Facts

Plaintiff Bronwood LLC sued in May 2001 for $565 million alleging that the defendants were liable for breach of contract, breach of fiduciary duty and breach of the covenant of good faith and fair dealing. These claims were based on an LLC operating agreement and an alleged implied joint venture. Bronwood claimed that they were experts in the distribution of power. They claimed that the parties entered into an agreement to form an unregulated power company to distribute power at defendants’ industrial park near Reno, Nevada. Bronwood further claimed that the defendants used the threat of this project to squeeze a better deal from the incumbent-regulated utility company in the area. Bronwood claimed that when the defendants terminated its arrangement with Bronwood and contracted with the incumbent utility, it received $17 million in water rights and $12 million in free infrastructure construction that it would not have otherwise received. In addition, Bronwood claimed the loss of around $10 million in profits that it would have made had the unregulated power company been allowed to operate. At trial, the plaintiff asked the jury to award $10 million in lost profits and $29 million in unjust enrichment, or a total of $39 million

The defendants contended that the plaintiff’s statements regarding their experience and ability to deliver were not accurate. The defendants claimed that the plaintiffs failed to deliver on their end of the deal, namely coordinating the purchase and transmission of power, and of setting up a viable company. The defendants contended they were forced to make a deal with the incumbent utility company when Bronwood failed to come up with a viable, workable plan. The defendants further contended that the deal with the incumbent utility was no different than it would have been had this project not gone forward. They denied getting any new water rights, and denied getting infrastructure benefits that they were not otherwise entitled to under existing tariffs in Nevada.

Result

Defense verdict to Tahoe Reno Industrial Center LLC, Norman Properties LLC, Don Roger Norman; Hung Jury to Lance Gilman and Vince Griffith; Hung Jury as to affirmative defense verdict; Defense verdict on cross-complaint to Bronwood LLC and Richard Katzenbach. The court granted nonsuit as to plaintiff's claims for alter ego liability on the part of all defendants.

Other Information

The court is in the process of evaluating the verdicts and scheduling a second trial.

Deliberation

20 days

Length

62 days