Fox, Paine settle out of court

In August Saul Fox sued his partner Dexter Paine for allegedly trying to force him from the firm they founded a decade ago. The two have settled out of court before a Chancery Court of Delaware judge could hear testimony on the case.

The founders of California middle market firm Fox Paine & Co. may have closed the final chapter of their long and bitter break-up. Nearly four months after Saul Fox filed a lawsuit against his partner Dexter Paine in the Chancery Court of Delaware, the two have reached a settlement out of court. Terms of the settlement were not announced.

Saul Fox

In the suit, Fox charged Paine with breaches of fiduciary duty, breaches of contract, unjust enrichment and misappropriation of Fox Paine & Co.’s assets, all as a part of a calculated campaign to “drive Fox from the firm”.

W. Dexter Paine

Fox, a former lawyer and Kohlberg Kravis Roberts partner, and Paine, a Kohlberg & Co. investment professional, formed their eponymous firm in 1997 and had raised $1.5 billion  by 2000 for its first two funds. But in 2005 the two decided that Paine would raise the third fund alone through the newly formed Fox Paine Management III, while Fox would focus on “non-fund opportunities”.

After the split, Fox claims that Paine hired away “almost every employee” at the firm to work for Fox Paine Management III, after which the employees became “less respectful of, and less responsive to” Fox. Fox also alleged that Paine tried to sell a portfolio company of an earlier fund while Fox was in Australia.

Paine responded that the lawsuit was without merit.

“In setting up and managing Fox Paine Management III, LLC, we obtained a license from Fox Paine & Company and have always adhered to a set of mutually agreed upon terms for sharing resources and costs,” Fox Paine Management III said in a statement.

Fox Paine Management declined to comment on the settlement.