A U.K. court has ordered South Carolina attorney Peter Protopapas to pay 1 million British pounds – about $1.3 million at current exchange rates -- by the end of the month to compensate a foreign company that complained he tried to illegally seize control of it to collect money for U.S. asbestos plaintiffs.
The sanctions order follows a November ruling by the U.K. High Court of Justice ordering Protopapas to cease interfering in the operations of Cape Plc, an industrial-services company based on the island of Jersey in the English Channel. South Carolina judge Jean H. Toal appointed Protopapas receiver for Cape, whose corporate predecessor mined asbestos in South Africa, even though Cape has never conducted business in South Carolina and has no assets in the state.
The attempt to seize Cape represents a major expansion of Judge Toal’s practice of appointing receivers over companies to extract money from their insurers to pay asbestos claimants and their lawyers. Once restricted to long-dead companies that had operated within South Carolina, Judge Toal has tried to extend her reach to solvent companies with little or no ties to the state, including mining giant Anglo American and DeBeers diamond merchants.
The South Carolina Supreme Court heard arguments in February over whether she has jurisdiction over a solvent Canadian company in a key test of her powers.
Protopapas already faces potential criminal penalties in the U.K. if he persists in purporting to represent Cape or its parent company, Altrad Group, which is owned by French billionaire Mohed Altrad. Protopapas has fired back at Cape, seeking an injunction against Altrad’s lawyers.
The South Carolina Supreme Court denied that motion but called the U.K. court’s global injunction against Protopapas “shocking and indefensible” and an unwarranted interference in South Carolina’s judicial process.
Protopapas, a prominent personal-injury lawyer, didn’t respond to requests for comment. As receiver, he gets to keep a third of any money he collects from the companies he oversees and places the rest in private funds in Delaware designed to compensate asbestos plaintiffs and their lawyers.
He didn’t participate in the U.K. hearings, where the court heard evidence from a process server who attempted to serve him notice of the hearing at his office in South Carolina.
“Mr. Protopapas slammed the door in my face and told me not to come back, and that if I did he was going to put me on trespassing notice,” the server said in a witness statement.
Cape sought more than $3.7 million in legal fees from Protopapas but Justice Anthony Mann refused to give Cape the full amount, saying he had “serious concerns about the amount of the costs.”
“I do not doubt that this was an expensive action to run, albeit that the non-participation of the defendant meant that a lot of the costs one expects to see in a fully fought action were not incurred,” the judge wrote. He gave Protopapas until April 28 to pay.
The South Carolina Supreme Court ultimately will decide whether Judge Toal has the power to appoint receivers over out-of-state companies that did no business in South Carolina. In the meantime, one of her targets finally surrendered, paying an undisclosed amount of money to extract itself from litigation over a long-dead company plaintiff lawyers accuse of selling asbestos in South Carolina.
In what has become a typical sequence of transactions, on the eve of a March 31 trial for breach of contract, Penn National Insurance agreed to “buy back” insurance policies it issued to Covil Corp. decades ago. Judge Toal, as she has done in previous cases, sealed the amount of money Penn National paid, saying “premature disclosure of the specific details of this settlement agreement could be misappropriated and chill the receiver’s ability to equitably liquidate receivership assets.”
The money will flow into the Covil QSF, a Delaware fund that Protopapas can manage as he sees fit. Judge Toal awarded 40% of the funds as fees to Protopapas and other law firms, including Morgan Lewis of New York. It is not known how the rest of money is being distributed, as Judge Toal has allowed the operations of the Delaware funds remain confidential.