Client Funding Solutions Corp. v. Crim

• Decision Date: 06 May 2013
• Docket Number: Case No. 10–cv–482.
• Parties: CLIENT FUNDING SOLUTIONS CORP., Plaintiff, v. Debbie CRIM, a.k.a. Debbie Crim Clark, Defendant/Third–Party Plaintiff, v. The Vrdolyak Law Group, Third–Party Defendant.
• Court: U.S. District Court — Northern District of Illinois

943 F.Supp.2d 849

CLIENT FUNDING SOLUTIONS CORP., Plaintiff,

v.Debbie CRIM, a.k.a. Debbie Crim Clark, Defendant/Third–Party Plaintiff,

v.The Vrdolyak Law Group, Third–Party Defendant.

Case No. 10–cv–482.

United States District Court,

N.D. Illinois,

Eastern Division.

May 6, 2013.

John L. Ropiequet, Steven N. Malitz, Arnstein & Lehr, LLP, Chicago, IL, Louis Aaron Berns, Favil David Berns & Assoc., Northlake, IL, for Plaintiff.

Victor P. Henderson, Henderson Adam, LLC, Chicago, IL, for Third–Party Plaintiff.

Daniel C. Meenan, Jr., Michael Joseph Kralovec, Kralovec Meenan LLP, Joseph R. Lemersal, Nash, Lalich & Kralovec, Chicago, IL, for Third–Party Defendant.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, JR., District Judge.

Before the Court are Third–Party Plaintiff Debbie Crim's motion for leave to amend her operative third-party complaint [232] and motions in limine to exclude expert testimony by Gene Neri [226] and Peter Vrdolyak [231], Third–Party Defendant Vrdolyak Law Group's (“VLG”) motions in limine numbers 1–12 [228] and motion for instructions [265], and the parties' supplemental written memoranda concerning issues raised by the Court. See [259], [260], [262], [263]. For the reasons stated below, the Court denies Crim's motion for leave to amend [232]; grants in part and denies in part her motions in limine, [226] and [231]; grants in part, denies in part, and reserves ruling on in part VLG's motions in limine [228]; and denies as moot VLG's motion for instructions [265]. This case remains set for status hearing on May 15, 2013 at 10:15 a.m.

I. Motion for Leave to Amend

Leave to amend a complaint should be freely given “when justice so requires.” Fed.R.Civ.P. 15(a). Nevertheless, “courts in their sound discretion may deny a proposed amendment if the moving party has unduly delayed in filing the motion, if the opposing party would suffer undue prejudice, or if the pleading is futile.” Campania Mgmt. Co. v. Rooks, Pitts & Poust, 290 F.3d 843, 849 (7th Cir.2002). Delay alone is usually insufficient to deny a motion to amend, Dubicz v. Commonwealth Edison Co., 377 F.3d 787, 792 (7th Cir.2004); the Federal Rules of Civil Procedure countenance amendments during and after trial. See Fed.R.Civ.P. 15(b)(2). But “the longer the delay, the greater the presumption against granting leave to amend,” King v. Cooke, 26 F.3d 720, 723 (7th Cir.1994) (internal quotation omitted), as “[e]leventh hour additions are bound to produce delays that burden not only the parties to the litigation but also the judicial system and other litigants.” Soltys v. Costello, 520 F.3d 737, 743 (7th Cir.2008) (quotation and alterations omitted).

Crim filed her motion seeking leave to amend Count VIII of her second amended third-party complaint nearly eight months after the completion of discovery, a mere six weeks prior to the originally scheduled trial date, and only after VLG filed its motions in limine. See Soltys v. Costello, 520 F.3d 737, 743 (7th Cir.2008). She contends that the changes she wishes to make are “technical” in nature and will “clarify her claim * * * so that her case may be tried on the merits.” [232]. VLG contends that Crim's proposed amendments raise a “new and completely different theory,” such that allowing the amendment would prejudice it and require the reopening of discovery. [234]. The Court denies the motion, because granting Crim leave to amend her third-party complaint as requested at this late juncture would cause undue prejudice to VLG and would unduly delay the already protracted progression of this case.

From the outset, Crim consistently alleged in Count VIII a conspiracy between Plaintiff Client Funding Solutions (“CFS”) and VLG to convert her settlement proceeds. See [21] ¶ 150; [123] ¶ 153; [140] ¶ 177. “In furtherance of said conspiracy,” she alleged, “CFS knowingly used information Vrdolyak revealed in breach of his fiduciary duty to Crim as the basis for this lawsuit and to attach the proceeds of Crim's settlement.” [21] ¶ 151; [123] ¶ 153; [140] ¶ 178. She also alleged that “Vrdolyak used CFS' lawsuit as an excuse to withhold and convert all of the settlement proceeds not just the amount sought by CFS.” [21] ¶ 153; [123] ¶ 156; [140] ¶ 180. The conspiracy described by these allegations is plainly—and solely—one to convert her settlement proceeds.

The parties' proposed pretrial order [230] expanded the scope of the alleged conspiracy, but did so in a manner consonant with the proceedings in the case up to that point. The pretrial order stated that “Count VIII of the complaint is for Conspiracy. [Crim] claims that she was damaged because [VLG] conspired with another to withhold money belonging to [Crim] and coerce [her] to pay a series of loans.” [230] at 3. These sorts of “constructive amendments” to complaints are permissible, particularly where the parties agree as to the issues that have been or are being litigated. See Torry v. Northrop Grumman Corp., 399 F.3d 876, 878–79 (7th Cir.2005).

Crim's proposed third amended third-party complaint attempts to expand her allegations further still. Although Crim claims that “[t]he only thing that is being changed is the time period of the conspiracy,” [244] at 5, it appears from the face of the proposed third amended third-party complaint that the scope and object of the alleged conspiracy have significantly changed. The proposed third amended third-party complaint omits any mention of conversion and instead alleges that “CFS and Vrdolyak conspired to induce Crim to enter into a lending relationship with CFS and obtain a large portion of Crim's litigation proceeds.” [232–1] ¶ 177. It also adds allegations that the loans from CFS “violated the Truth in Lending Act by, among other things, describing loan amounts that Crim never received,” id. ¶ 178, and contends that “Vrdolyak used CFS' lawsuit as an excuse to withhold all of the settlement proceeds, not just the amount sought by CFS, and pressure Crim to settle with CFS to avoid further inquiry into CFS' illegal lending practices and the relationshipbetween Vrdolyak and CFS.” Id. ¶ 182 (omitting any mention of conversion). The allegations about settlement pressures were contained in the pretrial order, but the others were not and indeed have been largely absent from the proceedings.

Crim's proposed amendments change the character and substance of the alleged conspiracy. Rather than alleging a conspiracy to convert, the proposed amendments omit any mention of conversion and add allegations about inducement to use CFS, coercion to settle claims with them, and noncompliance with the Truth in Lending Act. This is a marked departure from Crim's earlier characterizations of the alleged conspiracy, which had at its “core” certain “demand letters” from CFS and the attachment of Crim's funds. See [76] at 3; see also [64] (describing conspiracy as “colluding with CFS to tie up Crim's funds”); [209] at 17 (“The act of filing the complaint was the unlawful purpose in furtherance of the conspiracy to deprive Crim of her money and force her to pay Client Funding.”). Crim points to one paragraph of a summary judgment brief, see [209] at 18, and a single line of her deposition testimony, see [244] at 6, in an attempt to establish that the parties had “pretried” the Truth in Lending Act theory, see Torry, 399 F.3d at 878, such that VLG could not claim surprise or prejudice. See [232] ¶ 15. Complaints may be amended to conform to the evidence adduced, see Fed.R.Civ.P. 15(b), but two isolated suggestions after years of discovery do not evidence make. Likewise, although the parties exchanged discovery as to the relationship between VLG and CFS dating back to 2005, Crim's testimony as to her belief that VLG and CFS were “working together throughout the course of the time,” her assertions that each loan transaction with CFS was initiated by Vrdolyak, and her efforts to obtain a complete list of referrals to CFS do not serve to give VLG notice of her belatedly broadened conspiracy allegations. Permitting the requested amendment at this stage of the litigation would require further discovery (on top of the already costly and extensive discovery that has been taken in this case) to avoid prejudice to VLG and further postponement of the trial. See Aldridge v. Forest River, Inc., 635 F.3d 870, 875–76 (7th Cir.2011). The motion for leave to amend [232] is denied.

II. Nature of Breach of Fiduciary Duty Claim: Legal or Equitable

Following a discussion of the issue at the last pre-trial conference, the Court requested that the parties submit supplemental briefs concerning whether Crim is entitled to a jury trial on her breach of fiduciary duty claim [259]. After reviewing the parties' submissions, [260], [262], [263], and carefully examining the applicable law, the Court concludes that Crim's breach of fiduciary claim is equitable in nature and must be resolved by the Court.

Federal procedural law controls the question of whether there is a right to a jury trial. Simler v. Conner, 372 U.S. 221, 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963); Int'l Fin. Servs. Corp. v. Chromas Techs. Canada, Inc., 356 F.3d 731, 735 (7th Cir.2004). Federal Rule of Civil Procedure 38(a) provides that there is a right to a jury trial where either the Seventh Amendment or any federal statute so requires. Fed.R.Civ.P. 38(a); Int'l Fin. Servs. Corp., 356 F.3d at 735. Because Crim has not pointed to any statutes supporting her contention that she is entitled to a jury trial on this claim, her right to a jury trial depends solely on the Seventh Amendment, Int'l Fin. Servs. Corp., 356 F.3d at 735, which guarantees the right to a jury “In Suits at common law, where the value in controversy shall exceed twenty dollars.” U.S. Const. amend. VII. The Supreme Court has interpreted the phrase “Suits at common law” to refer to “suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were...