We continue to be busy and have been fortunate to work and be successful on interesting and challenging cases. In my ongoing case for a Chinese company which obtained an arbitration award against a Massachusetts corporation, and for which we later obtained a verdict personally against its owner, you may recall that when the smoke cleared following trial, we had a judgment against the individual owner for approximately $2.6 Million. We then began post-judgment discovery which is allowed by Federal Rule of Civil Procedure 69. The individual defendant was required to answer questions and provide documents we requested. As a result, we learned that while our case was pending, he transferred about $2 Million of his funds from the U.S. to an off-shore “asset protection” trust located in the Pacific Cook Islands. These entities and their bank accounts are commonly used to avoid paying U.S. taxes or to shelter assets from U.S. creditors. They exist in jurisdictions like the Cook Islands and certain Caribbean islands that have garnered a reputation for using their local legislation to prevent their island trustees and their banks from being required to pay the funds to creditors like my client.

     The usual process is for a Court, upon the creditor’s motion, to order the defendant to repatriate the alienated assets, that is, to return them to the U.S. Our motion requiring repatriation and deposit of the funds with the Federal Court Clerk was allowed by the Court. The next step is to bring a motion to hold the defendant in contempt of the Court’s order when he fails to repatriate the funds. The defendant will then customarily plead that he asked the trustee to return the funds, per the U.S. Court’s order, but that the trustee has refused to do so, arguing that this is an “irrevocable” trust and that it has clauses that allow the trustee or “trust protector” (both of course located in the foreign jurisdictions) to refuse repatriation if they deem the reason to be “duress” by a creditor or U.S. Court. How convenient.

     However, the Federal Courts caught onto these antics and have held the debtors in contempt of court for failing to bring back their assets to the U.S. This has resulted in some defendants being jailed for years pursuant to the Courts’

inherent power to compel recalcitrant defendants to obey the Court’s orders. After all, it was the defendant in my case who voluntarily chose to put the assets into that jurisdiction while he was a defendant in a lawsuit seeking to recover at least the amount of money he chose to send off-shore. The irony is that this same defendant who was found liable for fraudulently conveying his company’s assets, continued in his modus operandi by fraudulently transferring his assets to a trust of which he was the primary beneficiary.

     One of the aspects of the law which I have always enjoyed is the variety of issues that arise, especially in litigation,

combined with the changes in the law brought about by changing social and economic conditions. The law over centuries and even just decades changes to accommodate the needs of the population, both by statutes passed by legislatures and by Courts developing the “Common Law” in nations that developed their law from British antecedents. The case law has steadily grown where defendants’ efforts to evade collection using these off-shore

trust have been stymied by our Courts.

     I’ll keep you advised as this legal case continues.

     In another case, I was asked to defend a personal injury claim for a long-time non-profit client. I cut my teeth on

personal injury cases when I first started out of law school. They were a good way to get an opportunity to appear in Court for motions, jury-waived trials and eventually jury trials. Learning to be a trial lawyer involves the eponymous “trial and error” technique. One learns a great deal from the errors one makes early on as a young lawyer. Those cases tended to be of limited financial importance to a law firm, and thus suitable for a young lawyer making his way in the profession to cut his or her teeth on. Fortunately, I landed some good wins, and got a lot of good experience in the process, which later served me well.

     So, it was in the spirit of reliving those early successes that I represented my client, a charitable educational institution. Although it was to some eyes a simple “slip and fall” case, it bore some heavy responsibility. The plaintiff could document well over one million dollars in medical bills and expenses and of course had an open-ended claim for what’s referred to as “pain and suffering”, the amount of which is generally in the jury’s discretion. Fortunately, two Massachusetts statutes led the way to success for us. One was the “recreational use” statute and the other was the “charitable cap” statute. In our situation, we were able to take fair advantage of both. The injury took place at a playing field which my client owned, but also allowed members of the public to utilize without charge for recreational use. The statute provides complete immunity for state and private parties that make their property available without asking those enjoying the property to pay an entrance fee.

     Even if there were liability, the Massachusetts charitable cap statute limits the charitable institution’s damages to $20,000, no matter what the severity and economic cost of the injuries. The reasoning, among other things, is that charitable institutions like hospitals and universities which depend on donations from philanthropic minded persons, should not be financially ruined if one their employees makes a mistake leading to a negligence claim. When I started practice some years ago it was a “charitable immunity” statute, preventing any damages to be awarded to an injured person. That statute was amended some years ago to cap damages at $20,000 – another example of the changes in the law through statutory changes which, in that instance, was encouraged by a Massachusetts Supreme Judicial Court decision that urged the legislature to update the total immunity provision.

     I was recently invited to the Annual Dinner of the American Swiss Foundation, with which I have maintained a close relationship for the more than 20 years when I was President and on the Board of Boston-based Friends of Switzerland. The ASF, which is headquartered in New York City, held its gala on the floor of the New York Stock Exchange. The ASF, like Friends of Switzerland, encourages good will and understanding between the governments and people of the “Sister Republics”. Among the American and Swiss luminaries that attended was His Excellency Jacques Pitteloud, the Ambassador of Switzerland to the United States. 

     As always, we continue to practice in a wide range of legal areas, including corporate, commercial and business law, trials and appeals, real estate issues, employment, discrimination, divorce, international and university law. If you have any questions about our areas of practice or about any legal matters where we can be of assistance to you or someone you know, please do not hesitate to call on me.

     Marc Redlich