Grochocinski v. Mayer Brown Rowe & Maw LLP et al

Filing 226

TRANSCRIPT OF PROCEEDINGS held on 10/30/2007 before the Honorable Virginia M. Kendall. Status Conference. 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
October 30, 2007
Status Hearing

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

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Defendants.
------------------------------TRANSCRIPT OF STATUS HEARING
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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09:13:34

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(Commenced at 9:13 a.m.)

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THE CLERK:

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THE COURT:

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MR. NOVACK:

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MR. JOYCE:

And Ed Joyce, J-o-y-c-e, for the

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THE COURT:

Good morning.

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MR. CARROLL:

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THE COURT:

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All right, gentlemen.

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high and low and inside and out, and here's what I'm

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going to do:

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because I still believe that there are many fact

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disputes that need to be resolved and that it is not a

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situation where I can dismiss on a motion to dismiss.

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But let me tell you where I'm coming from as far as how

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we're going to move forward.

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persuasive, and I think the issue of unclean hands, for

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lack of a better term -- he's used the term repeatedly

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fraud on the court, I think there might be a few other

06C5486, Grochocinski versus

Mayer, Brown, status hearing.
MR. NOVACK:

Good morning, your Honor.

Steve Novack for defendants, N-o-v-a-c-k.
Good morning.
Good morning.

plaintiff.

Rob Carroll, C-a-r-r-o-l-l.
Good morning.
I have reviewed this

I am denying the motion to reconsider,

I find defendant's position extremely

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variations of what that issue is -- but there is a

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question lurking about why this was handled in the way

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it was and issues as to the trustee's position in coming

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forward and being paid by this entity, issues regarding

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why the trustee didn't go in and move to vacate the

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dismissal, and I think what we need to do is we need to

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do discovery solely on that, what I would call, unclean

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hands issue first, so that I can have facts in front of

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me and decide whether the case should be dismissed based

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problem with.

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that I can't get rid of this on a dismissal, but I find

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your argument extremely persuasive.

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situation.

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that the District Court resolves as opposed to the

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bankruptcy court?

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not the least bit unique.

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all the time.

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time that you have an entity that has a defaulted

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judgment that has gone in -- you're coming in on a

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malpractice count.

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malpractice claim with the only asset in the estate

upon that issue.
It's a fact dispute that I'm having the
I think there are disputed issues of fact

It is a very unique

It's a very odd case.
MR. JOYCE:

Judge, why is this something

Because in the bankruptcy court it's

THE COURT:

It's a regular -- it happens

I don't think it happens all the

How often have you seen a

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being the value of the defaulted judgment?

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MR. JOYCE:

Correct.

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THE COURT:

In many.

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reconsider hearing in the motion to dismiss, I think

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that we need to get to the fact disputes that can aid me

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in resolving whether it is common, whether it is

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something that was a normal business strategy.

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doesn't sound like it, based upon the unique set of

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facts here.

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discovery would be that would get to the bottom of that

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issue that we can resolve it first before we go into the

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malpractice issue?

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necessary?

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that there would be discovery taken of the trustee,

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probably in the form of a deposition of the trustee;

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probably deposition of Mr. Spehar, who's the principal

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of the entity that got the default judgment; and

MR. JOYCE:

I'm focusing on -- the creditors

very often fund -THE COURT:

Oh, fair enough.

That's one

issue; that's one issue.

Fair enough.

That's

one issue in many.
But as has been laid out at the motion to

It

So I'd like to ask you what you think the

What do you believe would be

MR. NOVACK:

I would imagine, your Honor,

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probably some depositions of the key shareholder, slash,

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officers of the debtor.

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THE COURT:

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MR. NOVACK:

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were not contacted by the trustee to even ask them about

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the allegations that we think are completely

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unsupported.

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the people that had the information about this

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complaint, I think, will testify that they were never

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contacted by the trustee, that they don't believe in

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this complaint, and had they been asked by the trustee

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they would have so told him.

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would resolve any fact dispute which would justify the

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proper procedure of moving forward in the case?

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MR. JOYCE:

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opinion, and I'm concerned that --

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THE COURT:

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a new opinion on the motion to reconsider.

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heard my opinion.

And -And those things would be

needed to show -THE COURT:

What would the shareholders show

you?
MR. NOVACK:

Well, I think, among other

things, the shareholders are going to show that they

They're on information and belief.

THE COURT:

Okay.

But

And what do you think

Well, I haven't seen your

Well, my opinion -- I don't have
You just

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MR. JOYCE:

Okay; okay.

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THE COURT:

My opinion and order was the one

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concern is that when you give Mr. Novack a limited bite,

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he's going to get the whole apple.

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submit for deposition twice --

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unclean hands situation -- and I'm using that term, I'm

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not so sure that is the -- I think that's a more

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appropriate term rather than the fraud on the court that

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you've used, but that's just my analysis of it.

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go for full discovery.

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case, because I find the motion to reconsider very

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persuasive.

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disputes in this case that I can't get to the bottom of.

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And maybe your fact disputes will show that it needs to

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go forward for full discovery.

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will need to have your clients be deposed on other

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issues other than that later on.

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coordination of this issue and this discovery first that

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I think is the appropriate way to go.

that was issued over a month ago.
MR. JOYCE:

THE COURT:
of discovery.

Okay.

Here's my concern:

My

So I'm going to

Well, you may be going on merits

Who said it's going to be a limited bite?

What's important here is that if it is an

If that's the case, then we're not going to
So it's my coordination of the

But, as I've said, I think there's fact

And it may be that you

But it's my

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MR. JOYCE:

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to asking questions that would go to the area of unclean

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hands?

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MR. JOYCE:

That's fine.

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THE COURT:

That's right.

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And I -- how long do you think that would

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90 only because 60 gets us bumped up against the end of

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the year and the holidays.

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THE COURT:

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I am sure you're going to have a dispute as

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to what is covered, I bet, and you're going to come back

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to me.

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MR. JOYCE:

It's a bad bet for me.

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THE COURT:

Just -- I can see you and I can

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see that that's where we're headed.

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will be here and I will resolve whether it is limited or

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not.

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judge, let me resolve it.

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unclean hands.

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discovery, you, if you fully believe it's appropriate,

THE COURT:

So he's then going to be limited

That's correct; that's

absolutely correct.

be?

60 days?
MR. NOVACK:

Judge, I was going to suggest

Fair enough.

90 days.

But that's okay.

Rather than sending this off to a magistrate

So 90 days for the limited discovery on
And then from the basis of that

I

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can move for summary judgment on that issue alone.

And

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if it is denied, we go forward for the rest of the case.

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MR. NOVACK:

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THE COURT:

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MR. JOYCE:

Thank you, Judge.

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THE COURT:

Thank you.

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(Concluded at 9:20 a.m.)

Thank you very much.
And that's the way we're going

to handle this.

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- - -

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C E R T I F I C A T E

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I certify that the foregoing is a correct transcript

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from the record of proceedings in the above-entitled

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matter.

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April M. Metzler, RPR, CRR

Date