Honsador would-be buyer wins $36M in suit
Richard Foreman says his partners pushed him out to grab a deal for the lumber firm
The Houston businessman who contends he was secretly cut out of the sale of one of the state's largest lumber suppliers to a Cleveland-based private investment firm was awarded more than $36 million in damages.
A Circuit Court jury on Wednesday ordered Key Principal Partners LLC -- an affiliate of KeyCorp, Ohio's third-largest bank with $93 billion in assets -- to pay Richard R. Foreman $12.1 million in compensatory damages and $13.6 million in punitive damages for leaving him out of the sale of Honsador Lumber Corp. in 2004.
Under Hawaii's unfair competition statues, however, the violation allows Foreman to collect triple the $12.1 million, or $36.3 million, instead of taking the punitive damages.
The jury also ordered Foreman to pay Key Principal Partners $30,000 for a breach of contract related to an outstanding payment.
"This verdict tells Key that it's wrong to steal a deal from your partner," said Foreman's attorney Kurt B. Arnold of Itkin, Arnold & Itkin LLP in Houston, Texas in an interview yesterday. "It's crazy to think that Key relies on businesspeople to bring it deals and then backs out."
KeyCorp spokesman William C. Murschel said yesterday the company will appeal.
During the trial, Key Principal Partners had argued that Foreman actually did have opportunities to purchase Honsador, but didn't follow through, and didn't disclose that he was putting in only $1.5 million of his own money.
The deal, worth an estimated $50 million, included Honsador's two subsidiaries: Honolulu Wood Treating, the state's largest wood treatment company, and Ariel Truss, the state's largest manufacturer of roof trusses.
Foreman claims that a group of investors led by him had reached an agreement to purchase Honsador for $28 million. His lawsuit contends Key Principal Partners agreed to join his venture but then secretly negotiated a deal with Honsador owner James J. Pappas for the higher amount.
Honsador, established in 1935 as Honolulu Sash & Door, has facilities on Oahu, Maui, the Big Island and Kauai. It also has a facility in Portland, Ore., where building materials are purchased directly from producers for shipment to Hawaii.
The Associated Press and Bloomberg News contributed to this report.