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Mr. Beda, and the Commissioner, executed on July 1, 1993, no
portion of the purchase price was allocated to the Xerox lawsuit.
The Xerox Lawsuit: Post-1986
Following the buy out of Wehr, the S corporations continued
the lawsuit against Xerox in Wehr's name. The primary disagreement
of the parties to that lawsuit during the post-1986 period
concerned the nature and extent of the damages caused by Xerox's
failure to complete the implementation and installation of the
computer system. The parties fought over: (1) Whether Xerox could
examine the S corporations' audited financial statements with
respect to the issue of lost profits (even though the damages were
alleged only with respect to Wehr); (2) whether Wehr could continue
to pursue noncontract claims under the so-called economic loss
doctrine; (3) whether Wehr had a duty to mitigate damages following
the termination of services by Xerox, and if so, when would the
computer system project have been completed if it had been
continued by Xerox or another party; and (4) whether Wehr could
introduce a new method of calculating damages that produced figures
ranging from $20 million to more than $120 million in damages.
In late 1992, the District Court ruled that Wehr could
introduce evidence as to the new method of calculating damages at
trial; immediately thereafter, Xerox sought to settle the lawsuit.
Initially, Xerox offered between $2 million and $3 million, but
petitioner responded that he would not accept less than $10
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