Ervin Cohen & Jessup Prevails at Appeal in Bitter Brotherly Billboards Battle
A 2nd District Court of Appeals panel sided with attorneys at Ervin Cohen & Jessup LLP, reversing an order approving a controversial sale of hundreds of billboard assets of the prominent Regency Outdoor Advertising firm valued at a minimum of $222 million, and likely much more, in a decision Friday that could have ripple effects for the industry. The assets at issue include several billboards across the Southland, including West Hollywood’s Sunset Boulevard.
Firm Partners Michael D. Murphy and Amy Russell represented David Seyde, who in his capacity as consultant of Regency, and an owner of one of the Regency subsidiaries, played a prominent role in the incredible success of Regency over the course of the last 20 years.
Regency is co-owned by Drake and Brian Kennedy, wealthy brothers entangled in a long-running personal dispute. After a decade of fruitless attempts to move past their animosity for one another, the brothers mutually agreed to sell off Regency’s assets in 2017 in a deal valued at roughly $500 million.
Despite his significant role in the company’s continued success, the Kennedy brothers attempted to deny Seyde his contractually guaranteed percentage share of the sale’s proceeds payable from a $25 million escrow fund. After Regency’s assets were forced into a receivership for the purpose of accomplishing the sale, Seyde should have been able to rely on the court’s protection of him, as a creditor to the sale of Regency assets. Instead, the Kennedy brothers orchestrated a receivership sale in secret, to be conducted by the receiver, but that would deny Seyde his cut.
The lower court acknowledged that Seyde should have been given his contractually mandated percentage but was convinced by the Kennedy Brothers and the Receiver to allow the secret sale to proceed. ECJ attorneys urged the lower court that this was an illegal receivership sale, but the court declined to revisit the transaction. This prompted an appeal by ECJ. Despite significant opposition from globally renowned litigator Daniel Petrocelli - backed by a team of elite lawyers from O’Melveny Myers and Perkins Coie - ECJ prevailed, as the panel ruled the lower court erred in conducting a receivership sale while denying Seyde his share.
“We conclude that, due to the receiver’s involvement in the transaction, the sale was accomplished through the receivership and thus the trial court was required to consider Seyde’s objections,” wrote the panel in its opinion. “Accordingly, we reverse the court’s order approving the stipulation for sale and remand for the trial court to consider Seyde’s objections and determine the fairness of the transaction before approving any sale.”
In a statement, Murphy praised the panel’s decision and noted the ruling could have a significant impact for the billboard industry, particularly locally.
Any owners of billboard assets derived from this voided sale of Regency assets will face questions as to the legitimacy of their rights. “Now, finally, after years of scheming, obfuscation, and secrecy, the Kennedy brothers will finally be forced to pay what they owe, after having threatened the stability of the billboard market just to deny our client his money,” said Murphy. “We’re grateful to the court for recognizing that an injustice was done.”
The panel’s decision can be viewed here: Kennedy v. Kennedy et al., B313835 (decided Jan 26, 2024, filed in Los Angeles County Superior Court)
Michael Murphy is a Partner in the Litigation Department. Michael has extensive experience in litigation and matters involving corporate governance disputes, breaches of fiduciary duty, fraud, defamation, the anti-SLAPP statute, trademark and trade dress litigation, trade secrets and real estate litigation, among others. Michael also has experience counseling clients on various types of contract negotiations, including Operating Agreements, asset purchase agreements and management contracts. He has prosecuted trademark applications before the United States Patent and Trademark Office, as well as the Trademark, Trials, and Appeal Board (TTAB).
Amy Russell is a Partner in the Litigation Department. Amy’s practice focuses on general commercial litigation. She has represented clients from a wide range of industries in cases involving issues related to real estate, construction, employment, entertainment, professional malpractice, corporate governance and breach of fiduciary duty. She regularly works in both state and federal court and has experience representing clients at trial, in arbitration and in mediation.