For thirty years, our client, Al, was a partner with the Defendants in an engineering firm and commercial real estate business.  When he was 75 years old, Parkinson’s disease and dementia forced Al to stop working. As a result, Defendants took over complete control of the operations of the partnerships, including all of the books and records. At that point, Al’s only information about the businesses came from statements made by his partners (in conversations, emails and letters) and annual written financial reports Defendants prepared and sent to Al.

Once Al was unable to work, Defendants engaged in a 10 year pattern of fraud and embezzlement, taking over $500,000 in monies belonging to Al. When Al’s daughter discovered in 2014 that Defendants had been defrauding and embezzling from her dad, she hired us to get justice.

The case was litigated for years, with Defendants fighting fiercely at every stage.  This case presented many hurdles, but the most daunting was that our client, Al, could not testify at trial because of his dementia.  That meant the Defendants could and did fabricate the most convincing story they could create, knowing that Al was not able to rebut their testimony.  Our only chance of success was to prove through tough cross-examination that the Defendants were testifying falsely.

And, we did that very well.  After a two-week trial, the jury unanimously found the Defendants liable for fraud, embezzlement and financial elder abuse, awarding full damages to Al — plus $400,000 in punitive damages.  On top of that, the court awarded Al attorneys’ fees he spent proving his case — for a total judgment of $1.2 million.

When MCI Telecommunications Co. Suspected it was paying too much to lease a building in So. Natomas, in 1995 it hired a lease-auditing company. And sure enough, the auditor discovered a major goof in the amount of space MCI was actually leasing.  Because of the miscalculation, the company would be overcharged by $1.1 million over the life of the lease.  Now, an $850,000 judgment has been awarded by an arbitration in the case – but not to MCI.

The judgment goes against MCI and to the auditor, who said the telecommunications giant refused to pay him after he discovered the error. In an odd twist of fate, there was no judgment against the landlord that originally made the mistake – a partnership headed by TV and banking magnate Jon Kelly, and some of the principals of KCS Development Co. Real estate brokers say the case is a wake-up call to landlords and tenants alike to be more careful with large leasing deals. “The real estate community will think twice about the way it does leases after this,” said Jeffrey Ochrach, attorney for CRI Advisors Inc., the lease auditor.

Sacramento-based CRI Advisors was hired in 1995 to check the amount of space MCI was leasing at 2495 Natomas Park Drive.  In 1990, MCI signed a 10-year lease for 85,919 square feet in the first class-A office space built in South Natomas. In 1993, MCI added another chunk of space, putting the total lease at 95,305 square feet.  MCI would pay about $21 million over the 10 years, Ochrach said. The lease was in one of two mirror-glass, six-story office buildings put up near Interstate 5 and the garden Highway in 1989 by Kelly and some of his partners from KCS Development.   Five years later, MCI retained CRI Advisors, a three-person company that specializes in precisely measuring the amount of space leased in buildings. Owner Paul Ponzelli said his agreement with MCI was that his firm would  be paid 50 percent of any overcharge it discovered in the lease.   CRI Advisors found that MCI was paying for 5,000 square feet that it wasn’t using.  Ponzelli figured that would result in a $1.1 million overcharge to MCI over the term of the lease.  But to his surprise, MI refused to pay his half of the savings. He took the issue to the American Arbitration Association, a group of retired judges and lawyers who rule on cases the litigants don’t want to take to court.

During hearings in June, MCI claimed it had a prior agreement with the landlord that the extra space would be included in the lease.  MCI and the landlord also claimed it had been measured to their mutual satisfaction.   But the arbitrators found that MCI was being charged for space it wasn’t using, that Ponzelli had discovered the error and that CRI should be paid.  The panel awarded CRI a total of about $850,000.  “I’d say the lease-auditor business is going to pick up,” said John Frisch, a prominent office leasing agent and manager of Cornish & Carey Commercial/ Oncor International. “Anytime anything this high profile happens, your going to have more tenants engaging these people.” All parties to a deal are going to have to be more alert in issues like square footage, he said. “It means everybody in the deal is going to have to do a better job.” Dennis Shorrock, manager of the local Colliers International office, said the CRI/MCI case “will alert people to be more careful in signing leases without having their own representatives measure the space to make sure the landlord’s measurement is accurate.” Space measurement is a difficult science.  “A lot of people aren’t really knowledgeable about it and a lot of people don’t really understand it,” Frisch said.  “I’d say a whole lot of buildings don’t conform to the standards.”

Katie had congenitally defective jawbones: her jawbones are abnormally small and inadequate to hold very many permanent teeth.  She is also congenitally missing one-third of her permanent teeth.  And these conditions do and will lead to her jawbones deteriorating year by year for the rest of her life.  To ameliorate these conditions, Katie’s doctors developed a surgical plan: crack open the ridges of Katie’s jawbones; graft bone from her chin to fill in these cracks in order to build up Katie’s jawbones; surgically place dental implants into Katie’s reconstructed jawbones.

Katie’s doctors explained to Health Net that this treatment plan was medically necessary to address Katie’s jawbone condition and, therefore, the medical care was covered under Katie’s Health Net insurance policy.

But without consideration for the opinions of Katie’s doctors, and without conducting any investigation into the medical necessity of this treatment, Health Net denied insurance coverage for all or any part of this medical treatment.  As a result, Katie’s parents incurred approximately $30,000 in medical bills.  The Carters paid for this surgery by mortgaging their home, taking from savings and depleting some of Katie’s college savings fund.

Katie was forced to sue Health Net.  Health Net turned this minor lawsuit into a full blown war.  With Health Net’s financial might, this would not be a fair war.  It would be Napoleon versus the Russian Emperor circa 1812.  Health Net hired two law firms to fight Katie.  Health Net refused to turn over its files to show how it justified denying Katie’s claim for reimbursement.  Health Net refused to present its employees for their depositions.  Health Net delayed at every stage.  Health Net filed over one-half dozen different motions with the Judge.  Health Net’s strategy was to burden Katie with legal bills she couldn’t pay and thereby force her to give up.

Katie kept on fighting.  The Judge ordered Health Net to turn over its files and appear at depositions; and the Judge denied almost all of Health Net’s motions.  During the arbitration evidentiary hearing (the “trial”), Health Net called two physicians who made the “medical decision” to deny coverage.  Mr. Ochrach’s cross-examination impeached the testimony of both physicians, proving that they denied Katie’s request for coverage without giving any weight to Katie’s medical condition and the actual language in the Health Net insurance policy.  After a full year of legal battles usually reserved for the most expensive class action lawsuits, the bell tolled for Health Net.  The judge concluded that the only “fair reading” of the Health Net insurance policy required a finding that Katie’s treatment was covered.  The Judge awarded Katie a judgment against Health Net for her $27,000 in medical expenses plus another $154,000 – for a total award of $181,000.

Health Net didn’t stop there.  Health Net continued battling this case for two more years, forcing the case into the Federal District Court in Sacramento, the 9^th Circuit Court of Appeals in San Francisco, and back to State court in Auburn.  Katie kept on fighting . . . and she won.  Katie received a final Judgment against Health Net in the amount of $389,000.

Katie’s story is a chapter out of the John Grisham novel Runaway Jury.  Health Net obviously knew it was responsible for Katie’s medical bills, but it denied her claim.  The behemoth Health Net then spent an estimated half million dollars fighting Katie, expecting Katie to eventually cry “Uncle.”  But Katie persevered and defeated the giant company.

Justice is served.