Russian Media Group, LLC v. Cable America, Inc. et al

Filing 488

MEMORANDUM Opinion and Order: For the following reasons, Defendants' motion, R. 448 , is granted, and Mac Naughton's motion, R. 451 , is denied. (See order for further detail.) Signed by the Honorable Thomas M. Durkin on 6/22/2018:Mailed notice(srn, )

Case: 1:06-cv-03578 Document #: 488 Filed: 06/22/18 Page 1 of 3 PageID #:7079

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
W. JAMES MAC NAUGHTON, as assignee
of Russian Media Group LLC,

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Plaintiff,
v.
SHAI HARMELECH et al.,
Defendants.

No. 06-cv-3578
Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER
Before the Court is a motion by Defendants Shai Harmelech and USA
Satellite & Cable, Inc. titled “Motion to Quash Third Party Citation and Motion for
Summary Judgment,” R. 448. Motions for summary judgment are govered by Fed.
R. Civ. P. 56. However, Rule 56 is not the appropriate vehicle for Defendants’
motion. Defendants’ motion is more properly characterized as a request to deny W.
James Mac Naughton’s pending motion to reopen this case, R. 451, and to quash the
various citations to discover assets filed by Mac Naughton to enforce a judgment
against Defendants. See R. 411, 439, 440. For the following reasons, Defendants’
motion, R. 448, is granted, and Mac Naughton’s motion, R. 451, is denied.
Discussion
Mac Naughton previously represented Harmelech and USA Satellite in this
case in an action brought in 2006 by Russian Media Group LLC. Mac Naughton and
Defendants’ relationship ended in a dispute over legal bills. 1 Russian Media and
Defendants (working with different counsel) eventually settled this case.
Presumably in an attempt to gain leverage in pursuit of his fees, Mac
Naughton, through a holding company he controlled called Casco Bay, then bought
Russian Media’s judgment against his former clients—for $1 and release of a claim
Mac Naughton brought against Russian Media. R. 454-6 ¶ 2. Mac Naughton then
Mac Naughton brought suit in New Jersey state court against his former clients
Harmelech and USA Satellite for unpaid legal fees. Mac Naughton was eventually
fully compensated when Harmelech satisfied the judgment. R. 454 ¶ 4 (Harmelech
attested that the New Jersey judgment has been satisfied in full; Mac Naughton
does not deny that statement).
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brought suit in this district against Harmelech and USA Satellite to collect on the
Russian Media judgment. Mac Naughton v. Harmelech et. al., No. 14 C 10016 (N.D.
Ill. filed Dec. 14, 2014). Judge Holderman disqualified Mac Naughton from
representing Casco Bay in its pursuit of the assigned judgment. Id. at Dkt. 35 (N.D.
Ill. Mar. 17, 2015). Mac Naughton then caused Casco Bay to assign the judgment to
Mac Naughton personally. Mac Naughton now seeks to collect on the Russian
Media judgment in this 2006 case. He has also filed several other cases in this
district seeking to collect on that judgment under a number of theories. See Mac
Naughton v. Alden Mgmt. Servs., Inc., et al., No. 16 C 9027 (N.D. Ill. filed Sept. 18,
2016); Mac Naughton v. Harmelech et al., No. 17 C 227 (N.D. Ill. filed Jan. 11, 2017)
(seeking to enforce judgment through an alleged fraudulent conveyance of a condo
in Florida in which Harmelech’s mother-in-law lives); Mac Naughton v. Asher
Ventures, LLC, No. 17 C 4050 (N.D. Ill. filed May 29, 2017) (alleging Harmelech
fraudulently concealed ownership of stock and seeking to levy the stock to enforce
the judgment).
In a hearing before this Court on January 4, 2018, the Court expressed
concern about Mac Naughton’s ethical obligations to his former clients and the
impropriety of his attempt to enforce the judgment against them. Judge Feinerman
raised the same concern and recently issued an opinion holding that Mac Naughton
is violating Judge Holderman’s order by continuing to pursue the Russian Media
judgment. Mac Naughton v. Harmelech et. al., No. 14 C 10016 at Dkt. 242 (June 5,
2018). The Court adopts Judge Feinerman’s reasoning. Mac Naughton may not
disregard his obligations as a previous attorney for defendants Harmelech and USA
Satellite by seeking to enforce a judgment against those same clients he previously
represented, in the very case in which he represented them.
Rule 1.9(a) of the New Jersey Rules of Professional Conduct states that “a
lawyer who has represented a client in a matter shall not thereafter represent
another client in the same or a substantially related matter in which that client’s
interests are materially adverse to the interests of the former client . . . .” 2 Rule
1.9(a) describes the circumstances here. Mac Naughton previously represented
Defendants in this matter. He now seeks to represent another client (himself) in the
same or substantially related matter in which his interests are materially adverse
to the interests of his former clients (i.e. collection of the judgment against his
former clients, the Defendants). Although there is a dearth of on-point case law
addressing this issue (perhaps because Mac Naughton’s conduct is so obviously

The Illinois Rule of Professional Conduct 1.9(a) is nearly identical: “A lawyer who
has formerly represented a client in a matter shall not thereafter represent another
person in the same or a substantially related matter in which that person’s
interests are materially adverse to the interests of the former client unless the
former client gives informed consent.” Ill. S. Ct. Rs. Prof’l Conduct R.1.9.
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wrong that no one else has been bold enough to try it), 3 courts in both Illinois and
New Jersey have disqualified counsel for less egregious conflicts. See In re Marriage
of Newton, 955 N.E.2d 572, 588 (Ill. App. Ct. 1st Dist. 2011) (disqualifying counsel
and rendering retainer agreement void ab initio when attorneys met with one
spouse and then knowingly represented the other spouse in divorce proceedings);
United States v. Alex, 788 F. Supp. 359, 365 (N.D. Ill. 1992) (disqualifying attorney
who represented both the defendant and the defendant’s victims); State v. Ross,
2014 WL 563661, at *5 (N.J. Super. Ct. App. Div. Feb. 13, 2014) (attorney could not
represent defendant when he previously represented a potential witness in an
incident directly related to the case).
Attorneys have an ethical duty to their clients and the legal system. They
may not represent interests that are materially adverse to the interests of their
former clients, regardless of whether they are representing themselves or other
clients. “The Rules of Professional Conduct recognize that the practice of law is a
public trust and lawyers are the trustees of the judicial system.” In re Marriage of
Newton, 955 N.E.2d at 588. The case remains closed. 4
ENTERED:
_______________________
Honorable Thomas M. Durkin
United States District Judge

Dated: June 22, 2018

As Judge Feinerman stated, “the court need not address whether it has the
inherent authority to prohibit Mac Naughton from seeking in court to collect the
RMG judgment from his former clients. The court’s research has revealed no cases
addressing that precise issue, likely because no attorney before now has had the
audacity to purchase from that attorney’s litigation opponent a judgment entered
against his or her own client and then attempt to enforce that judgment against the
client.” W. James Mac Naughton v. Shai Harmelech, et al., No. 14 C 10016, Dtk. 242
at 9-10 (N.D. Ill. June 5, 2018).

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Because Mac Naughton has already recovered his legal fees through the New
Jersey case, an order denying the motion to reopen this case merely “decreases the
likelihood that Mac Naughton will obtain a windfall.” W. James Mac Naughton v.
Shai Harmelech, et al., No. 14 C 10016, Dtk. 242 at 9 (N.D. Ill. June 5, 2018).

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