The US Dollar.
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By John Gittelsohn
An obscure 21-year legal feud involving five brothers from India who’ve amassed a fortune in diamonds and Los Angeles real estate burst into public view this week with a multibillion-dollar US verdict that may be among the largest of the decade.
After a five-month trial, a jury ordered Haresh Jogani to pay his brothers Shashikant, Rajesh, Chetan and Shailesh Jogani more than $2.5 billion in damages and to divide up shares of their Southern California property empire —about 17,000 apartments worth billions more.
The trial, over allegations that Haresh breached a long-standing partnership with his siblings, continues with a punitive damages hearing Monday that could add to the award.
Jogani v. Jogani
The 2003 lawsuit already has been through 18 appeals, generations of attorneys and five judges in Los Angeles Superior Court. It’s drawing comparisons from some of the lawyers to the fictional Victorian-era probate case that Charles Dickens wrote about in his 1852 novel Bleak House. They’re calling Jogani v. Jogani the new Jarndyce v. Jarndyce, but with a twist.
“At end of the book, there was no money, hence the name, Bleak House,” said Peter Ross, an attorney who represents Chetan and Rajesh Jogani. “That’s not the case here. There’s billions here that remain to be distributed.”
Making the case more unusual is that most multibillion-dollar verdicts in the US are against giant corporations. How much each brother ultimately walks away with turns on the ups and downs of the real estate market, with apartment prices having fallen from their 2022 peak after higher interest rates raised borrowing costs and cut into property values. Apartment prices averaged $329,000 a unit in January in the Los Angeles area, down 26% from a November 2022 high, according to MSCI Real Assets.
Rick Richmond, the lawyer for defendant Haresh Jogani, declined to comment because the jury isn’t finished yet.
Diamond Trade
The Jogani family, natives of Gujarat, India, built a fortune in the global diamond trade, establishing outposts in Europe, Africa, the Middle East and North America. Shashikant “Shashi” Jogani moved at age 22 in 1969 to California, where he began a solo firm in the gem business and started to build a property portfolio, according to a complaint he filed in 2003.
The properties suffered losses in the recession of the early 1990s, which worsened after the 1994 Northridge Earthquake killed 16 people in one of his buildings, leading Shashi to bring in his brothers as partners. The firm then embarked on a buying spree that eventually built the portfolio to roughly 17,000 apartment units with the brothers collaborating until Haresh “forcibly removed” his sibling from managing the firm and refused to pay him, according to Shashi Jogani’s complaint.
Haresh Jogani contended that without a written agreement, his brothers couldn’t prove they had a partnership with him. But the jury found that Haresh had broken an oral contract.
Jurors heard testimony that oral agreements are customary in both the diamond trade and among Gujaratis.
‘Just as Valuable’
“The law is you can have oral contracts that are just as valuable as written contracts,” said attorney Steve Friedman, an attorney for Shashi Jogani.
As the trial was coming to a close, Haresh Jogani moved to disqualify the judge, accusing her of “racial animus” toward his lawyer and other misconduct. In a filing last week, Judge Susan Bryant-Deason denied doing anything improper and rejected the claim that she’s “biased or prejudiced for or against” any of the parties or lawyers in the case. She referred the motion to the court’s supervising judge, where it is pending.
The jury concluded Shashi owns 50 per cent of the real estate partnership, followed by 24 per cent to Haresh, 10% to Rajesh, 9.5 per cent to Shailesh and 6.5 per cent to Chetan, the youngest, who is now 62 years old, according to Ross. The initial damages award for Shashi, now 77, was $1.8 billion.
The properties generated as much as $137 million a year in net operating income, according to Michael Friedman, 37, who with his father, Steve, has represented Shashi since 2014, the year after he passed the bar to practice law.
“There’s an enormous portfolio that Shashi built,” he said. “And it sustains itself.”