Facts

At issue in this case is a piece of property in Larkspur previously owned by the First Church of Christ, Scientist (seller). The property is located one-third of a mile from the Lark Creek Inn in downtown Larkspur. In addition to its prime location, the property was desirable because of its easy potential for developing homes.

The seller retained defendant Thomas Kearney of the brokerage firm Meridian Commercial Inc. as its listing agent. In January 2004, the seller listed the property for $1,275,000. Shortly after, Alex McLean contacted Kearney and hired him as his own agent; McLean denied this fact despite documentary evidence proving that he did hire Kearney. Twelve offers were submitted to buy the property. Plaintiffs Gary Winston and John McGeough submitted the highest offer of $1,425,000, which they increased two days later to $1.5 million. McLean had submitted the eighth highest offer at $1,305,000. But the seller invited only McLean to submit a counter-offer. It accepted the counter-offer of $1,371,000 and the transaction closed in late February 2004.

CONTENTIONS:
Plaintiffs sued Kearney, Mark Levin, and Meridian Commercial Inc., the firm the employed Kearney and Levin. Plaintiffs later added McLean as a defendant. Plaintiffs alleged intentional interference with prospective economic advantage.

At trial, plaintiffs showed that Kearney never presented the seller with its second $1.5 million offer. Kearney failed to disclose to all potential buyers that the seller wanted an offer with no contingencies. This failure proved damaging to defendants' case, as plaintiffs demonstrated that their offer would not have had any contingencies had Kearney honestly disclosed that a no-contingency offer was important to the seller. The seller confirmed that it would have accepted plaintiffs' offer had it been presented without contingencies.

Settlement Discussions

The brokerage firm, Kearney and Levin settled with plaintiffs for an undisclosed sum at the settlement conference. McLean refused to make any settlement offers, but stated the matter could be settled if plaintiffs purchased the property from him for $3 million. Because plaintiffs had just settled with the other defendants, they offered to settle with McLean by paying him $2.8 million for the property.

Damages

Plaintiffs claimed their damages were the lost profits from the increase in value of the property and loss of their development rights. An expert testified that the property more than doubled in value over the course of two years to $3,150,000 at the time of trial. Another expert testified further that additional development of the property would have netted $300,000 to $350,000 more in profits per single family home. Plaintiffs testified that if they acquired the property, they would have developed three homes in which they would have occupied two of them and sold the third.

Result

The jury awarded $2 million for lost profits with no out-of-pocket damages. Case settled before judgment was entered. At the time of trial, the property was valued at $3,150,000.

Other Information

Post-verdict settlement; property valued at $3,150,000.

Deliberation

five hours