William H. Pauley III, a federal judge in New York City, didn’t like the case of BrandAid Marketing Corp. v. Cyberian Enterprises Ltd. or the lawyers, one of them from Richmond, who tried it.
He ruled initially in 2005 that both sides had committed fraud and dismissed their claims under the doctrine of in pari delicto. The 2nd U.S. Circuit Court of Appeals agreed a year later that neither side was a symbol of virtue but concluded that Cyberian had behaved much worse than BrandAid and sent the case back to Pauley.
Pauley had trouble understanding why Cyberian would offer $21 million in cash for BrandAid, which had little cash flow and more than $5 million in liabilities, but he concluded that it had done so and then acted as if the deal had been consummated and took over BrandAid when no cash or property ever changed hands.
In January, he ordered Cyberian to pay $21 million for breach of contract, although the opinion suggests that collection of the judgment is unlikely.
He didn’t stop there. “This case presents a cautionary tale about the potential for advocates to obscure the issues and impose needless burdens on busy courts. The action began with a groundless application for preliminary relief. Incessant pre-trial sparring, ad hominem attacks and a barrage of frivolous motions on the eve of trial impeded resolution of this matter.
“The parties post-trial submissions only further clouded their unfocused trial presentations. Even on remand, the lawyers continued to obfuscate, leaving this Court to grope down a dimly lit corridor. Time will tell whether this Memorandum and Order finally puts an end to this madness.”
It didn’t. The Virginia State Bar had filed disciplinary charges against Cyberian’s attorney, Stephen S. Biss of Richmond, for, among other things, assuring BrandAid’s principals that he held the $21 million in escrow.
Last week, a three-judge panel suspended Biss’s license for a year and a day. He has filed a motion to have the panel reconsider the punishment.
By Alan Cooper