Williams v. CWI, Inc. - 777 F. Supp. 1006 (1991)

Rule:

The District of Columbia Court of Appeals has found it appropriate to assess punitive damages in proportion to the sum hoped to be gained by the fraud.

Facts:

Plaintiffs Reginald Williams, a young professional basketball player, and his wife, Kathy, were unsophisticated in matters of finance and business. As the result of a lucrative basketball contract, they were looking for opportunities to invest and were referred by a local banker to Waymon Hunt, a financial planner, and his company, CWI, Inc. Hunt brought to the plaintiffs’ attention an opportunity involving the purchase of atmospheric reverse refrigeration heating units. They signed a purchase agreement and forwarded a substantial deposit, but no money was ever remitted to the purported manufacturer and seller of the units. Immediately upon receipt, Hunt appropriated the money for his own use. Plaintiffs instituted the present complaint, seeking to recover the money they had entrusted to Hunt, as well as costs, expenses, and punitive damages. The case was tried before the court without a jury.

Issue:

Under the circumstances, were the plaintiffs entitled to the reliefs they were seeking for?

Answer:

Yes.

Conclusion:

The court held that the plaintiffs were entitled to a judgment against Hunt on both contract and fraud theories. According to the court, Hunt’s actions proved that he defrauded the plaintiffs since he misappropriated the money given to him. He also misrepresented the status of the arrangement when he prepared the plaintiffs’ tax returns on which Hunt took certain deductions and credits that could only be taken if a transaction had in fact been consummated. The court concluded that the plaintiffs incurred significant expenses because of Hunt's violation of the contract and fraudulent conduct; thus, they were entitled to recover the money they had entrusted to Hunt, the expenses related to the preparation of improper and illegal tax returns, and punitive damages.