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What I Learned from a Recently Settled Case

Modesett Williams - Monday, June 20, 2016

We recently settled a business dispute involving claims for breach of contract, breach of fiduciary duty and fraud. We quickly realized that an insurance policy would likely cover the claims, but its limits were about one-third of our damages. It was also a "declining" policy, meaning the limits declined as attorney's fees were paid. The defendants were likely judgment proof.


The plan was straight-forward: gather all of the evidence we could find and give it to the defendants. Within 30 days of the case being filed, we had our persons with knowledge of facts, a decent (but not perfect) damage model and most of the facts understood. We sent responses to request for disclosure before a request was sent. We produced about 1000 pages of documents we had identified. We answered interrogatories within a few days. Then we spent hours interviewing the important witnesses and got detailed affidavits from two of them.


Then we sent a detailed Stowers demand for policy limits. Rejecting our demand would mean the insurance company risked being on the hook for the entirety of a judgment. The time for the demand expired. We gave defendants an extension. Then defendants wanted to mediate and we agreed. Then we filed a summary judgment motion on one of our claims - as a plaintiff. I had even written a preliminary opening statement to test the logic of our position.


We prepared mightily for mediation and had a great presentation. Nevertheless, mediation was unproductive because we argued over what the facts were, rather than what the numbers should be. We adjourned the mediation. Then we provided additional declarations, designated experts on damages and liability issues, which were all issues the defendants had with our case. Having fixed the "problems" with our case, our mediator went to work. We settled for policy limits.


Insurance makes a case much easier to settle. It is designed to pay claims. It also removes some of the emotion defendants feel when they get sued. It also changes your audience. Insurance companies like to "build" a file, so the more information you give them, the easier it is to justify payment of significant sum. There is nothing more intimidating to a defendant than having a plaintiff with all the facts available and understood early in the case. PowerPoint presentations are helpful, but not as big a deal as you think they will be. The Stowers doctrine is a powerful bargaining chip, but has its limitations.

Proving Economic Damages: Client, Expert or Both?

Modesett Williams - Friday, February 12, 2016

Jury trials in commercial litigation offer business owners the opportunity not only to tell their story, but also to describe their damages. Because owners know more about their business and market than anyone else, they are well-suited to make this calculation and support it with historic information and future projections based on their experience in the real world. With proper preparation, this can be compelling testimony.


But should you hire a damage expert as well? Probably so, for at least three reasons. First, jurors like to create their own damage models and reach their own conclusions on a plaintiff's damages. Multiple damage options give jurors the formulas and raw data they need to calculate their own number and still survive a JOV. Second, having a bit of tension between the expert's typically lower number and the owner's more optimistic figure makes both witnesses' calculation truly independent. Third, multiple calculations could give you additional support on appeal.


In one case, this strategy worked out well. The jury heard both the owner's number and the expert's. The numbers were about 30 percent different. The jury went with the expert, with a small twist in our client's favor. We were fine with that. In fact, I suspect the defendants used the expert's appraisal to get a loan to pay our judgment! Our takeaway: Empower the jury by giving them options on damages. They are going to make their own calculation anyway.


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