All due respect to the parties concerned in this federal lawsuit, but it seems a little odd that a world-renowned axiologist — an expert in value — would offer up a major chunk of his life’s work without the benefit of a written contract. Unfortunately for Dr. Kurt Kaltreider, that’s exactly what happened.
On May 3, Kaltreider, a noted expert in the mathematics of value, filed a complaint in Nashville’s U.S. District Court alleging breach-of-contract wrongs against S. Guerry Simmons, a senior equity portfolio manager and principal at Nashville-based Weaver C. Barksdale and Associates Inc., which manages $4 billion for clients in 15 states.
The parties are in conflict over a stock-picking methodology Kaltreider created in 1976 using the science of Formal Axiology. The resulting “Formulas” described in Kaltreider’s complaint, linked here, predicted accurately the behavior of publicly traded stocks, the result of “a great deal of research and effort, including a number of years of back-testing.”
The short version of the history portending this lawsuit is that Simmons had agreed to use Kaltreider’s investment selection procedures for Simmons' clients at Weaver C. Barksdale, with restrictions thrown in to protect Kaltreider’s knowledge and future ability to earn revenue from that knowledge. The duo's verbal deal also called for Kaltreider to be paid as clients benefited and Simmons’ roster of customers grew.
It’s not clear when things went awry. Kaltreider and Simmons had agreed to a revenue sharing arrangement, which from 1998 through 2008 rendered Kaltreider nearly $700,000.
That money is long gone as Kaltreider is filing his lawsuit without the benefit of an attorney and he’s not sure how much he’s owed.
“That’s one of the reasons I’m asking the court to order an accounting,” Kaltreider said.
Despite the lack of written documentation, Kaltreider is nonplussed.
“This case is as clear as it possibly could be and I have no misgivings about representing myself,” Kaltreider said. “My cousin is a federal judge, I have other lawyers and judges in my family and they’ve all helped me draft this complaint and will be helping me as we go along.”
Interestingly, according to Kaltreider’s complaint, Simmons first brought legal action against Kaltreider in the summer of 2008 when the investment advisor filed asked a federal judge to annul any and all contracts between the two. Apparently, that request was later withdrawn.
Now, Kaltreider is asking the court to force Simmons to comply with all provisions of the verbal joint venture agreement and pay him the money he's due under that contract.
Simmons, who joined Barksdale in 1998, was contacted but had no comment on the pending case.