The Los Angeles Superior Court today granted Ellis George client Jason Frank’s Motion for Summary Judgment and entered a $4.85 million judgement against Michael Avenatti. This is in addition to another judgment in Frank’s favor for $10 million that was recently entered against Eagen Avenatti LLP, the law firm of which Michael Avenatti is the sole shareholder through his personal corporation.
Last week’s decision is the culmination of a years-long dispute between Frank and Avenatti which was sparked after the latter and his law firm entered into a profit-sharing agreement with the former, and then engaged in bad-faith conduct which breached the agreement. Avenatti and his firm failed to pay Frank money owed under the agreement based on the profits Eagen Avenatti LLP made, then attempted to conceal the fact by misrepresenting the actual profits of his firm and refusing to produce its tax returns to Frank, though such production was a term in the profit-sharing agreement.
A three-judge arbitration panel found that Eagen Avenatti “acted with malice, fraud and oppression by hiding its revenue numbers” and “tax returns.” The finding brought Eagen Avenatti to the brink of bankruptcy. A settlement agreement was reached during bankruptcy proceedings. Avenatti had to personally guarantee Eagen Avenatti’s obligation of $4.85 million to Frank under the agreement, and Eagen Avenatti was bound to an automatic judgment of $10 million against it if it failed to pay the $4.85 million. Eagen Avenatti never paid.
Ellis George partner Eric George, representing Frank, then filed the current action for breach of contract and moved for summary judgment. On the eve of the summary judgment hearing, Avenatti tried another procedural machination: removal to federal court. After reviewing a memorandum from George who called Avenatti’s move “a stratagem for evading summary judgment” and “procedurally and substantively frivolous,” the Court agreed with George and denied Avenatti’s petition, calling Avenatti’s arguments “[in]sufficient.” After the $4.85 million judgment was entered in Frank’s favor, George told the Daily Journal: “No matter how [Avenatti] tr[ies] to spin it, it comes back to the fact that he took money. It wasn’t his and now there’s a judgment saying its owed to my client.”
