Business

Silpada’s court fight over disputed merchandise turns to $61,000 in legal fees

Background: Why Silpada Designs closed

Lenexa-based Silpada closed last year and sold off most of its merchandise. The remains, a lawsuit said, were carted away by employees under "the cover of darkness."
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Lenexa-based Silpada closed last year and sold off most of its merchandise. The remains, a lawsuit said, were carted away by employees under "the cover of darkness."

The Gold Rush Exchange may have to pay more than $61,000 in legal fees of the defunct Silpada Designs Inc. in a continuing courthouse battle over $300,000 worth of jewelry and merchandise.

It’s the latest twist in Silpada’s journey from highly successful Lenexa startup to money-losing retailer that shocked its sales reps and customers alike with sudden news last year that it was shutting down.

Silpada had said it decided to close because it couldn’t keep fighting multiple trends working against its business model. A company official originally said Silpada still was profitable but then acknowledged that the business had been losing money for years and that the owners decided to stop covering its losses.

Gold Rush said it bought the disputed Silpada goods legally from Silpada employees after the summer shutdown. Silpada said in court in January that Gold Rush conspired with the former Silpada employees who used their “insider knowledge” and a forklift to steal the merchandise. Gold Rush and the former employees have disputed the claims the merchandise was stolen.

The $61,000 legal tab stems from a longer battle over possession and control of the merchandise while the larger dispute progresses though the legal system. The court has decided to appoint a receiver to take possession of the merchandise.

Gold Rush’s attorney, Connie Shidler, called the amount of claimed legal fees “ridiculous” and said she will continue to fight court decisions that lead to the hefty potential legal bill in the still-unresolved battle.

Silpada’s attorney, Patrick McInerney, said he could not confirm the amount but said it stemmed from the company’s legal battle to protect the merchandise covered by a temporary restraining order issued last November. The restraining order prohibited Gold Rush, owned by businessman William Reneau, from selling or offering the merchandise for sale.

“We had to do a lot of work to try to protect our client’s property, particularly when Reneau continued to violate the order,” McInerney said.

Gold Rush has said in court filings that all of the items remain in the same location and in the same condition as when the order was given.

Jackson County Circuit Judge Justine E. Del Muro held in late February that Gold Rush was in contempt for violating the order, and she allowed Silpada to seek payment of its legal costs from pursuing that finding. An invoice to Silpada that was submitted in court itemized $61,397.92 in fees and costs from the contempt issue.

Shidler petitioned to get Del Muro first to reconsider the finding and then to set it aside. Failing each time, Shidler then asked the Missouri Court of Appeals to intervene, and it rejected that request Thursday.

In court filings, Shidler argued that the court had based its finding on internet sales offers by Stephen Edwards, who had purchased some of the Silpada goods before the temporary restraining order was issued.

Shidler’s filings said it was impossible for Gold Rush to comply with the restraining order regarding the items Edwards bought because it no longer possessed them at the time of the order. They said Gold Rush could not control what Edwards did because he was not an employee, nor could Gold Rush remove Edwards’ online postings that offered the merchandise for sale.

“The Court has seen this differently but I cannot say that I understand how it drew the conclusions of violation that it did, and I will continue to fight to make this right,” Shidler said in an email.

In the middle of the controversy are Silpada-labeled boxes, jewelry and materials, as well as purses, scarves and other accessories that the company had earmarked for destruction. They included returned purchases, odd-lot items and “failure to launch” merchandise that Silpada said fell short of its “rigorous standards for Silpada-branded merchandise.”

This article was updated to correctly identify the Missouri Court of Appeals.

Mark Davis: 816-234-4372, @mdkcstar

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