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BIRNBERG v. MILK STREET RESIDENTIAL ASSOC. LTD. PARTNER.

August 19, 2003

CARL BIRNBERG AND JACOB MOSKOVIC, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
MILK STREET RESIDENTIAL ASSOCIATES LIMITED PARTNERSHIP, LEND LEASE REAL ESTATE INVESTMENTS, INC., BOSTON FINANCIAL TECHNOLOGY GROUP INC., LAKE MICHIGAN ASSOCIATES, LLC, LMA GP LLC, CLARK ENTERPRISES, INC. AND CLARK ONTERIE, L.L.C., DEFENDANTS; CARL BIRNBERG AND JACOB MOSKOVIC, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS, V. BOSTON FINANCIAL GROUP, LIMITED PARTNERSHIP, AND BOSTON FINANCIAL GROUP, INC. DEFENDANTS



The opinion of the court was delivered by: Blanche Manning, District Judge

MEMORANDUM AND ORDER

Plaintiffs Carl Birnberg and Jacob Moskovic are former limited partners of a partnership that owned a high rise building in Chicago, Illinois. After selling their interests in the limited partnership, Plaintiffs brought the instant action, on behalf of themselves and a proposed class (consisting of the other limited partners), for breach of fiduciary duty, breach of contract, breach [ Page 2]

of implied covenant of good faith and fair dealing, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, intentional interference with contractual relations, fraud, and negligent misrepresentation against: (1) Milk Street Residential Associates Limited Partnership ("Milk Street"), a Massachusetts limited partnership; (2) Lend Lease Real Estate Investments, Inc. ("Lend Lease"), a Delaware corporation; (3) Boston Financial Technology Group, Inc. ("BFTGI"), a Massachusetts corporation; (4) Lake Michigan Associates LLC ("Lake Michigan"), a Delaware limited liability company; (5) LMA GP LLC ("LMA"), a Delaware limited liability company, (6) Clark Enterprises, Inc. ("Clark Enterprises"), a Maryland corporation; (7) Clark Onterie, LLC ("Clark Onterie"), a Maryland corporation; (8) Boston Financial Group, Limited Partnership ("BFGLP"), a Massachusetts limited partnership; and (9) Boston Financial Group, Inc. ("BFGI"), a Massachusetts corporation.

The instant matter comes before the Court on Plaintiffs' Objections to the Report and Recommendation ("R&R") of Judge Nolan, submitted to this Court pursuant to Federal Rule of Civil Procedure 72, recommending that this Court deny Plaintiffs' Motion for Class Certification. Having reviewed Judge Nolan's thorough and well-reasoned R&R. the objections and submissions, and the pertinent parts of the record, this Court adopts Judge Nolan's R&R in its entirety denying the motion for certification and OVERRULES Plaintiffs' Objections. [ Page 3]

BACKGROUND*fn1

This matter stems from a partnership dispute arising out of the Franklin Building Associates Limited Partnership ("the Franklin Partnership"), which was formed by BFTGI in 1984 to own units in Onterie Associates, an Illinois limited partnership, which was created to own and operate the Onterie Center, a 60 story residential and commercial building in Chicago, Illinois. Plaintiffs were among 174 limited partners who bought an interest in the Franklin Partnership.

The Franklin Partnership, however, was not a financial success and by June of 1998, it was facing foreclosure. Plaintiffs allege that Defendants created a scheme to unlawfully enrich themselves at the expense of the limited partners by fraudulently obtaining the consent of two-thirds of the limited partners for approval of a plan to buy out the limited partners.

STANDARD OF REVIEW

Section 636(b)(1)(B) of Title 28 authorizes a district court to refer a matter to a magistrate judge to conduct an evidentiary hearing. Following this hearing, the magistrate judge cannot enter a final judgment, but must submit to the district court proposed findings of fact and recommendations for disposition, to which either party may file written objections within 10 days. 28 U.S.C. § 636(b)(1)(B); Fed R. Civ. P. 72(b). The district court is required to conduct a de novo review of those portions of the magistrate judge's report and recommendations to which specific written objections have been filed. Rajaratnam v. Mover, 47 F.3d 922, 924 (7th Cir. [ Page 4]

1995). This de novo review, however, is not the same as a de novo hearing. The district court is not required to conduct another hearing to review the magistrate judge's findings and credibility determinations. United States v. Raddatz, 447 U.S. 667, 675 (1980); Goffman v. Gross, 59 F.3d 668, 671 (7th Cir. 1995); United States v. Severson, 49 F.3d 268, 273 (7th Cir. 1995). Rather, the district court has discretion to "accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b).

If the district court finds a problem with the R&R, it may take additional evidence, call witnesses, or remand to the magistrate judge for further proceedings. Raddatz, 447 U.S, at 675. Judicial efficiency, however, requires parties to present their arguments to the magistrate judge in the first instance, as the review procedure is not an opportunity to present new arguments not considered by the magistrate judge. Scholes v. Stine, McGuire & Benjamin, 786 F. Supp. 1385, 1394 n. 8 (N.D. Ill. 1992). If, following a review of the record, the district court is satisfied with the magistrate judge's findings and recommendations, it may in its discretion treat those findings as its own. Raddatz, 447 U.S. at 676. With these principles in mind, the Court reviews Judge Nolan's R&R de novo.

ANALYSIS

Plaintiffs object to Judge Nolan's R&R recommending that this Court deny their Motion for Class Certification. Judge Nolan found that Plaintiffs' failed to meet: (1) Rule 23(a)(4)'s adequacy of representation requirement; and (2) Rule 23(b)(3)'s requirement that common questions of fact or ...


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