Grochocinski v. Mayer Brown Rowe & Maw LLP et al

Filing 225

TRANSCRIPT OF PROCEEDINGS held on 9/26/2007 before the Honorable Virginia M. Kendall. Oral Argument. Court Reporter Contact Information: APRIL METZLER, 312-408-5154, [e-mail]. IMPORTANT: The transcript may be viewed at the court's public terminal or purchased through the Court Reporter before the deadline for Release of Transcript Restriction. After that date it may be obtained through the Court Reporter or PACER. For further information on the redaction process, see the Court's web site at www.ilnd.uscourts.gov under Quick Links select Policy Regarding the Availability of Transcripts of Court Proceedings. Redaction Request due 3/16/2011. Redacted Transcript Deadline set for 3/28/2011. Release of Transcript Restriction set for 5/24/2011. (Metzler, April)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

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DAVID GROCHOCINSKI,

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Plaintiff,

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Case No. 1:06-cv-5486

v.

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Chicago, Illinois
September 26, 2007
Oral Argument

MAYER BROWN ROWE & MAW, LLP,
et al.,

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Defendants.
------------------------------TRANSCRIPT OF ORAL ARGUMENT
BEFORE THE HONORABLE VIRGINIA M. KENDALL
UNITED STATES DISTRICT JUDGE

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APPEARANCES:
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For the Plaintiff:

Edward T. Joyce & Associates
By: Edward T. Joyce, and
Robert D. Carroll
11 S. LaSalle St., Ste. 1600
Chicago, IL 60603
[phone]

For the Defendants:

Novack & Macey
By: Stephen Novack, and
Steven J. Ciszewski
100 N. Riverside Plaza, Ste. 1500
Chicago, IL 60606
[phone]

Court Reporter:

April M. Metzler, RPR, CRR
219 South Dearborn St., Rm. 2318-A
Chicago, IL 60604
[phone]

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Proceedings recorded by mechanical stenography;
transcript produced by notereading.

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(Commenced at 10:07 a.m.)

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THE CLERK:

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it please the Court, Steve Novack on behalf of

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defendants.

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THE COURT:

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MR. NOVACK:

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MR. CARROLL:

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behalf of plaintiff and Art Aufmann on behalf of the

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plaintiff.

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the motion to reconsider.

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make to all of you before we begin is to remember the

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procedure that we're at at this point, which is on a

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motion to dismiss.

And that, I think, is critical to

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the analysis here.

So whenever you're arguing, as much

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as we want to get down to what the California judge did

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with this judgment or what may or may not have happened

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with the trustee's decision-making process, I want to

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make sure that you are applying the proper standard

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under the motion to dismiss standard.

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06C5486, Grochocinski verse

Mayer Brown, oral argument.
MR. NOVACK:

THE COURT:

Good morning, your Honor.

May

Good morning.
Good morning.
I'm sorry.

Good morning.

Rob Carroll on

Good morning,

everyone.
We're going to have oral argument today on

MR. NOVACK:

And I guess my one point to

Okay?

Yes, your Honor.

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THE COURT:

So let's move forward.

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MR. CARROLL:

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MR. NOVACK:

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please the Court, and thank you for allowing us to

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present argument today.

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THE COURT:

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MR. NOVACK:

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function.

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a variety of matters ranging from Daubert decisions on

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expert witnesses, to motions in limine, to summary

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judgments, to directed verdicts.

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exercise that function to prevent an unjust and absurd

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result.

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result?

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and either way the case should be -- should not go

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forward.

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Brown wins.

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in the first place.

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trustee's going to win.

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should have been a case, and that's because if the

Very good.
Thank you, your Honor.

May it

Thank you.
I'll reserve a few minutes for

rebuttal.
Judge, you have a very important gatekeeping
It's a function that this Court exercises in

Here, you should

Now, why would I say it would be an absurd
Well, Judge, there are only two possibilities,

One possibility is the trustee loses, Mayer
Well, the case shouldn't have gone forward

But the other possibility:

Assume the

Still, your Honor, there never

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trustee does win, the result will be to line the pockets

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of a party, Spehar, that asserted a claim that will have

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to have been proven to be a losing claim for the trustee

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to win that got an undeserved TRO that --

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MR. NOVACK:

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THE COURT:

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conclusion that it's absurd, because -- certainly I have

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never seen any posture like this in a case before the

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Court.

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MR. NOVACK:

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THE COURT:

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under the Illinois law -- and this is undisputed,

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nobody's contested this point -- and we cited the Tri-G

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case, Supreme Court 2006, the Governmental

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Interinsurance Exchange case, 2006.

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malpractice plaintiff to win a case that alleges that an

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attorney failed to defend the case, it must prove that

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the client would have won that case had the attorney

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only defended it.

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THE COURT:

But stop right there.

Why does

it have to be a losing claim?

this stage?

Yes.
How do I get to that point at

Even if I were to agree with your

Right.
But how can I, at this stage,

knock it out of the box?
MR. NOVACK:

THE COURT:

Because, your Honor, the --

In order for a

But they've alleged -- so if at

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this stage with the allegations before proofs, I have to

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take all of their allegations as true.

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may, I'm going to put up a blowup that I did of one of

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those -- two of those allegations, but the one I'm going

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to focus on now is paragraph 64.

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win this case is to prove that Spehar would have lost

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the underlying case.

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following day; that's what the Illinois law is.

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he alleges that such a losing claim was all that had to

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happen to have proven the victory that Spehar got was

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for Mayer Brown to have shown up.

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Given and Mayer Brown had -- and then he lists four

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things, and then he uses an and/or, so it's really any

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one of those four -- but they all reduce themselves to

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the same thing.

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been an injunction and there would not have been

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damages.

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claim, as he must under the law, and he must win that

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allegation to win the case.

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case, guess where the money goes?

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very party that he will have proved had no claim in the

MR. NOVACK:

I agree with that.

And if I

The trustee knows that the only way he can

It's a given; it's like night
And so

Because, he says, if

We should have shown up.

If we had shown up, there would not have

So he is alleging that Spehar had a losing

But if he wins that allegation and wins the
The money goes to the

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first place.

And that's -- I tried to illustrate that

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and put some concrete numbers on it on this board.

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this going to be a problem that I'm away from the

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microphone?

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MS. REPORTER:

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MR. NOVACK:

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example, Count 2, and the trustee proves his case on

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liability and gets the exact amount he's claiming in the

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complaint, $17 million.

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based on the Spehar arrangement, the first 7 million

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goes to the lawyer.

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to the analysis.

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create a positive result because a lawyer is going to

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get a fee.

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the 10 million?

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it's a pro rata sharing -- 890,000 of it is set to go to

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the estate.

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motion to dismiss, which is the order entered by Judge

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Squires approving the agreement.

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THE COURT:

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MR. NOVACK:

No.

Is

Thank you.

Now, let's just take, as an

What we know from that is,

Well, that's -- that's irrelevant

You can't create damages.

So that leaves $10 million.

You can't

What happens to

Well, the first 8- -- not the first,

Now, when I get to the -THE COURT:

Would it -- what is this based

on, this breakdown?
MR. NOVACK:

This is our Exhibit D to our

The arrangement.
And the page on that is called

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the calculation schedule.

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THE COURT:

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MR. NOVACK:

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to hand it up as a stand-alone page and also the full

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order of Judge Squires and I've yellow highlighted the

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relevant numbers.

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arguments weren't presented -- we weren't there -- but

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they were approved.

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THE COURT:

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MR. NOVACK:

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THE COURT:

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MR. NOVACK:

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THE COURT:

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claim against us at the time this thing was approved.

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So we weren't called upon to comment one way or the

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other.

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MR. NOVACK:

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THE COURT:

THE COURT:

And I could hand up --

That's fine.
-- to your Honor -- I'm going

And this was approved by the

bankruptcy judge, right, this arrangement was approved?
MR. NOVACK:

It was; it was.

But these

Okay.
They were approved and so -And if you weren't out -Pardon?
And you weren't out in

California when the judgment was entered either.
MR. NOVACK:

THE COURT:

Well, there was no malpractice

Okay.

Your client wasn't out

there?
Pardon?
Your client wasn't out there?

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MR. NOVACK:

Yes.

I'm sorry.

I meant to

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THE COURT:

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MR. NOVACK:

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But because it's been approved, and if

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there's a recovery here, this is the way it's going to

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be broken down.

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THE COURT:

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MR. NOVACK:

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when I get to the damage argument, I'm going to show you

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that that itself is a windfall and shouldn't happen

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because no money's been paid on the judgment.

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client would get a cash payment when it hasn't paid any

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part of the judgment.

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absurdity, we'll just assume that's where that's going.

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THE COURT:

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MR. NOVACK:

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THE COURT:

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MR. NOVACK:

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THE COURT:

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MR. NOVACK:

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say that.
That's what I meant.
I meant to say that.

Okay.
890,000 to the estate -- and

So the

But for this purpose of the

But look what happens to what we call in our
brief the lion's share.
Right.
Just to -About sixteen times, by the way,

I have that expression in the papers.

to it.

I know.
I understand.
But I want to put some numbers

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That means that of the 17 million, over

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THE COURT:

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MR. NOVACK:

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THE COURT:

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But the problem is the way that the

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complaint is alleged is that the trustee's made a

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decision here that the suit against Mayer Brown has

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merit for it to go forward, right?

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looks at the assets of the estate -- this being the sole

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asset of the estate -- and has to make some independent

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determination that it is worthwhile to move on.

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he's made that determination, right?

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assume that.

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Whether -- he made a decision.

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bad --

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mean, the trustee in a bankrupt estate looks at the

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assets and debts of the estate and stands in the shoes

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of that estate and then says whether he is going to move

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forward --

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MR. NOVACK:

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THE COURT:

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So he's moved forward because as much as

16 million's going to Spehar and the lawyers --

MR. NOVACK:

I understand.
-- $9 million -I understand.

I mean, the trustee

And

Well, I'm not prepared to

He certainly made the decision to sue.

THE COURT:

Whether it was a good or

Well, let's talk about that.

Correct.
-- or not.

I

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that goofy judgment -- and I'll -- it is goofy, it's

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speculative and based on complete speculation about

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whether the company could have gone forward, whether the

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agreement actually existed and they deserved a

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commission, whatever, whatever that judgment was based

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on, he's made a judgment that it exists because the

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Mayer Brown attorneys never appeared to challenge it.

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And, therefore, there's some merit to his case to

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challenge.

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is a different issue, before you get to the point of

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whether the trustee's making the decision of moving on

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the case.

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all respect, he is not the Supreme Court.

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Seventh Circuit.

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THE COURT:

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MR. NOVACK:

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that it's -- passes muster under 12(b)(6) is irrelevant.

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And he has no more weight in saying that than I tell you

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that it doesn't.

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bring it and then I still need to rule on the 12(b)(6).

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Understood.

And whether that brings this absurd result

MR. NOVACK:

Well -- but, your Honor, with
He is not the

I agree.
He is not the Northern District

of Illinois.
The fact that he thinks it's meritful and

THE COURT:

Okay.

I understand that.

Fair enough.

That he can

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MR. NOVACK:

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THE COURT:

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trustee who's bringing this case is bringing it in good

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faith -- are we assuming in good faith?

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alleging that he's conspiring with Spehar to --

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you denied it, and we have not brought it on

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reconsideration.

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think it's a fraud on the Court.

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that; I have not asked you to reconsider it.

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to -- I'm keeping that argument in my pocket for the

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merits of the case or any appeal.

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agree that it's in good faith.

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in good faith?

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District Court and look at a state court judgment and

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say, Well, that sure is a goofy judgment.

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throw it out because equitably it results in a lion's

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share of recovery to Spehar.

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this motion and I didn't ask you in the other motion to

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make a finding that that judgment was wrong.

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underlying judgment was bad.

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complaint is bad because it alleges that that underlying

MR. NOVACK:

Right.
But here's the point:

The

Are you

We made that in our motion and

We don't think it's in good faith.

THE COURT:

MR. NOVACK:

We

But you've rejected
I'm going

But, no, I don't

How could it possibly be

How could I possibly sit as a

I should

How can I do that?

Judge, I am not asking you in

We're not asking you to find that that
I'm saying that this

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judgment was bad.

It has to, because of this zero sum

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game, this case within a case.

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Illinois law is.

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mistakes in the world, lawyer, but you're not liable.

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You're not liable unless the client would have prevailed

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but for your mistake.

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end of the day, there's two possibilities, right?

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possibility is that it's proven that the underlying

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judgment was bad and the trustee is going to arguably

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win on that.

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the underlying claims are going to be held as being

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good.

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claim is good, then there cannot be a malpractice case,

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because they didn't lose because of negligence.

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lost because of the facts and the law.

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THE COURT:

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MR. NOVACK:

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thing they have to prove in order to win, which is that

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the underlying judgment was bad, then the person that

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got the bad judgment -- so you'd have to make two

That's just what the

The Illinois law says you can make all the

THE COURT:

And the case within a case is

exactly why it should go to discovery as opposed to
being resolved at this point.
MR. NOVACK:

But, Judge, when we get to the
One

Another possibility is that the -- is that

And I say that if it's proven that the underlying

They

I understand.
But if they do prove the one

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rulings.

You'd have to say, I find that the underlying

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judgment was bad, Spehar's claim was meritless, CMGT

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would have won if only those lowsy lawyers at Mayer

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Brown would have shown up, it's a bad, bad judgment.

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And then you'd have to say, So as a result of Spehar

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filing a bad judgment, I'm going to give Spehar $9

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million.

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THE COURT:

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MR. NOVACK:

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the District Court shouldn't allow that to happen.

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That's what the gatekeeper rule is.

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on its head.

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problem in the first place with a $9 million recovery.

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The only way that Spehar can be a good guy

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here is to prove that his judgment was good, but that

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makes us win.

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why you don't have to decide it now.

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say, you know what?

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Brown wins or wrongdoer gets the money, I'm not going to

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let that case go forward.

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I don't like putting these parties through the burden of

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this case when those are the only two possible results.

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Right.

I understand.

Well, Judge, with all respect,

That turns the law

That's rewarding the party that caused the

So I'm saying either way it goes -- that's
You just have to

Either way it goes, either Mayer

THE COURT:

I don't like either result.

Then why -- then how, at this

stage, do I take the fact that the Mayer Brown attorneys

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did not attack what could be a valid judgment?

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isn't that just the reverse of your argument, that they

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are now being rewarded for their lack of their

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appropriate professional efforts to find in the case --

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the last one.

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you're bound to follow here -- and this is Supreme Court

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law, not you predicting it -- says that negligence alone

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is not enough; negligence alone is not enough.

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if -- now, it's -- the fact that Mayer Brown didn't show

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up is not in itself sufficient to sustain the client's

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cause of action.

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were dealing with the damages issue.

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damage --

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whether it's just negligence alone?

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before discovery, as to why they didn't show up?

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no idea why the lawyers didn't show up.

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whether there were communications back and forth.

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have a complaint and the allegations are taken as

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true --

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MR. NOVACK:

And why

I think it's even easier than

It's because the Illinois law, which

Even

Even if negligence is established -- they

THE COURT:

MR. NOVACK:
negligence.

Unless there's

But how do I know at this stage
How do I know,
I have

I have no idea
I

Well, the complaint alleges

This is a complaint for negligence.
THE COURT:

Well, there's two complaints --

15

10:22:39

1

MR. NOVACK:

I don't know what other

10:22:41

2

possibility there is.

10:22:45

3

Well, this is a malpractice -- I can only deal with what

10:22:48

4

the pleading is.

10:22:51

5

The pleading says it's malpractice.

10:22:54

6

Supreme Court says it doesn't matter if the lawyer gets

10:22:56

7

a -- what you say is a windfall and gets rewarded for

10:23:00

8

his negligence.

10:23:03

9

just isn't paying for it.

10:23:04

10

10:23:06

11

okay, that's okay, because negligence alone is not

10:23:08

12

enough.

10:23:14

13

and in Sterling Radio where the Illinois Appellate Court

10:23:19

14

very recently, 2002, dealt with a similar issue, there

10:23:24

15

somebody else paid the judgment and the plaintiff said,

10:23:27

16

so what?

10:23:31

17

admitted negligence -- then you're going to give him a

10:23:33

18

windfall.

10:23:36

19

works.

10:23:38

20

is going to get a windfall, because they -- and that

10:23:41

21

court refused to apply the collateral source rule, which

10:23:43

22

is applicable in personal injury cases, and said, We

10:23:47

23

don't care if the lawyer gets a break here.

10:23:50

24

10:23:52

25

An intentional breach of duty?

The pleading says it's negligence.
And the Illinois

Well, he's not getting rewarded.

He

The Illinois Supreme Court says, That's

These are equal elements of the cause of action

If you let that lawyer off the hook -- he

And the Court said, No, that isn't the way it

We look at the plaintiff to see if the plaintiff

What we don't want to have happen is for the
client to be in a better position, because of the

16

10:23:55

1

negligence, than he would have been if there hadn't been

10:23:57

2

any negligence.

10:24:01

3

saying, happened.

10:24:09

4

was a break for everybody.

10:24:12

5

judgment.

10:24:13

6

10:24:17

7

any issue of fact here for this motion.

10:24:20

8

the four corners.

10:24:26

9

either -- whichever road this case goes down, it ends up

10:24:30

10

either with us winning -- and that's not a reason to

10:24:32

11

keep the case going if we're going to win -- or we lose

10:24:40

12

and the winner is the guy that caused the problem in the

10:24:40

13

first place.

10:24:44

14

finding that his judgment was bad.

10:24:50

15

absurd, and that's the absurd result that is going to

10:24:53

16

happen.

10:24:56

17

10:25:01

18

Count 2 -- before I leave Count 1, I want to follow up

10:25:03

19

with what your Honor said, that you observed that the

10:25:06

20

judgment appears to be goofy and seems to be

10:25:11

21

speculative.

10:25:11

22

10:25:14

23

original motion to dismiss was that on Count 1, where

10:25:18

24

they're claiming the damages are the loss of value of

10:25:21

25

the company, we cited the Illinois law that says, In a

And so that's, exactly what you're
They let the lawyer off the hook.

It

Somebody else paid that

So you don't -- you don't have to resolve
This is within

This is a motion to dismiss because

And in order to win, there has to be a
So that's why it's

Our second ground on this motion is

One of the grounds we asserted in our

17

10:25:24

1

startup company situation, you can't do that.

And your

10:25:29

2

Honor's opinion didn't address that argument.

10:25:31

3

10:25:34

4

you just said about the speculative nature of it.

10:25:38

5

I'd ask your Honor to consider, not reconsider, because

10:25:42

6

there was nothing in your opinion on that -- on that

10:25:45

7

argument.

10:25:45

8

10:25:50

9

10:25:53

10

actual damages.

10:25:56

11

must be monetary loss.

10:26:02

12

think is closest to our case, which says that if the

10:26:04

13

client is never going to pay that judgment, then there's

10:26:07

14

no liability for the lawyer.

10:26:09

15

10:26:10

16

10:26:14

17

10:26:15

18

paid on it at the time of the filing, and as you just

10:26:19

19

confirmed, the trustee's stands in the shoes of the

10:26:23

20

bankrupt at the time -- the millisecond prior to the

10:26:28

21

filing.

10:26:28

22

10:26:31

23

that, well, maybe we'll win on Count 1.

10:26:34

24

money that we win on Count 1 and pay the judgment and

10:26:37

25

then there's loss.

But I think that it's consistent with what

Count 2 on damages.

Starting with the law,

again, negligence alone isn't enough.

There must be

The Illinois Supreme Court says that

THE COURT:
there?

And

Sterling Radio is the holding we

Are you making an assumption

The client's never going to pay the judgment?
MR. NOVACK:

Well, your Honor, no money was

What is being asked in the response brief is
We'll take the

The problem with that, Judge, is

18

10:26:44

1

that those damages are completely and totally

10:26:48

2

speculative because nobody knows right now, how could

10:26:52

3

they, whether they're going to win on Count 1.

10:26:55

4

are no concrete or finite damages as of the filing of

10:26:59

5

the complaint, and that's the test.

10:27:01

6

10:27:04

7

later.

10:27:07

8

the case goes slow, damages will accrue, or maybe we'll

10:27:11

9

win this other count and then we'll have damages.

10:27:13

10

10:27:17

11

Illinois law, which requires actual, not speculative,

10:27:21

12

damages.

10:27:25

13

cited, the Illinois Supreme Court 2005 case for that.

10:27:28

14

You cannot, quote, making that demonstration of actual

10:27:34

15

damages requires more than supposition or conjecture

10:27:38

16

where the mere possibility of harm exists, or damages

10:27:41

17

are otherwise speculative, actual damages are absent and

10:27:45

18

no cause of action yet exists.

10:27:48

19

10:27:51

20

somehow spill over to Count 2, which I don't concede but

10:27:54

21

just arguendo for now, that's for a later day.

10:27:58

22

damages are suffered, then the case -- you know, the

10:28:02

23

trustee would file that case.

10:28:05

24

time.

10:28:09

25

So there

It's not, Well, I might suffer damages
Just be patient with me your Honor and maybe if

The test under 12(b)(6) and applying

And, again, I rely on the NIEP case that you

Well, if they were right that Count 1 could

If those

We'll deal with it at the

But today it's completely, totally speculative.
It's really no different.

Think of it this

19

10:28:11

1

way:

What if a plaintiff had a lawyer in a case and the

10:28:15

2

lawyer made a mistake in the middle of the case, a huge

10:28:19

3

mistake?

10:28:24

4

an evidence deposition of an elderly sick witness and

10:28:26

5

the witness died.

10:28:31

6

fires that lawyer and hires a new lawyer to finish out

10:28:33

7

the case.

10:28:34

8

10:28:39

9

10:28:42

10

dismissed.

10:28:45

11

case.

10:28:49

12

10:28:51

13

court sitting there, a $17 million judgment sitting

10:28:56

14

there which, you know, you allege will never be

10:28:58

15

collected and you allege is not good, but it is a

10:29:01

16

judgment of a Court.

10:29:03

17

10:29:05

18

fact -- that's what's called the judgment rule, and

10:29:08

19

Illinois does not follow the judgment rule.

10:29:11

20

Radio is the proof that Illinois does not follow the

10:29:13

21

judgment rule.

10:29:16

22

is entered, that's it.

10:29:19

23

That's the damages.

10:29:20

24

10:29:22

25

He ignored the client's instructions to take

Oh, my God, the case is dead.

He

If that plaintiff filed the suit right then
against the lawyer for malpractice, that suit would be
Why?

There's no damage.

He might win that

Maybe some other witness will fill the gap.
THE COURT:

MR. NOVACK:

But there's a judgment of a

But the fact -- but just the

Sterling

The judgment rule says if the judgment
Don't ask any more questions.

The payment rule, which is Illinois's rule,
says, No, you have to actually pay that judgment or be

20

10:29:26

1

damaged in some other way by it.

And here there has

10:29:31

2

never been a payment, and the only time there could be

10:29:34

3

one, even giving their theory credibility, is in the

10:29:38

4

future with a big if, a big if.

10:29:42

5

case.

10:29:45

6

said, Well, Judge, don't dismiss my case because I think

10:29:49

7

I'm going to lose that case, just wait, be patient, and

10:29:52

8

when I lose it, then I'll really have damages.

10:29:54

9

Court's going to say, No, you don't have your damages

10:29:58

10

now, it's conjecture, and you don't know what's going to

10:30:00

11

happen.

10:30:03

12

Count 1.

10:30:04

13

10:30:09

14

answer.

10:30:11

15

dealt with it on all fours.

10:30:14

16

Supreme Court has over and over and over again said you

10:30:17

17

have to have monetary loss and it cannot be speculative.

10:30:24

18

You put those two together, I think they come out the

10:30:26

19

way Sterling Radio did.

10:30:27

20

10:30:30

21

Court limited Sterling Radio to cases of collateral

10:30:34

22

source rule.

10:30:39

23

was doing was reciting what the Illinois Appellate Court

10:30:44

24

case that it was reviewing said -- and there's actually

10:30:49

25

a clause that didn't appear in your Honor's quote, that

They've got to win that

And in my other hypothetical, if the plaintiff

The

And we don't know what's going to happen on

So I think Sterling Radio is the Illinois
I recognize the Illinois Supreme Court has not
However, the Illinois

Now, your Honor's opinion said the Supreme

Really what this -- what the Supreme Court

21

10:30:51

1

said, In the case before us here, the Appellate Court

10:30:56

2

found Sterling Radio to be inapposite, because under --

10:30:59

3

unlike Gruse, and then it went on with the quote.

10:31:03

4

And --

10:31:03

5

THE COURT:

10:31:05

6

reasoning in any way.

10:31:10

7

from the case which talks about the appellate reasoning.

10:31:16

8

And if you read the full case, it is essentially

10:31:21

9

adopting not distinguishing that reasoning in any way.

10:31:24

10

10:31:26

11

with you on that, and here is why.

10:31:31

12

issue of whether a judgment that hasn't been paid could

10:31:35

13

be damages.

10:31:41

14

two quotes to prove that point.

10:31:47

15

I can find them.

10:32:07

16

because they're very important.

10:32:08

17

10:32:16

18

Court's judgment is not related to shifting burdens of

10:32:19

19

Gruse, and then it goes on to say, Nor does it turn on

10:32:21

20

whether the existence of an unsatisfied judgment is

10:32:25

21

sufficient in and of itself to withstand the challenge

10:32:28

22

to the damages itself of the legal malpractice claim.

10:32:34

23

10:32:34

24

is not going to be addressed.

10:32:38

25

that -- and that's at page 310 of the 216 Ill.2d volume.

MR. NOVACK:

It doesn't distinguish the
It doesn't -- my quote is a quote

Judge, I respectfully disagree
It didn't reach the

As a matter of fact, it said -- and I have
As soon as -- assuming

Just bear with me one second, please,

The first one said the flaw in the Appellate

So what the Court was saying is that issue
And then to confirm

22

10:32:44

1

Then two pages later at 312 to 313, In making the point

10:32:49

2

that the plaintiff's argument was internally

10:32:50

3

inconsistent, it said, quote, if -- and this is the

10:32:55

4

keyword -- if, as NIEP contends, the existence of the

10:32:59

5

indemnity judgment standing alone is sufficient to

10:33:03

6

constitute legally cognizable damage, even though the

10:33:05

7

judgment has never been enforced against NIEP.

10:33:10

8

went on to say that argument that was the plaintiff's

10:33:12

9

argument was inconsistent with another argument.

10:33:16

10

didn't say, you know, the rule is and that's

10:33:20

11

inconsistent.

10:33:25

12

the issue -- and it says we're not reaching that, and

10:33:28

13

then, secondly, it says if.

10:33:32

14

question because it found that proximate cause was not

10:33:35

15

present, and that's all it had to do.

10:33:39

16

address it.

10:33:45

17

it had no occasion to bless or criticize the Appellate

10:33:48

18

Court on that particular point.

10:33:51

19

10:33:54

20

because Sterling did not turn only on the collateral

10:33:58

21

source rule.

10:34:04

22

Sterling Radio made was -- and this is at page 63 of 328

10:34:13

23

Ill.App.3d 3rd, before you get to the collateral --

10:34:17

24

THE COURT:

10:34:18

25

MR. NOVACK:

It said if.

Then it

But it

So we've got a word whether

So it doesn't reach the

So it did not

It just left open that other question.

So

And the Appellate Court was wrong about that

As a matter of fact, the first ruling that

Say where it is again.
328, Ill.App.3rd at 63.

23

10:34:23

1

THE COURT:

Okay.

10:34:24

2

MR. NOVACK:

10:34:26

3

that was the client, suffered only a diminution of the

10:34:30

4

value of his shares and not a loss of his personal

10:34:33

5

funds.

10:34:36

6

argument was just the entry of the judgment alone.

10:34:38

7

10:34:40

8

paragraph, very next sentence, Alternatively Seeth urges

10:34:46

9

us to apply the collateral source rule, and then it goes

10:34:49

10

on to do that.

10:34:53

11

with the judgment versus payment rule on damages, and

10:34:57

12

then dealt with the collateral source.

10:34:58

13

10:35:01

14

Honor, it held that it did not apply because in

10:35:04

15

malpractice, which is what we have here, the purpose of

10:35:07

16

a malpractice action is the place -- I'm quoting now on

10:35:11

17

page 64 -- To place the plaintiff in the same position

10:35:14

18

he or she would have occupied but for the attorney's

10:35:18

19

negligence.

10:35:22

20

by bringing suit against the attorney than if the

10:35:25

21

underlying action had been successfully prosecuted or

10:35:29

22

defended.

10:35:29

23

10:35:32

24

judgment, to get money -- if the estate got money now,

10:35:36

25

it would be in a better position than if the judgment

It say, Thus, Seeth (phonetic),

Accordingly, we reject Seeth's argument.

His

Then it goes on and in the very next

But this case dealt with both.

It dealt

And when it got to collateral source, your

The plaintiff can be in no better position

Well, on the judgment issue now, default

24

10:35:39

1

had never been entered into.

It would be getting

10:35:42

2

$890,000 because a judgment was entered against it.

10:35:45

3

That makes it in a better position than if there had

10:35:48

4

never been the suit.

10:35:52

5

It's on all fours, all fours, your Honor.

10:35:55

6

10:35:57

7

the absurd result and your Honor exercising your

10:36:00

8

gatekeeping function and for the lack of damages, we

10:36:05

9

respectfully ask your Honor to reverse your prior

10:36:07

10

decision and dismiss the complaint.

10:36:12

11

argue certification.

10:36:16

12

address that point.

10:36:16

13

10:36:18

14

10:36:18

15

10:36:20

16

about it, because I didn't say this in the brief, but

10:36:22

17

I'm going cite -- I'm going to quote from case that was

10:36:25

18

cited in the brief.

10:36:26

19

10:36:31

20

written by Judge Posner, said that, Where the statutory

10:36:35

21

criteria are met, the District Court no longer has the

10:36:39

22

discretion, but has the duty to certify.

10:36:42

23

says:

10:36:46

24

the duty of the District Court -- and of our court as

10:36:49

25

well -- to allow an immediate appeal to be taken when

That's our -- that's our case.

So I would say for both of those reasons,

We alternatively

I think the briefs adequately

THE COURT:

I don't need you to address

that.
MR. NOVACK:

I would like to make one point

Seventh Circuit in Ahrenholz, a 2000 case

Here's what he

It is equally important, however, to emphasize

25

10:36:51

1

the statutory criteria are met.

10:36:54

2

10:36:57

3

for the reasons set forth in the brief, and, therefore,

10:37:00

4

I ask in the alternative -- hopefully we won't get

10:37:03

5

there -- but in the alternative, to certify the question

10:37:06

6

for appeal.

10:37:07

7

THE COURT:

10:37:18

8

Good morning.

10:37:19

9

MR. CARROLL:

10:37:19

10

Again, my name is Rob Carroll.

10:37:22

11

plaintiff.

10:37:22

12

10:37:25

13

off, which is with their damages argument.

10:37:28

14

going to get to the points raised by defendant.

10:37:30

15

Specifically, I'm going to get to the point that

10:37:32

16

Illinois has adopted the judgment rule, not the payment

10:37:35

17

rule, and that's very clear, and that Sterling does not

10:37:38

18

say that Illinois' adopted the payment rule.

10:37:41

19

10:37:43

20

case, which this Court relied on in finding that the

10:37:45

21

judgment rule applies, I want to talk about the Stanley

10:37:49

22

case from the Fifth Circuit, which I provided to the

10:37:51

23

Court and to counsel as soon as -- as soon as I became

10:37:55

24

aware of it.

10:37:58

25

I submit that the statutory criteria are met

Okay.

Thank you.

All right.

Good morning.

I'm here for the

I want to start where the defendants left
And I'm

But before I discuss Sterling or the Gruse

It came out September 13th of this year.
Now, the Stanley case is a case that is --

26

10:38:03

1

is very similar to this case factually.

In that case

10:38:09

2

there was a lawyer who had been sued.

10:38:15

3

prosecutor, and he had been sued by somebody who had

10:38:18

4

been wrongfully convicted of a crime because he had --

10:38:21

5

because the prosecutor had allegedly withheld

10:38:25

6

exculpatory evidence.

10:38:30

7

victim was suing the prosecutor, the victim obtained a

10:38:34

8

multimillion dollar judgment.

10:38:36

9

10:38:39

10

victim forced the lawyer into involuntary Chapter 7

10:38:44

11

bankruptcy, just as in this case the judgment creditor

10:38:48

12

for CMGT was forced into a bankruptcy proceeding.

10:38:54

13

10:38:57

14

proceeding was commenced, the trustee for the criminal

10:39:00

15

prosecutor filed a legal malpractice case against the

10:39:04

16

prosecutor's lawyers for negligence arising out of the

10:39:08

17

underlying case.

10:39:16

18

lawyer's defense in the legal malpractice argued that

10:39:19

19

the case should be dismissed on summary judgment because

10:39:21

20

there was no damages.

10:39:23

21

And part of the reason that they argued that

10:39:25

22

there was no damages is because the judgment debtor, the

10:39:28

23

criminal prosecutor in the underlying case, had been

10:39:33

24

absolved of any personal liability through Chapter 7

10:39:37

25

bankruptcy discharge.

He was a criminal

And in the lawsuit in which the

After the victim obtained that judgment, the

Now, in Stanley after the bankruptcy

And the lawyers argued in that -- the

27

10:39:38

1

And the Court takes the Fifth Circuit --

10:39:43

2

took that on review, and they looked at it in two steps.

10:39:47

3

Okay?

10:39:49

4

bankruptcy -- federal bankruptcy rules, specifically

10:39:52

5

section 541(a), you have to look at the debtor -- the

10:39:57

6

judgment debtor in a snapshot of time to figure out

10:40:01

7

whether there's a cause of action that accrued to the

10:40:04

8

bankruptcy estate.

10:40:08

9

to look at the judgment debtor as of the moment the

10:40:11

10

10:40:12

11

10:40:14

12

distinguished on the basis of his argument about the

10:40:17

13

value of that judgment?

10:40:22

14

that the judgment is worthless because there was no

10:40:25

15

entity that was ongoing.

10:40:29

16

And this judge out in California comes up with this

10:40:33

17

$17 million judgment out of thin air on a lot of

10:40:36

18

speculation and it's a meritless judgment, according to

10:40:40

19

your allegations.

10:40:43

20

and what happened to the prosecutor here with the

10:40:46

21

judgment against him and the way that that went into

10:40:49

22

bankruptcy.

10:40:51

23

10:40:52

24

agree with is that we've alleged that -- I want to be

10:40:55

25

careful here -- we have not alleged that the claim that

The first step they said is that under the

And, specifically, you're supposed

bankruptcy is commenced.
THE COURT:

But isn't the Stanley case

You know, his argument is is

It was a startup that failed.

And there's a difference between that

Don't you agree?
MR. CARROLL:

Well, one thing that I don't

28

10:40:58

1

Spehar Capital had, the substance of it was meritless.

10:41:02

2

We have alleged that there were procedural defenses that

10:41:05

3

would have prevented that judgment from being entered,

10:41:09

4

and I think there's a difference.

10:41:11

5

10:41:13

6

allegations that -- and he has highlighted the critical

10:41:15

7

paragraphs -- that it would not have obtained injunctive

10:41:18

8

relief or damages.

10:41:20

9

10:41:20

10

10:41:22

11

10:41:22

12

10:41:25

13

arguments in a minute, after I address the damages

10:41:28

14

arguments.

10:41:31

15

have not alleged -- you will not see anywhere in our

10:41:34

16

complaint us alleging the substance of the dispute was

10:41:37

17

meritless.

10:41:40

18

improper jurisdiction.

10:41:42

19

Illinois.

10:41:42

20

10:41:47

21

appeared, if the defendants had appeared and defended

10:41:49

22

that case, then they -- they defended the request for

10:41:57

23

injunctive relief, because there was monetary damages

10:41:59

24

that could have been rewarded because that relief wasn't

10:42:03

25

appropriate.

THE COURT:

MR. CARROLL:
THE COURT:

Okay.

And so --

Well, it says in your

Right.
So you would not have obtained

it -MR. CARROLL:

-- and I'll get to the fraud

I don't want to get too offtrack.

But we

We've alleged that California was the
It should have been brought in

We've alleged that if -- if Mayer Brown had

29

10:42:03

1

THE COURT:

That it was inappropriate, did

10:42:05

2

10:42:05

3

10:42:07

4

inappropriate.

10:42:10

5

valid claim, but that they were going about it the wrong

10:42:13

6

way, that they could have sued for money damages instead

10:42:16

7

of equitable relief.

10:42:19

8

because there was money damages that could have been

10:42:21

9

obtained, equitable relief was inappropriate.

10:42:25

10

They also could have argued that even if

10:42:26

11

equitable relief was appropriate, Spehar should have

10:42:30

12

been forced to post a TRO bond.

10:42:33

13

have been millions of dollars, and we don't think Spehar

10:42:36

14

would have been able to afford it.

10:42:38

15

been able to post it and the injunctive relief never

10:42:41

16

would have been entered.

10:42:42

17

10:42:44

18

breach of contract claim against CMGT.

10:42:48

19

But it doesn't get to the merit of the substance of the

10:42:51

20

dispute.

10:42:51

21

10:42:56

22

Given and MBRM had abandoned their duty, CMGT filed

10:43:00

23

suit.

10:43:03

24

and limited appearance to contest California's

10:43:06

25

jurisdiction.

you say?
MR. CARROLL:

That equitable relief was

Not that Spehar Capital didn't have a

And because there's that --

And that bond would

And they would have

Now, that doesn't mean they had a valid
Maybe it did.

Our allegations go to, you know, if -- as

It would have filed them -- had to file a special

That's the type of defenses that we're

30

10:43:07

1

asserting should have been presented by defendants, had

10:43:10

2

they actually appeared in California.

10:43:13

3

10:43:19

4

procedural history that I have ever seen.

10:43:24

5

your client seek to stop a company from the startup as

10:43:32

6

opposed to, for example, seek commissions subsequent to

10:43:35

7

the startup, and then to have the company go bankrupt

10:43:38

8

and then get a judgment against the company, and then

10:43:40

9

have your clients pay the trustee for the attack on the

10:43:48

10

judgment is, as counsel has claimed, he's calling it a

10:43:53

11

fraud on the Court and wants me to reach in and stop

10:43:58

12

this inequitable position.

10:44:02

13

10:44:05

14

fact that it may or may not have been a valid judgment

10:44:10

15

in California.

10:44:14

16

aspect of moving forward in the fashion that your

10:44:18

17

clients have moved?

10:44:18

18

10:44:20

19

thing very clear.

10:44:23

20

Spehar.

10:44:25

21

10:44:28

22

Spehar, of course, is now funding the trustee's actions,

10:44:31

23

right?

10:44:31

24

10:44:34

25

THE COURT:

You know, it's the oddest
And to see

And you seem to just want to focus on the

But what about the just unclean hands

MR. CARROLL:

Well, we have to keep one

Our client is the trustee, not

And Spehar is not a party -THE COURT:

MR. CARROLL:

I know.

And the problem is that

Well, Spehar has reached an

agreement with the estate to pay the costs of the

31

10:44:36

1

litigation.

10:44:36

2

THE COURT:

10:44:38

3

MR. CARROLL:

10:44:40

4

10:44:41

5

10:44:42

6

10:44:42

7

10:44:44

8

you a specific example, but it's really not that crazy

10:44:48

9

of a result.

10:44:49

10

10:44:52

11

estate with very few liquid assets.

10:44:56

12

that it has is a legal malpractice claim.

10:44:59

13

cost very much to Spehar to fund the estate to pursue

10:45:04

14

that claim.

10:45:07

15

it doesn't cost him that much.

10:45:10

16

then his judgment gets paid.

10:45:13

17

it's not that absurd to think that a judgment creditor

10:45:17

18

of an estate, that doesn't have that much in assets,

10:45:21

19

would help fund litigation, when litigation is one of

10:45:25

20

the assets of the estate to eventually get paid.

10:45:27

21

10:45:30

22

validity of the claim and espoused the validity of the

10:45:32

23

claims to say that they believe it is an asset of the

10:45:36

24

estate?

10:45:41

25

And how common is that?
I would think it's very common

that -THE COURT:

Would you think it is or it is

not?
MR. CARROLL:

I think it is.

I can't cite

I mean, you have a Chapter 7 bankruptcy
One of the assets
It doesn't

Whether he thinks it has any merit or not,

THE COURT:

And if the estate wins,
And so it's not that --

Has your client analyzed the

Is that -- in essence he had to do that, right?
MR. CARROLL:

Yeah -- yes, yes.

32

10:45:43

1

THE COURT:

In spite of the fact that he

10:45:44

2

knows what the law is on damages for startup companies;

10:45:48

3

in spite of the fact that he knows about the very

10:45:50

4

beginning of the lawsuit where just from the allegations

10:45:55

5

it appears that the potential commission agreement may

10:46:00

6

have expired; in spite of all that, he believes that

10:46:03

7

there is validity to pursue the Mayer Brown lawyers for

10:46:07

8

this judgment?

10:46:09

9

10:46:10

10

lawyers were representing CMGT, and they should have

10:46:15

11

gone out to California.

10:46:18

12

10:46:21

13

were negligent.

10:46:23

14

complete negligence?

10:46:25

15

been there, but they weren't.

10:46:28

16

get dismissed on just negligence?

10:46:31

17

overt act of malintent.

10:46:34

18

10:46:35

19

malintent.

10:46:39

20

a legal malpractice case, which is what we have pled, is

10:46:42

21

that there was a duty between the attorney and the

10:46:45

22

client, which there was, that there was a breach of that

10:46:50

23

duty by the lawyer, which there was, and that there was

10:46:54

24

proximate cause -- there was a -- that breach

10:46:57

25

proximately cause the damages.

MR. CARROLL:

THE COURT:

Absolutely.

The Mayer Brown

They have should have -Okay.

So they didn't and they

How do you respond to his argument of
They blew it.

MR. CARROLL:

They should have

So why doesn't the case
I mean, it's not an

It doesn't have to be

It's a negligence case.

And the elements of

33

10:46:59

1

THE COURT:

10:47:02

2

proximate cause and damages.

10:47:03

3

speculative nature of what the California judge did?

10:47:07

4

10:47:10

5

that was entered -- you know what?

10:47:13

6

appeared at that prove-up hearing --

10:47:16

7

THE COURT:

10:47:17

8

MR. CARROLL:

10:47:18

9

10:47:20

10

have done, and they didn't do that.

10:47:23

11

here today.

10:47:24

12

10:47:27

13

should have come, you should have challenged

10:47:29

14

jurisdiction and equitable relief.

10:47:33

15

to a prove-up for default, you should have came.

10:47:36

16

should have vacated the default.

10:47:38

17

challenged the basis of the damages, that they're

10:47:41

18

speculative, and they didn't do any of that.

10:47:44

19

because of that CMGT is bankrupt.

10:47:47

20

because defendants did not defend it in the litigation

10:47:53

21

in California.

10:47:54

22

10:47:58

23

bankruptcy because of the default judgment that has been

10:47:59

24

entered.

10:48:03

25

the defendant's malpractice.

MR. CARROLL:

Okay.

And your two problems are
And damages, the

Well, that's a valid judgment
If defendants had

Okay.
-- they could have challenged

it and said it's speculative.

That's what they should
That's why we're

Our client is the estate.

We're saying you

And when it came up
You

You should have

And

CMGT is bankrupt

CMGT was forced into an involuntary

The default judgment was entered because of
And so, you know, CMGT

34

10:48:06

1

has -- or the estate of CMGT has a valid claim against

10:48:09

2

their lawyers for being in the position that they're in

10:48:11

3

today.

10:48:14

4

10:48:17

5

10:48:18

6

THE COURT:

10:48:19

7

MR. CARROLL:

10:48:20

8

10:48:21

9

10:48:23

10

of a distinction between the Stanley case and this case.

10:48:25

11

I agree that there are some factual differences, but I

10:48:28

12

don't think that they merit a different result, because

10:48:31

13

under federal -- first of all, what you're being asked

10:48:35

14

to reconsider are two things.

10:48:37

15

10:48:40

16

decision about -- they're saying you're not being asked

10:48:42

17

to reconsider your decision about whether this case is a

10:48:45

18

fraud -- and I'll get to that.

10:48:47

19

Count 2, specifically you're being asked to reconsider

10:48:50

20

your finding on damages.

10:48:51

21

THE COURT:

10:48:51

22

MR. CARROLL:

10:48:53

23

finding -- and that's -- they're not challenging your

10:48:55

24

finding that there was a duty and that there was a

10:48:57

25

breach of that duty or even causation.

But I want to get back to -- unless you have
more questions on -No.

Go ahead.

-- on this issue, I want to

get back to damages.
I really don't think that there's that much

You're being asked to reconsider your

But with respect to

Right.
And when it comes down to that

They're just

35

10:49:00

1

simply challenging damages.

And on damages the Stanley

10:49:05

2

case says that step 1 is to look at state law to

10:49:10

3

determine whether a cause of action accrued as of the

10:49:12

4

commencement of the bankruptcy.

10:49:14

5

10:49:18

6

doing that they say you then have to look at whether

10:49:20

7

this estate -- this state applies the judgment rule or

10:49:24

8

the -- other rule -- and that was briefed for the motion

10:49:28

9

to dismiss.

10:49:30

10

to you, Illinois applies the judgment rule.

10:49:34

11

that we cited and that you relied on in your opinion was

10:49:37

12

Gruse v. Belline, which says that an unpaid judgment,

10:49:42

13

even if it's unpaid at the time of trial, constitutes

10:49:46

14

actual damages absent evidence to the contrary.

10:49:49

15

And I'll get to that phrase, absent evidence to the

10:49:52

16

contrary, in a second.

10:49:53

17

10:49:57

18

looked at arose out of an argument made by the defendant

10:50:01

19

in that case that there were no damages because the

10:50:06

20

judgment debtor had been absolved of personal liability

10:50:09

21

because of the bankruptcy relief, because it had been

10:50:12

22

discharged in bankruptcy.

10:50:13

23

10:50:15

24

bankruptcy law, you cannot look past the commencement of

10:50:19

25

the bankruptcy to determine whether the judgment debtor

And in this case you have already -- and in

And you found that based on the cases cited
In the case

Okay?

Now, the second step that the Stanley Court

And the Court said that under federal

36

10:50:22

1

was injured.

And the Court said, We cannot and will not

10:50:26

2

take into consideration the subsequent discharge because

10:50:30

3

that's looking beyond the snapshot in time, that's

10:50:34

4

violative of the bankruptcy rules that says that you

10:50:37

5

look simply whether a cause of action has accrued as of

10:50:41

6

the commencement of the bankruptcy.

10:50:43

7

10:50:49

8

Gruse says that an unpaid judgment is evidence of

10:50:55

9

damages, absent evidence to the contrary.

10:50:57

10

saying, Well, we have evidence to the contrary here.

10:51:00

11

The judgment rule, as it's stated in Gruse, shouldn't be

10:51:03

12

applied here because we have evidence that CMGT has not

10:51:07

13

and never will pay the default judgment.

10:51:11

14

And the only evidence that they have ever

10:51:13

15

presented to this Court is the bankruptcy relief that

10:51:16

16

was obtained after the bankruptcy was commenced.

10:51:19

17

you read Stanley, Stanley says that under federal

10:51:23

18

bankruptcy rules, you're not -- Courts are not supposed

10:51:27

19

to look at the subsequent bankruptcy relief in

10:51:30

20

determining whether the judgment debtor was injured as

10:51:33

21

of the commencement of the bankruptcy.

10:51:35

22

10:51:39

23

bankruptcy rules, to accept their argument.

10:51:42

24

and it should really stop there.

10:51:45

25

into whether CMGT was damaged stops there, because there

Now, the defendants here are arguing that

And they're

And if

So it would be improper, under federal
And that --

I mean, the inquiry

37

10:51:49

1

has not been any evidence presented by the defendants,

10:51:52

2

other than the bankruptcy relief that was obtained after

10:51:55

3

the bankruptcy was commenced.

10:51:57

4

10:52:02

5

today they said that Sterling supports the rule that you

10:52:07

6

have to -- the payment rule rather than the judgment

10:52:09

7

rule.

10:52:14

8

statement in Sterling that the payment rule applies

10:52:17

9

instead of the judgment rule.

10:52:21

10

Court in the Northern Illinois Emergency Physician's

10:52:25

11

case correctly noted, Sterling never addresses the

10:52:28

12

question of whether Illinois applies a judgment rule or

10:52:30

13

a payment rule.

10:52:34

14

the facts of that particular case, which were -- would

10:52:37

15

the Court apply the collateral source rule.

10:52:40

16

10:52:42

17

because they're very unique and they are very unlike the

10:52:46

18

facts here.

10:52:49

19

legal malpractice plaintiff was an individual who in the

10:52:55

20

underlying litigation was a shareholder of a company.

10:52:59

21

And in that underlying litigation he and the company

10:53:02

22

were sued.

10:53:06

23

$700,000 settlement, and that resolved.

10:53:12

24

in that case paid nothing, and the individual lawyer

10:53:17

25

then sued both him and the lawyers who represented the

Now, during defendants' oral argument here

But Sterling -- it doesn't -- there's no

And as the Appellate

Sterling dealt with a question of under

Now, the facts of that case are important

In Sterling, you had a situation where the

And the company alone paid a roughly
The individual

38

10:53:21

1

company for malpractice.

10:53:22

2

10:53:25

3

not going to apply the collateral source doctrine

10:53:28

4

because that would allow somebody who never paid

10:53:30

5

anything in the underlying matter and was not going to

10:53:34

6

have to pay anything -- if he wins this malpractice

10:53:36

7

case -- to anybody to pocket $700,000, which is an

10:53:39

8

unjust windfall.

10:53:41

9

10:53:45

10

trustee wins, let's say, either of the counts, Counts 1

10:53:48

11

or Count 2, that money doesn't just go into his pocket.

10:53:52

12

It has to be distributed to all of the creditors, Spehar

10:53:56

13

included because he is a judgment creditor, but also to

10:53:59

14

other creditors of the estate.

10:54:00

15

THE COURT:

10:54:02

16

MR. CARROLL:

10:54:04

17

10:54:07

18

10:54:10

19

this agreement that was reached between Spehar and the

10:54:14

20

trustee.

10:54:17

21

bankruptcy Court.

10:54:19

22

trustee -- I'm sorry -- wins this malpractice case, the

10:54:22

23

bankruptcy Court is going to have to approve the

10:54:25

24

distributions that are made.

10:54:27

25

that it's overly weighted in favor of Spehar, it can

And the Court said, Under these facts, we're

In this case, on the other hand, if the

the estate.

Are there other creditors?
There are other creditors of

Spehar is not the only creditor.
Okay.

And -- and a lot's being made out of

But that agreement was approved by the
And ultimately it's CMGT -- or the

And if that Court thinks

39

10:54:31

1

refuse the distribution that the trustee has proposed.

10:54:34

2

10:54:36

3

going to look at that $17 million judgment and make a

10:54:39

4

determination as to whether or not it was frivolous or

10:54:43

5

speculative or -- it's assuming it's a valid judgment

10:54:47

6

and it's going to distribute according to that valid

10:54:50

7

judgment.

10:54:53

8

the bankruptcy priorities, correct?

10:54:55

9

10:54:59

10

$17 million judgment is proven by somebody in a court of

10:55:02

11

law to be a fraud or to be somehow not proper, I mean,

10:55:07

12

then it is a valid judgment.

10:55:12

13

against CMGT.

10:55:17

14

Spehar is a valid judgment creditor.

10:55:21

15

10:55:26

16

that was made.

10:55:33

17

dismiss, at page 7, defendants make a one-page --

10:55:41

18

10:55:42

19

10:55:44

20

10:55:45

21

10:55:49

22

10:55:53

23

heading is, The complaint should be dismissed as a fraud

10:55:56

24

on the judicial system.

10:55:58

25

THE COURT:

But the bankruptcy Court isn't

It will look at it, for example, according to

MR. CARROLL:

Correct.

But until that

It's a valid judgment

And until somebody proves otherwise,

Not -- I want to get to this fraud argument
If you look at the defendant's motion to

THE COURT:
me.

I don't think I have that with

I have all the new motions.
MR. CARROLL:

You don't need it.

I'll read

it and I'll make my point clear.
Page 7 under -- it's Roman numeral one.

It is within this section, this one-page

The

40

10:56:01

1

argument -- and it's the only place in their motion to

10:56:03

2

dismiss that the argument is made that because -- that

10:56:09

3

Spehar allegedly orchestrated the filing of this case,

10:56:12

4

and that he's behind this entire case and that he's the

10:56:15

5

real party in interest.

10:56:18

6

page 7 under the heading, The complaint should be

10:56:20

7

dismissed as a fraud on the judicial system.

10:56:23

8

10:56:25

9

10:56:30

10

Court says that as a sanction, a case can be dismissed

10:56:33

11

with prejudice where it has been proved by clear and

10:56:37

12

convincing evidence that a party committed a fraud on

10:56:39

13

the Court.

10:56:41

14

find in defendant's motion to dismiss with respect to

10:56:43

15

this argument that Spehar is a bad guy and that he's

10:56:47

16

orchestrating all of this, and that he believes his

10:56:50

17

claim doesn't have any merit.

10:56:53

18

made fall within this one page.

10:56:54

19

10:56:57

20

have the problem with if it's a fraud on the Court, it

10:57:00

21

has to be a fraud, including the trustee?

10:57:02

22

MR. CARROLL:

10:57:03

23

And they're now saying today and they said

10:57:06

24

in -- defendants said in their reply, Wait a minute.

10:57:10

25

We're not complaining about your ruling about the fraud.

That argument is found only on

And the case cited in support of that
argument is a case in which as a sanction -- in which a

That is the only argument you're going to

THE COURT:

All these arguments being

But, more importantly, don't I

Absolutely.

41

10:57:12

1

But what else could they be complaining about?

10:57:15

2

if they're complaining about something else, it's

10:57:17

3

improper on a motion to reconsider because the only

10:57:19

4

place you're going to find this argument that they're

10:57:22

5

making about Spehar being the, quote, real party in

10:57:24

6

interest, is under the fraud argument.

10:57:26

7

section in their motion to dismiss where they're saying

10:57:29

8

this, you know, element 1 or element 2, or whatever

10:57:35

9

element is missing --

10:57:35

10

10:57:36

11

their damages argument as well that the lion's share of

10:57:39

12

the recovery for damages would go to Spehar.

10:57:43

13

it's certainly -- it's certainly in that allegation as

10:57:49

14

well.

10:57:49

15

MR. CARROLL:

10:57:50

16

THE COURT:

10:57:52

17

the end is a party that shouldn't be gaining because of

10:57:55

18

the operations of the way they -- the way this is in

10:58:00

19

bankruptcy court in the first place.

10:58:04

20

will fill in the gaps when you are up on your rebuttal.

10:58:09

21

But I assume that's their position from their papers so

10:58:12

22

far.

10:58:12

23

10:58:14

24

that -- that CMGT is in bankruptcy because its lawyers

10:58:19

25

didn't defend it.

THE COURT:

MR. CARROLL:

Because

There's no

Well, I think they've made it in

And so

But until -That the real party to gain in

And I'm sure you

Well, that argument ignores

I mean, they keep calling Spehar the

42

10:58:22

1

wrongful person.

And so far -- and you made a very good

10:58:26

2

point at the beginning of this oral argument, is that we

10:58:29

3

have to keep in mind where we are in the stage of this

10:58:31

4

case.

10:58:31

5

10:58:34

6

motion to dismiss stage.

10:58:37

7

anywhere that Spehar is a bad guy and did something

10:58:40

8

wrong and that he thinks his claim has no merit and that

10:58:44

9

he doesn't deserve to be -- you know, deserve to be paid

10:58:48

10

10:58:50

11

10:58:54

12

there has been nothing proven about Spehar doing

10:58:57

13

anything wrong, committing any fraud, lying to the

10:58:59

14

California court.

10:59:02

15

a judgment.

10:59:06

16

the California court as to what his damages were.

10:59:09

17

maybe that would not have been accepted had Mayer Brown

10:59:12

18

about been out there defending CMGT, but --

10:59:14

19

10:59:19

20

couldn't your client have -- since they then stand in

10:59:22

21

the shoes, of course, of the entity, couldn't he have

10:59:27

22

moved to vacate the default judgment?

10:59:30

23

10:59:32

24

could have.

10:59:34

25

the Court today.

We are at the pleading stage.
Okay.

We are at the

And there's no evidence

as a valid judgment creditor.
Our client is the trustee, not Spehar.

And

He went out to California and he got

He presented testimony that was accepted by

THE COURT:

MR. CARROLL:

Now,

When your client came onboard,

It's a fact issue.

Maybe he

I don't think that's an issue that's before
I think the Court properly ruled that

43

10:59:37

1

that is a fact issue that we have to look at what

10:59:42

2

decision-making process he went into in deciding whether

10:59:45

3

or not to do that and what a court would have done had

10:59:47

4

he made that motion.

10:59:50

5

vacate a default judgment, for example, in Illinois --

10:59:55

6

and I don't -- as far as I know, California is not any

10:59:57

7

different -- after 30 days, it's very difficult to get a

11:00:01

8

motion for default vacated.

11:00:03

9

reasons as to why it should be vacated, and malpractice

11:00:07

10

by your lawyers is not a compelling reason.

11:00:09

11

Illinois the Courts say sue your lawyer.

11:00:13

12

11:00:17

13

hasn't been raised in defendant's motion to reconsider.

11:00:19

14

And I think this Court correctly ruled as a fact issue

11:00:23

15

that should be decided in that after discovery has been

11:00:26

16

commenced in this case.

11:00:34

17

11:00:37

18

particularly Count 2 of this case, to prove that the

11:00:40

19

judgment -- the default judgment is based on speculative

11:00:44

20

damages.

Such proof would not make the judgment

11:00:50

21

invalid.

And even if it is -- no, I'll just stop there.

11:00:54

22

If I can just have one minute?

11:00:55

23

THE COURT:

11:01:27

24

MR. CARROLL:

11:01:28

25

THE COURT:

You know, motions -- motions to

You have to show compelling

At least in

And -- but ultimately that's an issue that

It's also not a defense to this case,

You may.
That's all.
Okay.

Thanks, Judge.

Thank you.

44

11:01:29

1

Any reply?

11:01:31

2

MR. NOVACK:

11:01:40

3

Judge, first of all, I neglected to ask you

11:01:42

4

if you wanted me to hand up eight and a half by 11s of

11:01:46

5

the boards.

11:01:46

6

11:01:48

7

complaint and I have the exhibits, so -- and I actually

11:01:53

8

have pretty good eyesight, so I can see it well.

11:01:58

9

11:02:01

10

11:02:04

11

were made.

11:02:09

12

we can keep going like this.

11:02:10

13

11:02:13

14

Stanley is distinguishable on numerous, numerous

11:02:17

15

grounds.

11:02:20

16

that's significant because Louisiana did adopt the

11:02:26

17

judgment rule.

11:02:26

18

11:02:27

19

the Fifth Circuit, which is a sister circuit, and

11:02:32

20

applying federal bankruptcy law.

11:02:35

21

to -- I know they applied the Louisiana judgment rule,

11:02:38

22

but his argument was more about the controlling federal

11:02:45

23

bankruptcy law.

11:02:45

24

11:02:47

25

THE COURT:

MR. NOVACK:

Yes, your Honor.

That's fine.

I have the

Now you're just bragging.

Judge, let me try to address the points that
I'll try to stick to the order and just --

Counsel started with the Stanley case.

That was Louisiana law, not Illinois law, and

THE COURT:

MR. NOVACK:
then right now.

I think he's really focusing on

Okay.

And then it comes down

Well, let me go to that

45

11:02:48

1

THE COURT:

Okay.

11:02:48

2

MR. NOVACK:

11:02:52

3

should accept this -- that the Court can't look at what

11:02:55

4

happens after the bankruptcy is filed, they said you've

11:02:58

5

got to put blinders on.

11:03:02

6

put blinders on as to the argument that the damages for

11:03:05

7

Count 2 are going to be the product of the -- winning

11:03:10

8

Count 1.

11:03:14

9

occurred.

11:03:15

10

11:03:19

11

Count 1, that doesn't create the damages for Count 2,

11:03:22

12

because under their argument you can't look at what

11:03:26

13

happens after the bankruptcy's been filed.

11:03:28

14

11:03:30

15

doesn't matter.

11:03:33

16

filed and it's sitting there and it's a valid judgment.

11:03:36

17

It's a valid amount of money regardless of how you think

11:03:40

18

it's frivolous, regardless of how you and I may think

11:03:44

19

what did that judge base his decision on, it stands and

11:03:48

20

it's a judgment.

11:03:49

21

11:03:55

22

question whether the judgment rule or the payment rule

11:03:55

23

applies.

11:03:55

24

THE COURT:

11:03:55

25

MR. NOVACK:

The argument is -- and we

Judge, take him at his word and

That can only happen after the bankruptcy has

And so you can't -- and so even if they won

THE COURT:

But I think their argument is it

The judgment is before the bankruptcy's

MR. NOVACK:

But that goes back to the

I understand.
Now, they're saying that even

46

11:03:55

1

if I'm right that it's the payment rule not the judgment

11:03:59

2

rule, they say there may be payment, there may be

11:04:04

3

payment with the proceeds of the judgment on Count 1.

11:04:08

4

But that cannot happen by definition.

11:04:11

5

happened yet.

11:04:14

6

until sometime in the future, which is by definition

11:04:17

7

after the bankruptcy is filed.

11:04:19

8

11:04:22

9

11:04:25

10

versus the payment rule or vice versa.

11:04:30

11

their argument -- and your Honor asked me a question

11:04:33

12

about this -- they might get proceeds from Count 1 and

11:04:37

13

doesn't that -- won't that cause the very damage under

11:04:41

14

Count 2, because they'll use some of that to pay off the

11:04:44

15

default judgment.

11:04:45

16

And now I'm saying even if that's true, even

11:04:48

17

if that does happen -- which is too speculative to think

11:04:51

18

about -- but even if you do, under the rule of the Fifth

11:04:56

19

Circuit that they're espousing and asking to you

11:04:58

20

enforce, you can't even look at that as being the thing

11:05:01

21

that creates the damages.

11:05:02

22

11:05:05

23

they're asking you to do now -- this is not in the

11:05:07

24

brief, but he made the argument.

11:05:10

25

about how it gets paid.

It's speculative.

It hasn't

And it'll never happen

So all I'm saying is I'm not using that rule
to show that there's -- that the judgment rule applies
But, rather, to

The other second bite at the apple that

He says, Don't worry

Now, of course, there's an

47

11:05:13

1

agreement that says it's going to get paid.

11:05:15

2

11:05:18

3

decide then that maybe, yeah, that judgment was

11:05:20

4

frivolous, that judgment was speculative, or --

11:05:23

5

THE COURT:

11:05:24

6

MR. NOVACK:

11:05:25

7

THE COURT:

11:05:27

8

I think what he was saying is that the bankruptcy judge,

11:05:31

9

once this -- if it were a part of the estate -- would

11:05:35

10

still need to assess whether Spehar would get a

11:05:39

11

particular percentage of the judgment, because other

11:05:42

12

creditors are also available for the money, or should be

11:05:46

13

able to get the money as well.

11:05:47

14

11:05:49

15

about that.

11:05:52

16

to get out of that agreement.

11:05:54

17

approved the agreement.

11:05:58

18

They promised Spehar that in exchange for the things

11:06:01

19

that he was going to do, which is financing the case,

11:06:03

20

that's what he'd get.

11:06:05

21

second bite at the apple.

11:06:09

22

second bite at the apple, we'll just think about that.

11:06:11

23

11:06:14

24

this is and, therefore, the case should stop now.

11:06:16

25

they're telling you, No, let the case go forward and let

But he says the bankruptcy judge could

I don't know.
-- Spehar -No, I don't think he said that.

MR. NOVACK:

Well, let me say two things

One is that I don't see how they're going
The bankruptcy judge

They signed the agreement.

I don't know that they get a
But if they did get the

Here I am telling you what an absurd result
And

48

11:06:18

1

some other judge make that ruling, but we've already

11:06:21

2

spent the money defending the case, you know, et cetera,

11:06:25

3

et cetera.

11:06:26

4

11:06:28

5

creditors, Judge, don't be fooled by that.

11:06:31

6

I'll use that lion's share again -- beyond the lion's

11:06:35

7

share creditor.

11:06:39

8

happen to also be shareholders -- and we all know

11:06:43

9

there's equitable subordination, there's almost

11:06:45

10

nobody -- I can't give you chapter and verse -- Spehar

11:06:49

11

would probably get more of that recovery if it went

11:06:53

12

simply as him as a creditor, as opposed to him as a

11:06:57

13

party to this agreement.

11:06:59

14

going to be hurt by this.

11:07:02

15

11:07:04

16

difficulty with -- and he was candid enough to say, I

11:07:08

17

have to be careful, and there's a reason why he has to

11:07:11

18

say that.

11:07:13

19

an excellent argument.

11:07:13

20

11:07:17

21

claim or a meritful claim, he said, I'd better be

11:07:20

22

careful how I answer it.

11:07:22

23

answered it in a way that you ought to dismiss the case

11:07:25

24

right now from the bench.

11:07:26

25

And as far as whether there are other
Spehar is --

If you take away the creditors who

So there's nobody else that's

Now, the one thing that counsel had the most

And I respect Mr. Carroll.

I think he made

But when you asked, Is this a meritless

And I think, Judge, he has

His partner said the same thing at the last

49

11:07:29

1

oral argument.

I didn't say anything about it because

11:07:31

2

he was new to the case, he was covering for Mr. Carroll.

11:07:33

3

But they've now thought hard about this, and their

11:07:36

4

position is that Mr. Spehar had a valid claim.

11:07:40

5

what they're now telling you.

11:07:44

6

paragraph 64, and it defeats their claim because if

11:07:47

7

Spehar had a valid claim, then it wasn't the negligence,

11:07:51

8

alleged negligence, and I haven't stipulated to

11:07:55

9

negligence.

11:07:58

10

negligence of Mayer Brown that caused that judgment, it

11:08:01

11

was the facts and the law of what now we're being told

11:08:04

12

is a valid claim.

11:08:07

13

rule, hold them to that, and I think you should just

11:08:09

14

dismiss the case right now.

11:08:13

15

There is irony to the fact that they've now

11:08:16

16

said that we should have vacated that default judgment.

11:08:20

17

And I know you ruled on this before, but he raised it.

11:08:23

18

He said we should have vacated it.

11:08:26

19

have to.

11:08:29

20

Well, the time was up.

11:08:33

21

versus from bankruptcy law that trumps --

11:08:36

22

THE COURT:

11:08:39

23

plays out at this stage right now.

11:08:42

24

11:08:44

25

That's

That's inconsistent with

Assuming arguendo it wasn't the alleged

Well, under the case-within-a-case

The trustee should

The trustee -- you heard the argument of,

MR. NOVACK:

No, no, no, we cited chapter and

But I just don't know how that
That's the problem.

The California judge -- we

don't even have to worry about what the California judge

50

11:08:46

1

would have done.

We cited it in our brief.

He incited

11:08:49

2

a motion to vacate.

11:08:52

3

happen.

11:08:55

4

know somebody's going to come in and vacate it.

11:08:57

5

the trustee had the time to do it, but the time was

11:09:00

6

extended and he didn't do it.

11:09:02

7

11:09:04

8

not in the pleading.

11:09:08

9

these arguments rang true to them.

11:09:11

10

the default judgment caused the bankruptcy.

11:09:14

11

alleged in the complaint.

11:09:16

12

11:09:19

13

did.

11:09:22

14

default judgment was entered after that happened and

11:09:27

15

there's no allegation that it caused the bankruptcy.

11:09:28

16

The only damages that is alleged in this

11:09:31

17

complaint arising from the default judgment is the

11:09:34

18

$17 million default judgment, which hasn't been paid --

11:09:39

19

and I suggest will never be paid -- and even if it might

11:09:43

20

be paid by Count 1, certainly it's too speculative.

11:09:49

21

argument that, Well, maybe, the -- Spehar's substantive

11:09:55

22

claim is meritful, but the way he went about it it is

11:09:58

23

meritless.

11:10:00

24

11:10:01

25

He said, I know what's going to

I'll go along with the 17 million, because I
Well,

We're now hearing for the first time, It's
It's because, I think, some of
They're saying that
That's not

In paragraph 65, it says it was the TRO that
That was months before the default judgment.

The

The

Either way it doesn't matter.
The complaint is that the TRO was entered

and the default judgment was entered.

That's -- either

51

11:10:05

1

was valid or invalid.

11:10:09

2

Spehar chose to file an invalid TRO and got away with it

11:10:13

3

because nobody came out there, or filed an invalid

11:10:16

4

default judgment motion and got away with it because

11:10:18

5

nobody was there.

11:10:19

6

11:10:21

7

day -- getting away with, as you're using that

11:10:23

8

expression -- every day if people don't appear on cases,

11:10:26

9

if they don't respond to complaints, default judgments

11:10:30

10

11:10:32

11

11:10:34

12

that claim was valid and we had gone out there and

11:10:37

13

procedurally, let's just say procedurally --

11:10:39

14

THE COURT:

11:10:39

15

MR. NOVACK:

11:10:42

16

claim -- this is a guy, Spehar, who has come to Chicago

11:10:45

17

to put this company in bankruptcy.

11:10:49

18

come to Chicago to assert his valid claim.

11:10:53

19

was a valid claim, we're going to lose, whether losing

11:10:57

20

in California on default or Illinois on the merits.

11:11:00

21

He's got to prove that they wouldn't have won that case.

11:11:04

22

And if that's true, he doesn't deserve the money.

11:11:08

23

11:11:13

24

and forth as to whether the $17 million judgment was

11:11:16

25

speculative or whether the trustee's claim is

THE COURT:

And if it's invalid, it's because

But don't we do that every

are entered and proveups are entered.
MR. NOVACK:

But if that complaint -- if

Okay.
-- avoided it, if it's a valid

Surely he would have
And if it

Finally on damages, Judge, we're going back

52

11:11:18

1

speculative.

In reality, there's double speculation.

11:11:22

2

11:11:25

3

has -- and I'm not saying you've made a holding about

11:11:28

4

it -- but you've recognized it looks kind of goofy,

11:11:32

5

looks kind of speculative, and everybody knows that that

11:11:34

6

one is speculative.

11:11:35

7

11:11:39

8

little, if I am supposed to be looking at that judgment

11:11:43

9

and somewhat, what, collaterally attacking it in this

11:11:47

10

case?

11:11:50

11

when I looked at the judgment and I realized that it's

11:11:54

12

on a startup company and no one appeared and $17 million

11:11:57

13

was proved up that it sounds extremely speculative.

11:12:02

14

11:12:05

15

District Judge -- or the state court judge that

11:12:08

16

addressed the judgment, made the judgment, made the

11:12:11

17

findings, I would be collaterally attacking that

11:12:13

18

judgment.

11:12:15

19

11:12:15

20

don't have to do that.

11:12:18

21

possibilities, right?

11:12:21

22

and valid, in which case we didn't cause it; the facts

11:12:24

23

of the law caused it.

11:12:25

24

11:12:28

25

The $17 million judgment, as the Court

THE COURT:

And my opinion is to me worth

Am I supposed to -- I could tell you right now

But to suggest that I know better than the

MR. NOVACK:

But that's why I'm saying you
Because, again, there's only two
Either the $17 million was solid

Or it was invalid and speculative, in which
case that person shouldn't get the $9 million.

But

53

11:12:33

1

there's a second speculation here, which is even more

11:12:36

2

important.

11:12:36

3

11:12:39

4

of CMGT.

11:12:46

5

was in a startup company, but if the Trautner's

11:12:51

6

financing -- and I'm going to come back to the word

11:12:54

7

financing -- his allegation I'm on -- it was not getting

11:12:58

8

the Newco deal, that's Trautner that caused the problem.

11:13:04

9

If it had received that, it would have become a highly

11:13:08

10

11:13:09

11

11:13:11

12

record:

11:13:14

13

wasn't an infusion of funds.

11:13:18

14

Newco was 20 percent of Newco.

11:13:22

15

startup, would get 20 percent interest in Newco, another

11:13:26

16

startup.

11:13:32

17

Those are speculative.

11:13:35

18

motion.

11:13:35

19

11:13:37

20

unless we sit down and do some discovery to determine

11:13:41

21

the 20 percent influx of funding versus what the

11:13:46

22

agreement was?

11:13:49

23

motion to dismiss stage that can be so easily decided.

11:13:52

24

11:13:54

25

The trustee's arguing that he gets the value
That's the damage in Count 1.

CMGT not only

profitable company.
Well, remember, Judge, this is in the
There was no financing from Newco.

There

All that CMGT got out of
So CMGT, itself a

Illinois law says those aren't actual damages.

THE COURT:

We cited those cases in our

But how do I get to that point

It does not appear to me that at a

MR. NOVACK:

Well, we cited exactly the

chapter and versus in the record, not outside the

54

11:13:57

1

record.

I think it was on page 11 of our reply brief in

11:14:00

2

the underlying motion to dismiss.

11:14:03

3

it, so I don't know what your reasoning was on that.

11:14:06

4

11:14:10

5

damages for the loss of a startup company.

11:14:13

6

no dispute, no dispute that this was a startup company.

11:14:17

7

11:14:18

8

11:14:19

9

11:14:21

10

briefly, this is far beyond anything I said in my

11:14:23

11

response, and it's also beyond anything that's in the

11:14:25

12

motion to reconsider.

11:14:28

13

the motion -- no argument in the motion to reconsider

11:14:30

14

that this Court made an error with respect to the

11:14:33

15

damages to Count 1.

11:14:36

16

we're getting into.

11:14:37

17

THE COURT:

11:14:39

18

MR. NOVACK:

11:14:41

19

reason for that is you didn't give any reasoning on

11:14:44

20

that, and we couldn't make the three elements of

11:14:46

21

reconsideration to say that you decided incorrectly or

11:14:51

22

what have you.

11:14:53

23

issue --

11:14:53

24

11:14:55

25

You didn't address

But there can't be, under Illinois law,

THE COURT:

And there's

I'll give you a chance, okay,

for a surreply.
MR. CARROLL:

I just wanted to say very

There was no reconsideration in

And right now I think that's what

Okay.

Well, fair enough.

Well, counsel is right, but the

It's not in your opinion.

THE COURT:

That was an

It isn't in your motion to

reconsider, either, so his point is valid.

All right.

55

11:15:00

1

MR. NOVACK:

Well, Judge, I think I have

11:15:02

2

said all that I want to say, and I thank you once

11:15:04

3

again --

11:15:04

4

THE COURT:

11:15:05

5

MR. NOVACK:

11:15:07

6

11:15:08

7

MR. CARROLL:

11:15:09

8

MR. NOVACK:

11:15:10

9

11:15:10

10

11:15:20

11

11:15:20

12

11:15:20

13

one of my, I suppose, judicial pet peeves.

11:15:21

14

the course of the oral argument, I do not know who the

11:15:25

15

counsel or gentleman is in the first row right here.

11:15:28

16

don't know if he's an attorney with your firm.

11:15:30

17

wasn't introduced to me.

11:15:32

18

11:15:35

19

you, sir, made a number of times shaking of your head,

11:15:37

20

rolling of your eyes with various questions that the

11:15:40

21

Court asked and responses.

11:15:43

22

Court.

11:15:46

23

you're affiliated with that side.

11:15:47

24

11:15:51

25

Okay.
-- on behalf of both of us.

And I'm sure I speak for Mr. Carroll.
Of course.
Thank you for letting us do

that.
THE COURT:

All right.

You're welcome, and

I will take it under advisement.
I just have one thing to add, which is just
Throughout

I

He

Throughout the course of the oral argument,

It's just not helpful to the

It's not helpful to your side.

I don't know how

So in future -- for future reference, for
all of you, I never find that behavior to be

56

11:15:54

1

professional or helpful.

11:15:58

2

all trying to do the right thing here, to read the law

11:16:02

3

accurately, to apply the law appropriately.

11:16:05

4

I'm doing, and that's why I've given you this

11:16:07

5

opportunity.

11:16:12

6

don't aid in that regard.

11:16:14

7

MR. NOVACK:

11:16:15

8

THE COURT:

9

(Concluded at 11:16 a.m.)

10

And I think that just we're

That's what

So extra facial expressions and gestures

I apologize for that.
Thank you.

- - -

11
12
13
14
15
16

C E R T I F I C A T E

17
18

I certify that the foregoing is a correct transcript

19

from the record of proceedings in the above-entitled

20

matter.

21
22
23
24
25

April M. Metzler, RPR, CRR

Date