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KERRIGAN v. VILLEI

September 15, 1998

DENNIS KERRIGAN, Plaintiff,
v.
A. WILLIAM VILLEI, Defendant, v. LESTER TAUBMAN, et al., Third Party Defendants.



The opinion of the court was delivered by: REED

FINAL ADJUDICATION INCLUDING FINDINGS OF FACT AND CONCLUSIONS OF LAW, VERDICT AND JUDGMENT

 Reed, J.

 September 15, 1998

 Plaintiff Dennis Kerrigan ("Kerrigan") commenced this suit against defendant A. William Villei ("Villei") in July of 1995, seeking to recover $ 250,000 from Villei, who acted as trustee of such monies for a business transaction between Kerrigan and Aladdin Acceptance, Inc. ("AAI"). Villei brought a third party complaint against third party defendants Lester Taubman ("Taubman"), Shirley Taubman, and AAI. Kerrigan and Villei settled their dispute before trial in December 1997. A trial was conducted before this Court on December 11, 1997 to decide the claims brought by Villei against the third party defendants. The third party defendants never answered the third party complaint of Villei and did not appear at the December 11, 1997 trial.

 Villei seeks $ 1,184, 891.57 in compensatory damages and $ 500,000 in punitive damages from the third party defendants under theories of fraudulent misrepresentation, negligent misrepresentation, breach of contract, indemnification, and tortious interference with contract. Having conducted a non-jury civil trial at which counsel for Villei participated but the third party defendants did not make an appearance, and based upon the pleadings, the evidence and testimony presented at trial, and the declarations of counsel, I make the following findings of fact and conclusions of law:

 I. FINDING OF FACT

 1. Villei is an adult individual residing in Montgomery County, Pennsylvania. (December 11, 1997 Trial Testimony of A. William Villei. ("N.T. Villei") at 34). Villei is the trustee of the Villei International Trust ("the Trust"), a trust formed by him and others in the early 1990s. (N.T. Villei at 37).

 2. Taubman is a shareholder and president of AAI. (Exhibit V-18; October 23, 1996 and November 4, 1996 deposition of Lester Taubman ("N.T. Taubman") at 27 (l. 16-25), 28 (l. 1-4)). Third party defendant Shirley Taubman is the wife of Lester Taubman and a shareholder of AAI. (November 4, 1996 deposition of Shirley Taubman ("N.T. Shirley Taubman") at 12 (l. 16)). Shirley Taubman serves as the secretary of AAI. (N.T. Shirley Taubman at 18).

 3. AAI has its principal place of business at 5055 Oak Hill Lane, Suite 211, Delray Beach, Florida 33484. (Exhibit V- 18; N.T. Taubman at 23 (l. 1-7); N.T. Shirley Taubman at 13 (l. 19-22)).

 4. Villei formed the Trust in the British Virgin Islands and opened accounts with National Westminster Bank ("Nat West"), Barclays Bank, and PNC Bank on behalf of the Trust. (N.T. Villei at 36-37, 40).

 5. Villei and the Trust are in the business of providing credibility to buyers and sellers of financial instruments issued by the top one hundred banks in the world which serve to guarantee payment on large transactions, such as the purchase of billions of dollars in commodities. (N.T. Villei at 40-44).

 6. Villei introduces buyers and sellers to leading world banks, allows the buyers or sellers to close transactions in the Trust's accounts and, similar to title companies in real estate closings, acts as a closing agent on these transactions. (Id.)

 7. The Trust either receives the buyer's funds first (known as a "funds first" transaction) or receives certified and verifiable evidence of bona fide bank instruments for sale into its accounts from the buyers first (known as "collateral first" transactions). (October 31, 1996 dep. of Dennis Kerrigan ("N.T. Kerrigan") at 62-63; N.T. Taubman at 29-31, 35-37).

 8. After Villei receives confirmation from a bank as to the validity of the buyer's funds and the validity and legality of the seller's bank instruments, Villei closes the transaction by directing the disbursement of the purchase money to the seller's bank and the transfer of bank instruments to the purchaser's bank. (N.T. Villei at 62). Villei is usually paid a fee for providing his credibility at these top banks and facilitating these transactions. (N.T. Villei at 47-48).

 9. On August 15, 1993, Taubman agreed to purchase large amounts of money in bank debentures known as "standby letters of credit" and "prime bank guarantees" from G.G. Security Holdings Corporation ("G.G. Security"). *fn1" (N.T. Taubman at 244-251).

 10. At this time, Taubman had a relationship with Barclays Bank in France through the account of "F. Micoulaud," which he intended to use as a dosing agent for his transaction with G.G. Security. (N.T. Taubman at 252).

 11. After August 15, 1993, Taubman ended his relationship with F. Micoulaud and Barclays Bank and began looking for an escrow agent and credibility for his transactions. (N.T. Taubman at 72 (l. 12-25), 73 (l. 1-8)).

 12. Taubman learned in August 1993 that Villei maintained bank accounts through the Trust that were qualified and had enough credibility to serve as an account to close on these types of transactions. (Id.)

 13. After August 15, 1993, Taubman and Villei spoke concerning Villei's ability and willingness to help Taubman close on these transactions. (N.T. Taubman at 74 (l. 9-14, 16, 19-24); N.T. Villei at 46-47).

 14. In the course of their negotiations, Villei identified his bank accounts as of August 25, 1993 as a Nat West account, a Barclays account, and a PNC international account in the United States. (Exhibit V-3; N.T. Villei at 57; N.T. Taubman at 89 (l. 16-25), 90 (l. 1-15)).

 15. Villei sent Taubman the identity of the bank officers and account numbers of these bank accounts. (Exhibit V-3; N.T. Taubman at 91 (l. 6-13)).

 16. Villei told Taubman that the Trust had a prepared Trust Agreement which governed its relationships with individuals who sought to use the bank accounts owned by the Trust. (N.T. Taubman at 75 (l. 16), 76 (l. 4-6), 77 (l. 8-11); N.T. Villei at 50-52).

 17. At the request of Taubman, Villei faxed the Trust Agreement to Taubman. (N.T. Villei at 51-52; N.T. Taubman at 97 (l. 5-9)).

 18. Taubman, a veteran of these types of transactions who had previously reviewed trust agreements, was familiar of the meaning of the terms of the Trust Agreement. (N.T. Taubman at 82- 83, 88 (l. 4-7)).

 19. On August 24, 1993, Taubman signed the Trust Agreement as trustor and as president of AAI and faxed it to Villei. (Exhibit V-4; N.T. Villei at 56; N.T. Taubman at 285 (l. 21-25)).

 20. Paragraphs 2 and 3 of the Trust Agreement provide that Villei agreed to operate the bank account in a fiduciary capacity for Taubman as the trustor and that the funds and securities deposited therein shall be held by Villei "for the benefit of" Taubman as the trustor. (Exhibit V-4 at 1 PP 2-3).

 21. In paragraph 4 of the Trust Agreement, Taubman represented that the business transactions that AAI would be involved in would be in full compliance with all laws and regulations of the countries and nations where the business transactions would take place. ( Exhibit V-4 at 1 P 4).

 22. Paragraphs 5 on page 1 and 7 on page 3 provide that in reliance upon the representations of the trustee, and in consideration of the commission of 0.25% of the amount being paid "into the trustee's account and in continuation to each transaction to be agreed upon between the parties hereto," Villei agreed to act as trustee "for the benefit of the trustor [Taubman]." ( Exhibit V-4 at 1 P 5 and 3 P 7)

 23. Paragraph 7 of the Trust Agreement specifically provided that Villei's fees and expenses must be satisfied before any funds in the bank account would be distributed even though the parties to the Agreement did not specify how the ...


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