Today’s newspaper heralds the latest developments in the RIB lawsuit. The court has ruled against Wright Pierce on the Consumer Protection Act (CPA) claim and restored the damages from the jury’s reduced amount to Wolfeboro’s original claim. Bottom line is that the current damages stand at $15.4 million. Two days ago, Wolfeboro filed their intention to seek treble damages and all cost, bringing the total to something like $25 million.
Sounds great for the town doesn’t it? What we don’t know is how much it is realistic to expect the town will actually get.
Undoubtedly, the stakes are high enough to guaranty an exhaustive appeal. Maybe the amount will be enough to draw out a big settlement, but I have to wonder how much the Selectmen can settle for after telling the public that they have $25 million coming.
No doubt the company has professional liability insurance, but it’s hard to imagine that a firm with revenues in the $20 million range would have that kind of coverage. Additionally, I’m not sure if professional liability insurance would cover the double and treble damages for fraud as the court has ruled.
The company is a services company. It is employee owned. The employees directly involved in this case probably own less than 25% of the company. I can’t imagine why employee owners would allow the balance sheet to grow to more than a few million. The remainder of the professionals who own and work for Wright Pierce, who had nothing to do with this, would be saddled with this huge debt as a liability. Why would they continue to own and work for a company with a negative balance sheet? Could the company even borrow that amount if they wanted to?
It’s going to be a long time before this is over, and in the meantime I have to wonder if a $20+ million judgement hanging over their heads will cause the company to shrink as the appeal proceeds, and ultimately result in a bankruptcy filing.
I guess the town knows what they’re doing.