Business disputes can be as simple as a
customer’s failure to pay an invoice on time or as complex as trying to
unravel a multi-party, multi-million dollar business transaction that has
gone bad. Whether you are an individual, a local business or a
multi-national corporation who needs help in resolving a business dispute in
North Carolina (either as a plaintiff or a defendant) we have likely handled
a dispute similar to yours. Because business disputes come in all shapes
and sizes, we cannot possibly describe them all here, but the following is a
brief description of some of the kinds of cases we typically handle.
Shareholder Disputes
Disputes among owners of closely held
businesses are, unfortunately, common. These disputes are frequently tinged
with personal rancor due to the close working or family relationships often
involved in closely held businesses. We represent minority shareholders,
majority shareholders and businesses in these types of disputes, and we have a
wealth of experience in helping clients resolve ownership and management
disputes, either through negotiation or, if necessary, litigation. We have
helped structure buyouts of minority interests, sales of entire businesses, and
have recovered millions of dollars for minority shareholders through litigation
when other avenues failed.
Accounting and Business
Valuation Disputes
We regularly represent accounting firms,
such as McGladrey & Pullen and its affiliate, RSM McGladrey, Inc., in claims
arising from auditing and business valuation services. Often these cases have
involved allegations that the accounting firm failed to detect fraud, or aided
in the commission of a fraud, when valuing the business, auditing the financial
records, or assisting a client with its books.
We also represent purchasers and sellers of
businesses in post-purchase disputes that involve accounting issues. For
example, we represented a large commercial bank in a $23 million action brought
by the purchaser of a technology leasing subsidiary of the bank. The purchaser
alleged that the bank’s subsidiary had misrepresented the financial condition of
the subsidiary, resulting in an alleged overpayment of $23 million. The case
settled for a small fraction of the claim on the eve of a two week arbitration.
Business Fraud/Unfair and
Deceptive Trade Practices
North Carolina has a particularly potent
Unfair and Deceptive Trade Practices Act. Claims under this Act (commonly known
as “Chapter 75 claims”) allow for the recovery of treble damages and attorneys’
fees, and are frequently asserted in business disputes along with claims of
common law fraud. We have defended and asserted these types of claims countless
times on behalf of clients.
For example, we represented the seller, a
major mobile home dealer, in a $50 million valuation and fraud dispute with
General Electric over GE’s purchase of a mobile home retail sales business in
North Carolina. Both buyer and seller claimed they were defrauded by the other
in the transaction. The case was simultaneously litigated in three different
courts in the state and federal courts in North Carolina and Delaware. The case
settled at mediation after the 4th Circuit affirmed the dismissal of GE’s RICO
and securities claims against the seller. See
Parker
v. General Electric, 247 F.3d 543 (4th Cir., 2001).
Property Rights
We have litigated many kinds of cases
involving real and personal property rights, including
condemnation actions, rights of parties in real
estate buy-sell agreements and development contracts, and landlord/tenant
disputes involving commercial leases. The firm represents a number of developers
of commercial space and shopping centers, as well as property managers for such
space, and attorneys in each of our offices have been involved in representing
landlords in disputes with tenants, condemning authorities, and contractors.
Representative cases include:
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We were counsel for IBM in a $10
million lease dispute over IBM’s alleged improper termination of a lease for
280,000 square feet of warehouse and manufacturing space. The case settled
for a fraction of the claim at mediation.
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The firm represented Royal Insurance
throughout the United States in commercial office lease negotiations, and
often our litigation section has been involved in disputes arising under
those leases. For example, through negotiation and threatened litigation,
the firm assisted Royal Insurance in avoiding $500,000 of contested common
area maintenance and tax pass-through charges claimed by landlord under an
office lease in Massachusetts.
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We successfully defended a large retail
grocery chain in a seven-figure action brought by a shopping center
developer/landlord, based upon the validity and interpretation of
contractual provisions in a lease that the landlord claimed imposed
geographical restrictions on the tenant’s right to conduct retail grocery
operations within a certain radius of the landlord’s shopping center.
Insurance Coverage
Disputes
The duty of an insurer to defend a claim
against an insured in North Carolina is extremely broad, and the consequences of
failing to defend an insured on a claim that is potentially covered by an
insurance policy can be significant. We represent both insurers and insureds in
disputes over coverage and the duty to defend. For examples of the consequences
to insurers for guessing wrong on the duty to defend issue, take a look at the
following cases:
Glennview Memorial Park, Inc. v. Nationwide Mutual Insurance Co. (Wake
County Superior Court) (2005)
Granutec, Inc. v. Aetna and St. Paul Fire & Marine Ins. Co., 1998 U.S. Dist.
LEXIS 3527 (1998) (U.S. District Court, Eastern District of North Carolina)
Top
Financial Transactions Litigation
Poyner & Spruill has a long history
representing the banking and financial services industries in North Carolina.
We have represented many of the major North Carolina banks for years on both
business and litigation matters. Our familiarity with the business side
of the financial services industry gives us
an important advantage as we litigate issues that are of concern to our
financial services clients. We frequently work with members of our
banking, credit and
financial services team to provide the most effective and cost-efficient
representation to our clients on litigation matters. We represent several major
North Carolina based commercial banks with multi-state operations, as well as a
wide variety of other financial service companies. We handle almost all types
of litigation for these financial services clients. Some representative types
of work are listed below:
Lender Liability
When deals go bad or times get hard,
unhappy borrowers often look around for someone to blame. All too frequently
they seek to blame lenders, because, as John Dillinger famously said in response
to the question why he robbed banks, “that’s where the money is.” Whether the
claim is asserted against the lender in the first instance or as a counterclaim
in response to an action to collect an unpaid loan, the complaints range from
failure to make a loan to recklessly continuing to lend, and everything in
between. The claimed damages allegedly suffered by the aggrieved borrower are
often staggering, and frequently exceed by several orders of magnitude the
amount of the original loan. All too often, these cases pit the word of an
unhappy customer against the word of a lending officer (frequently a former
employee). We may not have seen all of these, but we have seen and litigated a
lot of them. We regularly represent banking and other financial institutions who
are sued on lender liability claims, including breach of fiduciary duty, fraud,
negligent misrepresentation, anti-tying violations and unfair and deceptive
trade practices.
UCC Litigation
The dishonest bookkeeper is one of the
greatest sources of UCC litigation. In this recurring fact pattern, the clever
(or occasionally not so clever) bookkeeper of a bank customer figures out a way
to pad his or her salary by forging signatures on checks, writing checks to
dummy entities, keeping double sets of books, etc. Usually the customer trusts
the bookkeeper so much that the bookkeeper also gets to review the bank statement
every month, so the fraud goes undetected for years. When the customer finally
discovers hundreds of thousands of dollars of losses (or more), the customer
suddenly blames the bank for not detecting the criminal activity of the
customer’s employee and sues the bank. The issues of who is responsible for
check fraud, forged endorsements and forged signatures, presentment, negotiation
and transfer warranties and other issues are typically resolved by Article 3 and
4 of the Uniform Commercial Code. Liability frequently depends on how quickly
the customer has caught the problem and notified the bank, or whether the bank
should have been on notice of a problem. We have litigated many of these types
of claims.
We have also litigated more exotic UCC
issues, such as the interpretation of language in Article 5 letters of credit
regarding whether a U.S. bank “confirmed” or otherwise agreed to be liable for a
deferred payment letter of credit issued by an Iraqi bank before the first Gulf
War.
