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It’s not how you expect to be treated by the law firm that bears your name and where you have been practicing law for more than 40 years. Yet, when Robert Monaghan, 73, became disabled, his firm not only stopped his paychecks but also dropped him from the health insurance plan just when he needed it most. And it did so without the courtesy of a telephone call. At least, that’s Monaghan’s account in his suit, filed in Union County, N.J., Chancery Division on Jan. 13, against Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski and his four fellow equity partners, Henry Morgan, James Melhuish, Elliott Abrutyn and John Lisowski. None of the defendants have yet answered. Monaghan accuses the firm and its inner circle of violating the partnership agreement and breaching their fiduciary duties toward him. He is suing for compensatory damages and attorney fees and for punitive damages against co-managing partners Morgan and Abrutyn. Presiding Chancery Judge Miriam Span signed an order to show cause asking for specific performance of the partnership agreement, an accounting of firm assets and liabilities, access to the books and records, appointment of a “special fiscal agent” to take control of the assets and other relief. A hearing is set for Feb. 20. Regardless of the outcome, the case offers a glimpse into the visceral side of partnership breakups: how longstanding allies can quickly turn into bitter antagonists when one partner is on the outs. Morgan Melhuish, based in Livingston, N.J., dates back to 1910 and does mainly insurance and other defense work. Monaghan began working there in 1960 and became a partner in 1970. His specialty is aviation law. Documents appended to the complaint show the firm has had the same equity partners since May 1982 when Henry Morgan, who then owned all the firm’s assets, began to transfer equity to five other partners, including Richard Arvidson, who died in 1999. In the 20 years that followed, no new equity partners have been added, according to the complaint, which states that Morgan now has a 24 percent interest, while Melhuish, Monaghan, Abrutyn and Lisowski each own 19 percent. The owners comprise a gerontocracy with an average age of nearly 71 years. Morgan at 82 is the oldest, while Abrutyn at 59 is the youngest. The firm’s entry in the Martindale-Hubbell Law Directory shows 18 other, presumably nonequity partners, two of counsel and 20 associates. SILENT TREATMENT According to the complaint, the rift between Monaghan and his partners began in January 2002, when he was hospitalized for pneumonia and complications arising from congestive heart failure and subsequently became disabled. He claims he was entitled to keep receiving his full partnership draw, bonus and distribution for at least 18 months. The complaint includes what is purportedly the firm’s May 19, 1982, partnership agreement, and a December 1985 amendment. They provide that, after 18 months, a disabled partner is entitled to “the lesser of $5,700 per month, or the actual annual partnership income of the other nondisabled signatories” other than Morgan, until the disabled partner turns 65 or dies. After 65, “the right of the disabled signatory, to any draw or distributions shall be determined solely by the other signatories.” The agreement further provides for a disabled partner’s annual draw and distribution to be reduced by any payments received from disability insurance for which premiums were paid by the firm. Monaghan alleges that he continued to receive his equal draws and distribution through May 2002, when they stopped without warning. Shortly afterward, he learned he also lost his firm medical coverage. When he contacted the office, he was told by head bookkeeper James Murphy “that Morgan and Abrutyn had instructed the payroll department not to provide Monaghan any further salary, draw or distribution,” and “no further explanation was offered,” he alleges. Subsequent discussions between Monaghan and his partners “to amicably resolve issues” in a good faith effort “to negotiate a fair and equitable resolution” were “thwarted by his partners, who advised that the firm was experiencing cash flow difficulties, was not as profitable as in prior years and that the Firm had been forced to increase its bank loan,” states the complaint. In her brief, Monaghan’s lawyer, Andrea Sullivan, argues for an accounting based on his right as a partner to look into possible mismanagement during his absence and “to determine the financial status of the partnership and the reason for its apparent decline in profitability while he was disabled.” Sullivan, a partner with Greenbaum, Rowe, Smith, Ravin, Davis & Himmel in Woodbridge, N.J., did not return calls requesting comment. Monaghan also alleges that his partners threatened to dissolve the firm and that after months of negotiations proved unsuccessful, his partners, “at the eleventh hour … claimed for the first time … that Monaghan had agreed to ‘retire’ in January 2002 while he was ill.” “That is blatantly untrue,” states the complaint. “Indeed Monaghan has been hoping for months to recover and be able to practice law again.” FIRM SAYS TREATMENT WAS FAIR The defendants had filed no responsive papers as of last week, but their lawyer, Laurence Orloff, calls the complaint “replete with material inaccuracies.” “Contrary to the impression sought to be left by the complaint, the firm has at all times treated Mr. Monaghan and continues to treat Mr. Monaghan with complete fairness and generosity,” says Orloff, a partner with Roseland’s Orloff, Lowenbach, Stifelman & Siegel. “Unfortunately, he has chosen to attempt to advance his negotiating position by bringing his disagreements with the firm into the public arena rather than resolving them privately.” Contrary to the impression created by Monaghan’s papers of being “out in the streets,” he received more than about $175,000 during 2002 between distributions from Morgan Melhuish and disability insurance payments, notes Orloff. On top of that, the firm has been paying $800 per month for Monaghan’s medical coverage under COBRA, he adds. The case is Monaghan v. Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, UNN-C-06-03.

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