Nelson v. Schultz, 122117 FED7, 17-2092

Docket Nº:17-2092
Opinion Judge:PER CURIAM.
Party Name:Kenneth E. Nelson, Plaintiff-Appellant, v. Bruce R. Schultz and Jon K. Rodgers, Defendants-Appellees.
Judge Panel:Before WOOD, Chief Judge, and Manion and Kanne, Circuit Judges.
Case Date:December 21, 2017
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Kenneth E. Nelson, Plaintiff-Appellant,


Bruce R. Schultz and Jon K. Rodgers, Defendants-Appellees.

No. 17-2092

United States Court of Appeals, Seventh Circuit

December 21, 2017

Argued November 15, 2017

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15 C 8560 - Harry D. Leinenweber, Judge.

Before WOOD, Chief Judge, and Manion and Kanne, Circuit Judges.


Kenneth Nelson sued two former business partners, Bruce Schultz and Jon Rodgers, for breach of contract and several torts. During discovery Schultz and Rodgers asked Nelson to produce various bank statements and tax returns, which, the defendants said, they needed to defend against his claims. After Nelson refused, the district court granted the defendants' motion to compel their production and warned him, twice, that it would dismiss the case if he did not produce the documents or provide an affidavit documenting a diligent search for them. Nelson did neither, and the judge dismissed the case for want of prosecution. On appeal Nelson argues that the district judge erred by not assessing whether his misconduct justified dismissing the case. Because the judge sufficiently evaluated this matter and did not abuse his discretion by dismissing the suit after multiple warnings, we affirm.

This dispute began when Nelson, Schultz, and Rodgers formed an LLC to develop a property in Downtown Chicago. In mid-2005 they created 664 N. Michigan, LLC, which, according to Nelson, they formed in order to develop the Ritz-Carlton Residences, a mixed-use luxury skyscraper on the Magnificent Mile. The LLC's operating agreement provided that development fees would be divided among the LLC's managers "as they mutually agree" and that a manager of the LLC could be removed for cause by a majority vote of the LLC's owners. According to Nelson, the LLC's managers were Nelson Hotels, Inc. (Nelson was its president) and Prism Construction Management, owned by Schultz and Rodgers.

In late 2005, Rodgers and Schultz voted to remove Nelson Hotels, Inc. as an LLC manager, which, according to Nelson, caused his company lose out on $1.13 million when the Ritz-Carlton Residences was built. Nelson asserts that Schultz and Rodgers removed his company as a manager to enrich themselves; they justified their decision, however, on grounds that he had a negative $15 million net worth that prevented the LLC from getting financing for the development.

Ten years later Nelson sued Schultz and Rodgers for breach of contract, unjust enrichment, breach of fiduciary duty, and conversion. After Nelson's lawsuit survived the defendants' motion to dismiss, the parties proceeded to discovery.

Schultz and Rodgers sought to gather evidence to support their defense that Nelson's...

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