By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Lawrence McBride had reason to celebrate when he met James Halpin for dinner that spring night. With help from his pal Halpin, then chief executive of Dallas-based CompUSA Inc., McBride had just pitched a deal to expand the retail chain south of the border, a project he hoped would one day make him rich.
Halpin initially had been lukewarm about expanding the computer and software chain into Mexico, fearing that the market for personal computers there was too soft, but he nevertheless cleared the way for McBride--a Highland Park neighbor and friend--to sell the idea to his board.
Halpin purposely stayed away when McBride and his business partners made their presentation to other company executives on an April afternoon in 1998. The partners promised that if the company gave their team exclusive rights to open stores in Mexico, they would do all the legwork and find an investor. For more than a year, McBride had discussed the idea with Halpin, but on that day the CompUSA CEO simply introduced everyone and exited the boardroom before McBride launched his presentation. Halpin did not want to give the appearance that he was interfering, McBride says.
When the other CompUSA corporate officers liked the proposal, Halpin invited McBride to celebrate. The two men went alone to Bob's Steak and Chop House and toasted the Mexico plan; the CompUSA CEO paid the bill.
"Now you are on your own," McBride remembers Halpin told him. Just how little McBride could count on his friend wouldn't become clear until many months later.
Unfortunately for McBride, the idea of CompUSA in Mexico would transform into something altogether different for Halpin after McBride and his partners started wooing Carlos Slim Helú, reportedly the richest man in Latin America, to invest in their franchises.
Three years later, McBride's deal is dead. So is his friendship with Halpin. Slim owns CompUSA. Yet McBride still might become a very wealthy man, thanks to 12 Dallas jurors who taught CompUSA and its former chief executive a simple $454 million lesson: Friendship and business don't mix.
The verdict is an eye-popping amount even for Slim, the man caught in the middle of the deal gone bad. With a net worth of nearly $8 billion, according to Forbes magazine, Slim's various entities control the retailer Sanborns; the Mexican telephone monopoly Telemex; Mexico's largest restaurant chain; insurance, mining and manufacturing companies; Prodigy Communications in Mexico as well as a part of the U.S.-based Internet company; and a joint-venture Spanish-language Web portal with Microsoft. Since his investment company Grupo Carso paid $702 million in January 2000 for the 75 percent of the company it didn't already own, Slim also controls CompUSA.
In early February, after a three-week trial, a Dallas jury ordered CompUSA, Halpin, Slim and the Mexican financier's companies to pay McBride and his partners $90 million in actual damages and $364.5 million in punitive damages for breach of contract. The jury decided that they had unfairly squeezed McBride and his partners out of the franchising relationship McBride initially proposed.
Mark Werbner, the lawyer who took the lead at trial representing McBride's group, argued that Halpin, Slim and the financier's relatives and associates duped the Dallas businessmen. "You are going to hear a story, a true story, of greed, abuse of power and corporate conniving and how a friend sold his friend down the river, how Slim stole this company cheap," Werbner promised in his opening statement.
A San Antonio native with a nasal voice and hunched posture, Werbner does not dominate a courtroom physically, but he nevertheless impressed the jury with deft digs at opposing witnesses He impressed them enough that after the trial the jury forewoman, a high school French teacher, invited Werbner to speak to her students.
In contrast, Halpin, who enjoys the good looks of a television anchorman, a large head full of thick auburn hair and a prominent jawline, earned the disdain of most jury members. "He would sell his mother," one juror suggested in an interview after the trial. The panel targeted Halpin to pay personally slightly more than half of the punitive damages.
Halpin may yet slip away unscathed. The former CEO, who departed CompUSA two months after Slim bought the company, left with a golden parachute worth $21 million and a contract that might require CompUSA to pay any judgments entered against him. "If we had known that, we may have decided differently," says one jury member about Halpin's contract, which she read about in the newspaper after deliberations.
In a hearing last week, Joe Harrison, the lawyer Halpin employed after the verdict, joined the other defense counsel in arguing again that CompUSA never completed a deal with McBride's group and that Slim was never bound to invest in it. Therefore, they contended, McBride and his partners had no legal rights to claim anything when Grupo Carso announced it had bought CompUSA for $10.10 a share.
The story that the defense told was simple. McBride and his partners failed to deliver a viable Mexican franchise proposal for CompUSA. Halpin and his board, having been introduced to Slim by McBride, agreed when the Mexican financier offered to buy the company. Everything else--like a soured friendship--mattered little and, more to the point, called for guesswork. "The plaintiffs got the jury all stirred up speculating about phone calls and e-mails that might have been. They [the jury] wrote their own script," Harrison told the judge at the post-trial hearing last month.