David Sugden
Proving Fraud with a Hostile Witness: $6.7M Verdict
October 7, 2024 5:30 PM||TLU n Demand
The client was a company called Ten-X. Ten-X provides people the ability to buy and sell properties through an online auction. It’s like eBay for commercial real estate properties. If a seller is interested in selling their property, Ten-X will work with that seller to market that property and place it on its online auction site. And when the auction takes place, potential buyers can provide bids on the property and the potential buyer with the highest bid gets the property. To ensure that the transaction works and is done quickly, Ten-X will only let bidders participate in the auction after they have been qualified – in other words, they have the money to buy the property.
The defendants included both an individual and corporate entities that owned and were trying to sell a property in Houston. In February 2021, Defendants reached out to Ten-X to sell the Houston Property through Ten-X’s auction. Defendants signed a contract with Ten-X wherein Ten-X agreed to market and auction the property with a “reserve price” of $1.5 million (i.e., the minimum acceptable bid in which Defendants would agree to sell the property).
The auction took place in May 2021, and the winning bidder was Scott Max. Ten-X had qualified Scott Max as a viable bidder after Max provided various bank and financial statements. However, when Ten-X reached out to Max to finalize the transaction, Max disappeared. An investigation by Ten-X revealed that there was no Scott Max – Scott Max was instead the owners of the Houston Property. The defendants created a false persona in an effort to drive up the auction price and, when he won, he tried to ghost Ten-X.
Ten-X brought claims for fraud and breach of contract. The webinar will cover the following:
- Trial Preparation Format and Process
We did not use a formal focus group (have done it many times). However, our firm has a mock courtroom so we practiced various witness examinations, openings, etc.
- Motions in Limine
Defendants filed motions to bifurcate the case so punitives would be decided in Phase 2. Related to their MIL, Defendants moved to preclude all references to the defendant’s wealth in Phase 1. The individual defendant wass independently wealthy, and we saw this as a potentially strong case for punitive damages. We argued that Phase 1 should include evidence about the defendant’s experience and sophistication related to commercial real estate transactions. In order to do that, we argued that the jury should hear about the volume and worth of his commercial transactions leading up to the Ten-X auction. The judge allowed evidence related to the volume of transaction and number of properties owned by Defendants, but excluded evidence of the properties’ value until Phase 2 of the trial.
- Corporation versus Individual Defendant
Questions focused on issues related to a corporate plaintiff suing an individual (i.e., a big company going after an individual).
- Opening Statement and Closing Argument Process
We will discuss the timing of the preparation of the PowerPoint presentation for opening (and closing) and the process of preparing the presentation to deliver an opening statement without notes or a ‘memorized’ presentation.
- Punitive Damages
We will discuss using the jury instructions to revisit the wealth and conduct of Defendants to justify punitive damages.
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