A civil jury in Chicago ruled last Tuesday that Cablevision
Systems Corp. chairman Charles F. Dolan must pay a group of limited-partner investors,
identified as Lid Associates, $18.4 million in connection with the 1995 sale of a cable
system.
The jury at the Circuit Court of Cook County, Ill., ruled
that Dolan breached his fiduciary duties to this group by not fairly allocating the
proceeds from the sale of a 90,500-subscriber suburban Chicago system to the former
Continental Cablevision Inc. for $168.5 million. Cablevision was not named in the lawsuit.
Dolan's lawyer vowed to appeal. "This case is far
from over, and we will take legal steps to protect Mr. Dolan's interests in an effort
to overturn this aspect of the case," Chicago lawyer Richard J. Gray said.
Gray added that a motion to contest the $18.4 million award
would be filed with the trial judge, Lee Preston, at the Cook County Law Division.
Judge Preston rejected a request from the plaintiffs for
punitive damages.
Dolan had raised nearly $38 million from the investors, who
responded to a private offering between 1979 and 1983, according to the lawsuit.
When Dolan sold to Continental, he paid his limited
partners about $43 million -- or their original investment, plus a $5 million profit --
while Dolan pocketed $51 million, according to plaintiffs' lawyer Jay Canel.
According to Gray, during the period in question, Dolan
volunteered to defer fees and made loans to keep the failing suburban Chicago cable
company afloat, accounting for the interest Dolan was paid at the sale.
"While we continue to believe that he was owed
appropriate interest on those loans, a Cook County jury disagreed," Gray said.
Canel refuted Gray's argument. "Dolan claimed
that he put up $36 million of his own money. In actuality, his public company,
Cablevision, put up $20 million, and he put up $5 million," he said.
