Facts

Plaintiff Andrea Berkay sued her partner Sam Ersan and a corporation Ersan owned, Spectrum Security Services Inc., claiming breach of partnership agreement and breach of fiduciary duty.

PLAINTIFF'S CONTENTIONS:
Plaintiff claimed she was wrongfully and unknowingly, cut out of the business she founded. Plaintiff contended that Ersan breached the partnership agreement and his fiduciary duties to her by usurping partnership opportunities for his own benefit, and failing to provide an accounting and failing to wind up the partnership properly. Plaintiff claimed she was entitled to the value of the opportunities and assets diverted together with interest from the date of the breach from Ersan and the newly formed corporation Spectrum Security.

At trial, plaintiff argued the partnership had been turned into a corporation and plaintiff had not been put on notice of her claims until at least 2009.

DEFENDANT'S CONTENTIONS:
Defendants claimed that the now operative corporation was not the business plaintiff helped found and plaintiff's claims were barred by the statute of limitations.

Settlement Discussions

Defendants would only mediate the case if plaintiff agreed to a cap of $1 million. Plaintiff made a settlement demand during trial in the amount of $7 million, which was not accepted.

Result

Following the five-day bench trial, the court entered a verdict in plaintiff's favor for $33,726,936 against Ersan. The judge found for the plaintiff on her claims of breach of partnership agreement, breach of fiduciary duty, and imposition of constructive trust, against Ersan. Judgment was entered in Spectrum Security Services' favor based on statute of limitations.

Other Information

Ersan filed a motion for a new trial based on excessive damages. According to defense, the parties had a child together in 1991 and were never married. Plaintiff's lawsuit began as a Marvin action, which was dismissed via summary adjudication prior to trial Trial proceeded only on plaintiff's business claims, which were entirely predicated upon a written partnership agreement that commenced in 1994 and ended in 2001. The court's statement of decision confirms that the partnership dissolved and that plaintiff received a final K1 from the partnership in 2002. Undisputed evidence demonstrated that plaintiff knew about the claims she alleged about beginning in 1994, but plaintiff never complained about her treatment at the time, failed to initiate any claim until over 15 years later, and did not sue until almost 19 years had passed. Plaintiff claimed that Ersan was a fiduciary because they were co-parents and former romantic partners. The court declined to find that such a fiduciary relationship existed, however, the court interpreted the evidence from a family law perspective, and awarded "damages" as if the parties were married partners until the time of trial and ignored the substance of defendant's statute of limitations defense. Ersan has commenced an appeal. FILING DATE: July 1, 2013.