Domina Law Group pc llo became involved as counsel for a major Chicago area meat distribution company when its attempt to negotiate a contract of business (partnership) arrangement failed. The dispute that followed pitted the Chicago meat company against a New York City real estate investor.
The case played out in United States District Court, District of Nebraska. The meat company and the real estate magnate purchased a cattle slaughter facility in Hastings, Nebraska, out of bankruptcy. The investment plan was for the meat company to operate the plant. Its personnel had done so successfully at other locations.
The east coast investor admitted no knowledge of the cattle, cattle slaughter, or meat businesses. Yet, when the time came to negotiate a business agreement, the parties could not agree because the east coast party insisted upon control, not 50%, and dragged its feet at investing its funds.
After may attempts to work matters out without success, Dave Domina was asked to file suit for the meat company. "Our client invested the energy and effort necessary to develop a business plan and put boots on the ground to start the process of cleaning up the property and preparing it for production." Domina continued, "Despite meeting expenses without assistance from the other party as expected, efforts to resolve matters continued until the east coast investor decided to take the transaction by closing the real estate with its money and excluding my meat client."
This triggered a little known process known as "fair valuation." Again, Domina said, "Fair valuation is a relatively new legal phenomenon used when investors in closely-held companies cannot get along and a legal process must exist for valuing and separating common ownership interests."
Domina explained, "We argued that because our client contributed the business plan, sweat equity, and cash necessary to get the business started, it owned 50%. We claimed our client should be paid for this ownership, which would otherwise be inappropriately taken from it."
The United States District Court agreed after a 5-day trial to Hon. F.A. Gossett, III, sitting without a jury.
The Court awarded nearly $900,000 to Domina's client despite the objection that the sole investment amount was 1/9th this sum.
New Legal Activity
"We are keenly aware that separating ownership interests in limited liability companies, partnerships, and closely-held corporations is a dramatically escalating area of legal dispute. Statutes recently enacted and designed to prevent disputes will continue to cause them instead," Domina predicted