when success matters
I commonly see close friends form small businesses together. They usually operate as a partnership or LLC. Unfortunately, these business unions are much like marriages – they don’t always last. When things go awry, [Read more…] about What Duties Do Business Partners Owe Each Other?
Our client, Cal, owned an oil change business which was a franchisee of a major oil company. Under the franchise agreement, Cal had the right to grow his company by opening more and more stores, and then to sell the whole business back to the franchisor (the major oil company). The language of the franchise agreement in this regards was ambiguous and certainly susceptible of different meanings. The oil company claimed that Cal was limited in the number of stores he could open and sell back. The reason the interpretation of the contract was so important is that, if our client was correct, the oil company would owe many millions of dollars.
The entire case hinged on the meaning of the word “or.” That is, does the work “or” mean “and/or” or does it have only the disjunctive meaning of “or.”
Litigation was hard-fought. The oil company hired one of the country’s largest law firms, who fought tooth and nail on every issue. We took depositions around the country, seeking to prove that the oil company executives had the same understanding of the contract that Cal did. Through these depositions — using key correspondence and notes written by the oil company executives — we were able to make a very good case that the word “or” as used in the parties’ contract meant “and/or,” which meant Cal could open many stores and then sell them all back to the company under a contractual formula that made such a transaction very valuable for our client.
Before trial, the major oil company paid my client $4 million to settle.
After a three week trial, a Sacramento County jury found Westlake Financial Services, a major Los Angeles car loan company, guilty of fraudulent lending practices, and awarded a Sacramento Dollar Rent a Car franchise over $400,000 in damages plus $2.7 million in punitive damages. “The jury found that Westlake induced Dollar to enter into contracts by making false representations, overcharged interest, assessed unwarranted late charges, and failed to give credit for many monthly payments,” said Dollar’s attorney, Jeffrey H. Ochrach of Roseville.
The litigation stemmed from breaches of agreements under which Dollar bought and financed fleets of rental cars with Westlake. Under their contracts with Dollar, Westlake was required to buy back most of these cars, thereby paying off the balance on the loan. But Westlake refused to honor its contracts and then sued Dollar on the loans Westlake failed to pay off. This dispute took five years to get to trial. At trial, Westlake introduced many documents that Dollar asserted were highly questionable: “After five years of litigation, Westlake ‘found’ invoices, checks and other documents it somehow couldn’t find when we asked for them before trial. These documents were supposed to help their case, but I think the jury recognized that Westlake fabricated these documents during trial and it cemented the notion that these guys were untrustworthy,” said Mr. Ochrach.
“One of the things that makes this case so satisfying is that Westlake sued Dollar for about $1 million, claiming enormous amounts of interest, late fees of $140,000 and denying receipt of hundreds of thousands of dollars in payments. But the jury waded through all of the accounting evidence and determined that Dollar had fully paid these loans – in fact, Dollar overpaid.” Mr. Ochrach commented, “I explained to the jury that the only way to stop this kind of fraud is to hit Westlake with a verdict that catches the attention of Westlake’s shareholders and the public.” The jury’s message was loud and clear.
A former politician who resumed practicing law after retiring from the legislature sued Mr. Ochrach’s client, Marty, for unpaid legal fees. On behalf of his client, Mr. Ochrach countersued the lawyer for legal malpractice. Why? The lawyer represented Marty in his corporate matters,
and the lawyer failed to properly advise Marty about a contract with one of his employees. The employee sued Marty claiming he was a 50% partner entitled to half of the profits of the company, and the employee won. Marty claimed the employee was not a partner and, instead, was given a 10% profit sharing in the company. The reason the employee won, according to Mr. Ochrach, was that the lawyer failed to properly document the relationship with the employee.
Just before trial, Mr. Ochrach convinced the court to throw out the lawyer’s lawsuit against Marty. Then, the parties went to trial over Marty’s lawsuit for legal malpractice. The highlight of the trial was Mr. Ochrach’s cross-examination of the lawyer. Mr. Ochrach was able to show to the jury how simple it would have been for a competent lawyer to draft a simple contract that would have laid out the terms of the employee’s compensation, which would have defeated the employee’s claim that he was owed a percentage of profits of the company.
At the conclusion of trial, the jury awarded Mr. Ochrach’s client $2.8 million.
The plaintiff alleged a conspiracy to defraud her arising from transactions involving the sale of a ranch and Percheron horses. At trial, the plaintiff called defendant’s alleged co-conspirator to testify against Mr. Ochrach’s client. However, Mr. Ochrach had thoroughly investigated this witness and the plaintiff and, on cross-examination, impeached the witnesses almost every minute. In fact, after about 30 minutes of of cross-examination, the alleged co-conspirator — who was really a co-conspirator with the plaintiff — began pleading the 5th Amendment privilege against self-incrimination to every question. Mr. Ochrach had destroyed his credibility.
In the end, the judge entered a decision exonerating Mr. Ochrach’s client of any wrongdoing — a complete defense victory.