The Walnut Creek real estate brokerage firm Security Pacific Real Estate and its former agent, Kevin Roberts, successfully defended a One Million dollar lawsuit for defects in a luxury home in the case of Hart v. Security Pacific, Contra Costa Superior Court case number C94-03288.
Security Pacific and Roberts were represented by attorneys Dean Harper and Mary Sullivan of Bowles & Verna. After a six week trial, the jury returned a 12 to 0 verdict in favor of Roberts and Security Pacific on all claims, which included breach of fiduciary duty, negligent misrepresentation, concealment and fraud. After only two hours of deliberation, many jurors were upset that they were not allowed to award Security Pacific all of its attorneys’ fees and costs for having to defend the claim.
Factual Background
The case arose out of a 1991 sale of an $810,000 property in Danville, California. The property had been listed for $985,000. The sellers had moved out, but were paying on existing loans of $765,000. The house also had some defects. They were anxious to sell.
The plaintiffs, Patrick and Lynda Hart, retained Kevin Roberts and Security Pacific in 1991 to assist them in purchasing a high-end home. Mr. Roberts had showed the Harts over thirty homes in a three month period. He ultimately presented a "low-ball" offer on the property and eventually the Harts entered into a contract with the sellers, Mo and Marianne Shaikhaie, for $810,000.
The 4700 square foot home was only nine months old. During escrow the sellers disclosed several punch list items in need of repair and a driveway encroachment problem. Nevertheless, the Harts agreed to close escrow on the written promises from the builder that he would repair all of the punch list items and take care of the easement problem with the neighbors.
Escrow closed and the builder refused to perform. Further, when the first rains came, the Harts’ home leaked through the roof, decks and windows. Other problems developed. The Harts obtained several expert reports which initially suggested that the home needed approximately $150,000 in repairs. By the time the case was presented at trial, plaintiffs’ experts opined that the home needed $865,000 in repairs. The plaintiffs also attempted to recover emotional distress damages and loss of use damages. The defense experts maintained that the total repairs necessary were $168,000.
The Harts maintained at trial that they thought they had purchased their dream house and ended up buying into their worst nightmare. They showed video clips of rain coming through the ceiling into their home. The Harts blamed Kevin Roberts for allegedly failing to recommend that the Harts obtain inspections during escrow, withholding material information, misrepresenting the condition of the property, down-playing the significance of the punch list items and failing to recommend that the Harts seek legal counsel during escrow.
Mr. Roberts testified that he did not withhold any information, properly counseled and advised the Harts, did verbally recommend that the Harts obtain inspections and verbally advised them to seek legal counsel. Fortunately, the jury believed Mr. Roberts.
Defense of the Fiduciary Relationship
The court instructed the jury that Mr. Roberts, as a fiduciary, had the duty of utmost care, loyalty and honesty. In addition, Mr. Roberts had a duty to counsel and advise his clients and verify all material information, or disclose to his principal that such information had not been verified. Although the fiduciary duty is indeed broad, the Security Pacific attorneys were able to persuade the jury that Mr. Roberts had fully discharged his obligations.
Why The Case Did Not Settle
You may ask, why didn’t the case settle like so many others? The reason is that plaintiffs did not drop their demand below $400,000. Security Pacific’s insurance carrier offered $70,000 to settle the case before trial, but the plaintiffs refused the offer. Some cases, unfortunately, cannot be settled.
