A federal judge has rejected business magnate Raymond G. Perelman’s efforts to assert new counterclaims against his son Jeffrey E. Perelman in a lawsuit over the son’s acquisition of several companies from his father and the son’s formation of a trust to benefit his daughter.
U.S. District Judge Mary A. McLaughlin of the Eastern District of Pennsylvania ruled that it would be futile for Raymond Perelman to bring the counterclaims.
Jeffrey Perelman originally brought the lawsuit against his father seeking a declaratory judgment his father did not have any viable legal claims when business assets were transferred from Raymond Perelman’s companies to Jeffrey Perelman’s companies in 1990 and when Jeffrey Perelman formed the Alison R. Perelman Trust. Jeffrey Perelman also sued his father and his billionaire brother, Ronald Perelman, for defamation on the basis that Raymond and Ronald Perelman allegedly accused Jeffrey Perelman of committing fraud in his business dealings and of stealing from his own daughter, according to the opinion.
A related lawsuit that Raymond Perelman filed in the Philadelphia Court of Common Pleas on the same day Jeffrey Perelman filed his federal lawsuit was dismissed on Jeffrey Perelman’s preliminary objections because of the parol evidence rule. The state court decision was affirmed on appeal.
The counterclaims rejected by McLaughlin include a claim seeking a declaratory judgment that Raymond Perelman cannot be liable for defamation because it is allegedly “true that Jeffrey defrauded his father into transferring ownership”; a claim seeking a declaratory judgment that “Jeffrey procured a false misleading amended death certificate for his mother, Ruth Perelman” with allegedly incorrect information regarding his mother’s domicile at the time of her death; and a claim for equitable recoupment seeking to reduce any potential award to Jeffrey Perelman on his defamation claim.
Allowing Raymond Perelman to seek a declaratory judgment that he is not liable for defamation raises issues that were raised already in Jeffrey Perelman’s claims as well as Raymond Perelman’s affirmative defenses, the judge reasoned.
While Raymond Perelman argued that his counterclaim was necessary because “‘this stain on Raymond’s good name cannot be erased by a mere determination that Jeffrey has failed to make out the legal elements of his cause of action, or that Raymond has a viable affirmative defense,’” the judge said, “Here, the defect would be nominal and serves no ‘useful purpose’ aside from the symbolic.”
Further, the judge said the declaratory judgment on Raymond Perelman’s alleged defamation would not affect the future behavior of the parties. “The Declaratory Judgment Act cannot be used to obtain declaratory relief solely to adjudicate past conduct or to proclaim that one party is liable to the other based upon that conduct or to proclaim that one party is liable to the other based upon that conduct,” the judge reasoned.
McLaughlin rejected a declaratory judgment regarding Jeffrey Perelman’s alleged procurement of a misleading death certificate for his mother because Raymond Perelman’s assertion that he may face increased taxes as a result of the amended tax certificate, the judge said, is speculative.
The judge also rejected the counterclaim of equitable recoupment as futile because “the presence of fraud in the 1990 transaction was central to the 2010 state court decision.” There is a res judicata problem, she said.
The equitable recoupment cause of action also does not fit the typical context for this equity-based cause of action: permitting a defense that would otherwise be barred by the statute of limitations, McLaughlin said.
One of Raymond Perelman’s attorneys, Andrew Eckert of Buckley, Brion, McGuire, Morris & Sommer in West Chester, Chester County, Pa., did not respond to requests for comment Thursday afternoon.
“We are very pleased with the court’s decision,” said James T. Smith of Blank Rome, one of Jeffrey Perelman’s attorneys. “Hopefully this resounding loss for Raymond … will quell his incomprehensible desire to sue his son Jeffrey and Jeffrey’s family based upon claims that lack any legal or factual merit.”
(Copies of the 14-page opinion in Perelman v. Perelman, PICS No. 12-2430, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •