Property flippers accused of committing real estate fraud. $3.1M. Ventura County.
Summary
Defendants buy a distressed property and then attempt to make cheap repairs before reselling it.
The Case
- Case Name: Cari Lange v. Kerry Mulder, et al.
- Court and Case Number: Ventura County Superior Court / 56-2021-00557202-CU-BC-VTA
- Date of Verdict or Judgment: Wednesday, August 28, 2024
- Date Action was Filed: Monday, August 16, 2021
- Type of Case: Breach of Contract, Real Estate Fraud, Misrepresentation
- Judge or Arbitrator(s): Hon. Vincent J. O'Neill (Ret.)
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Plaintiffs: Cari Lange
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Defendants: Kerry and Robert Mulder
- Type of Result: Arbitration Award
The Result
- Gross Verdict or Award: $ 3,102,726.20
- Net Verdict or Award: $ 3,191,061.38 (amt. of judgment, incl. prejudgment interest, fees and costs)
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Economic Damages:
$997,536 (compensatory and collateral damages)
- Trial or Arbitration Time: 23 days of arbitration
The Attorneys
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Attorney for the Plaintiff:
Myers, Widders, Gibson, Jones & Feingold, LLP by Jill L. Friedman and Michael J. Pellegrini, Ventura.
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Attorney for the Defendant:
Westlake Law Group, APC by Christopher A. Fortunati, Westlake Village.
The Experts
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Plaintiff's Technical Expert(s):
Robert I. Schwartz, architecture/general contracting.
James Dunn, Camarillo, real estate appraising.
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Defendant's Technical Expert(s):
None.
Facts and Background
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Facts and Background:
Defendants, who were experienced house flippers, purchased the highly distressed view property in 2019 for $785K. Prior to purchase, they hired a general contractor to inspect. The contractor outlined several structural and safety issues, including problems with the structural foundation beams. The defendants used this information to negotiate a credit on the purchase. They put the property on the market with little modification. When several potential buyers withdrew their offers and the house fell out of escrow, defendants took the property off the market and made substantial modifications without a building permit before putting it back on the market for $1.3M.
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Plaintiff's Contentions:
That the hillside house was in grave disrepair, a condition that defendants Mulders became increasingly aware of as they attempted to sell and alter it. That with little construction expertise and the help of unlicensed laborers, they made low quality, superficial changes to disguise its fundamental failings. Through misrepresentations, failures to disclose, and concealment, and with the help of an inexperienced real estate broker who represented both sides, Defendants sold the property to Plaintiff with a shortened escrow and inspection contingency period. Plaintiff's inspectors did not do destructive testing, nor did they have reason to suspect that such testing was needed based on defendants' disclosures or lack thereof.
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Defendant's Contentions:
That the property was sold "as is" and that they "over disclosed," pointing to all of the reports that were turned over as part of the mandated disclosure packet.
Demands and Offers
- Plaintiff §998 Demand: $1,000,000 including attorneys' fees and costs
- Plaintiff Final Demand before Trial: $1,000,000 including attorneys' fees and costs (This offer would include plaintiff keeping the property.)
- Defendant §998 Offer: Rescission and payment of $1,303,599.35
- Defendant Final Offer before Trial: Rescission and payment of $1,303,599.35 (This offer would involve plaintiff returning the property.)
Additional Notes
The complaint was filed against various defendants, including the sellers/flippers, the dual real estate broker, the escrow company and the pest control company. The case against the sellers was arbitrated pursuant to the standard California Residential Purchase Agreement. The rest of the case was stayed and is pending as of December 10, 2024.