Daewoo Must Pay O.C. Piano Dealer $10 Million More : Courts: Punitive damages follow by a day jury award of $3.62 million in compensatory damages for fraud and ruined business.

Former piano distributor Vernon Schafer Jr. was awarded $10 million in punitive damages Friday by a jury that found the U.S. affiliate of giant Daewoo Group defrauded him and destroyed his business.

A day earlier, the jury awarded Schafer $3.62 million in compensatory damages in a case that originally was filed against Schafer by Daewoo International (America) Corp.

“I thought I was going to die before the verdict came in,” Schafer said in an interview from his Anaheim home. “This has been a great ordeal for me. I’ve been in business for 40 years and I’ve never had something like this happen. I’m still uptight, but I’m starting to feel a little relief.”

Schafer, who appeared in court for all 31 days of trial over eight weeks, said he didn’t realize that he had won until he saw his lawyer smiling.

Daewoo America, which has nearly $1 billion in annual sales, said it will appeal.

“This is an aberration and a miscarriage of justice,” said J. Eric Isken, Daewoo America’s trial lawyer. “Daewoo feels very strongly that Mr. Schafer never was defrauded. The fraud claim is entirely unsupported.”

The jury in the Orange County Superior Court trial in Westminster found that Daewoo America had defrauded Schafer and ruined his once-thriving Schafer & Sons Piano and Organ Co. in Santa Ana by reneging on promises to him.

Schafer & Sons, which had its pianos made by various manufacturers since 1955, sold its products through its wholesale distribution network nationwide, a franchise operation in Northern California and its Colton Piano retail outlets in Southern California.

For 16 years, it sold pianos made by Samick in South Korea under a handshake agreement that never was put in writing. But when prices started to rise in 1989, Schafer switched to Daewoo America to supply pianos under the Schafer & Sons name. Under a written agreement, Schafer also was to be the main U.S. distributor for Daewoo’s own Sojin pianos.

Schafer & Sons turned over a line of credit to Daewoo America and Schafer later provided a personal guarantee of up to $5 million as security for pianos being shipped from South Korea, where the Daewoo Group conglomerate is based.

When Schafer’s company’s debt to Daewoo America rose to more than $4 million, Daewoo turned to the personal guarantee, but Schafer wouldn’t pay. The Ridgefield, N.J., company sued for breach of contract.

Schafer countersued, saying the pianos were so shoddy that dealers no longer would buy them, even though Daewoo continued to ship pianos.

Daewoo America, he charged, also wrongly drew down his line of credit, refused to pay for servicing the pianos and continued to use the Schafer & Sons name without his consent for at least two years after his company fell into bankruptcy in 1991.

Daewoo’s actions also led to the demise of the Colton Piano chain, Schafer asserted. He formed a new company, Ruston Music Corp., to buy the Colton name and operate the one remaining store in Colton.

Schafer, who promised his customers a Schafer & Sons piano that would last for life, said he now wants to open a Colton store in Orange County and start repairing Daewoo-made pianos that have broken down.

At 66, he said he also hopes to find another manufacturer that will once again make Schafer & Sons pianos.

“I’ve got six kids between 4 and 16 to keep me young,” said Schafer, who also has five adult children from a previous marriage. “I want to teach the children the business.”