$541,000 Awarded in Bungled Bankruptcy Case

A Los Alamitos real estate broker who claimed that he lost a shopping center because his lawyers bungled his bankruptcy was awarded $541,000 in damages for legal malpractice Friday.

Henry Leason said the Fullerton law firm of Miller, Bush & Minnott had failed to file the proper papers on time to avoid a foreclosure sale.

The verdict was returned by a jury that had heard the case for four weeks before Orange County Superior Court Judge Jack K. Mandel. The trial was delayed briefly when defense lawyer Landon Mustell moved to disqualify Mandel, who earlier had urged the Miller partnership to settle the case for $500,000.

According to lawyers for both sides, Leason was negotiating to sell a shopping center with eight stores at 12641 Westminster Ave., Garden Grove. He was in default on four notes totaling $721,000 that were secured by the property, and a forced sale of the shopping center was scheduled for 10 a.m. April 19, 1985.

Papers Incomplete

Leason said he had consulted with Miller, Bush & Minnott and was advised that filing a petition for bankruptcy in federal court would automatically halt the foreclosure sale. A lawyer in the firm prepared the bankruptcy papers and left them for a senior partner to file.

But when John M. Minnott arrived at court with the bankruptcy petition shortly before 10 a.m., he realized they were incomplete.

Steven A. Silverstein, Leason’s lawyer, said a bankruptcy petition properly filed would have halted the foreclosure long enough for his client to sell the shopping center.

“There were at least four forms they needed, and they only had one,” Silverstein said. “And they brought other forms they didn’t need. But even if they had the right forms, they were there too late.”

“We’re considering appealing,” Mustell said. “The issue in the case is not whether the foreclosure sale would have been stayed but whether he could have obtained the benefits he desired if the bankruptcy had been filed.”

Originally Asked $600,000

Mustell contended that Leason did not have a firm deal for the property. He said any delay provided by the bankruptcy would have been too brief to salvage a sale.

Silverstein said he had asked for $600,000 to settle the case before trial, and Mustell had offered $15,000.

The motion to disqualify Mandel came after the judge suggested to the defendants that they settle the case for $500,000, Silverstein said.

“The judge told them, “You’re getting killed. You should settle or you’ll probably lose more money,’ ” Silverstein said.

Mustell then asked that Mandel be disqualified, a motion denied by another judge.

Mandel declined to comment.