Recent Court Trials, Arbitrations and Mediation
The firm's client brought an action against the sellers and real estate brokers
after purchasing a shopping center, alleging that the seller and the real estate brokers understated the common area maintenance expenses (CAM) causing the shopping center to be overvalued. Defendants did not make any monetary settlement offers during the litigation, claiming that they made the necessary disclosures and that the firm's clients should have performed, or did perform, sufficient due diligence that revealed the accurate CAM amounts. In 2013, at the pre-trial mediation, Mr. Lisnow negotiated a $400,000 settlement which represented the approximate amount our client overpaid for the shopping center.
In a 2011 jury trial in Orange County Mr. Lisnow represented a home buyer
against his real estate agent for Breach of Fiduciary Duty and Fraud. The jury awarded the firm's client $400,000 in compensatory damages and $203,000 in punitive damages.
In a 2011 bench trial in Ventura County, Mr. Lisnow represented the seller of
a food service company who sold his multi-million dollar business and was sued by one of its vendors whose invoices were never paid. The vendor claimed that at the time the firm's client sold the business that the sale was a fraudulent conveyance to avoid payment to its creditors. The Judge found that the firm's client did not fraudulently transfer his business and thus rendered his verdict in favor of the firm's client.
In a 2011 mediation, Mr. Lisnow represented a real estate brokerage firm being
sued by charter school. The school alleged that during lease negotiations our client made oral and written misrepresentations regarding the size of the real property the school intended to lease. The school discovered after entered into a lease and beginning construction that the property was smaller than represented. The school alleged damages of $400,000. The case settled before trial for $29,000.
Three recent automobile personal injury lawsuits were settled by the firm in mediation; one for $550,000, one for $560,000 and another for $75,000.
Our client, a pedestrian, was hit by an automobile, received a $3,000,000
Firm's Published Opinions
Sandler v. Sanchez (2013) 206 Cal App. 4th 1431
This is an important decision which has been extensively cited in business and real estate law journals. The key issue is the extent of the duty owed by a designated broker of a corporation to the corporation's clients. The law requires that each corporate real estate brokerage company have an individual, who is a licensed broker, act as the designated broker of the corporation. This "designated" broker is responsible to supervise and oversee the activities of the sales agents under Business and Professions Code 10159.2 and 10177.
The firm represented Sanchez, the designated broker of the corporate broker. Plaintiff lost over $600,000 in a loan on a real estate transaction and sued the corporate broker, a salesperson of the corporate broker, and the firm's client, Sanchez, as the "designated" broker. Plaintiff learned that the property did not have enough equity to secure his $600,000 loan, and the loan was insufficient to pay for the needed repairs to the real property. The primary lender foreclosed, leaving plaintiff's note unsecured.
The complaint contended that Sanchez owed plaintiff a duty to supervise the activities of the real estate agent, and that had Sanchez properly reviewed the escrow documents Sanchez would have been aware of the agent's wrongful conduct and plaintiff would not have lost the $600,000 investment. Plaintiff further contended that Sanchez's failure to supervise constituted a breach of his fiduciary duty to plaintiff.
Our firm filed a demurrer to the complaint stating that Sanchez did not owe any duty to Sandler. The trial court agreed and the case was dismissed. Sandler filed an appeal. The Court of Appeal ruled that the duty imposed on the officer who is the designated broker under Business and Professions Code
10450.2 and 10177 is owed to the corporation. The designated broker owes a duty to the corporation to supervise the sale agents and that duty does not extend to third parties. Hence, Sandler had no right to sue Sanchez.
Garcia v. Becker Bros. Steel Co. (2011) 194 Cal. App. 4th 474
Under California law, a manufacturer is strictly liable when a product it places on the market, knowing that it will be used without inspection for defects, proves to have a defect that causes injury. Strict liability also applies to those entities within the stream of commerce--including retailers, distributors, sellers and lessors. The firm's client operated a steel rolling business, and sold its equipment to another company (an occasional seller) in the same business which company later sold it to another steel rolling company. At the second company a worker severed his finger when using our client's machinery which they claim was defective. The issue was whether the firm's client remained liable for injuries caused by the equipment it sold far down the stream of commerce. The Court of Appeal ruled that the firm's client, as an "occasional seller" of equipment, does not owe a duty to warn of a risk of using equipment to subsequent users beyond the immediate purchaser. With no reported cases in California on this issue the decision in by the Court of Appeal set the legal standard in California. Our client was dismissed from the lawsuit.
WRI Opportunity II, LLC v. Cooper (2007) 154 Cal. App. 4th 525
In this case, the firm's client was the guarantor of a loan used to construct a condominium building. The lender under the loan agreements was entitled to the repayment of its principal, interest as well as share in the developer's profits. This is known as a 'Shared Appreciation Loan'. The developer defaulted on the loan and the lender sued the guarantor to recover payment under the loan. After all fees and charges were considered, the lender had an effective interest rate of over 30%. On the lenders' motion for summary judgment against the guarantor, the court gave judgment to the lender for the entire amount of the loan, including all interest and its portion of the profits as provided for in the loan documents.
On appeal, the firm's client took the position that the loan was not an enforceable Shared Appreciation Loan and that the interest rate being charged by the lender was usurious. The Court of Appeal addressed whether a guarantor could waive a usury defense. It noted that the California Constitution establishes the maximum interest rate on loans and held that a guarantor could not waive a usury defense just as it could not waive the right to defend on the basis that a contract was illegal and unenforceable. The court also stated that the Legislature did not intend, by enacting section 2856, subdivision (a)(1), to curtail the rule that a usury defense cannot be waived. The firm's client was not required to pay on the profits or pay the lender's usurious interest rate which was reduced to seven percent.
The Court of Appeal also ruled that the terms of the loan did not meet the statutory requirements to constitute a Shared Appreciation Loan and set out the criteria of what is required to establish a true Shared Appreciation Loan.
Kurtz v. Calvo (1999) 75 Cal App. 4th 191
The buyers' broker financed $48,500 of the purchase price of an apartment building under a note secured by a junior deed of trust on a property different than the one that the buyers had purchased three years earlier. The broker assigned the note to the sellers. The buyers later lost both properties in foreclosures by senior lien holders. The sellers sued the buyers to recover on the note. The trial court ruled that the anti deficiency rule of C.C.P. 580b barred the sellers' suit because the note was a purchase money obligation.
The court of appeal reversed. The Court held that Code of Civil Procedure 580b prohibits a deficiency judgment after foreclosure "under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property." Because the sellers' note was secured by a property other than the one they sold, 580b did not apply and it was not a true purchase money loan.
Van Beurden Ins. Services v. Customized Worldwide Weather (1997)
15 Cal. 4th 51
This California Supreme Court decision was not about the underlying case, which the firm won, but on the issues of whether the opposing party had timely filed its notice of appeal. This case was decided using technical statutory interpretations and set out the rule of whether a party has 60 days from entry of judgment or 180 days from entry of judgment to file a notice of appeal. Failure to file a notice of appeal within the prescribed time of days forever bars the bringing of an appeal.
Hodges v. Mark (1996) 49 Cal. App. 4th 651
Hodges filed a complaint to enjoin Mark, the firm's client, from foreclosing on several parcels of plaintiffs' real property, contending that the foreclosures would violate the anti-deficiency statutes. The complaint alleged that Mark made fraudulent misrepresentations about the apartment building which was the subject of the underlying transaction.
The basic facts are: Hodges paid Mark $784,250 for the apartment building. The entire purchase price was represented by notes and deeds of trust constructing a wraparound mortgage covering the encumbered apartment building and cross-collateralizing the borrower's home and a duplex. After the borrower defaulted on the note Mark foreclosed on the apartment building.
Mark also filed a notice of default on Hodges's house and duplex which secured the notes. The foreclosure was suspended when plaintiff commenced litigation.
The Court of Appeal held that Mark's non-judicial foreclosure of the apartment building did not raise the California Code of Civil Procedure 580d bar to his foreclosure of other properties securing notes delivered by purchaser, nor did C.C.P. 580b, which bars an anti-deficiency judgment against the purchaser on a purchase money mortgage, apply. California's anti-deficiency laws do not preclude a creditor from pursuing all security given to collateralize an indebtedness, notwithstanding the anti-deficiency legislation.
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