Partners Michael D. Murphy and Amy Russell convinced a California 2nd District Court of Appeal panel to reverse a controversial quarter-billion-dollar billboard sale

A 2nd District Court of Appeals panel sided with attorneys at Ervin Cohen & Jessup LLP, reversing a controversial sale of hundreds of billboard assets of the prominent Regency Outdoor Advertising firm valued at a minimum of $222 million, and likely much more, in a decision Friday that could have ripple effects for the industry. The assets at issue include several billboards across the Southland, including West Hollywood's Sunset Boulevard.

Firm Partners Michael D. Murphy and Amy Russell represented David Seyde, who in his capacity as consultant of Regency, and an owner of one of the Regency subsidiaries, played a prominent role in the incredible success of Regency over the course of the last 20 years.

Regency is co-owned by Drake and Brian Kennedy, wealthy brothers entangled in a long-running personal dispute. After a decade of fruitless attempts to move past their animosity for one another, the brothers mutually agreed to sell off Regency's assets in 2017 in a deal valued at roughly $500 million.

Despite his significant role in the company's continued success, the Kennedy brothers attempted to deny Seyde his contractually guaranteed percentage share of the sale's proceeds payable from a $25 million escrow fund. After Regency's assets were forced into a receivership for the purpose of accomplishing the sale, Seyde should have been able to rely on the court's protection of him, as a creditor to the sale of Regency assets. Instead, the Kennedy brothers orchestrated a receivership sale in secret, to be conducted by the receiver, but that would deny Seyde his cut.

The lower court acknowledged that Seyde should have been given his contractually mandated percentage but was convinced by the Kennedy Brothers and the Receiver to allow the secret sale to proceed. ECJ attorneys urged the lower court that this was an illegal receivership sale, but the court declined to revisit the transaction. This prompted an appeal by ECJ. Despite significant opposition from globally renowned litigator Daniel Petrocelli - backed by a team of elite lawyers from O'Melveny Myers and Perkins Coie - ECJ prevailed, as the panel ruled the lower court erred in conducting a receivership sale while denying Seyde his share.

"We conclude that, due to the receiver's involvement in the transaction, the sale was accomplished through the receivership and thus the trial court was required to consider Seyde's objections," wrote the panel in its opinion. "Accordingly, we reverse the court's order approving the stipulation for sale and remand for the trial court to consider Seyde's objections and determine the fairness of the transaction before approving any sale."

In a statement, Murphy praised the panel's decision and noted the ruling could have a significant impact for the billboard industry, particularly locally.

Any owners of billboard assets derived from this voided sale of Regency assets will face questions as to the legitimacy of their rights. "Now, finally, after years of scheming, obfuscation, and secrecy, the Kennedy brothers will finally be forced to pay what they owe, after having threatened the stability of the billboard market just to deny our client his money," said Murphy. "We're grateful to the court for recognizing that an injustice was done."

The panel's decision can be viewed here: Kennedy v. Kennedy et al., B313835 (decided Jan 26, 2024, filed in Los Angeles County Superior Court)

Ervin Cohen & Jessup LLP is a full-service firm that provides a broad range of business-related legal services including corporate law; litigation; intellectual property & technology law; real estate transactions and finance; construction & environmental law; tax planning and controversies; employment law; health care law; bankruptcy, receivership and reorganization; and estate planning. For more information, visit ECJlaw.com.