Biglaw

Judge Benchslaps Gibson Dunn Saying They 'Committed Fraud About Fraud'

The judge embraces his bluntness.

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Delaware Vice Chancellor Travis Laster is pretty miffed at the Biglaw firm of Gibson Dunn. The specifics of it don’t matter much — well, if you care about whether COVID-19 counts in a contract’s exception for calamities or natural disasters, you might care about the case AB Stable VII v. MAPS Hotels and Resorts and you should feel free to read the 243-page opinion yourself — but we are so here for the benchslap.

Gibson Dunn represents Anbang Insurance, which was trying to sell luxury hotels to Mirae Asset. But even before the global pandemic threw a monkey wrench into the proceedings, Laster says Anbang — and their attorneys — withheld key information that should have been disclosed to the buyers.

As reported by Allison Frankel of Reuters:

According to Laster, Gibson Dunn deliberately withheld key information from Mirae and its lawyers at Greenberg Traurig, instead providing “misleadingly incomplete” representations about disputed deeds on some of the Anbang hotel properties. The firm also “sadly … misled the court,” about Anbang’s own investigation of the disputed deeds, the vice chancellor wrote.

“Put bluntly, (Anbang and Gibson Dunn) committed fraud about fraud,” the judge said.

Ultimately, Laster found, the decision by Anbang and its lawyers to withhold critical information from Mirae and the lenders that were slated to provide billions in financing ended up backfiring when the information came to light. The funders were spooked, the closing was delayed and COVID-19 proceeded to decimate the hotels’ business. If Gibson Dunn and its client had been “candid” from the beginning, Vice Chancellor Laster wrote, “the transaction likely would have closed, and this litigation would never have happened.”

According to the judge, a “shadowy and elusive” character concocted a scheme involving forged deeds to claim ownership of some of the properties. In a separate case — also in front of Judge Laster, World Award Foundation v. Anbang — over the ownership of the properties, Gibson Dunn represented that they didn’t know anything about the scheme. That was in January of 2020, however, the judge notes, “Gibson Dunn had … embarked on a massive investigation in August 2019, and it had uncovered considerable information.” That’s… not a great look.

According to the opinion, Gibson Dunn and Anbang did not disclose the World Award case to Mirae, and when the case was found by Goldman Sachs investigators, the signing got postponed. This pushed the closing of the deal into COVID times, and well, that’s how we get this case.

Gibson Dunn hasn’t commented on the matter, but as Frankel notes:

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In Anbang’s final post-trial brief, the firm said that the disclosure issue was a red herring because the disputed deeds were obvious fakes. It also said that Mirae hadn’t shown any impact from any delay in revealing the extent of the fake deed dispute, since “those matters were disclosed before a closing date had been set.”

But Mirae’s counsel, Michael Carlinsky of Quinn Emanuel, has a different take, saying, “We are extremely gratified with Vice Chancellor Laster’s thorough and detailed opinion finding that Mirae Asset was justified in terminating the transaction based on (Anbang’s) breaches and pattern of deception.”

I just bet they are.

headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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