Judge issues arrest warrants on attorney, funder pursuing $66M Liberian judgment

By Nicholas Malfitano | Mar 26, 2017

PHILADELPHIA – The latest development in a lawsuit surrounding the pursuit of a multimillion-dollar Liberian judgment has resulted in a federal judge issuing bench warrants for the arrests of a British Virgin Islands-based attorney and a prominent Irish real estate developer funding it.

On March 17, U.S. District Court Judge Paul S. Diamond approved warrants for the arrests and extraditions of Martin Kenney, a dual Irish and Canadian citizen based in the British Virgin Islands who practiced as a fraud and asset recovery lawyer, and Garrett Kelleher, an Irish real estate magnate.

Kenney and Kelleher were previously found in civil contempt of U.S. federal court in July and absent from a related Dec. 14 court hearing due to “jurisdictional issues.”

That same absence led to formal charges of criminal contempt, and for Diamond to order the opening of a criminal proceeding against Kenney and Kelleher for prosecution by the U.S. Attorney’s Office for the Eastern District of Pennsylvania on Feb. 8.

Kenney and Kelleher were further ordered to appear in person at a hearing on April 25, to show why they should not be found in criminal contempt by the Court.

Kenney released a statement through New York City attorney, Joseph H. Lilly III.

“It is extremely unfortunate that this case, which commenced in a neutral forum (the Cayman Islands) to resolve a conflict between inconsistent judgments of two sovereign nations, has resulted in the issuance of bench warrants for what is a misdemeanor charge of criminal contempt against Mr. Kelleher of Dublin and myself by the U.S. District Court in Philadelphia. I respect the District Court, and I have devoted my life to upholding the rule of law by representing victims of fraud and abuse to provide them with economic justice. Mr. Kelleher, a well-regarded Irish businessman, ‎provided funding to support my clients’ cause,” Kenney said.

“In this case, I was instructed as a foreign lawyer, based in the British Virgin Islands and acting for the Commissioner of Insurance of Liberia, to bring proceedings against a foreign company, ACE Limited (now known as Chubb), in a neutral forum, which was the Cayman Islands. I did so by instructing Walkers (Cayman) and the late Lord Patrick Neil QC (London). I also did so nine years after CIGNA, the U.S. insurer of more than 23 damaged Liberian businesses, had sold its Liberian book of risks to a foreign company, ACE, then-domiciled in the Cayman Islands,” Kenney continued.

Kenney said the U.S. District Court “has determined that...it remains the superior jurisdiction and that its order overrides the orders of another state, i.e. Liberia.”

“No U.S. court has previously exercised its injunctive power over a non-resident, non-U.S. citizen, and non-party to a U.S. case with no minimum contacts with the forum. This case therefore remains a troubling state of affairs. I am confident that the U.S. Court of Appeals for the Third Circuit will conclude that the District Court has gone beyond the limits of its powers in this case – on the basis of the constitutional guarantee of due process (or of substantial justice and fairness) articulated by the Supreme Court of the U.S. in a long line of authorities which place rational limits on the long-arm powers of U.S. courts,” Kenney said.

When reached in an interview appearing in Reuters, Kelleher offered he had been told the issuance of the arrest warrants was “unprecedented.”

Counsel for Cigna Worldwide (CWW) offered no comment on Diamond’s issuance of the arrest warrants for respondents Kenney and Kelleher.

Case History

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

After a jury verdict for AJA, U.S. District Court Judge Thomas 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 multimillion-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 Charges and Settlement 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 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.

Moreover, 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.

In December, Lohman settled with CWW for the amount of $225,000 and was dismissed from the litigation.  

A Jan. 31 letter from CWW counsel Donald W. Hawthorne stated CWW and Chubb were of the belief Kenney and Kelleher were unwilling to engage in settlement negotiations, in conjunction with their continued contesting of the U.S. District Court’s jurisdiction over them.

Kelleher, who represents himself in this matter, responded in February via letter to deny those assertions.

“I wish to inform you that Mr. Kenney and I have each recently entered into nondisclosure agreements with CWW and Chubb (Mr. Kenney on Jan. 30 – the day before Mr. Hawthorne’s letter – and myself on Feb. 7) for the purpose of conducting settlement discussions with CWW and Chubb,” Kelleher said.

“While those discussions have not commenced as of this date, I wish to clarify for the record my unequivocal intention to participate in such discussions in good faith, contrary to the implications of Mr. Hawthorne’s Jan. 31 letter, and I am confident that Mr. Kenney has the same intention,” Kelleher added.

A formal response from CWW said it was “mystified” by Kelleher’s letter.

“While CWW remains open to listen to and participate in good faith in efforts to resolve the contemnors’ liability for compensatory sanctions – including on an ‘ability to pay’ basis – there is no indication that the conversations initiated to date will lead to a resolution, or if they do, how long that process would take,” a Feb. 22 letter from Hawthorne to Diamond read.

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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