Facts

In August 2006, Ed & E Investors LLP (Ed & E) entered into an agreement with George Behnam for architectural work. Behnam's services were needed for a Studio City condominium development that Ed & E was planning. That December, Ed & E obtained both the property and construction financing from a local bank. Ed & E was granted its permits for the construction project the next summer. But, that fall, construction ceased. The next spring, in 2008, the bank revoked the financing due to lack of progress and sold the property at auction. Subsequently, Ed & E submitted breach of contract and professional negligence claims against Behnam to arbitration.

PLAINTIFF'S CONTENTIONS:
Ed & E claimed that Behnam owed a duty to harmonize the various necessary plans. Ed & E claimed that Behnam's architectural plans contained dozens of design defects and omissions, including an error in the basement design, which resulted in insufficient ceiling height over the disabled parking spaces. The defects, Ed & E claimed, made the building impossible to construct as planned and caused the delay in construction which, in turn, caused Ed & E to lose the project and property altogether.

DEFENDANT'S CONTENTIONS:
Behnam claimed that no defects were present in the design or in the alternative any defects were fixable. He further argued that the fact that the project was sold at auction and the new owner had proceeded with construction showed that the building was capable of construction as planned. Behnam further argued that he did not have the duty to harmonize the various plans.

Behnam also pointed out that, under Ed & E's financing contract, it had 18 months from the date of the agreement, December 2006, to finish construction. Yet, Behnam argued, Ed & E did not begin construction until nearly the fall of 2007. It was at this time, Behnam argued, that the condominium real estate market experienced a serious reduction in demand. Furthermore, Behnam argued, Ed & E changed the primary building material from steel to wood in the middle of construction.

Behnam finally argued that the bank revoked the financing agreement after re-valuating the project and deciding that it would not turn a profit.

Settlement Discussions

Ed & E offered to settle for $1,000,000; Behnam offered to settle for $4,999.

Damages

Ed & E sought to recover $3,940,570, for the purchase price for the property they lost at auction, auction costs, interest on the bank's financing, principal and interest on a second loan they obtained, fees for general contractors, the principal on a promissory note it entered into with the bank for the balance of the original loan, the value of the lost property minus the sale price at auction, lost profit, attorney fees and costs.

Result

The arbitrator found that Behnam had not committed professional negligence because there was no physical damage, no wrongful termination, and no intentional act. He also found that Behnam was competent in his performance of the contracted-for services. Finally the arbitrator found that the allegations of negligence claimed by Ed & E were not the cause of their loss. Having found in favor of Behnam, the arbitrator ordered Ed & E to cover the arbitration fees and expenses for $11,180. Behnam later moved for expert fees, pursuant to C.C.P. Section 998.