Mizrachi v. Ordower et al

Filing 248

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 5/2/2021: The Court rules on the parties' remaining motions in limine as set out in this order. The Court believes that it has now ruled on all of the matters presente d in the parties' motions in limine. Based upon the Court's exclusion, via this order, of additional evidence (including, but not limited to, the experts' respective weighing of and conclusions about what the evidence shows), all of which was done after the Court's setting of trial time limits, the Court reduces each side's trial time allocation by one hour, to a total of fifteen each, thirty total. The Court notes that it regards this as a very conservative downward adjustment given the amount of evidence excluded via the present order. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JOSEPH MIZRACHI,
Plaintiff,
vs.
LAWRENCE ORDOWER and
ORDOWER & ORDOWER, P.C.,
Defendants.

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Case No. 17 C 8036

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:

In this order, the Court rules on the remaining motions in limine filed by the
parties in this case, in which the plaintiff, Joseph Mizrachi, asserts claims of legal
malpractice and breach of fiduciary duty against the defendants, Lawrence Ordower
and his law firm.
1.

Robert Hirshon and Michael Flaherty
Mizrachi offers Robert Hirshon as an expert on various points. Hirshon's

proffered opinions are: (1) there was an attorney-client relationship between Mizrachi
and Ordower; and (2) Ordower violated his duty of care and fiduciary duty in various
ways, including by violating several of the Illinois Rules of Professional Conduct (IRPC).
Ordower offers as an expert Michael Flaherty. Flaherty offers five opinions,
some of which counter Hirshon's opinions and some of which address other topics.
Flaherty's first opinion is that there was no attorney-client relationship between Mizrachi
and Ordower. His second opinion is that Ordower did not breach any provision of the

IRPC or a fiduciary duty. Flaherty's third opinion is that Mizrachi has not shown that any
of his claimed damages were proximately caused by any breach of duty by Ordower.
His fourth opinion is that Mizrachi lacks standing to recover damages because he
suffered no damages in his individual capacity. Flaherty's fifth opinion is that the
attorney's fees listed in the report by Mizrachi's expert Matthieu are not a legally
recoverable item of damages.
The Court previously made an oral ruling excluding both Hirshon and Flaherty's
opinions regarding whether there was an attorney-client relationship between Mizrachi
and Ordower.
a.

Opinions regarding the IRPC and breaches of specific Rules

Hirshon's second opinion and Flaherty's second opinion—regarding breaches of
duty by Ordower—concern admissible topics, specifically the duties owed by a lawyer to
a client and Ordower's deviation or non-deviation from those duties. In a legal
malpractice case, opinions on these topics are not simply admissible, they are generally
required under Illinois law. See, e.g., Barth v. Reagan, 139 Ill. 2d 399, 407, 410, 564
N.E.2d 1196, 1200, 1201 (1990); Johnson v. Komie, 2019 IL App (1st) 171189-U, ¶ 38,
2019 WL 489844, *7; Prather v. McGrady, 261 Ill. App. 3d 880, 890, 634 N.E.2d 299,
306 (1994).
This does not mean, however, that these two witnesses' opinions as set forth in
their reports are all admissible. There are significant problems with both of them.
First, Hirshon will have to rephrase any opinions in this are so that they are
based on an assumption that the jury finds an attorney-client relationship, not a
conclusion on his part that there is such a relationship—as the Court has precluded him

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from opining on the latter point.
Second, each of Flaherty's opinions on the IRPC begins with a statement similar
to the following: "There can be no Rule 1.4 violation because there is no attorney-client
relationship between Ordower and Mizrachi." Dkt. no. 227-3 (Flaherty report) at ECF p.
39 of 68. Such testimony (whether it concerns IRPC 1.4 or any other rule) is
inadmissible. When Flaherty testifies regarding the IRPC and the obligations they
impose, Ordower's counsel may appropriately couch the question in terms of an
assumption that an attorney-client relationship is found to exist. But he may not elicit or
imply Flaherty's view that there was no such relationship.
Third, both Hirshon and Flaherty's opinions regarding the requirements of the
pertinent Rules or common-law obligations are admissible, as they establish the
contours of any applicable legal duties. This is the sort of testimony specifically
contemplated by Illinois law regarding the nature of evidence required in legal
malpractice cases.
The big problem is the next point. All of Hirshon and Flaherty's opinions
regarding Ordower's violation or non-violation of the IRPC involve what amount to
"ultimate issues." That by itself does not make them inappropriate, as the Federal
Rules of Evidence authorize such testimony in appropriate situations. See Fed. R. Evid.
704(a). But both of these experts' opinions involve, to a large extent, weighing
competing evidence and drawing conclusions regarding various persons' intent and
what did and did not happen. For example, on IRPC 1.4, Hirshon says the following:
Ordower has violated his duty to adequately communicate with his client,
Mizrachi, pursuant to IRPC 1.4. Prior to closing and for weeks after the
closing, Ordower never informed Mizrachi that Ordower and Holtzman
were excluding Mizrachi from the deal that Mizrachi had put together from
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its inception. Even if, as Ordower claims, he thought that Mizrachi, through
his voicemail, was withdrawing from the deal to purchase the Brentwood
interest, Ordower had an obligation to confirm that Mizrachi was in fact
withdrawing from the deal. Certainly a reasonable lawyer would put
something of this consequence in writing. But at the very least, IRPC 1.4
required that Ordower confirm verbally that Mizrachi intended to walk
away from the deal. Ordower did the opposite. Not only did Ordower fail to
confirm that Mizrachi was withdrawing from the deal, Ordower engaged in
a pattern of misleading conduct. For example, in the days leading up to
and on the day of the proposed closing of the Brentwood transaction,
Ordower informed Finkelstein that the only issues left were some internal
issues and true-ups. Instead of consulting with his client about matters of
the greatest importance—whether Mizrachi actually intended to back out
of the transaction—Ordower engaged in a subterfuge.
In response, Flaherty offers the following opinion (this is an excerpt from a much
longer discussion):

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The best way to start the discussion is with Flaherty's opinion on IRPC 1.4. 1 It
reads like a summary judgment brief, not an expert opinion. It is readily apparent from
reading Flaherty's report (both this part and those concerning other IRPC provisions)
that what he has done is to cull the evidence, make determinations about what to rely
on and what not to rely on, draw factual inferences, and decide what did and did not
happen. That's a pretty good description for what a jury is supposed to do. In other
words, Flaherty's opinion, as he expresses it in his report, largely involves telling the jury
how to weigh the evidence, which is inappropriate. See Fed. R. Evid. 704, adv. cmte.
note (expert may not "merely tell the jury what result to reach"). And nothing about this
exercise involves the application of any particular expertise that Flaherty has and that
an average juror lacks. As such, his opinion contributes nothing meaningful that would
help the jury in any appropriate way. See, e.g., United States v. Hall, 93 F.3d 1337,
1342 (7th Cir. 1996) ("[T]he ultimate test is whether the testimony would assist the trier
of fact in understanding the evidence"); see also Thompson v. City of Chicago, 472 F.3d
444, 457 (7th Cir. 2006) (expert testimony that would have led jurors to substitute
experts' conclusions for those of the jury should have been excluded).
Although Hirshon's opinion on Ordower's violation of IRPC 1.4 reads less like a
legal brief than Flaherty's, it suffers from the same infirmities, as do both witnesses'
opinions regarding other provisions of the IRPC. This is particularly apparent in the
second half of Hirshon's IRPC 1.4 opinion, where he says that "Ordower engaged in a
pattern of misleading conduct" and "engaged in a subterfuge." These are opinions

1

Unlike the text of Hirshon's opinion, which the Court was able to cut-and-paste into this order, it could
not do so with Flaherty's, as his report was filed as a scanned, non-text-searchable Acrobat document, so
the Court took what Acrobat calls a "snapshot" of the pertinent passages and pasted it into this order.

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regarding a person's reasons for acting and regarding how a factfinder should weigh the
evidence, both of which are improper. The rest of Hirshon's opinion on IRPC 1.4,
though less patently inappropriate, likewise is phrased in terms of findings about what
he concludes did and did not happen. It is therefore thus just as inadmissible as
Flaherty's.
In addition, a good deal of the proposed testimony by both experts involves
assessment of credibility and intent, which are not proper subjects for expert testimony.
"Credibility is not a proper subject for expert testimony; the jury does not need an expert
to tell it whom to believe . . . ." United States v. Vest, 116 F.3d 1179, 1185 (7th Cir.
1997) (citation omitted). The same is true regarding testimony about a person's intent
or state of mind. See, e.g., Dahlin v. Evangelical Child and Fam. Agy., Inc., No. 01 C
1182, 2002 WL 31834881, at *3 (N.D. Ill. Dec. 18, 2002) (Kennelly, J.).
In summary, the opinions proposed by Hirshon and Flaherty may not be offered
in the way they are presented in the experts' reports. (Though the Court has used the
experts' proposed opinions on IRPC 1.4 as an example, the same infirmities plague
their opinions regarding other provisions of the IRPC.) The Court believes it may be
possible to elicit the expert's conclusions in an appropriate way: as responses to
questions that ask the expert to assume certain facts or scenarios (properly founded in
the record) and then opine regarding a lawyer's obligations and breach of those
obligations. The Court will permit testimony by both experts based on properly-founded
hypotheticals, subject to objections, of course, regarding the impropriety of particular
hypotheticals and to any attempt to elicit or offer testimony that creeps into what the
Court has precluded.

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Finally, as indicated on page 3 of this opinion, both Hirshon and Flaherty may
appropriately testify regarding what the relevant standards are that govern lawyers in
the situation at hand—in other words, the IRPC and any obligations arising from
common law—why they exist, when they apply, and what a lawyer must do or is not
required to do to comply with them. But again, this testimony may not creep into an
assessment of what the evidence in the case shows on these points.
b.

Flaherty's other topics

The discussion in the previous section covers all of the opinions offered in
Hirshon's report and all but three in Flaherty's. Flaherty offers opinions on three other
points: proximate cause, standing, and whether certain attorney's fees are properly
recoverable as damages. The latter two opinions (standing and recoverability of certain
items) amount to legal opinions on points on which the Court has made rulings and/or
will instruct the jury. They are inadmissible. See, e.g., White v. Fitzpatrick, 755 F. App'x
563, 569 n.2 (7th Cir. 2018); Roundy's Inc. v. NLRB, 674 F.3d 638, 648 (7th Cir. 2011).
Flaherty's third opinion is that Mizrachi has not shown that any of his claimed
damages were proximately caused by any breach of duty by Ordower. On this,
Flaherty's report again makes it clear that what he has done is assess the evidence,
draw inferences or conclude that no inference can be drawn, and reach conclusions
regarding the or insufficiency of the evidence. This strays beyond the appropriate
province of an expert, at least one in Flaherty's field, and it offers nothing from his
expertise that a jury cannot already do on its own. This opinion is inadmissible.
2.

Kenneth Matthieu
Mizrachi has a second expert, Kenneth Mathieu, a forensic accountant. He is

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offered to provide opinions regarding the amounts that should be recovered by Mizrachi
if he prevails. Some background is needed before addressing Ordower's arguments
that some of Matthieu's opinions are inadmissible.
Matthieu says that an entity called Net Lease Management Partners, LLC
(NLMP) was formed to purchase and manage commercial properties. Initially, NLMP
was owned as follows:
•

JAL Group, LP – 1.02%

•

Brentwood Capital, LLC – 40.65%

•

AFP Eleven Corp. – 50%

•

LPBP Corp. – 8.33%

The operating agreement for NLMP designated JAL as the managing member of NLMP
and stated that JAL would be paid a fee. The operating agreement also provided for
distribution of NLMP's "net cash flow," "capital receipts," and "net mortgage proceeds"
in specified amounts and proportions. JAL, as managing member, was entitled to
certain portions of these amounts. There is a dispute over whether Mizrachi had an
interest in JAL.
There were negotiations on the part of Mizrachi, Seymour Holtzman, and, later,
Ordower to purchase a majority interest in Brentwood Capital, which as indicated above
was a significant minority holder of NLMP. The core issue in the present lawsuit is
whether Ordower served as legal counsel for Mizrachi in connection with the dealings
the Court is about to discuss.
At some point, Mizrachi, Holtzman, and Ordower agreed to form an entity called
SJLSJL, LLC to jointly purchase the interest in Brentwood Capital, with each of them to

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contribute one-third of the amount due and hold the interest in equal proportions.
Mizrachi says he understood as of a certain point that JAL, an entity of which he claims
to have been an owner, would be designated as Brentwood's managing member
following the acquisition.
The deal to acquire Brentwood Capital did not end up happening the way that
Mizrachi says he expected. Mizrachi contends this is because Ordower and Holtzman
shut him out of the deal. Ordower contends it is because Mizrachi backed out. In any
event, Ordower and Holzman contend they became the sole owners of SJLSJL. They
also eventually became members of NLMP's management committee, and once there
they removed JAL from its position as NLMP's managing member. This left Mizrachi
without a share of Brentwood Capital and without any distribution entitlements via JAL.
In August 2017, a little under three months before Mizrachi filed the present legal
malpractice / breach of fiduciary duty suit against Ordower, SJLSJL filed suit against
Mizrachi in Florida state court, seeking a declaration that Mizrachi had no interest in the
entity. In January 2019, Holzman joined the Florida lawsuit as a plaintiff, and Ordower
ended up at some point getting named as a defendant. Still later, in October 2019,
Mizrachi filed a counterclaim in the Florida case, seeking a declaration that he owned a
one-third interest in SJLSJL. A few months before that, in August 2019, Mizrachi filed a
state-court lawsuit in Delaware against Holtzman and Ordower, likewise seeking a
declaration that he owned a one-third interest in SJLSJL. Neither the Florida nor the
Delaware case has proceeded to judgment; they have, largely, lagged behind the
present case.
Now back to Matthieu's report. He includes three elements of damages. The

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first is the amount Mizrachi would have received in distributions from NLMP by virtue of
a one-third ownership share of SJLSJL. The second is the amount Mizrachi would have
received by virtue of his ownership interest in JAL. The third is the "total legal and other
expenses incurred by Mizrachi related to Attorneys' fees and other expenses to address
the consequences of the Defendants' alleged legal malpractice and breach of fiduciary
duties . . . ." Dkt. no. 223-6 (Matthieu report), ECF p. 12 of 40.
Now to Ordower's motion; he challenges the second and third items in Matthieu's
report. See Defs.' Mem. in Support of Mots. in Limine (dkt. no. 223) at 28. On
Mizrachi's purported share of the managing member payments due to JAL—which
Mizrachi claims was 50.5%—Ordower contends Matthieu has no basis for applying the
50.5% figure, which is disputed. See id. at 29. On the legal fee issue, Ordower claims
the fees in question were actually paid by certain entities and that Matthieu has no basis
other than Mizrachi's word on the question of Mizrachi's ownership of those entities.
See id. at 30.
These arguments lack merit as a basis to exclude Matthieu's testimony. It is
certainly appropriate for Ordower to cross-examine Matthieu regarding his reliance on
Mizrachi's version of the events and its effect on his opinions; to critique Matthieu during
argument for that reliance; and to offer competent evidence regarding the points on
which he attacks Matthieu. But Matthieu's reliance on Mizrachi's account does not
render his testimony inadmissible. As Judge Amy St. Eve (then a district judge) put it:
The Advisory Committee stressed that 'the trial court's role as gatekeeper
is not intended to serve as a replacement for the adversary system' or to
allow the district court to preempt the jury by evaluating the correctness of
the facts on which the expert relied." Richman v. Sheahan, 415 F. Supp.
2d 929, 943 (N.D. Ill. 2006) (citation omitted). "Moreover, although an
expert cannot rely on facts that are clearly contradicted by undisputed
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evidence, an expert may rely on his client's version of the facts when
forming his opinions." Sanders v. City of Chicago Heights, No. 13 C 0221,
2016 WL 1730608, at *6 (N.D. Ill. May 2, 2016) (citing Cage v. City of
Chicago, 979 F. Supp. 2d 787, 810 (N.D. Ill. 2013)). As the Seventh
Circuit explained in Hall, "[t]he fact that there was a dispute between Hall
and the interrogating officers about the nature of the questioning itself
provides no reason to exclude the expert testimony; it is a rare case where
everything is agreed except the subject matter for which the expert is
presented." Hall, 93 F.3d at 1345; see also Scott v. City of Chicago, 724 F.
Supp. 2d 917, 923 (N.D. Ill. 2010) ("It is of course permissible for an
opinion witness, in arriving at his or her conclusions, to premise that result
on one side's view of contested events."). Moreover, [Plaintiff's expert] Dr.
Leo is not vouching for Plaintiff's version of the facts. It will be up to the
jury to determine if it believes Plaintiff's version of the facts upon which Dr.
Leo relied in rendering his opinions.
In addition, Defendants fail to cite legal authority that an expert witness
cannot consider his client's version of the contested facts—or must
consider both sides' versions of the contested facts—when forming expert
opinions and the Court could find none. This is because "[e]xperts
routinely base their opinions on assumptions that are necessarily at odds
with their adversary's view of the evidence." Richman, 415 F. Supp. 2d at
942; see, e.g., Kluppelberg, 2016 WL 6821138, at *6.
Harris v. City of Chicago, No. 14 C 4391, 2019 WL 2436316, at *12-13 (N.D. Ill.
June 5, 2017).
Because these are the only bases on which Ordower challenges Matthieu's
testimony, the Court overrules his motion in limine.
3.

James McGovern
Ordower's second expert is James McGovern. He is offered to testify on

causation and damages-related issues. His opinions are as follows. (1) The lost profits
and unjust enrichment claimed in Matthieu's report are speculative until the Florida
lawsuit regarding Mizrachi's claimed ownership in SJLSJL LLC is decided. (2) There is
no causal link between the alleged wrongdoing and Mizrachi's claimed lost profits
arising from the claimed loss of the one-third interest in SJLSJL (this is item one from

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Mizrachi expert Matthieu's report). (3) There is no causal link between the alleged
wrongdoing and Mizrachi's claimed lost profits arising relating to the managing member
interest in NLMP (this Is item two from Matthieu's' report). (4) Matthieu's calculation of
lost profits is wrong even if Mizrachi prevails on all issues. (5) There is no causal link
between the alleged wrongdoing and the unjust enrichment damages claimed in
Matthieu's report. (6) Lost profits and unjust enrichment damages are alternatives, and
awarding both would give Mizrachi a windfall.
Mizrachi moves, first, to exclude McGovern's opinions 2, 3, and 5, arguing that
they amount to liability opinions on which he has no relevant expertise. The Court
agrees. Like the reports of Flaherty and Hirshon, these opinions by McGovern are
based on his resolution of conflicts in the evidence and judgments about its sufficiency
to prove certain points. These are quintessential jury functions on which McGovern
contributes nothing from his forensic accounting expertise that would be helpful to the
jury.
Mizrachi's argument regarding opinion 1 is that the question of whether damages
are speculative and thus non-recoverable due to the pendency of the Florida case—as
McGovern contends—is a question of law. Mizrachi is right about this, and as such
expert opinion on the point is improper. It is and will be up to the Court to decide
whether Mizrachi's claimed damages arising from his expected or hoped-for one-third
share of SJLSJL are recoverable. To the extent there is a legitimate point that this
issue may be affected by the outcome of the Florida litigation—to which all of the
relevant individuals are parties—this can be dealt with in the present case by ensuring
that the jury is required to break down the basis for any damages it awards and,

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perhaps, by posing special interrogatories to the jury. This will enable and facilitate any
later review or adjustment.
The same is true of McGovern's opinion 6, that Mizrachi can't recover both lost
profits and unjust enrichment because they are duplicative. The question of whether
remedies are duplicative such that a party must elect between them is a matter of law.
The Court assumes this will be dealt with in this case by clear instructions to the jury—
which the Court will rely on the parties (including Ordower) to propose—and, if needed,
special interrogatories.
The Court overrules Mizrachi's objection to McGovern's opinion 4. It is based on
the premise that McGovern is applying a comparative-fault analysis and saying what the
damages are only if Ordower is 100 percent responsible. If that were correct, the
opinion would in fact be inadmissible, as McGovern has no basis in his training or
expertise to opine regarding the percentage of each side's purported fault, nor is his
testimony regarding the legal standard for awarding damages properly admissible.
McGovern's opinion 4 is better read, however, as simply a statement that, if liability is
found, he disagrees with Matthieu's calculations as well as the basis for his
disagreement. See dkt. no. 227-4 (McGovern report), ECF pp. 24-25 of 47.
Considered this way, opinion 4 is an appropriate and admissible opinion.
4.

Mizrachi motion in limine 2
In his second motion in limine, Mizrachi asks the Court to preclude argument that

he is not entitled to damages unless and until the Florida court determines what interest,
if any, he has in SJLSJL as well as argument that any award here could improperly lead
to a double recovery when considered with the Florida case. These points will be dealt

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with via jury instructions and, if appropriate, special interrogatories. The parties may of
course make arguments consistent with the jury instructions, but Ordower cannot gain
with the jury what he lost with the Court, specifically, postponing the trial until after the
Florida litigation is finally determined. The Court therefore grants Mizrachi's motion.
Conclusion
The Court believes that it has now ruled on all of the matters presented in the
parties' motions in limine. 2 Based upon the Court's exclusion, via this order, of
additional evidence (including, but not limited to, the experts' respective weighing of and
conclusions about what the evidence shows), all of which was done after the Court's
setting of trial time limits, the Court reduces each side's trial time allocation by one hour,
to a total of fifteen each, thirty total. The Court notes that it regards this as a very
conservative downward adjustment given the amount of evidence excluded via the
present order.
Date: May 2, 2021
________________________________
MATTHEW F. KENNELLY
United States District Judge

2 The Court notes that it is not entirely clear whether, and how, Mizrachi's fiduciary duty claim differs from
his malpractice claim; his proposed jury instructions on the fiduciary duty claim premise the claim entirely
on the contention that he had an attorney-client relationship with Ordower. If there is actually a difference
between the two claims, there is some possibility it may affect one or more of the rulings in this order.

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