Confidential

Facts

In 1981, plaintiff SRECO-Flexible Inc. entered into a written lease agreement with defendants Philip Stratiner, Gary Stratiner, Janice Lewis, and Reva Henslowe (Stratiner defendants), for a certain commercial real property located in Marina del Rey. In 1989, the plaintiff and the Stratiner defendants executed a lease amendment and an addendum, which included a Right of First Refusal for the plaintiff to purchase the leased property under certain terms and conditions. The Stratiner defendants and defendant TCR Southern California II, Inc. (TCR) entered into a purchase agreement for the leased property. The plaintiff filed suit alleging that the defendants intentionally circumvented the plaintiff's Right of First Refusal under the lease agreement.

PLAINTIFF CONTENTIONS:
The plaintiff contended that beginning in or about July 2001, the Stratiner defendants and defendant TCR began negotiations for TCR to purchase the leased property. The Stratiner defendants attempted to obtain and then purchase the plaintiff's waiver of the Right of First Refusal. When the plaintiff refused to either waive or sell its right, the Stratiner defendants and TCR entered into an agreement, without disclosing the same to the plaintiff, for the purchase and sale of the leased property in March 2004. The plaintiff contended that the defendants conspired and entered into an agreement to circumvent and deny the plaintiff's benefit of its Right of First Refusal. The defendants did so by conferring substantial rights to TCR, without conveying fee title. The defendants intentionally delayed entering into a formal purchase and sales agreement until after the expiration of the plaintiff's lease. The plaintiff contended that such conduct by the defendants constituted an intentional deprivation of the plaintiff's Right of First Refusal and damaged the plaintiff by denying it the right to purchase the leased property. STRATINER DEFENDANTS

The plaintiff contended that beginning in or about July 2001, the Stratiner defendants and defendant TCR began negotiations for TCR to purchase the leased property. The Stratiner defendants attempted to obtain and then purchase the plaintiff's waiver of the Right of First Refusal. When the plaintiff refused to either waive or sell its right, the Stratiner defendants and TCR entered into an agreement, without disclosing the same to the plaintiff, for the purchase and sale of the leased property in March 2004. The plaintiff contended that the defendants conspired and entered into an agreement to circumvent and deny the plaintiff's benefit of its Right of First Refusal. The defendants did so by conferring substantial rights to TCR, without conveying fee title. The defendants intentionally delayed entering into a formal purchase and sales agreement until after the expiration of the plaintiff's lease. The plaintiff contended that such conduct by the defendants constituted an intentional deprivation of the plaintiff's Right of First Refusal and damaged the plaintiff by denying it the right to purchase the leased property. STRATINER DEFENDANTS CONTENTIONS:
The Stratiner defendants contended that the plaintiff's intentional breaches of the lease barred exercise of any first refusal right. The defendants also contended that the plaintiff's failure to satisfy an unlawful detainer judgment against it barred any relief at all, and that no agreement triggering a first refusal right was reached while the lease was in effect or while the plaintiff was not already in default. DEFENDANT TCR

Settlement Discussions

The defendants made a joint C.C.P. Section 998 offer of $300,000, which the plaintiff rejected.

Result

The parties settled for $2.9 million at a mediation before Earl Willens of ADR Services Inc.