Rancho San Marcos Partners, Claremont Heights Partners, Harold A. Katersky and Harold A. Katersky Trust v. Klara Katersky
Published: Oct. 12, 1996 | Result Date: Aug. 13, 1996 | Filing Date: Jan. 1, 1900 |Case number: BC108177 – $2,650,000
Judge
Court
L.A. Superior Central West
Attorneys
Plaintiff
Steven J. Shapero
(Shapero & Shapero)
Steven J. Shapero
(Shapero & Shapero)
Defendant
Kevin S. Dicker
(Leonard Dicker & Schreiber LLP)
Kevin S. Dicker
(Leonard Dicker & Schreiber LLP)
Experts
Defendant
Ronald Greenspan
(technical)
Lee Hill
(technical)
Facts
Plaintiff Harold A. Katersky and defendant Klara Katersky dissolved their marriage in 1989 pursuant to a Marital Settlement Agreement (MSA) and Judgment of Dissolution which incorporated many of the terms of the MSA. Under the terms of dissolution, Harold was to pay to Klara assets with an agreed value of $5.2 million, including $4 million in cash, as well as real and personal property. Harold was to obtain general and limited partnership interests in limited partnerships which owned approximately 22 shopping centers, as well as other assets. In order to "even out" the division, Klara also received limited partnership interest with an original worth of $100,000. At the time of the termination of their marriage, the largest shopping center in which they owned an interest was the El Monte Shopping Center, a 400,000 square foot shopping center located in El Monte. The center was 100 percent leased with highly creditworthy tenants. In the MSA, and the Judgment of Disscolution, Klara appointed Harold as her agent with respect to all the assets and agreed not file or assert any claims against Harold or any of the partnerships. During the next five years, the commercial real estate market suffered a drastic decline. Although all of the financing on El Monte Plaza had been kept current, Harold had further encumbered the partnership property and then experienced difficulty in rolling over the financing, which had come due as balloon payments. While seeking replacement financing, Harold entered into forebearance agreements with lenders, which required paydowns on the existing loans and which essentially used all of the free cash flow from the property. In June 1994, Harold had obtained $46 million in commitments for the refinancing of El Monte Plaza and another cross-collateralized shopping center from institutional lenders (which included refinancing another smaller center). In June 1994, Klara called a meeting of the limited partners of the partnerships which owned the El Monte Shopping Center. At the meeting, on June 18, 1994, Klara allegedly accused Harold of criminal and fraudulent acts and asserted that he had failed to pay property taxes on the property, had placed a loan on the property for his own personal benefit and was the reason that the property was not financeable. A court reporter recorded the proceedings. After the meeting, Klara notified all concerned that she was the new general partner and that the loans which had been negotiated were rejected. The title company thereupon refused to issue a policy of title insurance. Klara then caused the lawsuit to be filed against Harold in the name of the partnership, and recorded a lis pendens in connection with it. Harold moved ex parte to shorten time to move to expunge the lis pendens on the grounds that Klara had never validly been elected as the new general partner. Klara filed Chapter 11 for one of the plaintiff limited partnerships. A determination was ultimately obtained from the Superior Court (the matter having been remanded by the Bankruptcy Court for that purpose) that Klara had never been elected general partner and that the action she caused to be brought should be dismissed. The bankruptcy was also dismissed, having been filed by Klara without authority to do so. Klara thereupon called another meeting, at which time she again declared herself to be the new general partner, and again filed a Chapter 11 bankruptcy. The loan which Harold had negotiated was no longer available, due to the delays and bankruptcy filings. Eventually the existing lenders foreclosed and the property, with a fair market value of approximately $33 million, was lost entirely. The plaintiffs brought this action against the defendant based on breach of marital settlement agreement, intentional interference with economic advantage, unfair competition and defamation theories of recovery.
Settlement Discussions
The plaintiffs made a settlement demand for $1 million at the mandatpry settlement conference. The defendant made a settlement offer of $10,000 and $500 per week for 10 years.
Damages
The plaintiffs requested compensatory damages of approximately $4.25 million, plus emotional distress and injury to reputation damages in unstated amounts. The dollar requests were based on debts owed to creditors secured by the property which were left unsecured by the foreclosure (and for which the plaintiffs were liable), other obligations of the property and lost equity.
Result
POST TRIAL MOTIONS: Per the defendant, the court granted a new trial conditionally, subject to plaintiff Katersky accepting remittitur of the punitive damages award from $1 million to $50,000, thereby reducing the total award from $2,650,000 to $1.7 million. The plaintiffs were given 30 days to accept the remittitur.
Other Information
The verdict was reached approximately two years and one month after the case was filed. SETTLEMENT CONFERENCE: A mandatory settlement was held on July 2, 1996 before Judge Anthony J. Mohr just prior to trial. It did not resolve the matter. The Court held that plaintiff Harold A. Katersky was a "public figure" for defamation purposes, based on the radio and television informercials Harold and Klara had broadcast during the 1980s, five years before the incidents in question, and based on two books Harold and Klara had written, which were published in the late 1980s.
Deliberation
5 days
Poll
9-3
Length
21 days
For reprint rights or to order a copy of your photo:
Email
jeremy@reprintpros.com
for prices.
Direct dial: 949-702-5390