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Lathrop Gage Obtains Successful Jury Verdict for Clients in Branson-Based Business Dispute

8/25/2009

Local Couple Awarded $2 Million,
Over 100% of Amount Requested at Close of 5-Day Jury Trial

Firm clients Bruce and Dianna Herschend received a successful outcome in a business dispute over the Branson-based themed attraction "The Butterfly Palace," when a jury found in favor of the entrepreneurial couple in the U.S. District Court for the Western District of Missouri, Southern Division, yesterday. Lathrop Gage attorney Joseph Reid (Business litigation & Tort litigation - Springfield) served as lead attorney in this matter.

"Needless to say, we are thrilled that justice has been served and that the jury was able to correctly evaluate the situation, after hearing nearly five days of testimony," said Bruce Herschend. "We're encouraged by this verdict since we had tried to resolve this for several years now. The legal team at Lathrop Gage did an incredible job with a very complex case involving thousands of pages of documents."

The jury's decision is the latest chapter in a publicized legal battle that was started when the Herschends entered into business in Branson with a Florida couple in 2004. The two parties set up two LLCs in the state of Missouri, RBD Marketing, LLC and Butterfly Creations, LLC; RBD purchased land on the Branson strip, constructed a building, and leased the building to Butterfly Creations, which operated "The Butterfly Palace & Rainforest Adventure" out of the building, opening for business in June of 2006.

But prior to opening, RBD needed more money to complete the construction. The other party in this venture, would not agree to make additional capital contributions or loans, so the Herschends ended up loaning more than $1,000,000 to RBD. This loan allowed the necessary construction to be completed. In October 2006, the revenue for the start-up Butterfly Creations was lower than expected, and the Herschends learned that the other party did not have the 80,000 customers at their old location as they had represented to the Herschends. This misrepresentation was largely responsible for the financial hardship of the business that owed more than $4 million in loans. Ultimately the operating company Butterfly Creations was evicted for non-payment of rent under its lease with RBD Marketing, LLC.

By early 2007, the Herschends had discovered what appeared to be misappropriated funds and several questionable payments made by the other party, and the Herschends believed that it was this discovery that led the other party backing out of the ownership transfer agreement in an effort to obtain a release from the Herschends for their actions. The other party hired a litigation attorney and had already cleared out their office and left the business. The Herschends have continued to operate The Butterfly Palace since November of 2006 making payments to the bank for RBD and Butterfly Creation's loans. Thus, Mr. Reid successfully argued during the trial that the defendants were guilty of abandoning the business.

The Lathrop Gage legal team also evinced other points in their argument, as the strategy was to highlight the defendants' fraudulent misrepresentation, negligent misrepresentation, breach of contract and unjust enrichment. Though the opposing party brought claims of their own, they were ultimately unsuccessful on all of their claims with the jury rendering a resounding set of 8 verdicts all in favor of the Herschends.

District Judge Ortrie Smith presided over a jury of 8 jurors selected from areas all over southern Missouri, who were required to render a unanimous verdict. The trial lasted five days and included ten witnesses, including two expert witnesses. The Herschends were awarded $1,619,672 in compensatory damages, 100% of what Mr. Reid asked for in closing argument for the Herschends' 4 counts. The clients were also awarded with $380,328 in punitive damages for the fraudulent misrepresentation claim, which brought the total award from the jury to exactly $2 million.

Mr. Reid has practiced civil litigation since 1995. He concentrates his practice on defending clients in business/commercial, personal injury, product liability, medical negligence, wrongful death, insurance bad faith defense, contract, and premises liability matters. Earlier this year the Springfield Business Journal named him as one of tomorrow's leaders for the southwest Missouri region, when the publication selected him as part of its 2009 class of "Forty Under Forty."

About Lathrop Gage:
A leading Midwest full-service law firm, Lathrop Gage LLP has approximately 300 attorneys in 11 offices nationwide - from Los Angeles to New York, New York. In 2009, Chambers USA ranked Lathrop Gage's corporate, environmental, intellectual property, litigation, real estate and labor and employment teams among the best in the Midwest. For more information, visit www.lathropgage.com.