Angelos Says Md. Reneged On Tobacco Contract
BALTIMORE, Dec. 22; Lawyer and Orioles owner Peter G. Angelos believes he's been "stabbed in the back" by Maryland's demand that Angelos seek his fees from cigarette makers before the state pays him for suing the tobacco industry, Angelos's lawyer told a
The heated rhetoric in the velvet-draped decorum of a Baltimore Circuit Court room was the latest salvo in the increasingly contentious fight between Angelos, a nationally known plaintiff's lawyer, and state Attorney General J. Joseph Curran Jr. (D), who is seeking to keep as much of Maryland's $4.4 billion share of the national tobacco settlement in state coffers despite signing a contract with Angelos to give him 25 percent.
"The attorney general dictated the terms of the contract" and now is trying to renege, said one of Angelos's attorneys, William F. Gately. Angelos has contended that the state should pay him--under the contract his fees would total more than $1 billion--and then seek reimbursement from a special fund established by cigarette makers to pay attorneys' fees from the national litigation.
But Assistant Attorney General Lawrence P. Fletcher-Hill called that argument "a red herring." It is Angelos who breeched his contract by refusing to first seek his fees from the tobacco industry before negotiating the rest of his payment, Fletcher-Hill said during nearly a day-long hearing before Judge Clifton J. Gordy.
"It could not be more simple," Fletcher-Hill said. "The attorney has an obligation to do what it is the client instructs the attorney to do. It's gotten turned around here so that the attorney is telling the client what to do."
With hundreds of millions of dollars at stake, the dispute between the state and Angelos has turned increasingly bitter in recent weeks. Curran's office sued Angelos two weeks ago.
Gordy said he would rule sometime next week, and both sides vow to appeal if they lose. Whether or not the judge decides to force Angelos to go to the national arbitration board, the lawsuit will continue over how much the state owes the lawyer and is slated for trial in September.
In an unusual admonishment to the lawyers today, Gordy predicted "a public bloodletting" if the lawsuit isn't settled. "If there was ever a case that cried out for a resolution between the parties, this is it," he said as he concluded today's hearing.
The dispute has hung up the initial $54 million payment due Maryland from cigarette makers, and payments expected next year also could be left in escrow, with the money unavailable to be spent on anti-cancer and education initiatives advocated by Gov. Parris N. Glendening (D), until the lawsuit is resolved.
In 1996, Angelos won a contract with the state to sue the tobacco industry to seek compensation for Medicaid costs associated with treating thousands of people with smoking-related illnesses. He agreed to front the expenses for the case, which are estimated to be $6 million to $10 million, and contracted to receive 25 percent of whatever the state got from the cigarette makers.
Two years later, the legislature cut the fee to 12.5 percent, which Angelos contended it could not unilaterally do. He was preparing to go to trial against the tobacco companies when the national settlement was reached in November 1998, paying the states more than $200 billion over the next 20 years.
All other states' lawyers have sought their compensation from the national fund established by the tobacco industry as part of the settlement, but Angelos contends he has no obligation to do that. "There are no other conditions" in the contract with Maryland, said another of his attorneys, H. Thomas Howell. "It's 25 percent. Period."
Although Fletcher-Hill spoke at length of Angelos's obligation to do what the attorney general, as his client, wants him to do, Howell told the judge, "I did not hear once what the state's obligation is under this . . . contract."
Fletcher-Hill argued that all contracts with contingency fees are subject to review by a judge and that Angelos's was no different.
But Gately said the review is only to ensure that naive clients aren't bilked by unscrupulous lawyers. "The attorney general will never be able to show misconduct or overreaching by Peter Angelos," he said.