PSD represents DGI-BNSF Corp., a real estate management company, against TRT Leaseco, LLC, in the Southern District of New York, in an action involving the terms that would govern the availability of approximately $180 million in net operating losses. After a multi-week bench trial, during closing arguments, PSD founding partner Barry Pollack argued, with respect to the CEO that controlled the defendant: “all I can say are inconsistencies and evasiveness. He just wasn’t there to answer your Honor.” The Court responded in agreement: “I did not find him to be particularly credible.” With respect to the CEO of PSD’s client, the Court commented that he “was an extremely credible witness” who “knew what he was doing, he knew what he was buying, there were other ways this deal could be structured, so that he could take care of the phantom income, and he was also prepared to pay the taxes, so that he had several — for at least some period of time, he was prepared to pay the taxes, so that it was not like he was in a fire sale circumstance.” The matter settled shortly thereafter.
Shortly before trial, PSD won a motion for leave to amend its client’s Complaint to add a fraudulent inducement claim. The amended claim attributed to the defendant alleged misrepresentations by the CEO of what subsequently became its majority stockholder. A 12-page memorandum opinion, dated November 6, 2019, addressed this somewhat novel issue.