After a week filled with emotional testimonies, a jury in Dallas County has delivered a significant verdict, awarding $46 million in favor of Anand Gala and his company, Gala Capital Partners Cici’s, in a complicated family business dispute.
This case stems from a partnership gone awry between two cousins, Gala and Sunil Dharod, who collaborated to acquire the pizza chain Cicis Pizza.
The jury reached this decision after several hours of deliberation, establishing that Gala was indeed entitled to damages due to breaches of contract and fiduciary duties on Dharod’s part.
Despite the substantial verdict, it remains to be seen if Gala will have to choose between claiming damages for breach of contract or for breach of fiduciary duty, as argued by the defense.
The case began when Dharod approached Gala with an opportunity to purchase Cicis Pizza for $11 million in 2020, where Dharod contributed 70% of the funding while Gala contributed the remaining 30%.
Gala’s company, GCP Cici’s, along with Dharod’s businesses, SSCP Management and OnWin, took over and reorganized Cicis Pizza under a new brand, Smiley Slice.
In the arrangement, Dharod held a majority stake in Smiley Slice, while GCP Cici’s maintained a minority interest.
Gala became the Chairman and CEO of the new entity but was allegedly dismissed by Dharod shortly following the business acquisition.
Following his termination, Gala accused Dharod of consolidating control over Smiley Slice and alleged he, alongside his companies, committed breach of contract, breach of fiduciary duty, and civil conspiracy.
On the other side of the case, Dharod filed counterclaims against Gala, alleging breaches in fiduciary duty, fraud via nondisclosure, and fraudulent misrepresentation.
Betty Yang, a partner at Gibson, Dunn & Crutcher representing Gala, expressed her satisfaction with the jury’s decision, emphasizing the importance of vindicating Gala’s rights.
She articulated the emotional weight of the case, especially in the context of personal stories, relating to both her background as a first-generation immigrant and the life journey of Dharod, who emigrated from India at the young age of fifteen and achieved U.S. citizenship in his twenties.
Yang pointed out that the essence of the case revolved around how individuals utilize wealth and power in their relationships with others, stating, ‘What this case is about is the fact that Mr. Dharod has used that wealth and success and power and privilege to step on the neck of the man whose family gave him the opportunity to live the American dream.’
During the jury’s deliberation, they found that Dharod, his trust, and the associated companies failed to comply with the operating agreement concerning the management fees charged to Smiley Slice, leading to a $20 million compensation for the damages incurred.
Additionally, the jury determined that Dharod’s entities neglected to distribute profits to GCP Cici’s, awarding over $3 million to Gala’s company for that failure.
They also ruled that GCP Cici’s was owed $29,000 for missing documentation as specified in the operating agreement.
Further findings suggested that Dharod and his associates breached their fiduciary duties by conditioning GCP Cici’s receipt of distributions on the signing of a general release and by imposing an excessive management fee on Smiley Slice.
For other financial losses incurred, the jury also awarded GCP Cici’s $320,000 regarding interest paid on a loan used to purchase an unrelated franchise.
Dharod’s counterclaims against Gala were found unfounded, and he did not win any of the claims he made against his cousin.
Despite this verdict, decisions concerning attorney fees and potential equitable relief related to breaches of fiduciary duty and piercing the corporate veil await future resolution.
In their closing arguments, Yang stressed the importance of the jury’s message to Dharod by requesting they consider granting exemplary damages to ensure he understood the inappropriateness of his actions.
On the defense side, LeElle Slifer, a partner at Winston & Strawn and representing Dharod, urged the jury to focus on the contractual language rather than alleged personal attacks made during the trial.
She argued that the plaintiff’s team was attempting to distract the jury from the core issues of the case, echoing that her client’s actions were in good faith.
Slifer reflected on the emotional toll the trial placed on both parties and indicated that they would consider options for appeal following the jury’s decision.
The jury’s ruling marks a significant chapter in a deeply personal and financial dispute between family members that escalated into a major legal battle over a popular pizza brand.
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