Developer Garrett Kelleher may face damages bill

A US court could hit Irish developer Garrett Kelleher with a large damages bill arising out of his involvement in a €60 million insurance claim if a recent contempt hearing goes against him.

Mr Kelleher, best known as the backer of the Chicago Spire, invested $2.85 million in 2006 in the efforts of Liberian group Abi Jaoudi and Azar Trading (AJA) to enforce a $66.5 million judgment against US insurer Cigna Worldwide, in return for a share of the lawsuit's proceeds.

While the case failed, ACE Group, which took over Cigna, has asked a US court to find Mr Kelleher, and two others, Martin Kenney and Samuel Lohman, in contempt for their role in the AJA litigation. The insurer says they breached an injunction barring the Liberians from ever attempting to enforce the judgment.

Liability

At the hearing in the US District Court in Philadelphia,

Pennsylvania

, Cigna’s lawyer, Donald Hawthorne, told Judge

Paul Diamond

he wanted the court to find Mr Kelleher and the others in contempt and make judgments against them for legal and other costs, potentially running into millions.

Mr Hawthorne also indicated that he wanted them held jointly and severally liable, which means that one of the three could be forced to foot the bill for all of them. “I certainly envision us getting to the stage of having judgments against these folks,” he said.

Mr Hawthorne added that he would address how the court could aid ACE with that on another occasion, but noted that his client should be able to collect what it is “rightfully owed”.

Judge Diamond has yet to rule on the issue. A transcript of the hearing on January 26th shows that early on in proceedings he indicated to Mr Kenney’s attorney that his client had to show that he was not in contempt of court.

Mr Kelleher was not in court as he maintains he is not subject to its jurisdictions. Cigna’s lawyer said the developer “hid” his involvement in the case behind Malta-based companies.

They invested in CIC, which sought to get the $66.5 million judgment enforced on behalf of AJA and 22 other Liberians. The Liberians lost commercial property in the civil war in the 1990s. AJA claimed against insurance it had with Cigna, but in 1995 the US district court ruled that the policy excluded damage caused by war. The US supreme court upheld this.

Case thrown out

AJA then went to a Liberian court, which in 2000 ordered Cigna to pay $66.5 million. However, in 2001 US judge Thomas O’Neill barred AJA from taking any action to enforce that judgment in any jurisdiction.

CIC and the Liberians convinced the African country’s insurance commissioner to take a case against Cigna in the Cayman Islands. That case was thrown out. ACE argues that by funding AJA’s litigation in the Cayman Islands they aided it in breaking the 2001 order.