Last month, a jury in Arapahoe County ruled in favor of the family of Denver oil tycoon Jack Grynberg in a fight over the control of the companies he started.
The jury resolved a dispute over whether Grynberg, himself, still had control over the companies after placing them in the names of his family members and later claiming he was revoking that control. The jury removed the companies from Grynberg’s control, but there’s still one final legal issue that will be decided by a judge in an upcoming bench trial.
The background of the case involves a three-year-long legal fight over a family dispute. And with the family turmoil also comes high tensions and emotional trouble. Glen Summers, a partner at Bartlit Beck, was cautious about commenting on the case because of the personal element for the clients. Despite the emotions though, the case was a major defense verdict that could have cost the defendants $281 million.
Jack Grynberg had started Pricaspian Development in the early 1990s and built a fortune off of mineral interests in Kazakhstan. He made his wife and three children the named owners of the companies — Gadeco and RSM in addition to Pricaspian — and according to court documents, by about 2014, his behavior became erratic. In 2016, Grynberg was removed as president of the companies. According to a motion for summary judgment, Grynberg “pressed to construct an argument to avoid these irrefutable facts and law,” claimed that he handed over control to his family as part of a verbal contract that would allow him to control the companies for life. Grynberg claimed that arrangement was honored for more than 20 years and the family members’ efforts to remove him have “effectively crippled Pricaspian at a time when major developments in global oil and gas markets require deployment of Pricaspian’s substantial capital investments.
The case has since gone to the Colorado Supreme Court twice on issues regarding the admissibility of evidence about Grynberg’s mental health. Most recently, the Colorado Supreme Court ruled on the issue of whether Grynberg impliedly waived his patient privilege by placing his mental condition at issue in his defense in the case.
Following the court’s decision, the case proceeded to a trial in early February where Grynberg sought to revoke his family’s control.
The court ruled on summary judgment that the family owns the company and that Grynberg couldn’t revoke their shares. The case then proceeded to a trial where a jury found that there was no oral contract granting Grynberg the ability to run the company for life and that the family members did not breach their fiduciary duties. The case is now set to proceed to a three-day bench trial in June over the question of whether Grynberg is owed back compensation.
In trial, the jury never reached the issue of Grynberg’s mental health, instead focusing on the question of whether there was a contract that would allow Grynberg to maintain control of the company for life. Summers said that Grynberg had made a reputation for being litigious — he had filed roughly 400 lawsuits and made his fortune through litigation over his stake in an oil and gas company consortium that he helped start.
He’s also no stranger courts in Washington, Wyoming or Texas with major litigation in large-scale oil and gas cases.
The key issues for the defendants in the jury trial were showing that there was no oral contract. Summers said they showed the early bylaws for the company that showed a traditional standard approach to corporate governance as well as demonstrating that based off of Grynberg’s litigious history, it was unlikely there would only be a verbal agreement regarding the control of the company.
If there were an agreement, it would have been in writing. “We had our witnesses testify there was no such agreement, and the jury found it was too much to think the family agreed he could run the company for life,” Summers said. “[Grynberg is] unbelievably litigious and tenacious. He litigates until he wins.”
Grynberg had requested $800 million discounted according to the value of the company, but the jury returned a total defense decision.
The final phase of the trial questions whether Grynberg can reclaim compensation.
He claims that he did not receive any compensation prior to 2010 and that he is now entitled to hundreds of millions of dollars of back pay.
Grynberg is seeking $400 million from that portion of the case. Attorneys for Jack Grynberg did not respond to requests for comment by press time.
— Tony Flesor