Opinion Letter Could Cost Andrews Kurth $90 Million

Andrews Kurth

Writing an opinion letter could cost Andrews Kurth more than $90 million.

Four stock purchasers allege that Andrews Kurth assured them that a stock sale by Motient Corp., a wireless service provider, did not violate the corporation's governing documents, when in fact the certificate of incorporation prohibited the sale. . . .

[A]ccording to the petition, the plaintiffs agreed to purchase stock with no voting rights but later learned that, at the time of the stock sale, Motient's certificate of incorporation -- issued by Delaware -- prohibited stock sales without granting voting rights.

Andrews Kurth asserted in the opinion letter that the firm had examined the certificate of incorporation that the company had certified as being current. The stock purchasers had asked that an opinion letter be written as part of their agreement to buy the stock, says Paul B. Lackey, attorney for the Highland entities in Andrews Kurth and managing partner of Lackey Hershman in Dallas.

Because Motient issued the stock in violation of its certificate of incorporation, the stock is void, the plaintiffs allege in the petition.

Details here from Texas Lawyer via Law.com.