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Boat Seller Defrauded by Broker

NEW YORK LAW JOURNAL

Tuesday, October 28, 2008

New York Law Journal
Volume 240, Page 24, Column 1

 Tuesday, October 28, 2008

Intentional Torts

Boat Seller Claims Hidden Sale Constituted Fraud

Verdict: $1.6 million

Heron v. Marine Sales Inc., 18524/06

Court: Nassau Supreme, Justice Michele M. Woodard, May 20

Plaintiff’s Attorney: Anthony T. Ballato, Massapequa

Defense Attorney: none reported

Facts & Allegations: In October 2005, plaintiff Pamela Gill Heron entered into an agreement with Marine Sales Inc. and its owner, Frank Hunter, boat brokers, to have her 31-foot boat sold. Within a few weeks, the defendants sold the boat for $85,000. Heron claimed she was deliberately not informed of the sale. The boat’s purchaser was issued a temporary registration by Hunter and Marine Sales, given that they could not procure Heron’s signature on the title.

Heron claimed she discovered the sale around July 2006, after she had made several inquiries and an unannounced visit to the marina with her husband. After weeks of Heron demanding payment with the assistance of the Freeport Police Department, Hunter and Marine Sales issued a partial payment of $10,000 in September 2006. About five weeks later, they issued a check for $20,000, which was returned for insufficient funds.

Heron ultimately learned that several other people had filed similar claims against Hunter and Marine Sales. In March 2008, Hunter pleaded guilty to second-degree grand larceny and first-degree scheme to defraud.

Heron sued Hunter and Marine Sales, alleging their actions constituted fraud and conversion. She claimed the defendants agreed they would sell the boat for about $90,000 and retain a 10-percent commission while providing free transportation and storage of the boat.

Although the defendants defended all pretrial proceedings with their legal counsel, they failed to appear for the trial. The matter proceeded to inquest.

Injuries/Damages: Heron’s counsel submitted documentary evidence and testimony of the defendants’ larceny and conversion of funds from the sale of Heron’s boat as well as the defendants’ knowledge of her unfortunate situation and desperate need of funds. Heron claimed the larceny of her funds further compounded her physical and mental suffering as well as her dire financial circumstances, resulting in extreme mental anguish. She claimed the defendants’ withholding of her funds led to the commencement of a foreclosure action against her residence. She sought compensatory and punitive damages.

Result: Justice Woodard found that Heron’s compensatory damages totaled¬† $600,000, which included $100,000 for the boat and a total of $500,000 for the loss of equity in her home and for her physical and mental suffering.

The judge opined that Hunter’s conduct was wanton, reckless, malicious and an affront to the general public. She found that Heron’s damages were the result of an intentional crime and an intentional tort from which her damages flowed in a foreseeable manner. She awarded punitive damages of $1 million, which is 10 times the amount of the larceny. She also awarded $1,125.06 in costs.