WAILUKU - About 3,800 purchasers in a lakeside development in Tennessee whose lake wouldn't hold water pursued the developer though Mainland courts for 16 years and finally caught up to him on Maui on Wednesday, winning access to assets to satisfy a $4.5 million verdict against Chicago banker and part-time Maui resident Clyde Engle.
A 2nd Circuit Court jury found that Engle had fraudulently transferred $10 million in bank stock to his wife, Siobhan, to hinder, delay or avoid paying the judgment. The jury also added $43 million in punitive damages.
Longtime court observers said the total of $53,842,250 was the biggest civil verdict they could remember in the 2nd Circuit Court.
The trial took five weeks. The verdicts on three counts were unanimous. An earlier trial here had resulted in a 9-3 hung jury. Civil verdicts do not have to be unanimous, but at least 10 jurors must agree.
The plaintiffs had earlier won a default judgment against Siobhan Engle when she failed to appear at the opening of the trial before Judge Joseph Cardoza in January.
The case nearly went to the jury last Thursday, but Clyde Engle instead went to Maui Memorial Medical Center, complaining of back problems.
Skeptical plaintiff's attorney George Grumley suggested that Cardoza "send Sheriff Sniffen to the hospital to bring Mr. Engle to the courtroom," but Cardoza instead placed a telephone call to Engle in his hospital room from the bench.
In a conversation via speaker phone, Engle said he understood that the judge and Grumley suspected he was "feigning" his medical trouble, but he assured them that "I would be glad to change places with anybody in the courtroom."
Cardoza never hinted that he doubted Engle's medical claim, and Grumley was careful not to say so when the court reporter was taking down the proceedings, but outside the court hearing he said he thought both defendants were manipulating the court.
Cardoza told Engle, "we are going to finish this trial," and Grumley praised the Maui judge for patiently presiding over a long and difficult trial with a defendant who had worn down Mainland courts. "The judge did a great job, and the people of Maui are lucky to have a judge like that."
The plaintiffs, who Grumley described as "salt-of-the-earth, working-class people" in court and "Larry Lunchbucket types" in the hallway, had obtained a judgment against Clyde Engle and his company, National Development, in Tennessee. Engle told the jury, "I was homered" in the Tennessee court, meaning that the authorities favored local residents over the out-of-towner.
Grumley told the Maui jurors the issue was not that the development had gone awry, but that Engle was not paying a decreed judgment. "Mr. Engle didn't create the problem by not building; Mr. Engle created it by not paying the judgment," he said.
The Engles were at one time prominent in Chicago society and charitable works, but when Engle's business dealings got in trouble in the 1990s, Chicago magazine profiled the couple as Vonnie and Clyde.
Clyde Engle was not even the original developer of Hidden Valley Lake, but when one of his companies bought out the developer, he bought what turned out to be years of trouble for himself. At one point, he even spent time in a Tennessee jail after being found in contempt of court for failing to produce documents.
The Maui trial was about documents, specifically a record of sales of shares in the holding company for Bank of Lincolnwood, of which Clyde Engle was president, in 2003 and 2004.
Siobhan (pronounced Shavonn) Engle paid around $14,500 per share, a total of $10 million. The plaintiffs alleged that the real value at the time was at least $60,000 a share.
They are not worth anything now. The Federal Deposit Insurance Corp. seized the $200 million Bank of Lincolnwood last year. However, Grumley said, the Hawaii Uniform Fraudulent Transfer Act states that the value to be considered is the value at the time of the transfer.
The lawsuit sought collection of a judgment on the bank stock "or other assets," so that the plaintiffs can hope to recover from the Engles' other property.
In his final argument, Grumley told the jurors that he would not propose an amount of punitive damages, if they found that punitive damages were appropriate, but suggested they could multiply whatever figure they determined for actual damages "by two, three, four times." The jury multiplied by four.
In the protracted series of lawsuits - which went to the appeals court in Hawaii twice and the U.S. District Court in Honolulu once - Engle was defended at times by a series of law firms. But by January, he said he couldn't afford a lawyer and ended up defending himself.
When Siobhan Engle failed to appear, saying she needed an operation in Chicago, the plaintiff lawyers, Grumley and Craig Nakamura and Erika Lewis of Carlsmith Ball, moved for a default judgment.
That was a strategic victory, Grumley said, because it precluded her from later raising certain defenses that she could have tried. After the jurors handed in their verdict, Clyde Engle also failed to make certain motions that could have protected potential defenses on appeal, Grumley said.
Maui lawyer Phil Lowenthal, who previously defended Engle, said "that shows that you should not try to defend yourself without a lawyer." Lowenthal was not present for the verdict, but he said the total damages were the most he could recall during his decades of practicing law on Maui.
Engle made one motion, to set aside the verdict on the grounds that the jurors could not have "reasonably considered" the large amount of complicated evidence in a short period. They got the case Tuesday afternoon, deliberated a short while and returned Wednesday morning, finishing at about 10.
Terri Gearon, the forewoman, said the jurors deliberated five hours. She also said that several of the jurors had had experience serving on juries before.
Cardoza said he did not know of any case law requiring jurors to spend a minimum amount of time deliberating, and also that they had had overnight to reflect on the testimony and his instructions. He denied the motion.
Clyde Engle said afterward that he was disappointed in the verdict, which he called "really surprising." Siobhan Engle was not in court.
Grumley, who is a near-neighbor of the Engles in Lake Forest, Ill., said, "I've been chasing Clyde Engle pretty steadily since October 2005
. . . four and a half years. We started in state court in Lake County, Illinois . . . This has been hotly litigated over 4,000 miles in five or six courts."
He credited Nakamura and Lewis with providing the local knowledge needed to make the case successful since "I didn't know the difference between the West Maui Mountains and Haleakala."
He had to catch Clyde Engle in Hawaii, because process servers couldn't get to the door of his Lake Shore mansion. They served him as he got off an airplane in Kahului.
To make his case, Grumley had to persuade the jury that Siobhan Engle had paid less than the "reasonably equitable value" of the Lincolnwood shares. A forensic accountant, Tom Macready, of Austin, Texas, testified that the shares were worth at least $60,000 and up to $70,000.
Grumley said Siobhan Engle had received $20 million in distributions from the bank, of which she was majority owner, over the next few years.
Clyde Engle argued that there were liens against the stock and that it was therefore not worth nearly as much as $60,000, and that since it was a minority interest, no third party would have bought it at all. He said his wife bought the stock from him, and made millions in loans to him, so that he could pay lawyers and judgments against his businesses.
* Harry Eagar can be reached at firstname.lastname@example.org.