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Saltzberg v. Fishman

OPINION FILED APRIL 10, 1984.

GERALD B. SALTZBERG, PLAINTIFF-APPELLEE,

v.

RONALD S. FISHMAN, DEFENDANT-APPELLANT (FISHMAN & FISHMAN, LTD., ET AL., COUNTERPLAINTIFFS-APPELLANTS,

v.

FISHMAN AND FISHMAN AND SALTZBERG, P.C., ET AL., THIRD-PARTY DEFENDANTS AND COUNTERDEFENDANTS-APPELLEES).



Appeal from the Circuit Court of Cook County; the Hon. George A. Higgins, Judge, presiding.

JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

A dispute arose between the firm of Fishman & Fishman (the firm), of which plaintiff Gerald Saltzberg was a partner, and defendant Ronald Fishman, who had been terminated as an associate with the firm. The dispute resulted in a memorandum agreement executed by both the firm and Fishman. Subsequently, a dispute arose regarding compliance with the agreement and the firm filed suit for an injunction and damages against Fishman. This suit resulted in a settlement agreement which was incorporated into a consent decree along with the previous memorandum agreement. When defendant Fishman failed to comply with the terms of the consent decree, plaintiff Saltzberg filed a post-decree petition for an accounting. Fishman filed a motion to dismiss, affirmative defenses, a counterclaim and a third-party claim. Following a hearing on the matter, defendant's motion was denied, his claims were dismissed, and his defenses were rejected. The court ordered defendant to comply with the terms of the consent decree and to pay over to the plaintiff Saltzberg fees which were due under the decree. The court also enjoined both parties from using the name of Fishman & Fishman. Defendant Fishman appeals from this order.

Prior to 1973, the law firm of Fishman & Fishman was a partnership composed of three brothers: Julius, Samuel and Jacob Fishman. Gerald Saltzberg became a full partner in February 1973. Jacob died in February 1973 and Samuel died in July 1973. This left Saltzberg and Julius Fishman as the sole surviving partners. Ronald Fishman was an associate with the firm and was never a partner.

On July 30, 1973, defendant was given 30 days' notice that his employment with Fishman & Fishman was being terminated. During August, defendant allegedly copied the firm ledger and attempted to lure clients away from the firm. By the end of the month, defendant had persuaded 16 clients of the firm to retain him as their attorney. This was allegedly accomplished while defendant was still employed with the firm and receiving a salary.

In an effort to recover the ledger sheets and firm files, the firm filed suit against defendant Fishman. Following numerous hearings, the parties entered into a memorandum agreement. Disputes arose concerning compliance with this agreement, and the firm filed an action in chancery seeking injunctive relief and damages against defendant.

On April 28, 1975, the parties executed a settlement agreement which was incorporated into a consent decree along with the previously executed memorandum agreement. Under the terms of the decree, the files which had been removed by defendant were divided into group "A" and group "B." Group A files were brought into the firm by defendant and, under the decree, were classified as defendant's property. Defendant's only obligation concerning group A files was to reimburse the firm for $7,200 in expenses which it had incurred on these files.

As to group B files, defendant's only relationship with these files was the assigned work he did on them as an employee of the firm. Under the decree, defendant was to receive 55% and the firm was to receive 45% of fees earned on group B files. Upon closing these files, defendant was to return them, pay the fees due the firm and reimburse the firm for costs previously expended. The decree also addressed the parties' right to certain firm names.

After leaving Fishman & Fishman, defendant established his own firm, Fishman & Fishman, Ltd. Defendant allegedly listed the new firm in Sullivan's Law Directory under the name Fishman & Fishman and listed Jacob Fishman as if he had been a member of defendant's new law firm prior to his death.

Under the consent decree, Gerald Saltzberg and his partner Julius Fishman were given exclusive right to the name Fishman & Fishman "or any name of their choosing other than Fishman & Fishman, Ltd." Defendant Fishman was given exclusive right to the name of Fishman & Fishman, Ltd. "or any name of [his] choosing other than Fishman & Fishman." Soon after the execution of the consent decree, Fishman & Fishman was dissolved and plaintiff Saltzberg started a new firm, Fishman and Fishman and Saltzberg, P.C. Plaintiff Saltzberg retained the name of Fishman & Fishman on the building's directory and on stationery used by the new firm.

After entry of the consent decree, defendant paid $22,000 on nine of the 16 cases listed on the group B list. Thereafter, defendant failed to make any further payments. Plaintiff Saltzberg then filed for post-decree relief to force defendant to abide by the terms of the consent decree.

In response to plaintiff's action, defendant filed a counterclaim and several affirmative defenses. Under the counterclaim, defendant charged plaintiff with breaching the terms of the consent decree. The affirmative defenses included: fraud, misrepresentation, and a charge that the settlement agreement constituted an illegal fee splitting arrangement. The motion to dismiss charged that because one of the parties to the agreements underlying the consent decree was the partnership of Fishman & Fishman, any suit to enforce the decree must include both partners. Because the post-decree action was instituted by only one of the partners, Gerald Saltzberg, defendant asked that the suit be dismissed.

Prior to filing his third amended complaint, plaintiff Saltzberg secured an assignment from Julius Fishman, the other partner of the firm, under which plaintiff was assigned all of Fishman's rights to seek post-decree relief and to receive all sums resulting therefrom. Defendant's motion to dismiss was thereafter denied. Following a hearing on plaintiff's request for post-decree relief, defendant's counterclaim, affirmative defenses and third-party complaint were denied. Defendant was ordered to comply with the terms of the consent decree and to pay over to plaintiff the fees to which he was entitled, plus any interest earned on those fees during the period that defendant wrongfully retained them. The court also enjoined both parties from using the name of Fishman & Fishman. Defendant appeals from the court's order.

Defendant's first contention, which is in two parts, concerns plaintiff's standing to initiate the suit which is the subject of this appeal. Initially, defendant contends that the agreements underlying this action are the property of a professional corporation and that therefore Gerald Saltzberg has no authority to maintain this action on his own behalf. Alternatively, defendant contends that if the agreements are deemed to be the property of the partnership of Fishman & Fishman, both partners in that firm must join in the suit as plaintiffs.

Defendant first contends that the firm of Fishman and Fishman and Saltzberg, P.C., rather than plaintiff, is entitled to bring the instant action. This contention presumes that the agreements which are the subject of this suit somehow became the property of the successor corporation upon dissolution of the partnership of ...


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