COSTA MESA, Calif., April 29, 2015 – partner Michael Adams, along with senior counsel Heather Herd, at Rutan & Tucker, LLP, California’s largest full-service law firm based in Orange County, recently achieved a substantial victory in a complex lawsuit for its client. The client was one of several co-investors who purchased a shopping center in Arizona using funds borrowed from a lender.
When the property first went into distress, the investors entered into a side agreement amongst themselves that if the lender sought to recover a deficiency on the loan, the investors would contribute to the deficiency in proportion to their ownership share in the investment. The lender non-judicially foreclosed on the property and sued our client for the deficiency based on his personal guaranty.
The client came to Rutan & Tucker after being represented by two previous law firms in the litigation. When Adams took over as trial counsel he faced a very difficult situation. The lender had already convinced the court it was likely to succeed on its claims and obtained a multi-million dollar pre-judgment attachment against our client. Rutan & Tucker identified a defect in the loan documents, and successfully negotiated a settlement of the lender’s claims for a small fraction of the deficiency. Rutan & Tucker then pursued the co-investors for contribution based on their side agreement. Despite ambiguities in the contribution agreement that arguably favored the defendants, Adams tried the case on the theory that the defenses to the enforceability of the side agreement were litigation afterthought that did not accurately reflect the parties’ intent at the time of signing the agreement.
In its statement of decision, the court found in favor of Rutan & Tucker’s client on all of the causes of action submitted for decision, awarded 100% of the claimed damages, awarded pre-judgment interest finding that the claim was liquidated, and declared Rutan & Tucker’s client to be the prevailing party for an award of attorneys’ fees and costs. The Court expressly found that the defenses were indeed litigation afterthought as Adams had argued.
“This was a case about fairness, and having co-investors pay their fair share of an investment loss,” said Adams. “It is a rewarding victory, not just because of the money that we won for our client, but because at the end of the day our client was able to see the justice system deliver the fair result.”
“This is a significant win by all measures,” said Mark Frazier, Chair of Rutan & Tucker’s Trial Department. “Michael and Heather deserve high praise for combining keen insight into real property secured transactions law with a compelling advocacy theme to redirect a difficult case to a result that substantially reduced our client’s financial exposure to the lender, and then did justice to the agreement among the co-borrowers, including putting the financial burden of litigation expenses on the disloyal co-investor.”
About Rutan & Tucker LLP
Rutan & Tucker is California’s largest full-service law firm headquartered in Orange County, California with offices in Costa Mesa and Palo Alto. Primary practice areas include corporate and securities law, business and real estate litigation, labor and employment law, intellectual property, real estate, government and regulatory law, land use law, bankruptcy, condemnation and property valuation, environmental law, and taxation and estate planning. Detailed information about the firm is available at www.rutan.com.