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ZALUTSKY v. KLEINMAN

August 30, 1990

ZALUTSKY, PINSKI & DiGIACOMO, LTD., etc., Plaintiff,
v.
GARY KLEINMAN, Defendant



The opinion of the court was delivered by: SHADUR

 MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 Facts1

 Z & P is a small firm *fn2" engaged in a high-volume consumer bankruptcy law practice in Chicago. While one of its principals, Irwin Zalutsky ("Zalutsky"), was on vacation in California in December 1982 he met with Los Angeles solo practitioner Kleinman at the request of Kleinman's father-in-law. That meeting stimulated their joint interest in joining forces, as to which Kleinman's January 6, 1983 follow-up letter to Zalutsky (Ex. A to this opinion) is self-explanatory.

 Further discussions -- a January 1983 meeting in Chicago among Kleinman, Zalutsky and Ronald Pinsky ("Pinsky," then the only other shareholder and director in Z & P), followed by some long-distance negotiations -- led to the execution of the Agreement, signed by Zalutsky and Pinsky in Chicago and Kleinman in California. Its most salient features were these: *fn3"

 
1. Their relationship was "a general partnership under the laws of the State of California," doing business under the name Zalutsky, Pinsky & Kleinman (para. 1), with its principal place of business in Hollywood, California (para. 2).
 
2. Zalutsky, Pinsky & Kleinman was to have a five-year term (para. 3). Its sole purpose was the practice of bankruptcy law (para. 4). Because only Kleinman was a licensed California practitioner, Zalutsky and Pinsky were limited to consulting with Kleinman -- not practicing law in California (para. 5).
 
3. Any partnership losses were to be shared equally -- that is, 50% by Kleinman and 50% by Z & P (para. 8). Partnership profits were to be shared differently: 60% to Kleinman and 40% to Z & P (id.).
 
4. All partnership books and records were to be kept at its principal place of business in California (para. 12). As for the determination of profits and losses (id.):
 
The accounting records shall be maintained in accordance with generally accepted bookkeeping practices for the type of business contemplated herein. The books shall be examined by an independent certified public accountant selected by the Partners jointly on a quarterly basis and on an annual basis. Any disputes concerning the profit or loss of the Partnership or the accounts thereof or any elements thereof shall be resolved by such independent certified public accounts [sic] by use of accounting principles consistent with this Agreement.
 
5. In light of the nature and location of the business (and of course the inherent limitations on Zalutsky's and Pinski's participation), Kleinman was to direct the partnership's day-to-day business affairs (para. 14). In recognition of the initial knowhow that Z & P was bringing to the combination, however, Kleinman was subject to a post-termination restrictive covenant (para. 19):
 
6. In seeming forgetfulness of the Agreement's already-referred-to opening paragraph, which said "the Partners hereby form a general partnership under the laws of the State of California," the drafter of the Agreement *fn4" included a somewhat bizarre choice-of-law provision (para. 26):
 
This Agreement is executed and intended to be performed [sic] in the State of Illinois, and the laws of that state shall govern its interpretation and effect, provided, however, that California law shall govern with regard to Kleinman's conduct as an attorney licenced [sic] to practice law in that state.

 So much for the negotiation and execution of the Agreement over seven years ago. Now its term is over (it ended on or about June 30, 1988), and Z & P claims that Kleinman has not furnished the necessary accounting or payment of Z & P's share of partnership income and assets.

 Jurisdiction Over Kleinman

 Z & P R. Mem. 6 n.* acknowledges that the facts would not justify possible jurisdiction over Kleinman under the tort branch of the Illinois long-arm statute, Ill. Rev. Stat. ch. 110, para. 2-209(a)(2). *fn5" Instead Z & P relies on the "transaction of any business" clause, Section 2-209(a)(1).

 At the outset this Court holds that the version of the long-arm statute to be considered is the one that antedates the recent September 1989 amendment that extended the statute's reach to become coextensive with the Due Process Clause. Though Z & P R. Mem. 5-6 contends that the relevant conduct of Kleinman extended past September 30, 1989 so as to bring the new amendment into play (see this Court's opinion in Bankers Leasing Association, Inc. v. Tompkins, McGuire & Wachenfeld, 734 F. Supp. 309 (N.D. Ill. 1990)), that is singularly unpersuasive. Accordingly this opinion looks to Illinois pre-amendment case law, under which the Illinois Supreme Court several years ago announced that it was not automatically bound to follow slavishly any federal expansion of due process ...


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