SMITH LC Team Defeats $90 million Dollar Claim By Bank of America
11 Feb 2015 John S. Clifford
Smith LC shareholders Steven C. Smith and John Clifford, with the assistance of Retired Commissioner Gale Hickman, have successfully defended a claim brought by Bank of America, as trustee of the estate of a deceased wife, against Smith LC’s clients, who are themselves trustees of the deceased husband’s substantial estate. In this lawsuit, Bank of America alleged that the wife was not adequately compensated for a community property interest in the husband’s separate property business and, as a result, the wife’s estate was owed substantial additional community property monies from her husband’s estate. In support of its claim, Bank of America’s expert, Stephen Zamucen, opined that the wife’s estate was entitled to more than $90,000,000 in supposedly unpaid community assets.
During more than three years of discovery in this highly complex litigation, made all the more difficult by the death of the principals, destruction of documents over the decades, and the dimming of memories of those witnesses remaining, Smith LC discovered the existence of a 1996 post-nuptial agreement settling community property claims between the husband and wife. Smith LC also discovered that the law firm prosecuting the case on behalf of Bank of America was in possession of this agreement prior to the filing of the complaint. Discovery also revealed that prior to agreeing to testify on behalf of Bank of America against Smith LC’s clients, Stephen Zamucen had not only been retained in 1995 to appraise the husband’s separate property business for sale, but he had utilized significantly different methodologies when he had worked for the deceased husband in 1995 than he was using in 2014 behalf of Bank of America.
As a result of the information gained through discovery, Smith LC was able to successfully move the court to expunge multiple lis pendens filed by Bank of America against its clients’ properties (resulting in significant sanctions against Bank of America). Smith LC was also able to successfully move the court to bifurcate trial in the matter into two phases – an initial phase in which Defendants’ affirmative defenses of laches, waiver, estoppel, and ratification would be tried first, followed if necessary by a trial to determine the existence and value of any community property interest in the husband’s separate property business.
Phase one of the trial commenced on November 13, 2014 in Department C26 of the Orange County Superior Court, Judge Gregory Lewis presiding. The matter was submitted for decision on December 22, 2014. During almost five weeks of trial, multiple witnesses testified, including expert witnesses Stephen Zamucen on behalf of Bank of America and Hank Kahrs of RGL Forensics on behalf of Defendants, as well as the deceased wife’s former investment advisor and former attorneys and former employees of the deceased husband’s business.
On January 26, 2015, Judge Lewis granted judgment in favor of Smith LC’s clients and ruled that “based on the affirmative defenses of Laches, Estoppel and Waiver, the court finds that Plaintiff’s claims are barred and Plaintiff should take nothing.” Judge Lewis noted that the fact that Plaintiff’s experts claim they had “enough information” to render an opinion “does not absolve the reality that critical evidence was destroyed during the years the claim was not pursued.” This victory against a major corporate fiduciary in Bank of America secures the legacy of one of Orange County’s premier businessmen and represents a significant achievement for both the clients as well as Smith LC.
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