Enhanced damages
In the recent opinion in Frame v. Maynard, the Appellate Division, First Department, State of New York, Nov. 18, 2010, found that enhanced damages were warranted where a general partner sold real property to himself and misrepresented to the limited partners the value of the property. Thus, the court found that although"the general rule is that the measure of damages when a fiduciary has sold property for an inadequate priced is the difference between what was received and what should have been received so that the beneficiary of the fiduciary is placed in the same position he or she would have been absent the breach ... Matter of Rothko (43 NY 2d 305[1977] ... established an exception to this general rule." The Court of Appeals held that the value should be at the time of trial, rather than the time of sale "where the breach of trust consists of a serious conflict of interest - which is more than merely selling for too little." The court in Frame found "Maynard's conduct in the present case is no less improper [than in the Rothko case], especially given that he repeatedly assured the limited partners that the price he was offering was generous while simultaneously negotiating for a mortgage that presupposed a far higher valuation for the partnership property." As counsel for the plaintiff, I would say Maynard represents an extreme example of a party which fails to evaluate risks. Maynard could have settled at the outset for about $400,000. Now, he can expect to pay about $3.8 million.