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VICTORIA R. NUETZEL # 115124 NUETZEL'& BLOMBERG LLP 2033 N. Main Street, Suite 1060

ALAMeDA COUNTY

F I LED
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Walnut Creek, CA 94596 Telet'hone: (925).95.24500 Facsimile: (925) 952-4502

JAN I 9 2006
ee, LERK,O_ F~_ E_ ,p~._ ~o y S

COURT
Deputy

Attorneys for Plaintiffs MORRIS N. REINISCH AND BARBARA A. REINISCH

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA - PLEASANTON UNLIMJTED JURISDICTION BRANCH

1111---------------------------. an
12 MORRIS N. REINISCH BARBARA A. REINISCH individual; and

an individual,

Case No.: VGOS239434

13
14 Plaintiffs,

lS
16
17

v.
, JEFFREY SCHMIDT, an individual; DONNA SCHMIDT. an individual; RUBY Hll.L REALTY, a business entity; ROBERT GffiBONS, an individual; REMAX ACCORD, business entity; RUTH ANN

. FJRST AMENDED COMPLAINT FOR BREACH OF CONTRACT, BREACH OF STATUTORY DUTIES, FRAUD,
'CONCEALMENT,

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19 20 21 22 23

DAVIDSON, an individual; SIGNATURE
PROPERTIES, INC., a California corporation; FIDELITY ThlSPECnON & CONSULTn-.TG SERVICES, a business entity and DOES I-50, inclusive, Defendants.

a

FIDUCIARY DUTY~ NEGLIGENT MISREPRESENTATION, STRlCT LIABILITY, BREACH OF EXPRESS W ARRANTI' AND NEGLIGENCE

BREACH OF

BY fAX
..
A. RErnISCH ("Plaintiffs")

24n--------25 26 complain against Defendants,

Plaintiffs MORRIS N. REINISCH and BARBARA and each of them, as follows:

27 28
First Amended Complaint

ZDSir-ZS6-S26

WdE~:t 9002 81 uer

GENERAL AIJ ,EGAnONS 2 3 4 5 1. Plaintiffs MORRIS N. REINlSCH and BARBARA A. RErnISCH ("Plaintiffs")

are individuals residing in the County of Alameda, California,

Plaintiffs are currently the owners

of a parcel of improved real property commonly known ag,456 Cabonia Court, Pleasanton,
California ("Property").

6
7

2.
.

Plaintiffs are informed and believe and thereon allege that Defendants Jeffrey ("Schmjdts") are, and at all times herein material were, individuals Schmidts were the owners ofthe Property which
.

Schmidt and Donna Schmidt

8 .residing in the County of Alameda, California. 9 10 11 12 13

they sold to Plaintiffs on or about September 17, 2004.

3.

Plaintiffs 'are informed and believe and thereon allege that defendant Signature is, and at all times herein material was, a corporation organized and Plaintiffs are

Properties Inc. ("Signature")

existing under the laws of California and.authorized to do business in California.

informed and believe and thereon allege that at all times berein material Signature was in the business of manufacturing,

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15 16 17 18 19 20 21 22 23 . 24 25 26 27

constructing, developing, and marketing residential homes for sale to
construction, development and/or

the general public and was responsible for the manufacturing,

Sale of the Property, the.construction
November 1996 .

of which was substantially

complete no earlier than

.4.

. Plaintiffs

are informed

and believe and thereon allege that Defendant Ruby Hill

Realty ("Ruby Hill") is, and at all times herein material was, licensed in California as a Real Estate Broker-Agent engaged in the business of marketing and selling real estate with its PlaintfIs are further informed

principal place of business in the County of Alameda, California

and believe and thereupon allege that at all times herein material Ruby Hill was a division of and wholly owned and controlled by Signature.

5.

Plaintiffs are informed and believe and thereon allege that Defendant Fidelity

Inspection & Consulting Services ("Fidelity") is, and at all !imes herein material was, a business entity authorized to do and doing business in the State of Cali fomi a and engaged in the business of providing inspection services including stucco inspections,

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First Amended Complaint

- 2-

£'cI

20Si>'-C!S6-S2S

~d£2:v

9002

81

uer

In or about August 2004. inclusive. Plaintiffs. Plaintiffs are ignorant of the true names and capacities of defendants sued herein as Does 1 through 50. 2 3 4 Gibbons ("Gibbons") Estate Broker-Agent. 10. and at all times material herein was. 7. Davidson and ReMax and Does 1-9 to act as their real estate agent with respect to Plaintiffs' Plaintiffs relied upon 27 planned purchase of a home in the County of Alameda. as a result of Morris Reinisch's employment. 6. to Pleasanton. in doing the things herein alleged. Plaintiffs will amend this complaint to allege their true names and capacities when they have been ascertained. licensed in California as a Real Estate 5 6 7 Accord ("ReMax") 8 9 10 11 12 13 14 Broker-Agent engaged in the business of marketing and selling real estate with its principalplace of business in the County of Alameda. Plaintiffs are informed and believe and thereon allege that defendant ReMax is. 8. was acting within the course and scope of said agency and/or employment. was acting within the course and scope of said agency and/or employment.~rU~~&901 Plaintiffs are informed and believe and thereon allege that defendant Robert is.e. each of said fictitiously named defendant was the agent and/or employee of the named defendants and in doing the things herein alleged was acting within the course and scope of said agency and/or employment. Plaintiffs retained Defendants 24 25 26 were transferred from Houston. Plaintiffs are informed and believe and thereon allege that defendant Ruth Ann is. and at all times herein materlai was. California. 28 First Amended Complaint -3- ~OS?-2S6-S26 WdE2:. 15 16 9. California. 17 18 19 20 21 ·22 23 defendant is responsible 11. and at all times herein material was. 9002 81 uec . California. and therefore sue them by such fictitious names. in doing the things herein alleged. Texas. Plaintiffs are informed and believe and thereon allege that at all times material herein. licensed in California as a Real Plaintiffs are informed and believe and thereon allege that at all times herein material Gibbons was an agent andlor employee of defendant Ruby Hill and. 12. Plaintiffs are informed and believe and thereon allege that each fictitiously named in some manner for the acts and omissions complained of herein. lid 11.()9:~!lOOl/81ft . herein material Davidson was an agent and/or employee of defendant ReMax and. licensed in California as a Real Plaintiffs are informed and believe and thereon allege that at all times Davidson ("Davidson") Estate Broker-Agent.

made an offer which was accepted by Schmidts on or about August 17.d I rog:" 900018 ilL "I!rUH£90L 1. 16. defendant Davidson showed Plaintiffs a number of different 3 4 5 6 residential properties and showed and rec~mmended the Property to Plaintiffs.. on or about August 16. 15. flooding in the area of the Property and certain construction practices by Signature Properties all of which information. 2 Defendants Davidson's and ReMax's skill and expertise in locating and assisting them in purchasing a home in California and in providing advise regarding necessary inspections for any property located in California. ReMax and Does 1-9 were further aware that Plaintiffs did not reside in California and therefore could not participate in necessary inspections and that Plaintiffs therefore relied upon Davidson. if di sclosed to Plaintiffs. knowledge regarding the Ruby Hill development. A true and correct copy of-the Residential Purchase Agreement is 19 20 21 22 23 24 25 26 27 attached hereto as Exhibit A. Ruby Hill and Does 10-19 to act as their agent/broker in the sale of the Property. where the Property was located. would have materially affected Plainti ffs' decision to 14 15 16 _17 18 purchase the Property. including but 12 13 not limited to knowledge regarding drainage problems in the development generally. Davidson.I. 13. Thereafter. ReMax and Does 1·9 to ensure all necessary inspections were conducted and to confirm that the Property meet the employer's relocation program requirements. Plaintiffs are further informed and believe and thereon allege that at all times herein materia! Gibbons. Plaintiffs are informed and believe and thereon allege that Schmidts retained 7 8 9 10 Gibbons. 2004.9002 BI uer . Plaintiffs determined iliat they wished to make an offer for the purchase of the Property and. At all times herein material defendant Davidson was aware that the home was being purchased subject to a company relocation policy which required that a stucco inspection be performed to confirm that the home was constructed using ordinary stucco construction and specifically was not constructed with an Exterior Insulation and Finish System ("EFIS"). 28 First Amended Complaint -4- 2'OSt--2SS-S26 Wdt-2:t. 2004. superior 11 . Ruby Hill and Does 10-19 were agents andlor employee of Signature Properties and had superior knowledge regarding the nature of the construction of the Property.

2004. Plaintiffs received a Real Estate Transfer Disclosure Statement signed by Defendants Schmidts. Plaintiffs are informed and believe and thereon aUege that.~ 900llBIIl -1!rU~~C901 17. Defendants Donna Schmidt and Jeffrey Schmidt were aware that. ReMax and Does 1-9 retained defendant Fidelity Inspection and inspection of-the Property Consulting Services ("Fidelity") and Does 40-50 to conductastucco and on or about August 26. Davidson and Gibbons which disclosure indicated. 4 Davidson. that the Property had no drainage or moisture related problems.9002 81 u~r . 5 6 7 8 9 lB. among other things.. construction by Ruby generally.09. flooding in the area 0 f the practices by Signature Properties or any other facts regarding the Property of which they had knowledge.lid II. As a result. they were not advised Hill or Gibbons of drainage pro~lems in the development Property. 16 17 18 19 20 2\ 22 20. 19. 23 24 21. A true and correct copy of the Real Estate Transfer 10 Disclosure Statement is attached hereto as Exhibit B. 25 26 27 Plaintiffs discovered standing water in the back yard and buckling of the hardwood floor in the first floor of the residence. PLaintiffs were never advised by Defendants Donna Schmidt or Jeffrey Schmidt. aboul the buckling floor or drainage problems in the back yard.-256-526 Wdt. nor were they advised by ReMax or Davidson of the necessary inspections and drainage issues or any other facts of which they had knowledge which materially affected the value or desirability of the Property. the hardwood flooring in the first' floor of the Property had buckled and that the drainage surrounding the house was poor and inadequate to properly protect the Property from 15 moisture intrusion. In connection with the purchase and sale of the Property.. Fidelity conducted an inspection of the exterior stucco and provided a report to Davidson and Plaintiff. Plaintiffs retained consultants who removed portions of the flooring. prior to the sale of the 1. 2 3.2:t.. conducted extensive tests and discovered that necessary moisture barriers had not 28 First Amended Complaint -5 - 205t. Shortly after moving into the Property and no earlier than November 2004. which materially affected the value or desirability of the property. among other things. Plaintiffs relied upon said Real Estate Transfer Disclosure Statement in making the decision to purchase the Property.1 12 13 14 Property to Plaintiffs.

including buckling of the floors. removal of existing first floor flooring. Plaintiffs discovered that the windows and the exterior building envelope were defective and that water was entering the Property through the windows and through holes and tips in the exterior building envelope resulting in additional and further mold growth and damage to the floors and walls and other property damage. incur substantial ofa new drainage system. As a result of said defects. 23. and other ancillary interior repairs 21 required as a result of the property damage. As a result of said defects.in substantial damage. 24. . mold 4 5 and mold related damage. or will be required to. . installation of an expenses for the installation appropriate foundation vapor barrier. removal and installation of new windows. . Plaintiffs have. correction of the defects in 1he 17 18 building envelope and potentially removal and replacement of the entire outer surface of the 19 20 I Property . Donna Schmidt and Does 20·25) First Amended Complaint l. Also during the course of the mitigation repairs a portion of the exterior wall was . conduct mold remediation and replace damaged floors and walls. During the course of said work and no earlier than December 2005. Plaintiffs will additionally be required including replacing and restoring walls and to perform extensive interior repair work wan covering. mold remediation. Plaintiffs also have and will incur ancillary and incidental damages including loss of the use of the Property and expenses arising as a result of 22 23 24 25 26 27 28 the fact that the Property was and will be uninhabitable while the necessary repairs were or may be performed FIRST CAUSE OF ACTION BRBACHOFCONTRACT (By Plaintiffs against Defendants Jeffrey Schmidt. As a result of said defects. 22. provide proper moisture barrier sealing of the slab.·d . excessive moisture had permeated the residence resulting. Plaintiff commenced mitigation repairs in order to 6 7 8 9 10 11 12 13 14 15 16 correct the drainage deficiencies.:?OSv-2S6-S26 ~-------------------------------------------------------------------------------------~ .been installed on the foundation slab and that the drainage system surrounding the Property was 2 3 inadequate and otherwise defective. removed and Plaintiffs discovered that the building was constructed using an EFIS system. and installation of a new flooring system.

were improperly placed. mold. and a. failing to 14 15 disclose standing water in the back yard. 12 13 forth herein. Pursuant t~ the Residential Purchase Agreement. 30. required pursuant to Section 1102 of the California Civil Code. rotten uprights in the arbor in the backyard as a result of standing water. Plaintiffs have sustained damages in that they purchased a residence that has 20 defective floors and drainage. the disclosures 27. the parties are required to in a mediation of mediate any dispute before resorting to court action. Plaintiffs pray for judgment as hereinafter set forth. Plaintiffs entered into a Residential Purchase Under the terms Agreement (Exhibit A) with Defendants Donna Schmidt and Jeffrey Schmidt. 22 full extent ofsaid 23 $7500. 29. Plaintiffs reallege and reincorporate paragraphs I through 24 as though fully set On or about August 16. including. and believe that said damages will exceed 24 26 31. As a direct and proximate result of these acts. buckling of the hardwood floors in the first floor of the residence. and that the sprinkler systemwas 17 18 adding to drainage issues. 26. without limitation. Exhibit A. reasonab le attorneys' WHEREFORE.:vv&901 25. 2005.2004. Pursuant to the terms of said contract. Plaintiffs are further entitled to fees. Defendants breached the Purchase Agreement by. among other things. omissions and breaches by 19 defendants. 25. except those that were excused. Plaintiffs have performed all conditions. of the Purchase Agreement. down spouts improperly installed and positioned 16 . 28. covenants and obligations that were to be performed on their part. The parties participated this dispute on October 7.foundation lacking moisture protection all of which 21 must be corrected in order for the residence to be habitable. said Defendants agreed to disclose all known material facts and defects and make all other disclosures to Plaintiffs as required by law.lid 11:09:v900l/SIII -l!n:.000. 27 28 First Amended Complaint -7 - 205""-256-£26 Wd52:v 9002 Bl uer . 2 3 4 5 6 7 8 9 10 11 . Plaintiffs are current Jy unaware of the damages but are informed.

9 34. to disclose any defects in the property to a potential purchaser.. that down spouts were improperly 13 placed.SECOND CAUSE OF ACTION 2 3 4 BREACH OF STATUTORY DUTIES (By Plaintiffs against Defendants Jeffrey Schmidt. to proof. 1S Plaintiffs have sustained damages as set forth in paragraph 30. Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 27 28 First Amended Complaint -8- S'aI ZOSto-ZSS-S26 Wd92:. 14 35. that windows and doors were out of alignment. and that the sprinkler system did not work properly. . 6 33. 16 36. impose statutory duties on sellers of real property. The laws and regulations of California. that the arbor in the backyard was rotten as a result of 1'2 standing water. Section 1102 7 of the California Civil Code. Defendants. Donna Schmidt. 23 WHEREFORE. Donna Schmidt and Does 20-25) 38. including. but not limited to. 19 proximate result of said stress and severe emotional distress. Plaintiffs have also suffered severe emotional distress arising as a result of the 17 condition of their residence and the presence of mold and fear regarding their ability to complete 18 all necessary repairs ~d remove all mold in order to make the premises habitable. As a direct and " Plaintiffs have incurred significant 20 medical expenses and treatment for depression' and anxiety in an amount according 21 37. such as Jeffrey 8 Schmidt and Donna Schmidt. Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 5 forth herein. failing to 10 disclose that the back yard had standing water following any rain. 24 25 26 THIRD CAUSE OF ACfION FRAUD . above. did the things herein alleged with the intent to 22 defraud Plaintiffs and said acts were done maliciously and oppressively. among other things.p 9002 Bt uer . and each of them.' Defendants violated their statutory duties by.INTENTIONAL MlSREPRESENTATION (By Plaintiffs against Defendants Jeffrey 'Schmidt. Plaintiffs pray for judgment as set forth below. and Does 20 -25) 32. AB a direct and proximate result of these acts and omissions by defendants. that the hardwood floors in the 11 first floor of the residence had buckled.

Plaintiffs were 19 induced to and did purchase the Property. Defendants. 2S WHEREFORE. . Plaintiffs. Plaintiffs 22 sustained damages as set forth in paragraphs 30 and 36. and said acts were done maliciously and oppressively. 44.' Had Plaintiffs known the actual facts. When Defendants made these representations. As a direct and proximate result of said Defendants' misrepresentations. 2004. and es 20 -25. and 14 these representations were made by said Defendants with the intent to defraud and deceive 15 Plaintiffs and to induce Plaintiffs to purchase the Property. Donna Schmidt. inclusive. 26 27 28 First Amended Complaint .the back yard following rain indicative of a drainage problem. did the things herein alleged with the intent to 24 defraud Plaintiffs. and each of them. and that the sprinkler system did not work properly. they kriew them to be false. Plaintiffs are informed and believe and thereon allege that the representations made 8 by Defendants and each of them. that dow n 12 spouts were improperly placed.forth herein. 2 3 '39. that the arbor in the backyard 11 was rotten as a result of standing water. Defendants Jeffrey Schmidt. 13 41. In reliance on these representations. and each of them. 23 45.9- Ol·d 20Sio--2S6-S26 Wd92:t>. that windows and doors were out of alignment.9002 81 U~r . 20 21 43.16 42. were ignorant of the falsity of said Defendants' 18 representations and believed them to be true. above. were aware that 10 the hardwood floor in the first floor ofthe residence had buckled. they would not have purchased the Property. On or about August 24. executed a Real Estate Transfer Disclosure Statement 4 which falsely and fraudulently represented to Plaintiffs that said Defendants were not aware of any 5 drainage problems on the Property or any other problems that materially affected the value or 6 desirability of the Property purchased by Plaintiffs. were false in that said Defendants were aware that there was 9 standing water in . 7 40. Plaintiffs pray for judgment as set forth below. at the time these representations were made by said Defendantsand at 17 the time they purchased the Property.

and said acts were done maliciously and oppressively. 14 Defendants were required to disclose to Plaintiffs under California IS 49. ' 6 47. 23 53. At the time Defendants Jeffrey Sclun:idt. Donna Schmidt and Does 20-25. Defendants. By concealing the foregoing facts. and each of them.induce Plaintiffs to 1& purchase the Property. did the things herein alleged with the intent to 24 defraud Plaintiffs. Had Plaintiffs known the facts concealed by Defendants. which law. 2o Plaintiffs agreed to purchase theProperty. Plaintiffs 22 sustained damages as.FOURTH CAUSE OF ACTION 2 . Plaintiffs reallege and reincorporate paragraphs 4 1 through 24 as though fully set 5 forth herein. thai the arbor in 10 the backyard was rotten as a result of standing water. As a direct and proximate resultof said Defendants' concealment. and each of them. that down spouts were improperly placed. above. they were aware of and failed to disclose to Plaintiffs that ·8 there was standing water in the back yard following rain indicating problems with the drainage 9 system. Defendants intended to. 17 50. 13 48. 2l 52. Plaintiffs had no knowledge ofany of said facts as set forth in paragraph 47. sold the Property to Plaintiffs. they 16 would not have purchased the Property.FRAlID ~-CONCEALMgm' 3 (By Plaintiffs against Defendants Jeffrey Schmidt. Plaintiffs pray for judgment as set forth below. that windows and doors were out 0f 11 alignment. 19 51. set forth in paragraphs 30 and 36. As a direct and proximate result of Defendants' concealment of such facts. and that the spririkler system did not work 12 properly. cl ZOSt>~GSS-SZS WdLG:t> 900G B[ U~r . 27 28 First Amended Complaint I [ . Donna Schmidt and Does 20~25) 46. 7 inclusive. 25 26 WHEREFORE. that the hardwood floors in the first floor of the residence had buckled.

impose statutory and/or regulatory duties on real estate 9 brokers/agents to disclose to a potential buyer of real property all facts that materially affect the 10 value or desirability of real property that are known to or within the diligent attention or 11 observation of the broker/agent. Ruth Ann Davidson.~d 11'09:v 900l/SI/I • j!rlZv~&SOI 1 2 FIFTH CAUSE OF ACTION BREACH OF STATUTORY DUTIES 3 4 (By Plaintiffs against Defendants ReMax Accord. Defendants ReMax. or within the diligent t 7 attention and observation of. the parties. First Amended Complaint .1l - 21 'd 20Sv-2S6-S26 Wd~2:v 9002 81 uer . 27 28 58. Ruby Hill. of the Property about which inspection of the property. 18 57. but not limited to. The laws and regulations of California. Davidson. inclusive. and ( c ) to disclose all facts known to the agent materially 16 affecting the value or desirability of the property that are not known to. fairly.14 of the California Civil Code. 7 55. (b) act 13 at all times herein material 14 to (a) diligently exercise reasonable skill and care in the performance 1S onestly. Defendants Relvlax. Defendants further failed to advise Plaintiffs of the need for additional and further defects prevalent within 2S drainage inspections or to advise Plaintiffs of the potential construction 26 California. . Gibbons and Does 1-19. and (3) that the development had 23 drainage related issues generally all of which facts materially affected the value and desirability of 24 the Property. S Plaintiffs reallege and reincorporate paragraphs L through 24 as though fully set 6 forth herein. Davidson and Does 1-9 violated their statutory duties by. including. 19 among other things. as such owed a duty of care to Plainti ffs of the agent's duties. Ruby Hill Realty Robert Gibbons and Does 1·19) 54. were real estate brokers/agents and. Defendants Ruby Hill. Gibbons and Does 10·19 violated their statutory duties by. and in good faith. (2) that 22 the area generally known for drainage and water related issues. Section 8 2079. failing to disclose certain factsand conditions 20 they were aware but which could not be ascertained from a reasonable 21 including but not limited to: (1) that the Property was constructed with an EFIS system. 12 56.

inclusive. and (6) that other properties within the 8 development had sustained damages as a result of poor construction. all of which facts materially 10 59. is 63. - where the Property was located was 4 subject to extensive drainage related problems. 18 19 WHEREFORE. 15 16 17 . SIXTH CAUS~ OF ACTIQN BREACH OF FIDUQAR Y pUTY (By Plaintiffs against Defendants ReMax Accord. 21 62. Ruth Ann Davidson and Does 1-9) 1 through 24 as though fully set Plaintiffs reallege and reincorporate paragraphs 20 forth herein. Plaintiffs pray for judgment s:s set forth . and each of them. Davidson and Does 1-9. (2) that homes within the development had 5 sustained damages arising from water intrusion in the homes. to 27 advise plaintiffs of potential soil and drainage issues. Defendants. did the things herein alleged with the intent to 14 defraud Plaintiffs and said acts were done maliciously and oppressively. and each of them. recommend review of the drainage system. (3) that the area in which the 6 Property was located had previously flooded. above.among other things. (5) 7 that there were drainage problems with the Property. in that 22 Plaintiffs-and Defendants 23 said Defendants were. among other things. failing to disclose certain facts and conditions of the Property about which 2 they were aware but which could not be ascertained from a reasonable 3 including. 61.-2S6-S26 . licensed by the State of California as a Real Estate 24 Broker-Agent to sell real estate to the public. 9 affected the value 'and desirability of the Property. and each of them. A fiduciary relationship or relation of trust and confidence existed between ReMax. among other things. Plaintiffs purchased the Property and have 12 sustained damages as set forth in paragraphs 30 and 36. below.d 20Sf. The fiduciary duty or relationship of trust and confidence was breached by said 26 Defendants by their failure to. As a direct and proximate result of these acts and omissions and breach of 11 statutory duties by Defendants. of which Plaintiffs were members.12- Et . but not Iimited to: (1) the fact that the development inspection of the property. to PI"?perly retain and supervise the stucco 28 First Amended Complaint . (4) ~hat Signature Properties used EFI~ systems. 13 60.

When Defendants made these representations. house in good 18 condition. 2004. and each of them. 8 9 10 It 12 WHEREFORE. On or about August 20.. and each of them." 3 Hd ll'09:' 900Ua III -I'nl'l>~901 inspector. that 24 there were drainage problems with tbe Property. Defendants did the things bC!ein alleged with the intent to defraud Plaintiffs and 7 said acts were done maliciously and oppressively." 19 68.-e 2 ensure Plaintiffs received a ful1 and complete home inspection. Defendants Ruby Hill. that Signature Properties used EFtS systems. above .13 - 205v-256-526 WdB2:+ 9002 81 uer . SEVENTH CAUSE OF ACTION FRAUD . to verify that the Property complied with all relocation program requirements and to 64. 15 inclusive. Plaintiffs pray forjudgment as s-et forth below.Jngeneral. Gibbons and Does lQ-19. the house 26 was not in good condition but rather showed signs of water intrusion and water related damage.said Defendants were not" aware of any defects with respect to 17 the Property purchased by Plaintiffs and which specifically represented: "in general. and Does 10-19) 66. 14 67. and . Plainti ffs reallege and reincorporate paragraphs 1 through 24 as though fuUy set 13 forth herein. Robert Gibbons. and that. that other properties within the development had 25 sustained water related damages as a result of poor construction. Plaintiffs have suffered damages as described in paragraphs 30 and 5 36. they knew them to be false.INTENTIONAL MISREPRESENTATION (By Plaintiffs against Defendants Ruby Hill Realty. executed a Real-Estate Transfer Disclosure Statement which falsely 16 and fraudulently represented that . 27 28 First Amended Complaint 69. were false in that said Defendants were aware that the 21 development where the Property was located was subject to extensive drainage related problems 22 including problems resulting from water intrusion in the homes. that the area in which the 23 Property was located had previously flooded. 6 65. Plaintiffs are informed and believe and thereon allege that the representations made 20 by Defendants and each of them. As a direct and proximate result of the breach of fiduciary-duty on the part of said 4 Defendants.

Defendants did the things herein alleged with the intent to defraud Plaintiffs.' 19 Does 1o~ inclusive. 13 14 15 16· EIGHTH CAUSE OF ACTION FRAUD. Plaintiffs were Had Plaintiffs known the actual facts. Plaintiffs.1 these representations 2 Plaintiffs and were made by said Defendants with the intent to defraud and deceive Plaintiffs to purchase the Property.-2S6-92S Wd82:~ 9002 81 uer . Plaintiffs pray 'for judgment as set forth below. above. 20 where the Property was located was subject to extensive drainage related problems including 21 problems resulting from water intrusion in the homes. 9 sustained damages as set forth in paragraphs 30 and 36. Plaintiffs had no knowledge of the true facts which said Defendants were required 27 to disclose to PI ainti ffs under California law. In reliance on these representations. Prior to Plaintiffs' purchasing the Property. 10 12 73. . that there were 23 drainage problems with the Property. at the time theserepresentations 4 the time Plaintiffs purchased the Property. were aware of and failed to disclose to Plaintiffs that the development 19. 25 water intrusion and water relateddamages. 70. they would not have purchased the Property. 28 First Amended Complaint 91 "d 209t. 18 75. Gibbons and . were ignorant of the falsity of said Defendants' 5 representations and believed them to be true. and 11 said acts were done maliciously and oppressively. Plaintiffs reallege and reincorporate paragraphs 1 through 2~ as though fully set 17 forth herein. that the area in which the Property was' 22 located had previously flooded. that other properties within the development had. 7 8 71. that Signature Properties used EFIS systems. Defendants Ruby Hill. and. were made by said Defendants and at to induce 3. WHEREFORE. Robert Gibbons and Does 10~19) 74.~ CONCEALMENT (By Plaintiffs against Defendants Ruby Hill Realty. As a direct and proximate result of said defendants' misrepresentations. that the Property showed signs of 26 76. 6 induced to and did purchase the Property. sustained 24 water related damages as a result of poor construction. . Plaintiffs 72.

INTENTIONAL MISREPRESENTATION (By Plaintiffs against Defendants Ruth Arm Davidson ReMax Accord and Does 1-9) 14 15 82. As a result of said Defendants' concealment of such facts. 28 First Amended Complaint • 15 • 91 'd aOSv-2'SS-S26 Wd8a:v 900a Bl uer . Defendants ReMax. As a direct and proximate result of said Defendants' concealment. and each of them. 23 84. Davidson and Does 1-9. 17 83. above. s 6 7 79. and each of them. Had Plaintiffs known the facts concealed by said defendants. 80. Defendants 21 further. 4 purchase the Property. said Defendants intended to induce Plaintiffs to . 11 12 13 WHEREFORE. Defendants did the things herein alleged with the intent to defraud Plaintiffs and 10 said acts were done maliciously and oppressively. represented that the property was in good condition and appropriate for purchase by 22 Plaintiffs. Plaintiffs pray for judgment as set forth below. 2 they would not have purchased the Property. Plaintiffs are informed and believe and thereon allege that the representations made 24 by Defendants and each of them. 9 81. By concealing the foregoing facts. NINTH CAUSE OF ACTION FRAtJI) . inclusive. were false in that said Defendants were aware that the Property 25 was constructed using an BFIS system and therefore did not fall within the requirements for 26 purchase under Plaintiff's employer's relocation program and further that the Property was not in 27 good condition or appropriate for purchase by Plaintiffs. Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 16 forth herein.1 77. specifically representing tbat the Property was 20 constructed o f ordinary stucco and had not been constructed with an EFIS system. Plaintiffs 8 sustained damages as set forth in paragraphs 30 and 36. 3 78. falsely 18 and fraudulently represented to Plaintiff that the Property fell within the requirements of 19 Plaintiffs employer's relocation program. Plainti irs agreed to urchase the Property.

27 they would not have purchased the Property. 28 First Amended Complaint . Had Plaintiffs known the actual facts. Had Plaintiffs known' the facts concealed by said defendants) and each of them. Plaintiffs. and 3 Plaintiffs and to induce Plaintiffs to purchase the Property.I . Defendants did the things herein alleged with the intent to defraud Plaintiffs. Prior to Plaintiffs' purchasing the Property. 26 93. they knew them to be false. and and oppressively. d aos+-aSS-S26 WdSZ:+ 900a BI uer . Plaintiffs pray for judgment as set forth below. II 89. 2 When Defendants made these representations. these representations were made by said Defendants with the intent to defraud and decei ve . .16- t. inclusive.. 88.. that the area generally known for drainage and water related 22 issues and that the development had drainage related issues generally aU of which facts materially 23 affected the value and 'desirability of the Property. . 4 86. Plaintiffs reallege and reincorporate paragraphs and Does 1-9) 1through 24 as though fully set 18 forth herein.CONCEALMENT (By·Plaintiffs against Defendants ReMax Accord.Davidson and that the Property was 20 Does 1-9. Plaintiffs 10 sustained damages as set forth in paragraphs 30 and 36. were aware of and failed to disclose to Plaintiffs 21 constructed with an EFIS system.85. Plaintiffs bad no knowledge of the true facts which said Defendants were required 25 to disclose to Plaintiffs under California law. 12 said acts were done maliciously 13 WHEREFORE.. at the time these representations were made by said Defendants and at 5 the time Plaintiffs purchased the Property. 24 92. Plaintiffs were 8 9 87. they would not have purchased the Property. As a direct and proximate result 0 f said Defendants' misrepresentations. Defendants ReM ax . were ignorant of the falsityof said defendants' 6 representations and believed them to he true. above . 7 :induced toand did purchase the Property. 14 15 16 17 TENTH CAUSE OF ACTION FRAUD . Ruth Ann Davidson 90. 19 91. In reliance on these representations.

Prudential. Plaintiffs pray for judgment as set forth below. As a direct and proximate result of said defendants' concealment. As a direct and proximate result of Defendants breach of their duty of care. the Plaintiffs. 27 28 First Amended Complaint 8 [ 'd ZDSv-ZS6-SZS Wd6Z=v SDDZ 81 uer . and each of them. competent L8 and diligent investigation of the condition of th~ Property in connection . Defendants. ChJ. Plaintiffs agreed to 4 purchase the Property . Gibbons. above. and each of them. Defendants Ruby Hill. 9 10 It 12 13 14 98. above. 3 95. said Defendants intended to induce Plaintiffs to 2 purchase the Property. or within the diligent attention and observation of. Ruby Hill Realty. ELEVENTH. 16 99. Plaintiffs pray for judgment as set forth below. 25 Plaintiffs have sustained damages as set forth in paragraphs 30 and 36.Max and Davidson . 21 10Q. Re. By concealing the foregoing facts. .lSE OF ACTION NEGLIGENT MISREPRESENTATION (By Plaintiffs against Defendants ReMax Accord. Plaintiffs 6 sustained damages as set forth in paragraphs 30 and 36. owed a ·duty of care to Plaintiffs to conduct a reasonable. 17 inclusive. 5 96. As a result of said Defendants' concealment of such facts. Ruth Ann Davidson. 24 101.and Does 1~19. 26 WHEREFORE. with the sale and to 19 disclose all known facts materially affecting the value or desirability of the property that are not 20 known to. 7 97. WHEREFORE.Hd II :OS:!'900Valll '11f~~H890 I 94. breached their duty of care to PIainti ffs by failing to 22 disclose facts known to each of them which materially affected the value or desirability of the 23 Property. Defendants did the things herein alleged with the intent to defraud Plaintiffs and 8 said acts were done maliciously and oppressively. Robert Gibbons and Does 1~19) Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 15' forth herem..

16 17 18 WHEREFORE. 14 105. 24 manufacturing and marketing single-family homes for sale to the general public and that the 2S single-family home purchased by Plaintiffs herein was constructed. 22 107. were in the business of mass producing. As a direct and proximate result of Defendants breach of their duty of care." Defendants Jeffrey Schmidt. competent and diligent investigation of 8 the condition of the Property in connection with the sale and to disclose to Plaintiffs any defects in 9 the Property. among 11 other things. failing to conduct a reasonable. Plaintiffs are informed and believe and thereon allege that at all times herein 23 material Defendants Signature and Does 26-39. 36.. Plaintiffs pray for judgment as setforth below. Donna Schmidt and Does 20-25. 7 owed a duty of care to Plaintiffs to conduct a reasonable. and Does 26-39) Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 21 forth herein. constructed.Hd II:Og:~ 9QOV8111 • l'rUH€SO I 1 2 TWELFTH CAUSE OF ACTION NEGLIGENT MlSREPRESENTATION (By Plaintiffs against Defendants Jeffrey Schmidt and Donna Schmidt and Does 20-25) 102 . 6 103. Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 3 4 5 forth herein. 10 104. Complaint . 27 28 Firat Amended manufactured and marketed 108. breached their duty of care to Plaintiffs by. IHIRTEENTH CAUSE OF ACTION STRICT LIABILITY (By Plaintiff against Defendants Signature Properties 19 20 106.18 - st 'd ZOSto-2SS-S26 . 26 by said defendants. and each of them. Defendants. above. I5 Plaintiffs have sustained damages "as set in paragraph 30 and. Said Property contained material defects in that: (1) it was designed. inclusive. competent and diligent investigation of the Property 12 and by executing a Real Estate Disclosure Statement which negligently represented that Bald 13 Defendants were not aware 0 f any defects or mal functions with respect to the Property. and each of them.

and perforations allowing water intrusion. (4) the exterior building 4 envelope contained holes. Said defects were first discovered by 10 Plaintiffs as a result of investigation and certain destructive testing which revealed these latent 11 defects. The earliest said defects were discovered was November 2004 and certain of the defects 12 were not discovered until December 2005. buckled and now requires replacement. (2) the drainage 2 system underneath and surrounding the resid~n~e was defective and· inadequate for its intended 3 purpose.----- ------------------------------------------------------------ and marketed without a moisture barrier between the foundation and the floor. Plainti 15 residence becamesaturated ITs sustained prop~r1y damage in that the floor in the The-Property' with water. 20 fult extent of said damages but are informed and believe that the property damage exceeds 21 $750. Plaintiffs will amend this complaint to set forth 8 any such additional defects that may be determined. (3) the windows weredefective and improperly installed. 110. rips. 24 25 26.000. Plaintiffs are informed and believe and 6 thereupon allege that there are other.· BREACH OF ExpRESS WARRANTy (By Plaintiff against Defendants Signature Properties and Does 26-39) Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 27 forth herein. 22 2. In addition thewindows 19 replace so that future property damages can be avoided. and (5) down spouts 5 had been placed so as to direct water into the residence. All said defects are latent in nature and the 9 nature and extent of said defects were previously unknown. including the exterior finishmust be Plaintiffs are currently ~aware of the 18 abatement. FOURTEENTH CAUSE OF ACTION . Plaintiffs pray for judgment as set forth below. 28 FiTSI Amended Complaint . As a direc t and proximate result 0 f these defects in the design. construction and 14 manufacture of the residence. 13 109. latent defects in the construction of the Property 7 which defects have not yet been fully ascertained.resulted in the growth-of mold which requires and building envelope. additional. 16 sustained additional and further property damage in that moisture permeated the walls and floors 17 resulting in darnage to both and which also.3 WHEREFORE.19 - 02'd 209~-296-S26 WdOE:~ 9002 81 u~r .

constmcted.20 ~ 20Sv-2SS-S26 Wd08:v 9002 81 uer . Based upon the express warranty that the Property was free from material defects 13 IPlainliff chose to and did purchase the Property. Signature had an 10 discovered. manufactured and "marketed a single-family residence that contained material defects 'in that it did 16 not have a moisture barrier between "thefoundation and the flooring. not at issue herein. Plaintiffs contacted Signature who confirmed that the warranty was in full force and 11 effect and that Signature would and did. 26 Plaintiffs have been damaged in that they purchased a residence that contained material defects 27 which have resulted in property damage as set forth in paragraph 108 above. did not have a proper or 17 sufficient drainage system. in fact. Defendants breached said express warranty in that they designed. but Signature has failed _ 23 warranty to undertake to repair said defects as alleged in paragraph 24 and refused to perform the necessary repairs. 28 First Amended Complaint . 25 116. were of the Property. 9 112. l2 113. but not limited 21 to. pursuant to the terms of said express 113. who Plaintiff~ understood had worked directly for Signature and 3 sold homes in the development where the Property is located that all homes constructed by 4 Signature were subject to an express warranty. 22 11S. After moving into the Property certain minor defects. Plaintiffs were advised by Defendants Ruby 2 Hill Realty and Robert Gibbons. damage to the floors and walls and building exterior." 1g had defective windows and had a: defective building envelope which failed to prevent moisture -. 19 ~ntrusi~n and had improperly located down spouts all of which caused or co~tribut_ed to excessive 20 moisture in the Property resulting in mold growth and property damage including. undertake repairs pursuant to sald warranty. which has resulted in excessive moisture into and under the residence. l4 "15 114. Asa direct and proximate result of Defendants' breach of the express warranty. Specifically they were advised that Signature and S Does 26-39. Prior to the purchase of the Property.lid lLon 9001lB • !!fUHSSO \ LIt 111. expressly warranted that the Property was free from any material defects 6 for a period of ten years and that in the event that any defects in the Property were discovered 7 within 10 years of the date of the completion of the construction 8 obligation to repair said defects. inclusive. Plaintiffs made a demand upon Signature.

in fact. the relocation program. Plaintiffs reallege and reincorporate paragraphs I through 24·as though fully set 5 6 forth herein. Defendant Fidelity and Does 40-50 and each of them. Plaintiffs are informed and believe and thereupon allege that defendant Ruth Ann 8 Davidson retained defendant Fidelity and Does 40~SO to conduct a stucco inspection of the 9 Property to determine whether the-Property was constructed with an EFIS system or otherwise 10 conformed to the requirements 11 119.Defendant Signature owed a duty of care -to Plaintiffs to manufacture and sell 26 barnes free from material defects. As a direct and proximate result of Defendants breach of their duty of care. 16 inspection and negligently failing to properly discoverand/or 17 'Property had an EFIS-system and was ineligible for the employer's 18 121. the Property 13 compJied with the requirements ofPlaintifrs employer's relocation program including the 14 discovery and disclosure of whether the building used an EF1S system. 25 123. 7 118.WHEREFORE Plaintiffs pray for damages as set forth below FIFTEENTH CAUSE OF ACTION NEGUGENCE 2 3 4 (By Plaintiffs against Defendants Fidelity Inspection & Consulting Services and Does 40~SO) 117. Defendants brea-ched their duty of care by negligently conducting the stucco advise Plaintiffs that •. . of Plaintiffs employer's relocation program. 19 Plaintiffs purchased the Property and have sustained damages as set forth in paragraph 108 above. 15 120. in fact. owed a duty of care to 12 Plaintiffs to conduct the inspection reasonablely and to determine whether. Defendants breached their duty of care to Plaintiffs by manufacturi ng a borne that 28 First Amended Co mpl!Lint ~ 21 - Z'OSto--256-SZ6 Wd!&:+ 9002 Bt uer . Plaintiffs reallege and reincorporate paragraphs 1 through 24 as though fully set 24 forth herein. 27 124. 20 21 22 23 SIXTEENTH CAUSE OF ACTION NEGLIGENCE (By Plaintiffs against Signature Properties and Does 26~39) 122.

WHEREFORE. laintiffs have sustained damages as set forth in paragraph 108 above. 2. . 1 8 For punitive and exemplary damages in an amount sufficient to punish and make 9 an example of defendants. 7. 3. For interest. 10 Ruth Ann Davidson. "17 DATED: January t.and proximate 'result of Defend ants breach of their duty of care. Plaintiffs demand judgment as follows: 5 6 1. Ruby Hill Realty. For reasonable attorneys' fees against Defendants Jeffrey Schmidt and Donna 12 Schmidt. For general damages according to proof at trial." 8. For consequential and incidental damages according to proofat trial."2006 18 19 NUETZEL & BLOMBERG LLP 20 21 22 23 24 Attorneys for Plaintiffs 25 26 27 28 First Amended Complaint ~ 22 - 2'05t.G56.contained material latent defects 2 3 4 125. 4. Jeffrey Schmidt. As a direct . For Costs of suit. 13 14 6. ReMax Accord and Does 1~2S and each of them.526 WdIE:t 900G BI U~r . and 15 16 "For such other and further relief that the Court deems just and proper. Robert Gibbons. For special damages according to proof at trial. Donna Schmidt..£. 11 5.