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Families Face Obstacles in Collecting From Simpson

TIMES STAFF WRITERS

As O.J. Simpson absorbed the blow of a whopping $8.5-million judgment against him, a judge Wednesday cleared the way for jurors to strap Simpson with an even more devastating debt in the civil trial’s punitive damage phase, which begins this morning.

But though Simpson could be ordered to pay millions more, the families of murder victims Nicole Brown Simpson and Ronald Lyle Goldman could face serious obstacles in collecting significant sums of money. “If they [collect] a million dollars, they should kiss it,” Encino bankruptcy attorney Ronald Michelman said.

Before the plaintiffs can lay claim to even one dollar, Superior Court Judge Hiroshi Fujisaki must review the jury verdicts and decide whether the damage awards are reasonable. If he deems them inflated--the product of irrational passions rather than logical deliberations--he can slice them down, as judges frequently do. In a review of the nation’s largest personal injury awards in 1993, for example, The Times found that most plaintiffs received less than 20% of what the jury ordered.

And if Fujisaki approves the verdicts, Simpson can always appeal to a higher court.

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Then too, even if the biggest damage awards are upheld, the victims’ families might be unwilling to seize Simpson’s most vulnerable asset, the San Francisco condominium where his elderly mother, Eunice, lives.

“The plaintiffs have a lot of public goodwill, and I don’t think they’d jeopardize it by kicking Eunice out of the house,” Los Angeles business attorney Richard Brunette Jr. said.

For now, the plaintiffs are not talking about how they will collect any money they are owed. Still savoring their victory in winning unanimous verdicts against Simpson--and still scrambling to prepare for the punitive damages phase--they would not even venture predictions about how much they might eventually squeeze from Simpson. “It’s a problem we welcome down the road,” one source close to the plaintiffs said.

So far only two of the plaintiffs have won any money at all.

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Jurors unanimously ordered Simpson to pay Goldman’s parents $8.5 million in compensation for the loss of their son. But Nicole Simpson’s children did not request that type of compensation. (As her legal heirs, they are the only ones who could have brought such a claim.)

The children, Justin and Sydney, will have their only shot at funds in the punitive damage phase. If they do win money, Simpson will not be able to keep his money in the family by paying them first.

Trying to Distribute Awards Fairly

The plaintiffs’ attorneys say they will try to ensure that any funds coming in from Simpson are distributed fairly. For example, each plaintiff might get a piece of every dollar that comes in, with the money divided proportionately so that those holding the biggest judgments receive the most, one source said. The attorneys’ contingency fees also come out of these funds.

Several attorneys said compensatory awards do not get priority over punitive awards; all the judgments are combined into one lump sum, and the plaintiffs go after whatever assets they can find to start collecting on that debt.

Any money paid to Sydney and Justin will go into a trust fund, managed by an independent executor. Simpson will not be able to withdraw the money for any purpose other than an extraordinary medical emergency, according to a source close to the case. The children will not be able to touch it either, until they come of age.

How much the children win in the civil case depends in large part on how wealthy the jurors think their father is.

In calculating punitive damages, jurors are told to take three factors into account: They must consider the reprehensibility of the defendant’s conduct--in this case, slashing two people to death. They must also weigh the economic loss the victims suffered--in this case, just $100 for Goldman’s clothes and $250 for Nicole Simpson’s dress. Finally, they must consider the defendant’s wealth.

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And that will be the subject of hot debate.

Plaintiff attorney Peter Gelblum argued in court Wednesday that Simpson’s lawyers had engaged in some “creative accounting” to make him look poor. Gelblum told the judge that when he was starting to delve into Simpson’s assets last year, he found a statement putting Simpson’s net worth at $8 million. But a month and a half later, the defense team produced a revised statement claiming Simpson was worth just $500,000, Gelblum said.

According to lead defense attorney Robert C. Baker, Simpson has earned “considerably less” than $100,000 over the past six months. As for the future, Baker argued that Simpson may not ever be able to make money the way he knows best: by selling his sparkle.

“We don’t know if Mr. Simpson will ever have a personal appearance contract again,” Baker said. “We don’t know if he will ever have an endorsement deal again.”

Baker will surely try to convince jurors that Simpson’s prospects are bleak to soften any punitive damage award. Yet Fujisaki made that job tougher with his ruling Wednesday.

Over defense objections, the judge ruled that jurors could consider not only Simpson’s current net worth but also his earning potential and the value of his name and image. The plaintiffs will therefore be able to present testimony from marketing expert Mark Roesler, who contends that Simpson can pull in up to $3 million a year for the next 25 years, despite his damaged reputation.

Lawrence Schiller, who collaborated with Simpson on “I Want to Tell You,” a book published during the criminal trial, expressed considerable skepticism about the defendant’s earning power in this country--although he said Simpson still retains some star power abroad. “After Simpson was found not guilty in the criminal trial, he attempted to market his story. He was turned down by 11 major publishers” who feared women would shun the project, Schiller said. “If Simpson were to write a book now, what would he say that you don’t already know? . . . Is he going to say that he now remembers that he owned the Bruno Maglis?”

Simpson’s testimony in the civil case--in which he denied the authenticity of telephone records and photos and called dozens of people liars, including his therapist and his lawyer--may have eroded any lingering pull he had as a pitchman, Schiller added. “It destroyed his credibility as someone who is believable and marketable. . . . If he says, ‘I took this vitamin and it helped me with arthritis,’ are you going to believe him?”

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On the other hand, Schiller said he thought Simpson could line up some big-ticket speaking engagements on a world tour, especially in North Africa and the Middle East. “They view him as a man who in the criminal case fought the system and won,” said Schiller, who wrote the book “American Tragedy,” an inside look at the Simpson defense.

Possibly Vulnerable to Appeal

Given the uncertainty of Simpson’s earning potential, any extremely high punitive damage award could be vulnerable to appeal. Fujisaki acknowledged as much when he agreed to allow the plaintiffs’ marketing expert to testify about the value of Simpson’s name, though no higher-court ruling explicitly allows such evidence in California punitive damage trials.

“This will be a wonderful opportunity for an appellate court to make a ruling in this regard,” Fujisaki said.

A. Charles Dell’Ario, an Oakland attorney who specializes in appellate work, agreed that the law on this point is fuzzy.

He added that California appellate courts currently are “very hostile to punitive damages. If there’s a punitive damages award that exceeds more than 15% of Simpson’s demonstrated net worth, I would be surprised if the trial judge didn’t reduce it to that level.”

However, simply appealing the judgment against him would not let Simpson postpone payment of his debts.

Once the judge certifies the verdict and awards, the plaintiffs can go after his assets almost immediately, seizing his bank accounts and auctioning his property. The only way for Simpson to prevent them would be to post a bond equal to 150% of the judgment against him. According to his own lawyers, he doesn’t have the cash or the collateral for such a bond.

Despite this cash crunch, Simpson may yet find a way to put off paying the plaintiffs during an appeal, which could take about two years. One of Simpson’s colleagues speculated that a wealthy friend might help him muster the bond to postpone seizure of his assets pending an appeal.

But posting a bond would be risky even for a dear friend. If Simpson lost the appeal, the plaintiffs could immediately take the money or collateral he used to post the bond, said Venice civil rights lawyer Stephen Yagman.

Yagman also discounted the possibility of Simpson settling out of court with an offer to pay the plaintiffs a fixed amount. “I don’t believe Fred Goldman will, or should, settle the case,” Yagman said. “Settlement for less than the full amount would undercut everything the Goldmans have said to date. The only factor which would favor settlement is that the plaintiffs’ lawyers will want to get their contingency fee.”

On the other hand, the lead plaintiff attorneys are all veteran business lawyers, a lot more accustomed to tracking down money than to arguing about DNA in front of jurors. They might figure they could get more out of Simpson by hounding him for decades rather than going for a quick settlement.

“Mitchell Silberberg [the Goldman family’s firm] could really make Simpson’s life miserable if they want to play big law firm,” Los Angeles civil attorney Larry Feldman said. “They can drive him nuts.”

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Simpson’s Assets

In the second phase of the civil trial, the jury will examine O.J. Simpson’s financial assets in deciding whether to impose punitive damages. Although the full extent of his assets will be disclosed publicly as this phase unfolds, some of the key ones are already known, based on documents and sources close to Simpson.

Pension funds: Worth $2.5 million. Can be tapped by Simpson only for modest, everyday expenses.

Rockingham estate: Once valued at $5 million, is now worth about $3.5 million. Used as collateral for a $3-million bank loan obtained during criminal trial. Also encumbered by liens from defense lawyer Robert Baker and others.

San Francisco condo: Worth about $250,000. Residence of Simpson’s mother, Eunice. A IRS lien on the property was canceled after Simpson paid off overdue taxes on several properties.

Bentley automobile: N/A

Chevrolet Suburban: N/A

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Simpson has also liquidated some of his assets to meet other obligations, including legal fees for both trials. These include:

Ferrari automobile: Worth about $100,000

Pigskins Inc.: Corporation valued at more than $1 million a year ago

New York apartment: Sold for $1.1 million to pay off part of the bank loan

Other real estate: Condos in Orange County, no value disclosed, owned by partnership that included Simpson; court documents allude to shares in a medical building and real estate venture in Kentucky that he may have sold; no value disclosed.

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What If He Declares Bankruptcy?

Simpson cannot shrug off the verdicts by declaring bankruptcy. He could, however, force the Goldman and Brown families to get in line behind other creditors.

In a bankruptcy, Simpson’s secured creditors--including his attorney, who holds a deed on his Brentwood house--would be paid off first. The bankruptcy judge would then divide Simpson’s assets among his other creditors, including the victims’ relatives.

After that, the slate would be wiped clean for every creditor except the Goldman and Brown families. Their judgements against him would be renewable every 10 years until paid in full, so they would be able to go after any wealth Simpson accumulates in the decades to come.

Source: Los Angeles Times reports; Washington Post.


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