NEW YORK — Michael Glasser and Jerome Dahan have walked out as partners in Seven for All Mankind, known for its Seven Jeans label, and have filed a lawsuit against third partner Peter Koral for fraud, breach of fiduciary duty and breach of oral contract.

The suit was filed last month in California Supreme Court in Los Angeles. While Glasser, who addressed the sales and merchandising side of the business, and Dahan, designer, still own 50 percent of the Seven Jeans business, Glasser said he and Dahan no longer have anything to do with the company.

"Everything in the stores now was designed by Jerome, but once the new merchandise goes in February, [customers] will see a difference," Glasser said.

Koral is now running Seven on his own and Glasser and Dahan have moved on to create a new firm, Citizens of Humanity, a jeans line planned to launch at the Fashion Coterie here next month.

"It will be of the same ilk that Seven was as far as the prices are concerned," Glasser said. "We will sell to the same accounts…with new threads and pocket designs."

Glasser said the Seven Jeans business had sales of $60 million in 2002. According to court papers, Glasser and Dahan are suing Koral for amounts exceeding $20 million, plus unspecified punitive damages.

Reached by phone Thursday, Koral said, "I have no comment. Thank you."

Started by Glasser and Dahan in early 2000, the partners brought in Koral in spring 2000 to head up the financial aspect of the business. According to the lawsuit, the oral contract between the three said that Glasser and Dahan combined would own 50 percent of the business and Koral would own the remaining 50 percent.

According to the court papers, sales in 2001 exceeded $13 million, and had net profits exceeding $2 million. In 2002, the suit alleges that net profits were more than $20 million.

In a separate action, lawsuits are pending over trademark rights between Seven for All Mankind and Seven Licensing Co., a new company formed by Tarrant Apparel Group chairman Gerard Guez when he acquired the U.S. rights to the French jeans label Seven7.

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