Business Disputes
Case: Lender Ponzi Scheme
Result: $9.9 Million Judgment in Client’s Favor (plus $1.25 Million in Cash Settlements)
This case was referred by a local transactional business attorney. In it, a San Diego real estate developer entered a written contract for the purchase of a Rancho Santa Fe horse ranch, requiring a large earnest money deposit. The developer intended to fund the purchase with a real estate loan it obtained from Los Angeles loan brokers, which were purportedly backed by a National Bank. When the loan failed to fund, the Sellers sued our client for breach of the real estate sale agreement. Our client then sued the loan brokers, the bank, and a specific bank employee/insider for fraud, negligence, RICO violations, and other business torts. This was a document intensive case requiring many hours of document review, numerous bank subpoenas, witness depositions, and use of experts. The result was a $9.9 Million judgment for our client, along with over $1,250,000 in cash settlements. The court also awarded our client their litigation costs.
Case: Investor Fraud / Breach of Contract
Result: $4.5 Million Judgment for Client.
This case was referred by a local business and entertainment attorney. Our client was a San Diego realtor that had just come into money from a family inheritance. He was offered a too-good-to-be-true investment in a small gas station chain. The investor’s money quickly evaporated while his “business partners” vacationed on a sailboat in Mexico. We took immediate action suing for breach of contract and fraud. We used the court’s prejudgment writ of execution powers to locate and claw back money and other assets, and ultimately recovered a $4.5 Million Court ordered judgment in San Diego Superior Court.
Case: Stockbroker Falls Victim to Nationwide Ponzi Scheme
Result: $223 Million Jury Verdict after 6 week trial. Once reported as the largest single-plaintiff jury verdict in California history.
During the 1980s and 1990s, Prudential Securities, Inc. was investigated by the Securities and Exchange Commission (SEC) and found to have defrauded investors out of close to $8 billion - the largest fraud found by the SEC in U.S. history. Our client was a Prudential Securities broker who was induced into transferring his clients’ investments into worthless limited partnerships. Attorney Foldenauer was on the team of lawyers that represented the Plaintiff, and responsible for law & motion, civil discovery, and pr-trial litigation matters. After over two years of hard-fought litigation and a six-week trial, the jury awarded our client $223 Million in compensatory and punitive damages. The verdict was then reported as the largest single-plaintiff jury verdict in California history. Note: The award was subsequently reduced, appealed, and later settled in a confidential amount.
Case: Solar Energy Company Sued by Dissatisfied Investor
Result: Confidential Nuisance Value Settlement Agreement
In this case, we represented a local solar energy company that was sued in Federal Court by a disgruntled investor who lost money when the company failed to produce. Foldenauer Law Group successfully defended multiple defendant businesses and business owners against claims of securities fraud, conversion, breach of contract, breach of fiduciary duties, and RICO violations concerning Plaintiff’s alleged investments. The court granted several defense motions to dismiss at the pleading stage under Federal Rule 12(b)(6) which resulted in a nuisance value settlement.
Case: Senior Couple Swindled by Building Contractor
Result: Six-Figure Judgment After Three-Week Trial
This case was referred to us by a San Diego business transactional attorney. A senior couple had saved for retirement with the hope of one day building their dream home in North County, San Diego. The couple hired a licensed California building contractor but fell victim to fraud when the contractor made off with large advances and unearned fees. We were honored to take on this case and immediately filed suit in San Diego Superior Court making claims of breach of residential building contract, misrepresentation, concealment, conversion, and negligence. A six-figure judgment was obtained after a contentious 3-week trial. The court awarded the entire dollar amount requested at trial, plus all attorney’s fees and costs incurred in prosecuting the action. After losing, the Defendant sought to discharge his debt in Bankruptcy Court. We protected our clients’ judgment through successful prosecution in the United States Bankruptcy Court, and obtained a Final Order of Non-Dischargeability.
Case: Seller of a Video Production Company Sues Buyer – Breach of Contract / Fraud
Result: Obtained six-figure settlement on cross-complaint against Plaintiff.
Buyer (Defendant/Cross-Complainant) purchased from Seller (Plaintiff/Cross-Defendant) a small video production company located in the Little Italy areas of San Diego. The purchase price was determined by financial statements provided to Buyer by Seller. The business failed immediately and Seller sued the Buyer for money still owing under purchase agreement. Foldenauer Law Group was retained by the Buyer. We conducted full discovery which disclosed that the Seller had falsified financial statements. Seller wound up paying the Buyer a six-figure settlement on Buyer’s cross-complaint to avoid jury trial.
Case: Freeze Out of Founding Member of Information Technology Company – LLC Membership Dispute – Breach of Fiduciary Duty / Breach of Contract / Unfair Competition / Involuntary Dissolution
Result: Substantial six-figure settlement obtained prior to trial.
This case was referred by an attorney. Foldenauer Law Group represented a founding member of a successful San Diego information technology (IT) company, who had been ousted and “frozen out” of profits from the company he founded. This occurs in many ways. In this instance, it was achieved by a controlling group of owners that inflated their salaries so no profits remained for our client. We verified what had occurred, filed suit on behalf of the client, and aggressively prosecuted a civil action under various California Corporations Code sections. After a series of favorable pre-trial rulings, the matter was submitted to mediation which resulted in a substantial six-figure settlement and a buyout of our client’s interest.
Case: Residential Building Developers Sued by Investors After Market Collapses – LLC Membership and Partnership Dispute – Breach of Fiduciary Duty / Breach of Contract
Result: Favorable 12 – 0 Jury Verdict on all causes after 3 ½ week jury trial.
This case was referred by a personal injury attorney seeking help for one of his clients. We represented a residential building developer who had built several beautiful, modern beach homes in the Mission Beach and La Jolla areas. Our client was sued by one of his investors/business partners for fraud, conversion, breach of contract, breach of fiduciary duties, securities, and RICO violations when property values fell after the 2008 economic recession. Our client was exposed to multi million dollar verdicts. After a 3 ½ week trial, the jury returned unanimous verdicts in our client’s favor on all counts. Our client was also awarded his costs incurred in defending the action.
Case: Partnership Dispute – Breach of Contract / Breach of Fiduciary Duty / Securities Fraud / RICO
Result: Successful defense of case resulting in nuisance value settlement.
This case arose when a dentist lost money in a real estate investment. Foldenauer Law Group defended several San Diego residential building developers against claims of fraud, conversion, breach of contract, breach of fiduciary duties, securities, and RICO violations - and obtained a “nuisance value” settlement at mediation for the clients prior to trial.
Case: UFC Cage Fighter Sued by Business Manager – Breach of Management Contract
Result: Case dismissed before trial.
In this case, Foldenauer Law Group successfully defended a professional mixed martial artist (UFC cage fighter) in a “money grab” breach of contract lawsuit brought by his former business manager. Discovery in the case unearthed facts supporting a substantial cross-claim against the manager. Our client’s counterpunch lawsuit (i.e., cross-complaint brought on the fighter’s behalf) resulted in the manager agreeing to settled the case before trial with zero consideration paid to the manager.
Case: Asian Import Business – LLC Membership Dispute – Breach of Contract / Breach of Fiduciary Duty / Fraud
Result: Successful defense of case resulting in nuisance value settlement.
In this classic freeze-out case, we represented the defendant and counter-claimant in an LLC Member dispute. The parties owned a business importing and distributing products from China. The plaintiff sued our client for breach of fiduciary duty, fraud, and breach of contract - claiming $4,000,000 in damages. Our client counter-sued for breach of fiduciary duty, fraud, and breach of contract. After conducting discovery and winning some key motions we were able to successfully negotiate a nuisance value settlement for our client, without trial.
Case: Food Distribution Company Sued by Big Insurance Company – Breach of Contract, Insurance Bad Faith
Result: Successful defense resulting in a significantly discounted settlement amount.
This case was referred by a former client. Our client started a food distribution company with an old pick up truck and a garage. Over time, he developed it into a successful, mid-size company (500+ employees). Our client was sued by Liberty Mutual Group Insurance Company for breach of an insurance contract. We analyzed the case and switched the script by counter-claiming for bad faith insurance practices, breach of contract, and negligence. The case was resolved with a significantly discounted settlement at mediation.
Case: LLC Membership Dispute – Breach of Contract / Breach of Fiduciary Duty / Fraud
Result: Successful confidential settlement.
Our client, the owner of a local medical billing company, sued a former member of the LLC after they breached the non-compete clause of a buy-out agreement. The case successfully settled in a confidential settlement agreement before trial.
Case: Print Shop – Buyer versus Seller – Breach of Contract / Fraud
Result: Successfully settled before filing of lawsuit.
In this case, our client was a young businessman who had just purchased a printing business which failed to perform as represented. Our client wanted his money back – rescission and restitution. Prior to filing a lawsuit, we reviewed bank records and statements the Seller provided our client for valuation purposes. They were false, deceptive, and simply did not add up. The Seller denied these claims. We opted to use the mediation clause provided for in the purchase and sales agreement to force the Seller to an early mediation. We then presented our evidence and arguments to the mediator. The Seller had no alternative but to provide a complete refund to the buyer, plus fees and costs.
Case: 4th & B Nightclub Litigation – Buyer and Commercial Lender Sue Seller– Breach of Contract
Result: Successful Defense of a $2.6 Million Claim
4th & B Nightclub was once a local hot spot in downtown San Diego. The business had financial trouble resulting in litigation. In this case, a buyer who purchased the club was assigned interests under a commercial lease. Then, the Buyer failed to pay the seller as agreed, the Seller followed by failing to pay the bank, as agreed. This resulted in three-way litigation between the Buyer, Seller, and Bank involving judicial foreclosure and breach of promissory notes. Just prior to trial, Foldenauer Law Group was contacted by a business attorney and asked to jump in and try the case. Our firm represented the Seller through trial in North County Superior Court and successfully defended an approximately $2.6 Million breach of contract claim.
Case: Defense of Commercial Landlord – Breach of Commercial Lease Contract
Result: Obtained Settlement Award on Cross-Complaint against Plaintiff
Foldenauer Law Group was retained to defend a commercial property landlord against claims of Breach of Contract and Negligence, brought by one of his tenants. The Plaintiff alleged she suffered damages, including lost profits and earnings, as a result of mold. At trial, Foldenauer successfully moved to exclude all evidence of mold damages, arguing they were not authorized under the lease agreement. The court agreed and granted the motion. The matter then resolved with the unsuccessful Plaintiff agreeing to reimburse our client for all fees and costs he incurred in defending the action.
Case: Sale of Locksmith Business – Breach of Contract/Fraud
Result: Confidential Settlement
In this case, we represented the sellers of a state-wide locksmith services business who sued the buyers for Breach of Contract and Fraud. The Buyers of the business then counter-sued under the same theories, claiming the Seller had provided false financial statements. Using forensic accounts to establish there had been full and accurate financial disclosures, resulted in a pre-trial settlement for the full amount owed to our client, the Seller.
Case: Partnership Dispute at Architecture Firm – Breach of Contract / Breach of Fiduciary Duty
Result: Successful Confidential Settlement Enforceable by Stipulated Judgment
In this case, we were retained to enforce a Stock Purchase Agreement against our client’s former business partner in the architecture industry.
Case: Micro-Brewery Business Dispute– Breach of Contract / Promissory Fraud / Breach of Fiduciary Duty
Result: Successful Confidential Settlement
Foldenauer Law Group represented a well-known San Diego IPA brewer and micro-brewery owner who was sued by one of his investors for breach of a partnership agreement in brewery’s limited liability company. We were able to defend the action and reach a nuisance value settlement while also resolving a dispute over managerial control of the company.
Case: Employee Sues FedEx Delivery Route Owner – Wage and Hour Claim
Result: Successful Confidential Settlement
Defended a local FedEx delivery business owner against former employee claims of a wage and hour violations.
Case:Defense of Public Sculpture Artists Sued by National Shopping Center – Breach of Contract
Result: Obtained six-figure settlement on cross-complaint against national shopping center.
Normally, a Plaintiff files a lawsuit hoping to recover damages. It doesn’t always work out that way. This case presents an example of a business dispute where we represented the Defendants who are ultimately awarded substantial damages on their cross-claim against the Plaintiff. This case was referred by a local attorney who placed trust in us. A national chain of shopping malls hired local sculpture artists to create public art for one of its southern California shopping centers. After a change in ownership of the mall, a dispute arose surrounding the nature of the art and its placement. The mall then sued the artists for breach of contract and the artists counter-claimed for breach of contract. Foldenauer Law Group represented the artists as the Defendants and Cross-Claimants in the lawsuit. On the eve of trial, after the mall heavily litigated the case, we were able to obtain a six-figure settlement for our artist clients.
Case: Shopping Mall Sues Tenant – We Defend / Breach of Contract
Result: Confidential Nuisance Value Settlement
Represented a local business owner with space in a Chula Vista shopping mall against a claim of breach of the lease/license contract by the owner of the shopping mall.
Case: Family Run Avocado Ranch Partnership Dispute – Brother Sues Brother – Fraud/Breach of Contract/Breach of Fiduciary Duties/Business Freeze-Out
Result: Successful mid-six-figure settlement
This case presented a family partnership dispute, which often add emotional challenges to business disputes. In this case, one member (brother) of a family-owned limited liability company that operated a local avocado farm in North County attempted to freeze-out the other owner (his brother) and take over the business for himself. Our client hired us to defend the suit, prosecute a cross-claim, obtain an accounting, and dissolve the partnership. The is an example of a case where the Plaintiff pays the Defendant that Plaintiff has sued. The case settled during trial with a mid-six-figure cash award paid to our client.
Case: Restaurant Partnership Dispute – Breach of Contract / Fraud / Breach of Fiduciary Duty
Result: Nuisance Value Confidential Settlement Agreement
We represented the owners of several restaurants in the Gaslamp and Hillcrest Districts of San Diego against claims of fraud, misappropriation, and breach of contract by investors in the businesses.
Case: Partnership Dispute Between “Lifestyle Clothing and Tattoo” Company Owners – Breach of Contract / Fraud / Breach of Fiduciary Duty / Copyright and Trademark Infringement
Result: Confidential Settlement Agreement
Former owners of a local clothing and motorcycle parts company sued each other over claims of breach of contract, fraud, and intellectual property infringement. We represented the artist of the collection, and obtained an accurate valuation of the business and then negotiated a buyout with the assistance of a retired judge acting as mediator. The case was resolved without trial, which was in the best interest of both parties.
Case: Fashion model’s video images Misappropriated to Sell Male Enhancement Pills – Misappropriation of Likeness for Commercial Purposes / Invasion of Property / Intellectual Property
Result: Confidential Settlement Agreement
In this case, we were retained by a fashion model who was video-recorded while dancing with a middle-aged male on a La Jolla Beach. The video-recording was later sold as stock footage without licenses or authorization and ultimately placed in a television campaign by a company marketing male enhancement pills. We issued a strong cease and desist letter, obtained an agreement that the advertisement would be pulled, and then filed suit utilizing California’s powerful laws against misappropriation of likeness for commercial purposes. The case resulted in a substantial confidential settlement for our client against the videographer, stock footage company, advertising agency, and pill manufacturer.
Case: Influencer’s Beach Photos Misappropriated to Market Sunglasses on Television
Result: Confidential Settlement Agreement
A young female, popular on YouTube and Instagram, explained to us that her images had recently been used by an eyewear company in a television advertisement, without authorization or consent. We issued a cease and desist letter which resulted in removal of the images followed by a confidential cash award. The matter resolved without the need for litigation.
Case: La Mesa Winery Owner Sued for Violation of American Disability Act (ADA)
Result: Confidential Settlement
We were retained to represent local business owners in a suit that claimed the business’s parking lot was not ADA compliant. The case resulted in a favorable confidential settlement with contribution between the commercial landlord and the tenant.
Case: Partnership Dispute at European Automobile Repair Shop – Breach of Partnership Agreement / Breach of Fiduciary Duties
Result: Confidential Settlement Agreement
This case was referred by an attorney seeking a co-counsel arrangement. We agreed to join forces and put together a litigation team. Our client was a well-known and highly paid anaesthesiologist and partner of a successful outpatient surgery center in the south bay area of San Diego. The partners began fighting over money and had a falling out. Our client was frozen out from the business, and prevented from working at his own facility or sharing in business profits. His income was reduced to zero. We immediately filed suit in San Diego Superior Court and filed various pretrial motions that turned the tables and alleviated the situation for our client. We used financial experts to valuate the business and calculate our client’s past and future damages. The case settled on the eve of trial in a dollar amount very satisfactory to our client.
Case: Partnership Dispute at Outpatient Surgery Center / Freeze out – Breach of Contract / Breach of Fiduciary Duties
Result: Confidential Settlement Agreement
This case was referred by an attorney seeking a co-counsel arrangement. We agreed to join forces and put together a litigation team. Our client was a well-known and highly paid anaesthesiologist and partner of a successful outpatient surgery center in the south bay area of San Diego. The partners began fighting over money and had a falling out. Our client was frozen out from the business, and prevented from working at his own facility or sharing in business profits. His income was reduced to zero. We immediately filed suit in San Diego Superior Court and filed various pretrial motions that turned the tables and alleviated the situation for our client. We used financial experts to valuate the business and calculate our client’s past and future damages. The case settled on the eve of trial in a dollar amount very satisfactory to our client.
Case: Disability Insurance Claim Wrongfully Denied – Breach of Contract / Insurance Bad Faith
Result: Confidential Settlement Agreement
Our client was a well- respected Otolaryngologist who suffered a neurological injury when he fell down a flight of stairs. His hands became shaky, and he was unable to perform surgeries. He made a claim on his occupational disability policy, which was denied. We reviewed the file and researched the insurance company and concluded that the claim had been wrongfully denied. We filed an action for breach of contract and bad faith insurance practices in United States District Court. We then deposed the insurance company’s employees to test the basis for the claim denial, which resulted in a desirable confidential settlement before trial.
Case: FDA Recall Threatens South Bay Egg Roll “Lumpia” Manufacturer / Breach of Contract / Negligence / Product Liability
Result: Confidential Settlement Agreement
Our client was in the business of manufacturing frozen lumpia (Philippine-Style egg rolls) at a Southbay San Diego facility. The frozen items were packaged and shipped to retailers and commissaries around the world. The wrappers used in the egg roll making process were purchased in bulk from a manufacturer in Los Angeles. One day, unexpectedly and without notice, the wrapper manufacturer decided to change the ingredients so as to add egg whites to its recipe, a known allergen. Because the wholesale buyers were not notified of the ingredient change, egg whites were not listed on their product packaging. This resulted in an FDA recall of our client’s frozen food product from around the world. Our client’s frozen food product could be tossed out or shipped back to San Diego for re-labeling. Our clients suffered substantial business losses, including product placement. Our firm filed suit against the egg roll wrapper manufacturer for failing to disclose allergens on its packaging. The case resulted in a substantial settlement – saving our client’s business from financial disaster.
CASE: INTERNATIONAL BUSINESS DISPUTE OVER UNPAID DEBTS / BREACH OF CONTRACT / ALTER EGO LIABILITY
RESULT: $310,000 VERDICT AT TRIAL, PLUS COSTS AND EXPERT FEES (CCP §998).
Our client was an inventor from Thailand that developed a digital book scanner used by American universities, government, organizations, and museums, including the U.S. Supreme Court, U.C. Berkeley, Harvard, Stanford, Yale, and the Library of Congress. He went into partnership with a T.V. personality featured on Donald Trump’s “The Apprentice.” After several years of business success, the Apprentice star absconded with hundreds of thousands of dollars and attempted to shield himself from liability behind his corporate entity.
Trial was conducted in May, 2021 during COVID-19. Through the use of modern technology, we presented the case from our conference room in San Diego, to the trial judge in Long Beach. Our client testified from Bangkok, Thailand, and our key expert from Baltimore, Maryland.
Our client prevailed on his breach of contract claim against the corporation and its owner through “alter ego liability.” [No directors or officers appointed; Sole shareholder acted as the president, CEO, CFO, secretary, director, and employee; No shareholder meetings or corporate minutes, etc.] The court entered judgment in the exact amount requested by Plaintiff’s counsel, and thereafter added prejudgment interest, costs and expert witness fees pursuant to C.C.P. §998.