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Litigation

Lawsuit Targets Gulf Oil Spill Compensation Fund, Administrator Kenneth R. Feinberg

Complaint Alleges Gross Negligence, Fraud, Fraudulent Inducement and Unjust Enrichment 

TAMPA, Fla. - A first-of-its-kind lawsuit has been filed in Florida state court against the Gulf Coast Claims Facility (GCCF), its administrator, Kenneth R. Feinberg, and his law firm, Feinberg Rozen LLP, alleging gross negligence, fraud, fraudulent inducement and unjust enrichment (Pinellas Marine Salvage Inc. v. Kenneth R. Feinberg, No. 11001744CI, Fla. Cir., Pinellas Co.). 

The 42-page complaint was filed Feb. 25 in Pinellas County Circuit Court by Tampa attorney Brian J. Donovan of The Donovan Law Group on behalf of Pinellas Marine Salvage Inc. and John Mavrogiannis.  

According to a press release from Donovan: 

Pinellas Marine Salvage Inc., a corporation organized under the laws of the State of Florida, is a full-service marine salvage facility on the west coast of Florida serving the Gulf Coast states of Louisiana, Mississippi, Alabama and Florida. The company was founded in January 1997 by Mavrogiannis to address a market need for used and refurbished marine parts, supplies and vessels. As a result of the actions of the defendants, the company is struggling to survive. 

Feinberg, acting through and as managing partner of Feinberg Rozen, established the GCCF to independently administer and where appropriate settle and authorize the payment of certain claims asserted against BP as a result of the explosion at the Deepwater Horizon rig and consequent oil spill into the Gulf of Mexico. 

"In their lawsuit, the plaintiffs allege, in part: (a) the defendants, without any legal authority for doing so, circumvent many of the  rights provided to victims of the BP oil spill under the Oil Pollution Act of 1990; (b) the defendants employ a 'Delay, Deny, Defend' strategy against claimants," according to the release. "This strategy, commonly used by unscrupulous insurance companies, is as follows: Delay payment, starve claimant, and then offer the economically and emotionally-stressed claimant a miniscule percent of all damages to which the claimant is entitled. If the financially ruined claimant rejects the settlement offer, he or she may sue; (c) the defendants delay payment by telling claimants, 'claims will be paid within 90 days after substantiation.' Unbeknownst to the claimants, substantiation means 'the claim has been received and reviewed by GCCF.' This definition of substantiation allows a claim to be received and held 'under review' indefinitely by GCCF. When GCCF finally 'substantiates' the claim, the claimant is told he or she will be paid within 90 days; (d) Feinberg uses the fear of costly and protracted litigation to coerce claimants to accept grossly inadequate settlements from GCCF.  During widely-reported town hall meetings organized to promote GCCF, Feinberg repeatedly tells victims of the BP oil spill: 'The litigation route in court will mean uncertainty, years of delay and a big cut for the lawyers.' and 'I take the position, if I don't find you eligible, no court will find you eligible;' and (e) Feinberg misleads claimants by advising during well-reported town hall meetings, on a number of occasions, potential claimants that the fund which he administers is fully funded in the amount of $20 billion. At the end of 2010, the most the fund would have had in its escrow account would have been $5 billion." 

Pinellas Marine Salvage Inc. and Mavrogiannis seek economic and compensatory damages, in amounts to be determined at trial, and punitive damages.

(Lexis.com subscribers can find Deepwater Horizon-related filings here.  If you do not have a lexis.com ID, you can get information on how to subscribe here.)

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