Jury awards $43.9 million over blast email breach [3-13-17]
Article Courtesy of The Sun Sentinel
By Ron Hurtibise
Published March 4, 2017
Here’s a reminder of why you should always pause and think a moment before hitting that email “send” button.
A Broward Circuit Court jury on Thursday awarded $43.9 million in damages to a South Florida condominium development group that included Dan Marino, Huizenga Holdings and the Maroone family in a lawsuit that started with a blast email.
The investors were part of a company called West City Realty Advisors when it contracted Wachovia Mortgage Corporation in 2006 to become the preferred lender for a Plantation luxury project called Veranda Condominium, according to a civil complaint.
By that time, about 95 percent of the project’s 200 units had been pre-sold and were under contract for a total of $79.5 million, the complaint says.
Meanwhile, the housing market had begun its infamous descent, making comparable condo units less expensive.
In October 2007, a Wachovia employee emailed one of the purchasers a reminder about an upcoming closing date — violating a confidentiality clause, the complaint states.
In the “carbon copy” or “CC” field of the email were the email addresses of more than 100 other project purchasers, the suit says.
According to the complaint, “Almost immediately after the Blast E-Mail was transmitted, the recipient of the Blast E-Mail replied to every buyer … and invited the buyers to reconsider their decision of whether to close on their purchase contracts, emphasizing that the purchase prices for their condominium units were ‘overpriced’ in the current market.”
Soon, the buyers created a united front against Veranda to get their deposits back, the suit says, and devise a strategy for reducing the purchase prices of their pre-construction contracts.
Lawsuits started flying, and ultimately Veranda returned abut $1.6 million in deposits to buyers contracted to buy more than 80 units for a sum of about $32.5 million, the complaint states.
Phase one was finished in 2008 with just 71 of the original purchasers paying their full contracted price, said Fort Lauderdale attorney William Scherer, who represents West City Realty Advisors.
Phase two was taken over by construction lender Regent Bank and recently completed by investors who purchased it out of foreclosure, Scherer said.
He said the $43.9 million awarded by the jury represented the total investment by Marino, Huizenga Holdings, the Maroone family, Rhonda Friednamer and the principal developers, Steve Douglas and Ken Simigran.
“They lost every penny and the jury brought back every penny,” Scherer said, adding the investors are asking the court to award an additional $21 million in pre-judgment interest.
The jury trial started Monday and dealt only with the damage award, Scherer said.
The plaintiffs won a default ruling in the case in 2011 when Wachovia — which was later acquired by Wells Fargo — failed to file an answer to the complaint, Scherer said.
Reached Thursday, a Wells Fargo spokesman said the bank believes it has “numerous strong grounds for an appeal.”
“Because of certain pre-trial rulings, Wells Fargo was unable to present to the jury important evidence and arguments about the many factors that contributed to [the] plaintiffs’ claimed losses that are unrelated to Wachovia/Wells Fargo,” said Tom Goyda, Wells Fargo senior vice president, consumer lending communications, in an email. “As a result, the verdict in plaintiffs’ favor was far larger than we believe is warranted by all of the relevant facts and circumstances.”