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Attorneys Liability Protection Society, Inc. v. Eisenhofer

Superior Court of Delaware, New Castle

June 9, 2014

ATTORNEYS LIABILITY PROTECTION SOCIETY, INC., a Risk Retention Group, Plaintiff / Counterclaim Defendant,
v.
JAY W. EISENHOFER, GRANT & EISENHOFER, P.A., and RICHARD P. GIELATA, Defendants / Counterclaim Plaintiffs.

Submitted: February 5, 2014

Upon Consideration of Plaintiff's Motion for Summary Judgment GRANTED

Robert J. Katzenstein, Esq., Smith Katzenstein & Jenkins, LLP, Wilmington, Delaware. Attorney for Plaintiff Attorneys Liability Protection Society, Inc.

James E. Semple, Esq., and Corinne Elise Amato, Esq., Morris James, LLP, Wilmington, Delaware. Attorneys for Counterclaim Defendants Attorneys Liability Protection Society, Inc.

John G. Harris, Esq., Berger Harris, Wilmington, Delaware. Attorney for Defendants / Counterclaim Plaintiffs Jay W. Eisenhofer and Grant & Eisenhofer, P.A.

OPINION

VAUGHN, President Judge

In this action Plaintiff Attorneys Liability Protection Society, LLC ("ALPS") seeks declaratory relief against defendants Jay W. Eisenhofer, Esquire, and the law firm of Grant & Eisenhofer, P.A. (collectively, G&E), and Richard Gielata.[1] The case involves ALPS's duty to defend and coverage issues arising from a professional liability insurance policy which ALPS issued to G&E.

This is ALPS's Motion for Summary Judgment.

FACTS

G&E was one of three law firms that served as co-lead counsel for the plaintiffs in a class action known as the Tyco litigation. At the commencement of the case, in 2002, G&E entered into a fee agreement with its lead plaintiff which provided that G&E would receive between 15% and 22.5% of any amount recovered.

In 2004 the parties were preparing for mediation. Because the mediation was occurring relatively early in the litigation, G&E and its lead plaintiff agreed that if the mediation produced a large settlement, G&E would seek fees that were less than those provided for in the 2002 agreement. The parties entered into a new fee agreement which provided for attorneys fees ranging from 5% to 15% of the amount recovered with a 10% enhancement for significant corporate governance reforms up to $25 million. The agreement also provided that if any other law firm representing the plaintiff class sought a higher fee, G&E would oppose such request. The mediation was unsuccessful.

After three more years of litigation, the Tyco litigation was settled. G&E and its co-lead counsel then sought and received court approval for a fee award of 14.5% of the settlement, or $464 million. Of that amount, $129 million went to G&E, with the rest going to the other co-lead counsel.

Shortly after the Tyco litigation was concluded, Gielata brought suit against G&E. His contention was that the 2004 fee agreement was still a valid agreement, despite the contention of both G&E and its lead plaintiff that the 2004 agreement applied only if the mediation was successful and became moot when it was not. He further contended that under the 2004 fee agreement, the proper amount of fees was $249 million, and because of G&E's promise in the 2004 fee agreement to oppose any fee in excess of that amount, G&E was liable for the difference between $249 million and $464 million, or $215 million. He alleged that he and the class suffered damages in an amount to be determined at ...


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