Lubells File Bella Dahl Countersuit
Jolna Design Group, the Sun Valley, Calif.-based maker of Bella Dahl and Jefri Jeans, is the defendant in a breach of contract cross-complaint filed on Sept. 17 in Los Angeles Superior Court by the labels’ former owners, husband-and-wife design team Jeffrey and Kim Lubell, in an effort to regain ownership interest in the labels after several months of failed negotiations.
This countersuit alleges that Jolna breached an agreement to pay 20 percent of the first year’s profits and 25 percent of ownership in the company, as well as committing civil conspiracy and fraud since September 2000.
“It’s a great company and a very prestigious label,” said Jeffrey Lubell. “We just want what was promised to us. As little as it is, it’s better to have a smaller piece of something than a larger piece of nothing.”
The Lubells said they believe that Jolna’s president and chief executive officer, Kerry Jolna, manipulated them out of ownership of the company they founded.
“We asked [Kerry Jolna] for a written agreement and our contract in writing, spelling out the terms of our oral agreement, and what he gave us stated everything but that,” said Jeffrey Lubell. “Now we’re looking for a court appearance with judge and jury.”
The Lubells said they were seeking a partnership to help solve the company’s financial troubles when they entered into an agreement with Jolna. Prior to making a verbal agreement with Jolna, the Lubells said they received similar offers from Koos Manufacturing Inc. and Tony Podell Inc. The designers said Jolna promised them a 50 percent stake in the company, but reduced their stake to one-third of the company’s profits, and then reduced it further to 20 percent of the first year’s profits, Jeffrey Lubell said.
“We didn’t get anything in writing because there was so much confusion at the time,” he said. “Our business was exploding and we needed financial support and someone to help us with production.”
Jeffrey Lubell said the company employed the couple as outside contractors, paying them a bi-weekly salary of $6,800. The couple headed up the divisions until it announced in May its decision to enter a new partnership deal with Vernon, Calif.-based private-label denim manufacturer Azteca Production International Inc. to produce a new denim line, Hippie Jeans. A month later, Jolna Design Group filed a lawsuit against the Lubells in Los Angeles Superior Court, claiming that the couple stole trade secrets and competed unfairly against the company when they left to launch a new denim line with Azteca.
At the time, Jolna officials said the lawsuit did not seek specific damages; rather, the filing was an attempt to come to an agreement and “restrain the defendants’ conduct.”
According to the report, Bella Dahl was worth $2 million when Jolna acquired the company in a private sale from CIT Commercial. In recent months Bella Dahl and Jefri Jeans have reported strong business.
Jolna’s attorney, Marc Brutzkus, partner at Ezra, Brutzkus & Gubner LLP, said both parties had preliminary conversations about settlement. However, the Lubells’ decision to countersue is “throwing fuel on the fire.”
“Frankly, we purchased the trademark and other assets through CIT in a legitimate sale,” said Brutzkus. “They didn’t have the working capital behind them and they didn’t have the finances to get pending orders out; they were up against a brick wall and [Jolna] helped them out of it.”
Brutzkus, who reviewed the allegations that the Lubells were forced to back out of another financial offer, said he was unaware of any prior deals with outside companies, but offered, “[The Lubells] would have been crazy to pass on any financial commitments that would have greatly benefited them because they had very few options.”
A status conference for both parties has been set for Jan. 3, 2002 at Los Angeles Superior Court. —Claudia Figueroa
