Ex-Dewey Executive D’Alessandro Can’t Shake $9 Million Suit

A bankruptcy judge Tuesday shut down an attempt by a former Dewey & LeBoeuf LLP executive to dismiss a lawsuit claiming he owes the defunct firm’s creditors $9.3 million.

Dewey’s bankruptcy trustee in March sued the executive, former Chief Operating Officer Dennis D’Alessandro, seeking the return of more than $9 million in salary, bonuses and other compensation that he received from 2008 until the firm’s 2012 collapse.

In filing the suit, Dewey’s trustee, Alan Jacobs, said the “astronomically generous” contract was atypical for the legal industry and “far above” the value of services he provided as COO. The suit seeks to recover the funds on the grounds that the payments were made while Dewey was unable to meet its other financial obligations.

Mr. D’Alessandro disagreed, arguing that the suit should be thrown out because he was not a so-called insider of the firm and that he was paid in the ordinary course of business in exchange for his services as a Dewey employee. He also argued that Dewey’s trustee can’t claw back payments from before 2010, based on previous statements from Dewey’s bankruptcy lawyers that it would be hard to prove the firm was insolvent in 2010.

Judge Martin Glenn in Manhattan took issue with every defense Mr. D’Alessandro raised, saying he’s seen enough evidence to suggest “that the transactions between the parties may not have been made at arm’s length” and that the lawsuit should carry on. In his ruling, Judge Glenn said the contract “did not actually require D’Alessandro to do any work; rather, it required Dewey to pay the full contract amount as long as D’Alessandro did not perpetrate a fraud or crime against the firm.”

Barry Pollack, an attorney for Mr. D’Alessandro, said Tuesday that his client was a valuable employee of Dewey and that “he has defenses that he will raise in this lawsuit and we believe will ultimately prevail.”

An attorney for Mr. Jacobs had no comment Tuesday.

According to filings in the case, Mr. D’Alessandro’s contract fixed his base salary at $900,000, with a guaranteed bonus of $200,000 per year, the opportunity for further bonuses, and the promise of payments made to a trust on Mr. D’Alessandro’s behalf. The six-year contract also contained a provision that if Dewey’s then-chairman, Steven Davis, was ever removed from that position, the entirely of the contract must be paid out.

Mr. Davis is among three former Dewey executives who face criminal charges tied to the firm’s collapse. Earlier this month, an attorney for the trio argued in court that there was no evidence their clients had intended to engage in accounting trickery or to “permanently” deprive Dewey’s lenders and bondholders of their property.

-Jacqueline Palank and Jennifer Smith contributed to this article.

Write to Sara Randazzo at [email protected]. Follow her on Twitter at @sara_randazzo.