Los Angeles Partner Craig Holden, along with San Diego Partner Gary K. Brucker, Jr. and Associate Carson P. Baucher, recently achieved a significant victory on behalf of a Lewis Brisbois client when they secured a binding order on a special master's accounting report that is now a special verdict valued at over $15 million in a complex entertainment accounting case that arose almost seven years ago.
In this matter, Lewis Brisbois was retained by the estate of a named partner of a prominent entertainment and media production accounting company. The organization, which handles the payroll for Hollywood film productions across the nation, has a complex structure of over 50 companies, including a Bermuda-based captive insurance company. Under a shareholders' agreement, the estate was entitled to a death benefit and the repurchase of its shares. However, the remaining named partners declared that the shares were worthless, even as they increased their income and bonuses in the following years.
The estate sued the company, and after years of discovery and stonewalling, it successfully moved for the appointment of a special master to serve as an accounting referee. The court-appointed referee faced a monumental challenge to untangle the company's hopelessly disorganized financial records, but he also had to vet numerous position papers submitted by the parties on hotly contested and complex accounting issues.
Although it took years of discovery, analysis, and over $500,000 in accounting fees, the final report issued by the special master on May 15, 2020 contained remarkable findings. By identifying millions of dollars' worth of off-balance-sheet assets and discounting millions of dollars' worth of inflated liabilities, the special master concluded that the company was anything but worthless on the day that the named partner passed away. In fact, according to the report, the defendants owed the estate millions under the shareholders' agreement. Although the defendants submitted numerous objections to the final report, the court overruled them and ultimately declared the report as binding. This binding ruling has the force and effect of a special verdict.
As a result, the estate and widow now have a special verdict valued at over $15 million, including estimated prejudgment interest and fees. A trial is scheduled for August 2021 on remaining tort claims that can further boost the total recovery for Lewis Brisbois' client.