Breach of contract, fraud claimed in sale of surfboard company. $4.6M. Orange County
Sale of well-known surfboard company doesn't go as planned.
- Case Name: Todd Greco, et al. v. Randy Cecola, et al.
- Court and Case Number: Orange County Superior Court / 30-2016-00840785-CU-CL-CJC
- Date of Verdict or Judgment: Thursday, May 30, 2019
- Date Action was Filed: Tuesday, March 15, 2016
- Type of Action: Breach of Contract, Fraud, Interference with Prospective Economic Advantage
- Judge or Arbitrator(s): Hon. Theodore Howard
- Plaintiffs: Todd GrecoGreco Surfboards, LLC
- Defendants: Randy CecolaAlex CecolaGreco Acquisition, LLCTrovare Capital Group, LLCGold Coast Surfboards, LLC
- Type of Result: Jury Verdict
- Gross Verdict or Award: $4,662,905.16
- Award as to each Defendant:
Breach of contract against Greco Acquisition, LLC: $3,076,290 plus 6% interest.
False promise against Randy Cecola and Trovare Capital Group, LLC: $3.076,290 plus 6% interest.
Fraud in the inducement against Randy Cecola and Trovare Capital Group, LLC: $3.076,290 plus 6% interest and $250,000 in lost profits.
Intentional interference with contractual relations against Alex Cecola and Gold Coast Surfboards, LLC: $660,000.
- The award against Defendants Greco Acquisition, LLC for breach of contract was $3,076,290 plus interest at 6% per the contract (totaling an additional $676,615.16).
- The award against Defendants Randy Cecola and Trovare Capital Group, LLC for false promise was $3,076,290 plus interest at 6% per the contract (totaling an additional $676,615.16).
- The award against Defendants Randy Cecola and Trovare Capital Group, LLC for fraud in the inducement was $3,076,290 plus interest at 6% per the contract (totaling an additional $676,615.16) and $250,000 jointly and severally for lost profits.
- The award against Defendants Alex Cecola and Gold Coast Surfboards, LLC for intentional interference with contract was $660,000 jointly and severally for lost profits.
- Punitive Damages:
Plaintiffs waived punitive damages.
- Trial or Arbitration Time: 10 days.
- Jury Deliberation Time: 6 hours.
- Jury Polls: 12-0 on plaintiffs' breach of contract, false promise, fraud claims; 11-1 on plaintiffs' intentional interference claim.
- Attorney for the Plaintiff:
Boesch Law Group by Philip W. Boesch, Jr. and Annie Ksadzhikyan, Santa Monica.
- Attorney for the Defendant:
Walters Law Group by Christopher Walters, San Diego.
- Plaintiff's Technical Expert(s):
Victoria Wilkerson, MBA, CPA, ABC, CFE, economics, Los Angeles.
Facts and Background
- Facts and Background:
Over nearly a decade, plaintiff Todd Greco, founder of Greco Surfboards, LLC, transformed what began as a small operation shaping and selling foam surfboards into a multi-million-dollar enterprise manufacturing and selling surfboards, stand up paddle boards, accessories and apparel online.
On September 30, 2015, Todd Greco entered into an Asset Purchase Agreement (sale of business) with defendants Greco Acquisition, LLC, Randy Cecola, and Trovare Capital Group. Despite defendants’ express agreement to pay a purchase price of $3,075,000, they failed to do so. Shortly after entering into the Asset Purchase Agreement, defendant Alex Cecola (Randy Cecola's son) and Sophia Cecola (Randy Cecola's wife), formed Gold Coast Surfboards LLC, a virtually identical surfboard company.
Pursuant to a writ of attachment, the Greco Surf inventory was seized by the Los Angeles Sheriff's Department in October 2016.
- Plaintiff's Contentions:
Breach of contract, false promise, fraud in the inducement, intentional interference with contractual relations.
That at the same time defendants were purportedly running the Greco Surf business, they were diverting potential customers and sales from the Greco business to Gold Coast, and liquidating the Greco assets by funneling funds into the Gold Coast bank accounts, while incurring substantial debts on behalf of the Greco Surf business.
- Defendant's Contentions:
Defendants denied plaintiff's claims of fraud and breach of contract.
Defendants/cross-complainants filed a cross-complaint, alleging that plaintiffs/cross-defendants misrepresented the success and stability of the Greco Surfboards business to defendants/cross-complainants, and that Greco Surfboards made misrepresentations to customers and vendors.
Demands and Offers
- Plaintiff Final Demand before Trial: $2,250,000
- Defendant Final Offer before Trial: $25,000 plus return of the business to plaintiffs.