Thakur Law Firm, APC wins $2.5 Million Trial Verdict for its Client Excellus Holdings in Fraud Case
SAN DIEGO CA – On February 7, 2023, San Diego County Judge Ronald Frazier handed down a long-awaited decision in the matter of FemCap, Inc. v. Excellus Holdings, LLC Case No. 37-2020-00015382-CU-BC-CTL.
After 10 days of testimony that spanned over four months, Judge Frazier ruled in favor of Excellus Holdings, LLC (“Excellus”), represented by Thakur Law Firm APC, against FemCap, Inc. (“FemCap”) and FemCap’s owner, CEO and Medical Director, Alfred Shihata, both represented by The Law Office of Edward W. Freedman, for fraud and breach of contract. The trial victory awarded Excellus recission of the contract for the sale of FemCap’s product, FemmyCycle, and ordering the return of the purchase price of $1.15 million dollars, as well as awarded additional consequential damages in the amount of $1.15 million dollars and a prejudgment interest of $373,671.23 from the date of the purchase.
Judge Frazier’s 13-page decision summarized how Shihata fraudulently concealed critical information regarding the regulatory status of the FemmyCycle product, a feminine-hygiene product regulated as a medical device by the U.S. Food and Drug Administration (“FDA”), while also breaching multiple covenants within the purchase agreement. Judge Frazier’s ruling against FemCap and Shihata was a significant milestone and critical win in a three-year legal battle.
The Final Statement of Decision issued by the court found that Shihata and Femcap not only breached the terms of the purchase and sale agreement for the FemmyCycle product but concealed pertinent facts throughout its sale to Excellus. Judge Frazier’s ruling stated that whereas “Excellus performed all, or substantially all, of its obligations[,]” Femcap through Shihata per the agreement failed to disclose all material records and information relating to the FemmyCycle product to Excellus. The court determined that such failings by Femcap and Shihata constituted a “material breach” of the agreement.
The court further found that Shihata and Femcap during the sale of Femmycycle fraudulently concealed from Christopher Petty and Monica Chinisaz, the managing members of Excellus that Femmycycle was not compliant with Health Canada and FDA regulations, Femmycycle had failed regulatory audits after the due diligence period of the sale transaction, and Femmycyle had a “deficient record keeping system.” The court determined that “Shihata and Femcap intended to deceive Petty and Excellus by concealing these facts [and] as a result of the concealed facts Excellus was harmed in the amount of $1,150,000.”
FemCap’s own regulatory compliance consultant, Dr. Albert Rego, while being cross-examined by Pamela Thakur acknowledged that the concealed audits, “show that the quality management assistant did not have product traceability and product identification and preservation among other issues – that were deficient.” Femcap’s own employee and Operations Manager, testified that she deleted pertinent emails from May 2019 to August 2019 relating to the Femmycycle product, including communications with distributors and customers and informed Shihata of the practice. Following the testimony of Femcap’s compliance expert and Femcap’s employee the court determined, “by overwhelming evidence that Shibata and FemCap concealed material information from Petty and Excellus … and had the omitted information been disclosed Excellus would not have purchased Femmycycle.”
Following Judge Frazier’s verdict, FemCap and Shihata have not filed a notice of appeal against it. FemCap and Shihata have yet to pay any of the monies due to Excellus, but Judge Frazier’s ruling also included a constructive trust in favor of Excellus and against Shihata for $1.15 million dollars.
Excellus was represented by Orange County trial attorney and principal of Thakur Law Firm, APC, Pamela Tahim Thakur. She states: “We could not be more delighted to have achieved this victory for our clients who genuinely deserve justice. Proving fraud to obtain rescission is a rare occurrence due to the high standards required to prove fraud,” said Thakur. She continues: “Achieving justice has been the driving force in this case, and it is the commitment of Thakur Law Firm in all matters.”
Thakur Law Firm, APC is a boutique civil litigation law firm, focusing on providing high quality solutions and legal representation for small to medium-sized businesses in all legal matters. No one outcome is guaranteed and will vary on a case-by-case basis. If you have questions or would like a complimentary consultation on a specific matter, please feel free to contact us at email@example.com or by phone at (714) 772-7400. Our legal team is available to assist you and your business further.
The case is captioned FEMCAP, INC. and Alfred Shihata v. Excellus Holdings, LLC, San Diego County Court Case No. 37-2020-00015382-CU-BC-CTL.