Car-rental company awarded damages

June 23, 2007|By Stephanie Newton | Stephanie Newton,Sun reporter

Rent-A-Wreck of America Inc., the national car rental franchiser based in Laurel, has been awarded more than $853,000 in damages against an investor who was found to have fraudulently induced Rent-A-Wreck into selling the company to him in 2005.

A Montgomery County jury found that San Diego Car Rentals Inc. and its president, Thomas Gruber, committed breach of contract and fraud. Rent-A-Wreck agreed to be acquired by Gruber's company in October 2005 but broke off the deal, according to its lawsuit, after it discovered that Gruber had exaggerated his net worth.

Rent-a Wreck then decided to sell to a management company headed by Montgomery County auto dealer Jack Fitzgerald. A law firm representing Gruber sent two threatening letters to Rent-A-Wreck and Fitzgerald, but before Gruber could sue, Rent-a-Wreck went to court first.

"They accused me of conspiring with the major stockholder of Rent-A-Wreck to literally cheat them out of their deal," Fitzgerald said. "It makes no sense."

"Those letters were nasty," said Fitzgerald, who added that he's bought more than 20 companies since 1996 without being sued. "You just knew that they were about to attack."

Of the $853,000 award, $750,000 was for punitive damages, according to court records. Gruber's defense team filed a motion for a new trial last week, but judgment favoring Rent-A-Wreck was affirmed by the court three days later.

Gregg Steinbarth, general counsel for Rent-A-Wreck, said Gruber told Rent-A-Wreck officials that he had a net worth of $5.5 million. "The evidence was that most of that was untrue," Steinbarth said.

Gruber declined comment when reached at Irvine, Calif.-based I/OMagic Corp, where he now serves as chief financial officer, according to Securities and Exchange Commission documents. His Baltimore-based lawyer, Robert Shaffer of Murphy & Shaffer, could not be reached.

Rent-A-Wreck, which has been franchising since 1973, has more than 300 locations across the country.

stephanie.newton@baltsun.com

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