Laura Yosowitz borrowed $500,000 from her family to bring a lawsuit against her ex-husband because she believed he lied about his business dealings when they divorced in 2016.
This week, a Houston jury issued a verdict that Martin Lee Kay, Yosowitz’s ex, did mislead her — to the tune of $155 million.
A Harris County jury heard eight days of testimony before ruling this past Tuesday that Kay, who is the CEO and cofounder of Entera Technology, committed fraud, breach of contract and breach of fiduciary duty to a business that Yosowitz and Kay started in 2011.
The key to the case, according to Houston trial lawyer Robert Burford who represents Yosowitz, was the three days Kay was on the witness stand answering questions.
“The jury didn’t like the way Martin Kay answered questions — very evasive,” said Burford, who spoke to the jurors after the trial. “We showed him his own documents and his own words and he kept saying that we were mischaracterizing what he was saying. The jury knew better.”
“We had strong evidence of fraudulent inducement of a divorce agreement,” he said.
Yosowitz and Kay signed an agreement when they divorced in 2016 to divide their marital estate, which included at minimum a 78 percent ownership stake in a real estate tech firm called Greenlet.
Burford argued that Kay promised to raise money and continue to grow Greenlet, which had already seen some success. Instead, Kay shifted financial resources and talent from Greenlet to his newly formed company Entera, which has the same business format as Greenlet, according to Burford.
Entera facilitates institutional investment in single family homes using big data and its artificial intelligence platform. Entera’s website claims to have enabled transactions on more than 14,000 single family homes valued at $4.6 billion across the U.S.
The Texas Lawbook made efforts to contact Kay and his lawyers, but neither responded.
In a motion for summary judgment, lawyers at Hedrick Kring who represent Kay argued that Yosowitz did not have standing to bring the breach of fiduciary and fraud claims because she was not a member or officer of Greenlet.
The jury found Yosowitz was a member of Greenlet and that Kay breached his fiduciary duty to the business and owes the company $138 million.
The jury also ruled that Kay is liable to Yosowitz, individually, for an additional $17 million for breach of fiduciary duty, fraud and breach of contract claims.
But in an interview Monday, Burford said that Yosowitz is legally entitled to half of 95 percent of the $138 million – not just half of the $78 percent. The reason, he said, is that a third party owned 22 percent of the brokerage side of Greenlet but only five percent of the software business and the software business is the most valuable.
“It is a very complex agreement, but we argue that our client should get half of 95 percent of the jury award,” he said.
That would put be $69 million – not $54 million, as earlier projected.
And Burford said he plans to file his request for lawyer fees, which would add millions of dollars more to the tab.
“Martin Kay breached his fiduciary duties — both to his ex-wife and to Greenlet — by self-dealing that included using Greenlet’s assets, business and business plan to create today’s wildly successful Entera,” Burford said. “We’re heartened that the jury agrees with us and took steps to make them whole.”
Jeff Diamant of Jeff Diamant P.C. and Shawn Johnson of SAJPLLC were co-counsel with Burford and his colleagues Brent Perry and Zachary Carlson.
The case is Laura Elizabeth Yosowitz v. Martin Lee Kay, et al., No. 2018-37750 in 334th District Court.