Judge Kaplan Blasts Plaintiffs in Irish Bank Case

Judge Kaplan Blasts Plaintiffs in Irish Bank Case Rick Kopstein U.S. District Judge Lewis Kaplan

Judges, understandably, don’t like to reverse their own opinions, so motions for reconsideration are always a long shot. But they don’t usually backfire as dramatically as they did Tuesday in a decision by U.S. District Judge Lewis Kaplan in Manhattan.

In a sharply worded ruling, Kaplan once again rejected a racketeering case brought against Ireland’s National Asset Management Agency by property developer John Flynn, four of Flynn’s family members and various corporate entities connected to them. Kaplan berated the plaintiffs and their lawyers for filing a “frivolous” motion asking him to reconsider his prior ruling dismissing the case on forum non conveniens grounds.

“In view of its transparent lack of merit, this motion properly could have been disposed of in a single word,” Kaplan wrote. “The court nonetheless has written to make clear that each and every argument made by plaintiffs has been considered with care and found wanting as well as to make the point that the filing of this motion was abusive.”

Flynn, his wife, Leona, and his children own several commercial and residential properties in Ireland. The Flynns said in a court filing that as part of their business dealings they borrowed $200 million from now-defunct Anglo Irish Bank Corporation, through 84 loan transactions dating back to 1994. They allege that they discovered in 2010 that the bank had overcharged them about $12 million in interest on those loans.

The Flynns’ efforts to recoup the claimed $12 million in overcharges was complicated by Anglo Irish’s recent collapse in the financial crisis and its subsequent bailout. Since then, many of Anglo Irish’s most risky loans have been purchased at a discount by NAMA, a “bad bank” created by the Irish government. The liquidation of Anglo Irish (since renamed Irish Bank Resolution Corp.) finally wound down this summer.

Rather than sue what remains of Anglo Irish over the alleged overcharges, the Flynns ended up bringing a racketeering case in U.S. district court in Manhattan against NAMA, the government entity set up to absorb bad debt. They alleged in their December 2013 complaint that NAMA conspired with Anglo Irish “to cover up the fraudulent overcharges so as not to repay plaintiffs and so as not to jeopardize the sale of the bank’s loans to third parties.” The complaint was filed by Leonard Zack of Zack & Associates and Lawrence O’Neill of O’Neill & Company.

Kaplan dismissed the case in a July 29 ruling, writing that Ireland is a more appropriate forum. The dispute, he wrote, “has much to do with Ireland and little to do with New York or the United States.” The judge conceded that John Flynn and Leona Flynn live in Florida but noted that they still have “substantial connections to Ireland.”

In urging the judge to reconsider, the Flynns asserted that NAMA presented “knowingly false jurisdictional evidence” to support its motion to dismiss. They also argued that their ability to bring similar claims in Ireland has been severely limited by postfinancial crisis legislation in that country.

Kaplan got fired up by the allegation of false evidence, calling the claim “preposterous.” In his view, the only jurisdictional evidence NAMA presented was that members of the Flynn clan have Irish passports and driver’s licenses. The authenticity of that documentary evidence has never been questioned. “If a charge of knowing falsity properly might be made in this case, it perhaps might be made with respect to these allegations by plaintiffs against the defendants,” Kaplan wrote.

Richard Beran and Thomas Goodwin of McCarter & English represent NAMA. Anthony Callaghan and Robert Brady of Gibbons PC represent Michael Aynsley. Jean-Marie Atamian of Mayer Brown represents the Irish law firm Byrne Wallace, which is working on Anglo Irish’s liquidation and was named as a defendant in the case.

Zack, one of the lawyers for the plaintiffs, didn’t immediately return a call seeking comment.

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