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Peterson v. Islamic Republic of Iran

United States District Court, District of Columbia

June 22, 2018

Deborah D. Peterson, et al. Plaintiffs,
v.
Islamic Republic of Iran, et al. Defendants.

          MEMORANDUM AND ORDER

          HONORABLE ROYCE LAMBERTH UNITED STATES DISTRICT JUDGE.

         Background

         The movants-Mr. David Cook and his firm, Cook Collection Attorneys, PLC (collectively "Cook")-now seek a common law equitable lien over the plaintiffs' attorneys' ("respondents") share of the recovery in this case and sequestration of the portion disputed in the ongoing arbitration between Cook and the respondents. ECF No. 575. Cook formerly worked as collection counsel in this case.

         This is the fifth time and the third forum in which Cook has sought relief similar to that for which he asks here. Previously, in this Court, Cook sought an "attorney's charging lien" against the funds "to be received by the Plaintiffs" in this case. ECF No. 528 at 1-2. This Court granted the plaintiffs' motion [ECF No. 539] to quash that lien because Cook had no contractual or attorney-client relationship with the plaintiffs; rather, Cook has a contractual relationship with the plaintiffs' attorneys. (ECF No. 564). The D.C. Circuit affirmed that decision. Peterson v. Islamic Republic of Iran, 724 Fed.Appx. 1 (D.C. Cir. 2018).

         Cook sought similar relief in the Southern District of New York. There, he tried to assert a statutory charging lien under New York law on the proceeds being used to satisfy the Peterson judgment and other judgments against Iran. The District Court denied Cook's motion to intervene to assert this lien as untimely, Peterson v. Islamic Republic of Iran, No. 10-cv-4518, 2016 WL 9447953 (S.D.N.Y. June 6, 2016), and the Second Circuit affirmed, Peterson v. Islamic Republic of Iran, 690 Fed.Appx. 744 (2d Cir. 2017).

         Cook also sought similar relief in arbitration. Cook has, for the past several years, arbitrated the merits of his contract claim against the respondents and other attorneys who have been involved in this litigation with JAMS in New York. Twice in the course of that arbitration, once in 2016 and once in 2018, Cook has sought from the arbitrator an interim award creating some form of security interest in any funds that the respondents receive from the trust that now holds the funds pending payments to the plaintiffs. Specifically, Cook sought to enjoin or otherwise prevent the respondents from acquiring and spending as they will any payments they receive from those funds as attorney's fees. Both times, the arbitrator denied Cook's petitions. See generally Arbitration Order No. 2, ECF No. 577-2; Arbitration Order No. 15, ECF No. 577-3. Both times, the arbitrator chastised Cook for his flagrant forum shopping. Id. Both times, the arbitrator characterized Cook's efforts as attempts to effect pre-judgment attachment. Id. And both times, the arbitrator made clear that Cook's requests should be denied on their merits. Id. In both cases, the arbitrator said that

The merits of the case are still very much in dispute. The Claimants (Cook) have offered no evidence of the irreparable harm they may suffer if the injunction is not granted, other than a conclusory assertion for the need for "security" from an "empty award." The Respondents, on the other hand, would suffer harm as a result of the restrictions placed on their ability to spend these funds as they see fit. Finally, a grant of the relief requested by the Claimants would promote forum-shopping which disserves the public interest.

         Arbitration Order No. 15, ECF No. 577-3 at 5-6.

         Having been denied four times already (six, if you count the appeals) in three separate forums, Cook now tries again to obtain a security interest in the judgment proceeds of this case, this time in the form of a common law equitable lien over and sequestration of the respondents' share of the recovery. In response to Cook's motion, the respondents move to compel arbitration of Cook's motion and to stay proceedings in this case. Having reviewed the record and the applicable law, the Court grants the respondents' motion, compels Cook to arbitrate his motion, and stays proceedings in this case until arbitration is completed.

         Analysis

         "Section 3 of the Federal Arbitration Act [FAA] entitles litigants in federal court to a stay of any action that is 'referable to arbitration under an agreement in writing.'" Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 625 (2009) (quoting 9 U.S.C. § 3). Cook and the respondents have a written agreement that contains an arbitration clause requiring arbitration of "any disputes by and among any of the attorneys." ECF No. 575-3, p.4, ¶5.

         Cook's attempt to secure an equitable lien over and sequestration of any funds that the respondents may receive for their services in this case qualifies as a dispute among the attorneys. Even if the arbitration agreement were narrowly construed to cover only disputes arising out of the contract, this dispute would meet that criterion as it arises out of Cook's attempt to secure and collect payment for services allegedly performed under the contract. That this dispute is arbitrable is amply demonstrated by Cook's two previous attempts to obtain nearly identical relief from the arbitrator. Because this dispute is arbitrable, the Court must stay proceedings between these litigants until arbitration has been had in compliance with the parties' agreement.

         Cook argues that his motion need not be referred to arbitration for three reasons. First, he argues that the arbitrator has decided to defer to this Court on this issue. Second, he argues that the respondents are in default in proceeding with arbitration under § 3 of the FAA. Third, he argues that the arbitrator has no authority to issue the lien/injunction he seeks because it would bind nonparties to the arbitration agreement. All of these arguments are meritless.

         I. The Arbitrator Has Not Decided to Defer to the ...


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