The Bowles & Verna, LLP commercial and business litigation trial team of Richard T. Bowles and Kenneth B McKenzie won a defense verdict in a $2.4 million commercial real estate case on November 3, 2011 in San Francisco Superior Court.
It took the jury only twenty minutes to reach a unanimous verdict for Bowles & Verna clients Abol & Farrouk Hosseinioun after the two week trial.
The case was centered on a commercial building in the City of San Francisco that Sierra Industries LLC had purchased from the Hosseiniouns. Atop the building was a billboard structure. When the building was purchased by Sierra Industries, the Hosseiniouns, as part of the due diligence process, provided lease documents regarding the billboard to Sierra Industries, putting Sierra Industries on notice that the billboard tenant had done some work on the billboard, but that the Hosseiniouns had no knowledge of the extent of the work nor did the Hosseiniouns participate in the work being performed on the billboard. Further, the Purchase Agreement for the building stated that Sierra Industries was responsible to look into all permitting issues pertaining to the building, including the billboard.
Nine years after the purchase of the building from the Hosseiniouns, the City of San Francisco determined that the billboard had to be removed because it no longer conformed to City laws. Sierra Industries LLC filed a this case against the Hosseiniouns, claiming the Hosseiniouns concealed the illegality of the billboard and failed to disclose information about the billboard during the sale of the building. Sierra Industries argued that they lost over $2.4 million in income and monetary value to the building by being forced to remove the builboard.
At trial, the Bowles and Verna trial team of Richard T. Bowles and Kenneth B. McKenzie successfully defended against Sierra Industries' claims, and argued that the Hosseiniouns, as sellers of the building, had no duty to investigate issues related to the billboard, but, rather, only had to disclose to the buyers information that they were actually aware of. Conversely, they argued, the buyer, Sierra Industries, had a duty to perform due diligence on the disclosed information and Sierra Industries failed to do so.
The jury's unanimous verdict is another success for Bowles & Verna's Business Litigation and Real Estate groups.
For more information on Bowles & Verna's Commercial Litigation practice, or if you have a similar issue and would like legal advice, please contact Richard T. Bowles at email@example.com
U.S. News and World Report has ranked Bowles & Verna, LLP as a Top Law Firm in Commerical Litigation and Personal Injury Litigation.
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The Walnut Creek real estate brokerage firm Security Pacific Real Estate and its former agent, Kevin Roberts, successfully defended a One Million dollar lawsuit for defects in a luxury home in the case of Hart v. Security Pacific, Contra Costa Superior Court Case Number C94-03288.
Security Pacific and Roberts were represented by attorney Dean Harper of Bowles & Verna. After a six week trial, the jury returned a 12 to 0 verdict in favor of Roberts and Security Pacific on all claims, which included breach of fiduciary duty, negligent misrepresentation, concealment and fraud. After only two hours of deliberation, many jurors were upset that they were not allowed to award Security Pacific all of its attorneys’ fees and costs for having to defend the claim.
The case arose out of a 1991 sale of an $810,000 property in Danville, California. The property had been listed for $985,000. The sellers had moved out, but were paying on existing loans of $765,000. The house also had some defects. They were anxious to sell.
The plaintiffs, Patrick and Lynda Hart, retained Kevin Roberts and Security Pacific in 1991 to assist them in purchasing a high-end home. Mr. Roberts had showed the Harts over thirty homes in a three month period. He ultimately presented a “low-ball” offer on the property and eventually the Harts entered into a contract with the sellers, Mo and Marianne Shaikhaie, for $810,000.
The 4700 square foot home was only nine months old. During escrow the sellers disclosed several punch list items in need of repair and a driveway encroachment problem. Nevertheless, the Harts agreed to close escrow on the written promises from the builder that he would repair all of the punch list items and take care of the easement problem with the neighbors.
Escrow closed and the builder refused to perform. Further, when the first rains came, the Harts’ home leaked through the roof, decks and windows. Other problems developed. The Harts obtained several expert reports which initially suggested that the home needed approximately $150,000 in repairs. By the time the case was presented at trial, plaintiffs’ experts opined that the home needed $865,000 in repairs. The plaintiffs also attempted to recover emotional distress damages and loss of use damages. The defense experts maintained that the total repairs necessary were $168,000.
The Harts maintained at trial that they thought they had purchased their dream house and ended up buying into their worst nightmare. They showed video clips of rain coming through the ceiling into their home. The Harts blamed Kevin Roberts for allegedly failing to recommend that the Harts obtain inspections during escrow, withholding material information, misrepresenting the condition of the property, down-playing the significance of the punch list items and failing to recommend that the Harts seek legal counsel during escrow.
Mr. Roberts testified that he did not withhold any information, properly counseled and advised the Harts, did verbally recommend that the Harts obtain inspections and verbally advised them to seek legal counsel. Fortunately, the jury believed Mr. Roberts.
Defense of the Fiduciary Relationship
The court instructed the jury that Mr. Roberts, as a fiduciary, had the duty of utmost care, loyalty and honesty. In addition, Mr. Roberts had a duty to counsel and advise his clients and verify all material information, or disclose to his principal that such information had not been verified. Although the fiduciary duty is indeed broad, the Security Pacific attorneys were able to persuade the jury that Mr. Roberts had fully discharged his obligations.
Why The Case Did Not Settle
You may ask, why didn’t the case settle like so many others? The reason is that plaintiffs did not drop their demand below $400,000. Security Pacific’s insurance carrier offered $70,000 to settle the case before trial, but the plaintiffs refused the offer. Some cases, unfortunately, cannot be settled.
Two of the firm’s partners have just completed a six month jury trial against an insurance company that tried to avoid paying a claim by accusing its insureds of burning down their own home. The jury disagreed and awarded plaintiffs Stephan and David Phillips over $7.5 million dollars.
Fire Insurance Exchange (Farmers) insured the Phillips’ three story, 11,000 square foot residence located on 168 acres in Martinez, California, since the home was built in 1985. After an electrical fire occurred in the laundry room in June, 1994, the family moved out while Farmers prepared repair estimates. Five months later, with the repair estimates still not finalized, the house burnt to the ground. Shortly thereafter, the remaining structures were vandalized.
Although none of the investigative agencies was ever able to determine the cause of the November, 1994 fire, Farmers treated the claim as possible arson by the insured and refused to pay. Almost two years later, in September 1996, Farmers formally denied all of the claims, accusing the Phillips of setting the second fire, vandalizing their own property, fraudulently overstating their losses and breaching the insurance contract. Farmers then demanded the return of the approximately $650,000 it had paid in connection with the first fire.
After over two years of preparation, the trial commenced in August, 1998, with Richard T. Bowles and Robert I. Westerfield of Bowles and Verna representing the Phillips. After hearing some 60 witnesses testify over a six month period, the jury deliberated for four days before finding that Farmers had breached the insurance contract, acted in bad faith and also acted with fraud, oppression or malice. The jury awarded approximately $3.5 million in compensatory and $3.3 million in punitive damages. The Court increased the recovery by awarding over $700,000 in attorneys fees. The Phillips’ requests for costs and interest and Farmers’ post trial motions are pending.