Ruling Makes Trial Likely in Bitter Fight to Control Guess

A state appellate court set the stage Thursday for a trial in the long-running battle between two sets of brothers for control of Guess, a Los Angeles blue jeans company.

In a unanimous decision written by Judge L. Thaxton Hanson, the California Court of Appeal in Los Angeles held that Georges Marciano and his brothers, founders of Guess, may continue to seek to undo a 1983 transaction in which half of the company was acquired by the Nakash brothers. The Nakashes own Jordache Enterprises, a rival jeans maker.

The Nakashes had contended that the Marcianos were precluded from attempting to rescind the deal after a federal lawsuit on the same issue was dismissed in 1984.

A Los Angeles County Superior Court judge, however, ruled last March that the Marcianos could proceed with their case in state court, and the appeals court for the second appellate district upheld that ruling.

Marshall Grossman, an attorney for the Marcianos, called the decision “highly significant,” adding: “If the Marcianos are successful, they will not only recover substantial damages but they will (also) get their company back.” The Nakashes could not be reached for their comments on the court ruling.

The two sides have engaged in a bitter battle of escalating charges, with the Marcianos accusing the Nakashes of violating customs laws and stealing designs and the Nakashes countering that the Marcianos evaded taxes with a kickback scheme. As a result of the litigation, the Guess board several months ago impounded more than $30 million in dividends that otherwise would have been distributed to the Nakashes.

Grossman said a trial by jury had been scheduled to begin Monday but was canceled until the appeals court issued a ruling. He said he now expects an new date to be set soon.