Facts

Plaintiffs William and Clair Spencer, co-trustees of the Spencer Exchange Trust (fbo the William D. Spencer and Claire A. Spencer 1995 Living Trust) and plaintiffs Kenneth and Jeannine Paganini, co-trustees of the Paganini Exchange Trust (fbo the Paganini Trust), owned a Lombard Street property in San Francisco. They entered into an oral agreement evidenced by written memoranda with defendant David Richardson, aka Laddie Richardson, sole owner and operator of defendant Laddie Richardson Construction Company Inc. as well as the Responsible Managing Officer of defendant Richardson Construction Inc., to repair all problems he discovered of the property and remodel it. While working, Richardson notified plaintiffs that he encountered dry rot conditions on the premises. After completion of his work, Richardson accepted payment. Believing all problems with the property to be remedied, plaintiffs subsequently sold the premises to Donald and Michael Carmignani without disclosing the dry rot conditions. The Carmignanis sued plaintiffs for defects in the property when it was discovered the dry rot conditions still existed. The Carmignanis also sued for non-disclosure of a plumbing "chase" (a walled-off room enclosing plumbing pipes), as there were significant costs incurred in repairing conditions within the chase.

The Carmignanis received $638,767 in judgment from plaintiffs. Plaintiffs then sued defendants for negligence, breach of contract, fraud, misrepresentation, and indemnity.

PLAINTIFFS' CONTENTIONS:
Plaintiffs claimed that defendants did not properly repair the dry rot issues with the property, as they had represented.

DEFENDANTS' CONTENTIONS:
The defense contended that Richardson was not responsible for conditions within the chase since none of his work involved the chase. Moreover, defendants contended, plaintiffs admitted at trial that they built the chase themselves when they bought the property and it was not disclosed to the Carmignanis at the time of sale.

The defense also contended that, since the jury in the Carmignani case found that plaintiffs committed fraud, they could not recover their attorney fees since they were not "without fault," which is the requirement of recovering fees under the "tort of another" doctrine. Additionally, the defense contended that there was no other statutory or contractual basis on which plaintiffs could seek attorney fees.

Damages

Plaintiffs sought to recover $638,767 in damages plus attorney fees incurred during the Carmignani case, totaling over $825,000.

Result

A verdict was returned for plaintiffs. Each of the Paganinis and Spencers received $22,400. Jeannine Paganini and Claire Spencer each received $3,315 in attorney fees in defense from the Carmignanis suit. The claims for breach of oral contract, breach of oral contract, negligence, and fraud were time-barred. Although, the jury apportioned 12 percent of liability to defendants and 88 percent to plaintiffs, the court did not apply comparative fault, having found that one of the jury instructions was ambiguous. The case is currently on appeal.

Other Information

FILING DATE: Jan. 12, 2007.