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11th hour settlement stops business litigation in its tracks

After a week of testimony in trial regarding a contract dispute between Advanced Consumer Electronics (ACE) and Maximum Security, the parties reached a settlement. Arizona readers may recognize the names of these companies as being security companies for both commercial and residential properties. The business litigation surrounded a failed merger.

In Feb. 2014, the parties signed a contract to merge the two companies with the surviving entity being ACE. Maximum Security received a $50,000 down payment on the $500,000 purchase price. Upon receipt of the down payment, ACE took possession of Maximum's assets. As part of the deal, the senior manager of Maximum would retain her position.

She would receive six years of pay regardless of whether she remained with the company that long. The owner of ACE decided after the contract was signed that he wanted to nullify this provision. The senior manager declined to nullify it, and their relationship began to go downhill.

In Aug. 2014, she resigned her position, claiming that the work environment had become increasingly hostile. She also alleged that ACE's owner failed to make any further payments under the contract and failed to reimburse her for expenses. In her lawsuit, she sought damages to which she believed she was entitled under the contract, including the remainder of the purchase price, her future earnings and other expenses.

The trial was set to recommence on the following Monday; however, the parties reached a settlement for $475,000 the Sunday before the trial was to continue. Many people believe that reaching a settlement is no longer an option once business litigation goes to trial. However, as was the case here, an Arizona company can work toward settlement even after the trial begins.

Source: mtairynews.com, "Settlement ends business merger contract dispute trial in Surry County Superior Court", Terri Flagg, Nov. 25, 2015

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