Ring v. Schencker

• Decision Date: 28 June 2021
• Docket Number: 1-18-0909
• Parties: BARRY RING Plaintiff-Appellant/Cross-Appellee, v. RICHARD SCHENCKER, Individually and d/b/a RICHARD L. SCHENCKER, LTD. and RICHARD L. SCHENCKER, Attorney and Counselor, Defendant-Appellee/Cross-Appellant.
• Court: United States Appellate Court of Illinois

2021 IL App 180909-U

BARRY RING Plaintiff-Appellant/Cross-Appellee, v. RICHARD SCHENCKER, Individually and d/b/a RICHARD L. SCHENCKER, LTD. and RICHARD L. SCHENCKER, Attorney and Counselor, Defendant-Appellee/Cross-Appellant.

No. 1-18-0909

Court of Appeals of Illinois, First District, First Division

June 28, 2021

This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1)

Appeal from the Circuit Court Of Cook County. No. 15 L 005404. The Honorable Thomas R. Mulroy Judge Presiding.

PRESIDING JUSTICE WALKER delivered the judgment of the court. Justice Coghlan concurred in the judgment.

ORDER

WALKER PRESIDING JUSTICE

¶ 1 HELD: The manifest weight of the evidence sufficiently supports the trial court's finding that Plaintiff-Appellant failed to prove damages due to Defendant-Appellee's alleged breach of duties. The trial court did not abuse its discretion when it imposed sanctions against Plaintiff-Appellant under Rule 137 and limited the award to fees for the trial and posttrial proceedings.

¶ 2 Barry Ring sued Richard Schencker for legal malpractice alleging that Richard divulged Barry's secrets to attorneys working against Barry in Barry's divorce litigation. The trial court entered judgment in favor of Richard after a bench trial, and imposed sanctions on Barry under Supreme Court Rule 137 (Ill. S.Ct. R. 137 (eff.)). In his appeal, Barry argues the court relied on evidence stricken from the record, the court impermissibly restricted expert testimony, and the court's findings are contrary to the manifest weight of the evidence. Richard cross-appeals, arguing that the court awarded insufficient fees. We find that the court did not rely on the stricken evidence, Barry did not show prejudice from the restriction on expert testimony, and the evidence sufficiently supports the court's finding that Barry failed to prove Richard's actions caused any damages. On the cross-appeal, we find that the court did not abuse its discretion in the imposition of the sanction the court chose.

¶ 3 I. BACKGROUND

¶ 4 Barry Ring and Carol Schencker signed a prenuptial agreement and married in 2009. For several business transactions, Carol's father, Richard Schencker, acted as Barry's attorney and as attorney for business entities Barry created. Carol filed a complaint for dissolution of the marriage in May 2013. Richard immediately notified Barry that Richard would no longer serve as Barry's attorney.

¶ 5 Carol filed a motion for a temporary restraining order (TRO) to prevent Barry from hiding his assets. She alleged,

"on June 21, 2013, *** Barry depleted the parties' only joint checking account and deliberately cut Carol off from credit cards which she historically relied on in order to pay expenses for herself and the parties' two minor children. Further, Barry is attempting to take out a $ 1.1 million mortgage on the parties' marital residence claiming that he needs the funds to expand his medical business.***

Barry has repeatedly threatened Carol that he is 'taking all of our money and putting it into the business and he will make sure that all of the money is put into the business.' Barry has also threatened that he would 'put himself out of business, close all of his businesses and be a stay-at-home dad' by claiming that he 'does not need a lot to live on.'

Within the last two weeks, Barry told Carol 'I will fuck you and your lawyer' and that it will be 'fun for me.

The divorce court entered an initial restraining order on June 25, 2013, modified first on July 3, 2013, and further modified in subsequent orders. Carol and Barry settled most of the financial issues in the divorce by March 2014.

¶ 6 In May 2015, before entry of the final judgment in the divorce case, Barry sued Richard for legal malpractice. Much of the complaint focused on Richard's role in helping Barry set up a corporation, Colvel Investments, LLC, to acquire real estate in Indiana that Barry intended to use for his practice as a doctor specializing in pain management. As part of Barry's plan to keep his intentions secret from potential competitors, Barry asked Carol to act as legal owner of Colvel, using her maiden name on documents for Colvel's incorporation and for Colvel's acquisition of real estate. According to Barry, despite Carol's role as owner, "everyone involved understood and agreed that [Barry] would remain in control of Colvel."

¶ 7 Barry alleged in his amended complaint:

"[Richard] disclosed confidential information about Barry and his business interests to Carol and the attorneys representing her in the Divorce.

***

Included in the information Schencker learned as Barry's attorney and subsequently improperly disclosed over email was the equity in Barry's business interests, which Schencker additionally utilized in assisting Carol to prepare a Disclosure Statement listing Barry Ring's business interests to be filed in the Divorce.

Schencker also provided to Carol's attorneys in the Divorce information regarding negotiations he conducted as counsel on Barry's behalf regarding the acquisition of vacant property in Indiana. ***

Schencker even disclosed to Carol's attorneys certain legal and business strategies Barry used to deal with competitive entities ***.

Schencker advised Carol's divorce attorneys early in the divorce that Carol was involved in the ownership and control of Colvel and that this could be used to gain leverage against Barry. As a result, Carol's divorce attorneys used Carol's role with Colvel to obtain a $400, 000 settlement payment for Carol in exchange for, among other things, ending any litigation over the ownership and/or control of Colvel."

¶ 8 The bench trial on the malpractice complaint began in February 2018, more than a year after the divorce court entered its final judgment. Expert witnesses for Barry testified that Richard's emails to Carol's attorneys showed that Richard violated his duties as Barry's attorney. Richard's own expert admitted that at least one email appeared to violate Richard's ethical duties to his former client. The trial court accepted the written statements of the parties as to their expert's opinions and limited the expert testimony at trial to cross-examination.

¶ 9 Enrico Mirabelli, the attorney who represented Barry in the divorce, testified that the original restraining order entered on June 25, 2013, "pretty much locked up all of Dr. Ring's accounts and ability to do business ***. *** [T]he banks *** weren't allowing Dr. Ring to write checks." The modifications entered in July 2013 eased the restrictions and permitted Barry to pay his employees "but his ability to mortgage, hypothecate, loan, transfer property, real estate was still tied up." The modified order "prevented] Dr. Ring from proceeding with his plan to build on the property in Hobart, Indiana." Because of the continuing restrictions and Carol's extensive knowledge of Barry's real estate interests, Mirabelli worked to "[g]et the case settled on the property issue as quickly as possible." To that end, Mirabelli persuaded Barry to give Carol "a payment of 400, 000 that was nowhere to be found in the prenup." Mirabelli said," [I]f I don't have to deal with this TRO, I'm going to *** enforce his prenup the way it was written." Mirabelli clarified that the "payment was for the purpose of Carol being able to get a residence for her and the two daughters. It was to buy peace. It was to buy a settlement."

¶ 10 Jennifer Dillon Kotz, who represented Carol in the divorce, testified that Carol provided all the information that formed the basis for the temporary restraining order. Dillon Kotz explained:

"It's not uncommon in a divorce case where at the beginning of the case, in particular in this case, Carol was cut off from her credit cards. I believe, the remaining amount of money in a joint account had been removed. There was also, I believe an attempt to mortgage a property. And so given the situation and it is a very short period of time, the safest thing to do was to do a temporary restraining order."

¶ 11 Barry testified that in July 2013, Richard said to Barry, "You don't want to F with me and my daughter. I know too much about your business practices." Richard testified that Barry "made it very clear in a rather vile way that he was going to make sure that Carol would have nothing. And then that he would go after me." Carol testified that Barry said, "I am going to fuck you and fuck your family, you fucking cunt." The court said, "I don't want to hear anymore of this." The court granted Barry's motion to strike Carol's testimony about the threat.

¶ 12 The court resolved the malpractice complaint in April 2018. The court said:

"Plaintiff stated numerous times that he was going to transfer assets to disadvantage Carol in the divorce case and he made it clear in a vile way that he was going to make sure that there were no assets for Carol to find so she would have nothing.

Plaintiff further said that he would go after Defendant and make sure that he had nothing. When Carol filed for divorce from Plaintiff, her lawyers filed an ex parte TRO proceeding because Plaintiff had threatened to ruin Carol had cut Carol off from the use of her credit cards, had money removed from the parties' joint bank account and had attempted to mortgage a property. ***

Almost immediately after the entry of the TRO, Plaintiff's counsel had it modified to remove the restrictions on Plaintiff's business accounts. Thereafter the divorce court entered a preliminary injunction against Plaintiff which superseded the TRO. The preliminary injunction order does not enjoin any of Plaintiffs business financial accounts or real estate property. The TRO was filed in July and by

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