Starr v. Mooslin

• Court: California Court of Appeals
• Citation: 92 Cal.Rptr. 583,14 Cal.App.3d 988
• Decision Date: 01 February 1971
• Parties: Elena STARR, Plaintiff and Respondent, v. Carl J. MOOSLIN, Defendant and Appellant. Civ. 35801.

Page 583

92 Cal.Rptr. 583

14 Cal.App.3d 988

Elena STARR, Plaintiff and Respondent, v. Carl J. MOOSLIN, Defendant and Appellant.

Civ. 35801.

Court of Appeal, Second District, Division 2, California.

Feb. 1, 1971.

Rehearing Denied March 2, 1971.

Hearing Denied April 29, 1971.

Ives, Kirwan & Dibble, Los Angeles, and Carl J. Mooslin, in pro. per., for defendant-appellant.

J. J. Brandlin and William T. Brandlin, Los Angeles, for plaintiff-respondent.

HERNDON, Acting Presiding Justice.

Statement of the Case

Defendant and appellant Carl J. Mooslin, an attorney at law, appeals from the judgment awarding plaintiff damages in this action for legal malpractice. Plaintiff Elena Starr charged that as the result of defendant's negligence in representing her in a transaction involving a sale of real property, she suffered damages in the sum of $50,000. The judgment against defendant in the amount of $42,000 was entered upon the verdict of a jury. Defendant also appeals from the order denying his motion for judgment notwithstanding the verdict.

Statement of the Facts

Plaintiff, a woman in her eighties, was the owner of real property located at 355 South Alvarado Street, Los Angeles. Defendant a practicing attorney and engaged in the general practice of law, had handled various legal matters for plaintiff over a period of approximately ten years.

Some time in the year 1965 plaintiff decided that she would offer her property for sale. Thereafter she received offers from Lucius Foster and William Cooper. Plaintiff discussed some of these offers with the defendant. On January 4, 1966, plaintiff and defendant met with Foster and Cooper at defendant's law office. At this meeting the parties negotiated further with respect to the purchase and sale of the property but no agreement was reached. Foster stated that he would not be participating in the transaction as a principal but that a Mr. Robert Fisher, 'an experienced builder and developer' whom he represented, would offer $60,000 for the property, $10,000 to be paid in cash at the close of escrow with the balance to be evidenced by a $50,000 promissory note secured by a deed of trust. The offer further provided that the purchase money deed of trust would be subordinated at a later date to a $275,000 construction loan. The money for construction purposes would be borrowed in installments, the first to be in the amount of $30,000. Foster further stated that Fisher would be willing to provide additional security by way of a deed of trust on other real property owned by him.

On the following day, January 5, 1966, Mrs. Starr decided that she would accept the offer as presented by Foster on behalf of Fisher. After calling Foster and informing him of her decision, she called defendant and requested that he appear at the City National Bank in Beverly Hills at the time appointed to represent her in the opening of the escrow for the purpose of effectuating the sale.

In response to plaintiff's request, defendant went to the City National Bank and, after verifying the terms of the sale with the parties present, proceeded to dictate the escrow instructions to an employee of the bank using a printed form.

The escrow instructions thus prepared provided for a total purchase price of $63,000 of which $10,000 was to be paid in cash and the balance to be evidenced by a $50,000 promissory note payable to plaintiff secured by a purchase money deed of trust. Further provision was made for the delivery to Foster of a note in the amount of $3,000 to cover his broker's commission. Fisher and Cooper and/or their nominee were named as purchasers. By a subsequent amendment to these instructions the purchase price was reduced to $60,000 and the provision for the promissory note in payment of Foster's commission was eliminated.

The instructions further provided that the buyer would execute and place in escrow a deed of trust as additional security in favor of the seller on real property located at Roseland and LaBrea, Los Angeles, California, the legal description of said property to be furnished at a later date. Beneath the foregoing provisions the following language as dictated by defendant was typewritten into the instructions:

'The following is stated as a matter of record only with which the escrow holder is not to be concerned: (1) Seller agrees to subordinate on demand, to a 1st trust deed, not to exceed $275,000.00, bearing interest at not more than 7.5% Per annum, for not more than 30 years. Seller agrees to subordinate forthwith to $30,000.00, the same being a portion of the above referred to $275,000.00 loan, and will execute upon demand any additional subordination agreement in order to enable Buyer to refinance or to increase the encumbrance to be placed upon the land provided the same shall not exceed in total $275,000.00 represented by a single 1st trust deed.'

The escrow instructions thus prepared by defendant were signed by plaintiff as seller and by Fisher and Cooper as buyers and were deposited with City National Bank as escrow agent. By an amendment to the instructions Fisher alone was designated as the buyer and plaintiff's deed to Fisher as grantee was thereafter deposited in escrow.

Within a few days thereafter Fisher made arrangements to borrow $30,000 from Irving and Matilda Scham and Ben and Eva Solomon. This loan was to be evidenced by a promissory note secured by a first deed of trust on the property which plaintiff had agreed to sell to Fisher. On January 18, 1966, Fisher and the parties from whom he was borrowing the $30,000 opened an escrow at LaCienega Escrow Company for the purpose of effectuating that loan. Fisher deposited therein his promissory note and the lenders deposited the $30,000.

On the following day, January 19, 1966, Fisher deposited in the original escrow at City National Bank his promissory note in the amount of $50,000 payable to plaintiff and the two deeds of trust on the subject property, one of which was security for the $30,000 loan and the other was to secure plaintiff's $50,000 note. Plaintiff's deed of trust contained on its face the following provision: 'This deed of trust is second and subject to a first deed of trust to record concurrently.'

On January 24, 1966, the LaCienega Escrow Company paid out $10,150 to the City National Bank for plaintiff's account, $18,265 to Robert Fisher, $300 to Lucius Foster, and $1,285 to other persons not involved in this case.

According to the testimony of the employee of City National Bank who handled the escrow for that institution, the instruments deposited therein were recorded pursuant to the oral direction of defendant and the escrow was thereupon closed. As a result of these procedures plaintiff's $50,000 purchase money deed of trust and the $30,000 deed of trust held by the Schams and Solomons were recorded concurrently. Plaintiff's deed of trust was thereby subordinated.

Subsequently, Fisher failed to make the payments on the Scham-Solomon note. Fisher's default resulted in foreclosure proceedings instituted by the Schams and the Solomons. At the trustee's sale the property was purchased by the beneficiaries. Plaintiff was unable to bid at the sale because of her lack of sufficient funds. The purchasers at the foreclosure sale thereafter brought an unlawful detainer action against Mrs. Starr to obtain possession. Mrs. Starr filed an answer and cross-complaint naming as cross-defendants Fisher, Cooper, Foster, the Schams, the Solomons, and others, and charging said cross-defendants with fraud and conspiracy to deprive her of her property. This litigation was terminated by a settlement whereby Mrs. Starr repurchased her property for $32,500.

Immediately thereafter plaintiff resold the property for $57,500 of which $32,500 was paid to the buyers at the foreclosure sale. Plaintiff received $1,500 in cash and a promissory note in the amount of $14,035 secured by a deed of trust on the subject property. Approximately $800 was expended in escrow expenses and $8,167 was paid over to Mr. J. J. Brandlin as compensation for his legal services.

Thereafter the instant action against defendant was filed by Mrs. Starr. Her complaint alleges that defendant, as an attorney, undertook to represent her and to act as her attorney in consummating the sale of her property. It is further alleged in substance that defendant negligently performed his duties in that he failed to use that degree of learning, skill and judgment ordinarily used by lawyers of good standing and practicing in the same locality under similar circumstances and as a proximate result of such negligence plaintiff was damaged in the sum of $50,000.

At the trial oral and documentary evidence was introduced proving the facts as above recited. It is to be observed that except for the opinions of the expert witnesses hereinafter summarized, the evidence was virtually uncontradicted. On cross-examination by counsel for plaintiff, defendant testified that he was acquainted with subordination agreements and recognized that such agreements ordinarily provided that the proceeds from secured loans would be used to improve the real property. Defendant did not research the applicable law prior to preparing the escrow instructions in this case. At the time of this transaction it was defendant's understanding that it was probably the law that if plaintiff and the buyer entered into a subordination agreement which provided that the buyer was to use the $30,000 to improve the property and if the lenders of the $30,000 had notice thereof and plaintiff did not waive her rights under the subordination agreement and if the $30,000 was not so used, the subordination would not be effective and plaintiff's trust deed would retain its priority. Notwithstanding his uncertainty on the subject, however, defendant did not research the law and the escrow instructions as prepared by him did not contain such provisions.

Plaintiff's Expert Witness

Plaintiff ca...