Articles Posted in Civil Litigation

photo-suing-supplier-300x199No business is an island. Without trusted suppliers businesses would close shop. What happens when that trust is breached and you’re left holding the bag? If disagreements can’t be worked out and your company is facing or may face a serious loss as a result you may want to consider legal action against a supplier or former supplier.

Huy Fong Foods Inc., based in Irwindale, makes the Sriracha brand hot sauce from chiles (which are peppers). Without chiles there is no Sriracha but that hasn’t stopped the company from suing its chile supplier, Underwood Ranches, based in Camarillo, according to NBC4. Underwood’s website describes the company’s history and its current business including, “Today the farm grows red jalapeños for Huy Fong Foods…”The two companies have had a relationship for thirty years.

Underwood is being sued for breach of production agreement, breach of contract and civil theft. The complaint alleges,

The American civil legal system normally doesn’t allow for a successful party to recoup its legal costs, unless that’s spelled out by statute. Though in other countries a plaintiff brining a lawsuit runs the risk of paying the defendant’s lawyers’ bills, normally unless a claim is particularly groundless and “frivolous” the plaintiff need only cover his or her own costs. A recent Los Angeles County Court case is an exception to that rule, according to the Daily Journal.
Nancy Arambula Corona, a former on-site building manager, sued her ex-employer, Weiss Family Properties, LLC, (which owns apartment buildings in Los Angeles County) under the state’s Fair Employment and Housing Act and its Labor Code. According to the filings in the case,

• Corona suffered an injury on the job.
• Defendant states it reasonably accommodated her by having another employee clean her building.
• Weiss eventually fired Corona because she couldn’t perform her job and plaintiff’s physician stated her condition wouldn’t improve.
• Corona also claimed she was owed unpaid overtime pay while Weiss claimed they paid her for the hours she submitted on her time sheets.

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Good morning!  Let’s talk a little bit about conflict of interest. Conflict of interest arises in two situations.  One is what we call successive representation.  This occurs when  I represented Bob 2 or 3 years ago and now David comes to my office and wants me to represent him because of issue that he has with Bob.  That’s a conflict of interest because I would be representing a new client suing a former client.  That’s a no‑no.  A court in that situation would determine whether or not attorney learned a secret about Bob and that will aid David in this situation.  This is what we call successive representation.

The other situation is we call multiple representation, where we present two or three or more clients in a same lawsuit.  Client always want to share cost with attorney’s fee, which is understandable, but oftentimes we find that each one has their own interest.  For example, each has a different opinion about the direction of litigation.  One might want to settle, while another wants to move forward with litigation, etc..   In this situation, if the defendant side needs to come up with the settlement, often times the defendants will point the finger at each other as to who is more at fault.  So that’s where the situation becomes sticky.

Good Morning.  I still can say it’s good morning even though it’s almost noon time.  I woke up early this morning and went to Torrance courthouse for a hearing. On the way back to my office, I thought about a video that I put out last month where I talked about how your attorney’s character count.

Not only does your attorney’s character count, but also your attorney’s personality, the way that they handle your matter, and how they litigate a case. All of these shape the landscape of your case; Meaning, they can affect whether or not your case is going to find resolution, whether or not your case is going to be litigated efficiently as efficient as possible, and/or whether or not your case is going to be settled within a reasonable time.

I currently have two partnership dispute cases that are in the extreme. They’re both dealing with dispute between partnerships that have a significant amount of real estate holdings.  In one case, I filed on behalf of my client against the other partner and received a call from the other attorney. The first thing that came out of his mouth was, “Hey, what does your client want?”. I told him exactly what I’m expecting and what my client wants in terms of resolving this issue. The other side’s attorney listened and we worked out a resolution plan.

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photo-PDC-EB5-scam-300x200It’s never a good thing to have a federal judge order a freeze on your business’ assets. That’s what happened to an Orange County firm that federal officials claim stole money from foreign investors, mostly Chinese citizens, who hoped their cash would lead to permanent U.S. residency, the Los Angeles Times reports.

Newport Beach lawyer Emilio Francisco and his investment firm, PDC Capital, face civil fraud charges filed by the Securities and Exchange Commission (SEC). It claims Francisco spent at least $9.5 million of investors’ cash on personal expenses (some going to help pay for a yacht, a yacht-club membership and his credit card) instead of investments that would qualify investors for the EB-5 visa program, which offers permanent residency to foreigners who make job-creating investments in the U.S.

Investors provided PDC with more than $72 million from 2013 to 2016, according to the SEC’s suit. More than a hundred investors put in $500,000 each. They believed the money would be spent building assisted-living facilities and opening new locations of Caffe Primo, a Los Angeles coffee shop and restaurant chain. The SEC states some of the money went to the promised projects, but millions of dollars were invested in other projects and more than $2 million went to pay Francisco’s personal expenses.

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photo - toy idea theftA stagnant company, one that’s not looking to improve on its products or come up with new ones, may not have a bright future. There may be pressure to come up with the next successful products as well as pressure to cut costs and improve profits. That may result in legal problems if a company illegally uses someone else’s concept without their approval or paying them. A recent Bloomberg article spelled out this problem of intellectual property theft in the toy industry.

Ellie Shapiro came up with a toy in 2012. They were little animal figurines with snow globes in their bellies which she called Wishables. She worked as a freelance toy inventor but prior to that she spent ten years as an executive at Mattel Inc. and Walt Disney Co. Shapiro pitched her toy ideas to toymakers including Hasbro, Inc.

She signed a confidentiality agreement, met with Hasbro executives in Santa Monica in 2013 and showed off her prototypes, sample packaging and feed back from focus group testing. Executives liked the presentation, asked for samples but later told her they were passing on the idea.

In the fall of 2014 she walked into a Target store and saw a new Hasbro toy, an animal figurine that was also a snow globe. “At first, I was in shock and in disbelief,” Shapiro told Bloomberg. “Then I felt completely sick.” She later sued Hasbro for stealing her idea in federal court in the Central District of California. The company responded by saying snow globes have been used in toys for years and a similar design was developed in-house in 2012, prior to her submission.

Shapiro sued an Australian toy maker previously and settled the case in 2014. In the past she felt Hasbro stole a previous idea, threatened to sue them but ultimately did not. Freelancers like Shapiro face the double threats of having their ideas stolen and not making any money or suing (which can be expensive) and getting a litigious reputation risking being avoided by toy companies and not making any money. Some inventors see theft as the cost of doing business, hoping eventually a company may agree to pay for an idea.

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photo - hold the mayoNew companies seeking investment and funding are under a lot of pressure to show success. One such company is facing an investigation by the Securities and Exchange Commission (SEC) to see if it tried to boost its sales numbers by hiring contractors to buy their product then reimburse them for the purchases.

The SEC is looking into San Francisco based Hampton Creek, Inc., according to Bloomberg, which broke the story about the potentially bogus sales numbers in order to impress potential investors. The agency is trying to determine if the startup broke federal law by failing to disclose it was buying its own vegan mayonnaise from stores, making it appear to be more successful than it actually was, according Bloomberg’s sources.

At issue is whether company founder and CEO Joshua Tetrick improperly recognized revenue from purchases made with company money. Bloomberg reported Hampton Creek started an operation to purchase its own mayonnaise starting as early as 2014. The SEC has jurisdiction over the closely held company because it has raised money from outside investors.

Investors have come up with more than $220 million for Hampton Creek and Tetrick told employees in August he expects to raise another round of financing by September that will increase the value of the company to $1.1 billion, according to Bloomberg.

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photo - wolves among sheepThose who own successful local businesses often rely upon networking to try to meet potential customers, referral sources, future employees and investors. That networking can occur any time and any where people meet, including while attending religious services. You may feel a connection to someone who shares your faith and attends the same church. You may feel that person is also more trustworthy because of that apparently shared faith, but your feelings may be wrong.

Steven McKinlay and Kristi McKinlay of Coto de Caza were arrested in December (just before Christmas) and are facing grand theft and fraud charges. The Orange County District Attorney’s office claims they bilked investors, including people they knew through their church, out of more than $3 million, according to the Orange County Register.

They are the owners of God’s Sports Company located in Foothill Ranch. The McKinlays have been charged with a dozen felonies, including using untrue statements in the purchase or sale of a security, grand theft and the use of a device in a scheme to defraud. If convicted the two could be imprisoned up to 23 years and eight months.

Law enforcement claims,

  • The two victimized at least ten people, including a former Major League Baseball player, a friend who gave them money he received due to an injury and a person being treated for cancer who wanted to build an inheritance he could pass on to his family.
  • Investors, many of whom knew the McKinlays through the church they attended, paid them from $22,500 to more than $700,000 to invest in God’s Sports Company.
  • The McKinlays failed to tell investors about Steven McKinlay’s prior bankruptcy filings and property liens that had been filed against the pair.
  • Some of the “invested” money was used as part of a Ponzi scheme where money provided by newer investors repaid some of the older ones.
  • The church got the benefit of a $50,000 donation from the McKinlays paid from investor funds.
  • The McKinlays got the benefit of the rest. Instead of being used to build the business money believed to have been invested instead went to the couple’s personal use including $17,000 a month rent for two homes, payment for their daughter’s wedding, a car and an Angel Stadium luxury suite.

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photo - Michigan scamCon men are very good at sales. They know the importance of trust and how to gain it. They may be charming, tell a great story and be very convincing about the investment opportunities that are available for just the right people. And you are just the right person! That may have been the pitch to 84 year old Elsa Prince-Broekhuizen before she made her investment.

The president of a western Michigan investment company has agreed to plead guilty to stealing about $16 million from Prince-Broekhuizen, a prominent western Michigan philanthropist according to the Lansing State Journal . She’s also the widow of billionaire industrialist Edgar D. Prince.

The fraud occurred over a period of 16 years according to the felony information filed in U.S. District Court in Grand Rapids. A plea agreement states 68-year-old Robert Haveman admits to wire fraud, money laundering and causing $16.2 million in losses to Prince-Broekhuizen and the Elsa S. Prince Living Trust.

Haveman is president of EDP Management in Holland, Michigan, which managed investments for Prince-Broekhuizen and the trust. It’s alleged that at least $1 million of the ill-gotten gains were used as partial payment for a real estate purchase. Court documents state that starting in 1999 Haveman moved money into a personal account and also spent it on personal expenses and investments. Haverman falsified accounting records to hide the fraud.

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photo - elder abuseFinancial abuse of the elderly not only harms the older person but also harms those who aren’t getting the financial support they’re entitled to. A lawsuit filed in December alleges an elderly woman with good intentions was manipulated by a financial advisor. A charity that at one point was the beneficiary of a trust created by a wealthy, elderly woman found itself out in the cold. The financial advisor allegedly found a $2.4 million windfall, according to mynewsLA.

Seal Beach based charity Los Angeles Thoracic and Cardiovascular Foundation claims Juanita Earley’s investment adviser, James Schaedler, took money meant for the organization. The defendants are Schaedler, Merrill Lynch (the wealth management arm of Bank of America) and Banc of America Investment Services Inc. (BAIS, Merrill’s predecessor). Financial elder abuse and negligent supervision are the causes of action.

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