The National Law Journal wrote about the Ohio law firm's battle: Michael Kelley and James Ferraro ran one of the most profitable plaintiffs law firms in Cleveland -- so profitable that they were able to buy three jets, million-dollar mansions and an arena football team. All went well until Michael Kelley died in 2006.
Kelley was known as "The King of Torts" for his "billion-dollar asbestos practice." But after Kelley's sudden death in 2006 of a heart attack, the fate of the law firm and its billions of dollars, planes and arena football team fell in the hands of a Cuyahoga County state court judge.
In short, Kelley's widow, Lynn, herself a former Cleveland Heights municipal judge, is battling Ferraro for half of the law firm's total assets, once estimated at $3.5 billion. Tree months after her husband's death, Mrs. Kelley demanded dissolution of the 15-lawyer firm and division of the assets, including the jets and the arena football team, the Las Vegas Gladiators, which will be moving to Cleveland this year.
Mrs. Kelley's lawyer, William Wuliger of Cleveland, said that there is evidence of a partnership agreement that spells out how, if a "liquidating event" occurs, the law firm would be dissolved and the profits and assets split. " Kelley argues that death as a liquidating event under the partnership agreement.
Ferraro, Kelley's partner, who also owns a highly successful plaintiffs firm in Miami, The Ferraro Law Firm; a well-known Coral Gables, Fla., restaurant, Randazzo's; and a 21,000-square-foot, 14-bedroom compound in Martha's Vineyard, Mass. views things rather differently.
Since there is a gag order in this case, Ferraro's attorneys would not comment on this matter until a further order by the Cuyahoga County Common Pleas, Judge Daniel Gaul.
Ferraro believes that he had a an oral agreement with Kelley that if one of the partners died, the deceased's family would get graduated payouts for several years, and then they would end. Ferraro claims that the partnership agreement does not include death as a liquidating event, and that Lynn Kelley is not mentioned in the partnership agreement. Apparently, Ohio law is vague about partnership agreements, it will be strictly up to the judge or jury to decide what Kelley gets, if anything.
Mediation and settlement talks have failed, and the case is now headed for trial in March. The trial is expected to include fireworks, and possible testimony from a former National Football League quarterback and part owner of the Gladiators.
There are also questions regarding the state of the Kelleys' marriage. Lynn Kelley stated in her suit that she wanted to prevent Ferraro from wasting the firm's assets, frivolously flying around the country, and from cutting off medical benefits to her son. She sought a restraining order that would freeze firm accounts, but the judge has not ruled on it.
The case has been so controversial that both sides are prevented from talking to the press. Some of the numerous documents have been sealed by the court. One judge was removed from the case. Both sides have sought sanctions and protective orders.
Efforts to obtain information about finances at the law firm have been frustration. A former partner, John Sivinski, who has a contractual case against the firm, filed a motion to intervene in the matter.
When Mrs. Kelley's lawyer was asked, where he got the figure of $3.5 billion, he said, "Information evolves over time. If you look at historical financial information, this law firm generated significant money." He said, "The iron curtain went up when Michael died," he said. "Before then, there was no need to know what was in Berlin."
Mina N. Sirkin is a Certified Specialist attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. She practices in Los Angeles County, California. [email protected]. http://www.SirkinLaw.com.
