Bowyer v. Sentinel Systems, Inc., Helionetics, Inc., Sergo, Katz and Markheim
Published: Mar. 1, 1997 | Result Date: Dec. 12, 1996 | Filing Date: Jan. 1, 1900 |Case number: 747201 – $1,448,000
Judge
Court
Orange Superior
Attorneys
Plaintiff
Defendant
Facts
In 1990, plaintiff Arvel Bowyer, a writer of computer software, and defendant Sergo, a designer of computer hardware systems, formed defendant Sentinel Systems Inc. to fully develop Sergo's crashproof computer concept known as the Sentry-E. By 1993, the plaintiff had invested around $400,000 in cash and more than $200,000 in services. In February 1993, defendant Sentinel was purchased by defendant Helionetics Inc. for $1.4 million shares of its common stock. Helionetics was to provide substantial capital funding to Sentinel and to distribute the shares to the former Sentinel shareholders upon the reaching of certain development and marketing targets. The funding was not fully forthcoming. Nevertheless, the February 1993 agreement was amended, and the plaintiff received his allocation, amounting to 470,000 shares, in May 1994. The plaintiff claimed that for various reasons, actual progress developing the Sentry-E between February 1993 and August 1994 was minimal. The plaintiff also claimed that the directors of Helionetics (defendants Markheim and Katz) organized extravagant "demonstrations" and accompanying press releases suggesting very substantial progress and immenent sales/revenues. These allegedly caused the company's traded share price to rise and fall dramatically during the 18 months. In August 1994, the plaintiff was asked to provide a full account of the Sentry-E's status. The plaintiff reported that its development was nowhere near complete, and that the Helionetics board's promotional activities had been blatantly misleading. Immediately thereafter, the plaintiff was fired from his position with Sentinel. The Helionetics board subsequently refused to allow him to publicly sell his Helionetics stock. The plaintiff brought this action against the defendants based on wrongful termination and breach of fiduciary duty theories of recovery.
Settlement Discussions
Per the plaintiff, there were no meaningful settlement discussions since the defendants' offers were predicated on corporate liability only, which was unacceptable to the plaintiff. Per the defendants, a settlement was reached, but the plaintiff breached the settlement agreement and refused to perform as agreed. On the day of trial, the plaintiff demanded $700,000 compensatory damages from all defendants jointly. The defendants made no settlement offers.
Specials in Evidence
$740,000 (past and future earnings).
Damages
The plaintiff claimed lost stock value of $353,000. The plaintiff claimed he also sought $1.5 million in punitive damages.
Other Information
The verdict was reached approximately two years and one month after the case was filed. A settlement conference was held on Jan. 11, 1996 before Judge Horn of Orange Superior Court. It did not resolve the matter. An attorney who was called by the defendants as a witness had his evidence terminated by the judge and was summarily excused, The judge held that the witness was ignoring his warning and was attempting to introduce evidence that he had unabiguously ruled inadmissable.
Deliberation
1+ - 2 days
Poll
11-1
Length
12 days
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