Litigator of the Week: Michael Frevola of Holland & Knight
Tommy Thompson became a national hero for locating the S.S. Central America, a steamship that sank off the coast of North Carolina in 1857 while carrying hundreds of people and 21 tons of gold. But 25 years after the remarkable discovery, which spawned a New York Times bestseller and talks of a movie deal, Thompson is on the lam. The "ship of gold," meanwhile, is buried in a sea of litigation.
This week, thanks to Michael Frevola of Holland & Knight, a group of treasure hunters who helped Thompson in his quest came a big step closer to cashing in. In a 28-page decision issued Wednesday, the U.S. Court of Appeals for the Sixth Circuit ruled that Thompson can't withhold payment from nine technicians and project managers on the Central America mission who've been fighting for years for their share of the loot.
"We could not be more pleased with the decision," Frevola said.
The Sixth Circuit panel rejected various arguments by Thompson's attorneys, including an affirmative defense that the treasure hunters violated a confidentiality agreement by blabbing about Thompson's treasure-hunting techniques. The court also upheld a ruling that Thompson must account for some of his assets — including 500 gold coins and seven crates of artifacts — and refrain from transferring them.
With Thomson's liability to his crew members no longer in question, they're now slated to begin a bench trial on damages. Frevola said his clients will seek as much as $6 million worth of the Central America's gold, which has been valued at around $100 million.
Thompson has been mired in lawsuits ever since he returned from the 1988 rescue to his hometown of Columbus, Ohio. The first battle was with 39 insurance companies that covered losses from the shipwreck 130 years earlier. The insurers argued that by virtue of paying those claims, they owned some of the gold. In 1996, a judge ruled that under the laws of salvage — or, as we like to call it, the doctrine of "finders keepers" — Thompson's exploration company was entitled to about 90 percent of the gold. The judge called Thompson's discovery "a paradigm of American initiative, ingenuity, and determination."
In 2000, Thompson sold much of the gold to a mint for $52 million. He assured his crew members that once his company was turning a profit, he would keep an earlier promise to share the spoils with them. At the time, they had only received a modest wage for their work on the rescue. Thompson made similar assurances to a group of investors that had loaned him more than $20 million.
Those assurances eventually stopped coming, prompting both his crew and his investors to bring suit in 2006. The investors have focused on getting Thompson's company into receivership. The crew members, on the other hand, are seeking contract damages. Frevola has been representing the technicians and project managers from the beginning, along with local counsel Michael Szolosi of McNamara & McNamara. Their case is being heard before U.S. District Judge Edmund Sargus Jr. in Columbus.
Frevola has taken an aggressive stance in the trial court, and he's prevailed at pretty much every turn. One of Frevola's first moves was to demand an inventory of Thompson's treasure. In 2009, Judge Sargus held the defendants in contempt of court for failing to comply with the audit. In 2011, the judge granted Frevola's clients summary judgment on all of Thompson's affirmative defenses. Thompson's lawyers at the Ohio firm Farlow & Associates tried to argue that the technician and project managers lost their right to the profits by violating confidentiality agreements Thompson made them sign before the high-seas adventure. But Sargus rejected the argument on judicial estoppel grounds, finding Tompson took contradictory positions during his litigation with insurers. A year later, Sargus ordered prejudgement attachment of the gold coins, the artifacts, and a trust set up by Thompson.
The legal battles have apparently taken a toll on Thompson, who disappeared in late 2012 along with his girlfriend. Shortly before Thompson went missing, Frevola moved to hold him in contempt, arguing that he had still failed to explain the whereabouts of his money. Judge Sargus agreed and ordered Thompson to testify in court. He never showed, so an arrest warrant was issued. Thompson's wanted poster recently graced digital billboards in Ohio and Florida, where he was last seen. Thompson's former lawyer told Fox News that his client is "at sea," is unreachable, and doesn't know about the arrest warrant.
Thompson's evasiveness will surely complicate the damages trial, which will likely be held next year. Frevola declined to explain his strategy for the remainder of the case. But he struck a buoyant tone. "The defendants have fought a delaying campaign for a long time," Frevola told us. "It's really clear when you read the decision that the appeals court sees what's going on and understands that our clients have legitimate claims."