If you’ve been involved in the real estate market over the past 6 years as a real estate agent, lender, seller, or even buyer, you are at a greater risk of being involved in a lawsuit. Today’s Article is one of several which will educate you on the strategies you can use when faced with a lawsuit to take control of the situation, minimize the risk, and maybe even make it go away.

Here’s a possible situation in which you could find yourself: 

A Demurrer is one of those funny sounding latin words which essentially means “so what”… as in “you’ve filed this Complaint but I don’t know what you’re saying so how can I respond?”  It is a hard to pronounce but powerful tool to narrow and focus the claims and possibly eliminate them up-front. In California, the legal authority for a Demurrer is found at Code of Civil Procedures Sec. 430.10. A demurrer is a pleading used to test the legal sufficiency of other pleadings, not their truth. For example, all facts stated in the Complaint are assumed to be true however improbable they may be!  The Demurrer challenges only defects in the Complaint which would prevent the Plaintiff from being able to actually state a claim against the defendants.

Common grounds for Demurrer include: a) The court has no jurisdiction over the claim - such as when the parties have agreed to arbitration; b) The person who filed the Complaint does not have the legal right to sue - such as when the Plaintiff had previously filed and been discharged in Bankruptcy; By far, the most common grounds for Demurrer are: c) that the pleading does not state facts sufficient to constitute a cause of action against this Defendant; or d) the claims made are ambiguous and unintelligible.  The important part here however is that although the facts stated in the Complaint are deemed to be true (at that stage only), the Court on reviewing a Demurrer can consider certain other documents and statements by the Plaintiff where those counter what the Plaintiff claims in the Complaint.

So here’s how it works in practice. 1) You get served with a Complaint; 2) As soon as you are served, you serve the Plaintiff with discovery requests demanding that the Plaintiff clarify facts concerning the claims and produce all supporting documents. The Plaintiff must respond under penalty of perjury within 30 days thereafter; 3) within the time allowed for filing a response to the Complaint (generally 30 days), you file a Demurrer.  The Court will set a hearing date, generally 45-60 days out but in some Counties, such as Sacramento, the hearing may be 6 months later.  Now you wait for the Plaintiff’s discovery responses and, when they arrive, you look to see if they counter the Plaintiff’s claims in the Complaint. They often will.  Then, if and when the Plaintiff files an Objection to the Demurrer, you file a Reply with the Plaintiff’s own sworn Discovery responses undermining his claims. If the Court agrees with you, the Demurrer will be granted and the Court will usually give the Plaintiff a chance to fix the Complaint - if that can be done. The Plaintiff may file an Amended Complaint trying to deny the defects stated in the Demurrer, and if so, possibly another Demurrer is warranted.  The result of this strategic pleading will at least narrow the issues and often will enable you to win outright without ever having to file an Answer.

Here’s how this worked in a recent case where a foreclosed buyer sued the seller and real estate brokerage company over supposedly undisclosed defects:  All lawsuits must be brought within a certain time called the “Statute of Limitations Period”. For a Fraud lawsuit, this is 3 years (in CA) from the date the Plaintiff knew or should have known that they were injured from the alleged fraud, called the “date of discovery”. The dates in the Complaint indicated that the Complaint was filed within 3 years from this date of discovery.  However, when we received the Plaintiff’s Discovery responses, we received documents indicating that the Plaintiff discovered the alleged fraud months earlier and even had filed an insurance claim more than 3 years before the Complaint.  Based on this simple step, the Court granted the Demurrer and ultimately threw the case out.  But there was even more. Further Discovery revealed that the Plaintiff had filed Bankruptcy and had not disclosed this possible claim. So, the Plaintiff had no right to bring any claim on the alleged fraud.

This is not an uncommon result. It is strategically taking control of the case at the outset by going on the attack. If successful, you save years of legal battles and many thousands of legal costs incurred in going to trial. If nothing else, you force plaintiffs to lay out their claims more clearly, narrow the scope of the litigation, get rid of non-meritorious claims, and gain important evidence at the begining of the case. The downside is that you educate the Plaintiff in defects in their case that you can use against them later.  But I would rather seek to knock the case out up front if at all possible and, for this, the Demurrer is a great legal tool.

The information presented in this Article is not to be taken as legal advice. Every persons situation is different. If you are facing a lawsuit, get competent legal advice in your State immediately so that you can determine your best options.

Here at BPE Law, our attorneys have handled thousands of lawsuits both in California and nationwide, plus in the Federal Courts. We’re experienced, aggressive, and focussed on getting you the results you want as cost-effectively as possible.  For agents, we have relationships with most E&O carriers and can work seemlessly with them on your behalf.  To learn more, contact me at sjbeede@bpelaw.com or even better, call us at 916 966-2260 for our $200 Attorney Consult to learn the strategies you need to move forward.