That’s a lot of money, even by California standards. The case of Jose Ivan Rodriguez Jimenez v. Capero Investments Inc. & Louis Brian Teque has “teaching moments” for those involved in real estate sales and parties to litigation.
Jury Decides Real Estate Agent Ripped Off His Client
In this Los Angeles Superior Court case, the jury in July found the defendants liable for actual and punitive damages. Jimenez convinced the jury that his real estate agent, not the seller, failed to provide needed disclosures about the home’s condition in documents before the sale closed.
Jimenez sued Louis Teque and Capero Investments Inc. in 2018 after buying the home in question, reports the Courtroom View Network. He claimed it wasn’t safe to live in due to hidden but substantial fire damage caused by defective wiring. The jury didn’t agree with the defendants’ claims Jimenez didn’t have an inspection done, which could’ve revealed the damage before the sale or knew the home’s condition.
Plaintiff’s attorney stated his client would’ve accepted $100,000 to settle the case, but the defendants failed to respond with a “legitimate” offer to resolve the matter before or during the trial. In addition to a $500,000 punitive damages award, the jury also decided Jimenez should be paid $106,852 in compensatory damages for his payments on a house he couldn’t use and the costs of a rented home.
Takeaways From the Case
1.Required Disclosures
If you’re involved in a real estate transaction and have a legal duty to disclose a defect in a property but fail to do so, you could be sued. This case was filed in 2018, but there wasn’t a trial until four years later.
Not only do the defendants need to pay the verdict (which may or may not be covered by insurance), they had to put in the necessary time and effort to defend themselves. If insurance didn’t cover their defense costs, defendants would have to pay for them too, so the defendants’ actual cost might be far higher than the jury verdict.
2.Punitive Damages
There were compensatory or actual damages and punitive damages in this case. The actual damages are to make Jimenez whole. The jury found he had out-of-pocket losses because of the defendants’ actions, and they must pay him back.
Punitive damages, according to California statute, are available if a party breaches an obligation not created under contract law. The plaintiff must prove “by clear and convincing evidence” the defendant engaged in “oppression, fraud, or malice” to qualify for a punitive damages award (in addition to the actual damages).
The statute uses the following definitions:
• Oppression: “(D)espicable” conduct causing the plaintiff “cruel and unjust hardship in conscious disregard of that person’s rights.”
• Fraud: An intentional misrepresentation, deceit, or hiding of a material fact known by the defendant with the intent to deprive the plaintiff of property or legal rights or cause an injury in some way
• Malice: Conduct by the defendant intended to cause the plaintiff injury, or their “despicable conduct” was committed “with a willful and conscious disregard of the rights or safety of others.”
This is a high standard, so relatively few punitive damages awards are given. The higher the award, the greater the incentive for the defendant to appeal it, hoping it will be overturned or reduced.
3.Settlement Negotiations
We don’t have the defendants’ side of the settlement negotiation story. Still, if the evidence was clear enough to justify a punitive damages award, the defendants should’ve taken settling the case seriously. If the case isn’t successfully appealed, they’ll pay six times the plaintiff’s settlement offer.
If you’re a defendant and agree to a settlement, you risk paying more than a case is worth (it might be dismissed, or the damages award may be minimal). This case shows the risk of not settling a lawsuit – a jury verdict against you with damages far higher than you expected.
No matter which side of a case I represent, I give my client an honest assessment of their chances of success and tell them what I think would be a fair demand or offer. It’s up to you to accept or ignore my advice. I’ll do everything I can to help you reach a successful outcome, whether that’s through litigation or negotiation.
We’re Here to Help
If you’re involved in buying or selling property, whether you’re a party or an agent, and you have questions about disclosures, call Anthony Burton at (949) 244-4207 or complete our online contact form today.
