Hartzog v. Smolens CA4/3

Filed 4/16/13 Hartzog v. Smolens CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

TODD HARTZOG et al.,

Plaintiffs and Appellants, G046506

v. (Super. Ct. No. 30-2010-00433851)

DAVID SCOTT SMOLENS et al., OPINION

Defendants and Respondents.

Appeal from a judgment of the Superior Court of Orange County,
David R. Chaffee, Judge. Affirmed.
Law Offices of Mark D. Holmes and Mark D. Holmes for Plaintiffs and
Appellants.
Bremer, Whyte, Brown & O‟Meara, Keith G. Bremer and Rachel A. Mihai
for Defendants and Respondents.
* * *
 INTRODUCTION
Todd Hartzog and Stacy Hartzog (the Hartzogs) purchased a house from
Thomas Beadel and James Quandt. The Hartzogs contend Beadel and Quandt
misrepresented and failed to disclose facts regarding the condition of the house. The
Hartzogs further contend they would not have purchased the house if Beadel and Quandt
had provided them with the true facts regarding the house.
David Scott Smolens and In One Construction, Inc., doing business as All
In One Construction, are licensed contractors. (David Scott Smolens and In One
Construction, Inc., will be referred to herein as Smolens.) Smolens performed work on
the house before Beadel and Quandt sold it to the Hartzogs. The Hartzogs sued Smolens
for fraud, among other things. Smolens filed a motion for summary judgment. The court
granted the motion and entered judgment in favor of Smolens and against the Hartzogs;
the Hartzogs appeal.
Smolens successfully made a prima facie showing for judgment in his
favor. He thereby shifted the burden to the Hartzogs to demonstrate the existence of a
triable issue of material fact. The Hartzogs failed to do so; therefore, we affirm the
judgment in favor of Smolens.

STATEMENT OF FACTS AND PROCEDURAL HISTORY
Beadel and Quandt purchased a house located on Via Gallo in Coto de
Caza (the property) at a foreclosure sale before January 2009. Shortly thereafter, Beadel
and Quandt hired Smolens to perform work at the property. Beadel and Quandt asked
Smolens to repair damage caused by water, dry rot, and pests, and told Smolens what
parts of the property to work on.
In March 2009, the Hartzogs purchased the property from Beadel and
Quandt. Smolens was not a party to the purchase transaction. Before completing the
transaction, the Hartzogs hired a home inspector to inspect the property; neither the

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inspector nor the Hartzogs‟ real estate broker communicated with Smolens. In a written
form, Beadel and Quandt made disclosures to the Hartzogs of “known material facts and
defects affecting the Property.” (Some capitalization omitted.)
In 2010, the Hartzogs experienced water intrusion on the property, and
learned that Beadel and Quandt had allegedly failed to disclose certain defects in the
property.
In December 2010, the Hartzogs filed a complaint against Smolens, among
others. In March 2011, the Hartzogs filed a second amended complaint. The second
amended complaint asserted causes of action against Smolens for negligence, fraud, and
violation of Business and Professions Code section 17200 et seq. Smolens moved for
summary judgment or, in the alternative, summary adjudication of the issues. The
Hartzogs filed opposition to the motion. After a hearing, the trial court granted the
motion for summary judgment. The Hartzogs appealed.

DISCUSSION
I. APPEALABILITY
The clerk‟s transcript does not include a judgment. An order granting a
summary judgment motion is not an appealable order. (Sullivan v. Delta Air Lines, Inc.
(1997) 15 Cal.4th 288, 307, fn. 10.) However, the order of dismissal, signed by the trial
court judge, meets the criteria of an order of dismissal under Code of Civil Procedure
section 581d, and therefore constitutes a judgment for all purposes.

II. STANDARD OF REVIEW
“[T]he party moving for summary judgment bears the burden of
persuasion” that there are no triable issues of material fact and that the moving party is
entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 850.) The moving party also “bears an initial burden of production to make

3
a prima facie showing of the nonexistence of any triable issue of material fact; if he
carries his burden of production, he causes a shift, and the opposing party is then
subjected to a burden of production of his own to make a prima facie showing of the
existence of a triable issue of material fact.” (Ibid.) “A prima facie showing is one that is
sufficient to support the position of the party in question.” (Id. at p. 851.)
“A trial court properly grants summary judgment where no triable issue of
material fact exists and the moving party is entitled to judgment as a matter of law.
[Citation.] We review the trial court‟s decision de novo, considering all of the evidence
the parties offered in connection with the motion (except that which the court properly
excluded) and the uncontradicted inferences the evidence reasonably supports.
[Citation.] In the trial court, once a moving defendant has „shown that one or more
elements of the cause of action, even if not separately pleaded, cannot be established,‟ the
burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden,
the plaintiff „may not rely upon the mere allegations or denials of its pleadings . . . but,
instead, shall set forth the specific facts showing that a triable issue of material fact exists
as to that cause of action . . . .‟ [Citations.]” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th
465, 476-477.)

III. EVIDENTIARY OBJECTIONS
Smolens filed evidentiary objections to significant portions of the
declarations of Todd Hartzog and William Sterling, which were filed in opposition to the
summary judgment motion. The trial court disregarded the objections because they failed
to quote or set forth the objectionable statement or material, which is required by
California Rules of Court, rule 3.1354(b)(3). (Additionally, Smolens failed to submit a
proposed order in the form set forth in rule 3.1354(c).) The trial court did not sustain or
overrule the objections; it simply disregarded them.

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 On appeal, Smolens states, “it was not reasonable for the trial court to say
that [Smolens] had to retype 50 pages of inadmissible declaration statements in their
objections.” What is truly unreasonable is Smolens‟s failure to follow the clear
requirements of the rules of court, thereby placing on the trial court the burden of parsing
through the lengthy declarations to determine the material or statements to which
objections were made.
When the trial court “fails to rule expressly on specific evidentiary
objections,” they are preserved on appeal. (Reid v. Google, Inc. (2010) 50 Cal.4th 512,
534.) We will address the evidentiary issues as they are relevant to this appeal.1

IV. FRAUD
“The elements of fraud, which give rise to the tort action for deceit, are
(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce
another‟s reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting
damage.” (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1255.)
When a fraud claim is based on concealment, rather than a direct misrepresentation of
fact, the plaintiff must prove the following: “„“(1) the defendant must have concealed or
suppressed a material fact, (2) the defendant must have been under a duty to disclose the
fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the
fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of
the fact and would not have acted as he did if he had known of the concealed or
suppressed fact, and (5) as a result of the concealment or suppression of the fact, the
plaintiff must have sustained damage.” [Citations.]‟ [Citation.] „A duty to speak may

1
This case does not present issues of the trial court overruling well-taken
objections, or improperly sustaining objections that were not well taken, and what effect
our de novo standard of review would have on our ability to independently review the
admissibility of any or all evidence presented in support of or in opposition to a motion
for summary judgment.

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arise in four ways: it may be directly imposed by statute or other prescriptive law; it may
be voluntarily assumed by contractual undertaking; it may arise as an incident of a
relationship between the defendant and the plaintiff; and it may arise as a result of other
conduct by the defendant that makes it wrongful for him to remain silent.‟ [Citation.]”
(SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 864.)
In the motion for summary judgment, Smolens established that he (1) made
no misrepresentations to Beadel and Quandt; (2) never met, much less communicated
with, the Hartzogs before the Hartzogs purchased the property; (3) was never hired by
and never performed any work for the Hartzogs; and (4) was only a contractor for Beadel
and Quandt. This evidentiary showing made out a prima facie case, and shifted the
burden to the Hartzogs to establish through admissible evidence the existence of a triable
issue of material fact.
In opposition to the summary judgment motion, the Hartzogs essentially
conceded they could not assert a claim against Smolens for making a misrepresentation
directly to them or for fraudulently concealing material information from them. They
argued, however, that Smolens was nevertheless liable for fraud under an indirect
deception theory or under an aiding and abetting theory.2

A. Indirect Deception
“It is true that in order for a defendant to be liable for fraud, he or she must
intend that a particular representation (or concealment) be relied upon by a specific
person or persons. [Citation.] However, it is also established that a defendant cannot
escape liability if he or she makes a representation to one person while intending or

2
In the trial court, the Hartzogs also argued Smolens was liable under a
conspiracy theory. On appeal, the Hartzogs are not contesting the trial court‟s ruling that
they failed to offer any evidence that Smolens conspired with Beadel and Quandt to
defraud the Hartzogs.

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having reason to expect that it will be repeated to and acted upon by the plaintiff (or
someone in the class of persons of which plaintiff is a member). [Citations.] [¶]
This is the principle of indirect deception described in section 533 of the Restatement
Second of Torts (section 533): „The maker of a fraudulent misrepresentation is subject to
liability for pecuniary loss to another who acts in justifiable reliance upon it if the
misrepresentation, although not made directly to the other, is made to a third person and
the maker intends or has reason to expect that its terms will be repeated or its substance
communicated to the other, and that it will influence his conduct in the transaction or type
of transaction involved.‟ Comment d to section 533 makes it clear the rule of section 533
applies where the maker of the misrepresentation has information that gives him
special reason to expect that the information will be communicated to others and will
influence their conduct. Comment g goes on to explain that it is not necessary that the
maker of the misrepresentation have the particular person in mind. It is enough that it is
intended to be repeated to a particular class of persons.” (Shapiro v. Sutherland (1998)
64 Cal.App.4th 1534, 1548.)
The first question we must address is whether the theory of indirect
deception was pled in the Hartzogs‟ second amended complaint. The trial court
concluded, “the indirect deception theory is a departure from the theories advanced in the
[second amended complaint].” We agree. The second amended complaint does not
allege Smolens made any false representations to, or fraudulently concealed any material
information Smolens had a duty to disclose from, Beadel and Quandt, with the intent that
such misrepresentations or nondisclosures would be passed on to the Hartzogs and others
in the class of potential buyers of the property. To the contrary, the second amended
complaint alleges Smolens fully informed Beadel and Quandt about the property‟s
substantial defects and the cost to repair those defects. It further alleges Smolens
specifically agreed with Beadel and Quandt that Smolens would only take “minimal
measures to stabilize the Property‟s structure—and not repair or remediate any of the

7
major defects and conditions that existed at the Property, or in the Property‟s structure,”
and that major defects would be covered up. It does not allege that Smolens made any
misrepresentations to Beadel and Quandt, with the intention or reason to expect those
misrepresentations would be repeated, or their substance communicated, to the Hartzogs.
(Rest.2d Torts, § 533.)
Even if this theory had been pled in the second amended complaint, we
would still find it was inapplicable as a matter of law. The theory of indirect deception,
as set forth in section 533 of the Restatement Second of Torts, applies “if the
misrepresentation, although not made directly to the other, is made to a third person and
the maker intends or has reason to expect that its terms will be repeated or its substance
communicated to the other, and that it will influence his conduct in the transaction or type
of transaction involved.” (Rest.2d Torts, § 533.)
Smolens offered admissible evidence, through his declaration, that he never
made any misrepresentations to Beadel and Quandt: “I and All in One Construction have
never made any misrepresentation to the Prior Owners regarding the Property.” This
evidentiary showing, although thin, was sufficient to shift the burden to the Hartzogs.
The Hartzogs‟ opposition to the motion for summary judgment failed to create a triable
issue of material fact as to whether Smolens ever made a misrepresentation to Beadel and
Quandt. The Hartzogs‟ opposition to Smolens‟s statement of undisputed material facts
states, in relevant part: “Moving Parties misrepresented the condition of the Property and
its defects and conditions to Prior Owners in their Invoices („AIO Invoices‟); and also
concealed from the Prior Owners defects and conditions, namely, that the entire structure
was subsiding, and would continue to subside; that there was a „negative grade‟ or „faulty
grade‟ problem that had caused water intrusion over a long period of time and if not
remedied, would continue to cause damage to the Property‟s structure; that the
foundation was damaged due to water intrusion, and would continue to sustain damage if
not remedied.”

8
 The evidence to which the Hartzogs cite, however, does not support that
statement; to the contrary, it supports Smolens‟s claim that he never made any
misrepresentations to Beadel and Quandt. The declaration of Todd Hartzog states,
“according to the AIO Invoices, Smolens, Beadel and Quandt agreed to only replace
some of the rotten and damaged support beams, and do nothing about the subsiding
structure, faulty grade, cracked foundation, the water intrusion, support beams that were
below grade and still rotting and deteriorated, and the major work that would have to be
done to remedy the rotten support beams, faulty grade, water intrusion, pests and
drainage problems.” (First italics added.) Todd Hartzog cited to a single invoice that
lists multiple items of work performed by Smolens at the property, but does not contain
any alleged misrepresentations by Smolens to Beadel and Quandt. The Hartzogs also
cited the declaration of their contracting expert witness on construction, who declared, in
relevant part, as follows:
“ . . . As evidenced by Smolens‟ Invoices and his deposition testimony, at
the time Smolens opened up the kitchen flooring and sub-flooring in January of 2009,
Smolens, Beadel and Quandt all saw and became aware of some of the serious defects
and conditions in the Property and the Property‟s structure that would cost hundreds of
thousands of dollars to remedy; and based on the AIO Invoices and the physical evidence
beneath the kitchen flooring and sub-flooring it is clear that Quandt, Beadel and Smolens
agreed to only replace some of the rotten and damaged support beams under the flooring
and sub-flooring—essentially to keep structure from continuing to subside and to prevent
it from collapsing—and do nothing about the rest of the support beams that were still
rotting and deteriorated. . . .
“ . . . Specifically, as evidenced by Smolens‟ Invoices and his deposition
testimony, Beadel, Quandt and Smolens agreed that Smolens would conceal or ‘cover
up’ the rotting and deteriorating support beams (mudsill (mud plate) joists and posts)—
and then „put lipstick on the pig‟—put flooring and subflooring over the rotting and

9
deteriorated support beams—and make the observable portions of the rest of the Property
as attractive as possible so that Beadel and Quandt could ‘flip’ the Property by selling it
to unsuspecting purchasers such as the Hartzogs. [¶] . . . [¶]
“ . . . The fraudulent intent of AIO and Smolens in concealing the problems
at the Property is inferred by the fact AIO and Smolens did in fact cover up major and
existing problems with the Property that would have cost hundreds of thousands of
dollars to remedy . . . and made the Property appear superficially attractive—„put lipstick
on the pig‟—all so that Beadel and Quandt could quickly „flip‟ or sell it to unsuspecting
buyers such as the Hartzogs. . . .
“ . . . Smolens, a B1 contractor with years of experience, knew as soon as
he looked below the kitchen floorboards and sub-flooring that the foundation was
damaged and the structure‟s support beams and mudsill were water-stained, mildewed
and rotting and, therefore, that all of the support beams and the mudsill (or mud plate)
needed to be replaced. . . .
“ . . . Indeed, the physical evidence under the kitchen floorboards
demonstrates a clear agreement by Beadel, Quandt and Smolens to perform only minimal
repairs to keep the Property’s structure from falling apart—and they and Smolens then
„put lipstick on the pig‟—to make the Property as superficially attractive to unsuspecting
purchasers such as the Hartzogs. . . .
“ . . . The half measures that Smolens took with respect to the foundation
and support beams allowed water intrusion to continue, so that both the new and old
support beams, posts and mudsill would continue to rot; and the subareas beneath the
floorboards would continue to provide an environment ripe for mold, fungus, mildew, rot,
wood destroying pests and rodents.
“ . . . Beadel and Quandt also represented that they were not aware of any
„Water intrusion in any part or any physical structure on the Property . . . standing water,
drainage, flooding, underground water moisture . . . on or affecting the Property.‟ . . .

10
 “ . . . This representation was false, as Beadel and Quandt had to be aware
of at least some water intrusion on the Property’s support beams, at the very least,
because they agreed that Smolens had to replace at least some of the support beams
because the beams were rotten—at least in part from being exposed to water. . . .
“ . . . Beadel and Quandt also represented that they were not aware of any
„problems with or infestation of mold, mildew, fungus or spores, past or present, on or
affecting the Property.‟ . . .
“ . . . This representation was also false, as Beadel and Quandt had to be
aware of the major problems with mold, mildew and fungus—both past and present—that
affected the Property.
“ . . . In short, Beadel and Quandt had to know from directing Smolens to
replace some of the joists and posts in the subareas that ‘some’ of the joists and posts
underneath the kitchen floor were deteriorating and rotten as a result of water intrusion,
black mold and black stains on them, they had to be fully aware that the under portion of
the Property was an environment that harbored such mildew and mold. . . .
“ . . . Beadel and Quandt also represented that they „fortified the structural
integrity of the home.‟ However, this was false. They only had Smolens replace some of
the support beams that supported the Property’s structure to keep the Property’s
structure from collapsing; and had decided not to replace several major support beams,
opting instead to leave them rotting and decaying. . . .
“ . . . Consequently, Beadel and Quandt had to know about at least some of
the major defects and conditions in the Property and its structure; and did not disclose
any of these [defects] and conditions in order to sell the Property quickly (flip it) to an
unsuspecting purchaser such as the Hartzogs. [¶] . . . [¶]
“ . . . [E]ven the Invoices represent only that damaged, rotted and
deteriorating portions of the Property‟s structure were being repaired—and there is no

11
mention whatsoever that damaged support beams were left in place; or that substantial
defects and conditions still existed after Smolens finished the work.
“ . . . AIO and Smolens claim that Smolens was just a contractor who did
work for Beadel and Quandt at the Property. Although Smolens himself did not sell the
Property to the Hartzogs, Smolens knowingly did wrong—he used his construction
expertise to take systematic measures to conceal the true condition of the Property and
‘put lipstick on the pig’—make it look attractive so that Beadel and Quandt could quickly
sell the Property to an unsuspecting subsequent buyer, such as the Hartzogs. [¶] . . . [¶]
“ . . . Smolens clearly, systematically and intentionally just „put lipstick on
the pig‟—covered up major defects and conditions in the Property and made the Property
look attractive—and knew that because Beadel and Quandt were going to re-sell the
Property, they would not disclose the conditions that Smolens had concealed from Beadel
and Quandt—and thereby defraud potential purchasers, such as the Hartzogs. . . .
“ . . . As just one example, Smolens represented to Beadel and Quandt in
his Invoices that Smolens had „removed five existing bad floor joists and one rim joist in
the kitchen . . . ; replaced floor joists and rim joist in kitchen . . . ; removed and replaced
one kingpost in the kitchen . . . .‟ . . .
“ . . . However, nowhere in any of the Invoices did Smolens mention (1) a
faulty grade condition (2) obvious drainage or water intrusion problems (3) the
foundation was cracked, (4) all of the support beams (joists, mudsill and posts) were so
rotten that the Property‟s structure has subsided, and was continuing to subside; or (5) all
of the support beams (joists, mudsill and posts) were so rotten . . . .
“ . . . In addition, at his deposition, Smolens denied that he made any
recommendations to Beadel or Quandt regarding what work should be performed on the
Property. Smolens insisted they always told him what to do. . . .
“ . . . The foregoing is important. Because if the conditions that existed
under the kitchen floor when Smolens opened it up were not obvious to Beadel and

12
Quandt, they were obvious to Smolens—any competent licensed contractor had to know
as soon as the contractor saw these conditions that these conditions were present; had
been present for a very long time and had caused substantial damage to the Property‟s
structure; and if these conditions were not remedied, the conditions would continue[] to
cause substantial damage to the Property‟s structure.
“ . . . Consequently, it is clear from the Invoices and Smolens‟ own
deposition testimony that Smolens concealed at least some of the substantial defects and
conditions in the Property and its structure from Beadel and Quandt.
“ . . . As a result of Smolens concealing at least some defects and conditions
from Beadel and Quandt, Beadel and Quandt falsely represented to the Hartzogs that the
„Property was extensively remodeled;‟ they had „fortified the structural integrity of the
home;‟ they were not aware of any „Water intrusion in any part or any physical structure
on the Property . . . standing water, drainage, flooding, underground water moisture . . .
on or affecting the Property;‟ they were not aware of any „problems with or infestation of
mold, mildew, fungus or spores, past or present, on or affecting the Property;‟ they had
„corrected a number of drainage issues and virtually updated every aspect of the home.‟
“ . . . As the Invoices make clear, Smolens did not say anything in the
Invoices to Beadel and Quandt about the Property having (1) a faulty grade condition
(2) drainage or water intrusion problems (3) a cracked foundation, (4) rotting and
pest-ridden support beams (joists, mudsill and posts); (5) a structure that had subsided,
and was continuing to subside. . . .
“ . . . Smolens could have avoided the Hartzogs‟ claim for indirect
deception based on concealment by simply writing a letter or email to the Prior Owners
detailing the defects and conditions he saw—and recommending that they repair all of the
defects and conditions . . . —not just the few that Prior Owners directed him to perform.
This is what construction contractors—licensed experts in the repair of people‟s homes—

13
do all of the time in such circumstances.” (Fn., boldface & some italics omitted; italics
added.)
Not only does Sterling‟s declaration fail to show evidence of any
misrepresentation by Smolens to Beadel and Quandt, but it shows to the contrary that
Beadel and Quandt were fully informed of everything Smolens was aware of, and that
they collectively agreed to proceed with making minor repairs to the property while
ignoring larger issues. This is completely inconsistent with the inference the Hartzogs
attempted to draw, that Smolens misrepresented facts to Beadel and Quandt, which
misrepresentations were then passed on to the Hartzogs by Beadel and Quandt, and that
Smolens concealed facts from Beadel and Quandt.
Even if the Hartzogs‟ evidence raised a triable issue as to whether Smolens
concealed a material fact from Beadel and Quandt, we would conclude Smolens would
not be liable under the indirect deception theory of fraud. First, the doctrine has never
been applied in such a way. The Hartzogs argue that “California courts have also
recognized claims for indirect non-disclosure of material facts made by a defendant to [a]
second person when the defendant knows or has reason to expect that these material facts
will not be disclosed to another and a third person or class of persons, who will . . . act on
the non-disclosure to his or her injury.”
In all of the cases cited by the Hartzogs, however, the defendant made a
false representation of fact, and the nondisclosure was of the true facts. (Shapiro v.
Sutherland, supra, 64 Cal.App.4th at pp. 1539-1540 [in real property disclosure form,
home sellers responded in the negative when asked if they were aware of noise problems
in the neighborhood, but concealed true fact that next-door neighbors had loud arguments
and late night parties]; Geernaert v. Mitchell (1995) 31 Cal.App.4th 601, 604 [home
seller made false representations of fact that house foundation had no problems and all
modifications to the house were done to code, but concealed true facts which were to the
contrary]; Barnhouse v. City of Pinole (1982) 133 Cal.App.3d 171, 178 [property

14
developer represented to home buyers that houses were built on fill, but concealed fact
that fill had not been done properly, and land also had preexisting slides and springs];
Granberg v. Turnham (1958) 166 Cal.App.2d 390, 392-393 [listing agreement falsely
represented property was in a single zoning area, rather than covering two separate
zoning areas; real estate broker‟s agent did not reveal true facts to multiple listing service,
which promulgated the misrepresentation to the public]; Wice v. Schilling (1954) 124
Cal.App.2d 735, 737-739 [written representation submitted to escrow that property was
free from termites and fungi, without divulging full contents of 14-page report
documenting locations and extent of termite infestation and fungi]; Crystal Pier
Amusement Co. v. Cannan (1933) 219 Cal. 184, 185-186 [representation that pier would
be built using certain materials, without disclosing it was actually built with inferior
materials, making it unsafe; indirect deception theory not at issue because court
concluded representations were made to individuals who were directors or officers of
both the company that originally hired contractor and the company that bought the rights
to build on the pier].)3

3
One case cited by the Hartzogs, Massei v. Lettunich (1967) 248 Cal.App.2d 68,
does not involve a direct misrepresentation, but is distinguishable from the present case
on its facts. A landowner hired a contractor to grade and fill his land, but rejected the
contractor‟s recommendation that the fill be compacted. (Id. at pp. 70-71.) An
engineering firm hired by the landowner recommended the foundations for the homes to
be built on the site be extended one foot into the ground. (Id. at p. 71.) The landowner
then hired a company (Trent & Son) to construct the homes, but did not reveal the land
had been filled, or the existence of the report recommending the sunken foundations.
(Ibid.) Trent & Son bought the lots from the landowner, giving notes that would not
become due until the homes were built and then sold. (Ibid.) The buyers of the homes
that were ultimately built sued when the land under their homes began subsiding. (Ibid.)
In concluding the homeowners could sue the original landowner for fraudulent
nondisclosure, the appellate court held as follows: “„The law is well settled that
“representations made to one person with intention that they will be repeated to another
and acted upon by him and which are repeated and acted upon to his injury gives the
person so acting the same right to relief as if the representations had been made to him
directly.”‟ [Citations.] No reason appears why this same rule should not be applicable to
nondisclosures as well as misrepresentations. The jury could easily have found that [the

15
 B. Aiding and Abetting
The Hartzogs also argue they created a triable issue of material fact as to
whether Smolens aided and abetted the fraud by Beadel and Quandt. “„“Liability
may . . . be imposed on one who aids and abets the commission of an intentional tort if
the person (a) knows the other‟s conduct constitutes a breach of duty and gives
substantial assistance or encouragement to the other to so act or (b) gives substantial
assistance to the other in accomplishing a tortious result and the person‟s own conduct,
separately considered, constitutes a breach of duty to the third person.” [Citations.]‟
[Citation.]” (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144.) The
Hartzogs do not contend Smolens owed them any duties that could have been breached;
therefore, we analyze the issue solely as to whether Smolens knew Beadel and Quandt‟s
conduct breached a duty, and whether Smolens gave substantial assistance or
encouragement to Beadel and Quandt in doing so.
The trial court initially found the Hartzogs had failed to allege a cause of
action for aiding and abetting a fraud by Beadel and Quandt, but nevertheless proceeded
to consider whether the Hartzogs had proffered evidence to create a triable issue of
material fact. The opposition to the motion for summary judgment did state that if the
court did not believe the Hartzogs had pled a cause of action for aiding and abetting a
fraud by Beadel and Quandt, the Hartzogs requested that the court grant leave to amend
the complaint. Because the Hartzogs did timely request leave to amend, we will move
beyond the initial question whether aiding and abetting was alleged in the second

original landowner], in failing to disclose to the Trents that the lots had been filled, did so
because he was fearful that the prospective purchasers would in turn learn that fact and be
dissuaded. [The original landowner], of course, had a pecuniary interest at stake because
it was agreed that the Trents‟ notes as payment for the lots would not be due and he
would not be paid until the residences were sold.” (Id. at p. 73.)

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amended complaint, and proceed to a determination whether an aiding and abetting
theory can withstand summary judgment.
The problem with the aiding and abetting theory is that the Hartzogs did not
offer any evidence that Smolens knew Beadel and Quandt would perpetrate a fraud on the
Hartzogs. Smolens therefore cannot be liable for aiding and abetting any fraud. The
Hartzogs offered evidence that Smolens knew Beadel and Quandt intended to resell the
property. In his deposition, Smolens testified as follows:
“BY [the Hartzogs‟ counsel]:
“Q And did they ever indicate to you that they wanted to res[ell] the
property?
“A Yes.
“Q And did they have a particular time frame in mind for reselling the
property? [¶] . . . [¶]
“THE WITNESS: Not conveyed to me, no.
“BY [the Hartzogs‟ counsel]:
“Q Did they ever tell you that they wanted to sell the property as soon as
possible?
“A No.”
Although Smolens was aware that Beadel and Quandt intended to sell the
property, the evidence does not support an inference that Smolens knew they intended to
sell the property quickly, or “flip” it, much less that they intended to do so without
informing “unsuspecting purchasers such as the Hartzogs” of the problems uncovered
during Smolens‟s repairs at the property. From the evidence before the trial court, one
cannot infer Smolens had knowledge that Beadel and Quandt had any intention to fail to
make the appropriate disclosures about the property to potential purchasers, or to
withhold any evidence regarding the condition of the property from them.

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 In Casey v. U.S. Bank Nat. Assn., supra, 127 Cal.App.4th at page 1146, in
reviewing an order sustaining a demurrer, the court held: “„In the civil arena, an aider
and abettor is called a cotortfeasor. To be held liable as a cotortfeasor, a defendant must
have knowledge and intent. . . . A defendant can be held liable as a cotortfeasor on the
basis of acting in concert only if he or she knew that a tort had been, or was to be,
committed, and acted with the intent of facilitating the commission of that tort.‟
[Citation.] Of course, a defendant can only aid and abet another‟s tort if the defendant
knows what „that tort‟ is. As the Supreme Court put it in Lomita [Land and Water Co.
v. Robinson (1908) 154 Cal. 36, 47], the defendant must have acted to aid the primary
tortfeasor „with knowledge of the object to be attained.‟ [Citation.]”
The Hartzogs cite Neilson v. Union Bank of California, N.A. (C.D.Cal.
2003) 290 F.Supp.2d 1101, in support of their argument that they offered sufficient
evidence to create a triable issue of material fact as to whether Smolens had knowledge
and intent as an aider and abetter in the alleged fraud by Beadel and Quandt. The
Hartzogs quote Neilson for the following proposition: “Applying this standard, the
complaint adequately pleads that defendants had actual knowledge of the primary
violation committed by Slatkin. The complaint asserts that the Banks knew Slatkin was
committing fraud and was breaching his fiduciary duties to class members. It also alleges
that each bank actively participated in Slatkin‟s Ponzi scheme with knowledge of his
crimes. Slatkin‟s crime, of course, was the operation of a Ponzi scheme that defrauded
hundreds of investors and caused losses of hundreds of millions of dollars. The
complaint details the manner in which the Ponzi scheme operated, describes Slatkin‟s
fraudulent transactions, and outlines the Banks‟ involvement in these activities. It
alleges, in particular, that the Banks utilized atypical banking procedures to service
Slatkin‟s accounts, raising an inference that they knew of the Ponzi scheme and sought to
accommodate it by altering their normal ways of doing business. This supports the
general allegations of knowledge.” (Id. at p. 1120.) We generally agree with Neilson‟s

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conclusions, although it is a federal case, applying a different standard of pleading fraud
claims. We are concerned, however, with a case at the summary judgment stage, when it
is the evidence presented, not the facts alleged, that is the focus of our inquiry. Neilson
does not address what evidence would be sufficient to establish the fraud claim in that
case.
Having reviewed the record de novo, we conclude the Hartzogs did not
offer evidence that would show the existence of a triable issue of material fact as to
Smolens‟s knowledge and intent to support a claim for aiding and abetting a fraud.
While Smolens admitted at his deposition that he knew Beadel and Quandt intended to
resell the property, there is no evidence Smolens knew Beadel and Quandt intended to
quickly flip the property, much less that he knew they were going to commit a fraud
against any prospective purchasers by concealing the property‟s defects.
Sterling declared Smolens‟s knowledge of the upcoming fraud, and intent
to aid and abet that fraud, might be inferred from his participation in the partial repair of
the property‟s damage and covering up the repairs. We disagree. Sterling‟s conclusions
are speculative, inadmissible, and not sufficient to raise a triable issue of material fact.
Contrary to the Hartzogs‟ contention on appeal, as an appellate court we are not bound to
accept and rely on evidence that is clearly inadmissible because the other side has not
objected to it. Declarations in support of or in opposition to a motion for summary
judgment “shall be made . . . on personal knowledge, shall set forth admissible evidence,
and shall show affirmatively that the affiant is competent to testify to the matters stated.”
(Code Civ. Proc., § 437c, subd. (d); see Herrera v. Deutsche Bank National Trust Co.
(2011) 196 Cal.App.4th 1366, 1376 [declaration insufficient because not based on
personal knowledge and contained inadmissible hearsay]; Garibay v. Hemmat (2008) 161
Cal.App.4th 735, 743 [expert witness‟s declaration insufficient when “„based on
assumptions of fact that are without evidentiary support or based on factors that are
speculative or conjectural‟”].)

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 As noted ante, however, Smolens did object to Sterling‟s declaration, and
those objections were preserved. Sterling‟s statements that Smolens undertook any acts
“intentionally” or “knowingly” are clearly conclusory, speculative, and inadmissible.
Further, the inferences Sterling drew from the admissible evidence of the work actually
performed by Smolens—that Smolens agreed with Beadel and Quandt to conceal the
property‟s serious problems with the knowledge that Beadel and Quandt intended to
defraud prospective purchasers—is not reasonable under any scenario. Sterling‟s
declaration extrapolates from Smolens‟s deposition that Smolens knew Beadel and
Quandt would commit fraud, and intended to participate in that fraud. These are, quite
simply, too many unreasonable leaps to unsupported conclusions.
The biggest problem with the aiding and abetting theory is revealed in a
review and analysis of the expert‟s declaration. Sterling explained in detail the
information that Beadel and Quandt allegedly misrepresented, or failed to disclose, on the
required disclosure form when they sold the property to the Hartzogs. This, of course, is
the heart of the Hartzogs‟ claim. Yet, what is completely missing is any admissible
evidence that Smolens knew Beadel and Quandt would make those misrepresentations
and fail to make those disclosures, or that he intended to assist them in so doing. For this
reason, even assuming the Hartzogs could amend their complaint to allege a cause of
action for aiding and abetting a fraud, such a claim would not survive summary
judgment. The trial court did not err in granting Smolens‟s motion.

V. CAUSES OF ACTION FOR VIOLATION OF BUSINESS AND PROFESSIONS CODE
SECTION 17200 ET SEQ. AND NEGLIGENCE

The Hartzogs‟ cause of action for violation of Business and Professions
Code section 17200 et seq. is premised entirely on their claim for fraud. Therefore, this
cause of action stands or falls on the fraud cause of action.

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 The Hartzogs concede on appeal that the trial court correctly granted the
summary judgment motion as to their cause of action for negligence.

DISPOSITION
The judgment is affirmed. Respondents shall recover costs on appeal.

FYBEL, J.

WE CONCUR:

MOORE, ACTING P. J.

THOMPSON, J.

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