First Union to appeal $276 million judgement

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Posted 7:44AM on Thursday, March 28, 2002

BALTIMORE - Officials at First Union National Bank said they will appeal a jury award of $276 million - one of Maryland's biggest - to a businessman who claims the bank defrauded his software business. The six-member Circuit Court jury agreed with software company owner Scott Steele that First Union National Bank, owned by Wachovia Corp., not only broke its contract with Steele's company, but it never intended to honor the pact. The jury of five women and one man deliberated for three and a half days before awarding Steele $200 million in punitive damages and $76 million in compensation for lost business. "I think it will say to corporate America, and to banks in particular, that you can't do this," said Evelyn McClain, the jury forewoman. "You can't defraud people. That's the message. And to First Union, it says that what you did was misconduct. It was wrong, and we feel that this is what you need to pay punitively." Wachovia, the nation's fourth-largest bank, was shocked by the verdict. "We were surprised and disappointed with the result of this case," said Christy Phillips, a spokeswoman for Wachovia. "We strongly disagree with the jury's verdict and are confident that we have strong grounds on which to challenge it. We will vigorously pursue all avenues to overturn this verdict, including the appeal process." First Union's business took off after Steele's company, Steele Software Systems Corp., helped it launch an online loan application system in 1997. The bank nominated Steele, 44, for its "Vendor of the Year" award, which his lawyers said described him in glowing terms. The bank broke the three-year contract more than a year early and started its GreenLink venture, which performed the same function. First Union attorneys said the contract was only for two years and GreenLink was started after the bank joined with Value America, which had more experience than Steele.