Winter 2011 Newsletter

Volume 7, Issue 1

2010: The Year In Review

Every year we move closer to our goal of being the preeminent boutique real estate litigation firm in Los Angeles. In 2010 we made great strides towards the goal, thanks to our friends and clients.

Trial Victory in Ventura

We were pleased to win a corporate shareholder trial in Ventura Superior Court this year. Mr. Wagenseller spend two weeks in trial in a case where the plaintiffs – minority shareholders in the corporation – alleged fraud, breach of fiduciary duty, involuntary dissolution of the corporation and accounting against our client, the majority shareholder of the corporation.

We were able to refute plaintiffs’ allegations that corporate money was improperly diverted to family members and that pension funds were wrongly diverted at the expense of the minority shareholders.

The Court sided with us on all of the substantive issues of the case. We are pleased with this victory for our client.

Ex-Partner Lawsuit Dismissed

Our client, the owner of a shopping center, was sued by an ex-partner and current tenant in the center for breach of contract, intentional interference with contractual relations, common law unfair competition, conspiracy to defraud, breach of the covenant of good faith and fair dealing and violation of Business & Professions Code section 17200.

We also represented a tenant in the center who was also being sued by plaintiff.

The plaintiff alleged that the center had violated an exclusive use agreement that prevented the landlord from renting to other similar businesses. He alleged the tenant, knowing of this promise, intentionally interfered with the agreement.

We held an early meeting of counsel to discuss settlement and engaged in a mediation, to no avail.

Our analysis indicated that plaintiff could not prevail on a lost profits claim and we pushed plaintiff to dismiss his case and focus on building his business.

Soon after the mediation, the plaintiff voluntarily dismissed his entire action. We were pleased to get an early resolution to this case.

International Retailer v. Mall Owners

We successfully resolved all of the litigation involving our client, a European clothing chain, and their shopping mall landlords. We represented the tenant in five lawsuits throughout California relating to the renegotiation of their leases in a changing retail environment.

Real Estate Fraud Case Settled

We successfully settled a real estate fraud case on behalf of our client, the purchase of a shopping center. We alleged that the seller provided our client with a falsified rent roll, fake operating statement and false tenant estoppels certificates.

The seller argued that the purchaser knew that some of the tenants were not paying the rents listed on the rent roll. In addition the seller pointed out that the declining real estate market prevented the purchaser’s claims for damages since the tenants would have gone out of business in any event.

After more than a year of litigation, the parties were able to settle the case prior to trial.

Partnership Agreements, Leases and Other Contracts

Not all of our work is litigation. We were able to help clients avoid litigation. Two longtime restaurant/bar business partners came to us to help them put together a partnership divorce, including assignments of LLC interests and agreements with their downtown landlord. We were able to put together a deal where one partner bought out the other partner without the expensive litigation that usually accompanies these partnership fights.

Another client opened a new coffee house on Fairfax and we were happy to help them with their lease.

If you or someone you know has a real estate issue, please feel free to give us a call and we can help you decide on your best course of action. We appreciate your referrals and are proud of the excellent service we have provided our clients.

Preliminary Injunction: Denied!

Our client, the lender on an apartment building, was in the process of foreclosing when the borrower applied for a preliminary injunction in the Superior Court. We opposed the application and the court agreed with us, denying the application. Our client was then able to sell the property.

What Is A Preliminary Injunction?

A preliminary injunction is a provisional (i.e., before trial) injunction that is meant to keep the status quo prior to a trial and judgment. A preliminary injunction is intended to prevent ‘irreparable injury’ from occurring prior to a final court ruling. In our case the plaintiff was making the argument that a foreclosure would transfer title away from him before the court could rule on his complaint.

There are two types of injunctions: a prohibitive injunction or a mandatory injunction. The prohibitive injunction prevents a party from doing something (i.e., selling the property). A mandatory injunction compels a party to affirmatively do something.

When Will A Court Grant A P.I.?

The key ingredient in a claim for a preliminary injunction is a showing that the moving party has a reasonable probability of prevailing. In other words does it look like they will win the case?

This must be done through a showing based on admissible evidence and a viable legal complaint. In our case we argued, among other reasons, that the complaint did not adequately allege causes of action for breach of contract and fraud. A preliminary injunction may not be based on a complaint that does not adequately allege legal causes of action.

In addition a mandatory injunction is more difficult to win than a preliminary injunction (because the court is more hesitant to force a party to affirmatively do something as opposed to simply maintaining the status quo). Case law states that a mandatory injunction is not permitted except in extreme cases and is only rarely granted.

The court will also look to see whether monetary damages are adequate relief for the wrong complained of. Most cases entitled a party to monetary damages. A party seeking an injunction must establish that money damages would not be adequate or that it would be extremely difficult to establish the amount of damages.

In our opposition to the application, we argued that the plaintiff (1) did not allege a viable legal complaint, (2) misstated the facts (which we showed by introducing additional evidence) and (3) did not have standing to pursue these claims (because the plaintiff had filed for bankruptcy and these claims were the property of the bankruptcy trustee).

The court, noting each of our arguments, denied the plaintiff’s application. Our client was able to go forward with the Trustee’s sale and complete the foreclosure.

In another case we recently handled, the plaintiff brought an application for a mandatory preliminary injunction against our client, a residential homeowner. The parties had entered into a lease agreement for the house but our client, due to an accident, was unable to move as he had planned and decided to not lease the home.

Plaintiff’s application sought mandatory relief in asking that the court order our client to move out of his home and honor the lease with plaintiff.

Plaintiff argued that real property is considered unique in California (Civil Code section 3387) and therefore a contract relating to real property could be ‘specifically performed’ – where the court orders the parties to follow through on the contract rather than merely awarding damages.

We argued that the plaintiff had not proven irreparable injury since damages for a breach of contract are typically monetary and plaintiff could not move into any number of other homes in the neighborhood. In addition, while the statute relating to specific performance of a real estate transaction was ambiguous, the case law relating to specific performance and breach of lease was clearer – money damages are the appropriate remedy for a breach of lease.

After all, would a court not only order a homeowner to move out of his own home but also force him into a year-long landlord/tenant relationship with plaintiff?

We settled that case before the application was heard but I would hazard a guess that a court would not issue a mandatory injunction along those lines.

Southern California Super Lawyers 2011

Laine Wagenseller was nominated by a peer and named by Super Lawyers to be among Southern California’s Super Lawyers of 2011.

Super Lawyers performs a rigorous research and evaluation process in order to select an attorney who has achieved peer recognition and professional achievement.

The Super Lawyers magazine features attorneys throughout the country who have attained recognition in their field of practice and have done so with outstanding achievements. Only five percent of lawyers in the state are named by Super Lawyers.

This distinguishment is in thanks to our friends, colleagues and clients who have referred to us many business opportunities and recommended our firm as the go-to real estate and business law firm.

A Look Back At 2010

Message from Laine Wagenseller

One of my goals for the new year is to reach out to friends, clients and others who I haven’t spoken with in awhile. Let’s catch up, talk on the phone, have lunch and plot how we can take over the world.

I sat down recently to figure out what I want to accomplish over the year – how to build the business, who I want to meet, where in the world I want to visit and more. I am anxious to share these plans.

Our mission has not changed – to become the preeminent boutique real estate law firm in Los Angeles. To do this we are committed to providing the best legal and business advice possible and to giving our clients the best service possible.

What is your mission and what do you want to accomplish this year? Let’s compare notes and figure out how we can help each other with our goals. What can we do together to reach more people? What services and knowledge can we provide that make us the go-to people in our industries?

I look forward to a great 2011!

In The Works: Cases We Are Working On

  • Family Lawsuit, Part I: In this case our client is being sued by her grown daughter over an alleged real estate investment in 1974. Plaintiff has already sued all of her brothers and sisters as well as her late father’s estate.
  • Family Lawsuit, Part II: Our two clients (brothers) are being sued by their other brother over ownership of two apartment buildings.
  • Mortgage Fallout: Our client, a small Southern mortgage lender is being sued by Countrywide Mortgage over a repurchase agreement relating to the sale of mortgages (wholesale).
  • Injunction: We are defending the seller of an apartment building who took back a note in a lawsuit intended to delay or prevent foreclosure.
  • Neighbors: We are assisting a property owner whose neighbor is intentionally encroaching on her property.
  • Deadbeat tenant: We are suing a former tenant of an industrial warehouse for unpaid rent, damages to the building and damages arising from the early breach of lease.
  • Breach of Contract and Lease: We have a number of cases for money owed.
  • Leases: We are helping clients with leases (a Culver City auto shop, a downtown self-storage facility), a lease assignment (doctor’s office in Beverly Hills) and a lease termination agreement (strip mall restaurant in Santa Monica).

Basic Economics by Thomas Sowell

“If the government today were to come up with a “plan” for “universal access” to beach-front homes and put “caps” on the prices that could be charged for such property, that would not change the underlying reality of the high ratio of people to beach-front land. With a given population and a given amount of beach-front property, rationing without prices would have to take place by bureaucratic fiat, political favoritism or random chance – but the rationing would still have to take place. Even if the government were to decree that beach-front homes were a “basic right” of all members of society, that would still not change the underlying scarcity in the slightest.

If everything were made affordable by government decree, there would still not be any more to go around than when things were prohibitively expensive. There would simply have to be some alternative rationing method – ration coupons, political influence, black markets or just fighting.

Too often a false contrast is made between the impersonal marketplace and the compassionate policies of various government programs. But both systems face the same scarcity of resources and both systems make choices within the constraints of that scarcity. The difference is that one system involves each individual making choices for himself or herself, while the other systems involves a smaller number of people making choices for millions of others. The mechanisms of the market are impersonal but the choices made by individuals are as personal as choices made anywhere else.

The real contrast is between choices made by individuals for themselves and choices made for them by others who presume to define what these individuals “really” need. Basic Economics by Thomas Sowell.

News and Happenings…

  • Laine Wagenseller has joined the Advisory Board of CREW Los Angeles. CREW is a commercial real estate organization. Susan Barilich is CREW’s President for 2011 and Laine and Susan have worked together for several years on real estate cases. You can find more information at crewla.org.
  • USC’s West L.A. Marshall Partners, a support group for the Marshall School of Business, threw a great event at the new Tutor Center on campus. Professor Gerard Tellis spoke on “Building A Culture of Relentless Innovation.” Laine is a Marshall Partners Board Member.
  • Laine attended the ICSC (International Council of Shopping Centers) event “Retail Real Estate Evolution” at the Skirball Center in November.
  • The Drucker Forum has been hosting terrific speakers in its monthly gatherings. Go to DruckerBusinessForum.org for this year’s schedule.
  • Along with others in his men’s group at Bel-Air Presbyterian, Laine went to the Union Rescue Mission in December for a Christmas party for some of the men there. URM is a faith-based organization dedicated to serving men, women and children experiencing homelessness in Los Angeles. For more information, go to urm.org.
    Laine attended seminars on Real Property Law Practice: 31st Annual Recent Developments and Business Law Practice: Recent Developments on January 28th. The seminars go over the newest cases and the hot issues in property and business law.
  • The Federalist Society held its annual Western Chapters Conference at the Reagan Library on January 29. Hugh Hewitt was the keynote speaker and the theme was “After The 2010 Election: What’s Next For Campaigns and California?”
  • Check out inside this newsletter for more news and happenings in 2010.
  • Are You Getting The News? Did you know…that all of our newsletters and e-newsletters are available on our website at www.wagensellerlaw.com? We also post legal articles about issues that affect property and business owners. If you would like to receive our e-news monthly, please send me an email at ltw@wagensellerlaw.com.