Irish developer Garrett Kelleher is facing contempt proceedings in a US court later this month arising from his involvement in a €60 million insurance claim taken by a group of Liberian businesses.
Mr Kelleher, best known as the former 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.
The litigation ultimately failed, but ACE Group, which took over Cigna, will ask a US court in Philadelphia, Pennsylvania on January 26th to find Mr Kelleher along with two others, Martin Kenney and Samuel Lohman, in contempt of court for their role in the AJA case.
ACE says they breached an order barring AJA from attempting to enforce the $66.5 million judgment against Cigna.
Last November, Philadelphia US district court judge Paul Diamond ordered that all three should appear before him and show why they should not be held in contempt.
His order warns that a failure to appear “may lead to the imposition of fines or other sanctions”.
Jurisdiction
Mr Kelleher wrote to the judge last month saying that he did not intend to appear.
His position is that he is not subject to the court’s jurisdiction and that by turning up he risks subjecting himself to its jurisdiction.
His letter said he reserved the right to “all applicable defences” to Cigna’s allegations. It was not possible to contact Mr Kelleher for comment yesterday.
“If Mr Kelleher is found to have been in contempt of court he may be subject to sanctions, including substantial compensatory costs for the attorneys’ fees expended in pursuing him,” said Howard Schrader, general counsel of ACE’s international divisions.
“If upheld, the contempt finding would, of course, be part of Mr Kelleher’s permanent record.”
Mr Kelleher lived in Chicago for 11 years and still spends time in the US. He is listed as a member of the US-Ireland Alliance advisory board.
In 2006, his Shelbourne Developments became the main backer of the Chicago Spire, a skyscraper that would have been the world’s tallest, proposed for the city’s Lakeshore Drive.
However, the financial crisis intervened and Shelbourne relinquished the project. The site now belongs to a local property company, Related Midwest.
Mr Kelleher invested in the AJA claim through companies based in Malta.
They invested in CC International, which Mr Kenney and Mr Lohman established to get the judgment enforced on behalf of AJA and 22 other Liberian businesses.
The Liberians involved lost their businesses in the country’s civil war in the 1990s.
Commercial property owner AJA claimed against an insurance cover 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.
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.
CCI and the Liberians convinced the African country’s insurance commissioner to take a case against Cigna in the Cayman islands.
That case was subsequently thrown out.
ACE argues that as Mr Kelleher and the others funded AJA's litigation in the Cayman Islands they aided and abetted it in breaking the 2001 order.
