A U.S. District Court jury has awarded $111 million in damages to Scottsdale-based Meritage Homes Corp. in its lawsuit filed against Greg Hancock, the owner of Hancock Communities.
Meritage sued Hancock for violating his contract after Meritage purchased his company in 2001. Under the terms of the agreement, Hancock was supposed to work for Meritage for three years after the acquisition as president of Meritage's Phoenix division.
Meritage filed the suit in February 2004, alleging Hancock engaged in side deals while he still was under contract.
The jury found Hancock liable on nine counts including breach of fiduciary duty, breach of contract and fraud. It determined Meritage should receive $57 million in compensatory damages and $54 million in punitive damages.
Neither Hancock nor his attorney, Robert Frisbe, returned calls for comment.
"During (Hancock's) employment, he engaged in secret side businesses that ... took millions of dollars of corporate opportunities from Meritage and caused millions of dollars of other harm to Meritage," said Tim White, Meritage's executive vice president and general counsel.
Meritage was represented by former Attorney General Grant Woods and lawyer Dan Goldfine of Snell & Wilmer.
Meritage paid $80 million for Hancock Communities, and the deal included an agreement by Hancock to remain with Meritage for three years, through May 2004, but he quit in March 2003, Goldfine said.
"Within 30 days of (the acquisition), Hancock was out violating duties ... by participating in activities that were not permitted," White said. "We didn't know about those until months after he quit. He was not dedicating himself to the Meritage business, and as a result our market share fell off in 2003."
The acquisition price included $11 million for the use of the Hancock name and the value of the name through May 2007, White said.
"And by him quitting ... halfway through the three-year term and by him then allowing his brother Rick Hancock to use the Hancock name violated his obligations to us," White said.
The $57 million is tied to specific damages, while the $54 million is "tied to a decision by the jury to punish Mr. Hancock for his conduct," Goldfine said.
Hancock now owns a home-building business called Hancock Communities, which is based at 27th Street and Camelback Road in Phoenix.