Thursday, October 20, 2011

Second District Overturns Cert Denial in Bait-and-Switch/Fraud Action Brought on Behalf of Residents of a Senior Citizen Mobilehome Park: Marler v. E.M. Johansing LLC

On October 19, 2011, the Second District Court of Appeal (Division 6) reversed the denial of certification of contract and fraud claims arising out of an alleged scheme designed to secure consent from residents of a rent controlled senior citizen mobilehome park to convert the park to a condominium development. See Marler v. E.M. Johansing LLC, __ Cal.App.4th __ (2011). As stated in the Opinion, plaintiffs allege “that Park owners induced them to convert the Park to a condominium development through false promises about the purchase price they would pay for their lots; after Park residents approved the conversion, Park owners raised the lots prices so high that the majority of Park residents could not afford them.” Slip Opinion, at 1-2. By way of example, the named plaintiffs “lot price increased from $126,500 to $215,000, a price they could not afford. See id., at 4. The trial court denied certification on the grounds that the class was not ascertainable and that there was no community of interest, which the Court of Appeal deemed an abuse of discretion for multiple reasons.

The Court’s Opinion is one that plaintiff attorneys will want to note, as it contains excellent discussion of applicable rules relating to acertainability, including:
  1. Identification of dual tests concerning the evaluation of the class definition [Slip Opinion, at 7-8],
  2. Standards for addressing overly-broad definitions [Id., at 9],
  3. The permissibility of defining the class by facts relating to “ultimate issues” in the action [Id., at 9-10], and
  4. The obligation of the trial court to permit the class to be redefined if doing so would facilitate certification. Id., at 10.
Similarly, the Opinion also contains great discussion on the use of “inferred reliance” in the context of fraud, which in this case was deemed appropriate based on the use of a standardized “pitch” letter sent to park residents, as well as a survey utilized to gauge support of the conversion to condominium tracts. Id., at 13-14.

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