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Sichenzia Ross Ference LLP Wins Jury Trial, Defeats Post-Trial Defense Motions and Secures Expulsion and Disassociation of New Jersey LLC Member.

Press Release – New York, NY – March 15, 2021 – Sichenzia Ross Ference LLP (SRF) securities, business, and complex commercial litigation partner Scott Furst secured a $904,000.00 breach of contract victory for his clients in a multi-week jury trial in New Jersey Superior Court.  The lawsuit, which started in March 2017, arose from a start-up dispute between a civil engineer and an Atlanta-based international architecture and engineering firm that had agreed to join forces and form a New Jersey, public-sector focused start-up and pursue Women-Owned Business Enterprise certification.

The relationship quickly soured after the defendant rethought its contract negotiations.  The individual plaintiff was the start-up’s managing and majority member, and the defendant was the minority member.  The defendant attempted to force the plaintiff to relinquish, in effect, total operational control over the core functions of the business to the minority member.  Over the course of months, the defendant withheld resources and cut-off all financial support as part of its effort to wrest control away from the majority member.  Eventually, the defendant abandoned the plaintiffs in the middle of the calendar cycle for engineering firms to qualify and bid for state, county and municipal civil engineering projects.  Defendant’s timing could not have been worse.

The defendant, which boasted annual revenue in excess of $50,000,000.00 and operated in fourteen offices nationwide, as well as in China, Colombia and Mexico, had all of the financial advantages.  Plaintiffs, by contrast, were left cash-strapped and operating under significant restrictive covenants that capped their revenue abilities and strained their litigation resources.

Nonetheless, Plaintiffs and SRF elected to go to trial.  Mr. Furst showed the jury that a valid and enforceable contract had been entered into and, as the defendant’s own C-suite executives admitted under cross-examination, the defendant had intentionally breached once it had determined that the plaintiffs would not agree to give up control of the start-up.  The jury was presented with extensive documentary and testimonial evidence, and the plaintiffs’ strategy worked.  The jury deliberated for approximately three hours before unanimously finding that the defendant had breached.  The jury awarded damages of $904,000.00 to plaintiffs.  The Court subsequently awarded plaintiffs both pre- and post-judgment interest as well.

Mr. Furst also successfully defeated three (3) post-verdict motions by the defendant for judgment notwithstanding the verdict, a new trial, or, in the alternative, remittitur, which collectively sought to reverse the unanimous verdict based on facts and law or to force a reduction in the damages awarded.

Importantly, the jury trial also presented what may be a case of first impression dealing with the (1) involuntary disassociation of a member of a New Jersey limited liability company (“LLC”), and (2) expulsion of a member for wrongful conduct, under New Jersey’s Revised Uniform Limited Liability Company. See N.J. Rev. Stat. §§ 42:2C-46(a) and 42:2C-46(e)(1) and (3).  The Superior Court determined that the trial record had demonstrated that: (a) it was not reasonably practicable for the plaintiffs to stay in business with the defendant given the harm caused by the defendant and its abandonment of the start-up; and (b) the defendant had engaged in pre-termination “wrongful conduct” that had “materially and adversely affected [the LLC’s] business operations.”  On these bases, the Superior Court ordered that the defendant was expelled and disassociated from the start-up as of October 2016.

J.F. v. GreenbergFarrow Architecture Incorporated, (N.J. Super. Ct.).