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Sandra C. Barkley v. United Homes

February 28, 2012

SANDRA C. BARKLEY, PLAINTIFF,
v.
UNITED HOMES, LLC, UNITED PROPERTY GROUP, LLC, YARON HERSHCO, GALIT NETWORK, LLC, OLYMPIA MORTGAGE CORP., AND BENJAMIN TURNER, DEFENDANTS.
MARY LODGE,
PLAINTIFF,
v.
UNITED HOMES, LLC, UNITED PROPERTY GROUP, LLC, YARON HERSHCO, GALIT NETWORK, LLC, OLYMPIA MORTGAGE CORP., BAYVIEW LOAN SERVICING, LLC, BAYVIEW ASSET MANAGEMENT, LLC, U.S. BANK, N.A., AS TRUSTEE FOR BAYVIEW ASSET-BACKED SECURITIES TRUST SERIES 2007-30, AND BAYVIEW FINANCIAL MANAGEMENT CORP., DEFENDANTS. DEWITT MATHIS,
PLAINTIFF,
v.
UNITED HOMES, LLC, UNITED PROPERTY GROUP, LLC, YARON HERSHCO, GALIT NETWORK, LLC, AND ALLIANCE MORTGAGE BANKING CORP., DEFENDANTS.
SYLVIA GIBBONS AND SYLVIA GIBBONS, AS ADMINISTRATOR OF THE ESTATE OF RODNEY GIBBONS, PLAINTIFFS,
v.
UNITED HOMES, LLC, UNITED PROPERTY GROUP, LLC, YARON HERSHCO, GALIT NETWORK, LLC, AND OLYMPIA MORTGAGE CORP., DEFENDANTS. MILES MCDALE AND LISA MCDALE,
PLAINTIFFS,
v.
UNITED HOMES, LLC, UNITED PROPERTY GROUP, LLC, YARON HERSHCO, GALIT NETWORK, LLC, ALLIANCE MORTGAGE BANKING, CORP., AND BENJAMIN TURNER,
DEFENDANTS. CHARLENE WASHINGTON, PLAINTIFF,
v.
UNITED HOMES, LLC, UNITED PROPERTY GROUP, LLC, YARON HERSHCO, GALIT NETWORK, LLC, AND ALLIANCE MORTGAGE BANKING CORP., DEFENDANTS.



The opinion of the court was delivered by: Matsumoto, United States District Judge:

MEMORANDUM AND ORDER

Presently before the court is plaintiffs' proposed calculation of pre-judgment interest on their compensatory damages award, which defendants oppose. For the reasons set forth below, the court awards pre-judgment interest in the amount of: (1) $61,058.42 for Sandra Barkley; (2) $7,834.74 for Sylvia and Rodney Gibbons; (3) $42,476.67 for Mary Lodge; (4) $81,145.74 for Dewitt Mathis; (5) $95,387.82 for Miles and Lisa McDale; and (6) $18,222.71 for Charlene Washington. The court also grants post-judgment interest at the statutory rate.

28 U.S.C. § 1961.

BACKGROUND

Plaintiffs Sandra Barkley, Mary Lodge, Dewitt Mathis, Sylvia Gibbons, Sylvia Gibbons as the Administrator of the Estate of Rodney Gibbons, Lisa McDale, Miles McDale, and Charlene Washington (collectively "plaintiffs") commenced the instant actions against United Homes, LLC; United Property Group, LLC; Galit Network, LLC (the "UH Defendants"); Yaron Hershco ("Hershco"); Olympia Mortgage Corp.*fn1 ; and others, alleging that they engaged in a fraudulent property-flipping scheme wherein the UH Defendants acquired distressed, damaged, and defective properties in predominantly minority neighborhoods, made substandard and superficial repairs, and used racially targeted marketing strategies to sell the properties as "newly renovated" at substantially inflated prices, primarily to members of racial and ethnic minorities with little or no experience with homeownership and minimal financial acumen. (See generally ECF No. 1*fn2 , Complaint.) Plaintiffs further alleged that the UH Defendants conspired with appraisers, attorneys, and mortgage lenders to perpetrate the fraudulent scheme. (Id.)

On June 1, 2011, following a three-week trial, the jury found the UH Defendants, Hershco, and Olympia liable for engaging in deceptive practices in violation of Section 349 of New York General Business Law, fraud, and conspiracy to commit fraud, and awarded compensatory and punitive damages. (ECF Minute Entry dated 6/1/2011; ECF No. 566, Jury Verdict ("Verdict").) The jury found the UH Defendants, Hershco, and Olympia not liable on plaintiffs' discrimination claims. (Verdict.)

By Memorandum and Order dated January 27, 2012, the court adjudicated the parties' five post-trial motions. (See ECF No. 602, Memorandum and Order dated 1/27/2012 ("Mem.").) The court granted in part and denied in part the defendants' motions for set-offs to account for the settlement amounts paid by other entities that plaintiffs initially sued. (Id. at 43-44.) As a result, plaintiffs' final compensatory damages awards are as follows:

Plaintiff Final Compensatory Damage Award Sandra Barkley $83,460 Sylvia and Rodney Gibbons $10,490 Mary Lodge $58,100 Dewitt Mathis $106,640 Miles and Lisa McDale $127,800 Charlene Washington $24,900

The court also granted plaintiffs' motion for prejudgment and post-judgment interest on their final compensatory damages awards because "awarding pre-judgment interest on damages awarded for fraud is mandatory" under New York Law. (Id. at 44-55 (quoting In re Crazy Eddie Secs. Litig., 948 F. Supp. 1154, 1166 (E.D.N.Y. 1996)).) The court did not, however, establish an accrual date from which to calculate the pre-judgment interest. Section 5001 of the N.Y. C.P.L.R. provides that:

Interest shall be computed from the earliest ascertainable date the cause of action existed, except that interest upon damages incurred thereafter shall be computed from the date incurred. Where such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date.

N.Y. C.P.L.R. § 5001(b). The court agreed with plaintiffs' position that the "earliest ascertainable date the cause of action existed" was the date of the closing on plaintiffs' properties, but recognized that plaintiffs incurred some of the damages--such as the excess interest paid on the predatory mortgages and repair costs--at later dates. (Mem. at 52.) Because it was not feasible to compute interest for each item of damages from the date it was incurred, the court determined that pre-judgment interest should be computed from a "single reasonable intermediate [accrual] date" pursuant to N.Y. C.P.L.R. § 5001(b). (Id. at 52-53.) The court also directed plaintiffs to "submit a calculation of pre-judgment interest for each plaintiff, computed at nine percent per annum and accruing from a reasonable intermediate date, and submit documentation in support of the calculation of such reasonable intermediate date." (Id. at 54.)

DISCUSSION

In light of the numerous and significant harms each plaintiff sustained as of his or her respective closing date, plaintiffs contend that the appropriate "reasonable intermediate date" is the one-year anniversary of each plaintiff's home purchase. (ECF No. 604, Submission in Support of Calculations of Pre-Judgment Interest on Damages ("Pls.' Mem.") at 6.)

Plaintiffs assert that the harms they sustained largely stemmed from two root causes, both of which occurred on the date of each plaintiff's home purchase: (1) the properties were substantially over-appraised, such that the actual value of each property on the date of purchase was significantly lower than the price paid by each plaintiff, and (2) due to shoddy construction, the homes contained ...


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