Friday, April 24, 2020

Moore v. Teed (Cal. Ct. App. - April 24, 2020)

This opinion is like a legal version of The Great Gatsby.  Except it's in San Francisco instead of Long Island and it's got the legal twist of a buy-and-remodel that went astray.

The briefs are even better than the opinion in this regard, if only because they contain some exotic and particularized details that Justice Sanchez's opinion omits.  The Court of Appeal notes that the underlying dispute arose out of  "the purchase and botched remodel of a fixer-upper house in the Pacific Heights neighborhood of San Francisco."  Plaintiff wanted a nice house in San Francisco, but couldn't afford the type of house he desired.  So bought one to fix up.

That's a common story to people in many different income categories.  But in this particular case, the relevant income category is quite high.  Plaintiff was allegedly willing to spend up to $3 million for a house "in one of San Francisco's better neighborhoods," but that wouldn't cut it.  So he buys what we will call a "fixer-upper" on Green Street in San Francisco for . . . $4.8 million.  Which, allegedly, his real estate agent, who has experience in this area, says can be remodeled very nicely for an additional $900,000.

No small chunk of change.

What sorts of remodels are envisioned?  The basics, of course.  Principally making the basement into something nice.  I know you're thinking:  "Oh, it's an unfinished basement.  So put a couch and wood paneling or something in the thing?"  Not quite.  The basement remodel was to create "a cinema and a wine cellar" in the thing.  This is San Francisco, after all.  What counts as "the basics" is something different in that locale, apparently.

The whole thing ends up being a disaster because it turns out you can't do the work for even nearly $900,000, in part because the foundation of the home was defective and not waterproofed, and after the real estate agent/developer is fired, by the time of trial, plaintiff ends up spending nearly . . . . $9 million on the remodel.

So $4.8 million for the house.  Another $9 million for the remodel.  Wow.  I bet the house is pretty darn nice at this point.

Naturally, the plaintiff sues, and prevails (at least in part) at trial, getting some healthy damages as well as attorney's fees.  Defendant appeals, but the Court of Appeal affirms.

The opinion mentions that the property is located on "Green Street" in San Francisco, but provides no additional details.  Which only helps a little bit, since that's a very long street, and runs all the way from the Presidio to the Embarcadero.

But while the briefs generally omit the property address, the exhibits mention that it's at 2758 Green Street.  Very near the Presidio.  A house that Zillow estimates is worth around $12 million.  And in the Google Street View photo, you can still see construction trucks and employees working on the thing.

There are other details in the briefs that are interesting as well, like the loans that the father makes to his son (and Dad's employment and offshore location and properties) as well as details about the real estate agent defendant.  But the case is interesting enough even without them.

The doctrinal point of the opinion is not insubstantial:  whether you can get "benefit of the bargain" damages against fiduciaries in fraud claims involving real property transactions.  (The opinion here says "yes" but concedes that the Court of Appeal is divided on that point.)   But the real reason to read the opinion is simply to take a peek into a slightly different world than the one in which most of us typically live.