On the first day of what was forecast to be a 5-week jury trial in Orange County Superior Court, Burkhalter Kessler Clement & George LLP lawyers secured a complete judgment in favor of their client before the jury trial got underway.
The lawsuit stemmed from the uncompleted sale of about 2 acres of land in Costa Mesa. Burkhalter Kessler Clement & George LLP client, Red Mountain Retail Group, a Santa Ana based company specializes in revitalizing neglected and challenging properties into attractive, productive parts of the community. Consistent with this, back in 2006, Red Mountain acquired a blighted group of parcels suffering from some pre-existing contamination. Red Mountain set out to remediate the property and redevelop it. After weathering the Great Recession, the property was ready to market, and Red Mountain found a willing buyer in South Coast Communities, LLC. South Coast billed itself as an experienced home builder with the sophistication to handle environmentally challenged properties. Red Mountain and South Coast entered into a formal contract in August 2012. Under the terms of the deal, Red Mountain agreed to help South Coast get the City of Costa Mesa to approve South Coast’s planned housing development, and Red Mountain would work with the environmental agencies on remediation and to get the clearances required to allow development. All of the agreements between the parties (there were a total of seven amendments to the original contract), always maintained a clear “outside closing date”-an automatic termination date that would kick in if the deal had not closed by a date certain. The evidence in the case made it clear that these outside closing dates were commonplace in real estate contracts-especially where the parties are dependent on government approvals that are difficult to predict. Ultimately, despite everyone’s best efforts, the necessary government approvals were not obtained before the outside closing date. South Coast refused to close escrow, and the deal terminated on October 31, 2014, the “outside closing date”.
Despite the clear language of the contract, South Coast sued Red Mountain just seven days later, claiming the contract could essentially go on forever waiting for the government agencies to issue approvals. In addition, ignoring clear language in the contract that specifically limited the available remedies, South Coast asked the court to improperly force Red Mountain to sell the property to South Coast, or award over $9 million in claimed “damages.”
Red Mountain turned to long time Burkhalter Kessler Clement & George LLP trial counsel, Daniel J. Kessler, to defend the case. Kessler had successfully defended another Red Mountain related entity years prior in a real estate dispute. From early in the lawsuit, it became evident that South Coast’s strategy was to muddy the waters of a simple contract dispute with complicated, but irrelevant, environmental and land use issues. Utilizing a team including experienced litigators, Ros Lockwood and Amber Sanchez, and despite being besieged with nearly 26,000 documents in discovery, the Kessler and the Burkhalter Kessler Clement & George LLP team expertly kept the Court focused on the issue at hand: the contract. Burkhalter Kessler Clement & George LLP filed several key pre-trial motions directing the judge to the critical contract language regarding the outside closing date. The strategy paid off. Before the plaintiff could even begin jury selection, Superior Court Judge Ronald A. Bauer agreed with Burkhalter Kessler Clement & George LLP‘s contract interpretation, ruled that the contract had indeed terminated, and entered judgment in favor of Red Mountain.
Reflecting on the result, Burkhalter Kessler Clement & George LLP litigation head Dan Kessler stated, “I am very pleased for our client. It is very gratifying to see a Superior Court Judge like Judge Bauer spend the time to dig into the dense documents, apply the law, and make the right call. We felt very confident that a jury would have made the same call, but it would have been a tremendous waste of resources to go through the exercise of that trial.”
Kessler added, “The next step is getting back all of the legal fees and costs Red Mountain was forced to spend on this lawsuit that never should have been filed in the first place.”