Court Confirms $8.7 Million Arbitration Award Against OC Lawyer and Others in Partnership Dispute

ORANGE COUNTY – Orange County Superior Court Judge William D. Claster confirmed an $8.7 million arbitration award against Orange County lawyer Steven A. Silverstein and two other defendants. The prevailing plaintiffs, Megan and Rob Ekstrom, are 50% limited partners in a family partnership formed with their parents in 1997 to purchase industrial property in the City of Industry. Following the divorce of their parents and their father’s death in 2015, the charitable foundation formed by their father (Stanley W. Ekstrom Foundation) assumed the role of general partner. The Foundation is controlled by their father’s lawyer (Silverstein) who serves as its president and Lawrence C. Felix, the former president of the Ekstrom family’s powder coating business (Cardinal Paint and Powder). Mr. Silverstein also concurrently served as legal counsel to the partnership, the Foundation and Cardinal, and as chairman of the board of Cardinal.

In February 2021, plaintiffs learned after the fact that Silverstein, Felix and the Foundation had sold all of the partnership’s assets. Silverstein was hired by the partnership to provide legal and marketing services in connection with the sale of the partnership’s City of Industry property in exchange for a percentage of the sale proceeds. Silverstein concurrently represented both the partnership and Cardinal in connection with a lease amendment that resulted in payment to the company of $1.5 million in partnership sale proceeds, ostensibly for early termination of a lease that the arbitrator concluded had already expired years earlier. Following the sales, defendants refused to distribute the plaintiffs’ share of the sale proceeds unless plaintiffs agreed to sign a release.

Following a 15 day arbitration hearing before Retired San Diego Superior Court Judge Ronald S. Prager, the arbitrator rendered an interim award and concluded that Silverstein, Felix, and the Foundation breached their contractual, statutory, and fiduciary duties to plaintiffs. With respect to Silverstein, Judge Prager determined Silverstein breached his professional duties as partnership counsel to look out for the interests of all partners, failed to obtain informed written consent to represent multiple clients with conflicting interests in the transactions, and failed to obtain informed written consent to enter into a contingent fee business transaction with the partnership. 

Judge Prager’s final award jointly and severally against Silverstein, Felix and the Foundation totaled more than $8.7 million, plus additional pre award legal interest, and included an award of attorneys’ fees and costs in excess of $2 million. The arbitrator also determined that a release signed by Rob Ekstrom was illegally obtained by defendants and unenforceable¹.

Plaintiffs/claimants Megan and Rob Ekstrom are represented by William S. O’Hare, Sean M. Sherlock, and Gregory J. Sonnenberg of Snell & Wilmer L.L.P.

Defendants/respondents Steven A. Silverstein and Stanley W. Ekstrom Foundation are represented by Mark W. Huston of the Law Offices of Silverstein & Huston.

Defendant/respondent Lawrence C. Felix is represented by Tammy M.J. Hong and Jennifer Taggart of Demetriou, Del Guercio, Springer & Francis, LLP.

Footnotes

1. Past Results do not guarantee, warrant, or predict future cases. 

Founded in 1938, Snell & Wilmer is a full-service business law firm with more than 500 attorneys practicing in 16 locations throughout the United States and in Mexico, including Phoenix and Tucson, Arizona; Los Angeles, Orange County and San Diego, California; Denver, Colorado; Washington, D.C.; Boise, Idaho; Las Vegas and Reno, Nevada; Albuquerque, New Mexico; Portland, Oregon; Dallas, Texas; Salt Lake City, Utah; Seattle, Washington; and Los Cabos, Mexico. The firm represents clients ranging from large, publicly traded corporations to small businesses, individuals, and entrepreneurs. For more information, visit swlaw.com.