Monday, October 24, 2011
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C.A. Upholds $8 Million Award in Partnership Dissolution
By SHERRI M. OKAMOTO, Staff Writer
The Court of Appeal for this district on Friday upheld an $8 million damage award in connection with a partnership dissolution.
Div. Three, in an unpublished decision, ruled that substantial evidence supported a finding that Sergey Livnev individually was a partner in a partnership which acquired and licensed motion picture rights to television stations in the Commonwealth of Independent States and was liable for a breach of fiduciary duty and conversion.
The evidence presented at trial indicated that Livnev had orally agreed to form a partnership between his wholly-owned corporation, Juja Films Inc., and Olga Romanov, which began operating in 2003. Although the partnership, which they called Machina, was nominally between Juja and Romanov, Livnev and Romanov’s husband apparently made all of the business’ decisions.
In December 2005 and January 2006, Livnev expressed dissatisfaction with Romanov’s husband’s failure to provide needed cash to the partnership, and suggested dissolution. Romanov’s husband lent the partnership $700,000 in March 2006, and then another dispute arose after Livnev claimed that he personally, rather than the partnership, was entitled to $37,000 in profits on a particular deal.
In October, 2006 Livnev and Romanov’s husband met at a restaurant in Moscow and Livnev stated that the partnership was over.
He said he had transferred all of the partnership’s motion picture rights to Solnechny Potok, a Russian company the partnership had previously used as a licensing intermediary, which Livnev had purchased.
Livnev presented a buy-out agreement, offering $1 million for Romanov’s partnership interest, and said it was non-negotiable. He said the offer would be reduced by $100,000 each day if the agreement was not signed immediately.
Romanov’s husband did not sign the agreement, and she filed a complaint against Livnev, Juja Films and Solnechny Potok in October 2006 alleging counts for partnership dissolution and accounting; breach of fiduciary duty; injunctive relief; and conversion.
A nonjury trial commenced in February 2009 before Los Angeles Superior Court Judge Ralph W. Dau, who found that a partnership was created and that its members were Livnev and Juja Films on the one hand and Romanov and her husband on the other.
Dau also found Livnev had stopped accounting for and transferring to the partnership funds received from the licensing of motion picture rights owned by the partnership in June 2006.
He determined that the defendants had breached their fiduciary duties owed to Romanov as a partner and that they wrongfully converted partnership assets, causing Romanov damages in the amount of $6,667,496.50, representing one-half of the net income generated and received by the partnership but not shared. He awarded Romanov this amount, plus $1,405,289.06 in prejudgment interest, for a total of $8,072,785.56.
Dau also said Romanov was entitled to one‑half of $1,203,000 in receivables to the extent that those funds were actually collected in the future, and ordered dissolution of the partnership.
Writing for the appellate court on Friday, Justice H. Walter Croskey said Livnev failed to show any error in the trial court’s findings.
“We must presume that the evidence supports the trial court’s factual findings unless the appellant affirmatively demonstrates to the contrary,” Croskey said, noting “Livnev does not discuss the other evidence supporting the finding that he was a partner in Machina,” but instead attacked Dau’s purported reliance on statements Livnev had made.
Croskey noted that the statement of decision quoted an email from Livnev in which he identified himself and Romanov’s husband as “partners in Machina partnership,” and argued “you owe me a fiduciary duty,” however, he said Dau “never stated that this evidence alone” supported the finding that Livnev was a partner.
“Instead, the court referred generally to the ‘actions and words’ of both Livnev and [Romaov’s husband] and cited the statement quoted above as an instance in which Livnev purportedly acknowledged what the court found to be true based on the totality of the evidence,” Croskey said.
The justice explained that “Livnev was a partner if the parties carried on a business together as co‑owners, regardless of whether they intended to legally become partners,” and since Livnev did not discuss any of the evidence supporting Dau’s finding that he individually was a partner, he “has shown no error in this regard.”
Presiding Justice Joan D. Klein and Richard D. Aldrich joined Croskey in the decision.
Ronald M. Greenberg of Dykema Gossett represented Romanov. Kent M. Bridwell of the Law Office of Kent M. Bridwell, along with Kent L. Richland, Robin Meadow and Marc J. Poster of Greines, Martin, Stein & Richland represented Livnev.
The case is Romanov v. Livnev, B220445.
Copyright 2011, Metropolitan News Company