Facts

Claimants Randall A. Tommerup and Helen E. Tommerup, husband and wife from Dillon, Mont. decided to sell the family ranch in 2005. Claimants sought assistance from Melvin T. Day II, an employee of Waveland Capital Partners LLC.

Claimants filed an arbitration claim against Waveland Capital and Day in October 2010 alleging violations of Federal Securities Laws; violation of the Securities Act of Montana; violation of the Montana Unfair Trade Practices and Consumer Protection Act; violation of Utah Securities Act; breach of contract; common law fraud; breach of fiduciary duty; and negligence and gross negligence.

The causes of action relate to claimants' investment in DBSI Executive Park LLC, Tenant in Common and DBSI Arrowhead, LLC 1965, 1705 and 1715 Indian Woods Circle, Tenant in Common.

Respondents denied all allegations.

CLAIMANT'S CONTENTIONS:
Claimant contended that Melvin T. Day II, a financial advisor with Waveland Capital Partners LLC, recommended that they invest $150,000 in DBSI Executive Park LLC in January 2005 and $260,000 in DBSI Arrowhead LLC in September 2005. These investments, plaintiff contends, were part of a Ponzi scheme and the Tommerups lost most of their life savings.

RESPONDENT'S CONTENTIONS:
Respondents contended that claimants sought a Section 1031 exchange with their real estate broker to defer taxes on the sale of the ranch and identified two properties with the assistance of FOR 1031 LLC sales executive Melvin T. Day II, FOR 1031 Executive Park LLC in January 2005 and FOR 1031 Arrowhead LLC in September 2005.
In addition to Day's outside business activity with FOR 1031, Day was a registered representative with Waveland Capital Partners LLC.

Damages

Claimants sought $594,082 in damages.

Result

In January 2012, the District Court of Montana denied Waveland's Motion for a Preliminary Injunction as to the arbitration hearing due to execution of a uniform submission agreement. After a week of testimony, a Helena, Mont. arbitration panel issued an arbitration award in February 2012 finding respondents jointly and severally liable in the amount of $301,875, including three years and four months interest and $25,000 in discovery sanctions against Waveland Capital, totaling $361,820, according to plaintiff. The arbitration panel determined the FOR 1031 investments were unsuitable and Waveland failed to supervise Day.

Other Information

In March 2012, Waveland filed a motion to vacate the award based on the five-year statute of repose under the Securities and Exchange Act of 1934, while claimants filed a motion to confirm the award. The District Court of Montana confirmed the award on March 11, 2013. ARBITRATORS: Laurie E. Law, Keith C. Folkman, Steven T. Larsen.