Thursday, November 14, 2002
Court of Appeal Affirms Dismissal of Builder’s Lawsuit Accusing Aaron Spelling of Malicious Prosecution
By a MetNews Staff Writer
The general contractor who settled one highly publicized suit with producer Aaron Spelling and his wife Candy over the building of their Holmby Hills mansion, and won a second, cannot sue the Spellings for malicious prosecution, this district’s Court of Appeal has ruled.
In an unpublished opinion made public yesterday, Div. Three upheld Los Angeles Superior Court Judge Victor H. Person’s ruling that the Spellings and their lawyers, Robert S. Chapman and Brian L. Edwards of Greenberg, Glusker, Fields, Claman & Machtinger, had probable cause to sue Robert W. LaMar.
In 1991, LaMar and his company, R.W. LaMar Construction Inc. of Studio City, sued after the Spellings refused to make the final payment on the 56,500-foot home, located on the onetime Bing Crosby estate. The house took four years and cost $48 million to build..
The Spellings cross-complained, citing dozens of defects which they claimed LaMar was responsible for.
That suit was eventually settled. Three of LaMar’s insurers agreed to pay LaMar $650,000 and the Spellings $1.2 million, and the parties agreed to dismiss the suit and exchange releases.
The Spellings specifically reserved the right to sue if there were subsequently discovered defects. If they did so, however, the agreement provided that they would not look to LaMar personally, to LaMar Construction, or to the settling insurers, but only to LaMar’s other insurers, for payment.
The second lawsuit was filed by the Spellings in 1996. They claimed that they had discovered major problems with the roof, and that experts told them that LaMar made major errors in judgment, knew of the problems during construction, and did nothing to solve the problems.
They also claimed that a contractor hired to clean the air and ventilation ducts in the home had discovered that the ducts were made of fiberglass, rather than the metal required by the construction plans. They claimed $5 million in damages on theories of breach of contract, fraud, and breach of fiduciary duty, and also asked for punitive damages.
The claims regarding the air conditioning ducts were thrown out before trial on a motion for summary adjudication, the court ruling that the issues were resolved by the settlement of the first lawsuit.
The rest of the case was tried in 1997, with the builder’s lawyers claiming that the problems were a result of the Spellings’ insistence on cost-cutting measures. Candy Spelling made newspaper headlines when she acknowledged that “costs always were a concern” because “no one has unlimited funds.”
Her multimillionaire husband, she insisted, “is not Bill Gates.”
The jury found in favor of LaMar. The judgment was affirmed on appeal, and LaMar then sued the Spellings and their lawyers for malicious prosecution.
But Justice Richard Aldrich, writing for Div. Three, said the lawyers had probable cause to sue and the Spellings relied on their advice in good faith.
The attorneys, Aldrich reasoned, relied on the information given them by their construction experts that the roof and the ventilation system were defective and the Spellings’ insistence they had not authorized any changes.
“Such information would lead a reasonable attorney to conclude that there was a tenable lawsuit against LaMar for breach of contract and negligence,” the justice declared. “The fact that the jury failed to find the Spellings’ factual version of the events true…did not indicate there was no probable cause to file a case for negligence and breach of contract against LaMar.”
The fraud claim is more troublesome, Aldrich acknowledged, because “LaMar states a strong argument that that breach of a construction contract cannot and should not be transmuted into a fraud claim.” But the standard for getting past a summary judgment motion in a malicious prosecution suit is a high one, the justice said, requiring the plaintiff to show “that the causes of action were a sham and that no reasonable attorney would have pursued them.”
Greenberg Glusker’s theory that LaMar breached a fiduciary duty and committed fraud by failing to disclose the problems with the roof was supported by enough evidence to meet the probable cause standard, the justice concluded.
The case is LaMar v. Spelling, B151330.
Copyright 2002, Metropolitan News Company