John Strebel v. Steels, Frank Howard Allen Realtors, Haya Smith
Published: Dec. 2, 2003 | Result Date: Sep. 5, 2003 | Filing Date: Jan. 1, 1900 |Case number: SCV224527 Verdict – $400,000
Judge
Court
Sonoma Superior
Attorneys
Plaintiff
Defendant
Experts
Plaintiff
Carrie Lynn Pace
(technical)
John D'Andrea
(technical)
Defendant
Ronald Broyles
(technical)
William Jansen
(technical)
Facts
The plaintiff was represented by the defendant firm, the oldest independently-owned real estate brokerage in the Greater San Francisco Bay Area and the second-largest real estate brokerage business in Sonoma County, as a dual agent representing both the sellers of a residence in Kenwood and the plaintiff as a buyer of the same residence. The plaintiff, a retiring San Francisco school teacher of 35 years, entered into contract to purchase the property as his retirement home. He was induced to sell his San Bruno residence in reliance on his purchase of Kenwood. Unbeknownst to the plaintiff, but known by the sellers (the Steels) and the listing agent, Smith/Frank Howard Allen Realtors, the sellers had permitted title to the Kenwood property to become over-encumbered with IRS tax liens and the sellers were actually in the process of negotiating with the IRS for a compromise of said liens so that the property could be conveyed for the contract sales price. The compromise never occurred and plaintiff was unable to close escrow on the Kenwood property. The defendant agent also conceded that she deliberately prolonged the opening of escrow for Kenwood and the ordering of a Preliminary Title Report for the plaintiff (which would have revealed the excessive liens) at the request of the sellers. The plaintiff's sale of his San Bruno residence then closed and the plaintiff was left without a home. Due to the rapidly appreciating Sonoma County real estate market, the plaintiff was unable to purchase comparable housing in Sonoma County, notwithstanding his search for almost two years. Additionally, during the Kenwood sale transaction, and subsequent to the defendant firm learning of the tax lien situation, the defendant firm prepared and requested both the plaintiff and the sellers to sign an "Indemnification and Hold-Harmless Agreement" protecting the defendant firm in the event a lawsuit was filed by either party. Finally, after the defendant firm and its agent Haya Smith announced to the plaintiff that the Kenwood property was "unexecutable" and that he could not obtain it, the defendant firm refused to authorize the release of the plaintiff's $10,000 Purchase Money Deposit until the plaintiff released the firm and Haya Smith from all liability arising from the Kenwood transaction. The plaintiff was forced to hire legal counsel and make repeated demands on the defendant firm and their selected title company until the deposit was finally released, five months later.
Settlement Discussions
The plaintiff made a C.C.P. Section 998 offer for $199,000.
Damages
The chief issue was the appropriate measure of damages for the plaintiff arising from the fraud, in light of the fact that the defrauding entity was not a party to either of the plaintiff's contracts (San Bruno or Kenwood). The defense maintained that the defendants' conduct resulted in no damages to the plaintiff and that the plaintiff had received full consideration (current market value) when he sold his San Bruno residence in 1999, regardless of his reliance on the defendants' concealment and his apparent enforceable contract to purchase Kenwood. The plaintiff argued that such an analysis would leave the plaintiff with no remedy, the defendant's fraud and negligence notwithstanding. Despite a number of Motions in Limine by the defense, the court ruled that the jury could consider the lost appreciation from the sale of the San Bruno property per Civil Code Section 3343 (a)(3), Civil Code Section 3333, Civil Code Section 1709 and existing California State Law.
Result
The jury found defendants Smith and Frank Howard Allen Realtors were negligent, as a dual agent, in its representation of the plaintiff. The jury also found that both defendants Haya Smith and Frank Howard Allen Realtors had concealed material facts with an intent to defraud the plaintiff. The jury awarded $350,000 against Smith and Frank Howard Allen Realtors. The jury awarded $50,000 against the Steels for breach of contract. The jury also found that Smith and Frank Howard Allen Realtors had acted in a fraudulent and oppressive manner towards the plaintiff.
Other Information
The plaintiff intends to seek attorney fees per motion from the defendant firm arising from the language of the defendant firm's Indemnification and Hold Harmless Agreement. The defendants intend to appeal.
Deliberation
two days
Length
six weeks
For reprint rights or to order a copy of your photo:
Email
jeremy@reprintpros.com
for prices.
Direct dial: 949-702-5390