Jury finds for City of Pewaukee builder in civil suit
BMO Harris ordered to pay $1 million in punitive damages

By BRIAN HUBER - Freeman Staff

October 14, 2017

WAUKESHA — A City of Pewaukee builder has been awarded a $1.23 million verdict against a bank after it sold the loan the builder needed to complete a New Berlin condo project, causing the builder to spend his own funds to finish the job.

After a three-day trial last week, a Waukesha County jury in Judge Kathryn W. Foster’s court awarded Benjamin Mohns of Mohns, Inc. some $239,249 dollars in compensatory damages as well as $1 million in punitive damages, finding the bank unjustly enriched itself at Mohns’ expense.

Chris Nardella, a spokeswoman for BMO Financial Group, said in an email to The Freeman, “The Bank is aware of the jury’s verdict, but is confident that it did not engage in any wrongful conduct that would warrant the damages awarded. The Bank is evaluating its options for the judicial review of the verdict, and the pre-trial orders of the court in this case, including appeal.”

The case stems from Mohns being hired by developer Paul Bouraxis in 2005 to build the Hickory Hills Condominiums on Beloit Road in New Berlin, a project with 104 units in 26 buildings for a total of $16.4 million, plus $1.95 million in infrastructure, with financing approved by M& I Bank, according to the complaint in the case. M& I Bank paid out almost all of the payments from construction loans on the project until about 2010, when Mohns was concerned about whether he’d be paid for the work he was doing. After threatening to discontinue the work, Bouraxis — who was ultimately dismissed as a party to the action — told Mohns to contact M& I Bank, which assured Mohns he would be paid, with over $200 available to draw from.

But M& I Bank was merged into BMO Harris National Bank Association in 2011, which then sold its loans to another company without informing Mohns, his suit said. Ultimately, that company, MIL, denied responsibility and asserted it was not responsible for representation M& I, BMO or the loan officer who worked for both firms after the merger, made, the suit said.

Mohns sued for breach of contract, misrepresentation, and unjust enrichment, alleging that BMO profited on the loan sale after Mohns expended his own funds to improve the project.

A jury agreed, and awarded Mohns $39,835 for his own funds expended, 44,312 on interest on it, $22,434 on lost profits, as well as $132,668 to compensate Mohns after BMO Harris was unjustly enriched.

In addition, the jury awarded Mohns $1 million after finding that BMO Harris acted maliciously toward Mohns or in disregard of its rights.

John Machulak, attorney for Mohns, said Mohns was assured he’d be paid in 2011, and went a long way to completing three four-family buildings after BMO sold the loan without Mohns’ knowledge.

“The judge determined there was misrepresentation here because they really didn’t plan to pay him, they wanted to make this look better, the loan was upside down,” he said. “They were using him to show what was happening on the project and they got a much better price on the loan and then they wouldn’t pay him.

“Bottom line is I think that the jury ... saw it for what it was, it was a big bank taking advantage of the guy. Why not just pay the guy? You’re BMO. Why go through years and years of litigation ... Just pay the contract like you promised him.”