Estate of Berganzo–Colón v. Ambush

Decision Date07 January 2013
Docket NumberNo. 12–1218.,12–1218.
Citation704 F.3d 33
PartiesThe ESTATE OF Ángel BERGANZO–COLÓN Represented by Efraín and Rubén BERGANZO; The Estate of Antonio Rodríguez–Morales Represented by Noemí Rodríguez–Robles, Eliezer Rodríguez–Robles, Ángel M. Rodríguez–Robles, María M. Rodríguez–Robles and Ruth D. Rodríguez–Robles, Plaintiffs, Appellees, v. Joshua M. AMBUSH, Defendant, Appellant.
CourtU.S. Court of Appeals — First Circuit

OPINION TEXT STARTS HERE

Raúl M. Arias, with whom McConnell Valdes LLC was on brief, for appellant.

David Efron, with whom Joanne V. Gonzales Varon and Law Offices of David Efron, P.C. were on brief, for appellees.

Before HOWARD, LIPEZ and THOMPSON, Circuit Judges.

HOWARD, Circuit Judge.

Joshua M. Ambush, an attorney, appeals various judgments and orders of the United States District Court for the District of Puerto Rico, which nullified two retainer agreements signed by Ambush's clients. The district court issued its final judgment after a jury found that Ambush had secured his clients' consent to the retainer agreements by deceit. We affirm.

I. Background

In 1972, Japanese terrorists opened fire on a group of Puerto Ricans at Lod Airport in Tel Aviv, Israel, killing several of them. Among those killed were Ángel Berganzo–Colón and Antonio Rodríguez–Morales, whose heirs are the appellees in this case. At the time, sovereign immunity generally prevented a victim of terrorism (or his heirs) from filing suit in the United States courts against a nation that sponsored the terrorist act. In 1996, however, Congress created a “terrorism exception” to sovereign immunity. Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. No. 104–132, § 221(a)(1)(C), 110 Stat. 1214, 1241 (repealed 2008). For acts of terrorism that occurred before the law was enacted, plaintiffs had ten years to file suit. Id. § 221(a)(2).

In the early 2000s, Ambush was a new attorney in Maryland with an interest in cases relating to international terrorism. Ambush's research led him to believe that Libya and Syria had sponsored the Lod Airport massacre, and he thought that he could bring suit against those nations if he could find the right plaintiffs. He took his idea to an organization called the AmericanCenter for Civil Justice (the “Center”), which sponsored litigation by victims of terrorism. Ambush had become familiar with the Center through his family friend Eliezer Perr, who was one of the Center's principals. The Center agreed to participate, and Ambush found potential plaintiffs, including the appellees, with the help of his Puerto Rican cousin Leopoldo García–Viera.

In 2002, García had potential plaintiffs sign a Claimant and Center Agreement,” under which the Center would cover all costs of investigating and litigating their cases in return for twenty percent of any proceeds from litigation. They also signed a power of attorney in favor of Michael Engelberg, the director of the Center. The Claimant and Center Agreement was not a retainer agreement, but it did obligate the Center to secure counsel to commence litigation. It did not mention Ambush. Ambush, who does not speak Spanish, did not travel to Puerto Rico or meet with the signatories.

Over the next few years, Ambush and the Center unsuccessfully attempted to persuade a major law firm to litigate against Libya and Syria. Faced with the impending expiration of the ten-year statute of limitations, the Center asked Ambush to draft and file a complaint, which he did in April 2006. Without assistance from other attorneys, Ambush began to litigate the case, known as Franqui v. Syrian Arab Republic, No. 1:06–cv–00734–RBW (D.D.C. filed Apr. 21, 2006). He effected service on the defendants and opposed motions to dismiss. During this time, Ambush had no written agreement with the Center regarding compensation for his work on the Franqui litigation. From time to time, he would ask the Center for payment at the rate of fifty dollars per hour, as well as reimbursement for his expenses. The Center made some payments to Ambush, but the Center and Ambush dispute whether he was paid in full. Engelberg believed that Ambush had been paid everything he was owed. Ambush believed that he had an oral understanding with Eliezer Perr that he would receive a substantial percentage of any recovery.

In August 2008, as the Franqui litigation progressed, the United States and Libya signed a settlement agreement that foreclosed terrorism-related suits against Libya. In exchange, Libya would compensate victims of terrorist acts it sponsored, by contributing to a settlement fund to be administered by the United States Department of State. The fund would pay $10 million to the estate of each person killed in an act of Libyan-sponsored terrorism.

After the Libyan settlement was announced, the Center sent Ambush a letter telling him to turn his case file over to Paul Gaston, an attorney whom the Center had hired and who had filed a notice of appearance in the Franqui litigation a few months before. Ambush did not turn over his file, but instead went to Puerto Rico to meet with the Franqui plaintiffs for the first time.

On December 15, 2008, Ambush, along with his cousin García and a notary public, met with the families of Ángel Berganzo and Antonio Rodríguez. Berganzo had two heirs: Efraín and Rubén Berganzo–Cruz. Only Efraín attended the meeting. Rodríguez had five heirs: Noemí, Eliezer, María, Ángel, and Ruth Rodríguez–Robles. All but Ruth attended the meeting. What was said at the meeting is a matter of dispute that we will discuss below. But it is undisputed that all of the heirs present at the meeting signed retainer agreements—one for each estate—that revoked Engelberg's power of attorney, retroactively retained Ambush as the heirs' counsel for the Franqui litigation and the administrationof their claims in the Libyan settlement, and awarded Ambush ten percent of any recovery. Rubén Berganzo did not sign the retainer agreement, but he testified that his brother Efraín signed on his behalf under a power of attorney. Ruth Rodríguez signed the retainer agreement a week later in Florida. Two days after the meeting, Ambush sent a letter to Engelberg informing him that his power of attorney was revoked and telling him not to contact the plaintiffs in the Franqui litigation.

Ambush then worked to obtain settlement funds for the Franqui plaintiffs. He dismissed the Franqui litigation as the settlement agreement required, and he gathered the documents that the State Department requested. By April 2009, the State Department paid $10 million to Ambush's trust account for each of the two estates. Of this $10 million, Ambush sent $2 million to the Center pursuant to the Claimant and Center Agreements, kept $1 million pursuant to the retainer agreements, and sent $7 million to the heirs.

As one might expect, relations between Ambush and the Center soured. The Center filed suit against Ambush, alleging that he breached his fiduciary duty to the Center by convincing the Franqui plaintiffs to revoke Engelberg's power of attorney, and that he deliberately performed his work inefficiently and overcharged the Center. See Am. Ctr. for Civil Justice v. Ambush, No. 1:09–cv–00233–PLF (D.D.C. filed Feb. 6, 2009). Ambush counterclaimed for breach of contract, alleging that the Center had failed to pay him $2 million that it had promised as compensation for his work on the Franqui litigation.

While Ambush and the Center litigated against each other, the Center hired a Puerto Rico attorney, Javier López–Pérez, to run the following advertisement in the Puerto Rican press directed specifically toward the Franqui plaintiffs:

You could be the object of a scheme of improper collection of attorneys fees by attorneys in Washington and Maryland. If you are a party to the settlement that was reached with the Government of Libya and have been approached by attorneys from outside who propose new agreements for the payment of additional fees, please communicate with us immediately.

You do not have to pay any more than what was originally agreed.

López also was quoted extensively in a newspaper article titled “Victims of Lod Massacre ‘Deceived.’ The heirs of Ángel Berganzo and Antonio Rodríguez contacted López, who ultimately filed this action against Ambush in the United States District Court for the District of Puerto Rico.

The heirs alleged that the retainer agreements were void because Ambush secured their consent by deceit, known in Spanish as dolo. Puerto Rico contract law provides that [c]onsent given by ... deceit shall be void.” P.R. Laws Ann. tit. 31, § 3404. “There is deceit when by words or insidious machinations on the part of one of the contracting parties the other is induced to execute a contract which without them he would not have made.” Id. § 3408. According to the heirs' complaint, Ambush failed to disclose at their meeting that the Center had paid him for his work, falsely told them that the Center had done nothing on the estates' behalf, and misrepresented that the estates' compensation was contingent on the heirs' signature of the retainer agreements.

At trial, both of Berganzo's heirs testified, as did three of Rodríguez's five heirs: Noemí, Eliezer, and María Rodríguez. Ángel and Ruth Rodríguez did not testify. Engelberg, the director of the Center, also testified for the heirs. Both sides called Ambush as a witness, and Ambush called García, who was present at Ambush's meeting with the heirs. At the close of the heirs' case and again at the close of Ambush's case, the court denied motions by Ambush to dismiss the heirs' dolo claim as a matter of law under Rule 50 of the Federal Rules of Civil Procedure.

The jury returned a verdict against Ambush, deciding that he had committed dolo against all seven heirs, and it awarded $100,000 in additional damages to each of the five heirs who testified at trial. The court entered a judgment nullifying the retainer agreements and ordered Ambush to pay $1 million in...

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