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December 5, 2020 | Cases , Featured

Kibler Fowler & Cave Team Defeats Fortress Investment Group’s Summary Adjudication Motion, Paving the Way for a 2021 Jury Trial

On October 21, 2020 the Honorable Kenneth Freeman of the Los Angeles Superior Court, Complex Division, entered a 52-page order denying Defendant Fortress Investment Group’s motion for summary adjudication on the fraud claims asserted by our client, Himelsein Mandel Fund Management (HM).

This long-pending case arises out of a 2010 joint venture between HM and Fortress to invest in life settlements. The parties’ relationship began with a credit agreement through which Fortress provided HM $65 million in capital that was needed to sustain HM’s portfolio of life settlement assets and to grow its fund. As alleged in the lawsuit, Fortress later promised HM an additional $20 million, but then reneged on that promise, tricked HM into defaulting under the credit agreement, foreclosed on HM’s portfolio of life settlements, and then acquired those assets for itself in what the Superior Court later found to have been a corrupt auction process. HM sued Fortress for fraud, among other claims, in 2012. Following years of discovery and Fortress’ first failed gambit for summary adjudication on the fraud claims, Fortress successfully—and it turns out, erroneously—moved the court to strike HM’s jury demand, and the case proceeded to a bench trial in 2016 over HM’s objection. Then, after five weeks of testimony, the trial court entered judgment against both parties, denying HM its fraud claims and denying Fortress its cross-claim based on a deficiency under the credit agreement. Both parties appealed, and on March 28, 2019 the California Court of Appeal, Second Appellate District, reversed the judgment against HM, holding that “the denial of [HM’s] right to a jury trial in this case was a structural defect,” and ordering the judgment reversed and the case remanded to the Superior Court for a re-trial before a jury. But the appellate court affirmed the judgment against Fortress on its $100 million cross-claim, finding no error in the trial court’s conclusion that the auction of HM’s assets that led to Fortress buying those assets from itself was not run in a “commercially reasonable manner,” leaving only HM’s fraud claims for as much as $205 million to be tried to a jury.

Because of COVID-related dislocations, the scheduled October 2020 jury trial has been continued to sometime in 2021.

Our HM team is comprised of Partners Mike Kibler (who argued the motion) and Matt Cave, Of Counsel Dan Stujenske (who, along with Kevin Cammiso and Mike, wrote HM’s opposition brief), Senior Associate Adam Pullano, Associate Kevin Cammiso, and Senior Litigation Paralegal Samantha Ahlheim.

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