Sondra L. Grohman-Kahlig v. Clarence J. Kahlig, II, et al. 166th District Court, Bexar County, Texas (No. 2005-CI-13102)

Haynes and Boone represented an owner of several car dealerships in a suit brought by the owner’s former wife in which she sought to accelerate and foreclose on the balance of a $10 million note she obtained in their 2001 divorce settlement. The note was secured by stock of various car dealerships. The former wife alleged that her collateral was destroyed after these businesses were converted from corporations to limited partnerships in 2003, and contended that the conversion constituted an act of default under the note and security instrument. Besides foreclosure, the former wife also sought remedies for fraud, breach of contract, violations of the Texas Penal Code (hindering secured creditors), and various forms of negligence. After a week of trial in March 2007, the jury found no liability, thus validating that business conversions performed under the Texas Business Corporations Act did not adversely affect the rights of creditors. The Court awarded Defendants attorneys’ fees.

Related Practices

Email Disclaimer