Portion of Liberian insurance judgment case settled for $225K

By Nicholas Malfitano | Dec 29, 2016

PHILADELPHIA -- A federal judge has approved a settlement between a major insurance company and a co-respondent involved in a case surrounding the pursuit of a multi-million-dollar Liberian judgment.

On Dec. 21, CIGNA Worldwide (CWW) announced it had reached a settlement with Samuel M. Lohman, a U.S. citizen who resides and works in Switzerland and one of the respondents involved in the Abi Jaoudi and Azar Trading Corporation's (AJA) long-standing action against CWW, for counsel fee sanctions related to his being found in civil contempt.

Per the terms of the settlement, Lohman will pay a total of $225,000 in gradual installments by June 30, 2018, in order to be dismissed entirely from the litigation. The first $75,000 is due before the end of the year; an additional $50,000 is due before June 30, 2017; another $50,000 is due before Dec. 31, 2017; and the final installment of $50,000 is due before June 30, 2018.

Further, the settlement terms bound Lohman to withdraw any objections or appeals to his previously being found in civil contempt by the U.S. district court, cease to further aid and/or abet enforcement of the AJA claim, and did not act as a release of compensatory sanctions for Lohman’s co-respondents Martin Kenney and Garrett Kelleher and AJA -- only that the sum, which may eventually be paid by those parties, will be reduced by the $225,000 Lohman will pay here.

In a letter to U.S. District Court Judge Paul S. Diamond dated Dec. 21, Lohman’s counsel, Mark E. Gottlieb of Offit Kurman in Philadelphia, stated Lohman had authorized the initial payment of $75,000 to be deposited into the account of his attorneys, as ready for transfer upon Diamond’s approval of the settlement.

After a hearing held on Dec. 14 in the James A. Byrne Federal Courthouse in Philadelphia, Lohman was ordered by Diamond to surrender his passport to U.S. Marshals present in the courtroom, and to stay within the boundaries of the nine counties of the U.S. District Court for the Eastern District of Pennsylvania.

But, subsequent to his approval of CWW’s settlement terms with Lohman on Dec. 22, Diamond ordered the return of Lohman’s passport to him as soon as possible.

“On Dec. 14, 2016, Samuel Lohman appeared before me in connection with his citation for civil contempt. At that time, I confiscated his passport pending his deposition respecting his ability to pay the counsel fees Cigna Worldwide Insurance Co. has sought as a sanction for his civil contempt,” Diamond said.

“CWW, its indemnitor Chubb Limited, and Lohman have entered into a settlement agreement respecting CWW’s claim for counsel fees. Lohman, who is an American citizen, has requested the return of his passport so that he may return to Geneva, where he resides. CWW has no objection to his request. Accordingly, I order the [U.S.] Marshal’s Service and the Clerk of Court to return Lohman’s passport to him at the earliest opportunity.”

Kenney and Kelleher did not attend the Dec. 14 hearing, after being ordered to do so.

Though Kenney, a dual Irish and Canadian citizen based in the British Virgin Islands who practiced as a fraud and asset recovery lawyer, and Kelleher, an Irish real estate developer, were also previously found in civil contempt of U.S. federal court in July, they were not present at the hearing due to “jurisdictional issues," despite risking criminal contempt charges by their absence.

New York City attorney Joseph H. Lilly, III, said neither Kenney nor Kelleher had any comment regarding Lohman’s decision to settle with CWW.

On CWW/Chubb's part, it offered the following: “Chubb declines to comment on the settlement agreement with Mr. Lohman. With regard to Mr. Kenney and Mr. Kelleher, the court has not yet decided on an award for attorney’s fees as a sanction for their contempt of court.”  

Case History

In 1991, AJA, owner of commercial property in Liberia, brought action against CWW, in connection with damage the plaintiffs’ commercial properties sustained in the Liberian civil war.

After a jury verdict for AJA, O’Neill reversed its findings and entered a judgment in favor of CWW, finding the property damage was subject to the policy’s war risk exclusion.

However, AJA later refiled the case against CWW in a Liberian court and won a judgment of $66.5 million in 2000. When AJA tried to enforce the judgment, O’Neill issued an injunction in 2001, prohibiting any and all attempts to collect the $66.5 million judgment award in question.

The following year, a Liberian court reaffirmed the multi-million-dollar judgment and labeled O’Neill’s injunction “unenforceable.”

Judge Diamond says Kenney and Lohman, a United States citizen and a member of the Oregon bar with an office in Switzerland, “acted in concert to violate O’Neill’s injunction.”

In February 2005, Kenney and Lohman formed CC International Ltd., an entity to “obtain access to a court of neutral jurisdiction to determine the validity of their claims” -- such as the enforceability of the $66.5 million Liberian judgment.

In return for CCI stock, AJA assigned CCI title to rights to receive proceeds from the enforcement of the enjoined Liberian judgment.

In November 2008, CWW filed a motion for contempt against AJA, a Liberian receiver, Lohman and others for violating O’Neill’s injunction.

CWW also sought to identify the funders of the efforts to enforce the Liberian judgment. After a long discovery process, it was learned in August 2014 that Kelleher had invested $2.85 million in efforts to enforce the aforementioned Liberian judgment. On Nov. 12, 2014, CWW served Kelleher in Ireland with papers naming him as a contempt party.

Judge Diamond previously said the actions of AJA and the respondents it recruited “made repeated efforts to contravene this Court’s judgment, nullify this Court’s injunction, and defy this Court’s orders,” actions Diamond labeled as “an affront to the Courts of the United States.”

Contempt Proceedings

Last August, CWW counsel detailed the compensatory relief damages sought from AJA and contemnors Lohman and Kelleher in this action as $14.6 million, with Kenney being limited to a maximum amount of $10.4 million, if found jointly and severally liable along with Kelleher.

Less money is sought from Kenney due to his previous payment of certain costs for litigation heard in the Cayman Islands with Chubb (formerly ACE). Though it paid a comparatively smaller amount in legal fees for Chubb attorneys assisting in the Cayman action, Chubb is paying CWW’s larger legal fees in the instant Pennsylvania matter.

Further, the August motion from CWW now indicates if the final judgment were approved, AJA, Kenney and Kelleher would need to pay the funds, jointly and severally, within 30 days -- and CWW asked the court for post-judgment interest to be levied in the form of a daily $10,000 fine imposed on behalf of the district court, for each day the damages go unpaid.

If the damages go unpaid, the motion also called for arrest warrants to be issued for Kenney and Kelleher to be issued, if necessary.

Further, in the event any of the contemnors were unable to satisfy the judgment, were it to be approved, they would be required to submit a payment plan for said judgment within 14 days of its approval.

Diamond has not yet determined the final amount in damages to be paid to CWW. At the Dec. 14 hearing, Diamond alluded to attorneys’ fee claims sometimes being inflated and suggested CWW attempt to settle with the respondents, before starting his examination of what portions of the attorneys’ fee award sought by CWW are reasonable and what portions are not.

U.S. District Court for the Eastern District of Pennsylvania case 2:91-cv-06785

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com.

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