Friday, U.S. homebuilder Meritage Homes Corp. (MTH) said that it was awarded $111 million yesterday, in a unanimous jury verdict in Federal District Court in Phoenix. Meritage filed the lawsuit on February 24, 2004, against a former division president of Meritage Homes, Greg Hancock. Hancock is the current owner of Phoenix homebuilder Hancock Communities.
In 2001, Hancock sold his homebuilding business to Meritage, at which time he concurrently entered into an employment agreement with the Company. The jury found that Hancock breached contractual and fiduciary duties owed to Meritage and that he immediately began to commit fraud against the Company by engaging in side businesses that stole corporate opportunities and goodwill belonging to the Company while he was President of Meritage's Phoenix division.
Meritage is confident the verdict and judgment will stand, and intends to vigorously pursue various collection options to recover the award from Hancock; accordingly, the timing and ultimate amount of any collections cannot be predicted at this time.
Tim White, executive vice president and general counsel for Meritage, added, "This jury verdict sends a clear signal to Mr. Hancock and corporate officers in general that malfeasance and undisclosed self-dealing by officers of public companies will not be tolerated."
MTH ended Friday's regular trade at $25.24, gaining 57 cents, or 2.28% on a volume of 0.99 million shares. In after hours trading the share is at $25.03, losing 51 cents, or 2.01% on the NYSE.
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