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Law360 (July 14, 2020, 4:55 PM EDT) -- A California attorney breached his contract with a Texas company that sought to acquire KN95 face masks by sending $1.25 million to an unrelated party in Louisiana, his client has alleged in Louisiana federal court.
Share Holders LLC trusted attorney Thomas Gruenbeck to hold nearly $1.9 million as part of a deal in which the company would have acquired the masks from supplier BAFF Consultants Inc. amid the COVID-19 pandemic, but the lawyer instead sent about two-thirds of the money to King Consulting Group LLC, according to the complaint filed Monday in the Western District of Louisiana.
"Defendants owed a duty to plaintiffs to disclose the actual parties involved in the agreement and when the transfer of plaintiffs' funds were made pursuant to the agreement," the complaint reads. "Instead, defendants have intentionally and/or negligently misrepresented material facts during the [course] of their business together."
Share Holders, which does business as Advantage Testing, hired Gruenbeck to serve as the trust attorney for the deal, in which BAFF was set to supply the masks, according to the complaint.
After the date in April passed when Advantage Testing anticipated receiving the masks, Gruenbeck acknowledged that he had instead forwarded $1.25 million to King, according to the complaint. King was not part of the deal between Advantage Testing and BAFF, according to Monday's suit.
Advantage Testing wants the Louisiana court to grant either a preliminary injunction or a restraining order on 3.5 million masks that King is currently in possession of, according to the complaint.
"If the King defendants dispose of those masks before this court's determination on the merits of plaintiffs' claims, plaintiffs only recourse to recoup their funds will be lost," the complaint reads.
Advantage Testing seeks an unspecified amount of compensatory and punitive damages, pre- and post-judgment interest, and attorney fees and costs, according to the complaint.
Representatives for the parties could not immediately be reached for comment Tuesday.
Advantage Testing is represented by Gary J. Russo and Carmen M. Rodriguez of Jones Walker LLP.
Counsel information for the defendants was not immediately available Tuesday.
The case is Holder et al. v. Gruenbeck et al., case number 6:20-cv-00875, in the U.S. District Court for the Western District of Louisiana.
--Editing by Daniel King.
For a reprint of this article, please contact reprints@law360.com.
