RI, law firm reach $4.4M settlement in 38 Studios lawsuit

38 studios state house combo.jpg

PROVIDENCE, R.I. (WPRI) – The Chafee administration has reached a tentative settlement with two of the parties the state has sued for their role in putting together the controversial 38 Studios deal, WPRI.com has confirmed.

The draft settlement with Moses Afonso Ryan Ltd., a law firm that was bond counsel in the 38 Studios deal, as well as Antonio Afonso Jr., one the firm’s partners, calls for them to pay $4.4 million to settle the suit, according to court filings obtained by WPRI.com. The payment would be made by their insurance company, Liberty Insurance Underwriters Inc.

The proposed settlement is the first such deal reached in the 38 Studios litigation, though it still needs to win final approval from R.I. Superior Court Judge Michael Silverstein, who is overseeing the case. He has scheduled a July 7 hearing on the matter. A spokesman for Moses Afonso Ryan declined to comment, noting that Silverstein hasn’t ruled yet.

“I hope this is going to be the first in a series” of settlements, Max Wistow, the lead lawyer for the state in the 38 Studios suit, told WPRI.com on Friday. He declined to comment further because the litigation is ongoing.

The R.I. Commerce Corp. board of directors voted Monday evening to approve the settlement agreement, and the two sides finalized it on Tuesday, the documents show. “The proposed settlement is a step in the right direction, and I hope this is the beginning of a positive resolution to the 38 Studios saga,” Gov. Lincoln Chafee said in a statement.

In the court documents, lawyers for the two sides explained their rationale for moving to settle the suit.

Moses Afonso Ryan and Antonio Afonso himself “deny any liability for the allegations made against them,” the lawyers wrote. “Nonetheless, they are consenting to have their insurance carrier pay the remaining policy limits of [$4.4 million] to put this matter behind them and avoid the risk of a judgment after the trial that is larger than whatever might remain (if anything at all) as available insurance proceeds.”

Similarly, lawyers wrote that the Commerce Corp. “could possibly lose its case against the [Moses Afonso Ryan] defendants and get nothing” or alternatively “obtain a much larger judgment after trial, but there would be little if anything left in the [Moses Afonso Ryan] insurance policy to pay such a judgment.”

The Commerce Corp., known then as the R.I. Economic Development Corp., guaranteed a $75-million loan to lure 38 Studios, a video-game company founded by Curt Schilling, to Rhode Island in 2010. The company collapsed into bankruptcy in May 2012, and the Chafee administration sued the architects of the deal for alleged negligence the following November.

Moses Afonso Ryan and Antonio Afonso Jr. are two of the 14 defendants in the lawsuit. Others include Schilling and additional 38 Studios executives, Wells Fargo & Co., Adler Pollock & Sheehan and former EDC executive director Keith Stokes. Depositions are still being taken and a trial date hasn’t been set.

38 Studios’ demise left Rhode Island taxpayers on the hook to repay roughly $89 million in principal and interest payments to the 38 Studios bondholders, which has triggered a heated debate over whether lawmakers should repay them. Chafee, a strong advocate of paying back the bonds, has said he hopes taxpayers will recoup some or all of the money through the courts.

The General Assembly passed a law earlier this year specifically authorizing the administration to enter into legal settlements with the various parties in the 38 Studios suit if necessary.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

Tim White and Dan McGowan contributed to this report.

  • http://blogs.wpri.com/2014/06/27/ri-law-firm-reach-4-4m-settlement-in-38-studios-suit/ RI, law firm reach $4.4M settlement in 38 Studios suit | WPRI.com Blogs

    […] Read the rest of this story » […]

  • http://blogs.wpri.com/2014/06/28/the-saturday-morning-post-quick-hits-on-politics-more-in-ri-123/ The Saturday Morning Post: Quick hits on politics & more in RI | WPRI.com Blogs

    […] some news WPRI 12 broke late Friday that you might have missed – the state has reached a 38 Studios legal settlement with Moses Afonso Ryan and Tony Afonso. “I hope this is going to be the first in a series,” state attorney Max Wistow tells […]

  • http://wpri.com/2014/07/08/hearing-set-for-proposed-4-4m-settlement-in-38-studios-lawsuit/ Hearing set for proposed $4.4M settlement in 38 Studios lawsuit | wpri.com

    […] RI, law firm reach $4.4M settlement in 38 Studios lawsuit […]

  • http://wpri.com/2014/07/08/judge-hears-settlement-arguments-in-38-studios-suit/ Judge hears settlement arguments in 38 Studios suit | wpri.com

    […] RI, law firm reach $4.4M settlement in 38 Studios lawsuit […]

  • http://wpri.com/2014/07/22/judge-approves-4-4-million-38-studios-settlement/ Judge approves $4.4 million 38 Studios settlement | wpri.com

    […] RI, law firm reach $4.4M settlement in 38 Studios lawsuit […]

  • http://wpri.com/2014/10/10/ri-high-court-denies-38-studios-appeal/ RI high court denies 38 Studios appeal

    […] the banks that helped bring Curt Schilling’s video-game company to Rhode Island, had sued to block a settlement reached over the summer between the state and two other defendants in the suit, law firm Moses […]

  • http://wpri.com/2015/05/19/retire-chief-justice-williams-to-head-up-38-studios-mediation/ Retire Chief Justice Williams to head up 38 Studios mediation | wpri.com

    […] state last summer reached a settlement with the law firm Moses Afonso Ryan and lawyer Antonio Afonso, Jr. in the case. Other defendants […]

  • http://wpri.com/2015/07/07/reporter-kicked-out-of-latest-hearing-on-38-studios/ Reporter kicked out of latest hearing on 38 Studios | WPRI 12 Eyewitness News

    […] in the 38 Studios suit, the law firm Moses Afonso Ryan Ltd. and its partner Antonio Afonso Jr., agreed to pay $4.4 million last year to settle with the state. The money was put toward the bond […]

  • http://wpri.com/2015/08/07/state-reaches-12-5m-settlement-with-defendants-in-38-studios-lawsuit/ State reaches $12.5M settlement with defendants in 38 Studios lawsuit | WPRI 12 Eyewitness News

    […] The Commerce Corp. settled claims with Moses Afonso Ryan Ltd., a law firm that was bond counsel in the 38 Studios deal, as well as Antonio Afonso Jr., one the firm’s partners, for $4.4 million in June 2014. […]

  • http://wpri.com/2015/08/17/settlement-in-38-studios-suit-will-yield-9-9m-to-pay-bonds/ Settlement in 38 Studios suit will yield $9.9M to pay bonds | WPRI 12 Eyewitness News

    […] in the lawsuit. Another law firm, Moses Afonso Ryan, and one of its partners, Antonio Afonso Jr., agreed to settle for $4.4 million in June 2014. After legal fees and other costs, the Afonso settlement yielded $3.2 million to pay off the 38 […]

blog comments powered by Disqus