Wieboldt Stores, Inc. v. Schottenstein, 87 C 8111.
| Decision Date | 16 September 1991 |
| Docket Number | No. 87 C 8111.,87 C 8111. |
| Citation | 131 BR 655 |
| Parties | WIEBOLDT STORES, INC., By and Through its Trustee in bankruptcy, Thomas E. RALEIGH, Plaintiff, v. Jerome M. SCHOTTENSTEIN, et al., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
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Clifford Gary Kosoff, John Francis Hennessy, Jr., James E. O'Halloran, O'Halloran, Kosoff & Miller, P.C., Northbrook, Ill., for Estate of David C. Keller.
David Bodiker, Bodiker & Holland, Columbus, Ohio, for Estate of Alvin Schottenstein.
Sarah R. Wolff, M. Marshall Seeder, Sachnoff & Weaver, Ltd., Chicago, Ill., for plaintiff Wieboldt Stores Inc.
Barry A. Pitler, Sigi Offenbach, Pitler & Mandell, Chicago, Ill., Peter A. Spaeth, John G. Fabiano, James D. St. Clair, Hale and Dorr, Boston, Mass., for defendants Ari Desche, Jon Diamond, Irving Harris, George Kolber, Thomas Keteler, Jerome M. Schottenstein, Schottenstein Stores Corp., Geraldine Schottenstein, Jay L. Schottenstein, Susan Schottenstein, Ann Schottenstein and Saul Schottenstein.
John G. Jacobs, Robert Plotkin, Jonah Orlofsky, Plotkin & Jacobs, Ltd., Jeffrey Grant Brown, Law Office of Thomas J. Shannon, Ltd., Chicago, Ill., Joel M. Wolosky, Laura I. More, Parker, Chapin, Flattau & Klimpl, New York City, for defendants Julius Trump, Edmond Trump, James M. Jacobson and Albert Roth.
Clifford Gary Kosoff, John Francis Hennessy, Jr., James E. O'Halloran, O'Halloran, Kosoff & Miller, P.C., Northbrook, Ill., for defendant Robert A. Podesta.
Kenneth R. Gaines, Dennis P. Birke, Altheimer & Gray, John G. Jacobs, Robert Plotkin, Jonah Orlofsky, Plotkin & Jacobs, Ltd., Jeffrey Grant Brown, Law Office of Thomas J. Shannon, Ltd., Chicago, Ill., for defendant William W. Darrow.
Malcolm Hirsten Brooks, Thomas G. Gardiner, Elias N. Matsakis, Robert J. Block, McBride, Baker & Coles, Chicago, Ill., for defendants State Street Venture, One North State Street Ltd. Partnership, BA Mortg. and Intern. Realty Corp. and third-party defendants Boulevard Bank Nat. Ass'n, Bennett & Kahnweler Ass'n.
David Bodiker, Bodiker & Holland, Columbus, Ohio, for defendants Charles Schottenstein, Gary Schottenstein, Randee Schottenstein and Robert M. Schottenstein.
John W. Costello, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for defendant Gen. Elec. Capital Corp.
Joseph B. Lederleitner, Neil Kevin Quinn, Mary Anne H. Capron, Pretzel & Stouffer, Chtd., Chicago, Ill., Sheri Bluebond, Arnold Quittner, Gendel, Raskoff, Shapiro & Quittner, Los Angeles, Cal., for defendant Porter, Wright, Morris & Arthur.
Gary Michael Elden, John R. McCambridge, Philip C. Stahl, Donald A. Vogelsang, George Robert Dougherty, Grippo & Elden, Chicago, Ill., for defendant Isham Lincoln and Beale.
Joel J. Africk, Rodney D. Joslin, Jenner & Block, Chicago, Ill., Kevin S. Anderson, Laventhol & Horwath, Philadelphia, Pa., for third-party defendant Laventhol & Horwath.
Jack Samuel Tenenbaum, Marvin Alan Tenenbaum, John R. McLain, Tenenbaum & Senderowitz, Chicago, Ill., Theodore Gewertz, Douglas K. Mayer, Wachtell, Lipton, Rosen & Katz, New York City, for third-party defendants AMA/WSI Inc., Alan Cohen, Anthony Grillo, and Lewis Kruger, trustee.
Julian Jawitz, third-party defendant pro se.
Peter G. Swan, David Alan Kaufman, Emalfarb, Swan & Bain, Highland Park, Ill., for third-party defendants Gilbert K. Granet, Gilbert K. Granet Inc., WSI Liquidation Trust, WSI Investors Inc., and Christopher A. Jansen.
Robert J. Kriss, Carrie Kiger Huff, Mayer, Brown & Platt, Chicago, Ill., for Household
Commercial Financial Services, trustee.
Pending before this court are the following three motions: (1) a motion for summary judgment of cross-defendant Isham, Lincoln & Beale ("Isham"); (2) a motion for summary judgment of cross-defendant Porter, Wright, Morris & Arthur ("PWMA"); and (3) a motion to dismiss the complaint and/or for partial summary judgment of defendants Julius Trump, Edmond Trump, MBT Corporation ("MBT"), Bond Industries, Inc. ("Bond"), and the Trump Group, Ltd. ("TGL") (collectively, "the Trump defendants"). For the reasons stated below, all three pending motions must be denied.
As the parties are well aware, on December 20, 1985 WSI Acquisition Corporation ("WSI") acquired Wieboldt Stores, Inc. ("Wieboldt") in a leveraged buyout ("LBO"). On September 24, 1986 Wieboldt filed for relief under Chapter 11 of the Bankruptcy Code.
On September 17, 1987, Wieboldt's Chapter 11 trustee ("Trustee") filed this action against various defendants involved in the Wieboldt LBO, including members of Wieboldt's former Board of Directors. The Trustee alleged, in part, that the LBO constituted a fraudulent conveyance of Wieboldt's assets.
In November of 1988 this court granted certain defendants' motions to dismiss and denied the remaining defendants' motions to dismiss the Trustee's complaint. In that memorandum opinion and order the court detailed the alleged facts of the Wieboldt LBO. See Wieboldt Stores, Inc. v. Schottenstein, 94 B.R. 488, 493-496 (N.D.Ill. 1988).
After the denial of their motions to dismiss, the remaining defendants answered the Trustee's complaint and filed third-party complaints. In February of 1990 the court granted in part and denied in part certain motions to dismiss the third-party actions. Wieboldt Stores, Inc. v. Schottenstein, 111 B.R. 162 (N.D.Ill.1990).
This court has chronicled the general facts surrounding this litigation in its November, 1988 opinion and subsequent opinions. It need not rehash them here. Instead, the court shall discuss the facts relevant to each of the pending motions in the discussion section below.
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); Bankr.R. 7056. In ruling on a motion for summary judgment the evidence of the non-movant must be believed, and all justifiable inferences must be drawn in the non-movant's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986).
However, when confronted with a motion for summary judgment, a party who bears the burden of proof on a particular issue may not rest on its pleading, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact which requires trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The party must do more than simply "show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (footnote omitted). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'"1 Id., 475 U.S. at 587, 106 S.Ct. at 1356.
The first two motions pending before this court are Isham's and PWMA's motions for summary judgment on the cross-claims brought against them by defendants/cross-plaintiffs James M. Jacobson and Albert Roth.
Jacobson and Roth are two of the former members of Wieboldt's Board of Directors sued by the Trustee. Specifically, Jacobson and Roth were two of the nine members of the Wieboldt Board who voted to approve WSI's acquisition of Wieboldt.2 The Trustee alleged that Jacobson and Roth breached their fiduciary duties to Wieboldt and violated the Illinois Business Corporation Act in approving the LBO.
In their second amended answer, Jacobson and Roth brought two cross-claims against Isham and PWMA. According to the cross-claims, on October 3, 1985 Wieboldt and its Board of Directors retained Isham and PWMA to render professional legal services and advice to Wieboldt and its Board with respect to WSI's proposed acquisition of Wieboldt. (Trump Second Amended Answer at 72, ¶ 1.) Wieboldt's Board allegedly authorized Isham and PWMA to work together to share common duties and responsibilities in connection with the proposed acquisition. (Id.)
According to the cross-claims, Isham and PWMA rendered legal services and advice to Wieboldt and the Board. Specifically, Isham and PWMA negotiated and structured the acquisition of Wieboldt by WSI, drafted documents necessary to implement the acquisition, performed due diligence, and rendered advice relied upon by the Board in approving the acquisition. (Id. at 73, ¶ 2.)
In their first cross-claim, Jacobson and Roth sought contribution from Isham and PWMA to the extent of any recovery by the Trustee from the Trump defendants. (Id. at 76, ¶ 10.) Jacobson and Roth based their contribution claim on Isham and PWMA's alleged negligence in advising the Board relating to the acquisition of Wieboldt by WSI. (Id. at 76, ¶ 9.) In an opinion dated March 16, 1991, this court dismissed the Jacobson and Roth contribution claim. Wieboldt v. Schottenstein, No. 87 C 8111, slip op. at 1 (N.D.Ill. Mar. 16, 1991).
Jacobson and Roth bring their second cross-claim against Isham and PWMA for legal malpractice — legal malpractice in representing Wieboldt and its Board. (Id. at 76, ¶ 12.) It is this remaining cross-claim upon which Isham and PWMA now seek entry of summary judgment.
In an action for legal malpractice, a plaintiff must prove that the defendant attorneys owed plaintiff a duty of due care arising from the attorney-client relationship, that the defendants breached that duty, and that as a proximate result, the plaintiff suffered injury. Sexton v. Smith, 112 Ill.2d 187, 97 Ill.Dec. 411, 413-14, 492 N.E.2d 1284, 1286-87 (1986). Isham and PWMA argue that Jacobson and Roth have failed to raise a genuine issue of...
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