Facts

In February 2006, Mark Springer loaned $150,000 to Richard Lewis, an attorney, to complete an insurance transaction. Pursuant to a promissory note, the payment was due in one month However, when Springer did not receive the payment, the original note was amended and allowed for two additional extensions.

The parties entered into a binding memorandum of understanding in June after Lewis was still unable to pay the loan. Lewis promised to give Springer $1.25 million in shares of stock in Eagle Technologies Inc, valued at $250,000. The terms also included a personal guarantee from Lewis that he would pay Springer $250,000 plus interest at 14 percent if the stock was never issued to Springer of if Springer could not sell the stock for at least that amount. Lewis' business partner, Jeffrey DeHaven also signed and personally guaranteed the memorandum. DeHaven was also lent an additional $125,000.

Springer and his wife sued Lewis, Windfall Advisors Inc., Lewis' company, and DeHaven for breach of contract, breach of fiduciary duty, and fraud. The matter proceeded to bench trial.

PLAINTIFFS' CONTENTIONS:
Plaintiffs contended that the binding of memorandum of understanding had no value because the stocks were incapable of being purchased. Plaintiffs also contended that Lewis misappropriated the monies loaned by paying his personal expenses instead of keeping the money in escrow until the insurance transaction closed.

Damages

Compensatory damages of $250,000, the principle amount of the loan, plus 14 percent interest, guaranteed in the memorandum. Plaintiffs also sought an unspecified amount in punitive damages.

Result

Lewis defaulted at trial. DeHaven agreed to pay the initial loan amount of $125,000 in five quarterly installments, but has since defaulted after making the first two payments of $25,000 each. Lewis and Windfall was jointly and severally liable for $250,000, plus accrued interest of $157,000 (at the rate of 14 percent from June 4, 2006). Punitive damages were awarded in the amount of $100,000 against Lewis and Windfall for a total recovery of $507,500.

Length

one day