California Verdicts

Plaintiff(s):

Patriot Rail Corp.

Plaintiff Attorney(s):

Paul J. Brown;
Greenberg Traurig, LLP;
Houston,
TX,
for
Patriot Rail Corp. ■ Mary-Olga Lovett;
Greenberg Traurig, LLP;
Houston,
TX,
for
Patriot Rail Corp. ■ Aimee M. Housinger;
Greenberg Traurig, LLP;
Houston,
TX,
for
Patriot Rail Corp. ■ Jennifer Tomsen;
Greenberg Traurig, LLP;
Houston,
TX,
for
Patriot Rail Corp. ■ Laura Gleen;
Greenberg Traurig, LLP;
Houston,
TX,
for
Patriot Rail Corp. ■ Pamela A. Ferguson;
Greenberg Traurig, LLP;
Houston,
TX,
for
Patriot Rail Corp. ■ Stephen Paffrath;
Greenberg Traurig, LLP;
Sacramento,
CA,
for
Patriot Rail Corp.

Defendant(s):

Sierra Railroad Company

Defense Attorney(s):

McGregor W. Scott;
Orrick, Herrington & Sutcliffe LLP;
Sacramento,
CA,
for
Sierra Railroad Company ■ Jonathan G. Riddell;
Orrick, Herrington & Sutcliffe LLP;
Sacramento,
CA,
for
Sierra Railroad Company ■ Michael C. Weed;
Orrick, Herrington & Sutcliffe LLP;
Sacramento,
CA,
for
Sierra Railroad Company

Defendant Expert(s):

Forrest Vickery;
Appraisal;
Sacramento,
CA called by
McGregor W. Scott, Jonathan G. Riddell, Michael C. Weed

In 2007, plaintiff Patriot Rail Corp., a Florida-based short-line railroad company, was in negotiations to purchase the railroad division of Sierra Railroad Co., a California-based rail and energy company. Sierra claimed it was interested in selling its railroad division to help fund groundbreaking technology being developed by its Sierra Energy subdivision. In 2009, Patriot attempted to obtain a court order to force Sierra to sell after negotiations stalled. Patriot sued Sierra for fraud and breach of contract based on the failed acquisition negotiations. Patriot alleged that Sierra acted in bad faith and never intended to sell the company. Thus, it sought recovery of monetary damages as a reimbursement for its due diligence expenses. Sierra filed a countersuit, alleging that Patriot was the actual wrongdoer and had, among other things, misappropriated Sierra’s trade secrets to steal Sierra’s contract with McClellan Business Park. Sierra claimed Patriot breached the parties’ confidentiality agreement and intentionally interfered with Sierra’s business relationship with McClellan.

Patriot sought recovery of approximately $240,000 in damages for its due-diligence costs. Sierra claimed the lost business from McClellan greatly devalued the company, and was an attempt by Patriot to bankrupt Sierra and acquire its assets at a fraction of its value. It alleged that Patriot acted with malice and intent and that, therefore, Patriot should be subjected to punitive, as well as compensatory, damages. Thus, Sierra sought recovery of between $15 and $29 million in economic damages for lost profits and de-valuation of the company. It also sought recovery of punitive damages, as well as attorney’s fees and litigation costs.

The jury ruled in favor of Sierra on its countersuit and determined that Sierra’s damages totaled $39.6 million, which included $22.2 million in compensatory economic damages and $17.4 million in punitive damages. Thereafter, the trial court awarded Sierra an additional $13,144,465 in exemplary damages based on Patriot’s willful and malicious misappropriation. Thus, Sierra’s total recovery was $52,744,465.

Actual Award:

$52,744,465

Judge:

Troy L. Nunley

Trial Length:

3
 weeks

Trial Deliberations:

2.5
 days

Jury Vote:

8-0

Jury Composition:

3 male/ 5 female

Post Trial:

Patriot’s motions for a new trial and judgment as a matter of law are pending. Sierra’s motion for sanctions is also pending, and Sierra will be bringing a motion for attorney’s fees and costs once the new trial motions are completed.

This report is based on information that was gleaned from an article that was published by the Davis Enterprise and an interview of provided by Sierra’s counsel. Patriot’s counsel did not respond to the reporter’s phone calls.