Facts

On Aug. 2, 2006, plaintiffs Demetria Barnes and Lakeisha Butler purchased from defendant Oscar Ramos Morales a mixed residential and commercial property located at 7500 South Broadway in Los Angeles for $725,000. Morales had allegedly represented to Barnes and Butler that the two rental units on the property were rented for $800 per month, and that a catering truck that used a portion of the property provided additional income. However, Morales allegedly did not inform the plaintiffs that he had constructed a large metal overhang structure over a portion of the building without obtaining the proper building permit.

After the closing of escrow, plaintiffs discovered that the tenants had been paying $700 per month, and that the rental units were subject to the Los Angeles Rent Stabilization Ordinance (RSO). Under the RSO, the maximum rent allowable for each unit was $583.50. Furthermore, the city of Los Angeles sent plaintiffs an order that mandated that plaintiffs cease using the land to sell food from the catering truck as well as remove the metal roof structure.

Plaintiffs sued Morales as well as the real estate agents and brokers involved in the transaction.

Result

The court ruled in favor of the plaintiffs and awarded $291,466 in compensatory damages* and $56,419 in punitive damages. Plaintiffs were also awarded attorney fees and costs.

Other Information

Plaintiffs settled their claims against the real estate agents and brokers involved for $30,000 prior to trial. Plaintiffs' total recovery including pre-trial settlements, attorney fees and costs was $448,841. Plaintiffs' appraiser testified at trial that the property was worth $430,000 at the close of escrow. *The compensatory damages consisted of $25,466 for breach of contract, $295,000 for fraud, less $30,000 credit for pre-trial settlements.