Bloomfield developer Colgan wins defamation lawsuit

BLOOMFIELD, NJ — A defamation case which Bloomfield developer Bill Colgan brought against an attorney representing his interests has been settled. Colgan is the developer of Glenwood Villages in the downtown six-point area.

In a statement by Colgan, the settlement was favorable “and closes the book on a series of events involving an attempt to damage not only my individual character and reputation, but also the reputation of my firm, Community Healthcare Associates.”

Colgan said the attempt was made by Warren Martin Jr., a partner with Porzio, Bromberg and Newman, located in Morristown. CHA is located in Bloomfield, at the Leo Building.

According to court papers, Colgan and a number of his business associates hired Martin after Apollo Health Street, a company providing management services to hospitals and doctors, had signed a licensing agreement with them for proprietary software.

This was in 2008. Apollo then failed to fully pay for the services. The software was provided by Med-Link which is owned by Colgan and his associates.

Med-Link threatened to end the licensing agreement, but Apollo went to court to block this, alleging the company would be irreparably harmed.

Beginning July 2009, Colgan and his associates “began to suspect that Apollo’s financial health was showing signs of significant weakening due to lack of cash flow. This was evidenced by Apollo slashing its workforce and other expenses.”

Other financial developments made Colgan and his associates presume Apollo was insolvent.
In April 2011, Martin was contacted for legal help.

Based solely on Martin’s advice, Colgan and his associates filed a petition with the United States Bankruptcy Court in New Jersey to force Apollo into bankruptcy.

Apollo responded by filing a motion to dismiss the petition. Apollo refuted any contention it was insolvent and alleged that Colgan and his associates, as the petitioners, had failed to perform any due diligence before filing the petition.
“In fact, the only due diligence which Martin had undertaken before filing the petition was to review a Dun and Bradstreet report,” court documents said.

The bankruptcy court required Colgan and his associates to prove that Apollo was insolvent. They could not.
On May 18, 2011, the court found that Colgan and his associates “did not meet their burden of proving that Apollo was generally not paying its debts as they became due. In fact, the court found that Apollo was paying almost all of its creditors on a timely basis. The court also found that Apollo had valid reasons for not paying certain creditors such as the petitioners.”

Faced with the prospect of a multimillion dollar lawsuit against them, Colgan and his associates were forced to settle with Apollo for $4.45 million. This included waiving any payments to Med-Link.

Colgan and his associates then sued Martin and Porzio, Bromberg and Newman for damages stemming from legal malpractice.

Independent of this, Martin had, in Feb. 2012, filed a bankruptcy petition for Christ Hospital, located in Jersey City. The court conducted an auction to sell the hospital’s assets. The only two bidders were Colgan’s firm, CHA, and Hudson Hospital Propco. HHP was the successful bidder and in Sept. 2012, the sale was finalized.

At this time, Martin sent an email to Colgan, which he copied to a number of judges, attorneys and others, totaling 30 individuals. The email accused Colgan of asking Martin to fix the bidding of Christ Hospital so that CHA would be the successful bidder. The email was dated Sept. 12, 2012, and sent at 9:16 p.m. In part, it read:

“Bill- P.S. It was interesting how you told me that if your company, CHA, won the Christ Hospital auction, you would pay Porzio’s fees in full on the Apollo matter (you owe me $385,000), and there would be “no issues” with my handling of the Apollo matter and no lawsuit.

“But you later told me that since I didn’t ‘fix’ the Christ Hospital auction in your favor, not only would you not pay me what you owe me on the Apollo matter, but you would sue me for $4.5 million. I am sorry – But I made sure that the Christ Hospital auction was honest and fair for all parties – and not rigged in your favor. That is the only way I know how to do business. …

“Nice way to do business, Bill. Again, good luck with your lawsuit. -Warren-”
About six hours later, on Sept. 13, 2012, at 2:56 a.m., Martin sent another email to Colgan:
“Bill, It’s always easier to blame others for our own shortcomings. I wish you the best of luck. -Warren-”
Court documents said the statements that Martin alleged Colgan had made to him were complete fabrications by Martin and defamatory.

As part of the settlement, Martin wrote and signed a letter of apology to Colgan. It was dated Feb. 4, 2016, and refuted everything he had said in the two emails.

In his statement, Colgan said, “As revealed in court documents, Mr. Martin’s claims were baseless, and were asserted after Mr. Martin ‘had had too much to drink.’ Mr. Martin’s full written retraction, together with the court’s records, exonerate me to the fullest extent.”