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Firm News
Representative Engagements
Brewer & Pritchard: Representative Engagements
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COMPANY NEWS:
Judge Puts Brakes on Census 2000
Brewer Files Lawsuit Against Census 2000
Seven Years of Success in Service — Founded May 2, 1991
Brewer & Pritchard: Law Firm Resume of Representative Engagements
Recent Class Action Representations:
1. Represented defendants in securities fraud case: George Phillips vs. Automated Telephone Management Systems, Inc., et al; In the United States District Court for the Northern District of Texas, Dallas Division; C.A. No. 394-CV-1602X.
Result: Case settled.
2. Represented defendant in securities and licensing dispute: Lavernia Harris v. Link-Two Communications, Inc. and Eagle Wireless International, Inc.; In the 151st Judicial District Court, Harris County, Texas; Cause No. 98-00831.
Result: Certification opposed (by Brewer & Pritchard); case referred to binding arbitration of lead plaintiff's individual claims, and resolved in arbitration.
Recent Securities Representations:
1. Represented one of 12 defendants in securities fraud case: Albert Sidney Bowers, III v. North American Advanced Materials Corporation, et al.; In the 133rd Judicial District of Harris County, Texas; Cause No. 96-24679.
Result: Case resolved.
2. Represented defendants in securities fraud equitable proceeding: Lloyd R. Walker v. Waterguard Cable Products, Inc.,Waterguard Ind. Inc., Clarence S. Freeman, Matthew M. Freeman, Gregory A. Enders, Allen F. Dow, Alan F. Judkins, H. Richard Horner and James J. Mullen, Jr.; In The Court of Chancery of the State of Delaware In and For New Castle County; Civil Action No. 16365.
Result: Case resolved.
Recent Enforcement Representations:
1. Represented a publicly traded internet fax technology company (name is confidential) before the Securities and Exchange Commission, Midwest Regional Office (Chicago, Illinois) regarding integration and other 1933 Act allegations. S.E.C reference MC 13.
Result: Preempted civil enforcement proceedings through pro-active, corrective actions.
2. Represented a publicly traded pharmaceutical manufacturing and distributing company (name is confidential) in regard to a criminal investigation of the United States Attorney for Pennsylvania; Regional Inspector General for Investigations, Department of Health and Human Services regarding medicare fraud and other criminal and quasi-criminal allegations.
Result: Pre-empted criminal and civil proceedings by the government through pro-active, internal investigation and open communication with the government.
Current Securities and Enforcement Representations:
1. Represent 3 defendants in SEC enforcement civil proceeding: Securities And Exchange Commission v. Anita Carlisle D/b/a Carlisle Communications, J. Scott Sitra, Sitra Enterprises, Inc.,Jaflc Capital Management and Jeffrey Brommer D/b/a Investments 101, Ltd., et al., in the United States District Court for the Western District of Texas, Waco Division; Civil Action No. W98CA352.
Insurance Section Prevails in Declaratory Judgment Action: No Duty of Defense or Coverage Owed
In late June of 1998, Patrick Gaas and Heather Nelson prevailed on a motion for summary judgment filed on behalf of a nationally known insurance company. The result saved our client tens of thousands of dollars in defense costs as well as in potential costs for damages if the insured had been found liable in the underlying suit.
In that case, the insured sought defense and ultimately coverage for the plaintiff's claims for damages under two separate "claims-made" commercial general liability ("CGL") insurance policies. Generally, before an insurance company will have any duty to defend and/or provide coverage for a claim under a claims-made insurance policy the insured must satisfy two requirements. First, the insured must report the claim, in writing, to the insurer during the policy period. Next, the alleged wrongful act of the insured must have occurred after the retroactive date shown in the declarations page of the policy or during the policy period.
The court held that the first policy, although validly issued by the insurance company to the insured, was inapplicable to the plaintiff's claims in the underlying suit because the policy was issued to the insured after the date the incident occurred and the policy's retroactive date was also well after the incident occurred.
The second policy was not as easily dismissed as inapplicable because it was in effect when the incident involving the plaintiff occurred. An unknown person or persons mistakenly or fraudulently altered the insurance declarations page to reflect the name of the insured, presumably to show insurance coverage during the relevant time period. We successfully proved that the second policy was issued to a different insured and that it had never been issued to the company claiming defense and coverage under that policy. We further successfully argued that even if the policy had been issued to the insured, it failed to notify the insurance company of the claim within the policy period as required under a claims-made policy. Therefore, no duty to defend or provide coverage for the plaintiff's claims in the underlying suit would have existed even if the policy had been issued to that company. The court ultimately determined that the insurance company was not liable to the insured under either policy and awarded to the insurer reasonable attorney's fees and pre and post-judgment interest as well as all of its costs.
Our insurance practice group is experienced in handling complex insurance coverage issues, including cases involving severe bodily injury or death. If you are interested in discussing a coverage question or other insurance related matter, you may contact us at: insurance@bplaw.com
Not certified by the Texas Board of Legal Specialization.
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Corporate/Securities News: Brewer & Pritchard, P.C.Prepares Private Placement Memorandum
Brewer & Pritchard, P.C. recently prepared a Private Placement Memorandum for a development stage company whose strategy is to be a common carrier of exclusively wholesale one-way and two-way paging network services. The Company intends to enter into joint ventures with its customers to offer its customers paging network services as an aggregate to allow its customers to resell the Company's network services to individual subscribers and other communication providers. The Company believes that it is uniquely positioned to pursue the joint ventures as it has acquired and activated several hundred valuable licenses. The Company's management believes that as these licenses are integrated into both a regional and eventually a national network, the Company has the potential to recognize a value for this network greater than the sum of the individual licenses.
The Company structured the Private Placement Memorandum to raise $5,100,000 by offering 170 units (the "Units"), each Unit consisting of 12,000 shares of common stock and 12,000 four-year warrants to purchase 12,000 shares of common stock at a purchase price of $5.00 per share. The Units were sold to accredited investors at a price of $30,000 per Unit and were offered in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.
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Proxy Filings for GK Intelligence Systems, Inc. and Amedisys, Inc.
Brewer & Pritchard, P.C., assists several public companies in preparing 1933 Act and 1934 Act compliance work, including regular and periodic reporting requirements and proxy solicitations for regular and special meetings of shareholders. The firm recently prepared proxy materials for two public companies as described below.
Our firm recently prepared a proxy solicitation for a special meeting of stockholders for GK Intelligent Systems, Inc., (Amex symbol GKI) a Delaware corporation which is a developer and marketer of "intelligent" network performance support via the Internet and other Internet transmission modalities. The proxy was prepared for the purpose of amending GK Intelligent Systems' Certificate of Incorporation to increase the number of authorized shares of common stock.
Additionally, our firm prepared proxy materials for an annual meeting of stockholders for Amedisys, Inc. (Nasdaq symbol AMED), a Delaware corporation engaged in providing alternative site health care and physician management services. The Company provides home health care and supplemental staffing nurses and operates outpatient surgical centers. The Company maintains 28 home health care and supplemental staffing offices in eight states, and operates two outpatient surgery centers in Texas and is developing a surgery center in Louisiana. The Company also manages home health agencies, physician practices and rural health clinics and is the network manager of the Home Care Alliance of Louisiana. The proxy materials were prepared for electing directors, amending Amedisys' Certificate of Incorporation to increase the number of authorized shares of common stock, to consider the proposed employee stock option plan, to consider the directors stock option plan, to consider the employee stock purchase plan, and to ratify the selection of the independent public accountants.
Not certified by the Texas Board of Legal Specialization.
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Corporate/Securities News: Brewer & Pritchard, P.C. Represents pinkmonkey.com, Inc.
Brewer & Pritchard, P.C. represents pinkmonkey.com, Inc., a Texas corporation ("pinkmonkey.com"), which is engaged in publishing educational study aids that are distributed over the Internet directly to the consumer. Pinkmonkey.com operates a commercial website at www.pinkmonkey.com. Pinkmonkey.com offers a complete line of literature notes, study guides, test preparation guides, course software and test preparation software. Products are available 24 hours a day at prices substantially lower than traditional retail prices.
On June 23, 1998, pinkmonkey.com, inc. closed a reorganization agreement with North American National Resources, a publicly held Nevada corporation (the "Company") (OTCBB:NANR). In connection with the reorganization agreement, the Company has agreed to issue up to 10,200,200 post-split shares of unregistered and restricted shares of Company common stock for up to 100% of the issued and outstanding shares of pinkmonkey.com. Prior to closing, the Company completed an 8:1 reverse split of its 2,999,486 outstanding shares to 374,936, and then issued 1,425,064 additional post-split restricted shares for services rendered, for a total of 1,800,000 shares of Company common stock outstanding prior to the closing, of which 374,936 shares are freely tradeable. As of the closing, holders of more than 80% of the issued and outstanding shares of common stock of pinkmonkey had agreed to transfer their shares of common stock for an equal number of shares of Company common stock.
In connection with the closing of the reorganization agreement, the Company changed its name to pinkmonkey.com, inc. Commencing June 25, 1998, the common stock of pinkmonkey.com was traded over the Electronic Bulletin Board under the symbol "PMKY."
Not certified by the Texas Board of Legal Specialization.
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Seven Years of Success in Service
— Founded May 2, 1991
The firm is pleased to announce the successful completion of the last in a series of lawsuits concerning stainless steel, laminated curtain (exterior) wall building panels. This latest case ended with a $1.85 Million settlement with CNA, one of the insurers for Hexcel Corporation.
This settlement culminates a series of lawsuits which began in 1989, involving the 3D/International Tower in Houston, Texas (Galleria Business District), as well as the Enserch Tower (located in West Houston) and the Flagship Bank Building (Miami, Florida). Brewer & Pritchard, P.C. name shareholder, J. Mark Brewer, negotiated the settlement.
Brewer & Pritchard represented the owners of these buildings: Hines Interest Limited Partnership; Metropolitan Life Insurance Company (Metlife); and Enserch Corporation. The firm also represented Harvey Construction Company, the general contractor for 3D/I Tower.
Defendants in the various curtain wall litigation included some of the biggest names in the business: Robertson-Ceco's Cupples Products Division; Hexcel Corporation (makers of honeycomb "core" and adhesives); and American Cyanamid (adhesives and core materials), now part of American Home Products.
Insurers in "follow-on" litigation include not only CNA, but also Allianz, AIG, Evanston, International Surplus Lines, CIGNA/INA; American International Insurance Company; Scottsdale; and others, which paid a total of some $5 million dollars.
Law firms representing the opposition to Brewer & Pritchard's clients included Houston's Fulbright & Jaworski; St. Louis based Bryan, Cave; and Houston's Baker & Botts. Brewer & Pritchard principal, Patrick E. Gaas assisted J. Mark Brewer in the prosecution of these various cases.
Not certified by the Texas Board of Legal Specialization.
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Multi-Million Dollar Coverage Settlement
In the past few months, Brewer & Pritchard, P.C. principal Patrick Gaas has successfully completed the takeover of 4 construction projects. These take-overs were on behalf of the sureties (our clients) for the defaulted prime contractors.
Involved in this process were: the prompt selection and retention of knowledgeable construction consultants; investigation of the defaults; determination of the remaining scope of work; negotiation of ratification agreements with selected subcontractors and suppliers; solicitation and evaluation of bids for the completion of the projects; negotiation of takeover agreements with the project owners; negotiation of completion agreements with completion contractors; procurement of substitute payment; performance; and maintenance bonds. Also involved: analysis and evaluation of all applicable insurance coverages; and evaluation, payment, denial, litigation and/or negotiation of claims from unpaid subcontractors and suppliers.
Our surety practice group and Mr. Gaas are currently in the process of tackling numerous other projects and numerous other claims.
Contact Mr. Gaas or our surety group at construction-surety@bplaw.com, or call us at 713/209-2950.
Not certified by the Texas Board of Legal Specialization.
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Corporate/Securities News: Exchange Offer
Brewer & Pritchard, P.C. is a full service law firm for business, with expertise in corporate/securities law, mergers and acquisitions, and general business litigation. An example of a recent corporate transaction executed by our firm is illustrated below.
Brewer & Pritchard, P.C. represents one of the premier, leading providers of enhanced fax communications services in North America. Formed in April 1995 to capitalize on the dramatic increase in the usage of fax broadcast services, the Company has developed and is marketing its fax broadcast service to businesses and individuals. The Company raised approximately $1.9 million of capital for its start-up by forming sixteen limited liability companies ("LLCs") with various persons who received either a 40% or 50% interest in the revenue and profits of a city or a group of cities in exchange for a cash contribution. The Company was manager of the LLCs and had a revenue and profits participation in the LLCs ranging from 50% to 60%.
In November 1997, the Company offered to exchange up to 2,321,760 of its shares of Class A voting common stock, no par value ("Class A Common Stock"), for the LLCs outside members' net equity interest of the sixteen affiliated Texas LLCs. Shares were issued to each member in the proportion of 1.2 shares for each $1.00 of capital contributed by each member. There was no minimum number of members that were required to accept the exchange offer. In the event that a member did not accept the Exchange Offer, the member would not become a shareholder of the Company, the LLC would continue its operations and the member would continue to be a member in such LLC.
In December 1997, approximately 128 out of 128 members (100%) accepted the Exchange Offer by trading in their Minority Interest in the LLCs for the Company's Class A Common Stock. As a result of the Exchange Offer, the Company believes that its corporate equity securities will be more favorably valued than the interests in the LLCs. A larger capital and earnings base provides the Company with greater flexibility in accessing capital markets. In addition, the Exchange Offer results in decreased administrative expenses and simplified tax reporting requirements.
For information on corporate/securities issues, call us at 713/209-2950 or e-mail our corporate securities practice group at corporate-securities@bplaw.com.
Not certified by the Texas Board of Legal Specialization.
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Insurance Defense Report: Duty to Provide Coverage & Duty to Defend For Employment Related Claims
The explosion of both employment-related legislation and employee-generated litigation over the past several years has changed employer-employee relations law. Employers are increasingly being forced to respond to allegations of discrimination, sexual harassment and wrongful discharge or retaliatory discharge. An unanticipated consequence of this explosion in employment related litigation is the effect on insurance coverage under commercial general liability policies ("CGL policies").
CGL policies are the most common liability insurance policies relied upon by businesses to protect and indemnify against claims which may arise in the course of business. A CGL policy typically provides coverage for bodily injury or property damage arising from an unexpected or unintended occurrence, and excludes coverage for bodily injury which is " expected" or " intended" by the insured, as those terms are defined under the policy. Most CGL policies now also contain language which excludes coverage for many employment related claims, such as for liability assumed by the insured under workers' compensation, disability benefit or unemployment compensation laws, and for on-the-job bodily injuries suffered by an employee. Despite those provisions, many employers have been able to successfully invoke a duty to defend and/or coverage under CGL policies for employment related claims.
We believe that consulting counsel before making a final determination as to whether a duty to defend or coverage exists for employment related claims will protect the insurer from needless litigation and added expense by providing the insurer with a solid legal basis from which it can determine whether to provide a defense and/or coverage.
For more information on insurance related issues, e-mail us at insurance@bplaw.com.
Not certified by the Texas Board of Legal Specialization.
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Trial Verdict Report: Verdict for Firm Client, a General Contractor and Its Surety
A five day jury trial, hotly contested throughout, was punctuated by a " take nothing" verdict and the recovery of thousands of dollars in costs, in favor of our clients, a general contractor and its bonding company. Our clients were the defendants in The Cajo Companies d/b/a C. J. Construction & Designs, Inc. v. Hubco, Inc. and Hartford Fire Insurance Co. Patrick E. Gaas, a principal with Brewer & Pritchard, P.C., represented the defendants.
Our client, Hubco, was the prime contractor for the City of Houston's $2M+ Tierwester Overlay Project, part of the " neighborhoods-to-standards" inner city redevelopment program. Hubco subcontracted concrete base repair, manhole adjustments, curb and gutter removal and replacement, and concrete driveways and sidewalks to Cajo, a women's business enterprise (minority business).
The Plaintiff's Case: " Side Deals"
The most significant and intriguing issue in the case were alleged " side-deals" which supposedly included an unwritten agreement to falsely inflate the actual quantities that Cajo billed to Hubco under its " unit-price" contract for other work, and to increase the unit-price for certain work, both beyond that which the City of Houston agreed to pay Hubco. We argued to the jury that Cajo's claimed side deals- if accepted - would amount to a contract to defraud the City. Cajo also disputed a number of " backcharges," representing Hubco's costs incurred in supplementing or otherwise doing Cajo's work. Additionally, Cajo claimed that Hubco refused to pay a substantial, undisputed balance (almost $100,000.00) until nearly two years after Cajo completed its work- all in an effort to force Cajo to release its disputed claim. Cajo therefore sued Hubco and Hartford, its surety, for approximately $180,000.00, including actual damages, pre-judgment interest, and attorney's fees. Our Defense: Credibility
Hubco denied the existence of the side-deals and claimed that the temporary work was " incidental" to Cajo's other compensable work. Hubco also claimed that most of Cajo's problems were brought about by its own mistakes and lack of experience. The jury overwhelmingly agreed with Hubco; it denied Cajo any recovery.
Cases like this almost always boil down to credibility. We believed, and showed the jury, that Cajo's contentions were illogical and totally self-serving. We remained true to our position throughout the trial, won the critical issue of credibility, and hence the trial. TIPS
This case highlights the need for good project documentation from the standpoint of both the subcontractor and the general contractor. Subcontractors should strive to perform no extra or additional work unless or until they have a written change order or other directive authorizing the work and describing the compensation for the work. Similarly, and just as importantly, general contractors need to make clear to their field personnel and subcontractors that contractual modifications must go through the home office. This is for the general contractor's own protection.
Although all general contractors should consult their own counsel, we believe that most subcontracts should contain some acknowledgment on the part of the subcontractor regarding the limited authority of the general contractor's field personnel. For instance, " Subcontractor acknowledges that Contractor's field personnel have no authority to modify this Subcontract. Subcontractor shall receive no compensation for extra or additional work, unless such work and compensation are first approved in writing, by Contractor's Contracting Officer." This provision can be modified to allow for written field directives, perhaps limited as to amount of compensation. For more information on this case alert, call Patrick E. Gaas at his direct dial number: (713) 209-2912, or e-mail him at gaas@bplaw.com.
Not certified by the Texas Board of Legal Specialization.
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A Bond Principal May be Sued for Indemnity in Any Jurisdiction Where It Causes Its Surety to be Sued.
We represented the appellee in Gundle Lining Construction Corp. v. United States Fidelity & Guaranty Company v. Adams County Asphalt, Inc., 85 F.3d 201 (5th Cir. 1996), motion for rehearing denied.
Our client's bond principal, Adams County Asphalt, was a general contractor on a Pennsylvania project. Adams purchased material from Gundle, a Houston company. At the end of the project, Gundle claimed it was owed over $120,000 on its final invoice. Adams admitted it owed about $80,000 to Gundle, but refused to pay any amount. Adams had a standard indemnity agreement with our client, USF&G. As a result of the payment dispute, Gundle sued both Adams and its surety, USF&G. It sued in Houston. Ultimately, USF&G settled Gundle's claims against itself and Adams. We then sought indemnity and reimbursement from Adams by way of a third party claim in the same case. We obtained summary judgment.
The principal (Adams) appealed. It argued that Texas did not have jurisdiction over it since it is a Pennsylvania company. We successfully countered that the principal should have to answer to a lawsuit anywhere it causes its surety to get sued or suffer a loss. Adams caused USF&G to be sued in Texas because Adams had contracted with Gundle, a Texas company. Ada
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