BDO Seidman LLP v. Steve Powers
Published: Feb. 1, 2005 | Result Date: Nov. 29, 2004 | Filing Date: Jan. 1, 1900 |Case number: DUM0002908 Arbitration – $1,061,040
Facts
Accounting firm BDO Seidman was the defendant in an underlying litigation, filed in 2000 in the Los Angeles Superior Court. The suit related to BDO Seidman's audit of the financial statements of a privately held technology start-up that was to be merged into a publicly traded shell. In May 2002, BDO Seidman learned that the plaintiff in that litigation had breached the confidentiality provisions of the settlement agreement, including the settlement amount. Arbitration proceedings were instituted to resolve the apparent breach, as provided for in the settlement agreement. Counsel learned that, in addition to disclosing the settlement amount, the plaintiff had surreptitiously sponsored and solicited several new lawsuits against BDO Seidman by other plaintiffs, arising from the same audit. The plaintiff had sponsored these new lawsuits against BDO Seidman after settling his own lawsuit with BDO Seidman. In each case, the plaintiff had an interest in the outcome of the new litigation which, under the circumstances through which it arose, constituted a breach of the covenant of good faith and fair dealing implied by California law to the mutual releases in the settlement agreement. BDO thus amended its arbitration petition to add this claim.
Result
The dispute was arbitrated before retired Los Angeles Superior Court Judge Lester Olson. On Nov. 29, 2004, Judge Olson found in favor of BDO Seidman on all counts and awarded damages for violation of the confidentiality clause of the settlement agreement and for breach of the implied covenant of good faith and fair dealings, in the sum of almost $780,000. Judge Olson also found BDO Seidman to be the prevailing party under the settlement agreement and awarded reasonable fees and costs incurred in connection with the arbitration proceeding, including the pre-arbitration motions and ancillary proceedings. The total award was $1,061,039.
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