Garrett Kelleher threatened with contempt of court

Developer has invested in efforts of Liberian businesses to enforce $66.5m judgment against US insurer

Developer Garrett Kelleher has vowed to appeal the ruling of a US judge who warned that he was considering having the Irishman and two others prosecuted for contempt because of their involvement with a €60 million insurance claim.

Mr Kelleher invested $2.85 million in 2006 in the efforts of a group of Liberian businesses to enforce a $66.5 million judgment against US insurer Cigna Worldwide in return for a share of any proceeds.

The US district court in Philadelphia, Pennsylvania, ordered the Irishman, and two lawyers, Martin Kenney and Samuel Lohman, who had been advising the Liberians, to appear before it on Wednesday for a hearing where the insurer sought $14.6 million in costs from them.

Mr Kelleher and Mr Kenney were represented at the hearing, but did not appear in person. They are challenging the court’s jurisdiction in the case.

At the hearing Judge Paul S Diamond said that he was considering referring all three men to the US attorney's office for prosecution for criminal contempt of court.

The court barred Mr Lohman who did appear, from leaving its jurisdiction, the eastern district of Pennsylvania, and had his passport seized. It also allowed Cigna to begin discovery of the lawyer’s assets to establish if he has the means to pay any damages.

Supreme court

Following the hearing, Mr Kelleher pledged to appeal yesterday’s decision all the way to the US supreme court if necessary. He argued that the case was a “travesty of justice” for the Liberians, who have been pursuing their claim for 25 years.

“By the time I was approached to help fund this case a Liberian court had determined that Cigna had violated Liberian law by not maintaining funds in the country to meet local claims,” he said.

The case is rooted in the efforts of one group, Abi Jaoudi and Azar Trading (AJA), to enforce a claim against Cigna for damage to its property sustained during Liberia's civil war in 1990. The company's local subsidiary had insured the Liberian group's premises, which starving civilians looted in search of food.

Cigna originally refused to pay out on a subsequent claim, but a jury in the Philadelphia court found in favour of the Liberians in the mid-1990s. However, the judge used a little-used power and over-ruled the jury to find in Cigna’s favour.

AJA then returned to its home country, where the courts upheld a claim for $66.5 million. The Liberian insurance commissioner subsequently took over the case, and he pursued ACE, which had taken over Cigna, in the Cayman islands for the judgment.

Injunction

However, in 2001 the US company went to Philadelphia and got an injunction barring AJA from attempting to enforce the Liberian judgment. Last July, the Pennsylvania court found Mr Kelleher and the two lawyers were found to be in civil contempt for breach of this order.

Mr Kenney said on Wednesday that he was deeply disappointed that the court found reason to sanction him for his work on behalf of the Liberian clients, whom he said were seeking justice from a wealthy multinational insurance company.

“We have done nothing wrong in this case. We intend to use our rights to appeal this matter to the third Circuit Court of Appeals, where I am confident we will prevail.”

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas

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