Grochocinski v. Mayer Brown Rowe & Maw LLP et al

Filing 268

TRANSCRIPT OF PROCEEDINGS held on 5/20/2010 before the Honorable Virginia M. Kendall. Court Reporter Contact Information: April Metzler [phone], [e-mail]. 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. Redaction Request due 5/9/2012. Redacted Transcript Deadline set for 5/21/2012. Release of Transcript Restriction set for 7/17/2012. (rp, )

1

1
2
3
4

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

5
6
7
8
9
10

DAVID GROCHOCINSKI,

Case No. 1:06-cv-05486

Plaintiff,

Chicago, Illinois
May 20, 2010
Motion Hearing

v.

11

MAYER BROWN ROWE & MAW LLP,
et al.,

12

Defendant.
-------------------------------

13
14
15

TRANSCRIPT OF MOTION HEARING
BEFORE THE HONORABLE VIRGINIA M. KENDALL
UNITED STATES DISTRICT JUDGE

16
17

APPEARANCES:

18
19
20
21
22
23
24
25

For the Plaintiff:

Edward T. Joyce & Associates P.C.
By: Robert D. Carroll
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] or [e-mail]

2

1
2
3

APPEARANCES (Cont'd):

4
5
6

For the Defendant:

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

COURT REPORTER:

FEDERAL OFFICIAL COURT REPORTER
April M. Metzler, RPR, CRR, FCRR
715 Butternut Lane
Elgin, IL 60123
[phone]
[e-mail]

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

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

3
10:09:41

1

(Commenced at 10:09 a.m.)

10:09:41

2

THE CLERK: 06C5486, Grochocinski versus Mayer,

10:09:49

3

10:09:49

4

10:09:50

5

Morgans representing David Grochocinski --

10:09:53

6

THE COURT: Good morning.

10:09:53

7

MR. MORGANS: -- as respondent to the motion for

10:09:55

8

10:09:55

9

10:09:57

10

10:09:58

11

10:09:59

12

THE COURT: Good morning, Mr. Novack.

10:10:02

13

MR. CARROLL: Good morning, your Honor. Rob Carroll

10:10:02

14

10:10:04

15

THE COURT: Okay. Good morning, folks.

10:10:05

16

Well, I did receive this memorandum of law in support

10:10:08

17

of the motion to dismiss the motion for sanctions, and I think

10:10:12

18

I need to have written responses to it. But I will take your

10:10:16

19

oral response, if you have one today, but I'm going to require

10:10:19

20

you to give me more. Okay?

10:10:20

21

10:10:23

22

I may, first of all, I think that this motion or the grounds

10:10:28

23

in the motion should really just be a part of, maybe, Roman

10:10:32

24

numeral one of the response to the motion for sanctions.

10:10:34

25

Brown.
MR. MORGANS: Good morning, your Honor. David

sanctions by defendants.
THE COURT: Okay. Good morning.
MR. NOVACK: Good morning, your Honor. Steve Novack
on behalf of defendants.

for Edward T. Joyce and Associates.

MR. NOVACK: Okay. Then just briefly, your Honor, if

THE COURT: Oh, I see.
For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

4
10:10:35

1

10:10:37

2

be piecemeal briefing. But if the Court is going to hear it

10:10:41

3

separately -- and I think it should be denied out of hand.

10:10:45

4

The cases that are cited are cases that deal with

10:10:48

5

10:10:51

6

THE COURT: Right.

10:10:52

7

MR. NOVACK: They did not bring that lawsuit, was not

10:10:54

8

a party to that lawsuit before the incident in question. That

10:10:59

9

doesn't apply here, and I suggest respectfully to the motion

10:11:03

10

10:11:06

11

10:11:09

12

step as part of a proceeding that Mr. Grochocinski initiated

10:11:14

13

in this Court, the United States District Court --

10:11:15

14

THE COURT: Right.

10:11:16

15

MR. NOVACK: -- for the Northern District of

10:11:17

16

Illinois, which is the same Court in which the bankruptcy

10:11:20

17

Court sits.

10:11:23

18

10:11:26

19

to control proceedings before it, and I would suggest that it

10:11:33

20

is illogical -- I'll use that word, kind of, at the very least

10:11:35

21

to suggest that a subordinate bankruptcy court could get a

10:11:39

22

trump card over this Court's inherent authority to control its

10:11:43

23

own proceedings.

10:11:45

24

10:11:49

25

MR. NOVACK: I don't know the reason why there should

state law lawsuits against the bankruptcy trustee.

[sic] that it cannot apply here.
Our motion for sanctions was filed as simply the next

Our motion is based on the Court's inherent authority

And supporting my, sort of, common-sense argument, if
you will, and the lack of any case law cited against it, is
For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

5
10:11:53

1

the Maxwell case. Maxwell was the Seventh Circuit case -- one

10:11:56

2

of the cases your Honor relied on --

10:11:57

3

THE COURT: Right.

10:11:58

4

MR. NOVACK: -- in entering summary judgment. It's a

10:12:00

5

case strikingly similar, you'll recall. It was a malpractice

10:12:03

6

case there against an accounting firm. Summary judgment was

10:12:05

7

entered by the District Court, which even though it was a

10:12:09

8

bankruptcy trustee case was in the District Court.

10:12:11

9

10:12:14

10

invited sanctions motions both to be made in the District

10:12:18

11

Court for the proceedings there and in the Seventh Circuit for

10:12:22

12

proceedings there.

10:12:23

13

10:12:28

14

the litigation judgment exercised by trustees in bankruptcy

10:12:32

15

and, in an appropriate case, must give consideration to

10:12:35

16

imposing sanctions for the filing of a frivolous suit. The

10:12:38

17

Court did not say, But only after getting permission from the

10:12:42

18

bankruptcy judge.

10:12:44

19

10:12:47

20

Maxwell 2, a few months later, after substantively considering

10:12:52

21

the sanctions motion, and it described what had happened. And

10:12:57

22

it said that, In our opinion in this appeal we invited

10:13:01

23

appellee to file motions in the District Court and this Court

10:13:04

24

for an award of reasonable attorneys' fees.

10:13:07

25

The Seventh Circuit affirmed summary judgment, and

The Court said, Judges must be vigilant in policing

And then the Seventh Circuit issued, what I'll call,

Again, at no time did the Court say, But only if you
For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

6
10:13:10

1

first get permission from the bankruptcy Court. Those

10:13:13

2

sanction proceedings proceeded. And, in fact, the Court said,

10:13:17

3

You need no more permission to go to the District Court

10:13:21

4

without more and come back to us without more.

10:13:23

5

10:13:27

6

briefing schedule already set, I think, on a prima facie

10:13:31

7

basis --

10:13:31

8

10:13:33

9

10:13:35

10

10:13:37

11

10:13:39

12

10:13:44

13

preliminary to the substance of the motion that's been brought

10:13:47

14

against my client.

10:13:48

15

10:13:51

16

have the opportunity to reply on the jurisdictional issue. I

10:13:54

17

could orally tell you that Maxwell, for instance, did not

10:13:57

18

address the Linton case or the Barton doctrine at all.

10:14:01

19

What -- it simply was not an issue raised.

10:14:03

20

10:14:06

21

reply to the case law that he cites -- that Counsel cites in

10:14:08

22

opposition to this motion. It's a very important

10:14:11

23

fundamental --

10:14:12

24

10:14:16

25

And so this is a motion that seeks to interrupt a

THE COURT: Where are we in the briefing schedule as
far as your response to the motion for -MR. MORGANS: Our response is due in two weeks from
today, your Honor.
And my point is that the question of jurisdiction is

Now, I would like to see the case law, obviously, and

But, in any event, I would like the opportunity to

THE COURT: It is some -- but it is also somewhat a
subset of your response to the motion for sanctions, which is,
For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

7
10:14:19

1

Judge, you can't give them, because you don't have

10:14:21

2

jurisdiction to give them. So I think it can be embodied in

10:14:25

3

the same briefing schedule.

10:14:27

4

10:14:30

5

sanctions is likely going to require an affidavit of my

10:14:34

6

client, Mr. Grochocinski. The response to that could involve

10:14:38

7

a question of fact and an ultimate evidentiary hearing before

10:14:42

8

your Honor. The motion to dismiss, based on subject matter

10:14:46

9

jurisdiction, is based purely on the law and the record that's

10:14:50

10

10:14:51

11

10:14:54

12

is something you mentioned before, about the sanctions being a

10:15:01

13

disputed statement of fact and that -- and your client would

10:15:04

14

need to present an affidavit is that, of course, the Court had

10:15:07

15

the benefit of a thorough, very detailed deposition of your

10:15:12

16

client, and my findings regarding his activity were based upon

10:15:18

17

a Rule 56 summary judgment. So we had the facts. It would be

10:15:23

18

as if it played out in the courtroom. It just played out in

10:15:28

19

the chambers, where I read his entire deposition and went

10:15:31

20

through every single document in the matter.

10:15:34

21

10:15:41

22

findings changes those findings. Why wouldn't that be, for

10:15:46

23

example, a motion to reconsider where -- is he going to

10:15:49

24

present new facts?

10:15:50

25

MR. MORGANS: May I suggest, Judge? The motion for

before the Court -THE COURT: And the problem I have with this, which

So I'm not certain how a deposition subsequent to my

MR. MORGANS: Well, I believe so. Now, I have not -For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

8
10:15:54

1

I've got eleven boxes of documents on this case. I haven't

10:15:57

2

been in the case like --

10:15:58

3

THE COURT: Oh, believe me. They're in the back.

10:16:03

4

They've been living with me as well, and there's more than

10:16:04

5

eleven, so I know.

10:16:07

6

10:16:12

7

we are about to embark upon a brand new hearing and a new

10:16:16

8

factual analysis, when the Court's ruling it was based upon

10:16:21

9

the factual dispute before it and conclusions made by the

10:16:25

10

10:16:27

11

10:16:30

12

client was willful and deliberate -- that's the standard of

10:16:33

13

sanctions against a trustee -- and what he did. I believe I

10:16:37

14

will have evidence to present, that's not in the record

10:16:40

15

already, concerning my client's long experience, his handling

10:16:43

16

of default judgments, his -- the appointment of the special

10:16:54

17

counsel by the bankruptcy Court, the fact that my client's not

10:16:57

18

experienced in legal malpractice matters, facts that as

10:17:01

19

alluded to by counsel were in the Maxwell case, and I might

10:17:03

20

add --

10:17:03

21

THE COURT: And were in my case --

10:17:03

22

MR. MORGANS: -- sanctions were denied --

10:17:06

23

THE COURT: And were in my case in the depositions.

10:17:09

24

His entire background was reviewed regarding his understanding

10:17:16

25

of legal malpractice claims, as to whether he was experienced

But I worry that you're looking at this issue as if

facts presented to the Court.
MR. MORGANS: The question of sanctions is whether my

For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

9
10:17:19

1

10:17:20

2

10:17:23

3

because this is a -- this motion I've brought is -- can be

10:17:27

4

boxed together. It would delay the briefing schedule on the

10:17:30

5

merits, I agree, by some weeks, but it can be addressed. And

10:17:34

6

should the Court rule in our favor, then there would be no

10:17:37

7

need for the lawyers to brief the merits of the motion, nor

10:17:41

8

for the Court to have any sort of a hearing on the motion

10:17:43

9

unless and until the bankruptcy Court gave approval for the

10:17:46

10

bringing of the motion for sanctions. And, therefore, it's

10:17:49

11

economical for the Court and for the counsel and their

10:17:52

12

clients, who are paying the fees, to do it in the steps that I

10:17:55

13

suggest. The motion should be ruled on first --

10:17:58

14

THE COURT: Okay.

10:17:59

15

MR. MORGANS: -- the motion to dismiss.

10:18:00

16

THE COURT: Do you have anything you want to add?

10:18:01

17

MR. CARROLL: No.

10:18:01

18

THE COURT: Okay. Anything you want to add to that?

10:18:04

19

MR. NOVACK: (Shaking head.)

10:18:04

20

THE COURT: All right. Well, because the impact of

10:18:07

21

the motion is significant on your client, I will require a

10:18:11

22

briefing schedule on it, and I'll stay the briefing on the

10:18:16

23

others until this one is ruled upon. But I'm skeptical, but I

10:18:20

24

will be open-minded and do what you want me to do.

10:18:23

25

in this area.
MR. MORGANS: Well, what I'm suggesting, Judge, is

So how long do you need to -For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

10
10:18:27

1

MR. NOVACK: Could we have fourteen days, please?

10:18:28

2

THE COURT: Okay. Two weeks from today, and then

10:18:31

3

another week after that for your reply, and then I'll rule by

10:18:35

4

mail and give you a ruling on the motion to dismiss. If, of

10:18:39

5

course, you're correct, we won't go into the next one. And if

10:18:43

6

I disagree, I'm going to set -- restart the schedule on the

10:18:46

7

sanctions. Okay?

10:18:47

8

MR. CARROLL: Judge, I do have one question.

10:18:49

9

THE COURT: Sure.

10:18:49

10

10:18:51

11

10:18:54

12

THE COURT: It's going to be stayed --

10:18:56

13

MR. CARROLL: That's fine.

10:18:56

14

THE COURT: -- so you'll be able to stay as well. If

10:18:59

15

you want, you can chime in on this as well on the

10:19:02

16

jurisdictional issue.

10:19:02

17

MR. CARROLL: Very good.

10:19:03

18

THE COURT: But your substantive response will be

10:19:05

19

stayed until I hear Mr. Grochocinski's concerns that I don't

10:19:09

20

have jurisdiction over it.

10:19:10

21

MR. CARROLL: Very well.

10:19:10

22

THE COURT: Okay. All right. Thank you.

10:19:11

23

MR. MORGANS: Thank you, Judge.

10:19:12

24

MR. NOVACK: Thank you, your Honor.

25

(Concluded at 10:19 a.m.)

MR. CARROLL: We're filing separate responses to the
motion for sanctions. Is the briefing schedule --

For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]

11

1

- - -

2
3
4
5
6
7

C E R T I F I C A T E

8
9
10

I certify that the foregoing is a correct transcript from
the record of proceedings in the above-entitled matter.

11
12

May 20, 2010

13
10:50:37

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

Date

14

Official Federal Court Reporter

15
16
17
18
19
20
21
22
23
24
25
For a copy of this transcript, contact April Metzler, CRR
at [phone] or [e-mail]