Gemini Basketball Holdings, the former owner of the WNBA team Los Angeles Sparks has filed a lawsuit at Los Angeles Superior Court against attorney Marc Samotny and the law firm Patzik, Frank & Samotny for malpractice. The plaintiffs allege that the law firm had helped the current owners of Los Angeles Sparks to push Gemini out of the franchise. The malpractice suit has been brought over the way the law firm handled the negotiations on two loans totaling $4 million. Gemini Holdings has alleged legal malpractice, breach of fiduciary duty, fraud, and negligent misrepresentation. The company seeks unspecified damages and is represented by John Walton, of Pasadena.
The complaint mentions that Gemini Holdings acquired majority ownership of Gemini Basketball LLC after acquiring the Sparks in 2006. To finance the deal the company took a $3.25 million loan from the Broadway Federal Bank, and took another $750,000 loan from the same bank in 2008.
Gemini sought to restructure its finances and avoid defaulting by modifying its debt in early 2011, and hired Samotny and his law firm upon the suggestion of Williams Holding Group, the current owner of Los Angeles Sparks.
Gemini claims that while renegotiating the loans the company was kept in the dark by the law firm that had “withheld significant material information.” The information allegedly not communicated to Gemini included the insistence of the bank that Williams Holding Group, the current owner of Sparks, act as guarantor for the loans. The complaint also states that the law firm knew that Williams had no intention to fund Sparks further, but kept this secret from Gemini, leading to default on the loans.
Gemini claims that it was kept out of the entire renegotiation with the bank by the law firm, and the complaint mentions, “Near the end of 2011, GBH began questioning Samotny and PFS as to what was happening and why they were not getting information. At that time, Samotny and PFS stated for the first time that they were not representing GBH at all, and were only representing the interests of WGH.”
Gemini alleges that the law firm’s malpractices led to Broadway Federal Bank suing Gemini and compelling it “into accepting a squeeze-out” of its interest in Los Angeles Sparks.