David Rich of Todd & Weld Gains $6.8 Million Verdict for Client in Suit Alleging Deceptive Practices
David H. Rich, a partner at Todd & Weld LLP, obtained a $6.8 Million verdict on behalf of one of the firm's clients. The verdict included an award of attorneys' fees after proving that the conduct underlying the claim was unfair and deceptive and violative of Massachusetts law.
Beginning in the summer of 2008, Todd & Weld's client, 50 Thomas Patton Drive, LLC entered into a series of loan agreements with developer Steven Fustolo and his various companies. The loans were intended to be short term in nature and were secured by personal guarantees and junior mortgage interests in Mr. Fustolo's property. After a multi-day bench trial, the Court found in favor of the plaintiff, finding that Mr. Fustolo had repeatedly represented, orally and in writing, that the plaintiff's loaned funds would be placed by Mr. Fustolo into a "blocked cash" or "escrow" account to be held solely for the purpose of meeting certain underwriting requirements of a construction lender for one of Mr. Fustolo's construction projects in Revere, Massachusetts.
The Court also found that when the defendant's arrangement with his construction lender fell apart, the defendant, in a "reckless and indiscriminate" manner, misused the loaned funds for purposes "entirely unconnected" to the underlying transaction in a "surreal and desperate effort to save his development project." The Court found the "actions by Fustolo [to] constitute conversion of 50 Thomas Patton Drive's funds, and unfair and deceptive business practices, in addition to fraud and breach and contract."
The Court's judgment in the amount of $6,870,483.85 included a requirement that the defendant and his entities repay the full amount required by the outstanding promissory notes, including those amounts which technically exceeded the legal limit of interest which may be charged under Massachusetts law and prohibited by the Massachusetts usury statute. In this regard, the Court held that the parties to the transaction were "sophisticated businessmen, well aware of the risks of their profession and well able to arrive at terms appropriate to those respective risks." The Court's judgment also included an award of attorneys' fees as required by Chapter 93A.View PDF
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