Reid & Hellyer Client Prevails on Appeal, Alleging $3.2M Real Estate Fraud

September 29, 2013

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A buyer of land represented by attorneys from Reid & Hellyer prevailed on appeal, allowing a jury to decide whether the sellers committed fraud in failing to disclose that proposed high voltage transmission lines might impact the property.

The case arose in August 2007 when the buyer closed on a $3.2M sale of 153 acres of raw land in Palmdale, California. The purchase and sale agreement included a representation by the sellers that "there is no litigation, arbitration, or other legal or administrative suit, action, proceeding or investigation of any kind pending or threatened in writing against or involving Sellers relating to the Property or any part thereof, including, but not limited to, any condemnation action relating to the Property or any part thereof." After escrow closed, the buyer learned that the sellers had received notice from Southern California Edison that 145-foot, high-voltage transmission lines were proposed to be installed on or near the property.

In 2010, the buyer filed suit in Los Angeles Superior Court, Case No. LC088418, seeking to rescind the transaction, alleging misrepresentation through failure to disclose the high-voltage transmission line project.

After evidence was presented at trial, the sellers filed a motion for non-suit, contending that the buyer failed to prove as a matter of law that the high voltage transmission lines were threatened to be installed on the property, as alleged in the complaint. The trial court granted the sellers' motion and denied the buyer's request to amend the complaint to allege that the high voltage transmission lines were proposed on an adjacent property, but could impact the subject property.

On September 27, 2013, the California Court of Appeal found in favor of Reid & Hellyer's client in Landbank Development Company, LLC v. 26 Tierra Subida, LLC, et al. (Sep. 27, 2013) Case No. B240555. The Court of Appeal held in its decision that "a jury could infer that [the sellers] had knowledge of, and failed to disclose, a threatened condemnation action ―relating to the Property or any part thereof." The decision also found in favor of the buyer on the other two issues raised on the appeal relating to the personal liability of the officers of the seller-LLCs for their misrepresentations.

Senior Attorney Dave Moore of Reid & Hellyer remarked that "the Court of Appeal came to the right decision: this is a matter that should be decided by a jury."

Attorneys Dave Moore, Dan McKinney, and Jenna Acuff of Reid & Hellyer represented the buyer at trial. Attorney Michael G. Kerbs of Reid & Hellyer also represented the buyer on appeal.

Headquartered in Riverside, Calif., Reid & Hellyer has been serving the Inland Empire for more than 100 years as one of the most-respected full-service law firms in Southern California, providing legal services in business and real estate litigation, real estate development, transactional law, media law, bankruptcy and mediation.


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