Macquarie Capital-backed tug and barge owner Centerline Logistics has won a verdict in a dispute with founder Harley Franco over his ouster as chief executive.
Lawyers for Franco are fighting on, arguing that a judge should not have thrown out a $75m jury verdict, including $35.5m each against two Macquarie entities.
The sparring comes in a heated battle in which Franco alleged in a Seattle court that he was improperly replaced as chief executive of Harley Marine Services, before it was renamed Centerline in 2020.
Following a trial in late May and early June in a court in Washington state, a jury awarded Franco $75m in damages stemming from claims of tortious interference with contractual relations and defamation.
Jurors also decided that Centerline Logistics and Macquarie did not breach a contract or their fiduciary duty toward him, and they found in favour of Centerline chief executive Matthew Godden on all counts.
But King County judge Suzanne Parisien issued a new verdict throwing out the award, ruling the claims were privileged because the allegedly defamatory statements were made in litigation that was filed by Macquarie against Franco in Delaware in 2018.
Shortly before trial, the judge had already decided that the Delaware and Washington law shields claims made in court documents from defamation actions.
“We are happy to have this baseless lawsuit behind us … and will now seek reimbursement from Franco for diverted company assets,” Godden said of her decision.
But the legal battle case continues, with Franco’s lawyers at McNaul, Ebel, Nawrot & Helgren filing motions to reconsider and amend the judge’s decision.
“This court entered judgment in defendants’ favour based on the litigation privilege, without allowing Franco to be heard,” wrote McNaul Ebel team led by Robert Sulkin.
“This court’s ruling is inconsistent with Franco’s constitutional right to a jury.”
Franco’s lawyers told the judge that the litigation privilege does not apply to the case. They argued that Macquarie withdrew its Delaware lawsuit against the Harley Marine founder before he could apply for court sanctions for what they described as the defamatory claim that he stole two tow winches worth $1.2m from the company he led.
But lawyers for Centerline’s side have filed an objection pointing out that it was Franco’s lawyers who had proposed to Parisien that she allow the jury to weigh the claims based on defamation, but to reverse them in a so-called directed verdict if they were barred by the litigation privilege.
In his Seattle lawsuit, Franco had alleged Macquarie promised him that they would refinance a high-interest loan provided after a restructuring in 2015, but instead worked to take over the company, of which he owned 53% in 2017 and 2018.
First, he alleged Godden pushed to name him company president, then Macquarie sued in Delaware, where Harley Marine was registered, to challenge Franco’s status as chief executive.
In the Delaware case, Macquarie accused Franco of a variety of claims of diverting assets, including the alleged tow winch theft.
Hours after it withdrew the lawsuit, Macquarie allegedly held a board meeting by phone in which Godden — who started at the company as vice president of IT — was put at the helm of Harley Marine.
Godden then was alleged to have rushed to the tug-and-barge company headquarters to lock Franco out and close his email account.
The lawyer for Macquarie and Centerline, Kevin Marino of Marino, Tortorella and Boyle, has filed papers urging the judge to reject Franco’s request to restore the jury verdict.
“From the outset, Mr Franco’s claims were entirely without merit,” he said in a press release after the judge’s ruling to jettison the jury’s award.
This story has been amended to reflect that the jury found in favour of Centerline chief executive Matthew Godden on all counts, and to correct the spelling of his name. It has also been amended to add information on the judge’s decision, and to reflect that Franco alleged in his lawsuit that Godden pushed to be CEO, rather than Macquarie allegedly pushing for the appointment.
