Confidential
Settlement – $75,000Judge
Court
L.A. Superior Central
Attorneys
Plaintiff
Eric A. Schneider
(Anderson McPharlin & Conners LLP)
Defendant
Daniel B. Spitzer
(Law Offices of Daniel B. Spitzer)
Experts
Plaintiff
Michael Kemps
(technical)
Nikki Regan
(technical)
Stuart P. Gladstein
(technical)
Defendant
Andrea McNichol
(technical)
Yolanda Parker
(technical)
Arthur R. Swicker
(technical)
Facts
Between November 1991 and February 1993, the plaintiff/cross-defendant, credit union, made various loans to the defendants/cross-complainants, computer companies, which were guaranteed by the defendants/cross-complainants, co-owners of the defendant computer companies. (All defendants are collectively referred to as defendants/cross-complainants.) Prior to and during this time period, the plaintiff/cross-defendant, credit union, had entered into various contracts for computer maintenance services with the defendants/cross-complainants. In March of 1993, the defendants/cross-complainants did not make payments under the loan agreements, and in June of 1993, the credit union and the defendants/cross-complainants entered into a workout plan ("forbearance agreeement"). The defendants/cross-complainants made payments through and including October of 1993, and did not make any further payments thereafter, leaving a balance outstanding under the forbearance agreement of $590,000. The defendants/cross-complainants contended that they were excused from making any payments under the forbearance agreeement because the credit union had breached that agreement first by interfering with and existing in potential business relationships and by disparaging the defendants/cross-complainants and their business to others in the credit union industry. The defendants/cross-complainants also claimed, by cross-complaint, that the credit union and other cross-defendants (consisting of the credit union's board of directors and chief executive officer) (collectively "the cross-defendants") had breached various contracts, including the forbearance agreement and other agreements for computer maintenance and repair services. The defendants/cross-complainants also contended that certain of the agreeements which the credit union was attempting to enforce were forgeries. As a consequence, the defendants/cross-complainants contended that their businesses were destroyed. Ultimately, all four of the defendants/cross-complainants filed for bankruptcy. In addition, the defendants/cross-complainants contented that over a period of more than one year from mid 1992 to February of 1993, the cross-defendant chief executive officer had made unwelcome sexual advances toward one of the defendant/cross-complainant co-owners and when the advances were rebuffed, the cross-defendant chief executive officer and the credit union retaliated by discontinuing the defendants/cross-complainants' accounts receivable financing, by making disparaging and defamatory statements to current and potential customers and by interfering with the defendants/cross-complainants' existing and potential business relationships. The credit union brought this action agains the defendants/cross-complainants based on breach of contract and breach of promissory obligations theories of recovery. The defendants/cross-complainants brought this action against the plaintiff/cross-defendant and the other cross-defendants based on fraud, intentional interference with business relations, defamation, breach of contract and intentional infliction of emotional distress theories of recovery.
Settlement Discussions
The plaintiff/cross-defendant made a C.C.P. º998 settlement demand for $400,000. The defendants/cross-complainant made a C.C.P. º998 offer of compromise for $15,000.
Damages
The defendants/cross-complainants claimed damages in excess of $2,000,000 for loss of the two computer companies; loss of earnings to the co-owners; emotional distress; and punitive damages.
Other Information
The settlement was reached approximately three years and three months after the case was filed. The case settled on November 27, 1995, after seven days of a jury trial, with trial judge, Bruce A. Geernaert acting as mediator. The plaintiff/cross-defendant also agreed not to share in any distribution in the various bankruptcy estates of the four defendants/cross-complainants.
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