Jan. 23, 2006 — More information about the complex legal battles between Jeffrey Prosser and his Innovative Communication Corp. (ICC) on the one hand, and its various adversaries on the other has come to light this week.
First, there were two decisions against Prosser and company in Delaware's Chancery Court, not just one, as previously reported (See "Prosser Loses $89 Million Decision in Delaware Court").
In addition to the $89 million judgment lodged against ICC and Prosser — for under-compensating the minority stockholders in ICC's predecessor company, Emerging Communications, Inc. — there was another case, with the same set of contestants.
In the second case, decided at the same time, Justice Jack B. Jacobs (the same judge) awarded $28.5 million to the minority stockholders plus 6.27 percent in interest, compounded monthly since Oct. 19, 1998.
The Source estimates that the principal and interest in this case totals a little more than $45 million. The two cases had different sets of issues; the combined total of the two judgments is estimated to be more than $134 million.
The minority stockholders — represented by three Delaware-based corporations, all bearing the name Greenlight — now face another round in court, as ICC has appealed both judgments to the Delaware State Supreme Court.
The second development is related to the first: the filing in St. Thomas' U.S. District Court of a suit by ICC against its longtime banker, the Rural Telephone Finance Cooperative, a nonprofit institution headquartered in the Virginia suburbs outside Washington, D.C.
In its complaint, ICC's lawyers argued that RTFC knew all along that the minority stockholders were being under-compensated and that the bank, therefore, has an obligation to make a contribution (of unstated size) "as a joint tortfeasor for all or part of the judgments entered against [ICC and Emerging Communications] in the Delaware Chancery Court." Essentially ICC is claiming that RTFC should be financially liable, along with ICC, for monetary damages awarded in the lawsuits.
The ICC brief states: "RTFC knew that Emcom, ICC-LLC and its officers and directors could be engaging in tortious conduct, including but not limited to breaching their fiduciary duty to the shareholders by not disclosing the true fair market value of the stock to the [minority] shareholders."
The brief also stated: "Because RTFC's financial assistance [in the buyout of the minority stockholders] was a substantial factor in causing the resulting tortious conduct, as set forth in the … opinion of the Delaware Chancery Court … the RTFC is subject to liability for its own conduct in this transaction. "
A tort, according to the dictionary, is a "civil wrong independent of a contract"; a tortfeasor thus is an entity engaged in tortious conduct.
By noting that RTFC could be engaging in tortious conduct in this manner, ICC is, in effect, admitting that it could have been involved in wrongdoing also.
In a third development, ICC won at least a tactical victory (and some delay) by successfully arguing in the federal court in Alexandria, Va., that a suit for $10 million brought by RTFC against ICC be re-assigned to the federal courts on St. Thomas.
Three different federal judges in the Alexandria court have rendered decisions on the location of the courts to handle these cases involving RFTC and ICC.
In the first, and largest, which has more than $500 million at stake, the sitting judge allowed the case to be transferred to the U.S. courts on St. Thomas. This case, which is still active, caused RTFC to go to the 3rd U.S. Circuit Court of Appeals in an unsuccessful effort to get the sitting judge, Judge Curtis Gomez, to recuse himself (See "Court Actions Against ICC Multiply").
In a second case, regarding a specific multimillion dollar line of credit, a different federal judge ruled against a transfer and the case was quickly and quietly settled in Virginia between the parties, with no dollar figures being announced.
In this, the third of the cases, the requested transfer to St. Thomas was granted by a third federal district court judge.
On yet another front, a Belize television station that has been following with great interest Prosser's entrance into and departure (so far) from the local telephone market reported that the Belize government had run up a $70,000 (U.S.) legal bill in Toronto as an international arbitration process began in that city.
The contestants in this case are Prosser and ICC on one hand, and the Belize government on the other. Both contend that the other party did not play fair when ICC sought to gain control of the local phone company, said to be the richest corporation in that poor, Central American nation.
ICC set in motion the arbitration process, which was created earlier as part of the purchase agreement when ICC took steps to buy control of the phone company.
There have been no indications, anywhere, of the size of the Prosser and ICC's legal bills.
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