A federal jury in Dallas on Tuesday returned a $15 million verdict in favor of collagen manufacturer Maiden Biosciences against a company it found had wrongly transferred assets during the pendency of a separate 2019 breach of contract trial to avoid paying Maiden a $4.3 million default judgment.
Senior U.S. District Judge Sidney A. Fitzwater presided over the trial that began Dec. 12. Jurors sat through five days of testimony before beginning deliberations Monday. It took about three hours for the panel to return the verdict, which includes $5 million in actual damages and $10 million in exemplary damages.
Collin J. Cox of Gibson Dunn & Crutcher, who represented Maiden, told The Texas Lawbook on Tuesday that the case is important for more than just the parties involved because it speaks to what assets parties in litigation can and cannot transfer during the pendency of their cases.
“Here, it took Maiden another almost three years to receive a verdict against the corporations with the assets that could have satisfied Maiden’s initial claims,” he said.
Counsel for the defendants did not immediately respond to an email seeking comment Tuesday afternoon.
Maiden filed this lawsuit Feb. 15, 2021, according to court documents. In a second amended complaint, Maiden told the court it obtained a $4.3 million default judgment against RBC Life Sciences Inc. after suing that company in October 2017 for an agreement to purchase $2 million in product from Maiden annually.
Maiden alleged that it was during post-judgment discovery, after RBC refused to pay up, that Maiden discovered RBC “brazenly moved assets that would satisfy the judgment … outside the reach of Maiden’s grasp.”
Those companies that the assets were transferred to — DSS Inc., Decentralized Sharing Services Inc. and HWH World Inc. — are named as defendants in the lawsuit that ended Tuesday with the $15 million verdict.
The jury found DSS, Decentralized Sharing Services and HWH violated the Texas Uniform Fraudulent Transfer Act because the companies took RBC’s assets without providing reasonable equivalent value to RBC. The jury also found RBC transferred the assets with intent to defraud a creditor, Maiden.
The defendants had argued at trial that the assets were transferred for a fair price and that they had acted in good faith, without fraudulent intent.
Cox credited the work of three Dallas associates with securing the favorable result, calling Matthew Scorcio the case’s architect,” noting he took seven of the 15 live witnesses called at trial. Katie Rose Talley, he said, “handled a key cross-examination” and Michael Zarian “argued the jury charge and the motions during trial.”
“Each associate’s performance was stellar,” Cox said.
DSS is represented by Christopher R. Bankler, Brett Kutnick, Demi Williams, Hailey Oestreich, Lauren Ceckowski and Bruce Ruzinsky of Jackson Walker. RBC Life Sciences is represented by Gregory K. Ackels and Gregory Kaleel Ackels Jr. of Ackels & Ackels.
The case number is 3:21-cv-00327.