Businessman Gerry McCaughey tries to thwart AIG’s $4m US judgment tilt over soured New York hotel investment plan
Irish businessman Gerry McCaughey has insisted that insurance giant AIG should be prevented from securing a $4m (€3.7m) summary judgment against him in the United States. AIG was initially planning to seek the judgment in Los Angeles last week.
he dispute stems from a soured hotel investment plan in New York that was backed by Anglo Irish Bank, later IBRC, and a number of wealthy investors.
But lawyers for Mr McCaughey have argued that AIG does not have the right to have Irish judgments secured in favour of IBRC and an investment vehicle of the collapsed Irish bank, called Mainland, enforced in the United States and in AIG’s name.
They have also objected to Mr McCaughey’s wife, Sophie McCaughey, being named as a defendant by AIG in its case in Los Angeles.
They also argue that in the event judgment is granted, that a 10pc per annum post-judgment interest rate allowed under California law should not be granted.
AIG has told the US court it is entitled to collect the money due and wants permission to collect it from Mr McCaughey directly or via property owned by him and his wife.
AIG Europe launched the action against the businessman earlier last year.
Mr McCaughey, who has lived in California since 2009, was part of a group of 50 Anglo Irish Bank clients who between 2005 and 2006 invested in a fund involved in the acquisition and planned renovation of two hotels in New York city.
Mr McCaughey – who made an estimated €31m from the €98m sale of his Century Homes timber-framed housing business to Kingspan in 2005 – invested $1m in the hotel fund. Of that, $620,000 was provided by way of a loan from Anglo. The remainder was from Mr McCaughey’s personal funds.
However, the hotels project didn’t proceed as intended, primarily because the planned renovation would have been far more significant than had been contemplated.
Mr McCaughey and some other investors subsequently sued Anglo Irish Bank, seeking the return of a total of about $45m, which included their investment and damages. However, the High Court here dismissed the case and the Supreme Court later upheld that verdict. Costs were awarded against Mr McCaughey.
AIG stated that in exchange for reimbursing IBRC for its costs in the action, the insurer “received the right to pursue claims against Mr McCaughey to recover on a subrogated basis, with any monies recovered to be split between AIGEU and IBRC on an agreed basis”.
AIG has also argued that the McCaugheys have “no valid defence” against the proposed judgment being attached to their property.
The insurer also says in court documents that the McCaugheys’ opposition to the summary judgment “loosely alleges” that there are proceedings “in Ireland to determine if any rights to collect on the judgments against Mr McCaughey were also assigned to Deutsche Bank.”
But AIG says the McCaugheys argue “without any evidence” that Deutsche Bank acquired such rights.
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