Wachtell Fires Back with New Lawsuit in Feud with Icahn
Instead of greeting cards, Marty Lipton and Carl Icahn are exchanging lawsuits ahead of the holidays this year. The latest missive arrived on Wednesday, courtesy of Wachtell, Lipton, Rosen & Katz, opening a new front in an escalating spat that began when one of Icahn's takeover targets accused Lipton's partners of malpractice two months ago.
There's little love lost between Icahn, the corporate "hell-raiser," and Lipton, who spent his career honing defenses to hostile takeovers as a founding partner at Wachtell.
But, as our colleagues at the Am Law Daily reported in October, Icahn's takeover of CVR Energy has taken the feud to new heights. CVR, which came under Icahn's control in May 2012 after a five-month takeover fight, filed malpractice claims in federal court in Kansas City, Kan., against the company's former lawyers at Wachtell. CVR alleged in its Oct. 24 complaint that Wachtell lawyers failed to explain to the company's management that CVR would have to pay its financial advisers a $37 million fee in the event of a sale to Icahn.
On Wednesday, Wachtell shot back. The firm filed a lawsuit of its own in Manhattan state court, naming Icahn, CVR and Icahn's investment companies. And it moved to dismiss CVR's complaint in Kansas, blasting the case as "meritless and vindictive."
In the newly filed New York suit, Wachtell and its outside lawyers at Zuckerman Spaeder are asking for a declaratory judgment that the firm's work for CVR was "consistent with the standards of the legal profession and did not cause any loss to CVR." In the Kansas case, Wachtell and counsel at Berkowitz Oliver Williams Shaw & Eisenbrandt argue that CVR's claims should be dismissed for lack of personal jurisdiction and for improper venue.
Both filings claim that Kansas is an inappropriate venue for CVR's lawsuit, since the fee dispute between the company and the banks—which the company has refused to pay—resides in New York state court. Wachtell argues that the material CVR referenced in its complaint against Wachtell was used in breach of a protective order in CVR's litigation with the banks in New York. The firm also maintains that documents produced in the bank litigation make it clear that it was CVR's own chief financial officer who negotiated the terms of the agreement between CVR and its financial advisers, not the firm.
Lawyers at Berkowitz Oliver and Zuckerman Spaeder didn't immediately respond to our calls.
Herbert Beigel, a solo practitioner in Tucson, has been advising CVR both in its suit against Wachtell in Kansas and in the litigation with the banks in New York. He told us Thursday that he will also be defending CVR and the Icahn entities in the newest lawsuit, and that the defendants intend to "vigorously contest the claims."
Although Beigel declined to address any specific allegations lodged by Wachtell, he said, "We don't believe their claims have any merit."