Confidential
Settlement – $495,075Judge
Court
Orange Superior
Attorneys
Plaintiff
Defendant
Experts
Plaintiff
J.E. Jungren
(technical)
Ron Nelson
(technical)
William M. Jones
(technical)
Barbara A. Amstadter
(technical)
Wade Wilmarth
(technical)
Dennis A. Evans
(technical)
Facts
On June 18, 1994, the plaintiffs and the defendant sellers entered into a real estate purchase contract and receipt for deposit for the real property located on a slope in Laguna Niguel. The plaintiffs alleged that the defendant agent and his employer had direct and personal involvement in the property for approximately three years prior to the sale of the property in August 1994. They were requested to list and market the property in July 1991. Per the plaintiffs, these defendants also managed the property on a day-to-day basis, arranged for pool maintenance, landscape services and became responsible for paying all of the utilities on the subject property. The defendant realtor allegedly marketed and managed the property from July 1991 until February 1992, at which time the defendants sold the subject property to the defendant sellers. The plaintiffs also cliamed that the defendant agent had previously sold other parcels of real property to the defendant sellers, some time prior to his sale of the property to the sellers in February 1992. The geological inspection of the property, on behalf of the defendant sellers, occurred on Feb. 17, 1992. The defendant agent not only arranged the inspection, but was also found to have been present. The agent denied being present and produced airline tickets and calendars in that regard. In early October 1992, eight months after the sale of the property to the defendant sellers, one of the defendant sellers contacted the defendant pool builder for the purpose of hiring the company to repair and refurbish the property's pool. During the representative's drive to the property, he allegedly noticed that a lot of other driveways had cracks. The representative allegedly discussed these observations with the defendant seller. The plaintiff claimed that during these conversations, the defendant seller acknowledged his awareness of the condition of the driveways. When the representative got to the rear yard of the property, the plaintiff claimed he noticed that the pool was out of level and there was a 20-foot long crack running the length of the bottom of the pool which extended out of the pool and onto the patio and ran approximately the entire length of the rear yard. The defendant seller and the representative allegedly discussed that fact the the pool problems were directly related to ongoing problems with the slope. The representative also allegedly told the defendant seller that it appeared that there was a previous attempt to fill up the cracks with some sort of epoxy and that this previous repair job could not be expected to be permanent, and that in his opinion, the pool was either leaking out would leak in the immediate future. The renovation of the pool and the addition of the spa and surrounding concrete flat-work was completed in April 1993. The defendant realtor re-listed the property on behalf of the defendant sellers on May 24, 1994 and marketed the proeprty during the summer of 1994. On June 18, 1994, the plaintiffs presented an offer to the defendants in the amount of $350,000. After a series of negotiations and counter-offers, the property was sold to the plaintifs for $344,250. Prior to the close of escrow, the plaintiffs inspected property and asked the defendant seller, in the presence of the defendant agent, whether the defendant knew of any problems with the pool or whether the defendant seller had any knowledge of there being problems with movement or sliding of the slope areas. The defendant realtor allegedly told the plaintiff that he was in the best position to have knowledge about the subject property. He effectively assumed the role of the defendant seller in responding to all of the questions.
Settlement Discussions
The plaintiffs made a C.C.P. º998 settlement demand for $150,000. The defendants made no settlement offer.
Damages
The plaintiffs sought $650,000 in damages, including cost to repair damages of $389,000 to $589,000.
Result
CONTINUATION OF FACTS: When the plaintiff asked to be provided a copy of the written geological report that indicated thar there were no problems with the slope, the defendant agent allegedly responded: "What do you need that for?" The defendant agent allegedly indicated that there never was any written geological report and that the report was verbal. The plaintiff also asked the defendant agent whether the pool had ever had any type of structural problems or other problems relative to leaking and the defendant agent allegedly assured him that all of the work that was done to the subject pool was performed solely for cosmetic purposes. The documents in connection with the remodel of the subject pool, were not provided to the plaintiffs until after the close of escrow. The subject escrow closed during August 1994. When the plaintiffs moved into the property, they found that a copy of the renovation proposal performed by the defendant pool builder was left laying on the kitchen counter top. The arbitrator found that it was at this time that the plaintiffs first learned of the structural work performed on the pool and the presence of cracks on the original pool. Approximately 15 days after the plaintiffs took possession of the property, they began to notice that doors and windows would come open, significant cracks began to appear, as well as very significant separations of the concrete flat-work surrrounding the pool, as well as significant separation of the wall enclosing the pool equipment from the house. Up[on investigation, it was found that a water pipe from the spa broken and that this allowed significant water intrusion into the soil around the pool and slope. Once the repair was made, there was no further movement.
Other Information
The award was reached approximately one year and six months after the case was filed. The eight-day arbitration was held on June 3, 1996 before William Sheffield, of Judicate West. Judge Sheffield found for the plaintiffs and against the defendant real estate brokers on the negligence cause of action. He held that section 2079 of the Civil Code imposes upon real estate brokers in the defendant agents' position to disclose to a purchaser all information in their possession that a reasonably competent and diligent visual inspection by the broker would reveal. Moreover, Judge Sheffield found that earlier cases imposed upon the real estate broker an obligation to not only reveal what a competent visual inspection would reveal, but also to reveal any facts within the borker's knowledge that would materially affect the value of desirability of the property. Factually, Judge Sheffield found that the defendant agent knew when dealing with the plaintiff purchasers, of the geological inspection, as well as the results of that inspection. The arbitrator found that by not disclosing these facts to the plaintiffs, the defendant real estate brokers breached the standard of care. Moreover, the arbitrator found that the defendant real estate broker's own expert witnesses, Barbara Amstadter, testified that a broker's failure to disclose existing cracks and that the house being built an an area designated a slide area by city maps is so obvious a fact that would materially bear on the value and desirability of the property as to require no expert testimony as to the standard of care. Lastly, the arbitrator found that even if the defendants had argued proportionate fault or contributory negligence, their failure to disclose acted to remove any contributory fault from the plaintiffs. POST TRIAL MOTIONS: The defendants have appealed the judgment confirming the arbitrator's award, There are still civil claims pending for emotional distress. The matter is set for trial in february 1997.
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