United States District Court, District of Columbia
DEBORAH D. PETERSON, et al., Plaintiffs
ISLAMIC REPUBLIC OF IRAN, et al., Defendant
C. Lamberth United States District Judge.
a dispute between attorneys over who will reap the rewards of
a sprawling litigation against the Islamic Republic of Iran
(Iran) under the state sponsor of terrorism exception to the
Foreign Sovereign Immunities Act (FSIA). Nearly a decade ago,
this Court lamented the "contentious road blocks and
setbacks in what has been an increasingly futile exercise to
hold Iran accountable for unspeakable acts of terrorist
violence." In re Islamic Republic of Iran Terrorism
Litigation, 659 F.Supp.2d 31, 35 (D.D.C. 2009). In spite
of the difficulties FSIA plaintiffs have historically had in
obtaining and enforcing judgments against state sponsors of
terrorism- difficulties too often chronicled by this
Court-plaintiffs here managed to obtain judgments against
Iran totaling in billions of dollars. Now, after more than
fifteen years of litigation, plaintiffs' attorneys are
eager to collect their fees.
short, attorneys David Cook and Jay Glenn have filed notices
of attorney's charging liens [ECF Nos. 525, 528, 533,
& 538], claiming they are entitled to a share of the
contingent attorney's fees from the plaintiffs'
recovery. Before this Court are plaintiffs' emergency
motions to quash those liens [ECF Nos. 539 & 542]. This
Court also considers Cook's Counter Motion to Compel
Arbitration [ECF No. 544]. For the reasons discussed below
this Court will GRANT the motion to quash Cook's lien,
GRANT the motion to quash Glenn's lien, and DENY the
motion to compel arbitration.
here are victims of the October 23, 1983 bombing of a United
States Marine Corps barracks in Beirut, Lebanon. With help
from Iran, suicide bombers from Hezbollah murdered 241
American servicemen and injured several more. This Court
presided over a consolidated action by nearly one thousand
plaintiffs consisting of the victims, their families, and the
representatives of their estates. On September 7, 2007, this
Court found Iran liable for damages because they provided
material support and assistance to Hezbollah. Iran did not
appear here, and default judgment was entered in favor of the
plaintiffs in the amount of more than $2 billion.
2013, plaintiffs successfully brought an action to seize
Iranian assets in the United States District Court for the
Southern District of New York. That court ordered the
turnover of $1.75 billion in assets held by Citibank N.A.,
cash bonds that Bank Markazi-the Central Bank of Iran- held
in an account through an intermediary. The court's order
created a qualified settlement fund (QSF trust) and
transferred the seized funds to a trustee-the Honorable
Stanley Sporkin-for the benefit of the plaintiffs. The
court's order was affirmed by both the Second
Circuit and the United States Supreme
were represented before this Court by the Fay Law Group, PA,
Thomas Fortune Fay, the Perles Law Firm, P.C., and Steven R.
Perles (collectively, "Fay and Pedes"). The
contingency agreement is set forth below in full:
I, ___, ___, on their own behalf hereby retain and employ Fay
& Perles (Attorneys) to represent them in the litigation
and recovery or settlement of all claims and causes of action
against The Islamic Republic of Iran, The Iranian Ministry of
Information and Security, and their associates and agents
with regard to the October 23, 1983 bombing of the Marine
Corps Barracks in Beirut, Lebanon.
Client agrees to pay to said Attorneys a fee which will be
computed as follows: (1) 33 1/3 % of the total gross recovery
before deduction of any fees, liens or charges of any type;
and (2) an amount equal to the necessary expenses in the
preparation, domestic and foreign litigation, lobbying
efforts, and administration of the case. This fee is
contingent upon collection and to the extent of collection
only. The percentage attorneys fee above described will be
distributed to each of the Attorneys in an equal share. The
"necessary expenses" portion of the attorneys fee
will be distributed in the proportion which that
attorney's expenses bears to the total expenses of the
Client shall have no liability for any expenses in connection
with the preparation, prosecution and administration of the
claim, the above provision relating solely to the computation
of the attorneys' fee. The Attorneys will, under no
circumstances, represent to any vendor, supplier of services
or contractor with regard to services, that they are
incurring expenses on behalf of or chargeable to the credit
of the Client and all such expenses shall be the sole
obligation of the Attorneys and not in any manner the legal
obligation of the Client. Under no circumstances shall any
part of the attorneys' fee be considered to be a loan
from the Attorneys to the Clients. The fees due the Attorneys
shall constitute a lien upon any proceeds realized having
priority before all other liens on any sums realized from
Client understands that Fay & Perles are lead counsel and
co-counsel in a number of actions against the Islamic
Republic of Iran, that most of these cases have judgments,
and all are in a more advanced procedural posture than this
case. Client further understands that although the Attorneys
have been successful in the past in prosecuting cases under
the Foreign Sovereign Immunities Act, collection may depend
upon factors beyond their control, including, but not limited
to, statutory amendments and the foreign relations of the
United States. Attorneys will assert their best efforts but
cannot guarantee success.
Perles Contingent Retainer Agreement [ECF No. 539-2]. Fay and
Perles argue that this agreement authorized them to employ
other attorneys to assist them in their efforts, but did not
authorize counsel to obligate the plaintiffs to pay fees of
any other attorney employed. Pis.' Mem. in Supp. of Em.
Mot. to Quash Cook's Lien 3 [ECF No. 539-1].
Perles engaged Jay Glenn to prove the plaintiffs' damages
to a Special Master. Glenn asserts that, pursuant to a
written agreement signed in 2003, Fay and Perles agreed to
pay Glenn 3% of the gross amounts collected on judgments for
plaintiffs represented before the Special Master. Decl. of
Glenn Exhibit 1 [ECF No. 546-1]. Further, Glenn asserts that
Fay and Perles orally agreed to pay an additional one-third
of amounts collected on plaintiffs referred by Glenn. Decl.
of Glenn ¶ 11 [ECF No. 546]. Glenn claims to have
represented 103 plaintiffs before the Special Master,
resulting in a combined award of over $309 million. Mem. in
Opp'n to Em. Mot. to Quash Glenn's Lien 2 [ECF No.
545]. The referred plaintiffs were allegedly awarded $111,
750, 000.00. Decl of Glenn Exhibit 10 at p. 3 [ECF No.
546-16]. In contrast, Fay and Perles claim Glenn's only
agreement was with Fay and Perles themselves; they deny that
the oral agreement existed and argue that Glenn is not
entitled to a charging lien. Mem. in Support of Pis.' Em.
Mot to Quash Glenn's Lien 3 [ECF No. 542-1] ("Glenn
has no contract with Plaintiffs and no lien in [sic] can
Perles similarly engaged David Cook "to represent the
[p]laintiffs above referred to in order to effect a
collection of the amounts due [in this action]."
See Cook Agreement ¶ 3 [ECF No. 539-3]. Cook
agreed to bear all expenses while pursuing collection on the
judgment. Id. ¶ 6. "To the extent of the
recovery by the Collection Service, the recovery shall first
be subject to reimbursement of costs and expenses, and
thereafter, subject to the fees due the Collection
Service." Id. According to the agreement, the
fee due the collection service was "a contingency fee of
10% on any net recovery, as received." Id.
¶ 7. "Net recovery is defined as the total recovery
less costs of enforcement incurred by the Collection
Service." Id. "In the event of any
collection, the funds shall be remitted to a joint escrow
account from which the contracting parties will disburse
funds as they deem fit, however, the Collection Service shall
be able to deduct their fees and expenses before remitting
the funds to [Fay and Perles] who serve as the agent and
repository for any collections." Id. ¶ 9.
"In the event of any disputes by and among any of the
attorneys, or all of the same, and the clients, and all of
the same, such disputes shall be resolved by way of binding
arbitration ...." Id. ¶ 5.
and Cook each filed a notice of charging lien asserting a
property interest in the QSF trust. Specifically, Glenn
asserts a charging lien "for the purpose of securing
Glenn's fee claims of: (a) 3% of the respective gross
amounts collected on behalf of the 103 plaintiffs in this
action ... to which Glenn is entitled pursuant to an
agreement between Glenn and [Fay and Perles]; and (b) 11.11%
of the respective gross amounts collected on behalf of the 40
plaintiffs in this action ... to which Glenn is entitled
pursuant to agreements between Glenn, [Fay and Perles], and
the respective plaintiffs; plus (c) unreimbursed costs and
expenses due Glenn of $15, 288.56." Glenn's Am.
Notice of Charging Lien [ECF No. 538]. Cook also asserts a
charging lien "for the purposes of securing the fee
claim of 10% of the gross proceeds guaranteed under that
certain written contract dated April 5 and 6, 2008 by and
between [Cook] and the Plaintiffs." Cook's Notice of
Charging Lien [ECF No. 533].
Perles moved to quash those charging liens. Specifically, Fay
and Perles argue that this Court does not have jurisdiction
over the liens or funds at issue here because the corpus-the
QSF trust-is being administered in New York pursuant to
orders issued by the SDNY court. Em. Mot. to Quash
Glenn's Lien 2 [ECF No. 542]; Em. Mot. to Quash
Cook's Lien 3 [ECF No. 539]. Further, they argue that
Glenn's lien should be quashed because no agreement
existed between Glenn and the plaintiffs here. Em. Mot. to
Quash Glenn's Lien 2 [ECF No. 542]. Thus, because this is
a dispute between attorneys rather than a dispute between
attorneys and client, a charging lien is improper.
Id. Similarly, Fay and Perles argue that Cook's
lien should be quashed because he never appeared in the SDNY
case that lead to recovery, and instead was terminated for
incompetence. Em. Mot. to Quash Cook's Lien 2, ¶ 4
[ECF No. 539]. Further, Fay and Perles argue that "Cook
has no right to lien any property of the Plaintiffs because
he does not have a written agreement with the
Plaintiffs." Mem. in Support of Pis.' Em. Mot. to
Quash Cook's Lien 6 [ECF No. 539-1].
argues that his charging lien is valid because he represented
the 103 plaintiffs pursuant to the 2003 written agreement, an
additional oral agreement, and the 40 retainer agreements he
executed on behalf of Fay and Perles. Mem. in Opp'n to
Pis.' Em. Mot. to Quash Glenn's Lien 4-6 [ECF No.
545]. Cook argues that, while he did not appear in the SDNY
action, he retained New York attorneys to secure the Bank
Markazi assets. Id. at 8. Cook also argues,
similarly to Glenn, that the plaintiffs here were also
parties to Cook's retainer agreement with Fay and Perles.
Mem. in Opp'n to Pis.' Mot. to Quash Cook's Lien
9-14 [ECF No. 543]. In other words, Cook argues that
plaintiffs authorized Fay and Perles to hire third-party
service providers who would be paid an additional contingency
fee out of the recovered judgment. Id. at 10-11.
Thus, Cook argues he had a contingency agreement with
plaintiffs themselves and not merely with Fay and Perles.
Id. at 16. Finally, Cook argues that the question of
whether Cook is entitled to some or all of his fee should be
decided by an arbitrator pursuant to the arbitration clause
in the retainer agreement. Id. at 5; Counter Mot.
and Mot. to Compel 5 [ECF No. 544]. Cook asks this Court to
compel arbitration of his claims against Fay and Perles,
order the appearance of plaintiffs at that arbitration, and
order the QSF trustee to withhold 10% of the funds from
distribution pending the outcome of the arbitration.
Id. at 19.
existence and effect of an attorney's lien is governed by
the law of the place in which the contract between the
attorney and client is to be performed. 7 Am. Jur. 2d
Attorneys at Law § 351 (1980). The District of
Columbia has no statute setting out attorney's liens;
rather, D.C. relies on the common law. See Wolf v.
Sherman, 682 A.2d 194, 197 (D.C. 1996). The
"charging lien" arises when an attorney obtains a
judgment or decree for a client, and has been characterized
as "merely a claim to the equitable interference by the
court to have that judgment held as security for his debt
[the attorneys' charges against the client]."
Id. at 197 (quoting Lyman v. Campbell, 182
F.2d 700, 701-02 (D.C. Cir. 1950)). Unlike the retaining
lien, the charging lien is not dependent on possession of a
order for a charging lien to attach, "it is
indispensable that there exist between the client and his
attorney an agreement from which the conclusion may
reasonably be reached that they contracted with the
understanding that the attorney's charges were to be paid
out of the judgment recovered." Id. Whether
written or verbal, an unmistakable contingency agreement
between a client and his attorney gives rise to an equitable
attorney's charging lien. See District of Columbia
Redevelopment Land Agency v. Dowdey,618 A.2d 153, 160
(D.C. 1992) (finding an undisputed oral contract between an
attorney and his clients that the attorney would be paid out
of the recovered funds sufficient to support an equitable
lien). However, if no agreement exists between a client and
an attorney, there is no basis for inferring the intent
necessary giving rise to such an equitable lien. See