1601 McCarthy Boulevard, LLC v. GMAC Commercial Mortgage Corporation
Published: Jun. 7, 2005 | Result Date: Jan. 26, 2005 | Filing Date: Jan. 1, 1900 |Case number: CGC03425848 Verdict – $40,805,100
Judge
Court
San Francisco Superior
Attorneys
Plaintiff
Matthew M. Werdegar
(Keker, Van Nest & Peters LLP)
Defendant
Thomas M. Robins III
(Frandzel Robins Bloom & Csato LC)
Experts
Plaintiff
Elizabeth Dean
(technical)
Neil A. Lefmann
(technical)
Dennis Greenwald
(technical)
Defendant
Terry Lloyd
(technical)
Facts
Arthur and Colleen Giovara formed plaintiff 1601 McCarthy Boulevard LLC. The plaintiff borrowed $8.8 million from Wells Fargo Bank to purchase a commercial building. Defendant GMAC Commercial Mortgage Corp. performed special servicing of the loan at the request of Wells Fargo. Under the terms of the loan, the plaintiff was required to deposit into an impound account any monies received from a building tenant who terminated its lease. Once the space was re-leased, the defendant was required to release the proceeds of the impound account to the plaintiff if no default existed. In December 2002, one of the plaintiff's tenants terminated its lease and paid $7.243 million to be released from the lease. The money was placed into the impound account. However, when the plaintiff found a new tenant for the space, the defendant refused to turn over the money. The defendant cited the plaintiff's deteriorating financial condition and an alleged material adverse change in the company that constituted a breach of the original loan. The plaintiff sued the defendant for breach of contract, conversion, breach of fiduciary duty and unfair business practices. The plaintiff contended there was no material adverse change, that the defendant's claim of a material adverse change was a pretext to keep the money, and that in any event the defendant waited until the plaintiff deposited the funds in the impound account before claiming that the plaintiff was in breach of the loan agreement.
Result
The jury award included the release of the $7.243 million held in the impound account; compensatory damages in the amount of $562,000 and punitive damages in the amount of $33 million. Following the jury verdict, the parties tried 1601 McCarthy's B&P Code Section 17200 claim to the court.
Other Information
Following the jury verdict, the parties tried 1601 McCarthy's B&P Code Section 17200 claim to the court. The court found a violation of B&P Code Section 17200 - ordered restitution and entered an injuction.
Deliberation
5.5 hours
Poll
12-0
Length
16 days
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