Mr. H purchased a 21-unit apartment building from defendant sellers.
A few days before the close of escrow Mr. H discovered that a third party had clouded title to the property claiming he had signed a contract with the sellers for the same property only weeks before Mr. H’s contract.
Mr. H filed suit against both the seller and the prior buyer claiming that he had a right to purchase the property or, conversely, if the prior buyer had a right to purchase the property, that he be awarded breach of contract damages and punitive damages against the seller.
Although there is no legal right to recover punitive damages in typical breach of contract litigation, Mr. Denis also pursued a theory that the seller had intentionally concealed material facts from Mr. H related to the existence of the first buyer. This theory then allowed Mr. H to also pursue the recovery of punitive damages.
During the lawsuit the seller was represented by one of the largest law firms in Los Angeles which had also custom-drafted the purchase contract for the seller which had been used with both Mr. H and the first buyer. These custom-drafted contracts contained a number of clever and unique “escape clauses” intended to insulate the seller from any liability should the seller breach the purchase contracts.
During the course of the litigation, the seller’s law firm assured the seller that Mr. H would never win the breach of contract claim because of these “escape clauses” that it had drafted to insulate the seller, and the law firm “guaranteed” that Mr. H would never recover punitive damages.
Mr. Denis was able to identify two different legal theories which, if accepted by the jury, would negate the “escape clauses” designed to shield the seller from liability.
After the trial judge determined that the first buyer had a right to purchase the property from the seller, Mr. H’s claims for breach of contract and punitive damages were tried to a jury.
After a two week trial, the Torrance jury returned a verdict in favor of Mr. H for breach of contract and fraud and awarded him both compensatory damages and $100,000 in punitive damages.