Updated at 3:26 p.m.
A nonprofit that said it gave millions of dollars in grants to support the massive Indian trust litigation in Washington federal court is suing for $4.5 million of the $99 million awarded in attorney fees.
The Lannan Foundation, a New Mexico-based charitable organization, claimed that when it gave more than $6 million in grants to support the litigation, the lead attorney for the plaintiffs agreed to repay those grants using money recovered from the government. Since receiving a $99 million fee award-part of a $3.4 billion settlement-the foundation said plaintiffs' lawyers had refused to pay $4.54 million they owed.
The foundation filed the complaint yesterday in U.S. District Court for the District of Columbia against solo practitioner Dennis Gingold and the law firm Kilpatrick Townsend & Stockton. Gingold said he couldn't comment because he hadn't seen the complaint. In a statement, Kilpatrick partner and general counsel Susan Cahoon said the firm expected "to defend the suit vigorously."
"We do not believe that our firm has any responsibility for assuring repayment of grants that the Lannan Foundation may have made to the Blackfeet Reservation Development Fund," she said, a reference to the organization that received grants from the Lannan Foundation to support the litigation.
In a statement, foundation President J. Patrick Lannan said the plaintiffs’ lawyers had “chosen to disregard their promises to repay the Foundation.” The foundation is being represented by Mayer Brown litigation partner Reginald Goeke.
“Lannan Foundation regrets that it is necessary to bring this lawsuit against the attorneys of the plaintiffs to recover the unpaid balance of the refundable grants-up to $4 million of which the Foundation intends to dedicate to a scholarship endowment in honor of Elouise Cobell,” Lannan said, adding that the amount the group was seeking was less than five percent of the overall fee award.
In the mid-1990s, a class of Native Americans sued the U.S. Department of the Interior, accusing officials of mismanaging Native American trust accounts.
As the litigation picked up, the Lannan Foundation, according to its complaint, agreed to provide financial support to the plaintiffs. Between 1998 and 2009, the foundation said, it gave 11 grants totaling $7.825 million to the Blackfeet Reservation Development Fund, a nonprofit created by the lead plaintiff in the trust litigation, Elouise Cobell.
Of the total grant money, the foundation claimed it gave $6.425 million through refundable grant agreements. Under those agreements, according to the complaint, the plaintiffs and their lawyers agreed to repay the grants from any attorney fees, costs or expenses they received as part of a settlement or judgment in the case.
Following an award of interim attorney fees in late 2005, the foundation said they encountered pushback from Gingold when they asked for part of the award to satisfy the grant agreements. Eventually, according to the complaint, the group received $1.8 million.
The U.S. Department of Justice reached the $3.4 billion settlement with the class in late 2009. It was officially approved by the court in the summer of 2011. The court denied a request by the class for $10.5 million in expenses, an amount that would have included the money owed to the foundation for the grants, the foundation said. According to the complaint, a motion for reconsideration of that order with the respect to the foundation's money is still pending.
After appeals related to the settlement resolved, the foundation said it contacted Gingold in late 2012 about the repayment of its grant money. Gingold, the foundation claimed, appeared to take the position that the foundation's only chances to recover the money would be if the court granted the motion for reconsideration or if the group tried to recover it directly from class representatives.
Kilpatrick also denied the foundation's request for funds, saying it had no obligation under the grant agreements signed by Gingold. The foundation argued Gingold signed the agreements on behalf of all class counsel and that Kilpatrick acknowledged the agreements when it approved paying the foundation $1.8 million from the interim attorney fee award.
The defendants, the foundation claimed, "have unjustly and unlawfully deprived the Foundation of millions of dollars in funds to which it has a legal right and that the Foundation could be using to assist other worthy causes."
The case is before U.S. District Senior Judge Thomas Hogan, who also presided over the underlying Indian trust litigation.