Facts

Plaintiffs David and Laura Leon approached their realtor, defendant John Kenny of defendant Baldini Century 21, about entering a 1031 exchange. Pursuant to the exchange, the plaintiffs would sell their property and buy property of equivalent value within 90 days, in order to avoid capital gains tax responsibilities. The defendant discovered commercial real estate property that met the plaintiffs' investment needs. The plaintiffs decided to buy the property and contacted the property manager, defendant Michael Kenny. The plaintiffs put the payment in escrow.

Prior to listing, the defendant hired defendant Coastside Termite & Pest Control to perform an inspection of the premises. The inspection revealed dry rot on the premises. According to a contractor estimate provided to the plaintiffs, the approximate cost of repairs was $195,000.

Following negotiations, the plaintiffs received a $100,000 discount of their purchase price and assumed ownership of the property in July 2004. They brought an action for damages.

PLAINTFFS' CONTENTIONS:
The plaintiffs claimed that because defendants wanted to make the sale, they failed to disclose the extent of the dry rot and the presence of mold. They also asserted that defendant John Kenny, their agent, misled them when he showed them the documentation concerning the conditions of the property. The plaintiffs did not have a strong understanding of the English language, which placed a heightened burden on their broker to thoroughly explain the documentation. The plaintiffs would not have signed the paperwork had they fully understood the implications.

DEFENDANTS' CONTENTIONS:
The defendants denied liability. The dry rot and mold were revealed during the sale and considered the price discount. This is proven in the plaintiffs' signatures on the paperwork, which detailed the dry rot repair estimate by the contractor and the discount based on the estimate. Further, the contractor testified that the plaintiff knew of the conditions of the property.

Damages

The plaintiffs claimed damages totaling over $1 million to repair the property. The defendants claimed this estimate was exaggerated.

Result

The jury determined that defendants did not conceal the extent of the dry rot and mold. Further, the evidence did not indicate that the brokers tried to execute the sale by misleading plaintiffs. The jury also found that pest control inspectors did not breach the standard of care when performing their inspection.

Other Information

Cost awards for defendants: Carmen Guzman, a defendant in this action, dismissed her complaint against all defendants on Feb. 8, 2006. Cost awards against her are as follows: Ross M. Johnson, Janine Tarte, Julie Estridge collectively $869.58. Michael Kenny and Gordon Kenny Inc. collectively $2,305.77.

Deliberation

2.5 days

Length

18 days