Archives

Case of the Day: Savage v. Zelent

The case of the day is Savage v. Zelent (N.C. Ct. App. 2015). Alan Savage and Julie Anne Zelent lived together as a couple in Scotland. They eventually separated, and Zelent moved to North Carolina. She sued Savage in the Inverness Sheriff’s Court under the Family Law (Scotland) Act 2006, claiming that she was entitled to support from him. After a trial, the Sheriff found that Zelent was not entitled to contribution. Zelent did not appeal. Zelent’s counsel withdrew from the representation, which under the governing procedure meant that a peremptory diet—a kind of hearing— had to be held. The hearing was held, but Zelent did not appear despite receiving notice. In her absence, as permitted by Scots law, the Sheriff awarded Savage his expenses in an amount to be later determined by the Auditor. The Auditor held a diet of taxation, a hearing for the purpose of determining the amount of expenses. Again, Zelent did not attend. The Auditor found expenses in the amount of £148,516.75, and the Sheriff approved the report and awarded the expenses. Zelent did not appeal, but she also did not pay.

Savage sought recognition and enforcement of the judgment in North Carolina. The trial court recognized the judgment, and Zelent appealed.
Continue reading Case of the Day: Savage v. Zelent

Case of the Day: LV Highland Credit Feeder Fund v. Highland Credit Strategies Fund

The case of the day is LV Highland Credit Feeder Fund LLC v. Highland Strategies Fund, LP (Tex. Ct. App. 2015). The plaintiffs were investors in either Highland Credit Strategies Fund, LP, a Delaware limited partnership, or Highland Credit Strategies Fund, Ltd., a Bermuda mutual fund company. The defendants were the two funds as well as Highland Capital Management, LP, which managed the funds, and some of HCM’s executives.

Both the Delaware fund and the Bermuda fund invested in Highland Credit Strategies Maser Fund, LP, a Bermuda limited partnership. The claim was that in 2008, during the financial crisis, the funds began experiencing losses. The plaintiff investors were worried that other investors might begin to redeem their investments, and that due to the long waiting period before investors could receive their money after beginning the redemption process, the funds might not be able to satisfy the plaintiffs’ redemption requests if they waited too long. But, the plaintiffs claimed, the funds fraudulently misrepresented the number of redemption requests they had received, thus inducing the plaintiffs to delay. In October 2008, Highland Capital Management informed all investors that the funds were to be wound down. It proposed a plan of distribution that treated investors who had submitted redemption requests before a certain date more favorably than those who had not. The plaintiffs were in the unlucky group, and so they sued, claiming fraud, breach of fiduciary duty, and breach of Massachusetts’s statute on deceptive trade practices and its blue sky laws (some of the individual investor plaintiffs were from Massachusetts). The funds asserted that the claims of those investors who had invested in the Bermuda fund were barred by a release. The funds offered affidavits tending to prove that the Bermuda fund applied to the Bermuda courts for a “scheme of arrangement to liquidate the fund and pay off its creditors” in accordance with HCM’s plan of distribution. The creditors voted in favor of the scheme, and the Supreme Court of Bermuda approved the scheme. The scheme contained a release of HCM and both funds. The funds also submitted the Bermuda court order to the Texas court, and they moved for summary judgment. The court granted the motion, and the investors appealed.
Continue reading Case of the Day: LV Highland Credit Feeder Fund v. Highland Credit Strategies Fund

Case of the Day: Hyundai Securities v. Lee

The case of the day is Hyundai Securities Co. v. Lee (Cal. Ct. App. 2015). Lee was the CEO of Hyundai Securities from 1996 to 2000. Several Hyundai shareholders brought a shareholder derivative action against Lee in the Seoul Southern District Court, claiming that Lee was guilty of securities fraud. Lee appeared and defended. The Korean court entered judgment in favor of Hyundai for approximately $24 million plus interest at 20%. A portion of the damages were for a criminal fine Hyundai paid in Korea on account of Lee’s acts. Lee appealed to the Seoul Court of Appeals and then to the Korean Supreme Court. Both appellate courts dismissed the appeals. The dismissals were based on the merits. Hyundai then sought recognition of the judgment in the Los Angeles Superior Court. The court entered judgment in favor of Hyundai in a summary proceeding, but the Court of Appeal reversed on the grounds that Hyundai could not proceed by way of a petition but had to seek summary judgment. I covered this aspect of the case in April 2013. On remand, Hyundai moved for summary judgment. Lee argued that the court could not recognize the portion of the judgment attributable to the criminal fine, or the 20% interest rate. The court entered judgment in favor of Hyundai, and Lee appealed.
Continue reading Case of the Day: Hyundai Securities v. Lee