Leyla Pasic secures $1 Million Jury Verdict for Defrauded Commercial Tenant

SAN FRANCISCO, CALIFORNIA – On June 8, 2017, after six days of trial and three hours of deliberations, a panel of twelve jurors in San Francisco Superior Court found in favor of Plaintiff, ENA North Beach, on its claims for intentional misrepresentation, concealment, and breach of the covenant of good faith and fair dealing, and awarded Plaintiff ENA North Beach actual damages in the amount of $91,692.50.  The jury also found that an award of punitive damages was appropriate to punish Defendants 524 Union Street and Beverly Smucha for their pattern and practice of deceptive behavior.

In the second phase of the trial, the jury awarded $91,692.50 in punitive damages as against Ms. Smucha, and ten times the amount of actual damages, or $916,925.00, in punitive damages as against the partnership, 524 Union Street.  ENA North Beach Inc., Ms. Natasha Hong, and Mr. Arnold Bunyaviroch successfully defeated 524 Union Street’s cross complaint alleging breach of contract and breach of the covenant of good faith and fair dealing.

The lawsuit began in September of 2015, when ENA North Beach filed a complaint against Ms. Smucha and 524 Union Street after terminating a five-year commercial lease, wherein ENA North Beach leased from 524 Union Street, in San Francisco’s North Beach neighborhood, a commercial space for use as a full service restaurant with on-site sales of beer and wine.   Ms. Hong, who owns Mikaku Restaurant on Grant Avenue and Common Sage on Polk Street, sought to expand her business by opening an Asian-French fusion restaurant at 524 Union Street.  After signing the five-year lease, and making substantial investments in preparation for restaurant opening, she discovered that Ms. Smucha failed to disclose material facts about the subject property, including a vacancy exceeding three years, and the failure of the previous tenant to obtain a beer and wine license which resulted in the Conditional Use Permit authorizing full service restaurant and bar use at the subject property to lapse.  Because a new Conditional Use Permit for a full service restaurant cannot issue at this location again, Ms. Hong found herself stuck in an untenable position – her Lease obligated her to use the subject property as a full service restaurant with beer and wine, something that was now impossible. ENA North Beach terminated the lease and commenced litigation for breach of contract, breach of the covenant of good faith and fair dealing, and fraud and concealment.

For its part, 524 Union Street and Ms. Smucha took the position that ENA North Beach Inc. was not entitled to its security deposit, accused ENA North Beach Inc. of damaging the property, and on that basis, cross-complained.  At trial, 524 Union Street’s claims were completely defeated.

Prior to trial, ENA North Beach’s counsel discovered that 524 Union Street leased the subject property as a full service restaurant once again, to a subsequent tenant, despite its knowledge that the subject property could not be used for that purpose.  And when that tenant sought to terminate the lease, in what has become its pattern and practice, 524 Union Street accused it of damaging the property.  These facts set the tone at trial and proved imperative.

This complete victory entitles ENA North Beach Inc. and Ms. Hong to recover their litigation costs, including attorney’s fees.

The case is ENA North Beach, Inc. v. 524 Union Street and Beverly Smucha, San Francisco Superior Court, Case No. CGC15547922.

ENA North Beach, Ms. Hong, and Mr. Bunyaviroch were represented by Leyla Pasic of Wood Litigation, APC. Ms. Pasic represents clients' interests before state and federal courts in the areas of real estate and employment litigation.

Ms. Pasic and the attorneys at Wood Litigation, APC service national and international clients from their offices in San Francisco, California.

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