Business and Commercial Contract​

Representative Cases

Hon. David R. Chaffee (Ret.)
Mediator • Arbitrator • Discovery Referee

  • Plaintiff alleged fraud based on assertion that defendant tricked him into conveying a majority interest in a commercial real estate building in exchange for a minority interest in a limited liability company owning undeveloped land in Riverside County. Defendant alleged to have inflated the value of the land and misrepresented development approvals and permits.

  • Defendants operated a food court in a grocery store owned by plaintiff. A dispute ensued about money the defendants owed, and the parties signed a settlement agreement setting forth a particular amount owed. Defendants failed to pay. Plaintiff sued for breach of the settlement agreement, and defendants cross-complained arguing that they signed the agreement under economic duress and that plaintiff had committed fraud.

  • Dispute involving the business operations of various martial arts studios practicing a unique martial arts style. Plaintiffs had developed the unique martial arts style and operated a franchise company. Defendants were franchisees. Defendants contracted with plaintiffs to purchase their interests in various limited liability companies that held licenses for the various franchise studios. The relationship soured and the purchase agreements were not consummated. Subsequently, defendants began offering martial arts operations under a different company name and ceased any business relationship with plaintiff. Plaintiffs sued defendants for allegedly entering into an unlawful and secret plant to destroy plaintiffs by illegally rebranding their studios and terminating their franchise agreements.

  • Plaintiff provided temporary nursing personnel to defendant hospital based on a series of supplemental staffing agreements for two-year terms. Plaintiff sued hospital asserting causes of action for fraud and breach of contract seeking over $244k in invoices for services rendered. A few years earlier, the hospital had been sued for medical malpractice and settled for more than $500k. The hospital asserted that plaintiff’s supplied nurse had been the cause of the malpractice and demanded reimbursement from plaintiff, which was rejected.

  • Plaintiff purchased a 10-story office building in Midland, Texas. The day before the purchase closed, plaintiff’s representative contacted defendant insurance broker to obtain fire insurance for the building. Defendant filled out and signed an insurance application where he represented that the building had an operational sprinkler system. Whether plaintiff’s representative told defendant that the building had sprinklers was disputed. The building did not have a sprinkler system. Insurance company issued a fire insurance policy with a limit of $14,750,000. The policy required the building to have an automatic sprinkler system and an automatic fire alarm protecting the whole building. Later the same year, an arsonist set fire to the building. The insurance company denied coverage based on the absence of the sprinkler system. Plaintiff sued defendant insurance broker for breach of contract and negligence.

  • Business partnership agreement contained a provision that if an offer was made to purchase the entire business, either party had the right of first refusal to purchase it. Majority owner received an offer from defendant and gave notice to plaintiff minority owner. Plaintiff gave notice that she was exercising her right to purchase, but majority owner refused to sell the business to her and instead sold it to defendant. Plaintiff sued defendants alleging a sham sale. Causes of action for conspiracy, fraud, violation of Pen. Code 496 (receiving stolen property), declaratory relief, imposition of a constructive trust, conversion, and for an accounting.

  • Plaintiff was a minority owner of a freight forwarding company; defendant was the majority owner and president of the company. Plaintiff alleged that defendant misused and misappropriated company funds, including writing checks to cash and keeping the money for herself, and paying her own personal expenses. Plaintiff further alleged that he was denied access to company books and records by defendant.

  • Plaintiff entered into an agreement with defendants whereby plaintiff would provide financing for the purchase of shrimp for import. Defendant would handle the purchase, transport and sale of the shrimp. The net proceeds were to be evenly split between them. Plaintiff financed the purchase of Ecuadorian shrimp at a price of $700k. Defendant took possession and complete control of eight containers of frozen shrimp and caused them to be sold. All the while defendant represented to plaintiff that the market was bad and that all eight containers of frozen shrimp remained unsold and stored. Primary issue was whether the owners of defendant company were alter egos for purpose of liability for the fraud.
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  • Lawyer and his law firm purchased plaintiff’s business facilitating penny stock sales only to find out that plaintiff had failed to disclose that she had settled a SEC fraud prosecution concerning the business. The lawsuit involved many issues such as unwinding the sale, refund of purchase deposit, and return of internet domain names.

  • ​Plaintiff invented and patented a consumer product that he proposed to sell via direct response television, a campaign that would cost $1.4 million. Defendants agreed to fund the campaign, but required plaintiff pay $20k up front in “bank fees.” Further funding demands by defendants increased the total paid by plaintiff to $150k. After months of delays and no campaign funding ever being received, plaintiff demanded refund of the $150k. Plaintiff sued defendants for fraud and breach of contract, and sought refund of the monies advanced as well as lost profits.

  • Two individuals, one a California resident and the other a Colorado resident, entered a loan agreement in which the California resident borrowed $100k from the Colorado resident. The parties agreed that California law would apply and agreed upon an interest rate of 12%, a rate that was legal in Colorado but usurious in California. Plaintiff Californian borrower sued alleging causes of action for usury, cancellation of note, cancellation of life insurance policy security, and declaratory relief. Defendant lender cross-complained for beach of contract and reformation of the note.

  • Over a period of time plaintiff loaned large quantities of gold and cash to defendants to allow them to conduct their gold and jewelry businesses. Defendant wrote the details of each loan transaction on the back of a business card, which she dated and signed and gave to plaintiff to keep as “marker” or “IOU” for the debt. For a short period of time, defendants paid the agreed upon interest payments on the various loans, but eventually ceased payment and denied that any loan had been received. Plaintiff sued for breach of oral contract, various fraud and misrepresentation causes of action, conversion, and common count money had and received.

  • The lender on plaintiff’s home loan instituted a non-judicial foreclosure, recorded notice of default and notice of trustee’s sale against the property. Plaintiff filed suit against multiple banks and lending entities alleging a vast conspiracy to deflate the real property market, foreclose on existing loans, and then reap the profits when the conspirators allowed the market to recover. Plaintiff’s causes of action included fraudulent concealment, intentional misrepresentation, misrepresentation, violation of Civ. Code sec. 2923.5 (recorded the notice of default without first making contact and interacting with plaintiff), unfair competition (B & P sec. 17200), and breach of contract.

  • Plaintiff and defendant entered into an operating agreement for a rare coin wholesaler. After operating for several years, the majority shareholder terminated plaintiff as manager of the business and notified him one of the offices would close. The operating agreement was construed to require that within 30 days of plaintiff’s withdrawal, defendant was required to value his interest in the company and allow him to purchase the inventory of coins at 110 percent of their liquidation market value. Action was filed to determine the amount of damages plaintiff had incurred due to his breach of a specific valuation date.

  • Plaintiff entered into a sale agreement with defendant for the construction and purchase of a retail building. This action arose out of a dispute over which of two sections in the sale agreement governed plaintiff’s remedy when defendant failed to meet the substantial completion date specified in the sale agreement. One section provided a remedy of per diem liquidated damages credited at the close of escrow; the other prescribed remedies generally for the breach of any term of the sale agreement, including termination of the agreement and a return of the deposit.

  • Plaintiff sued defendant for breach of contract, alleging a tool grinding machine did not meet plaintiff’s specific need as represented to defendant. After receiving a notice to appear and produce documents and things at trial, plaintiff sold at auction its equipment and inventory, including a computer, computer program and steel blades that defendant contended were relevant evidence to determination of the case. Issues revolved around remedies for spoliation of evidence.

  • CEO of plaintiff company gave an employee of defendant company a list of plaintiff’s shareholders. Defendant then used the list to contact the shareholders on the phone and offer them defendant’s telemarketing services. Those calls prompted plaintiff to file suit against defendant for a variety of business-related causes of action including misappropriation of trade secrets, unfair business practices, and false advertising.

  • Plaintiffs purchased undeveloped real property and formed a corporation to develop the property as a service station and car wash. Plaintiffs then entered into a loan agreement with defendant bank. The agreement conditioned upon proof of cash injection by plaintiffs in the amount of $640k and personal guarantees by individual plaintiffs. Defendant bank found that only one third of the case injection had been made and sought to modify the terms of the loan. One of the loan guarantors then withdrew its guarantee. Thereafter, the defendant stopped funding construction but continued to make payments from the interest reserve to itself. Subsequently, defendant foreclosed and purchased the property via the foreclosure sale. Defendant then constructed a branch office at that location. Plaintiffs sued for breach of contract/wrongful foreclosure, breach of the implied covenant of GFFD, and unjust enrichment.

  • Defendant energy company needed to raise equity capital for its growing business, and its salespeople sold company stock to investors under private placement offerings. Plaintiff worked in the sales department and brought in over $8 million in revenue to defendant. As an incentive for its salespeople, defendant instituted a series of programs that tied compensation to the amount of revenue brought into the company. These programs detailed how much income, commission, and stock options each member of the department would earn. A dispute arose between plaintiff and defendant and plaintiff filed a complaint contending that defendant had breached it contract to issue and permit him to exercise his stock options.
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  • Plaintiff filed this class action against defendants who were in the business of exchanging customers’ dollars into foreign currency for transmission to a foreign country. Plaintiff alleged that defendants committed unlawful, unfair, and fraudulent business practice under the UCL (B & P Code sec. 17200 et seq.), engaged in deceptive advertising under the false advertising law (B & P sec. 17500 et seq.), and violated the fiduciary duties imposed upon a trustee by Prob. Code secs. 16002 (duty of loyalty) and 16004 (conflict of interest), when they failed to disclose to the customer that they get a more advantageous rate of exchange on the wholesale market than they give the customer, and when they failed to give the customer the benefit of the betty exchange rate.