Judge finds for Stanley Black on BH mansion fraud claim

UPDATED, Mar. 24, 2022, 4:17 p.m.: Stanley Black is on the brink of scoring a win in a nearly three-year legal battle against his longtime business partner Robert Barth, who is set to pay $13.4 million in damages for siphoning profits from a Beverly Hills mansion.

An L.A. County Superior Court judge has proposed Barth pay $6.7 million in damages — the total profits determined to have been diverted from shareholders — and $6.7 million in punitive damages, according to court documents filed this week. The decision came after a weeks-long trial in October and November of last year.

The decision reflects lost profits that should have gone to investors,” said Howard King, an attorney representing Stanley Black.

The judge’s proposal, set forth on March 21, stands as a decision of sorts, and it is expected to stand unless either party raises some objection that would lead to a change. Such cases typically allow 10 to 15 days for objections.

Barth’s trial attorney, Robert Klieger, said the circumstances render the judge’s proposal “just a tentative ruling” that can be challenged. If the proposal goes through, Klieger said Barth will appeal the decision.

King said the proposal is a formality and predicted its terms will hold up in the final decision.

In 2019, Black sued Barth, his business partner of more than three decades, claiming Barth defrauded him when the duo closed on a mansion at 840 Greenway Drive for $17.1 million two years prior.

The judge found that, before the purchase, Barth had designated himself sole manager of two limited liability companies that were used to purchase the property. Black held minority stakes in both of the LLCs.

The LLCs got ownership of the Greenway Drive property, then received an offer from the property’s tenant, Eric Baker, to buy it for $21.3 million. Barth, through the LLCs, countered with $25 million, which Baker accepted.

Around the same time, Barth “directed his personal attorney to create a purchase and sale agreement [for 840 Greenway Drive] between himself and the LLCs,” Judge Monica Bachner wrote in her decision.

Under that agreement, the LLCs sold the property to Barth for $16.9 million. Barth then sold the property to Baker for $25 million — the price Baker had agreed to.

Klieger told TRD  that Barth planned to buy the property and use it as a personal home. Barth “agreed to allow investment entities to purchase and operate the house as a rental property for a year and then planned to acquire it at cost for capital gains tax advantage,” Klieger said.

The court, however, that “Barth did not disclose his purchase and sale of the Greenway property to any of the investors,” Judge Bachner wrote in the proposed decision. “These actions deprived the LLCs of the more than $6 million in profits.”

The judge said the punitive damages are intended to have a “deterrent effect” on Barth, who is estimated to have a net worth of between $100 and $250 million.

Black is in another legal battle with Barth, alleging Barth lifted $1.8 million out of a joint bank account.

The two men still have a number of legal holdings together.

“There have been multiple settlement discussions that have never come to fruition,” King said, when asked whether there were any plans to separate the joint holdings.

This story has been updated to include comments from Robert Klieger, Robert Barth’s trial lawyer.