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NEW YORK � A lawsuit pitting former law firm partners against each other over a post-9/11 insurance payout will proceed, a state judge has ruled. Insurance defense firm Ohrenstein & Brown had its offices on the 85th floor of the World Trade Center’s North Tower and two of the firm’s employees were killed in the Sept. 11, 2001, terrorist attacks. Afterward, the firm received around $10 million in insurance money. In a lawsuit (.pdf) filed last year in Manhattan Supreme Court, former Ohrenstein & Brown partners Annmarie D’Amour, John Sachs and Philip Touitou charged that five other partners conspired to keep almost $4 million of the insurance money � a huge windfall for the small firm � for themselves, shutting out the firm’s other members. The suit alleges they did this by declaring themselves equity partners and the others non-equity, distinctions the plaintiffs claim had not existed at the firm prior to the arrival of the insurance payout. But the five partners targeted in the suit maintain Ohrenstein & Brown had long operated as a two-tier partnership in which they were the only equity partners and the only ones entitled to the money. The five partners are Manfred Ohrenstein, the former Democratic leader in the state senate; Michael Brown; Christopher Hitchcock; Geoffrey Heineman and Abraham Havkins. The firm did not have a written partnership agreement, but the defendants had moved to dismiss the case based on documentary evidence they said showed the plaintiffs lacked “indicia” of partnership, such as sharing in profits and losses, contributing capital and management responsibility. But in a decision issued in August and unsealed only last week, Manhattan Supreme Court Justice Richard Lowe ruled that the evidence advanced by the five partners did not conclusively establish who was an equity and who was a non-equity partner. He said several of the documents that appeared to be partnership agreements or drafts of such agreements were not supported by any information about when or in what context they were created. “Certain of the documents, on their face, contain no indication as to their provenance,” Lowe wrote in D’amour v. Ohrenstein & Brown, 601418/06 (.pdf). Even if the agreements were authentic and legitimate, he noted, there were no indications that the agreements were effective at the time the insurance money was paid. The judge also pointed out that drafts proposing a two-tier partnership did not establish that such a structure existed. The defendants also had submitted the partnership income tax returns, pointing out that the plaintiffs and other alleged non-equity partners did not have percentage shares of the partnership profits listed in their K-1 forms. But Lowe said this also was inconclusive because, though ownership percentages were reported for Ohrenstein and Brown before 2003, the three other purported equity partners were treated the same as the alleged non-equity partners. The judge noted that some of the documents submitted by the defendants dated to the period after which the five partners were alleged to have begun their scheme. The complaint states that the five partners met in secret and entered into a written agreement to grab the insurance payout in June 2003. Documents dating after that could reflect “bias or wrongful intent” because they “would be essentially contemporaneous with defendants’ allegedly wrongful conduct in furtherance of their purported ‘de-equitization scheme,’ pursuant to which defendants allegedly attempted to use various illegitimate means to establish that plaintiffs were non-equity partners,” the judge wrote. Lowe said similar issues attended the defendants’ submission of a December 2003 study of the firm performed by consultancy Hildebrandt International. The complaint alleges that the five partners hired Hildebrandt as part of their scheme to impose a two-tier partnership and misrepresented the firm’s structure to the consultants. The judge noted that the study was inconclusive in any case, describing Ohrenstein & Brown’s partnership structure as “largely unstructured.” SOME CLAIMS DISMISSED Though the judge did not dismiss any of the lawsuit’s 12 causes of action on the grounds that the plaintiff’s were non-equity partners, he did dismiss four on other grounds. He threw out two claims for conversion and misappropriation because, he said, the plaintiffs had failed to allege that a specifically identifiable sum of money was the subject of the claims. Lowe said the insurance money had been commingled with the firm’s other funds before being paid to the defendant partners and could not be considered specifically identifiable. The judge also dismissed fraud claims on the grounds that the plaintiffs had not sufficiently alleged that they relied on misrepresentations by the defendants and suffered as a result. The fourth dismissed claim sought to enjoin payments to Havkins, who left the firm pursuant to a separation agreement. The judge said the plaintiffs had not shown that continued payments to Havkins would harm them in a way that could not be redressed through damages. The lawsuit’s remaining claims include breach of fiduciary duty, conspiracy, unjust enrichment and constructive trust and restitution. The plaintiffs are also alleging civil rights violations in connection with Ohrenstein & Brown’s continued use of their photos in ads and on the firm’s Web site. REQUEST FOR DAMAGES Lowe declined to dismiss the plaintiffs’ request for punitive damages for some of the claims. He said it could not yet be conclusively determined “that the wrongful conduct alleged is not sufficiently egregious to warrant the imposition of punitive damages.” Two of the plaintiffs, Touitou and D’Amour, claim they were illegally expelled from the firm in 2004 after they formally complained about the defendant partners’ actions. Touitou is now a partner in the New York office of Hinshaw & Culbertson. D’Amour has not practiced law since leaving Ohrenstein & Brown. The third plaintiff, Sachs, left the firm voluntarily in November 2005 to become a partner at Epstein, Becker & Green. Ohrenstein & Brown had around 35 lawyers at the time of the World Trade Center attack. The two employees who were killed were members of the firm’s support staff, secretary Valerie Murray and billing supervisor AnneMarie Riccoboni. The firm expanded to 60 lawyers in the years immediately afterward, but the dispute over the insurance payout has since torn the firm apart. Most of the defendants also have since left the firm, which moved out of Manhattan last year and now has just 11 lawyers practicing out of Garden City, N.Y., and West Caldwell, N.J. According to the suit, the insurance money proved irresistible because it was far greater than the money the firm’s lawyers earned practicing in the insurance defense area, where billing rates are relatively low. Brown, who alone took $2 million of the insurance money, had an average billing rate in 2003 of $320 an hour, the suit alleges. Ohrenstein & Brown’s lawyer, Roger Crane of Nixon Peabody, declined to comment on the case. Sachs, who is appearing pro se with the other plaintiffs, said the judge’s decision “vindicated the belief that we were wronged.” Lowe’s decision and the case file had been maintained under seal owing to the sensitive financial information that the defendants had submitted with their motion to dismiss. After receiving several letters from both parties as well as from the New York Law Journal, a Recorder affiliate, the judge last week ordered that the file be unsealed and made public, though the defendants’ financial documents would be impounded. Anthony Lin is a reporter with the New York Law Journal, a Recorder affiliate.

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