California Apparel News

A long-brewing lawsuit between a former swimwear executive and the Southern California company that employed him is about to go to court.

An Oct. 3 trial date in Los Angeles Superior Court was set in the legal battle between Maxine Swim Group Inc., which for years has produced branded and private-label swimsuits, and Vincent E. Rojas, who was president and chief executive officer of Maxine until he was forced out April 12, 2004.

The trial will go forward if an Aug. 18 settlement conference is not successful.

Maxine Swim Group filed the lawsuit on Oct. 21, 2004. It alleges that Rojas paid himself at least $700,000 in unearned bonuses and other money after collecting an annual salary of $275,000, and that he commingled his bank account with the swimwear company’s account.

In addition, the lawsuit questions the way Rojas engineered a Liz Claiborne swimwear license that was negotiated in 2001. A controversial clause in the agreement put the license in default if Rojas left Maxine Swim Group, court documents said.

“That [license] was highly unusual,” said Randal Whitecotton, Maxine’s attorney, who said the company no longer has the Liz Claiborne swimwear license. The lawsuit also maintains that the company’s board of directors never approved the royalty payment terms that Maxine agreed to pay Liz Claiborne, the New York manufacturing giant that has several apparel labels and licenses its names to various lines of accessories, shoes and other apparel. In court documents, the swimwear company said the payments were “based on unrealistically high sales requirements.”

Other allegations state that Rojas refused to allow Maxine to increase its swimsuit production with overseas factories by signing a five-year lease for Maxine’s manufacturing facilities in Commerce, Calif., a decision that was not approved by the company’s board of directors. The lawsuit claims the decision tied Maxine into long-term agreements that cost the company money. Court documents show that in fiscal 2004, Maxine had a net loss of $3.8 million.

Maxine is seeking close to $1 million in damages from Rojas. Rojas has denied all the charges against him. Calls to his lawyers, Kevin Brogan and Julia Birkel, were not returned.

Also named in the lawsuit are Rojas’ brother Mario, who was a vice president at Maxine, and Ken Nim, another Maxine vice president. They left the company after Vincent Rojas lost his job. The lawsuit claims they knew about the chief executive’s unauthorized bonus payments and concealed them, charges that Mario Rojas and Nim deny.

In a cross-complaint, Vincent Rojas said that Maxine refused to buy back the shares he owned in Maxine, valued at $535,711, which constituted 20 percent of the company’s outstanding stock. Rojas said in court documents that it was understood that if he were terminated, his shares of stock were to be purchased by the Roundhill Group, which owned 50.1 percent of Maxine’s stock. The shares could not be sold on the open market.

But Maxine refused to purchase the shares, saying that the stockholder agreement was terminated because Rojas had pledged his stock to Finova Mezzanine Capital Inc., which had lent money to Maxine when Rojas was running the company.

Also named in the lawsuit are Steve Orenstein and Michael O’Keefe, independent salesmen who used to work for Maxine. The lawsuit claims that after Rojas left Maxine, he formed a competing swimwear company, called Hollywood Swim, which employed O’Keefe and Orenstein as salesmen. In legal documents, Maxine claimed that the two salesmen and Vincent Rojas went around badmouthing Maxine Swim Group and its products, causing Maxine to lose business. O’Keefe has been dropped from the case after settling with Maxine and agreeing to pay the swimwear company $10,000. Orenstein is still a defendant but denies all the charges.

Name game

Since the lawsuit was filed, the Maxine Swim Group has been operating under the name Manhattan Beachwear. It was a separate swimwear company that was purchased in 1999 by Maxine of Hollywood to form the Maxine Swim Group. Despite the acquisition, Manhattan Beachwear and Maxine of Hollywood operated as separate divisions. The Manhattan Beachwear division was headed by Allan Colvin, who started Manhattan Beachwear some 20 years ago, when he acquired the Hobie swimwear license geared to juniors.

When Vincent Rojas left Maxine in 2004, Colvin was named his successor.

More than a year later, in August 2005, Manhattan Beachwear LLC purchased Maxine Swim Group Inc. through an asset sale. The company has since moved its headquarters to a 181,000-square-foot building in Cypress, Calif. It now produces its long list of juniors and misses swimwear labels, including Hot Kiss, Hobie, Surfside, Kenneth Cole Reaction and Maxine, in overseas factories.