Facts

On Jan. 22, 2007, plaintiff Hunt Investors, LLC and defendant Extengine Transport Systems, LLC, signed a letter of intent to negotiate exclusively with each other over the sale of an interest in Olson Ecologic Engine Testing Labs by Extengine to Hunt for $3 million. Hunt and Extengine entered into a letter of intent, the only binding term of which was Extengine's agreement to negotiate exclusively with Hunt.

During the negotiation period, the terms of the sale changed so that Don Olson, the 20 percent owner of Olson Labs, would have to become a borrower on the $3 million loan issued by Hunt's lender, Main Street Capital. Don Olson did not want to sign the loan, which would subordinate his 20 percent ownership interest in the lab to the lender.

Birdwell had previously loaned $3.9 million to Extengine and Brad Birdwell sat on the Extengine Board of Directors. Birdwell originally favored the sale of the lab to Hunt so long as the $3.9 million in loans were repaid. Birdwell objected to the sale of Olson Labs on the grounds that the Olson Lab was substantially all of the assets of Extengine.

In February 2007, Birdwell sent letters to Extengine claiming Extengine was in default and threatened to sue Extengine if the sale of Olson Labs was completed to Hunt without their prior approval. When it appeared that Olson and Hunt were not going to come to an agreement between themselves, and Hunt demanded Extengine to have the Birdwell's UCC-1 release before they could move forward which they could not, Birdwell made an offer to Extengine to accept the transfer of Extengine 80 percent ownership for retiring the Birdwells' $3.9 million in loans, which Extengine accepted.

Settlement Discussions

Hunt demanded $350,000.

Damages

The plaintiff sought recovery of lost profits and punitive damages, which were stricken by the court during trial. The court ruled that plaintiff was only entitled to recover its out of pocket expenses, based on Copeland vs. Baskin Robins (2002) 96 Cal. App. 4th 1251, 1261. Attorneys fees: $158,915; accountant fees: $12,000; lender fees: $35,000; consultant fees: $2,412

Result

Defense verdict.

Deliberation

seven hours

Poll

12-0

Length

12 days