Former Nelson Brown & Co. leader Michael Nelson’s case against his former partners is headed to arbitration, after a federal judge ruled in his favor.
Nelson, now a partner at Eversheds Sutherland in New York, filed the initial complaint in July 2017, two years after leaving the firm, formerly known as Nelson Levine de Luca & Hamilton.
Nelson has alleged that his former partners were on the hook for a $4 million line of credit the firm had taken out, and that he had to repay a disproportionate amount of that loan, an amended complaint filed in 2017 said. Nelson also alleged that his ex-partners took advance draws when they left the firm, which ultimately exceeded their distributions for 2014, but he did not specify the amount of the excess draws.
In an order Jan. 28, U.S. District Senior Judge John R. Padova for the Eastern District of Pennsylvania granted Nelson’s motion to compel mediation or arbitration.
From the beginning, Nelson has sought to resolve his claims outside of court. According to court documents, before bringing the federal suit, Nelson attempted to initiate an arbitration or mediation in January 2017 by sending notice to the Pennsylvania Bar Association’s program administrator.
Padova’s opinion said Nelson’s motion called for consideration of whether the disputes he described in his complaint fall under the former partners’ operating agreement and buy-sell agreement. In those accords, Padova wrote, the parties entered into valid agreements to arbitrate.
Padova rejected all of the defendants’ arguments, deciding the Nelson’s claims were subject to those agreements. Their arguments included a contention that Nelson waived his right to seek arbitration by engaging in litigation, and that the defunct law firm must be joined, affecting the court’s subject matter jurisdiction.
Michael LiPuma, a commercial litigator with a solo practice in Philadelphia, is representing Nelson, court records show. He could not be reached for comment Friday.
Defendants Michael Hamilton, William Krekstein and Claudia McCarron, who are representing themselves in the litigation, did not respond to calls for comment Friday. Daniel DeLuca, who is representing himself and defendant Kenneth Levine, also did not return a call for comment. And Michael Savett of Clark & Fox, who is representing defendant John Clark, did not return a call either.