(CN) - After losing in trial against Kevin Costner, actor Stephen Baldwin has sued a law firm, claiming it concealed a $52 million deal with BP so Baldwin and his business partner would sell their shares in a business for just $1.4 million.
Baldwin and Spyridon Contogouris sued Jeffer Mangels Butler & Mitchell LLP and a partner in the firm, Daniel Grigsby, in Los Angeles Superior Court.
Costner is not a party to this complaint.
In June, a federal jury in New Orleans found Costner and a partner innocentof similar allegations brought by Baldwin and Contogouris.
Baldwin and Contogouris were members of Ocean Therapy Solutions, as was Costner. The company was created to sell an oil-and-water separating machine to BP after the Deepwater Horizon oil spill.
In the new complaint in Los Angeles, Baldwin and Contogouris claim the law firm defendants "withheld material information that they were duty-bound to disclose," and "told half-truths to plaintiffs concerning the status and terms of the deal" with Ocean Therapy Solutions (OTS).
Contogouris claims that when the BP oil catastrophe began, he knew of the oil and water separating technology that Costner had developed in the 1990s. But Costner no longer owned the rights for the technology, the plaintiffs say, so Contogouris set out to obtain the rights, and he did.
"On May 7, 2010, a joint venture to market the technology to BP ... was formed under a Joint Venture Agreement among the following individuals and legal entities: Contogouris, Baldwin, John Houghtaling, a New Orleans attorney ... West Pac Resources LLC ... an entity formed by Costner and Patrick Smith, Costner's business manager," and others, according to the complaint.
The Deepwater Horizon exploded on April 20, 2010.
Grigsby "is an attorney for OTS and participated in the formation of OTS," according to the complaint, which says he has been a partner in Jeffer Mangels Butler & Mitchell since before May 2010.
Baldwin and Contogouris claim that discord among members of the LLC started when "a difference in business philosophy developed."
While Contogouris and another member wanted to ensure recurring business from BP by renting the technology, other members wanted to sell the technology to BP outright, according to the complaint.
In June 2010, some members of OTS met with BP officials. Contogouris claims he was there, but was asked to leave before the meeting began.
"Plaintiffs aver they were purposefully excluded from the BP meeting of this date," the complaint states.
Baldwin and Contogouris claim that at that meeting BP signed a letter of intent with Ocean Therapy Solutions in which it agreed to buy 32 oil and water separating units for $52 million, with an $18.2 million advance deposit.
Baldwin and Contogouris claim the other members of OTS concealed that information from them, and let them sell their shares in the company a few days later for a total of $1.9 million ($1.4 million for Contogouris' shares and $500,000 for Baldwin's).
They claim that on June 9, 2010, during testimony before Congress, Costner indicated that BP had placed an order for a number of units.
"Contogouris, hearing these statements, attempted to contact Costner without success. He then emailed Grigsby, requesting a meeting or a few minutes of his time," the complaint states.
"When Contogouris spoke by phone with Grigsby on June 9, 2010, Grigsby confirmed to Contogouris that no agreement had been reached with BP. ... Grigsby did not mention the draft agreement with BP, nor BP's stated terms of a $52 million purchase with a $18.2 million upfront deposit," the complaint states.
"Contogouris and Grigsby discussed the proposed terms of the buyout over the next couple of days. Grigsby ultimately drafted documentation providing that the buyout would consist of [OTS member Patrick] Smith's personal purchase of the interests of Contogouris and Baldwin, based upon an assumed fair market value of OTS of $5 million," the complaint states.
Smith was a defendant, with Costner, in the previous lawsuit in New Orleans, in which they prevailed.
In the new complaint, Contogouris and Baldwin claim that that "Grigsby's previous legal work on behalf of OTS entailed acting in the capacity of attorney for OTS. He thus owed a fiduciary duty to Contogouris and Baldwin as members of OTS.
"As a result of his legal work on behalf of OTS, Grigsby knew on June 10, 2010 that OTS was in the final stages of negotiating a $52 million contract with BP, including an $18.2 million upfront deposit. This contract alone would render the fair market value of OTS well in excess of $5 million upon which the terms of the buyout were based. Yet Grigsby failed to inform either Contogouris or Baldwin of the pending nature of the contract."
Contogouris and Baldwin claim that "on June 16, 2010, Grigsby or an employee on his behalf contacted the California Secretary of State and authorized OTS to perform business in the State of California, for the express purpose of facilitating the establishment of a 'secret account' in California. Documentation attesting to OTS's qualification to do business in California was provided to Bryan Bates, a member of OTS ...
"Shortly thereafter, Bates used the documentation obtained by Grigsby to open a secret, unauthorized bank account for OTS at a RaboBank branch in Santa Barbara, California. The opening of this account by OTS was not authorized by its members, which at that time included both Baldwin and Contogouris. ... Plaintiffs are informed and believe ... that the primary, if not sole, purpose for the creation of the secret and unauthorized RaboBank account was to ensure that OTS had a place to 'park' the $18.2 million upfront purchase deposit from BP without Contogouris or Baldwin having any knowledge thereof."
The plaintiffs claim that "on June 11, 2010, wire transfers in the amount of $140,000 and $50,000 were sent from a RaboBank, N.A. account belonging to WestPac Development LLC ('WD'), a Smith-controlled entity, to Contogouris and Baldwin's bank accounts, respectively, representing the down payment. ..."
"Unbeknownst to both Baldwin and Contogouris at that time, BP issued a purchase order to OTS on June 12, 2010 for 32 units for a gross price in excess of $52 million. At this time, Baldwin and Contogouris were still shareholders of OTS as they had not been paid in full for their shares and were therefore entitled to their pro-rata share of any distribution to be made out of the advance BP deposit," the lawsuit states.
"On June 18, 2010, wire transfers in the amount of $1,260,000 and $450,000 were sent from a RaboBank N.A. account belonging to WestPac Development LLC ('WD') ... to Contogouris and Baldwin's bank accounts, respectively, representing the remaining payment to consummate the buyout."
Contogouris and Baldwin claims they were not paid in full for their shares until June 18, three days after BP announced that an order for 32 units had been placed with OTS.
"BP wired the $18.2 million deposit to OTS's RaboBank account on June 17, 2010. The financial terms of the order were not disclosed publicly by BP or by the defendants," the complaint states.
Baldwin and Contogouris claim they would never "have entered into the agreement made on June 11 to transfer their interest" had they known that BP was buying the 32 machines for more than $52 million.
Though Costner is not a party to this lawsuit, Baldwin and Contogouris's claim that "prior to the sale of plaintiffs' units to OTS, defendants Costner and Smith agreed to and schemed to make millions of dollars in selective distributions to themselves out of the monies paid as an advance deposit by BP, monies in which plaintiffs were entitled to also receive by distributions but for the misrepresentations and omissions of material fact made by Costner and Smith."
Baldwin and Contogouris filed a similar, pending lawsuit against New Orleans attorney John Houghtaling, in Orleans Parish District Court.
In their complaint in Los Angeles, Baldwin and Contogouris seek damages for professional negligence, breach of fiduciary duty and fraud.
They are represented by Byron Ball of Los Angeles.