PR Firm Ordered to Pay $236,000 in Merger Case
A San Diego advertising agency has received a $236,000 judgment against a Newport Beach public relations firm stemming from a merger that went awry, lawyers for both companies said Monday.
An arbitrator ordered Madeline Zuckerman Public Relations/Advertising Inc. of Newport Beach to pay $81,260 in damages and $155,373 in attorneys’ fees to Berkman, Rubenstein, Daniels & Spicer Inc. of San Diego.
The case arose from a dispute over the dissolution of a merger of the agencies. Zuckerman, whose tony client list has included such firms as jeweler Tiffany & Co. and the Westin South Coast Plaza hotel, agreed to merge her firm into what was then called Benedict, Rubenstein & Spicer Inc. in November, 1989. As part of the deal, she would have become a senior vice president in charge of the Orange County office. But the merger immediately went sour.
“They could not get along at all,” said Richard Rockwell, a lawyer for Zuckerman. After five months, Zuckerman exercised a clause that allowed her the option to terminate the contract.
When the two firms broke apart, Benedict, Rubenstein alleged that Zuckerman violated the contract by refusing to wait 90 days before resuming operation of her own agency. Benedict, Rubenstein sued last May, saying that Zuckerman tried to defraud them by never intending for the merger to work. Also, the San Diego firm alleged that Zuckerman left the firm saddled with unneeded computer leases and Orange County office space.
William Lee, a retired Orange County Superior Court judge hired to hear the case, found in a May 22 decision that Zuckerman violated an implied covenant of the contract by resuming her practice before the end of the 90-day period. Besides awarding damages, the arbitrator ruled that Zuckerman was liable for the computers and office space. But he rejected the allegation of fraud against Zuckerman.
“It bails them out of the situation they got into,” said David Chidlaw, a lawyer in San Diego for Berkman, Rubenstein.
Rockwell said most of the trial centered on dissolving the business relationship between the two agencies. “The judge felt the best thing for these parties was dissolution,” Rockwell said.
