Opinion ID: 597429
Heading Depth: 2
Heading Rank: 1

Heading: Mar Oil's Insurance Litigation

Text: 3 In March 1980, a supertanker owned by Mar Oil exploded and sank. Insured for the equivalent of some $42 million, Mar Oil promptly collected from all of its insurers except one, New Hampshire Insurance Company (New Hampshire), a United States company that had provided some $10.6 million of the coverage. Mar Oil commenced an action against New Hampshire in Spain (the Spain action), the agreed exclusive jurisdiction for suit on the insurance policy. Some months later, Mar Oil managing director Carlos Garcia-Monzon (Monzon) began seeking an attorney in the United States who might recommend other legal steps that could expedite collection of the $10.6 million. George A. Spyrou, an attorney son of one of Monzon's business acquaintances, recommended Morrissey. 4 Morrissey, who had been admitted to the New York Bar in 1973 and had briefly been an associate with two Wall Street law firms, was employed from 1980 to 1982 as an associate by single practitioner Peter Van Dyke Berg, Esq. During the years 1980 to 1983, Morrissey was also employed by a trust or trusts. He had rarely been involved in litigation and had never been involved in litigation involving maritime insurance matters. When contacted by Mar Oil, he sought the assistance of Spyrou and of an attorney who had previously advised him on accident claims involving insurance. 5 At the outset, Morrissey proposed to represent Mar Oil on a contingent-fee basis that would entitle him and his advisors to one-third of any recovery. Mar Oil, however, flatly rejected any form of contingency fee agreement. 782 F.Supp. at 902. The parties then agreed, in an October 31, 1980 contract drafted by Morrissey (the Fee Agreement), that Morrissey and his advisors would be paid at an agreed hourly rate and be reimbursed for all reasonable expenses. The Fee Agreement also provided that it was to be interpreted in accordance with New York State law, that it could be modified only by a writing signed by the parties, and that [i]f a lawsuit or litigation is authorized outside of Spain, a separate retainer is to be negotiated before commencement. 6 Morrissey thereafter recommended that Mar Oil file complaints with various administrative agencies and seek assistance from diplomatic officials and others in order to pressure New Hampshire to settle; none of these efforts was productive. Essentially, all of the numerous non-litigation pressure tactics recommended by Morrissey and [his advisors] were ineffective and without any positive outcome. 782 F.Supp. at 902. 7 Morrissey also believed that Mar Oil could bring a suit in the United States, and in or about December 1980 he brought in the New York maritime law firm of Healy & Baillie. Healy & Baillie researched whether Mar Oil could sue New Hampshire's parent corporation in New York, and the firm ultimately recommended suing the parent for tortious interference with contractual relations. In July 1981, Mar Oil filed such a suit against the parent and its chief executive officer in the United States District Court for the Southern District of New York (the New York action). The district court in that action allowed limited discovery, following which Healy & Baillie informed Mar Oil that the defendants would likely prevail on a motion for summary judgment. Accordingly, the firm advised Mar Oil to discontinue the New York action and to rely instead on the Spain action, which was apparently proceeding favorably. Morrissey, on the other hand, urged that the New York action be pursued, and Mar Oil followed his advice. In January 1983, as Healy & Baillie had predicted, the district court dismissed the complaint. 8 Mar Oil appealed, and as a result of conferences with staff counsel for the court of appeals, one of which was attended by the principals, New Hampshire and the New York action defendants eventually agreed to a global settlement of their disputes with Mar Oil. Accordingly, in May 1983, Mar Oil and New Hampshire entered into a settlement agreement providing for the termination of all litigation between them in New York and Spain in exchange for New Hampshire's payment to Mar Oil of $8,060,000. For fiscal reasons, Mar Oil allowed this amount to be paid into and remain in a New York escrow account of which Morrissey was the custodian (Mar Oil escrow account).