RECENT LITIGATION MATTERS
RECENT DESIGN PROFESSIONAL AND CONSTRUCTION LAW MATTERS
RECENT BUSINESS, REAL ESTATE, AND RELATED MATTERS
RECENT ESTATE PLANNING AND RELATED MATTERS

RECENT LITIGATION MATTERS

Defense verdict for accounting firm in "deepening insolvency" case.  Our client, an accounting firm, had provided financial statement and tax services to an e-commerce company that was subsequently forced into bankruptcy.  The bankruptcy trustee then sued the accounting firm for damages in excess of $5 million, claiming that its negligence led to the "deepening insolvency" of the e-commerce company.  This so-called "deepening insolvency" theory has, in recent years, plagued many accounting and law firms. Through a motion for summary judgment, we were able to defeat this claim and, in an extremely important decision, the dismissal was affirmed by the Third Circuit Court of Appeals, which significantly narrowed the reach of the "deepening insolvency" theory for future cases.

$2.5 million verdict in breach of contract case.  Powell Trachtman represented a contract food service provider engaged by a customer to service approximately fifty facilities.  Despite the fact that the client and its customer failed to finalize a written agreement respecting the financial terms of their arrangement, our client provided food services for a year, and then claimed that it had been underpaid, that it had lost future profits, and that it suffered other losses.  Our client's customer contended that it had fully paid our client and met all of its obligations, and refused to make a meaningful settlement offer.  We took the case through a two week jury trial in federal court, and obtained a $2.5 million verdict, all of which was collected.

Successful resolution of shareholder buy/sell claim.  An employee/shareholder resigned from our client's employ.  The parties were signatories to a buy/sell agreement that was over a decade old and had not been updated, creating various ambiguities.  In addition, the employee/shareholder claimed that the buy/sell had been orally amended by all of the shareholders.  Litigation ensued in federal court respecting the price our client would be obligated to pay for the employee/shareholder's stock.  After taking the employee/shareholder's deposition and pursuing certain motions, we were able to resolve the case for less than one tenth of one percent of the employee/shareholder's original demand.

Defense verdict in Florida death case.  Powell Trachtman was engaged to represent an aerial lift manufacturer after the lift operator died as the result of being pinned between the lift and a stationary piece of construction equipment.  The family of the deceased worker retained an experienced aerial lift industry expert, who proffered theories ranging from improper braking systems, to improper proportional control systems, to improper warnings.  Plaintiff's settlement demands were in the multi-million dollar range.  Powell Trachtman acted as lead counsel during a three week trial in Florida federal court.   We cross examined plaintiff's expert over three days, culminating in the judge's observation that the expert was the "worst witness he had seen in seventeen years on the bench."  A defense verdict was promptly returned in favor of our client, for which we remain national defense counsel.

Successful resolution of claim by business buyer against business seller.  The buyer of a distribution business retained us after the sale was consummated.  Our client contended that the seller's warranties about the business were inaccurate and that, as a result, it had dramatically overpaid for the business.  We assembled the facts documenting our client's contentions, and designed and presented a two hour presentation to the seller and its counsel.  As a result, we were able to negotiate a settlement resulting in our client saving over half of the purchase price it had originally agreed to pay, without incurring any litigation costs.

Defense verdict and recovery on counterclaim in breach of contract case.  Powell Trachtman was retained to represent a client sued for breach of a services contract.  At an early stage, we successfully enforced a contractual arbitration provision, thereby limited the adverse party's discovery rights and minimizing defense costs.  We then worked with our client to develop a substantial counterclaim.  After a three-day hearing, the arbitrator dismissed the claim against our client, awarded our client damages on its counterclaim, and awarded our client all of its attorneys' fees.

Successful resolution of sexual harassment claim.  A large insurance carrier retained Powell Trachtman to defend a major company and one of its senior officials against a sexual harassment and assault claim brought by a former employee.  After an intensive investigation, we successfully discredited the plaintiff's claim during her deposition.  Shortly thereafter, the case was settled for a small fraction of the plaintiff's original demand, saving our client substantial counsel fees and executive resources. 

Defense verdict in whistleblower/wrongful termination claim.  Powell Trachtman was retained to defend a corporation against whistleblower, wrongful termination and interference with prospective contractual relations claims brought by a former employee.  After extensive discovery, we filed a motion for summary judgment.  The court then granted our motion, and dismissed the case in its entirety.

Defense verdict, successful resolution of major death and injury claim.  Powell Trachtman was retained to defend the manufacturer of a boom supported aerial lift that was involved in a crushing type accident that resulted in one fatality and one disabling injury. The matter had been pending in state court for nine years before Powell Trachtman was retained.  Within two weeks after our engagement, we finalized a defense strategy and listed the matter for trial.  During the trial, which convened less than 90 days after our entry into the case, we successfully obtained the dismissal of the wrongful death case and settled the personal injury claim for less than one percent of the jury verdict and resulting settlement with the co-defendants.

Successful resolution of quadriplegia personal injury claim.  Powell Trachtman represented a college sued by a former student who suffered partial quadriplegia while participating in a club-sponsored sports competition.  We argued that the college satisfied its duty of care and, moreover, we were able to document through the use of sophisticated
expert reports that even if the college had done what the former student contended it should have done, the same injuries would have resulted. We filed a motion for summary judgment, which was granted, and the case was
dismissed.

Successful resolution of state tax claim.  Our clients had purchased a tax shelter which, subsequently, the IRS had discredited and invalidated.  As a result, state tax authorities had imposed substantial penalties against our clients for non-payment of taxes on the sheltered income.  We contested the assessment, and successfully eliminated all penalty assessments.

Successful representation in state license revocation action.  Powell Trachtman was hired by a College to represent the College’s interest in an action brought by a state agency to revoke the College's academic certification to train individuals as municipal police officers.  We represented our client in both administrative proceedings and injunctive proceedings before the Commonwealth Court.  Ultimately, we were able to negotiate a favorable settlement that resulted in the College's certification being reinstated.

RECENT DESIGN PROFESSIONAL AND CONSTRUCTION LAW MATTERS

Successful settlement in favor of engineer on developer's claim.  We were retained to defend an engineer which had been sued by a developer.  The developer claimed that its proposed multi-use project was denied by a
municipality due to design errors by the engineer.  During trial, we settled the case for less than 10% of the developer's claimed damages, and we recoverd a substantial payment for the engineer on account of its unpaid billings.

Successful settlement in favor of engineer on Kazakhstan project.  We represented an engineer sued for an alleged, serious design error in a construction project in Kazakhstan.  We were able to settle the case for an amount that represented less than 20% of the claimed damages, and as part of the settlement we protected the engineer from any personal payment obligation.

$37 million verdict in construction/civil rights case.  Powell Trachtman represented a construction company engaged by a municipality to build a reservoir.  During the construction, our client concluded that the reservoir design was unsafe and defective, and refused to continue. The municipality disagreed, it terminated our client without payment and, our client alleged, it "blackballed" our client in the industry.  The proceedings were extremely contentious and, ultimately, we obtained a $37 million jury verdict on behalf of our client - including $25 million in civil rights damages.

Successful resolution of a deficient design claim for a designer and construction manager of a warehouse distribution facility.  We represented the designer and construction manager of a warehouse distribution facility against a claim that a 150,000 square foot floor was deficient in its design and/or construction, requiring the entire floor to be replaced at a cost of $2.2 million.  The case was litigated in an American Arbitration Association proceeding for seven days.  We succeeded in disproving the fundamental bases of the claim, and the case was then settled for a nominal sum.

Successful resolution of claim against architectural firm in major, high profile case.  An internationally-acclaimed architectural firm faced a $20 million errors and omission and delay/acceleration claim arising out of its efforts as project architect for a symphony concert hall.  The architectural firm retained Powell Trachtman.  We favorably resolved all claims, and obtained a public statement of praise for our client's work issued by the project owner.

Successful resolution of multi-million dollar hotel water intrusion/mold growth claim.  We defended both the MEP engineering design firm and the interior designer of a multi-use facility against a multi-million dollar water intrusion and mold growth claim brought by the project's owner.  Through our use of extensive and technically-detailed presentations in a multi-stage mediation process, we were able to resolve the claim in our clients' favor - one client made a very limited settlement contribution (far less than what had been anticipated), and the other made no settlement contribution at all.

Highway design and engineering firms representation.  Powell Trachtman represents numerous highway design and engineering firms in cases involving serious automobile and pedestrian accidents.  In several recent cases, we successfully obtained pre-trial dismissals of engineering firms that were alleged to have improperly designed roadway improvements, and in another we obtained a dismissal during the trial through proof that the engineer’s plans had been prepared in accordance with applicable design standards.

Representation of many firms that serve as appointed township engineers for Pennsylvania municipalities.  Several of our clients were claimed to have negligently reviewed or approved land development plans prepared by others, and we have succeeded in obtaining the dismissal of those cases based on governmental immunity.

Successful resolution of a deficient design claim for a national engineering firm.  Powell Trachtman represented a national engineering firm in a lawsuit by an owner of a distribution facility claiming deficient design in connection with a 1.3 million square foot concrete floor above the distribution facility.  All of the contractors and their subcontractors were named as defendants/additional defendants in the case, and after a three-day mediation, and further intense negotiations thereafter, we successfully resolved the case for substantially less than had been reserved or anticipated.

Successful settlement in favor of engineer on developer's claim.   We were retained to defend an engineer which had been sued by a developer.  The developer claimed that its proposed multi-use project was denied by a municipality due to design errors by the engineer.  During trial, we settled the case for less than 10% of the developer's claimed damages, and we recoverd a substantial payment for the engineer on account of its unpaid billings.   

RECENT BUSINESS, REAL ESTATE, AND RELATED MATTERS

Acquisition, financing and development of manufacturing facility.  Powell Trachtman was engaged by a major manufacturer to handle the acquisition of a ten-acre industrial/commercial property using a multi-level financing facility which included not only term and mortgage loans, but international letters of credit and working capital.  After the acquisition was completed, we successfully handled various tax assessment, land development, and environmental issues arising from the further development of the site

Negotiation of major commercial sublease.  A major professional services firm retained Powell Trachtman to negotiate one of the first commercial subleases of Conrail's 800,000 square feet of first class Center City Philadelphia office space.  We successfully consummated the transaction, involving two full floors, totaling approximately 60,000 square feet.  

Representation of nonprofit research entity in commercialization of therapeutic drugs project.  Powell Trachtman was retained by a medical research nonprofit affiliated with a major Philadelphia university hospital.  We created an organizational framework that facilitates the commercialization of therapeutic drugs within the nonprofit context.  We also traveled with our client to Europe to meet a foreign joint venture partner and worked with that partner's foreign tax advisors to structure joint venture operations in a way that protected our client's tax exempt status.

Acquisition of industrial property requiring environmental remediation.  A client retained us to handle the acquisition of an industrial property. The agreement required that the seller perform certain environmental remediation.  When the seller could not complete all the remediation to the satisfaction of our client's lender, we devised a strategy in which the seller took back a 100% purchase money mortgage, with appropriate protections for our client, so our client could pursue the required municipal approvals pending refinancing when the seller fully performed.  This strategy allowed our client to acquire the property and obtain the mandated municipal approvals on a fast track, it saved substantial costs, and it allowed our client to satisfy its business requirements on schedule.

Business sale involving significant tax and key employee issues.  We represented a large distribution company in selling its business to a competitor, while leasing back commercial properties in two states, and retaining the sellers' key personnel through employment contracts.  This transaction was a stock sale, but structured as a "deemed" asset sale under applicable provisions of the Internal Revenue Code. This allowed the buyer to re-depreciate certain assets, thereby enabling our client to obtain a higher purchase price. We represented a client in negotiations of his employment contract as Chief Executive Officer with a major company, and successfully designed a complex and ultimately lucrative stock option and bonus compensation plan that satisfied the needs of both the employer and the employee.

Creation of ESOP as part of founder's succession plan.  We structured and drafted an Employee Stock Option Plan (ESOP) for a corporate client, and qualified it with the Internal Revenue Service.  The ESOP not only created incentives through which key employees were retained, it also provided a means of succession planning for the founder of the firm, liquidity for the purchase of the founder's equity, and payment to the founder with tax deductible dollars.

Development of national entity/licensing strategy for architectural/engineering firm.  We were engaged by a firm that provides engineering and architectural services throughout the country to develop a method through which it could comply with the regulatory patchwork of state professional licensing laws.  We developed an entity structure that meets these goals while at the same time imposing the minimum level of administrative burdens.

Acquisition involving SBA financing.  Powell Trachtman represented a client purchasing a new commercial building in a planned community, a portion of which was for its own use. The transaction involved primary and secondary acquisition loans, the latter of which was SBA insured, as well as the lease of the remainder of the building to commercial tenants.  We successfully finalized all aspects of the transaction.

Negotiation of a multi-million dollar statewide strategic sourcing contract.  Powell Trachtman was engaged by a medical service provider to negotiate and draft a multi-million dollar statewide strategic sourcing contract with the Commonwealth of Pennsylvania for the provision of doctors, psychiatrists, psychologists, nurses, and other health care professionals to state healthcare facilities throughout the Commonwealth. The contract not only allows the Commonwealth to have real-time management of its health care delivery system on a statewide basis to meet a wide range of patient needs but also allows the Commonwealth an annual savings of approximately $2.7 million. The contract has now become a model for other states.

RECENT ESTATE PLANNING AND RELATED MATTERS

Creative Estate Tax Planning for the Owner of a Subchapter S Corporation.  The owner of a substantial S-Corporation with a healthy cash flow retained Powell Trachtman to create an estate plan.  The owner wanted to divide the ownership of the company at his death among several trusts for his minor children.  The problem was that the proper type of trust for the job, a Qualified SubChapter "S" Trust, mandated current income distributions, and the owner wanted to accumulate income inside the trusts.  We devised a unique solution involving payment of the corporate income into a custodial account which, under Pennsylvania law, could survive until each minor's twenty-fifth birthday.  The upshot was protection of the corporation's S-election and the minimization of tax liabilities, while ensuring that each minor's inheritance was professionally managed and secured.

Successful Negotiation with the IRS to Eliminate Mounting Interest and Penalties for Estate Heirs.  The executor of an estate retained us to disentangle an escalating nightmare.  The decedent had owned a sole proprietorship whose business records were unintelligible and, even worse, the decedent had not filed current tax returns.  The executor faced mounting IRS interest and penalties, and was unable to file the necessary income tax returns, estate and inheritance tax returns, and fiduciary income tax returns.  We successfully worked with the IRS, completed all necessary returns to its satisfaction, eliminated the continuing interest and penalties, and completed the administration of the estate.

Updating estate planning documents reveals major flaws.  A seriously ill client retained us to assist him in his effort to update his estate planning documents.  As often occurs, our review revealed outdated provisions that would have seriously compromised the amount he would have been able to pass to his surviving spouse.  Our client had created a trust for his surviving spouse in the amount of the maximum federal tax exemption that existed at the time his estate plan was completed.  The client's will was created years ago, when the exemption was much less, making the risk of a 50% federal estate tax more imminent than the risk of overfunding a trust for his spouse.  As the exemption increased over the years, however, the static funding formula in the trust became outdated.  We found a way to meet our client's goals, eliminate the tax risks, and provide our client with the peace of mind he sought.