|
Lawrence Kamin Recovers Funds on Behalf of Commercial Client Pursuing the Case on Multiple Fronts Resulted in Multiple Recoveries Principal Attorneys John Monical Mitch Goldberg Paul Weltlich Situation A manufacturer of packaging materials (“Manufacturer”) had produced custom products for one of its media-buying customers (“Buyer”), but refused to deliver them because the Buyer had fallen behind on payments. The Buyer had supplied inserts for the goods, which the Manufacturer had incorporated into the custom products during the manufacturing process. The Buyer filed litigation, arguing that the Buyer owned and was entitled to immediate possession of the inserts. Because the inserts could not be separated from the product, the Buyer demanded that the entire product be delivered. Challenge Defeating the Buyer’s claim to the completed product was not a challenge, but it would have left the Manufacturer with the right to keep the products. The Manufacturer did not want the products, the Manufacturer wanted its money. The Buyer appeared to be headed for financial ruin and the custom goods, without a buyer to pay for them, were worthless to the Manufacturer. Solution Lawrence Kamin proposed that the Manufacturer agree to an order of replevin, which would direct the Manufacturer immediately to turn over the products to the Buyer. By statute, to receive such an order of replevin, the Buyer had to post a bond for twice the value of the products. If the Court ultimately determined that Buyer was never entitled to the products in the first place and the Buyer could not return the products to the Manufacturer, the statutory bond would act like insurance for the Manufacturer, reimbursing it for the loss of the goods. Pursuant to the order and with the protection of the bond in hand, the Manufacturer turned over the goods. We knew that the Buyer planned to immediately distribute the products and that they could never be returned. This ensured that, if the Manufacturer won the case, the remedy would be money, not useless products. After several months of litigation, the Court granted summary judgment in favor of the Manufacturer, finding that the Manufacturer, not the Buyer, was entitled to the products. Within days of the summary judgment, the Buyer filed for bankruptcy. The Buyer could not return the products pursuant to the Court’s order and Lawrence Kamin filed for enforcement of the bond. Simultaneously, Lawrence Kamin filed the Manufacturer’s claim in bankruptcy court. Based upon the Court’s order that the Buyer never owned the products, Lawrence Kamin argued that the products, and therefore the money received when the products were sold, never became part of the bankruptcy estate. Outcome Neither the bond company nor the bankruptcy trustee knew about or considered the Manufacturer’s claims against the other. Because each settled for a significant portion of the agreed product sale price, the Manufacturer actually recovered more than the sale price, allowing it to recoup a significant portion of its attorneys’ fees. Lessons Applied Sometimes, when you have more than one path, choose them both. In this case, the Manufacturer ultimately collected nothing from the Buyer, but the aggregate amount collected from the bond company and the bankruptcy trustee exceeded the original amount due on the products. |
