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An arbitrator has awarded just over $30 million to a Pennsylvania company that claimed the lenders and shareholders of a Texas company it purchased in 2000 misrepresented its financial situation, according to James Smith of Blank Rome, who represented the Pennsylvania concern. The action captioned TransCore Holdings Inc. v. Rocky Mountain Mezzanine Fund II involved Hummelstown, Pa.-based TransCore’s purchase of Viastar Holdings Inc. According to an award memorandum from JAMS arbitrator Curtis E. von Kann, named as respondents in the matter were investors Rocky Mountain, Hanifen Imhoff Mezzanine Fund, Moramerica Capital Corp. and NDSBIC; and stockholder W. Trent Ates. Smith, who represented TransCore in the case, said that under the terms of the 2000 stock purchase agreement, TransCore needed to prove only that one of the sellers had engaged in misrepresentation in order for all the sellers named to be found jointly and severally liable. That agreement called for any resulting disputes to be submitted to arbitration. Arbitration in the matter took 35 days over the course of over two years, and von Kann filed his award Dec. 31, Smith said. “This was not a settlement that we reached here,” said Smith, who was assisted by partner Daniel Rhynhart. “This was a hotly contested trial.” The lead respondents’ attorneys were K. Chris Todd and Silvija Strikis of Kellogg Huber Hansen Todd & Evans in Washington, D.C. They did not immediately respond to calls seeking comment. Rhynhart said that TransCore specializes in toll collection technology, while Viastar offered a variety of management services for trucking companies. According to von Kann’s 70-page memorandum, TransCore had claimed that “but for [the] misrepresentations, it would not have purchased Viastar, nor made further investments in it.” TransCore filed its action with JAMS in May 2002, Smith said, and arbitration got under way shortly thereafter. The process itself mirrored an actual trial, and was divided into three phases, he said. Hearings with von Kann were conducted intermittently in Dallas and in Washington, D.C., where von Kann, a retired District of Columbia Superior Court judge, is based. The first phase, which lasted roughly four days, addressed the scope of the relevant stock purchase agreement’s indemnification provisions. According to Smith, von Kann concluded at the end of that phase that if it were proven that any of the respondents had been involved in misrepresentations, all of them could be found liable. The second phase, which lasted approximately 25 days, involved establishing liability and damages, according to Smith. “The damages in the case were wildly complicated … and dealt with all sorts of tax-related issues,” Smith said. The final phase, which used up the remaining days of the process, saw further testimony from both sides as to damages issues, he said. Von Kann awarded TransCore a net total of $30,354,840.37 on its indemnification claim, to be recovered from the named respondents “jointly and severally.” Of that amount, just under $7 million was for attorneys’ fees and expenses. “This has been an extremely hard-fought arbitration,” von Kann wrote.

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