A lawsuit asking Coastal Contacts (COA.T) for more than $20 million has been seen, and heard, in a Vancouver courtroom.
Kovacevic Consult Inc. is seeking damages from Coastal Contacts Inc. after it says the eyewear company breached an exclusive contract with them in 2013 by hiring Guggenheim Partners to close a financing deal with Essilor (EI:EPA) for $430 million. Kovacevik’s advisors had initiated the financing process and provided ongoing support over the length of the deal, only for an alternate deal to be arranged without their knowledge.
In oral arguments Thursday and Friday, which Equity.Guru reporters attended, the plaintiff’s lawyer stated his client suffered a “loss of opportunity” after the deal was completed outside the time frame of their contract. The claim states Kovacevic and Coastal signed a mandate agreement to assist in a transaction, whereupon the consultants provided contacts with 14 European eyewear firms. In return, Coastal promised 5% of the “aggregate consideration” of any completed transaction. That fee would have been in the ballpark of $22 million, had Kovacevic been included in the discussions.
The plaintiff’s lawyer argued Coastal breached the arrangement by not living up to its “obligation to inform” them of developments outside the scope of the contract, insisting that there was also interest in a deal from Luxottica Group and that Kovacevic did not get the chance to arrange a competing bid from the Italian eyewear firm.
“They would have been able to get a deal moving (and) get an extension of their mandate,” the court was told. “Essilor was prepared to deal.”
Central to the plaintiffs’ case is their belief that, without their legwork, no deal for Coastal’s financing would have been forthcoming, and that, having done the heavy lifting, Coastal worked an end run around them to avoid paying a finder’s fee.
Previously the attorney for the defence stated during discovery, that no work was done by Kovacevic’s consultants after June 12. The presiding judge said no terms were established previously for any extension of exclusivity for negotiations, while no “bad faith” is being alleged by plaintiffs.
In replies to the plaintiff’s oral arguments Friday morning, the defendant’s attorney insisted that the end of the engagement term on June 10 saw an end to dealings by the consultants.
“There was nothing to trail … the advisors did nothing further to advance any discussions” with Essilor. “There was no success, and no fee generated.”
An application has been submitted by the plaintiff to cross-examine Coastal CEO Roger Hardy in the matter, but the defence attorney dismissed the idea, stating, “It is entirely unnecessary to resolve any of the issues.”
The judge told the court he will render his decision in the case within the next three to four weeks.