A Colorado district jury has ordered a business broker and his company to pay $10.5 million in damages in a case that stemmed from the sale of two financially troubled dealerships in Denver.
A Denver District Court jury found John Pico and his company, Aspen Brokerage Co. of Denver, liable for breach of their fiduciary duties to Mel Nelson, former owner of Metro Auto (Oldsmobile-Honda-Suzuki) and Metro Toyota.
Pico and his lawyer, Douglas McKinnon of Denver, said they will ask Judge Lawrence Manzanares to set aside the verdict and order a new trial. If that move fails, they intend to appeal the award.
The suit stems from Pico's handling of the 1991 sale of the two dealerships to John Elway and Rod Buscher. Nelson's lawyer, Richard Podell of Denver, said the transaction took place when the Colorado economy was in trouble and the dealerships were heavily in debt to General Motors Acceptance Corp. and other creditors.
'The business broker totally abandoned his client and worked with the purchasers in complete disregard of Nelson's rights and interests,' Podell said. He said Nelson lost his equity and anticipated profits. The verdict included $2.5 million in punitive and $8 million in compensatory damages and refund of the commission.
Pico said he has brokered the sale of more than 80 percent of all financially troubled dealerships in Colorado since 1976. He denied any misconduct. Rather than costing Nelson his equity as the suit alleged, Pico described it as an 'upside-down deal' in which Nelson's obligations were $12 million to $13 million.
To make the transaction work, Pico said, he persuaded GMAC to pay almost $1 million at the closing to cover the dealerships' unpaid taxes, service contracts and customer liens.
Pico also said he changed his normal policy requiring cash payment of his brokerage commission at the closing. Instead, he agreed to accept $50 per vehicle sold by the dealerships until his $740,000 commission was paid.
Elway and Buscher later sold the dealerships to Republic Industries Inc., lawyers for both sides said.
Nelson's separate claim against Elway and Buscher, alleging that they aided and abetted Pico's breach of fiduciary duty, was dismissed without trial. That decision is on appeal, McKinnon said.