Sherwood's Ex-owners Awarded $8.6 Million In Fraud Damages

May 15, 1991|By Kerry O'Rourke and Erik Nelson | Kerry O'Rourke and Erik Nelson,Staff writers

A Baltimore County jury awarded a Howard County businessman $8.6 million in damages Friday, saying a Baltimore bank had tricked him and apartner into signing personal loan guarantees for a Carroll County shopping center project.

After a 4 1/2-week trial, the jury found that Fairfax Savings Association defrauded Charles Ellerin of Columbiaand Boca Raton, Fla., and Louis Seidel of Baltimore, by inserting provisions into loan documents without the partners' knowledge.

Stanford Hess, an attorney for the bank, said Fairfax will appealthe decision to the state Court of Special Appeals.

The case has been in court since 1985 and had been tried three times, said David Freishtat of Baltimore, attorney for Ellerin and Seidel.

Ellerin, 72, said, "I feel great to have the courts finally bring justice to this thing."

Seidel, 56, said, "It's been six long, tedious years oflitigation. It's just been horrendous."

In 1982, the partners borrowed $5.7 million from Fairfax to buy Sherwood Square mall in Westminster and renovate it. They weren't successful with the project and in 1985 filed for bankruptcy. After the partners had defaulted on loanpayments, Fairfax attempted to foreclose on the mall.

For the next three years, the partners devised plans to pay off their debts, butnone met with the bank's approval.

In 1985, Fairfax sued Ellerin and Seidel for the amount of the loan, saying they had signed papers that held them personally responsible for the debt.

In 1986, the partners counter-sued, saying Fairfax and its lawyers inserted provisions in the loan documents without their knowledge that made them responsible for an additional $4.5 million, Freishtat said.

Hess said the case turned on a single telephone call.

Fairfax alleged that its representatives called Ellerin two days before the loan papers were signed to tell him of the personal guarantees that were added.

Six people testified about the call, Hess said, and "three people saidit did happen and three people said it didn't."

Ellerin and Seidel had agreed they would be responsible to complete the Sherwood Square project and for an additional $850,000, Freishtat said.

The juryfound that the partners were not aware of the additional provisions,he said.

The jury deliberated for about two days, a court official said. It awarded Ellerin, who owns Columbia school supply firm Chaselle Inc., $1.35 million for emotional distress and $34,564 in other compensatory damages, Freishtat said.

The jury awarded Seidel, a contractor, and his wife, Gloria, each $625,000 for emotional distress, he said. Ellerin and the Seidels also were awarded $6 million in punitive damages. Ellerin said Friday the three have decided how to divide that sum, but he did not want to give the details.

The case first went to trial in 1987 and resulted in a verdict against Ellerin and Seidel, Freishtat said.

The partners appealed, and the Court ofSpecial Appeals, Maryland's second-highest court, ruled the trial judge had given the jury erroneous instructions, he said. Last year, the case went to trial again and resulted in a hung jury, he said.

Fairfax has owned Sherwood Square since 1989, when it bought the mall for $3 million at a foreclosure auction. The 50,000-square-foot mall has never been more than half full. Later this month, two brothers from Pikesville, Baltimore County, expect to sign a contract to buy themall.

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