Procedural Error in NXIVM Settlement Agreement
It appears the plaintiffs in the NXIVM case (Edmondson et. al. v. Raniere et. al.) made a procedural error in the settlement agreement with defendant Nancy Salzman, the co-founder and former president of NXIVM.
The dispute is over $116,000.
Some 70 plaintiffs sued Salzman, Keith Raniere, Clare Bronfman, Sara Bronfman, and others in January 2020 for alleged abuses within NXIVM. Salzman agreed to settle in September 2022 by providing information against the other defendants and selling three properties, with “net proceeds” going to the plaintiffs and their attorneys, led by Neil Glazer.
Neil Glazer
Redefining “Net Proceeds”
After selling the properties for $600,000, Salzman decided to redefine “net proceeds” in the settlement agreement and deduct an additional $116,000 for federal capital gains taxes. The original settlement agreement does not include capital gains taxes in the definition of net proceeds.
Now out of prison, Salzman knows that possession is nine-tenths of the law. Salzman handed over her version of the net proceeds—about $400,000—and kept the $116,000.
Attorney Glazer’s Request
Attorney Glazer sought a court order from US District Judge Eric R. Komitee to compel Salzman to pay him the $116,000.
The net proceeds from the sale of the three properties, with the $116,000 deducted, amount to approximately $409,000. With the standard attorneys’ fees of 1/3 to Glazer and his firm ($135,000), the distribution to the 70 plaintiffs, if divided equally, amounts to about $4,000 per plaintiff. If Glazer prevails, the plaintiffs will net an additional $1200, and Glazer’s firm will collect an extra $39,000.
Judge Eric Komitee’s Decision Is In
The Federal Rules of Civil Procedure 41(a)(1)(A)(i) allows plaintiffs to voluntarily dismiss a defendant without a court order, which they did with Salzman. However, this means the court no longer has automatic jurisdiction over matters involving Salzman in this civil case. She’s out.
If Glazer wanted the court to retain jurisdiction over the settlement agreement after the plaintiffs dismissed the case, the dismissal order had to state that the court retained jurisdiction to enforce the settlement agreement.
It did not.
Judge Komitee’s decision referenced Hendrickson v. United States, which established that simply dismissing a case does not automatically allow the court to retain jurisdiction over a settlement agreement. There needs to be clear language in the dismissal order indicating that the court retained jurisdiction.
Challenge for Plaintiffs
Since the plaintiffs dismissed Salzman without a court order retaining jurisdiction with the court over the settlement agreement, they now face the challenge of proving why the judge should enforce the contract. The prospects look bleak based on the judge’s citation of the Hendrickson case.
Glazer could sue Salzman in a separate lawsuit for breach of contract. If the action survives a summary judgment, Salzman would be entitled to a jury trial.
Proper Policy
The correct policy in dealing with former NXIVM executives is to assume they will find a legal sidestep and ensure that the court’s dismissal order retained jurisdiction over the settlement agreement at the time of Salzman’s dismissal, which they did not.
This would have avoided the current dispute.
On a happier note, Nancy Salzman, who is now on probation and recently brought a cat named Lilly into her home.
Lilly
The properties and their sales prices were:
– 3 Hale: $230,000 (where Lauren Salzman lived before she bought her own home)
– 9 Hale: $190,000 (Next to Keith Raniere’s library, once occupied at various times by Michelle Salzman, Loreta Garza, and Sylvie Lloyd)
– 203 Yorktown Drive: $180,000 (Occupied by Dawn Morrison)
Salzman is Free
Salzman is out of prison. She completed her stay in a halfway house and returned to suburban Albany, where she had assisted Keith Raniere for 20 years in leading a community called NXIVM. She is on probation.
MK10ART’s painting of Nancy Salzman
MK10 Art’s painting of the two NXIVM leaders, Raniere and Salzman.
MK10ART’s painting of Nancy Salzman
