Bradley Hansmann, Travis McDonald and Ted Wright recently obtained a defense verdict for their clients (“Sellers”) after the Plaintiffs in this matter sought over $150 Million in damages along with unspecified amount in Punitive Damages. This case arose from the sale of a student housing complex in Columbia, Missouri. Shortly before the sale, in 2015, a series of protests at Mizzou related to race, workplace benefits, and leadership rocked the University of Missouri, resulting in the resignation of the President of the University of Missouri system and the Chancellor. These resignations took place after a series of events that included a hunger strike by a student and a boycott by the University of Missouri football team, which triggered nationwide scrutiny. In light of these events, the Plaintiffs believed the student housing complex that was being sold by WWBH’s client was undervalued and available at a discounted price only because of the negative media attention surrounding the protests at Mizzou. However, Plaintiffs misjudged the impact of the racial incident, which had a long-lasting negative impact on Mizzou’s enrollment. Under Plaintiffs’ ownership, the once-profitable property ultimately failed and was subject to foreclosure within two years after its purchase.
After the foreclosure, Plaintiffs alleged that the Sellers made misrepresentations in a variety of ways in the course of the sale of the student housing complex, including by failing to collect parental guarantees, providing misleading financials, under leasing the Property, and offering improper incentives to prospective tenants. As such, Plaintiffs alleged that its purchase of the complex was tainted by fraud and misrepresentations. Plaintiffs brought suit alleging causes of action for breach of contract, fraudulent misrepresentation, negligent misrepresentation, conspiracy, and breach of fiduciary duty and alleged they were entitled to punitive damages on all of these counts.
In defense, the Sellers argued that the Property went into foreclosure because of Plaintiffs’ underestimating the risk associated with the Property’s purchase, Plaintiffs’ failure to properly manage the Property, Plaintiffs’ inexperience with owning and managing a student housing complexes, and the recent influx of student housing developments that coincided with an enrollment drop at the University. In fact, the new student housing complexes coupled with the drop in enrollment at the University resulted in what was described as the “perfect storm” of events for the downfall of student housing communities in Columbia.
Complicating what was already a complicated case, Plaintiffs’ disgruntled investors filed various derivative actions in California against the Plaintiffs and WWBH’s clients for their losses due to the foreclosure.
The Missouri action was tried in Boone County Circuit Court. The trial lasted nearly three weeks, which was reportedly the longest civil jury trial in Boone County in at least fifteen years. In totality the Plaintiffs’ various entities in the corporate structure sought over $150 Million in damages, along with Punitive Damages. The jury deliberated up to midnight and returned a defense verdict in favor of WWBH’S clients.