Last week Billboard Insider wrote an update on the Verde Renfroe legal dispute. We asked whether Renfro had any ability to revise its claim based on Verde’s sale to Lamar. Out of home attorney Richard Rothfelder has these comments.
The short answer is this. Renfroe sold its membership interests to Verde in 2021 for $45,000,000. Verde sold all of its assets to Lamar about four years later for an unspecified amount. Unless there was a restriction in the Renfroe/Verde contract on re-selling the assets, Renfroe would not have any basis to claim any part of the sale price paid to Verde by Lamar.
This story is more complicated when it comes to the Renfroe/Verde dispute. It illustrates the need for our motto, “above all else, clarity” (with credit to my long-time legal assistant, Sherry Rich, for the motto). It also illustrates the truism that the correct answer to every legal question is, “it depends.”
Starting with clarity: The story says permitted development sites would be valued at 10x expected cash flow, while unpermitted development sites would be valued at 8x expected cash flow. Two sites in Charleston received permits “only… after a lengthy delay.” Should those sites have been valued at 8x expected cash flow because they were not permitted when the parties signed the contract, or should they have been valued at 10x expected cash flow because they received permits before the one-year true up?
That also leads to the correct answer, “It depends.” Did the parties discuss the possibility that an unpermitted site would become permitted before the end of the first twelve months? If so, did they provide for any adjustment based upon the mid-year change in status of the two sites? If so, did they bring clarity to these provisions? If not, both parties were victims of a common error, “You don’t understand. What I thought you heard is not what you thought I said.”
Finally, an editorial comment. While $1.3 million is a sizeable amount in the abstract, it is also less than 2.9% of the $45 million sale price. That is well short of material in accounting terms. More importantly, if the lawsuit continues, the attorney fees and court costs will consume far more than ten percent of the $1.3 million dispute. Mediation will serve both parties better than ongoing litigation. We can help with that.
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