Heggnes v. Risley 12/29/08 CA2/7

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B204008

Case Date: 04/02/2009

Preview:Filed 12/29/08 Heggnes v. Risley CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

HARALD HEGGNES et al., Plaintiffs and Appellants, v. ROBERT L. RISLEY et al., Defendants and Respondents.

B204008 (Los Angeles County Super. Ct. No. LC075116)

APPEAL from a judgment of the Superior Court of Los Angeles County, Michael Harwin, Judge. Reversed. Law Offices of Ray B. Bowen, Jr. and Ray B. Bowen, Jr. for Plaintiffs and Appellants. Garrett & Tully, Robert Garrett, Ryan C. Squire and Scott B. Mahler for Defendants and Respondents Robert L. Risley, Law Offices of Robert L. Risley and Mary Lolonis. Greenberg & Bass and James R. Felton for Defendant and Respondent Frank H. Whitehead, III. ______________________________

Harald Heggnes and Maria Heggnes appeal from the judgment entered in their legal malpractice action after the trial court granted summary judgment in favor of the Law Offices of Robert L. Risley and attorneys Robert L. Risley, Frank H. Whitehead, III and Mary Lolonis (collectively Attorney Defendants). We reverse. FACTS AND PROCEDURAL BACKGROUND 1. The Heggneses' Unsuccessful Attempt To Purchase the Apartment Building On April 30, 1996 the Heggneses entered into an agreement with George Mullin III to manage a 41-unit apartment building on Langdon Avenue in Van Nuys. The agreement also gave the Heggneses an option to purchase the building at any time prior to May 1, 2006, but provided for cancellation of the agreement upon the uncured default of either party.
1

The Heggneses exercised their purchase option, and on August 23, 2001 escrow was opened. The escrow instructions provided the total consideration for the sale was $1,256,000, including the Heggneses assumption of an existing $780,000 loan on the building in favor of Quaker City Bank and execution of a new note for $191,000, secured by a second deed of trust, in favor of Mullins company, Green Street Group Ltd. The escrow instructions specified an October 23, 2001 closing date but did not state time was of the essence.
2

1

The provision governing default by the Heggneses stated, in part, "Should any of the terms, provisions, conditions or responsibilities contained herein not be met, this agreement shall be in default. If this occurs, Mullin shall make written demand upon Heggnes that the default be cured. Heggnes shall have fifteen (15) calendar days to cure said default. Failure to do so shall give Mullin the right to cancel this agreement."
2

The escrow instructions stated, "Prior to the expiration of the time specified in this paragraph, I will hand you $131,800.00; $25,000.00 of which will be deposited with the signing of these instructions, Buyer will deposit balance into escrow and necessary costs and charges prior to close of escrow, and will deliver to you any instruments executed by me and additional funds which this escrow requires from me, all of which you are instructed to use and/or deliver provided that on or before October 23, 2001 you hold a policy of title insurance with the usual title companys expectations, with a liability of not less than $1,256,000.00 . . . ." 2

The transaction was not completed by October 23, 2001. Quaker City Bank did not approve Harald Heggness application for assumption of the existing loan until December 3, 2001, and Mullin had refused on January 29, 2002 to accept a $191,000 note, secured by a second deed of trust, from the Heggneses notwithstanding the escrow instructions provided he would do so. The Heggneses were unable to secure an alternative source of funds until February 2002 at which time Keith and Norma LaFond deposited $191,000 into escrow. On January 30, 2002 Mullin sent the Heggneses a notice of default demanding four defaults be cured within 15 days or the management agreement would be canceled. The defaults identified were "Building and Safety issues and violations," "Late payments on loan obligations," "Failure to name Mullin as an additional insured" and "All other defaults as determined by Professional Property Inspection." In a letter dated February 11, 2002 Whitehead, who had been retained by the Heggneses, disputed the Heggneses were in default of the management agreement and stated, "In short, it appears that you are attempting to thwart the Option to Purchase being exercised by my clients. Be sure that any further attempt to do so will be met with decisive action under the law. It is my suggestion that the parties work out the remaining issues in order to close Escrow no later than February 28, 2002." In an undated letter from Mullin to the escrow officer, Richard Shewfelt, Mullin stated, in part, "Your escrow for the sale of 8154 Langdon Ave., Van Nuys, Ca. has far exceeded its closing time, therefore, please consider this letter a cancellation of the escrow. This cancelation shall take effect immediately after the cancelation of the following described contract takes effect. [

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