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Miller, Starr & Regalia wasn’t negligent when it advised a retired couple who invested $3 million in a 1991 Lake Elsinore real estate deal, a Alameda County jury said Monday. The verdict ended a month-long malpractice trial that probed whether Miller, Starr partner Leslie Johnson failed to advise her clients about the risks they faced if one of the parties involved in the deal failed to live up to its obligations. The jury �� which deliberated for just over two hours �� voted 9-3 that Johnson wasn’t negligent. “It was really unfortunate that the case was brought,” said Johnson, a transactions attorney who has worked at Miller, Starr for 33 years. The plaintiffs’ attorney, San Francisco solo Stephen Ledoux, has not decided whether to appeal. Rodney and Gertrude Medeiros sought up to $11 million from Miller, Starr, a firm whose founding partners penned an influential tome on real estate law. Johnson helped the couple strike an unusual sale-leaseback deal with Kmart, but the pair would be on the hook for lease payments if Kmart failed to pay. That’s what happened when Kmart went bankrupt in 2002. If the San Francisco couple had known they would be responsible for lease payments, they would have invested their money in an apartment building, which would have netted them $11 million, their attorney argued. Former Kmart officials gave key testimony raising questions about the Medeiros’ credibility, said Thomas Alborg, a Walnut Creek attorney who represented Miller, Starr. The officials testified that the company shuttered the Lake Elsinore store well before the bankruptcy and offered to pay a substantial sum to back out of the lease deal. The Kmart officials said the couple declined that offer. “It was a Perry Mason moment,” said Alborg, name partner at Alborg, Veiluva & Epstein. George Medeiros testified that he did not recall the conversation, he added. Ledoux said the jury instructions may be grounds for appeal. Alameda County Superior Court Judge John Kraetzer had dismissed the broker involved in the deal from the litigation, but the broker was still mentioned in the jury instructions, Ledoux said. In post-trial interviews jurors said that they felt the broker was at fault, the lawyer noted. “Had the jury not been able to blame someone who was no longer involved in the case, the verdict would have been different,” he said. Ledoux never objected to the jury instructions, Alborg said. The case is Medeiros v. Johnson, RG03079383.

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