LOS ANGELES, September 21, 2013 – Spillane Trial Group PLC achieved an unqualified series of victories on behalf of the Restful Group Entities, and managers Barry Seidman and Steven Pearl, in a cross-country series of cases asserted by disgruntled investors. The rulings from three separate forums – a Los Angeles arbitration, Southern California bankruptcy court actions and a Fairfax County, Virginia Circuit Court proceeding – exonerated the company and its principals of all claims of fraud, mismanagement and breach of fiduciary duty. Earlier this year, Spillane Trial Group successfully set aside a writ of attachment where one of the investors had attempted to seize the Restful Entities’ assets prior to trial.
The Restful Group Entities hold majority interests in subsidiary companies in Mexico that operate cemeteries. Its investors made high-risk, high-reward investments, hoping to realize potentially large returns. In what Spillane Trial Group believes was a play to take over the cemetery investments through aggression, two well-heeled investors launched a litigation assault against the Restful Group Entities and managers Seidman and Pearl, resulting in five different cases in three separate forums. These actions, and a desire to restructure their equity, propelled the entities to file related bankruptcy actions in San Diego.
Among other allegations, the claimants charged that the Restful Group entities, Seidman and Pearl issued false statements, failed to disclose material facts, improperly sold unregistered securities, grossly mismanaged assets and breached fiduciary duties to investors.
“The lawsuits kept accumulating, and we wondered if we could lose the business we put everything into for years,” said Seidman. “Then Spillane Trial Group accomplished these remarkable wins on every front, obtaining what we hoped for when we hired the firm for its expertise in managing high-stakes litigation across multiple forums. We were impressed with the firm’s record of results for entrepreneurs just like us, and we are now on its list of satisfied clients.”
In the Los Angeles arbitration, the arbitrator rendered a final award rejecting each and every factual and legal contention the claimant leveled and finding that neither Seidman nor Pearl had engaged in fraud, mismanagement or breaches of fiduciary duty.
Also, Virginia’s Fairfield County Circuit Court dismissed an investor’s fraud claim against the Restful Entities and Barry Seidman. The investor claimed that Seidman had fraudulently procured a $300,000 loan and that the defendants were liable for $3 million, including a draconian late fee clause. The court agreed with Spillane Trial Group that no fraud had been committed and that the late fee constituted an unenforceable penalty.
In the bankruptcy action, Spillane Trial Group convinced Southern District of California Bankruptcy Judge Laura S. Taylor to deny motions to dismiss the bankruptcy action, convert it to liquidation or appoint a Chapter 11 trustee. Again, the investors alleged the Restful Group Entities and Seidman had engaged in bad faith, mismanaged the business and defrauded the investors. They introduced evidence from an expert witness and from a former manager of the Mexican cemeteries.
Judge Taylor found the expert witness unconvincing – largely based on Spillane’s cross examination pointing out flaws in his analysis – and the former manager of the Mexican subsidiaries unbelievable. On the other hand, she found Seidman to have acted consistent with his duties and authority. She explained that the fact that the Restful Entities and Seidman had soundly defeated the movants in prior litigation “underscored the appropriateness” of her decision to reject the investors’ motions and that the Virginia court decision was “a decided success in the Debtors favor.” She pointed to the Spillane Trial Group’s ability to set aside the earlier writ of attachment as evidence of the investors’ unlikelihood of success on the merits.
“As it stands right now on the non-bankruptcy playing field,” said Judge Taylor, “the [Restful Groups] are doing pretty well. [The prior rulings] made me comfortable in the decision I was making.”
“Because we were able to thwart these investors’ efforts to take over the investment through meritless claims of fraud and mismanagement, our clients have been able to focus on their business, resulting in improvements in operations and management, increased revenues and dramatically decreased costs,” said Jay Spillane, managing partner of Spillane Trial Group. “This is exactly the kind of work we relish: facing down bet-the-company litigation, restoring reputations, and returning our clients to business as usual.”
About Spillane Trial Group PLC
Spillane Trial Group PLC is a law firm devoted exclusively to high-stakes business trials for entrepreneurs, closely-held entities and middle-market companies. The firm begins and ends every engagement with the singular goal of prevailing at trial and enjoys a winning track record. The firm handles cases before all administrative tribunals, federal and state courts and courts of appeal and is especially known for cases involving entertainment, intellectual property, technology, finance, real estate, family wealth and company control. For more information, log on to www.spillaneplc.com.