Klyse v. Redwood Trust Deed Services, Inc.
May 21, 2012OUTCOME: Summary Judgment Reversed
On appeal to the California First District Court of Appeals in San Francisco, Matisse Knight argued for and obtained the reversal of a Sonoma County trial court’s grant of summary judgment against the ... firm’s client. The case involves a private construction loan from the firm’s client to a contractor for the construction of a residence. The loan funds were held in trust by a Santa Rosa real estate broker to be disbursed to the contractor incrementally for construction. However, the real estate broker disbursed all of the loan funds (approximately $500,000) to the contractor without confirming that construction was taking place. As a result, no construction occurred and all the construction funds were lost. The Sonoma County Court granted the real estate broker’s motion for summary judgment, however, effectively terminating the case against that broker. The Sonoma Court ruled that the real estate broker owed no duty of care to the firm’s client and that specific Escrow and Real Estate Laws that apply to construction loans, and are intended to guard against the exact harm in this case, do not apply here. On appeal, however, the First District reversed the Sonoma Court’s decision and remanded the case back to that court, agreeing with Matisse as to the real estate broker’s potentially negligent acts and the applicability of the Escrow and Real Estate Laws regarding construction loans to the real estate broker.
