September 18, 2023 |

Kibler Fowler & Cave LLP Wins Summary Judgment on Behalf of 20 Defendants Involved in Cannabis Startup

Kibler Fowler & Cave’s Cannabis Litigation and Business Litigation practice groups obtained a complete victory on summary judgment in favor of its clients. In an action in Riverside County Superior Court before the Honorable Irma P. Asberry, KF&C represented all 20 defendants in a suit that alleged multiple causes of action, including recission, breach of contract, breach of fiduciary and fraud. After several years of litigation and 18 depositions, KF&C’s complete victory on all causes of action against all 20 defendants eliminated the need for the scheduled month-long trial.

KF&C represented THT Group LLC, a vertically integrated cannabis startup in Lake Elsinore, California, its member-manager and 18 other individuals several of whom were only tangentially connected to the company. Plaintiffs, who were investors in THT, alleged impropriety against THT and the other defendants. Plaintiffs alleged, among other claims, that they were fraudulently induced to invest and enter into an agreement to allow a new investor into THT, which would dilute their shares. This was despite having approved the new investor, and signed the agreements they were contesting in the lawsuit. They also alleged breach of contract and breach of fiduciary duty claims. Based on these claims, plaintiffs sought millions in compensatory and punitive damages.

After substantial discovery, including responding to 700 individual discovery requests, multiple motions to compel, and 18 depositions, KF&C obtained a complete victory in favor of all 20 defendants and against all claims. The Court agreed that there were no legitimate allegations of bad faith or improper purpose behind the payments to related entities. The Court found that each of plaintiffs’ remaining claims failed for multiple reasons, including that the common counts were redundant and that the contracts at issue were agreed to by all parties, and binding. Also, because the parties had agreed to change the terms of the repayment contract, plaintiffs’ evidence related to “gross profits” was rendered irrelevant. Similarly, the Court made its determination on the remaining claims based on the reasonable interpretation of the unambiguous terms of THT’s Operating Agreement and related documents.

The KF&C team is comprised of Partner John Fowler, Senior Associate Adam Pullano, Associate Zien Halwani, and Paralegal Praveeta Garcia.

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