Court Opinion

ID: 4287490
Source: CourtListenerOpinion
Date Created: 2018-06-22 21:00:45.94804+00
Date Added: 2024-06-11T14:37:05.423651
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

DEBoRAH D. PETERsoN, et al. §
§
PLAlNTlFFs, § CoNsoLn)ATEl) CAsEs:

§ No. 01-cv-02094 (RCL)

v. § No. 01-cv-02684 (RCL)
§
IsLAMIC REPUBLIC oF IRAN, et al. §
§
DEFENDANTS. §

 

Memorandum and Order

 

Bac round

The movants_Mr. David Cook and his firm, Cook Collection Attorneys, PLC
(collectively “Cook”)-now seek a common law equitable lien over the plaintiffs’ attorneys’
(“respondents”) share of the recovery in this case and sequestration of the portion disputed in the
ongoing arbitration between Cook and the respondents ECF No. 575. Cook formerly Worked as
collection counsel in this case.

l:his is the fifth time and the third forum in Which Cook has sought relief similar to that
for which he asks here. Previously, in this Court, Cook sought an “attorney’s charging lien”
against the funds “to be received by the Plaintiffs” in this case. ECF No. 528 at 1-2. This Court
granted the plaintiffs’ motion [ECF No. 539] to quash that lien because Cook had no contractual
or attorney_client relationship With the plaintiffs; rather, Cook has a contractual relationship With
the plaintiffs’ attorneys. (ECF No. 564). The D.C. Circuit affirmed that decision. Peterson v.
Islamic Republic of lran, 724 F. App’X l (D.C. Cir. 2018).

Cook sought similar relief in the Southern District of NeW York. There, he tried to

assert a statutory charging lien under New York law on the proceeds being used to satisfy the

Peterson judgment and other judgments against Iran. The District Court denied Cook’s motion to
intervene to assert this lien as untimely, Peterson v. Islamic Republic of Iran, No. 10-cv-4518,
2016 WL 9447953 (S.D.N.Y. June 6, 2016), and the Second Circuit afflrmed, Peterson v. Islamic
Republic of Iran, 690 F. App’x 744 (2d Cir. 2017).

Cook also sought similar relief in arbitration. Cook has, for the past several years,
arbitrated the merits of his contract claim against the respondents and other attorneys who have
been involved in this litigation with JAMS in New York. Twice in the course of that arbitration,
once in 2016 and once in 2018, Cook has sought from the arbitrator an interim award creating
some form of security interest in any funds that the respondents receive from the trust that now
holds the funds pending payments to the plaintiffs Speciflcally, Cook sought to enjoin or
otherwise prevent the respondents from acquiring and spending as they will any payments they
receive from those funds as attorney’s fees Both times, the arbitrator denied Cook’s petitions
See generally Arbitration Order No. 2, ECF No. 577-2; Arbitration Order No. 15, ECF No. 577-3.
Both times, the arbitrator chastised Cook for his flagrant forum shopping Id. Both times, the
arbitrator characterized Cook’s efforts as attempts to effect pre-judgment attachment ld. And
both times, the arbitrator made clear that Cook’s requests should be denied on their merits Id. In

both cases, the arbitrator said that

The merits of the case are still very much in dispute. The Claimants
(Cook) have offered no evidence of the irreparable harm they may
suffer if the injunction is not granted, other than a conclusory
assertion for the need for “security” from an “empty award.” The
Respondents, on the other hand, would suffer harm as a result of the
restrictions placed on their ability to spend these funds as they see
fit. Finally, a grant of the relief requested by the Claimants would
promote forum-shopping which disserves the public interest.

Arbitration Order No. 15, ECF No. 577-3 at 5-6.

Having been denied four times already (six, if you count the appeals) in three separate
forums, Cook now tries again to obtain a security interest in the judgment proceeds of this case,
this time in the form of a common law equitable lien over and sequestration of the respondents’
share of the recovery. In response to Cook’s motion, the respondents move to compel arbitration
of Cook’s motion and to stay proceedings in this case. Having reviewed the record and the
applicable law, the Court grants the respondents’ motion, compels Cook to arbitrate his motion,

and stays proceedings in this case until arbitration is completed

Analysis
“Section 3 of the Federal Arbitration Act [FAA] entitles litigants in federal court to a

993

stay of any action that is ‘referable to arbitration under an agreement in writing. Arthur Andersen
LLP v. Carlisle, 556 U.S. 624, 625 (2009) (quoting 9 U.S.C. § 3). Cook and the respondents have
a written agreement that contains an arbitration clause requiring arbitration of “any disputes by
and among any of the attorneys.” ECF No. 575-3, p.4, 1[5.

Cook’s attempt to secure an equitable lien over and sequestration of any lhnds that the
respondents may receive for their services in this case qualifies as a dispute among the attomeys.
Even if the arbitration agreement were narrowly construed to cover only disputes arising out of
the contract, this dispute Would meet that criterion as it arises out of Cook’s attempt to secure and
collect payment for services allegedly performed under the contract. That this dispute is arbitrable
is amply demonstrated by Cook’s two previous attempts to obtain nearly identical relief from the
arbitrator. Because this dispute is arbitrable, the Court must stay proceedings between these
litigants until arbitration has been had in compliance with the parties’ agreement

Cook argues that his motion need not be referred to arbitration for three reasons First,

he argues that the arbitrator has decided to defer to this Court on this issue. Second, he argues that

the respondents are in default in proceeding with arbitration under § 3 of the FAA. Third, he
argues that the arbitrator has no authority to issue the lien/injunction he seeks because it would
bind nonparties to the arbitration agreement All of these arguments are meritless
I. The Arbitrator Has Not Decided to Defer to the Court on this Issue.
Cook’s first argument mischaracterizes the arbitrator’s orders In the arbitrator’s first
order denying an interim injunctive award to Cook, the arbitrator opined that
The first and foremost reason for denying [Cook’s] motion is that
[he] already sought the same relief in the . . . Southem District of
New York. They lost there . . . . [It] Would not only be arrogant for
the Arbitrator to overrule Judge Forrest, but it would encourage
forum-shopping and create jurisprudential chaos
Arbitration Order No. 2, ECF No. 5 77-2 at 4. This does not indicate a desire to defer to this Court
(or a District Court generally) to decide these issues Instead, it indicates the respect the arbitrator
had for decisions already rendered by a District Court and the arbitrator’s desire not to make any
ruling contrary to those decisions And even though “the first and foremost reason for denying”
Cook’s motion was its previous denial in other forums, the arbitrator did go on to offer his own
analysis of why that motion deserved to be denied on its merits See generally ia'. In short, nothing
in the arbitrator’s first order indicates that the arbitrator intended generally to defer to this Court
or any other court on any matter within the scope of the parties’ arbitration agreement
The arbitrator’s second order also demonstrates no intent to defer decision of this issue
to this Court. That order dealt with Cook’s request for an interim award restraining the respondents
from “disposing of any newly distributed funds received from the QSF Trust other than in the
ordinary course of business until after the entry and confirmation of the Final Award.” Arbitration

Order No. 15, ECF No. 5 77-3 at l. That request was flatly denied on its merits See generally id.

A denial on the merits does not indicate an intent to defer to another adjudicatory body.

II. The Respondents Have Not Defaulted in Proceeding with Arbitration.

Cook’s second argument mischaracterizes the previous litigation in this case. Under §
3 of the FAA, an applicant in default in proceeding with arbitration is not entitled to a stay such as
that which the respondents seek. 9 U.S.C. § 3. Such a default occurs when the applicant “actively
participates in a lawsuit or takes other action inconsistent with” the right to arbitrate. Cornell &
Co. v. Barber & Ross Co., 360 F.2d 512, 513 (D.C. Cir. 1966). Cook argues that the respondents
here actively participated in litigation of this issue when they “brought their Motion to Quash
Cook’s Charging Lien before this Court and thereafter participated in briefing and oral argument
at the Circuit Court on the equitable lien issue.” ECF No. 579 at 6.

But Cook misconstrues that motion and the proceedings that followed. The Motion to
Quash makes clear that it was the Peterson “Plaintiffs, by and through undersigned counsel,” who
brought the motion to protect their own interests ECF No. 539 at 1. This reflects Cook’s Notice
of Charging Lien, which asserted a lien against any and all recovery “to be received by the
Plaintiffs,” not the respondents Therefore, the respondents’ involvement in those proceedings
was not active participation in a lawsuit of the sort that would waive a right to arbitrate because
they were not parties to those proceedings Rather, they were parties’ attorneys This was made
clear in the D.C. Circuit’s opinion, which affirmed this Court’s decision to grant the motion to
quash because Cook is not “entitled to invoke the power of the court to withhold payment of any
part of the judgment from Plaintl`fj%.” Peterson, 724 F. App’x at 4 (emphasis added). The D.C.
Circuit also made clear that the litigation did not address any claims that Cook may have against
any of the respondents Id. at 5. And because the respondents have not, in their personal capacities,

actively participated in any litigation in this Court regarding this matter (outside of responding to

the present motion and seeking to refer the motion to arbitration), the respondents have in no way
defaulted in proceeding with arbitration.
III. The Arbitrator Has Power to Grant the Relief Cook Requests.

Cook’s third argument for why these proceedings should not be stayed pending
arbitration is that arbitration of the equitable lien issue would exceed the arbitrator’s powers
because the determination Would necessarily affect non-parties Cook suggests that J ay Glenn and
possibly other lawyers could be involved in this “equitable interference.” This argument is
meritless Cook’s motion for an equitable lien and sequestration asks the Court to “sequester[]
funds recovered on the judgment and payable from the QSF Trust to Plaintiffs’ Attomeys Thomas
Fay, Steven Perles, Allen Rothenberg and Anthony LaSpada.” ECF No. 575 at 1. Neither Glenn
nor other attorneys are mentioned in the motion. Neither Glenn nor other attorneys are parties to
the current suit. All of the attorneys mentioned by name in Cook’s motion are parties to the
arbitration. Glenn is not. As such, the arbitrator does have power over all of the parties actually
named in Cook’s motion. And the Court has full confidence that the arbitrator will not overstep
the bounds of his power in considering this or any other motion.

Conclusion

Cook and the respondents are bound by a written arbitration agreement The dispute
created by Cook’s motion seeking an equitable lien over and sequestration of funds received by
the respondents from the QSF Trust is within the scope of that arbitration agreement Cook can
point to no reason for Which that arbitration agreement should not be enforced. Therefore, the
Court does the following:

0 GRANTS the respondents’ motion to compel arbitration and to stay
proceedings ECF No. 577.

o STAYS all proceedings in this Court between Cook and the respondents
until the arbitration between them is complete

o ORDERS Cook to arbitrate any further issues between him and the
respondents including the issue of equitable liens and sequestration
¢ DENIES AS MOOT Cook’s motion for an equitable lien over plaintiffs’
attomeys’ 1/3 share of the recovery and for sequestration of the disputed
portion. ECF No. 575.

It is so ordered.

Signed: June ’LL , 2018.

HON>§§§§LEl ROYCE LAMBERTH

UNITED STATES DISTRICT JUDGE