LA Real Estate Billions fuelled the Epic Court Battle between Brothers

By Bricksnwall | 2024-03-03

LA Real Estate Billions fuelled the Epic Court Battle between Brothers

Following a five-month trial, a jury awarded Haresh Jogani shares of their Southern California real estate business, which included over 17,000 apartments valued at billions more, as well as more than $2.5 billion in damages to his brothers Shashikant, Rajesh, Chetan, and Shailesh Jogani.


Five Indian brothers who have made a fortune in real estate and diamonds have been embroiled in an obscure 21-year legal battle that came to light this week when a multibillion-dollar US verdict—possibly the largest of the decade—was rendered.


Following a five-month trial, a jury awarded Haresh Jogani shares of their Southern California real estate business, which included over 17,000 apartments valued at billions more, as well as more than $2.5 billion in damages to his brothers Shashikant, Rajesh, Chetan, and Shailesh Jogani.


On Monday, the trial that concerns claims that Haresh broke a long-standing agreement with his siblings will continue with a punitive damages hearing that may increase the award.


Jogani against Jogani The Los Angeles Superior Court case from 2003 has already gone through five judges, eighteen appeals, and generations of lawyers. Some of the attorneys are drawing parallels between it and the fictitious Victorian-era probate case that Charles Dickens wrote about in his 1852 book Bleak House. With a twist, Jogani v. Jogani is being referred to as the new Jarndyce v. Jarndyce. 


There was no money at the end of the book, which is why Bleak House got its name," said Peter Ross, a lawyer for Chetan and Rajesh Jogani. Here, that is untrue. There are still billions to be distributed here.


The fact that large corporations are the target of the majority of multibillion dollar verdicts in the US adds to the case's unusualness. The real estate market's ups and downs eventually determine how much each brother ends up walking away with; apartment prices have declined from their 2022 peak as a result of rising borrowing costs and declining property values brought on by increasing interest rates. According to MSCI Real Assets, the average price of an apartment in the Los Angeles area in January was $329,000, a 26% decrease from a high in November 2022.


Trade in Diamonds The Jogani family, who originated in Gujarat, India, amassed wealth through the world diamond trade and established colonies in North America, Europe, Africa, and the Middle East. According to a complaint he filed in 2003, Shashikant "Shashi" Jogani relocated to California in 1969 at the age of 22, where he launched a solo firm in the gem industry and proceeded to acquire a property portfolio.


Shashi brought his brothers in as partners after the 1994 Northridge Earthquake killed sixteen people in one of his buildings and caused losses for the properties during the early 1990s recession. After that, the brothers worked together to grow the company's portfolio to almost 17,000 apartment units through a buying binge. However, according to Shashi Jogani's complaint, Haresh "forcibly removed" his sibling from managing the company and refused to give him his due.


Haresh Jogani argued that his brothers couldn't demonstrate they were in a partnership with him without a formal contract. However, the jury concluded that Haresh had breached an oral agreement.


Oral agreements are customary in the diamond trade and among Gujaratis, according to testimony presented before the jury.


Equally Important" According to the law, verbal agreements have the same legal weight as written ones, according to Shashi Jogani's lawyer Steve Friedman.


Haresh Jogani wanted to remove the judge as the trial was nearing to an end, accusing her of misbehavior and "racial animosity" toward his attorney. Judge Susan Bryant-Deason refuted allegations that she was "biased or prejudiced for or against" any of the parties or attorneys in the case in a brief last week. She also denied having done anything unlawful. She sent the motion to the court's supervisory judge, and it is presently pending. The jury ordered $165 million in damages to the brothers Chetan and Rajesh for Haresh's breach of the diamond partnership, in addition to $1.8 billion to Shashi, $234 million to Chetan, and $360 million to Rajesh for breaching the conditions of the real estate partnership. 


According to Ross, the jury also determined that Shashi, who is currently 77 years old, owns 50% of the real estate partnership, with Haresh owning 24%, Rajesh 10%, Shailesh 9.5%, and Chetan, the youngest, 62, 6.5%.


The properties brought in as much as $137 million annually in net operational revenue, according to 37-year-old Michael Friedman, who has been Shashi's attorney since 2014, the year he was admitted to the bar. Michael Friedman practices alongside his father, Steve.


"Shashi built an enormous portfolio," he remarked. "And it keeps itself going."


 Source: Money Control