Judge's instructions were improper, appeal claims

November 06, 1992|By Amy L. Miller | Amy L. Miller,Staff Writer

A Towson judge improperly gave instructions to a jury in May 1991, which led to an $8.3 million loan-fraud verdict against Fairfax Savings Association, attorneys for the Baltimore bank argued in the Court of Special Appeals in Annapolis yesterday.

"In the instructions . . . he did not couple the explanation to the jury with the five-part elements of a fraud case," said George A. Nilson, Fairfax's attorney. Those instructions led the jury to place too much weight on whether a telephone conference call took place between the bank and attorneys for the former owners of Sherwood Square mall in Westminster, Mr. Nilson said.

The appeal continues the case that the former owners, Charles Ellerin of Boca Raton, Fla., and Louis Seidel of Baltimore, filed against the bank in 1987. In the case, the partners said Fairfax inserted provisions into loan documents without their knowledge, between their approval of the draft version in late December 1982 and their signing of the final copy about a week later.

Fairfax maintained that the partners were informed of the changes during a conference call on Dec. 27, 1982. The changes made them liable for $4.5 million above the $5.7 million they borrowed to buy the building and an additional $850,000 to complete it.

During the case yesterday, Fairfax's lawyers also argued that the partners were still liable for $4.5 million because they did not complete the project and that the judge should have allowed testimony which would have put the integrity of Mr. Ellerin and Mr. Seidel in question.

The witness, who was called at the end of the 4 1/2 -week trial, would have told the jury that the partners knew about the provisions in 1983, Mr. Nilson said. Mr. Ellerin and Mr. Seidel have said they noticed the changes in 1984.

"Mr. Ellerin and [the partners' lawyer at the time] have lied," Mr. Nilson said, arguing that if the partners did not object to the changes at the 1983 meeting, they probably knew about them when the signed the documents in 1982.

However, David Freishtat, lawyer for Mr. Ellerin and Mr. Seidel, said the judge's instructions to the jury had been agreed upon by lawyers for both sides.

In addition, he said the last-minute witness' testimony was ruled inadmissible evidence because it was information that had been revealed in an earlier trial.

This case, filed after Fairfax sued the partners for defaulting on their loan, was tried three times before 1991.

Fairfax bought the mall, now known as Winchester Exchange, at a foreclosure auction in 1989. The bank sold it to the current owners, Robert and David Max of Pikesville, in June 1991.

The court will probably release a decision in three to five months, Mr. Freishtat said.

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