Grochocinski v. Mayer Brown Rowe & Maw LLP et al

Filing 265

TRANSCRIPT OF PROCEEDINGS held on 5/6/2010 before the Honorable Virginia M. Kendall. Status Conference. Court Reporter Contact Information: April Metzler, [e-mail], 419-787-1832. <P>IMPORTANT: The transcript may be viewed at the court's public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through the Court Reporter/Transcriber 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.</P> Redaction Request due 4/9/2012. Redacted Transcript Deadline set for 4/17/2012. Release of Transcript Restriction set for 6/15/2012. (Metzler, April)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

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DAVID GROCHOCINSKI,

Case No. 1:06-cv-05486

Plaintiff,

Chicago, Illinois
May 6, 2010
Status Conference

v.

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MAYER BROWN ROWE & MAW LLP,
et al.,

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Defendant.
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TRANSCRIPT OF STATUS CONFERENCE
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 P.C.
By: Arthur W. Aufmann
135 S. LaSalle St., Ste. 2200
Chicago, IL 60603
[phone]
- and Myers Carden & Sax, LLC
By: David E. Morgans
30 N. LaSalle St., Ste. 2200
Chicago, IL 60602
[phone]

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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APPEARANCES (Cont'd):

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For the Defendant:

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

For the Movant:

Gerard Spehar
1625 Grandview Avenue
Glendale, CA 91201
[phone]
- pro se -

COURT REPORTER:

FEDERAL OFFICIAL COURT REPORTER
April M. Metzler, RPR, CRR, FCRR
219 South Dearborn St., Rm. 2318-A
Chicago, IL 60604
[phone]
[e-mail]

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Proceedings recorded by mechanical stenography; transcript
produced by notereading.
For a copy of this transcript, contact April Metzler, CRR
at [phone]

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(Commenced at 9:40 a.m.)

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THE CLERK: 06C5486, Grochocinski versus Mayer,

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THE COURT: Okay. Good morning.

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MR. AUFMANN: Good morning, your Honor. Arthur

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MR. SPEHAR: Gary Spehar.

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THE COURT: Good morning.

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MR. SPEHAR: Good morning.

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MR. MORGANS: Good morning, Judge. My name is David

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Morgans, M-o-r-g-a-n-s. And on Tuesday I filed a motion for

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leave to appear on behalf of Mr. Grochocinski in this case,

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which I noticed for Monday.

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Is there any difficulty with that from anyone else?

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MR. CISZEWSKI: Not at all.

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MR. AUFMANN: No, your Honor.

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THE COURT: All right. So I'll grant you leave to

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MR. MORGANS: Thank you.

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THE COURT: Now, I have a number of motions, as you

Brown, Rowe and Maw.
MR. CISZEWSKI: Good morning, your Honor. Steven
Ciszewski, C-i-s-z-e-w-s-k-i, for defendant Mayer, Brown.

Aufmann, one of the attorneys for the trustee.
THE COURT: Okay. Good morning.

THE COURT: Right. I saw that, and that's fine. You
can appear for him individually, I assume.

appear. You don't need to come in on Monday.

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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that is filed by Mr. Spehar, who's acting pro se, and that

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only comes into play if he is allowed to intervene in the

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matter. So I've looked at some of the intervention law, but

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I'm curious as to whether either Mayer, Brown or the trustee

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wants to have a position paper regarding his motion to

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intervene.

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THE COURT: Okay.

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MR. CISZEWSKI: -- for a number of reasons, and we

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would -- we will put that in writing, if that'll assist the

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Court.

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reasons, there may be more, but two that, you know, we know

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exist for certain are that this is too late. Mr. Spehar's

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known about this case for some time. He was even deposed in

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this case, and there was absolutely no reason for waiting

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until the eleventh and a half hour, I mean, after the case is

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over for trying to intervene if he thought he had some rights

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that were at stake, so that's number 1.

all know, and I'm sure you've had a chance to read.
The first one is on the motion to alter or amend, and

So who wants to respond to that?
MR. CISZEWSKI: Yeah, Judge, for Mayer, Brown, we
would. We think there's no basis for the intervention --

THE COURT: Okay. And what do you believe is the
reason for there to be lack of intervention?
MR. CISZEWSKI: I think there's at least a couple of

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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sufficient interest here to intervene. The only thing he's

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really complained about is what was stated in your judgment

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about his reputation and things like that. And based on the

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case law we've reviewed thus far, we don't believe that that

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presents a sufficient interest for an intervention.

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behalf of Mr. Spehar, since I have permitted you to represent

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him?

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MR. MORGANS: Mr. Grochocinski.

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THE COURT: Oh, you're Grochocinski. I'm sorry.

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MR. MORGANS: No, Judge. I don't have a position on

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THE COURT: You don't have a position? Okay.

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MR. MORGANS: I defer to counsel who has been in

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THE COURT: Okay. Well, you're not in here yet.

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MR. SPEHAR: Okay.

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THE COURT: But I have read your paper --

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MR. SPEHAR: Okay.

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THE COURT: -- so let me just give you some of my

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initial reactions, but I'm going to let Mayer, Brown respond

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to it, and then I'll give you a reply to Mayer, Brown's

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position.

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The second reason would be is he doesn't have a

THE COURT: Okay. Did you want to respond to that on

that.

place on the case so far.

MR. SPEHAR: Okay. Thank you.
For a copy of this transcript, contact April Metzler, CRR
at [phone]

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THE COURT: So --

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MR. SPEHAR: I appreciate it, your Honor.

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MR. AUFMANN: You know, Judge, there might be one

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THE COURT: Oh, okay.

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MR. AUFMANN: -- in thinking this through.

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The trustee in the bankruptcy court proceeding is

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going to be pursuing a motion to abandon the claim. And the

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idea being that if one or more creditors want to then take up

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the claim and perhaps pursue an appeal of your Honor's ruling

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that they would then have the opportunity to do that.

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the bankruptcy court until, I believe, May 7th, that's --

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MR. SPEHAR: That's now been extended.

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MR. AUFMANN: Pardon me?

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MR. SPEHAR: It's now been continued for three weeks.

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MR. AUFMANN: Okay. Okay. It's now even continued

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beyond May 7th. Because that motion is not going to heard in

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the bankruptcy court until after the time within which to file

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a notice of appeal, the trustee filed a notice of appeal to

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preserve that. He didn't want to -- the trustee didn't want

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to have a situation where someone comes in and says, Well, I'd

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like to take over the claim. Oh, there's been a summary

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judgment entered. Oh, I want to appeal it, and now the time

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to appeal has run.

thing I might add I'm not sure if you're not aware of --

So because that motion is not going to be heard in

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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to take over the claim, that's why he filed the notice of

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appeal. The trustee himself is not pursuing the appeal. I

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just wanted to preserve it, if one or more creditors wanted to

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do that. So I just wanted to let you know that that's sort of

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a procedural scenario.

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now. I'm trying to figure out how that will impact the issues

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that I have first. Mr. Spehar's issue is the first one we

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need to address, which is whether he can be here, and I don't

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think that will necessarily impact the intervention.

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MR. AUFMANN: I'm not sure it will either. I just

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wanted to make sure you were aware of that. That's sort of

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the lay of land.

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THE COURT: No, thank you, I appreciate that.

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MR. MORGANS: Judge, I would like to say one thing on

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the appeal, that it is filed by the trustee who's the

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plaintiff in the case. And there is a motion to abandon, but

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the motion hasn't been heard, hasn't been granted, so it can't

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be assumed --

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THE COURT: Understood.

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MR. MORGANS: -- that the trustee will not be the one

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THE COURT: Right, I understand that.

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Okay. Okay. Well -- okay. So I can see how that

So the trustee, to protect creditors who might want

THE COURT: Yes. It's a little chess match right

pursuing the appeal.

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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we have for intervention, and you're all going to brief it.

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There's the intervention of right, and there's the permissive

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intervention. So the intervention of right, I think -- tell

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me your name from Mayer, Brown, Ciszewski?

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MR. CISZEWSKI: Ciszewski, yes.

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THE COURT: All right. Mr. Ciszewski is saying,

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first, you're untimely, which would be one of the factors, is

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that you need to assert yourself into it in a timely fashion.

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And then, secondly, whether or not you have an interest

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related to the property or transaction, and there is case law

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from the Seventh Circuit talking about whether or not

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someone's injury to their reputation --

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MR. SPEHAR: Okay.

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THE COURT: -- is sufficient interest for

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intervention of right, and that is responded to in this

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Circuit and others as in the negative. So intervention of

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right, I think, is an uphill climb for you, but that doesn't

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mean you can't still seek it.

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intervention is discretionary on my part, and so we would be

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focusing more on the factors in the permissive intervention --

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MR. SPEHAR: Your Honor, if I may?

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THE COURT: Sure.

would play out with Mr. Spehar.
Well, let's look at Rule 24, which is the rule that

On the other hand, the permission -- permissive

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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THE COURT: Your what?

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MR. SPEHAR: My Charter Financial Analyst credential.

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THE COURT: Oh, okay. So that --

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MR. SPEHAR: I will lose the credential.

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THE COURT: Okay.

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MR. SPEHAR: Yes, and that is very important to me.

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THE COURT: Oh, I see, okay, like a property right.

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MR. SPEHAR: Yes.

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THE COURT: Okay. Interesting.

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All right. Well, let's get it on paper, so go ahead

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How long do you need, Mr. Ciszewski, to respond?

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MR. CISZEWSKI: Could I have 21 days?

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THE COURT: Sure. So 21 days. And then how long do

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MR. SPEHAR: That would be fine.

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THE COURT: Okay. So then fourteen days. That'll

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continued until I rule on whether you can intervene, because

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if you can't intervene, you don't have a dog in the fight in

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order to get it altered or amended. Okay.

MR. SPEHAR: Besides my reputation basis, on which I
intervened, and that was my CFA credential.

It is a physical ...

and give me your response.

you want for a reply, two weeks after that?

give me a fully briefed motion on intervention.
And the motion to alter or amend then is entered and

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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the Court, since you've made such findings about me and you

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don't know me --

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THE COURT: Okay.

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MR. SPEHAR: -- and I haven't had a voice in this?

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THE COURT: Well, I know you from your papers, but

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Colorado. I'm from a ranching background, mining background.

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My handshake is golden. I have a daughter working at the

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University of Wisconsin. The -- my background in the

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securities industry began in 1981. I was, for twenty years,

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vice president of First Interstate Bank, which is the eighth

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largest bank in the United States, then Standard Charter Bank,

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then Alex Brown and Sons (phonetic), and then Morris

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Securities.

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State of Ohio, State of Michigan, State of California, many of

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the largest mortgage issuers in this country. I've testified

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before the Federal Reserve.

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All of this is by way of telling you they are saying

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that I am worthless, that I could not raise capital for CMGT.

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MR. SPEHAR: Okay. May I, your Honor, at all address

not from you personally.
MR. SPEHAR: I know, your Honor. I would like you to
know personally just about me a little bit.
I am not from la-la land, to begin with. I'm from

I have worked for and my clients have been in the

I want you to know that CMGT's CFO was a fellow by
For a copy of this transcript, contact April Metzler, CRR
at [phone]

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the name of Mike Bauers (phonetic). The reason I got involved

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with CMGT was because Mike Bauers also cleared securities for

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me in my first iteration of CR Capital.

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Sachs, with Bear Stearns, of which my brother was a senior

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managing director for Sullivan Brothers and with Mers

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Securities (phonetic).

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already had discussions with Bear Stearns about doing an IPO

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for CMGT. Michael Bauers knew me very well and knew my

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trading and he begged me to come in and help CMGT. The

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environment you need to know about at that time was --

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Basically now we're getting into the motion to alter and

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amend, and he hasn't been given leave to intervene. And other

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than giving a personal background, I don't think he should be

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allowed to go further and talk about the substance of this.

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address the Court, so he can address the Court. I'm not going

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to cut him off.

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At that time I was trading personally with Goldman

This is by way of telling you that I have a very
professional background. I'm capable of doing an IPO. I had

MR. CISZEWSKI: Your Honor, I'm going to object.

THE COURT: Well, I gave him the permission to

MR. SPEHAR: Thank you, your Honor. I appreciate it
very much.
I -- in 2000 we were coming out of the dot com bust,
which devastated the capital markets, and we were heading
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at [phone]

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right in 2001 into 9/11. So that's the environment when

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capital markets were in very bad shape in which I came into

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CMGT. That's why it took so long.

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reupped my contract and negotiated it in 2001. And in 2003

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defendant Given and Blega (phonetic) and Wong and Blega and

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Franco became my partners to raise a hundred million dollars

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in 2003, and defendant Given was my lawyer as our partnership

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counsel. So if they thought I was worthless, they never would

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allow you to intervene, you can address. But, remember, even

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if you intervene, then you would need to be addressing it in

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such a way that you'd have to attack the judgment, based on

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new law or new facts, other than that was presented to me

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and --

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MR. SPEHAR: -- motion to amend --

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THE COURT: -- I had quite a bit of documentation

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MR. SPEHAR: Yes.

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THE COURT: So let's address it as it comes along.

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I'll take a look at your motion to intervene, and we'll get a

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fully briefed motion so that I can get into that. I see we've

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got some other issues moving along.

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I would like you to note that defendant, Given,

have done that.
THE COURT: Well, these are issues that when, if I

before me to rule.

And anything from you, sir, that you are dealing with
For a copy of this transcript, contact April Metzler, CRR
at [phone]

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THE COURT: Okay. So 28 days.

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MR. CISZEWSKI: And we'd like 21 days to reply after

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And I think that's all that I have pending before me.

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MR. AUFMANN: Your Honor, there -- the motion for

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response. The same schedule is fine with me.

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THE COURT: Same schedule.

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MR. AUFMANN: I would ask, if your Honor would allow

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it, there's a lot of accusations made against my firm that are

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going to require a lot of detail in terms of fact -- laying

now?
MR. MORGANS: Well, my job is to defend the motion
for sanctions against Mr. Grochocinski.
THE COURT: Okay. So now as far as that's concerned,
I think we need to get a briefing schedule on that.
So that's been filed. How long do you need to
respond to that?
MR. MORGANS: My request is for 28 days. I spoke to
Mr. Novak about it yesterday, and he was agreeable if you are.

that.
THE COURT: And 21 days to reply to that. Okay.
That's on the motion for sanctions.

sanctions is also addressed to my firm.
THE COURT: Oh, okay. So you're going to be on the
same schedule then, I assume.
MR. AUFMANN: Right. We'll be filing our own

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at [phone]

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out facts to rebut those, what I consider to be conclusory

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allegations. Could we have --

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THE COURT: How long?

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MR. AUFMANN: Twenty?

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THE COURT: Okay.

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MR. AUFMANN: Thank you.

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THE COURT: That's fine.

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MR. MORGANS: I'd like --

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MR. CISZEWSKI: How would you like us logistically to

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handle the reply? Because we're now going to have two

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response briefs --

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separately. They have completely independent reasons and

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independent findings, so I would file two --

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MR. CISZEWSKI: Okay.

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THE COURT: -- separately.

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MR. MORGANS: Judge, may I have twenty pages for mine

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THE COURT: Sure, you can. Okay.

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MR. CISZEWSKI: And then that's -- I mean, we may --

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depending on if we need more space for the replies, we may --

THE COURT: Those would be conclusory findings, as
opposed to allegations.
MR. AUFMANN: Could I have a brief in excess of
fifteen pages?

THE COURT: I think you probably want to do a reply

as well?

For a copy of this transcript, contact April Metzler, CRR
at [phone]

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09:53:41

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09:53:43

2

09:53:44

3

MR. CISZEWSKI: Thank you; thank you.

09:53:45

4

THE COURT: All right, folks. I think that's

09:53:46

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everything, so I'll see you shortly. Thank you.

09:53:49

6

MR. MORGANS: Thank you, Judge.

09:53:49

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MR. CISZEWSKI: Thank you, your Honor.

09:53:50

8

MR. SPEHAR: Thank you, your Honor.

09:53:51

9

(Concluded at 9:53 a.m.)

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- - -

THE COURT: You can go up to twenty pages for your
reply as well.

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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 from
the record of proceedings in the above-entitled matter.

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/s/April M. Metzler, RPR, CRR, FCRR

May 6, 2010

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April M. Metzler, RPR, CRR, FCRR

Date

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Official Federal Court Reporter

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For a copy of this transcript, contact April Metzler, CRR
at [phone]