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Arthur Andersen wins suit
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May 11, 1999: 5:26 p.m. ET
Jury throws out class-action lawsuit filed by UDC Homes shareholders
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NEW YORK (CNNfn) - An Arizona jury has rejected a class-action lawsuit filed against Arthur Andersen LLP by home builder UDC Homes Inc., the accounting firm said Tuesday.
The lawsuit was filed in 1995 on behalf of UDC shareholders, who sought general damages of about $95 million and punitive damages in excess of $1 billion on allegations of securities fraud, Arthur Andersen said in a news release. On Monday, the Maricopa County, Ariz.-jury ruled in favor of Arthur Andersen on all counts after a six-month trial, Arthur Andersen said in a news release.
UDC was a leading national home builder prior to 1990, but its stock sank from $10 to $1 per share when interest rates rose sharply in 1994, Arthur Andersen said.
UDC filed for bankruptcy protection in 1995 as part of a plan for it to be sold to DMB Homes of Phoenix, the accounting firm said. Immediately after that, the class action suit was filed. The previous auditing firm, Coopers & Lybrand, and the UDC board of directors also were named in the lawsuit.
Arthur Andersen said the verdict vindicated its auditing practices and was a victory against frivolous class-action suits.
"We are grateful the jury ruled that Arthur Andersen acted properly," Jack Henry, an Arthur Andersen managing partner in Phoenix, said in a statement. "We stood by our client's financial reporting and our audit services from the beginning and our resolve has been recognized and rewarded."
UDC Homes was acquired by Walnut, Calif.-based Shea Homes in July 1998. A Shea official said Tuesday that Shea was not involved in the lawsuit and declined to comment on the ruling. 
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Arthur Andersen
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