DUNKERLEY v. TAYLOR

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Court of Appeal, Second District, Division 5, California.

James Allan DUNKERLEY and Andrea Lee Dunkerley, Plaintiffs and Appellants, v. Maurice L. TAYLOR, Jr., et al., Defendants and Respondents.

Civ. 64922.

Decided: February 16, 1983

William R. Smith, Los Angeles, for plaintiffs and appellants. Haight, Dickson, Brown & Bonesteel, Roy G. Weatherup, Stephen D. Flaherty, San Francisco, and Robert L. Washburn, Pacific Palisades, King & Williams and Andrea Lynn Rice, Los Angeles, for defendants and respondents.

Appellants James and Andrea Dunkerley appeal from an order sustaining a demurrer without leave to amend to their third amended complaint.   The basis of the order sustaining the demurrer was that appellants had failed to state a cause of action under sections 17200, 17203, and 17500 of the Business and Professions Code.1  We amend the order of the superior court by adding a paragraph dismissing the action, and treat the appeal as one from a judgment of dismissal.  (McGee v. Weinberg, 97 Cal.App.3d 798, 800, 159 Cal.Rptr. 86;  Bellah v. Greenson, 81 Cal.App.3d 614, 618, fn. 1, 146 Cal.Rptr. 535.)

FACTS

In September of 1980, appellants filed their initial complaint for fraud, misrepresentation, and breach of contract in connection with the sale of a house against Maurice Taylor, the seller of the house and not a party to this appeal, and against respondents, the selling and listing brokers and their salesmen.   The court sustained a demurrer to this complaint, partly on the basis that appellants' causes of action for fraud and misrepresentation were barred by the three-year statute of limitations (Code Civ.Proc., § 338, subd. 4), and gave appellants leave to amend.   Appellants' first and second amended complaints, also successfully demurred to, alleged causes of action for breach of contract and violations of sections 17200 and 17500 against all defendants.   Appellants were again granted leave to amend and filed a third amended complaint.   In the first and second causes of action of this last pleading, they alleged breach of contract and failure of consideration against Taylor only;  in the third cause of action, they asked for damages for unfair competition under section 17200 from all defendants;  and in the fourth and fifth causes of action, they demanded an injunction under sections 17203 and 17500 against respondents only.   A demurrer to the last three causes of action was sustained, this time without leave to amend, and this appeal has followed.

The third amended complaint discloses the following allegations which, for purposes of this appeal, are deemed established.   Sometime in early 1977, Taylor provided respondents Desert Wide Real Estate Network and Pete Datillo, the listing brokers, with a listing of his home for sale.   Respondents Murray Golub Century 21 Realtors and Richard Langley, the selling brokers, made the listing available to appellants.   All defendants assured appellants that the only defects in Taylor's house were holes in the walls and an inadequate paint job;  however, they knew, or with reasonable care should have known, that a large excavation once used as a bomb shelter was located underneath the house.   Appellants did not and could not reasonably discover this defect.   They bought the home in April of 1977.   In June, the foundations began to weaken and the walls began to fall or sink into the ground, whereupon appellants discovered the excavation.   They did not, however, file their initial complaint until September of 1980.

DISCUSSION

 Appellants first contest the validity of the demurrer to their second amended complaint which set forth a claim for breach of contract against respondents.   We cannot, however, consider the propriety of rulings concerning a pleading which has been supplanted by another.  “ ‘It is well established that an amendatory pleading supersedes the original one, which ceases to perform any function as a pleading.  [Citations.]’  ․ ‘Such amended pleading supplants all prior complaints.   It alone will be considered by the reviewing court.  [Citations.]’ ”  (Foreman & Clark Corp. v. Fallon, 3 Cal.3d 875, 884, 92 Cal.Rptr. 162, 479 P.2d 362.)   Thus, in Chicago Title Ins. Co. v. Great Western Financial Corp., 69 Cal.2d 305, 70 Cal.Rptr. 849, 444 P.2d 481, the Supreme Court rejected the appellant's plea that it consider the validity of demurrers to earlier complaints:  “We confine our attention herein to the most recently filed fourth amended complaint since ‘The [sic] court on appeal will not consider the sufficiency of a superseded complaint where the plaintiff has amended it after demurrer sustained.’ ”  (Id., at p. 311, 70 Cal.Rptr. 849, 444 P.2d 481.)   Appellants in the instant case failed to reassert their claim for breach of contract against respondents in their final amendment.   They are bound by their election and may not now rely on allegations they have chosen to abandon.2

 Appellants' third cause of action in their third amended complaint attempts to state a claim for damages under section 17200.3  The order sustaining respondents' demurrer to this count was apparently based on the trial court's belief that the statute does not permit suits for damages by private individuals.   We agree.

As applied to section 17500,4 the issue has already been decided.   In Chern v. Bank of America, 15 Cal.3d 866, 127 Cal.Rptr. 110, 544 P.2d 1310, the Supreme Court sustained a dismissal of a private plaintiff's claim for damages for false or misleading statements under section 17500:  “The applicable statutes do not authorize recovery of damages by private individuals.   Private relief is limited to the filing of actions for an injunction (id., § 17535);  and civil penalties are recoverable only by specified public officers (id., §§ 17535.5, 17536).”  (Id., at p. 875, 127 Cal.Rptr. 110, 544 P.2d 1310;  emphasis in original.)   We find that the reasoning of Chern applies equally to bar appellants' damage claim under section 17200.

Initially, we note the recital in appellants' complaint that respondents' statements concerning the home's condition “constitute unfair competition as defined by Section 17200 of the Business and Professions Code in that their statements violate Section 17500 of the Business and Professions Code.”  (Emphasis added.)   It is clear, therefore, that the basis of their claim is actually a violation of section 17500, although they have chosen to frame the cause of action as a violation of section 17200.   Appellants may not avoid the holding of Chern, and elevate form over substance, simply by expressing their claim, factually based on an untrue and misleading statement, as a violation of section 17200 instead of section 17500.

Moreover, sections 17200, 17203, 17204, 17206, and 17207 are similar in language and construction to sections 17500, 17535, 17535.5, and 17536.   Both sets of regulations first define the conduct they prohibit (§§ 17200 and 17500) and then state the remedies available:  private individuals and public officials may seek injunctions (§§ 17203, 17204, and 17535), but only public officials may sue for civil penalties which must be paid to a public agency (§§ 17206, 17207, and 17535.5, 17536).   Neither set authorizes the recovery of damages by private individuals.   Because of the similarities of the provisions, we find that the Supreme Court's analysis in Chern of section 17500 is equally applicable to section 17200:  individual relief is limited to an injunction of ongoing conduct.

 Appellants point to section 17203, which provides that a court may “restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.”   Contrary to appellants' contention, this section does not authorize a private action for damages for past conduct, but merely confers upon the court ancillary restitutionary powers necessary to make its injunctions effective.   In discussing section 17535, the section parallel to section 17203, the Supreme Court stated:  “[T]he trial court has authority to order restitution as a form of ancillary relief in ․ an injunctive action [brought by an individual]․  [¶] [The court may do so if it] determines that such a remedy is necessary to deter future violations of the unfair trade practice statute or to foreclose the defendant's retention of any ill-gotten gains.”  (Fletcher v. Security Pacific National Bank, 23 Cal.3d 442, 454, 153 Cal.Rptr. 28, 591 P.2d 51;  see also People v. Pacific Land Research Co., 20 Cal.3d 10, 19, fn. 9, 141 Cal.Rptr. 20, 569 P.2d 125;  People v. Superior Court (Jayhill), 9 Cal.3d 283, 286–287, 107 Cal.Rptr. 192, 507 P.2d 1400.)   We conclude that neither section 17535 nor section 17203 authorizes a private action for damages arising from a single event not likely to be repeated in the future.

Our holding is also supported by the Supreme Court's construction of the purpose of section 17200:  “The Legislature ‘intended ․ to permit tribunals to enjoin on-going wrongful business conduct in whatever context such activity might occur.’ ”  (People v. McKale, 25 Cal.3d 626, 632, 159 Cal.Rptr. 811, 602 P.2d 731, emphasis added.   See also Barquis v. Merchants Collection Assn., 7 Cal.3d 94, 111, 101 Cal.Rptr. 745, 496 P.2d 817.)   Section 17200 et seq. provides the individual with a means to enjoin on-going unlawful business practices;  it was not intended as a convenient way to avoid the statute of limitations applicable to a suit for damages arising from a single misrepresentation.5

 Lastly, we consider appellants' causes of action for injunctive relief under sections 17203 and 17535.   As we have stated, an individual plaintiff's request for injunctive relief under these sections is proper.   However, quite obviously an event which has already transpired cannot be enjoined.  (McManus v. KPAL Broadcasting Corp., 182 Cal.App.2d 558, 563, 6 Cal.Rptr. 441.)   Instead, the burden rests upon appellants to state factual allegations which, if proven, entitle them to injunctive relief, such as facts showing threatened irreparable injury or inadequacy of other legal remedies.  (See, e.g., Barquis v. Merchants Collections Assn., supra, 7 Cal.3d 94, 103, 101 Cal.Rptr. 745, 496 P.2d 817;  [general practice of instituting actions against consumers in wrong county, threatened to continue in the future];  McKay Jewelers, Inc. v. Bowron, 19 Cal.2d 595, 599, 122 P.2d 543 [irreparable injury from threatened enforcement of statute];  Payne v. United California Bank, 23 Cal.App.3d 850, 855, 100 Cal.Rptr. 672 [threat of future conduct likely to deceive or mislead the public].   See also Czap v. Credit Bureau of Santa Clara Valley, 7 Cal.App.3d 1, 7, 86 Cal.Rptr. 417.)   In their complaint, appellants merely allege “that the violations of law described in ․ this Complaint have been and are now being carried out” and that “Defendants, and each of them, will continue to engage in the unlawful acts, business practices, unfair competition and course of conduct set forth herein and will continue to be successful in inducing members of the public to enter into agreements for the disposition of property through the use of untrue and misleading statements.”   These allegations fail to set forth facts showing either inadequacy of other legal remedies, irreparable injury, or indeed any sort of threatened future conduct.   The only fact alleged to is respondents' misrepresentation concerning the condition of a particular piece of property to appellants at a certain time;  the remaining allegations are legal conclusions.   We cannot even infer the likelihood of future misrepresentations where the only fact stated by appellants concerns a single event and a single piece of property.   Under these circumstances, we find that appellants have failed to state a cause of action entitling them to an injunction.

The order of the superior court from which the purported appeal is taken is modified and amended by adding thereto a paragraph dismissing the action.   The resulting judgment of dismissal is affirmed.

FOOTNOTES

1.   Unless otherwise stated, all section references are to the Business and Professions Code.

2.   Even if we could review the sufficiency of appellants' cause of action for breach of contract against respondents, we would sustain the dismissal.   With certain exceptions not here applicable, a real estate broker who discloses his capacity as agent in a contract to sell real property is not liable for his principal's breach of contract.  (See Jacobs v. Freeman, 104 Cal.App.3d 177, 191, 163 Cal.Rptr. 680.)   Appellants claim that direct privity of contract existed because according to the escrow instructions, part of the down payment was to be used to pay respondents' commissions who in turn promised to pay for any closing costs which would exceed the agreed upon amount.   However, while these recitations show respondents may indeed have entered into a contract guaranteeing the closing costs, nothing indicates that they thereby obligated themselves to sell the subject property, with or without defects, and appellants cite no authority for such a proposition.In their brief to us, appellants also rely on Connor v. Great Western Sav. & Loan Assn., 69 Cal.2d 850, 73 Cal.Rptr. 369, 447 P.2d 609, to establish a duty on respondents' part to exercise ordinary care even absent privity of contract.   However, if such a duty did exist, an action for damages resulting from the breach thereof would be barred by the three-year statute of limitations (Code Civ.Proc., § 338, subd. 3), as were appellants' original actions for fraud and misrepresentation, and would properly be dismissed.  (See Cooper v. Jevne, 56 Cal.App.3d 860, 128 Cal.Rptr. 724;  Lingsch v. Savage, 213 Cal.App.2d 729, 29 Cal.Rptr. 201.)

3.   Section 17200 provides:  “As used in this chapter, unfair competition shall mean and include unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.”

4.   Section 17500 provides in pertinent part:  “It is unlawful for any person ․ with intent directly or indirectly to dispose of real or personal property ․ or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state ․ any statement ․ which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading․”

5.   Appellants rely on United Farm Workers of America v. Superior Court, 47 Cal.App.3d 334, 120 Cal.Rptr. 904, which held that a private party could recover damages under section 17500 and section 3369 of the Civil Code, the predecessor statute to section 17200 et seq.   In light of Chern v. Bank of America, we cannot follow this holding.   We also note that the plaintiff in United Farm Workers stated a viable cause of action not only for damages, but also for an injunction.   Hence, the court was not confronted with a case involving only a single transaction;  as such, it may be understood as merely affirming a trial court's inherent equitable powers to provide restitution.  (See People v. Superior Court (Jayhill), supra, 9 Cal.3d 283, 287, fn. 1, 107 Cal.Rptr. 192, 507 P.2d 1400.)

ASHBY, Associate Justice.

FEINERMAN, P.J., and STEPHENS, J., concur.