A California court has ruled in favor of Peter S. Beagle about most of his claims in a suit against former manager Connor Cochran, and awarded him $332,500 in damages.
In a decision handed down June 21, Alameda County Superior Court Judge Michael M. Markman found that Beagle proved his claims against Cochran for financial elder abuse, fraud, breach of fiduciary duty, and defamation. But the judge disallowed claims for elder abuse based on acts resulting in mental suffering, and conversion (of assets). He awarded Beagle $7,500 for defamation, and $325,000 on the remaining claims. The judge awarded no punitive damages. He did grant Beagle reasonable attorney’s fees in an amount to be determined.
Peter S. Beagle sued Cochran in 2015 for $52 million in damages, disgorgement of illegal gains and restitution, and dissolution of two corporations he co-owns with Cochran, Avicenna Development Corporation, and Conlan Press, Inc. The claims against the corporate entities were not part of this trial, being subject to the automatic stay of litigation that went into effect when Cochran and his companies filed Chapter 11 bankruptcy on January 4, 2018 (the day before the state trial was originally scheduled to begin.) The U.S. Bankruptcy Court later granted Beagle’s motion to partially lift the automatic stay and allow his suit against Cochran as an individual to proceed in state court.
While permitting the state trial to proceed, the Bankruptcy Court withheld permission to execute on any judgment pending its own order. Therefore, action cannot be immediately taken to collect the latest award of damages.
Judge Markman’s 17-page decision is informative about the court’s evaluation of the parties and issues.
While explaining his finding that there was elder abuse in financial terms, Judge Markman characterized defendant Cochran in these terms:
B. Elder Abuse Based on “Constructive Fraud”
“…The Court finds that Cochran assisting in taking Beagle’s intellectual property was for a wrongful use and with the intent to defraud Beagle. To better understand why, a few comments concerning Cochran’s demeanor at trial are in order Cochran presents as an extremely intelligent, articular, overly-aggressive hustler and pitch-man. Cochran’s written work product attempting to promote Beagle’s work is written as Cochran speaks – with a flair for the dramatic that is at best loosely based in truth. As byt one example, Cochran prepared pitch materials for Beagle purporting to estimate the value of Beagle’s intellectual property exceeding $15 billion. While Beagle’s work is certainly valuable, and Beagle likely found the idea in Cochran’s pitch that it was worth that much money to be pretty flattering, there is nothing that might suggest his intellectual property is worth that figure. Cochran also began holding himself out as a specialist in handling business affairs for older authors.
“Cochran’s work with Beagle unquestionably made Cochran Beagle’s fiduciary. Cochran served as Beagle’s business manager for many years. The testimony made clear that the two men shared an important friendship. The Court was convinced that Cochran really did believe he had Beagle’s best interests in mind when working for Beagle. Cochran was convinced that he needed to take care of Beagle’s finances, rationing cash and paying bills, and to otherwise help Beagle with day-to-day tasks (most of which involved money.)
“At a certain point, however, the evidence reflects that Cochran allowed his role as the trusted advisor to get the better of him. He crossed the line from business manager to over-paternalistic friend, exercising a surprising degree of control over Beagle’s finances and, in effect, Beagle’s life. His own testimony reveals that he had convinced himself that controlling Beagle was in Beagle’s best interests because he viewed Beagle as a spendthrift (and Beagle viewed himself that way). He also convinced himself that only he could rescue Beagle and transform Beagle’s works into an intellectual property mega-estate. And, Cochran convinced himself, he should benefit accordingly.”
This was one of the claims for which damages have been awarded.
However, Judge Markman said a second claim of elder abuse on other grounds of intentionally inflicting emotional distress was unproven.
B. Elder Abuse By Acts Resulting in Mental Suffering
“…Plaintiff has not proven a claim for intentional infliction of emotional distress. Specifically, Plaintiff did not show that Cochran’s outrageous conduct – directed at Plaintiff himself – was taken with “the intention of causing, or reckless disregard of the probability of causing, emotional distress.”…In order to be “outrageous,” the conduct ‘must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.’ …Cochran’s financial mismanagement, and his expressions of concern to Beagle’s friends and relatives for Beagle’s mental health and use of alcohol, do not rise to the level required by California law for an intentional infliction of emotional distress claim.”
“Cochran appears to have taken on a central role in managing Beagle’s funds, initially at Beagle’s request. But the evidence does not indicate that Cochran’s behavior relating to administering those funds triggered mental suffering for Beagle. Additionally, Beagle was apparently transferring funds at an alarming rate to his then-girlfriend, which Beagle would alternatively say she was using to visit a clinic or to gamble, or else would deny that he had made entirely. These transactions make it difficult to lay the cause of Beagle’s mental anxiety at Cochran’s feet.”
The court also explained why damages were awarded for the claims of fraud, defamation, and breach of fiduciary duty.
“…Specifically, Beagle testified that Cochran affirmatively misled him concerning their respective ownership interests in Avicenna. He also testified that Cochran failed to disclose the Bylaws to Beagle, which would have established that Cochran controlled the company rather than the two parties sharing an ownership interest in its assets (Cochran contests this, and testified he did provide a copy of the Bylaws to Beagle).,,,
“…Even if Cochran had disclosed the Bylaws to Beagle, and Beagle lost them or does not recall, Cochran’s affirmative statements to Beagle concerning their equal relationship in Avicenna until he filed suit was highly credible….”
“…Beagle has established by at least a preponderance of evidence that Cochran’s statements that Beagle had dementia were false, and Cochran knew they were false when made….
“….Cochran’s statements regarding Beagle’s memory in general, rather than his statements concerning dementia, appear to have been based on fact; they are not actionable….
“…Additionally, Beagle has an observable tendency to state things as fact even when he cannot recall the event(s) on which they are based…. The Court observed Beagle mixing up events in his testimony on more than one occasion during the course of the trial.”
E. Breach of Fiduciary Duty
“…Cochran obtained an unfair advantage as a result of his work as Beagle’s fiduciary. Among other things, Cochran transferred a substantial amount of money to himself to pay personal expenses….”
However, when it came to the claim of conversion, the court said part of that issue involved actions by Avicenna Corporation over which it did not currently have jurisdiction, while the plaintiff’s charge of conversion of the corpus of a trust created by Beagle’s mother was not proven.
“…Beagle himself assisted in making Cochran the trustee of The Rebecca S. Beagle Trust. There is no indication that Cochran gained that role as a result of fraud or elder abuse….”
Further developments in the case await action by U.S. Bankruptcy Court.
[Thanks to Nick Mamatas for the story.]