- Another small legacy of 9/11
I admit it: Some cases just leave me shaking my head. The squabble among current and former partners of Ohrenstein & Brown is just such a case. This is a law firm that had its offices on the 85th floor of the World Trade Center's North Tower. Two of its employees - one a secretary and the other a billing supervisor - were killed in the Sept. 11 attacks. The firm wound up receiving around $10 million in insurance money. At that point, things got very messy. Three former O&B partners say that five other partners conspired to keep almost $4 million of the insurance money by declaring themselves equity partners and the others non-equity. Here's the problem: the three partners claim there was no such designation prior to 9/11, and Manhattan Supreme Court Justice Richard Lowe ruled that the evidence advanced by the five partners did not conclusively establish who was an equity and who was a non-equity partner. From the NY Law Journal:
He said several of the documents that appeared to be partnership agreements or drafts of such agreements were not supported by any information about when or in what context they were created. "Certain of the documents, on their face, contain no indication as to their provenance," Lowe wrote in D'amour v. Ohrenstein & Brown. Even if the agreements were authentic and legitimate, he noted, there were no indications that the agreements were effective at the time the insurance money was paid. The judge also pointed out that drafts proposing a two-tier partnership did not establish that such a structure existed.
The defendants also had submitted the partnership income tax returns, pointing out that the plaintiffs and other alleged non-equity partners did not have percentage shares of the partnership profits listed in their K-1 forms. But Lowe said this also was inconclusive because, though ownership percentages were reported for Ohrenstein and Brown before 2003, the three other purported equity partners were treated the same as the alleged non-equity partners.
The suit alleges that the insurance money became irresistible to the five because it gave them far more money than they earned practicing law. In his decision, which was unsealed last week, the judge noted that some of the documents submitted by the defendants dated to after the time they were alleged to have begun their scheme (the five partners entered into a deal to grab the insurance payout in 2003, according to the complaint). Lowe did dismiss four of the 12 causes of action, but the other remaining claims - including breach of fiduciary duty, conspiracy, unjust enrichment and constructive trust and restitution - remain intact. Lowe declined to dismiss the plaintiffs' request for punitive damages for some of the claims. So the case goes on. The Law Journal story notes that the dispute has torn the firm apart and that most of the defendants have left. Sigh.
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| 11:18 AM Oct 18, 2007 | Email the Daily Dragon | Email this Article | Post Comments |
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