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Rein v. Socialist People's Libyan Arab Jamahiriya

July 7, 2006

DENISE H. REIN, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF MARK ALLEN REIN, DECEASED, ET AL., PLAINTIFFS,
v.
THE SOCIALIST PEOPLE'S LIBYAN ARAB JAMAHIRIYA, LIBYAN EXTERNAL MEMORANDUM SECURITY ORGANIZATION, A/K/A JSO, A/K/A AND JAMAHIRIYA SECURITY ORGANIZATION, ORDER LIBYAN ARAB AIRLINES, LAMEN KHALIFA FHIMA, A/K/A MR. LAMIN, A/K/A A AL AMIN KHALIFA FHIMA, ABDEL BASET ALI AL-MEGRAHI, A/K/A ABDEL BASET ALI MOHMED, A/K/A ABDEL BASET ALI MOHMED AL MEGRAHI, A/K/A MR. BASET, DEFENDANTS.



The opinion of the court was delivered by: Platt, District Judge

MDL 799

Before the Court are two motions concerning a contingency fee dispute between Sonnenschein Nath & Rosenthal ("SNR") and Constantine Cannon ("CC"):

1. SNR moves to retain the full contingency fee of $1.6 million it claims to have earned on behalf of Rose Copeland;

2. CC moves to retain the full contingency fee, or in the alternative, for 20% of Rose Copeland's total recovery.

For the following reasons, SNR's motion is GRANTED; CC's motion is DENIED.

BACKGROUND

As the facts concerning this long-running multi-district litigation have been adequately recorded in the prior decision of this Court, see, e.g., Rein v. Socialist People's Libyan Arab Jamahiriya, 995 F. Supp. 325 (E.D.N.Y.), aff'd, 162 F. 3d 748 (2d Cir. 1998), the facts discussed herein are limited to those relevant to the instant motions.

As part of this litigation against Libya, Rose Mary Copeland ("Mrs. Copeland") asserted a claim on behalf of her daughter, Dedera Lynn Woods, her son-in-law, Joe Nathan Woods, Sr. ("Joe Sr."), and their minor children, Chelsea Woods ("Chelsea") and Joe Nathan Woods, Jr. ("Joe Jr."), all of whom were killed in the bombing of Pan Am Flight 103 over Lockerbie, Scotland. (SNR Mem. Supp. and Opp. ("SNR Mem.") at 4).

In December of 1997, Mrs. Copeland and her daughter, Patricia Jones, (collectively, the "Copeland family") retained Douglas Rosenthal ("Rosenthal") of SNR on a contingency basis to pursue their claims against Libya. (CC Mem. Supp. ("CC Mem.") at 4). Mrs. Copeland's claim was asserted in her individual capacity and as representative of the estates of her grandchildren. (R. Copeland Decl. ¶ 2, Ex. A; T. Copeland Decl. ¶ 5). This 1997 retainer agreement stated that SNR would undertake "to represent you personally and in your capacity as personal representative of the estate in connection with litigation against the government of Libya and other defendants for compensatory or punitive damages as a result of the destruction of Pan Am Flight 103 (referred to herein as 'the Action')." (R. Copeland Decl., Ex. A). The agreement also covered representation in "any and all proceedings ancillary to the Action, including appeals." (R. Copeland Decl., Ex. A). A 2001 retainer agreement between Patricia Jones and SNR explained that "ancillary proceedings" included "efforts to obtain monies from third parties, including the United States government, based on your status as a victim family member." (R. Copeland Decl., Ex. B.; Rosenthal Decl. ¶ 13). Pursuant to these retainer agreements, the Copeland family was obligated to pay SNR "20% of all amounts recovered by you in or as a result of the Action." (R. Copeland Decl., Exs. A, B).

From the fall of 2002 to the fall of 2003, Libya reached a settlement agreement with 269 of the 270 claimants, including Mrs. Copeland. (CC Mem. at 5). The settlement agreement included payments of up to $10 million per decedent. (CC Mem. at 5). To date, a total of $16 million has been released from escrow as proceeds for the wrongful deaths of Joe Jr. and Chelsea Woods, the grandchildren of Mrs. Copeland. (CC Mem. at 6).

Mrs. Copeland was appointed by a New Jersey probate court as administrator of the estates of Chelsea and Joe Jr. (CC Mem. at 6, 7). The Woods family, i.e. the family of Mrs. Copeland's son-in-law and her grandchildren's father, had also sought to administer the estates of Chelsea and Joe Jr., but they were unsuccessful. (Rosenthal Decl. ¶ 15). In the fall of 2003, however, Mrs. Copeland and the Woods family agreed to share equally in the recovery from Libya. (T. Copeland Decl. ¶ 12; Rosenthal Decl. ¶ 15). As part of that agreement, the 20% attorneys' fee or $3.2 million, was also to be divided equally between SNR and Kreindler & Kreindler, as counsel for the Woods family. (Potter Aff. ¶ 3).

After the New Jersey probate court approved this arrangement, an alleged illegitimate child of Joe Sr. came forward and asserted a claim to the proceeds of the settlement. (T. Copeland Decl. ¶ 12; Rosenthal Decl. ¶ 16). In October 2004, the New Jersey probate court approved a further settlement agreement, in which this illegitimate child would also share in the proceeds. (Rosenthal Decl. ¶ 17 and Ex. B). Thereafter, in March 2005, two additional alleged illegitimate children of Joe Sr. came forward and asserted claims. (Rosenthal Decl. ¶ 18). A subsequent settlement agreement was also reached which included these two additional illegitimate children. (Rosenthal Decl. ¶ 18). Pursuant to this final agreement, the proceeds would be distributed as follows:

Woods family members: $2.5 million Jansen Bell (1st illegitimate child) $2.8 million Tamicka Martin (2nd illegitimate child) $1.638 million Tehrani Humphrey (3rd illegitimate child) $1.638 million Kreindler & Kreindler $1.6 million Copeland family members: $5.824 million (with $1.6 million reserved for attorneys' fees) (Rosenthal Decl., Ex. J). To date, all monies have been disbursed except the $1.6 million reserved for attorneys' fees from the Copeland family members. (CC Mem. at 16).

In connection with the New Jersey probate proceedings, the Copeland family retained the services of outside counsel recommended to them by Rosenthal. (T. Copeland Decl. ¶¶ 9, 10). Mrs. Copeland was advised by SNR and Rosenthal that the scope of SNR's retainer agreement with her did not include representation in the probate proceedings. (Rosenthal Decl. ¶ 23). Rosenthal does not dispute that he advised the Copeland family members that they would need to seek outside counsel for the probate proceedings. (Rosenthal Decl. ¶ 23). Notably, nor could he dispute this fact as it is documented: in the affidavit of another Copeland family member, Timothy Copeland (T. Copeland Decl. ¶¶ 9, 10); in an August ...


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