Saturday, January 23, 2010

Our Long National Nightmare is Over.

The USCF v. Polgar and Truong lawsuits were, in the main, settled. The stipulation of dismissal was filed with the court yesterday afternoon.

Polgar received no money. Her lawyers did receive $39,000 from USCF's insurance company, which, may cover the out of pocket expenses the lawyers incurred. It certainly doesn't cover even 20% of Ms. Polgar's legal fees.

In a prior post Jack LeMoine interpreted the settlement as a vindication of Paul Truong from the FSS allegations -- not so much. The brutal fact of the matter is that the Mottershead report remains unrebutted. Indeed, it's findings have been bolstered with more data -- data that was not within USCF's control.

I would also note that the 39k paid by USCF's insurer is what is known in the trade as a costs-of-defense settlement. When it would cost you 80k to try a case, and 39k to settle it, many insurers will cut their losses and pay to settle the claim. (Whether this is a good long term business strategy is a facinating question -- but beyond the scope of this blog.)


  1. Hi Wick,

    I defer to your experience and training, but it seemed like a loser strategy to me when the USCF initiated law suits. As much as people want to blame P+T (I agree with that) I think the EB was stubborn and boneheaded. I cannot believe that some sort of compromise could not have been reached to avoid the (not Monday night QB) OBVIOUS costs of litigation.

    I've read various EB members statements and many of them sound emotional and irrational. They have a higher responsibility and cannot indulge themselves in such a manner (IMHO).

    I don't care what you do with your money, but I think the EB tossed the members' money out with the bath water on this one, and I cannot condone it. There had to have been an easier, softer way.

    Personally, I hope that the members never elect Bill Goichberg to any office ever again. I served with him. He is far, far too emotional to be in charge of any enterprise.

  2. Spin the story however you wish but the brutal economic facts remain: at the end of the day Polgar received a $39,000 reduction of her legal fees out of an insurance policy for which the USCF paid the premiums. The USCF received NOTHING from Polgar or from any Polgar-paid insurance company.

  3. Sorry Jack. It ain't spin. It's analysis. It's analysis of someone who has been, historically, a political opponent of Bill Goichberg. Analysis from someone who knows a lot more about litigation than you do. You know more than I do about tax. Litigation, on the other hand . . .

    Jim. I agree that in retrospect, the SF and IL lawsuits, especially the latter, were not good moves; however, I am not sure that the Board's decisions, based on facts known at the time and legal advice received, were unreasonable.

    I am not sure the board got great legal advice at the beginning of the case.

    Once Polgar filed her suit, the events were pretty much out of control. Polgar was using scorched earth litigation tactics, and, if you don't fight back on the same basis, you get rolled.

  4. I agree that the kid gloves had to come off after the Polgar suit was filed. It seems to me that opportunities were wasted prior to that.

    I assume that the money paid to Polgar/Truong was based on legal fees incurred while they were members of the USCF Executive Board. That's most likely a by product of the D+O policy, which may be another victim of this mess. In any event, it cannot be portrayed as money going from the USCF to Polgar/Truong. At least, it can't be HONESTLY portrayed that way.

    I did not think the EBs could keep getting worse. They have.

  5. Jim,

    Unfortunately, we don't have a good handle on what opportunities were there. Per a Goichberg post, there was a pre-suit offer to allow Truong to resign, but have Polgar stay on the board. Had that offer been accepted, none of this mess would have happened.

    The board was caught in an untenable position. They had to get Truong off the board or face enormous potential liabilities. He wouldn't leave. How should that impasse have been broken.

    I know your experience with some of the personalities involved has been negative, but I have a great deal of trouble faulting Hough, Bauer, and Berry for this mess.