Litigation Lessons-How To Win And Collect In Full

Litigation has become expensive both in dollars and time consumption, and is only worth it if the dollars are sizable, and you can devote the time to managing the litigators and the process. I have just won a major lawsuit against Stan Thomas, a major national developer based in Atlanta, and there are some lessons to be learned. We were able to collect the full amount of the judgment plus interest, plus a portion of our legal fees. It was summary order in federal district court in Southern District of New York in Manhattan and the Second Circuit on appeal decided by summary judgment. The case is called Ross et al vs Stanley Thomas –Southern District of New York in Manhattan. 09 CIV 5631 (SAS)

In short, my partners and I were the winners of the RFP to acquire and develop the UP Railyards in Sacramento, CA in 2002. We brought Stan Thomas in as our money partner. In July 2004 he proposed to buy 100% of our ownership interest. In writing the operating agreement and terms of payment, I adhered to a cardinal rule of mine-KISS. The whole deal was wrapped in a single sentence which in essence said: if you refinance the property and the proceeds are more than your costs of development to date, then you must fully pay the seller as of date of closing on the refinancing. It is essential to make the operative clause in plain English, using simple well defined words that are common in everyday usage, and no formulas, nothing for misinterpretation, nothing that has any dual meaning, no legalese, and very clear payment dates and time. Thomas lawyers tried to argue that the word refinancing is ambiguous. They even rolled in an “expert” to say so. Both the lower court and the appeal court summarily rejected that argument. Do not assume judges are smart or understand anything about business. Some are, and they do get it. The judge in our case was a very astute and experienced federal judge who understood the case very quickly and tolerated no nonsense. Who you get as a judge matters. Try to go federal. The judges are much better than state judges in general, although some state judges are very good. It is essential to get your argument down to the basics that a non business person can easily grasp, and not get bogged down in superfluous issues. You may end up in front of a jury, and that means in front of the uninformed and often ignorant. Try to stay away from juries.