Appellant tenant sought review of the order of the Superior Court of the City and County of San Francisco (California), which sustained a demurrer without leave to amend, and dismissed appellant’s action against respondent lender of purchase money in appellant’s claim for damages resulting from defendant loaning money to a third party for the purchase of appellant’s condominium without appellant first exercising his right of first refusal.

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Overview

Appellant tenant lived in a building that was to be converted into condominiums. The city required the owner to give each tenant a right of first refusal to purchase their unit or any available unit at a discounted price for a period prior to sales to the general public. Owner never offered to sell appellant his unit, but instead sold the unit to a third party. Respondent lender of purchase money did not contact appellant before financing the transaction to see if his right of first refusal had been waived. Appellant made claims against all parties involved in the transaction, and appellant sought review of the dismissal of the complaints against respondent. The court held that the complaint contained all the essential allegations for conspiracy to defraud because it stated that there was a conspiracy to hide from appellant the facts of the sale and its financing in order to create higher profits for the owner. Those allegations along with allegations that respondent acquired its security interest by virtue of the wrongful conduct were sufficient to state a cause of action for relief in the form of a constructive trust. The dismissal was reversed only in regard to these issues.

Outcome

The court reversed the order only in regard to the counts claiming conspiracy to defraud and seeking imposition of a constructive trust because the conspiracy to defraud claim presented sufficient grounds to avoid a demurrer and the allegations that respondent lender of purchase money acquired its security interest in the property due to that wrongful conduct was sufficient to state a cause of action for relief in the form of constructive trust.