FAYETTEVILLE -- A Washington County jury awarded a Springdale woman almost $5 million in damages in a civil fraud lawsuit.
Nancy Kay Martinez won the verdict in late June. Jurors found Jay and Jennifer McLelland, themselves and through their companies, NWA Specialty Group, Rely Holdings and Catmax Trust, sold Martinez a house they didn't own and took money and equipment from a joint business venture.
Garnishment
A legal procedure by which a creditor can collect what a debtor owes by reaching the debtor’s property when it is in the hands of someone other than the debtor. Garnishment is regulated by statutes, and is usually reserved for the creditor who has obtained a judgment, or court order, against the debtor. Some property is exempt from garnishment. Exemptions are created by statutes to avoid leaving a debtor with no means of support.
Source: Staff Report
Claims included breach of contract, failure to comply with fiduciary duty, conversion of money belonging to Martinez through unauthorized checks, transfers, withdrawals and other transactions, unjust enrichment, deceit and conspiracy to defraud.
"The court does find that the evidence presented in this case presents a clear case of fraud or deceit," Circuit Judge Doug Martin wrote in his order of judgment.
Specifically, the jury awarded Martinez $290,225 for the deceit, plus pre-judgment interest of $35,304. Punitive damages against Jay McLelland, Jennifer McLelland, Rely Holdings, NWA Specialty Group, Catmax Trust and Jennifer McLelland as trustee of Catmax Trust were assessed at $750,000 each, for a total of $4.5 million, according to Greg Brown, the attorney who represented Martinez.
"This was probably the clearest case of fraud and theft I've seen in 12 years of doing this," Brown said. "I've seen a lot of it, but this one was pretty obvious."
Circuit Judge John Threet said punitive judgments of that size are exceedingly rare in Washington County in his experience.
A call seeking comment from McLellands' lawyers, Stanley Bond and Emily Henson, was not returned Wednesday. The defendants have asked for a new trial on the punitive damages award, arguing it is excessive.
Martinez sued in August 2016. She contended she had an agreement with the McLellands to buy a two-acre lot in Sloan Estates subdivision for $150,000, but, after paying more than $158,000 to Rely Holdings, she learned the McLellands and Rely Holdings never held an ownership interest in the property. Payments on the property were made by Martinez to various vendors and suppliers the McLellands owed money but she never received title to the land, according to the lawsuit.
The other damages were related to a joint business venture between the parties in an equipment rental business. According to the lawsuit, Jennifer McLelland provided false financial statements, never came up with her share of the start-up costs and then, along with Jay McLelland, began taking money out of the company's accounts and selling equipment from the business.
Garnishments have been filed and efforts are under way to recover property and collect the jury award.
NW News on 07/20/2017