ATTACHMENT A
Recent Developments
1. Broadband Holdings, Ltd. vs. Norwest Venture Partners, et al. San Francisco Superior Court No. CGC-04-429808:
The firm represents as plaintiffs several venture capital firms and individual investors in Yipes, a telecom startup firm. The plaintiffs invested more than $6 Million in Yipes, only to see their investment wiped out when the Defendant venture capital firms took actions causing Yipes to file for Chapter 11. The Defendants then loaned money to Yipes in bankruptcy and purchased virtually all of the assets of Yipes out of the bankruptcy as a going business. Plaintiffs complained that Defendants had breached their fiduciary duties to plaintiffs and other minority shareholders by acquiring Yipes' assets without providing plaintiffs an opportunity to participate in Yipes ongoing business.
Defendants raised defenses that Plaintiffs could not sue in state court because the Defendants' purchase of the assets of Yipes had been carried out under the auspices of the federal bankruptcy court, and that Plaintiffs were obligated to raise their claims in the bankruptcy court which had continuing jurisdiction over Plaintiffs' claims.
In August of 2007, following a bifurcated trial on the specific defenses, Judge Richard Kramer of the San Francisco Superior Court ruled in favor of Plaintiffs, rejecting each of the defenses related to the bankruptcy proceedings and permitting the case to go forward on its merits.
This decision appears to be one of first impression in California. It rejects the notion that Chapter 11 bankruptcy proceedings will necessarily insulate controlling shareholders from the consequences of breaching their fiduciary duties to minority shareholders when those controlling shareholders take for themselves the assets of a corporation to the exclusion of minority shareholders by purchasing those assets through the bankruptcy court.
A copy of Judge Kramer's decision is available here.
2. In a recent case handled by the firm, the client's husband had repeatedly promised to the client that title to three pieces of property acquired while the two of them were together as a couple would be placed in both their names. Unbeknownst to our client, the husband had caused title to two of the properties to be held only in his own name as his separate property or in his name and his mother's name as joint tenants. After the couple separated the husband transferred all of his title in all three of the properties to a trust with his mother as principal beneficiary and stating that his wife, (our client), was to receive nothing. The husband then died. The decedent's mother contended that the client had no right to any interests in any of the properties. Through litigation and then mediation, the firm was able to obtain for our client clear title to the two most valuable properties on highly favorable terms.
3. Client, a foreign national, inherited money in the United States and invested it in certificates of deposit in several banks in the U.S., giving his best friend a power of attorney in order that the CD's could be reinvested when they reached maturity. The client's then wife (now ex-wife) struck up a relationship with the friend, who proceeded to give all of the client's inherited money to the unfaithful wife.
On behalf of the client the firm sued the friend and one of the banks. Through mediation the client was able to recover the bulk of his loss.
4. An institutional client of the firm was sued by an employee claiming wrongful termination and workplace discrimination. The client's insurance carrier refused to provide a defense or indemnify the client for any judgment, contending that the client had notice of the employee's claim in a prior policy year and failed to inform the carrier in a timely manner. The employee's supervisor had received a notification from the Equal Employment Opportunity Commission (EEOC) that the employee had brought a charge of discrimination, but no notice was given to the carrier until the following year when the employee brought suit.
The firm prepared an analysis of the policy language showing that by the terms of the insurance carrier's own policy, the EEOC notice to the supervisor did not constitute knowledge of a claim on the client's part prior to the policy year in which suit was brought. The carrier agreed to provide a defense and the employee's suit was quickly resolved in a manner satisfactory to the client.
