Facts

On Sept. 1, 2006, North Bay Homes LLC sold residential beachfront property, which was composed of a main house and a beach house. In the development of this property, North Bay filed government applications to permit construction of a waterfront pier. The permits to build the pier were not acquired at the time escrow closed. Thus, North Bay and the buyer left $350,000 in escrow to fund the bid to complete the project once the permit was obtained. When the permit was obtained, North Bay offered to release $149,750 from escrow to the buyer to pay for the pier, but asked that the remaining $200,250 be released to North Bay. The buyer refused and North Bay filed for arbitration.

PLAINTIFF'S CONTENTIONS:
Plaintiff sought release of $200,250 from escrow.

DEFENDANT'S CONTENTIONS:
The buyer claimed the pier would be more than $149,750 due to higher costs. The buyer filed a counterclaim to the arbitration, asserting that North Bay failed to disclose that the bay side bluff was defective according to SB 800 standards for soil conditions.

Settlement Discussions

On the counterclaim, the buyer demanded $1,200,000 to $2,000,000 and North Bay offered $175,000.

Damages

North Bay claimed entitlement to the remaining $200,250. The buyer requested either $1.9 million for repair of the entire bluff or $1.2 million for installation of wire mesh.

Result

The arbitrator awarded North Bay $200,250, plus all interest in escrow. The buyer was awarded $149,750 for the pier and $76,065 for the cost of repairs, which was NorthBay's estimate. Additionally, the arbitrator awarded fees and costs to North Bay pursuant to its 998 offer in the amount of $139,928.