(Updates with judge’s ruling in second paragraph.)
July 6 (Bloomberg) -- TCW Group Inc. must face claims at trial by its former investment chief Jeffrey Gundlach, who said he was fired in 2009 so the company wouldn’t have pay him as much as $1.25 billion in management and performance fees.
Los Angeles County Superior Court Judge Carl West today denied TCW’s bid to bar Gundlach from pursuing breach-of- contract claims because he wasn’t under contract at the time he was fired. The judge ruled that a jury should decide whether TCW and Gundlach made an oral agreement in 2007.
“There is conflicting evidence in the record which at least raises a reasonable inference that the parties expressly agreed to begin performing under the new deal despite the lack of a signed agreement,” West said in his ruling.
Gundlach’s claims were filed in a countersuit against TCW that contended he was dismissed so the company wouldn’t have to pay $600 million to $1.25 billion in future management and performance fees from the funds his group managed.
About a month earlier, in January 2010, TCW, the Los Angeles-based unit of Societe Generale SA, sued Gundlach and three other ex-employees after more than half of its fixed- income professionals joined Gundlach’s new firm, DoubleLine Capital Inc. TCW is seeking more than $200 million in damages, claiming Gundlach stole its trade secrets as he plotted to start his own business.
The case is scheduled to go to trial on July 25.
West, in a separate ruling today, said TCW can’t proceed to trial with claims that Gundlach and the other defendants stole confidential information or allegations that they violated a California law against receiving stolen property. Both are covered by the claims of trade-secret misappropriation, he said.
“These rulings are a total win for DoubleLine and Mr. Gundlach, and a total defeat for TCW, on the parties’ motions for summary judgment and summary adjudication,” Kevin Allred, a lawyer for DoubleLine, said in an e-mailed statement. “We look forward to trial of the remaining issues in this case”
Susan Estrich, a lawyer for TCW, said the rulings change nothing in the trial.
“As to Gundlach’s contract claim, the judge ruled that a jury should decide the factual issues now under dispute,” Estrich said in an e-mailed statement. “But in doing so, however, the judge noted that Gundlach faces an ‘uphill climb’ in his contract claim because of Gundlach’s own 2009 e-mail declaring, quote, ‘Jeffrey Gundlach is not under contract with TCW.’”
The case is Trust Co. of the West v. Jeffrey Gundlach, BC429385, Los Angeles County Superior Court.
--Editors: Fred Strasser, Glenn Holdcraft
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