FEBRUARY 26, 2024 – (Cont.) Our firm had a client who bought a local short-line railroad out of bankruptcy. The company had gone off the rails financially, and our client was able to purchase it for scrap value. Except our client, being a very clever fellow, knew it was worth far more than salvage. While the debtor, the debtor’s creditors, the bankruptcy trustee, the attorneys, and valuation experts, along with the bankruptcy judge were focused on the value of recycled steel, our guy was inspecting the gold mine behind the scenes: a gazillion ancient crossing agreements between the debtor’s predecessor (a major railroad company before the short line outfit was spun off) and lots of very wealthy owners of exclusive properties on the the “exclusive” side of the railroad tracks. The crossing agreements granted the right to cross the tracks between the public byway on one side and the very fancy homes on the other—many of them located on spacious lots on Lake Minnetonka, the premiere lake of the Twin Cities Metro Are.
With modest sleuthing our guy confirmed that none of the rich people had been paying more than a token amount under any of the crossing agreements, even though the agreements included an express clause allowing the railroad to increase the rent at any time after a month’s notice. There was no restriction on the amount of any increase.
Again, everyone else in the world had been looking at the railroad as a railroad, not as a real estate company. The crossing agreements and the relatively insignificant revenue they generated were dismissed as having little value.
After buying the bankrupt company for a song—short and sweet—our client thanked the bankruptcy lawyers of our firm who’d managed the purchase on his behalf. He was then introduced to me, one of the “real estate” lawyers in the firm’s commercial department. That’s when Ari, I’ll call him, informed me of his gold mine: all those crossing agreements.
Ari was himself a lawyer, but years before he’d become a savvy full-time investor all over the map, but mostly in his home state many states away. Somehow he’d caught wind of the railroad opportunity in Minnesota, and here he was, ready to exploit it. He was definitely not “Minnesota nice.” He was assertive and candid to the point of being offensive, but in all honesty, I found his style as refreshing as it was challenging. You always knew where he stood, and he stood to leverage every advantage he had, starting with intellectual power that exceeded everyone he challenged.
My assignment was to fire off letters to all those rich people giving notice that starting in 30 days, the monthly price for the privilege of crossing Ari’s newly acquired railroad tracks would jump from $100 to $15,000. “We’ll start there,” said Ari, “and see how mad they get before we back down to $12,000, if we have to.” [1]
As I’d predicted, my phone started ringing off the hook, and the callers weren’t phoning to wish me a happy day.
I was then directed to other efforts to boost revenues of the railroad’s properties, all of which paid off; some after litigation—but litigation that Ari had anticipated and analyzed thoroughly before initiating. He was among a number of lawyers I’d had as clients—often the most difficult to manage. At his direction and substantial input, I brought a procedural motion. He insisted on flying up to Minnesota to attend the hearing. It wasn’t necessary, but fine—he was the client, he was paying for the motion, he had every right to be present for the courtroom show, even though he had no speaking part.
On the morning of the event, Ari appeared at my office. For a show of force he wanted two, not just one lawyer representing him in the courtroom. Accordingly, he conscripted my partner John—one of the bankruptcy lawyers who’d gotten to know Ari well and who’d referred Ari to me. A half hour before showtime, the three of us hiked over to the courthouse. Ari was a fast talker but not necessarily a fast walker, which forced John and me to slow our normally faster pace.
The hearing was unremarkable. John and I made our points in support of the motion, the other side responded, we rebutted, the other side argued again, we said we had nothing more, and the judge said he’d take things under advisement. We—including Ari—packed up our briefcases and headed back to our office building.
From the moment we exited the courtroom, Ari had things to say. He reminded me of a sports commentator ramping up his play-by-play summary of an NFL game. By the time we were free of the courthouse itself, Ari had turned up the volume as well as the cadence of his post-game assessment. John and I were mostly focused on crossing the street without getting killed.
The next intersection was the busiest in the whole of downtown back then—Seventh and Marquette. If you valued your life, you definitely wanted to be paying attention to the speeding traffic, turning traffic, and turning speeding traffic. Unless you were Ari. If you were Ari, you remained focused on the ongoing legal strategy of the case that had brought him to town.
“Furthermore [this], and moreover [that],” Ari said with an outdoor voice, which is what my wife would tell our kids was a voice too loud for inside, “and if the judge rules [this way], we should proceed [one way] and if he rules [that way], we should proceed [another way].”
His monologue broke a big sweat just as the three of us stepped off the curb and onto the street and the light for us turned yellow. It was a moment in which a split-second decision had to be made: commit and scurry across before light turned (too) red and the cross traffic roared to life OR step back onto the curb and wait for the light to cycle back to green. Our decision was made for us by Ari, walking between John and me, when he stepped forward, not back, and shouted out another “Furthermore.”
Okay, I thought. You’re sticking your foot—and neck—out? You leave John and me no choice. We have to stick with you, escort you across safely, or go down with you—three pancakes on hot pavement in the middle of downtown Minneapolis. I was ready to drag him across if I had too, and I could tell that John was in synch with me, however much Ari was oblivious to the dangers around us.
What my evolutionary instincts hadn’t anticipated, however, was that at the very nano-second after “Furthermore” left Ari’s tongue, one of his shiny black dress shoes caught the pavement and launched him out and down in a spectacular belly-flop, accompanied by the flat slap of his heavy briefcase against the unforgiving street. Cars screeched. John swore. My heart skipped about five beats. And Ari? Ari kept talking. “Moreover . . .” he said from his sprawled out position.
Frantic, John and I interrupted him. “Ari, you okay? Quick we’ve got to get to the other side!”
“Yeah I’m okay and I think if the judge denies our motion, we’ll need to . . .”
Ari’s physique was not that of an athlete, but his lack of urgency, I figured, was a side effect of his one-track mind. Not even three lanes of surging vehicles, including a city bus, could derail it.
Fortunately, none of got killed or injured. One side of Ari’s briefcase, however, got badly scratched.
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© 2024 by Eric Nilsson
[1] Ari was unmoved by people’s rancor. He loved the game of playing hardball but also knew exactly when to fold. I was surprised by how lucrative his gambit turned out.
