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A Superior Court jury in Delaware has hit First USA Bank with $6.8 million in damages in a breach of contract action brought by a real estate development company. The unanimous 12-member jury determined that First USA breached two residential real estate leases it had entered into with Pettinaro Enterprises and a handful of the company’s subsidiaries, the plaintiffs’ attorney, James Green of Seitz Van Ogtrop & Green, said. The case, captioned Branpark Inc. v. First USA Bank, was tried before Judge Fred S. Silverman. The jury reached its July 19 verdict after more than six hours of deliberations, Green said. “We disagree with the verdict and plan to appeal,” a spokesman for First USA said. According to the Superior Court’s June 2003 opinion on the defendant’s motion for summary judgment, the parties in September 1999 entered into lease agreements for residential units that were to be occupied by First USA employees who were relocating to Delaware. However, in September 2000, First USA notified the plaintiffs that it would not honor the contracts, a June 2004 pretrial stipulation stated. First USA asserted that the lease agreements were invalid and therefore unenforceable, because the First USA employee who had signed the leases was not authorized to do so, the stipulation said. Green said the multimillion-dollar award was for lost rent arising from two of the three contracts between the parties. According to Green, no damages were awarded for the alleged breach of the third agreement, which contemplated the conversion of a building on Wilmington’s waterfront to corporate suites. Because the lease term was not scheduled to begin until 2002, and First USA notified the plaintiffs that it would not honor the leases in 2000, the project was not completed, Green said. The plaintiff companies — developers, property owners and leasing agents — had negotiated the three leases with First USA relocation coordinator Melissa Counsellor, they claimed in the pretrial stipulation. According to Silverman’s opinion, the leases bore Counsellor’s signature, followed by a backslash and “First USA.” However, “no one at First USA with authority to enter into contracts of this sort was aware of the leases until the late spring of 2000,” the defendants contended in the pretrial stipulation. “When the leases came to the attention of senior officials at First USA, it held any payments to the … [plaintiffs] pending an investigation into the background of the leases, determined that the leases were not valid, [and] promptly notified … [the plaintiffs] of that determination.” The plaintiffs disagreed. They asserted in the pretrial stipulation that First USA employees had for one year occupied most, if not all, of the units specified in one of the leases. The defendant had also paid rent on all occupied units, the plaintiffs claimed in the document. According to the court’s 2003 opinion, Pettinaro Enterprises asserted that the rental payments had totaled hundreds of thousands of dollars. In addition to arguing that the leases were invalid, First USA asserted that the plaintiffs had failed to mitigate their damages after the bank indicated it would not honor the agreements, the stipulation said. Although the leases for which the jury awarded damages were valued at more than $16 million, the plaintiffs were able to mitigate their damages such that their asserted losses totaled less than $7 million, Green said. The plaintiffs plan to request interest on the lost rent, Green told the Delaware Law Weekly. Because First USA had prepaid for an apartment that it ultimately did not use, the company will receive a $23,000 credit against the award, Green stated. Seitz Van Ogtrop associate Kevin Guerke also served as counsel for the plaintiffs. Edmond Johnson and Richard Abbott of The Bayard Firm represented the defendant. Prior to trial, the defendants had offered $2.5 million to settle the dispute, Green said.

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