January 31, 2011
Major asbestos law firm Kelley & Ferraro files for Chapter 11 bankruptcy protection
Faced with a $4.2 million claim by a deceased name partner’s widow, a Florida-based asbestos law firm has filed for Chapter 11 bankruptcy seeking respite.
Kelley & Ferraro filed in Miami this week, as Lynn Kelley was pursuing a Cuyahoga County Court of Common Pleas case against the firm in Ohio concerning the amount she is allegedly owed by the firm after her husband’s death five years ago.
Although James Ferraro prevailed at trial on all counts and the firm prevailed on all counts but one, Kelley won a $4.2 million judgment on that one count.
A state appeals court has since ordered the firm to dissolve and ordered a new trial on damages, the article explains. Kelley’s lawyer contends she is actually entitled to $35 million, according to dissolution provisions of the law firm’s partnership agreement.
The timing of the bankruptcy filing was not coincidental as it was made on the same day civil proceedings brought by Lynn Kelley, widow of firm co-founder Michael Kelley, were to resume in Cuyahoga County Common Pleas Court. The bankruptcy filing automatically stayed the civil proceedings.
The legal feud between Ms. Kelley and Mr. Ferraro began in April 2006, four months after Michael Kelley died. Ms. Kelley alleged Mr. Ferraro was not following the company contract he signed with her late husband and claimed, among other things, that Mr. Ferraro had cut off her salary and refused to dissolve the firm and divide the assets as the contract required.
A jury found in favor of Mr. Ferraro on all counts and found in favor of Kelley & Ferraro on all counts but one, for which it awarded Ms. Kelley $4.2 million. Mr. Wuliger appealed the decision to a state appeals court, contending there were errors before, during and after the trial.
The Eighth Ohio District Court of Appeals ordered in June 2010 that the firm be dissolved, per the partnership agreement, and ordered a new trial held regarding the damages Ms. Kelley suffered, if any, as a result of Mr. Ferraro’s breach of contractual and fiduciary duties.
According to Mr. Wuliger, the contract requires 40% of the firm’s revenues to be paid to the Kelley estate. Ms. Kelley, he said, is owed well over $35 million and has received a couple hundred thousand dollars to date.
Kelley & Ferraro’s bankruptcy filing names Ms. Kelley and Mr. Ferraro as creditors, of whom there are an estimated 50 to 99. It estimated the firm’s assets and liabilities each at more than $1 million, up to $10 million. There should be funds available for distribution to unsecured creditors, the filing indicated.