Gary Lorch and Elizabeth Vanalek Obtain a Complete Victory in Multi-Million Dollar Business Sale Dispute


May 2021

Partner Gary Lorch and Associate Elizabeth Vanalek obtained a complete victory in a multi-million dollar dispute brought by the buyer of a specialized electronics manufacturing service company, sold by Gordon & Rees' clients to that Buyer, and also proved that the Buyer breached multiple agreements in connection with that purchase and sale and, as a result, owed money to the firm’s clients.

The firm's clients were the owners of a specialized electronics manufacturing service company, with factories located domestically and abroad.  In 2017, they entered into a Stock Purchase Agreement, selling the business to an Indian-owned company, who wanted to expand its footprint into the United States.  Sometime later, the Buyer asserted claims of fraud in connection with the sale, alleging (among other claims) that the firm's clients had misrepresented the value and quality of the existing inventory.

After pre-filing negotiations failed to resolve the parties’ disputes, the Buyer filed suit and asserted claims for breach of contract, fraud and related torts, seeking compensatory damages in excess of $8 million and also seeking punitive damages.  The case was then referred to arbitration, where it proceeded under JAMS International Rules before a three-person Panel.  The firm's clients asserted cross-claims for breach of contract for $540,000 due as an “Additional Cash Payment” under the Stock Purchase Agreement, and one of the firm's clients also sued for damages based on a claim that the Buyer breached the terms of an Employment Agreement.

The arbitration hearing took five full days, with post-hearing briefing over the next six weeks.  The Panel then took close to two months to issue its award.

The award was a complete vindication for the firm's clients.  The Panel ruled in favor of the clients, and against the Buyer Claimant, on the Buyer’s claims for fraud and breach of fiduciary duty.  The Buyer is to collect nothing from the firm's clients. The Panel also ruled in favor of the clients, and against the Buyer Claimant, on the clients’ claim for the unpaid balance due under the Stock Purchase Agreement, and awarded the clients $540,000. Lastly, the Panel ruled in favor of the firm's client on his employment claim, awarding him $100,000. 

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