Manglona dismisses lawyer’s counterclaims against Hillbroom

The federal court has dismissed all six counterclaims filed by attorney Barry J. Israel against his former client, Junior Larry Hillbroom.

In an order on Monday, U.S. District Court for the NMI Chief Judge Ramona V. Manglona dismissed with prejudice Israel’s counterclaims for indemnification, partial equitable indemnification, contribution, breach of contract, quantum meruit, and money had and received.

Dismissed with prejudice means Israel cannot re-file the counterclaims anymore.

In the 11-page order, Manglona ruled that all six of the lawyer’s counterclaims are dismissed for failure to state a claim on which relief can be granted.

Therefore, the judge said, there is no need to decide whether the counterclaims are compulsory and relate back to 2009, when Hillbroom first brought the lawsuit against Israel.

The Vietnam-based Israel and Guam lawyer David J. Lujan used to serve as counsels for Hillbroom in the late business tycoon Larry Lee Hillblom’s probate matter in Superior Court. Hillbroom is the DNA-proven son of Hillblom.

Hillblom died in a plane crash off Anatahan waters in 1995.

Approximately $100 million in assets were distributed to Hillbroom in the settlement of the probate case for Hillblom estate.

Since Hillbroom was a minor at the time of the settlement, the Junior Larry Hillbroom Trust was created for him.

Hillblom is suing Israel and Lujan for allegedly conspiring with Keith Waibel, trustee of JLH Trust, to inflate the attorney’s contingency fee when Hillblom’s fortune was still undergoing probate proceedings.

Israel filed counterclaims against Hillbroom and Waibel. He alleges that Hillbroom’s lawsuit is part of a shake-down scheme by Hillbroom and Waibel to mask their own mismanagement and dissipation of trust assets by falsely accusing the lawyers of fraud.

Israel asserts that if he is found liable, Hillbroom and Waibel should have to indemnify him for any sums he is forced to pay them.

Hillbroom, through counsel Graham Lippsmith, moved to dismiss Israel’s counterclaims.

In her order, Manglona said Israel fails to state a claim for indemnification, partial equitable indemnification, and contribution because the claim has not accrued and cannot be maintained against Hillbroom.

Manglona said the counterclaims for indemnity, partial equitable indemnity, and contribution have not yet accrued, because Israel has not yet discharged a liability.

The judge said because Israel’s liability, if any, has yet to be determined and he has not had to pay damages, he does not presently have a right of contribution.

Manglona said even if Israel had already discharged a liability, these three counterclaims against Hillbroom would fail to state a claim.

“The indemnification, partial equitable indemnification, and contribution claims are fatally flawed, because Junior [Hillbroom] can never be a third party in this action,” the judge said.

Manglona said Israel also fails to state a claim against Hillbroom for breach of contract, quantum meruit, or money had and received.

Manglona said that in 2003 the Larry L. Foundation sold to Israel its interest in Danao Holdings International, an unliquidated asset jointly owned by the Foundation and the JLH Trust.

The judge said in exchange for the JLH Trust’s interest in the Danao investment, Israel gave up his right to be paid the contingency fee on the future sale of any unliquidated assets or on payments or distributions.

“Whether on a breach of contract theory, in quantum meruit, or for money had and received, Israel asserts that Junior [Hillbroom] [as well as Waibel] is liable to him for the contingency fee subsequent to the sale of Danao,” Manglona said.

On breach of contract issue, Manglona said in consideration for giving up his right to his share of the JLH Trust Fee Agreement contingency fee, Israel purchased the Trust’s interest in Danao.

“For that reason, Israel has failed to make out a breach-of-contract claim that is plausible on its face,” she said.

On quantum meruit claim, Israel claims that he is entitled to the reasonable value of services he performed in carrying out his duties for the JLH Trust.

Quantum meruit determines the amount to be paid for services when no contract exists or when there is doubt as to the amount due for the work performed but done under circumstances when payment could be expected.

Manglona said Israel’s quantum meruit claim is based upon the same facts and seeks the same recovery as his breach-of-contract claim.

“It therefore fails for the same reason,” Manglona pointed out.

On money had and received claim, Israel asserts that 38 percent of any income to the JLH Trust subsequent to the sale of Danao is money had and received for Israel’s use and benefit.

Manglona said Israel has failed to allege a specific amount that Hillbroom owes him.

“Therefore, the claim for money had and received is facially deficient,” she said.