848 F. Supp. 2d 248
E.D.N.Y2012Background
- Plaintiffs allege a fraudulent property-flipping scheme by UH Defendants, Hershco, and Olympia involving overvalued renovations in minority neighborhoods and targeted marketing.
- Plaintiffs claim conspiratorial participation with appraisers, attorneys, and lenders, including Olympia, to perpetrate fraud.
- Jury trial began May 9, 2011; the jury found UH Defendants, Hershco, and Olympia liable for fraud, deceptive practices under NY GBL §349, and conspiracy to commit fraud, with damages awarded; discrimination claims were rejected.
- Post-trial motions were filed by defendants and Olympus, addressing verdict interpretation, set-offs under NY Gen. Oblig. Law § 15-108, and relief including interest and injunctive relief; Mary Lodge sought to void her mortgage.
- The court granted in part and denied in part: no duplicative damages found; entities on verdict sheets sustained liability; set-offs awarded (with details under seal); prejudgment and post-judgment interest awarded; permanent injunction under NY GBL § 349 granted; Lodge’s motion to void the mortgage denied.
- A separate order will implement the set-off reductions to each plaintiff’s compensatory damages; and Lodge’s rescission request was denied as inappropriate where status quo could not be restored.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duplicative damages on verdict | Plaintiffs contend no duplicative damages; jury likely allocated nonduplicative damages across fraud and conspiracy. | Defendants argue duplicative awards for fraud and conspiracy to defraud must be treated as duplicative. | Verdict not duplicative; waiver and non-duplication confirmed; no set-aside suggested. |
| Entities on verdict sheets | All United Homes entities liable through conspiracy; verdict sheets supported by evidence of unified operation. | Only entities directly involved in specific transactions should be liable. | Liability extended to all United Homes entities; verdict sheets upheld; piercing the veil supported liability across entities. |
| Set-offs under NY Gen. Oblig. Law § 15-108 | Set-offs should reflect only 'same injury' and avoid double recovery; some settlements not for the same injury. | Settlements with Rule 19 parties should be offset against verdicts; proportional reductions permitted. | No set-off for Rule 19 parties; otherwise, 58% proportional set-off for economic damages applied; reductions specified per plaintiff. |
| Pre- and post-judgment interest | CPLR 5001 requires prejudgment interest on fraud damages; interest begins when cause of action existed or when damages incurred; post-judgment interest due under 28 U.S.C. § 1961. | Interest should be discretionary; some damages financed by loans; interest may be unwarranted or duplicative. | Plaintiffs entitled to prejudgment interest at 9% per annum, calculated from an intermediate date; post-judgment interest awarded as mandated. |
| Permanent injunction under NY GBL § 349 | Statutory injunctive remedy appropriate to bar deceptive acts and protect consumers; relief narrowly tailored and warranted. | Injunctive relief unwarranted since damages already awarded and conduct ended; overbroad. | Permanent injunction granted; UH Defendants and Hershco barred from deceptive practices and ordered to advise potential buyers to use independent professionals. |
Key Cases Cited
- Gentile v. County of Suffolk, 926 F.2d 142 (2d Cir. 1991) (damages awarded for multiple injuries may be non-duplicative when theories overlap)
- Conway v. Icahn & Co., 16 F.3d 504 (2d Cir. 1994) (duplicate damages depend on whether there was a single injury)
- Lavoie v. Pac. Press & Shear Co., 975 F.2d 48 (2d Cir. 1992) (timely objection required to avoid waiver of verdict-variance issues)
- Kosmynka v. Polaris Indus., Inc., 462 F.3d 74 (2d Cir. 2006) (waiver when no timely objection to verdict form or instructions)
- Metron Tech. Distrib. Corp. v. Discreet Indust. Corp., 189 Fed.Appx. 3 (2d Cir. 2006) (waiver of duplicative damages argument when no timely objection or polling)
- Hoeffner v. Orrick, Herrington & Sutcliffe LLP, 85 A.D.3d 457 (N.Y.A.D. 2011) (conspiracy to defraud damages cannot independently duplicate damages)
- Whalen v. Kawasaki Motors Corp., U.S.A., 680 N.Y.S.2d 435 (N.Y. Ct. App. 1998) (Section 15-108 applies to settlements among joint tortfeasors)
- Singer v. Olympia Brewing Co., 878 F.2d 596 (2d Cir. 1989) (settlement-related damages considerations; distinction from 15-108 scope)
- Casey v. New York, 119 A.D.2d 363 (N.Y. App. Div. 1986) (apportionment of settlements; not binding on trial court)
- Hoeffner v. Orrick, Herrington & Sutcliffe LLP, 85 A.D.3d 457, 924 N.Y.S.2d 376 (N.Y.A.D. 2011) (conspiracy damages not independently duplicative)
- In re Crazy Eddie Secs. Litig., No. 95 Civ. 7781 (E.D.N.Y. 1996) (prejudgment interest on fraud damages mandatory under CPLR 5001(a))