Attorneys received a trial victory in a case referred by the parties to private arbitration
Attorneys received a trial victory in a case referred by the parties to private arbitration. The plaintiff, a former chief executive of a technology company, acquired company stock with monies borrowed from the company; the loan was secured by a pledge of the stock. The plaintiff was then fired and the company seized the stock, cancelled it on its books, and wrote off the note which it secured. However, the company failed to comply with the requirements of the UCC, Article 9, as to how this should have been handled. The plaintiff sued the company for various claims but not for the stock. Years later, the case was mediated and settled. After the settlement, which did not refer to the stock, the plaintiff's wife, a non practicing lawyer, pointed out to him that he had walked away from his stock which was fortuitously now worth a large sum, and it was the lawyer's fault for not recognizing this and failing to preserve the claim to the stock. We took the positions that (1) the plaintiff knew very well that the stock had been taken in satisfaction of the note and was quite satisfied with this result, (2) if the company had failed to comply with the UCC (which it had), the stock was still gone and the remedy was damages, being the difference between the value of the stock at the time and the debt, and (3) the plaintiff knew when he agreed to the settlement that it included all possible claims, including the stock, and his later claims to the contrary were mere buyer's remorse. There was extensive expert testimony about Article 9 and lawyers' duties. Plaintiff's expert asserted that since the company failed to act in accordance with the UCC, the stock, or its equivalent, was still in the company and the lawyers should have realized this. Our expert said this was nonsense. The lawyers could certainly have done a better job of identifying the issues and demonstrating that they adequately understood the UCC but we argued this was immaterial. In the end, the arbitrator decided the case on the plaintiff's lack of credibility and his second guessing.