Many leading businesses are discovering that mediation can be a powerful tool in resolving disputes early and fairly. In litigation, parties argue over who “breached” and the extent of “damages.” Mediation, however, involves much more than just an analysis of legal issues. It’s an opportunity to explore each side’s interests and relationships, empowering participants to develop their own business-driven solutions. Even in a case where “pure dollars” are at stake, Mark can help realistically evaluate claims and defenses, and structure creative payment terms.
$700K Partnership Dispute; Breach of Fiduciary Duty
Claim: Plaintiffs, who included sophisticated real estate entrepreneurs and attorneys, sued a prominent Southern California developer over the failure of a partnership venture which had been formed to acquire and then convert six commercial buildings into residential lofts. Among other things, plaintiffs claimed that defendants had promised to maintain at least a $1 Million equity interest, which they alleged did not happen. Defendants denied any wrongdoing, blaming the project’s failure on an inability to secure construction financing during the economic downturn, and the plaintiffs’ losses on their own lack of investigation and diligence before signing subscription agreements.
Result: The parties reached a settlement reimbursing the plaintiffs a significant portion of their initial investment.
$400K Legal Malpractice
Claim: Law Firm won a judgment for damages and attorneys fees totaling in excess of
$1 Million in connection with the eviction of a restaurant/tenant. The trial court found, among other lease violations, that the tenant had submitted false financial statements which underreported its revenues, holding that the tenant had failed to pay the appropriate rent. On appeal, however, the appellate court determined that there were deficiencies in the handling of the eviction process and reversed the judgment. Landlord then filed a malpractice action against the Law Firm, which denied liability and cross-complained for unpaid fees.
Result: Both sides accepted a Mediator’s Proposal resolving all claims.
Partnership Fraud and Accounting
Claim: Individuals who had invested hundred of thousands of dollars on the promise that a partnership would bring a new medical device to market sued for fraud. The product was never manufactured due to technical difficulties and rising costs.
Result: The parties negotiated an agreement to dissolve the partnership and distribute its assets so that investors’ money could be recouped. The defendant was required to adhere to a payment schedule and provide collateral as security for its settlement obligations.
Conservator’s Action for Misappropriation
Claim: Conservator filed suit against his sibling for fraud and conversion to recover almost $300,000 from the estate of their elderly and disabled mother.
Result: Rather than going to trial, which would have further harmed family relations, the parties agreed to a monetary settlement, including security for payment, assuring their mother’s continued medical and institutional care.
Claim: An independent physicians association sued its competitors, claiming they used confidential and proprietary information to encourage the transfer of patients to other associations.
Result: The defendant’s cash payment settled the case.
$1.3M Breach of Contract
Claim: Charter school operator entered into an agreement with a management firm to procure education support and administrative services for a group of charter schools. However, before the management firm could take over daily operations, the school district decided the schools should be shut down. The management firm sought recovery of more than $1.3M as reimbursement of actual costs incurred in preparation for assuming operations responsibility.
Result: A settlement was reached that avoided court action.
Claim: Action to dissolve partnership whose primary asset was an apartment building and for an accounting. Plaintiffs, who were siblings, alleged that the managing partner, who happened to be their cousin, took management fees without their knowledge or consent, and improperly charged other sums to the partnership entity. Defendant countered that his fees were reasonably and necessarily incurred in connection with the sale of the building and winding up of the partnership.
Result: A settlement was reached which allowed the participants to resolve all issues.
Bank Note and Commercial Guaranty
Claim: A bank sued a corporate borrower to collect a $350,000 loan that had been secured by personal guarantees and business equipment.
Result: The guarantors negotiated an agreement allowing them to sell the collateral on favorable terms, and to structure payments in the event of a deficiency. The bank also agreed to waive some accrued interest and other charges.
Failure of Development Project
Claim: Plaintiff and defendants, all family relatives, entered into an agreement for the defendants to re-pay loans made by plaintiff to fund construction of new luxury homes in Beverly Hills. Plaintiff alleged that he had agreed to extend the time for re-payment on the defendants’ representations that there was a buyer for one of the properties, which transaction would yield proceeds sufficient to payoff the loans, together with a profit. After one property was lost in foreclosure and plaintiff learned that another was encumbered, this litigation ensued.
Result: At mediation, the parties reached an agreement providing that plaintiff would accept a discount on the total loan balances in exchange for defendants making a series of installment payments.
Claim: A law firm sued to collect nearly $200,000 of outstanding attorney’s fees and legal expenses. The client contended it was withholding payment because the firm had over-charged and committed malpractice.
Result: The firm agreed to discount a portion of its fees in exchange for a payment schedule and release. While the full balance was neither paid nor collected, the parties were satisfied, knowing the matter was finally resolved.
Fair Credit Reporting Act (FCRA)
Claim: Plaintiff sued his mortgage lender for improperly reporting him as being delinquent on his purchase money loan and home equity line of credit, in violation of the FCRA. More specifically, plaintiff claimed that negative credit reporting had caused a business loan application to be denied. While acknowledging that some of its negative reporting may have been in error, the lender argued that such derogatory items were inadvertent and timely corrected.
Result: The parties reached a monetary settlement that ended the litigation.
Breach of Joint Venture Agreement
Claim: Developer and property owner each filed separate actions against the other alleging breach of contract and quiet title arising from a joint venture agreement to develop and market for sale two parcels of commercially zoned vacant land in San Bernardino County.
Result: Mediation helped the parties arrive at a creative settlement, transferring one parcel to investors in consideration of a $1 million loan payoff, confirming title to the other parcel in the record owner, and dismissing their respective court cases.
Misappropriation of Trade Secrets
Claim: Sheet metal manufacturer alleged that a group of former employees, who formed a competing firm, stole confidential product information and drawings, and then used those materials to unfairly compete with plaintiff for its customers in the automotive and aerospace industries. Plaintiff sought over $500,000 damages.
Result: Defendant agreed to a monetary payment and restrictions on certain business activities.
Claim: Two individuals, one who would contribute financing and the other who would contribute construction expertise, entered into an agreement to purchase adjacent lots in the Hollywood Hills and develop them with single family homes. A dispute arose when completion of the homes was delayed causing the partnership to suffer losses in a declining real estate market.
Result: One partner agreed to acquire the other’s interest in the partnership on mutually acceptable terms.
Claim: Partner owning a majority interest in automotive paint company filed suit against defendant, a minority partner and employee of the firm for more than 25 years, alleging fraud and mismanagement. Defendant filed a separate action to partition the real property comprising the company headquarters.
Result: A purchase of the defendant’s real property and partnership interests was negotiated, ending contentious and expensive litigation.