United States District Court, N.D. Illinois, Eastern Division
November 9, 2004.
THOMAS C. RICHARDSON, Trustee of the Bankruptcy Estate of MARK G. DALEN, Plaintiff,
KENNETH T. KUBIESA, et al., Defendants.
The opinion of the court was delivered by: JOAN GOTTSCHALL, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Thomas Richardson, trustee for the estate of Mark G.
Dalen ("Dalen"), sued Dalen's former attorney, Kenneth T. Kubiesa
("Kubiesa") and Kubiesa's former law firm, Power & Cronin, Ltd.
("Power"), alleging that Kubiesa committed legal malpractice by
(1) failing to adequately represent Dalen's interests during the
sale of Dalen's 50% share in Metropolitan Plant and Flower, Inc.
("Metropolitan") (Count I), (2) failing to adequately represent
Dalen's creditor interests during Metropolitan's subsequent
bankruptcy (Count II), and (3) failing to inform Dalen of the
risks presented by an adversary action filed against Dalen by
Metropolitan's principals and failing to inform Dalen of an
opportunity to settle that adversary action for less than
$100,000 (Count III).
The court granted summary judgment in favor of defendants on
Counts I and II of the complaint; only Count III remains. On
October 25-26, 2004, the court conducted a two-day bench trial on
Dalen's remaining malpractice claim and the parties have each
submitted written closing statements. Additionally, defendants
have filed a "Bench Memorandum" which the court has taken with
the case. Having examined the entire record and having determined
the credibility of witnesses, after viewing their demeanor and
considering their interests, the court finds that plaintiff has
failed to establish the elements of his claim by a preponderance
of the evidence and, therefore, rules in favor of defendants on Count III of plaintiff's compaint.
Dalen's Sale Of His 50% Share Of Metropolitan
In 1991, Mark Dalen started Metropolitan which manufactured
and sold artificial flowers, houseplants and trees with one of
his longtime business associates, Maxwell "Mack" Clamage, and
Mack Clamage's son, Ed Clamage. Dalen owned a 50% stake in
Metropolitan and the remaining 50% of the company was owned by
the Clamages. Metropolitan was immediately successful and grew
rapidly. However, as their company grew, disagreements began to
arise between Dalen and the Clamages about how the business
should be run. Eventually, the relationship between Dalen and the
Clamages deteriorated to the point that the Clamages sought to
buy-out Dalen's share of the company. Dalen agreed to enter
negotiations to sell his shares and hired defendant Kubiesa
Dalen's friend and longtime legal counsel to represent him in
the sale. Dalen and the Clamages eventually settled on a purchase
price of approximately $3.6 million, including a $1.1 million
down payment and the remainder to be paid over time. After
several banks refused to provide financing for the transaction,
the Clamages finally obtained financing for the purchase price
from NBD Bank ("NBD"). On April 18, 1994, both the financing
transaction and the stock purchase closed.
Metropolitan's Bankruptcy And The Adversary Claim Against
For a while, Metropolitan made regular payments to Dalen.
Including its $1.1 million down payment, Metropolitan paid Dalen
a total of $1.9 million. However, by September of 1995,
Metropolitan's financial condition began to decline, in part due
to the enormous debt burden that Metropolitan assumed in
purchasing Dalen's shares. Strapped for cash, Metropolitan
stopped making payments due Dalen in October of 1995. Even with
that temporary relief, Metropolitan's financial woes deepened and on February 14, 1996, Metropolitan
filed a Chapter II bankruptcy petition in the Northern District
On April 15, 1996, Metropolitan (now wholly owned by the
Clamages) filed an amended adversary complaint in the bankruptcy
court against NBD and Dalen, seeking to set aside the sale of
Dalen's shares to Metropolitan as a fraudulent conveyance.
Specifically, the Clamages alleged that the purchase of the Dalen
shares was an illegal leveraged buy-out, that the purchase price
was not justified by Metropolitan's then-existing assets, and
that Dalen knew that the purchase would drive Metropolitan into
insolvency. The Clamages demanded the return of the $1.9 million
that Metropolitan paid Dalen for the shares.
Efforts to Settle the Adversary Claim
During a hearing on the adversary claim, Bankruptcy Court Judge
Susan Sonderby recommended that the parties attempt to resolve
their dispute by engaging in a settlement conference mediated by
Bankruptcy Court Judge Ronald Barliant. The parties agreed and
conducted a settlement conference on May 7 and 8, 1996. During
their negotiations with NBD, the Clamages determined that they
could reach a global settlement of the adversary claim if Dalen
contributed approximately $100,000 towards a larger settlement
payment to NBD. Both Ed Clamage and Kubiesa testified that, at
some point during the first day of the settlement conference, Ed
Clamage approached Kubiesa with that settlement scenario. Kubiesa
did not accept the offer and informed the Clamages that any
settlement scenario should include payment to Dalen rather than
from Dalen. As discussed in detail below, Kubiesa and Dalen
dispute whether Kubiesa informed Dalen of Ed Clamage's settlement
Undeterred, the Clamages decided to communicate their
settlement offer directly to Dalen. On or about May 21, 1996,
Mack Clamage called Dalen and asked him to contribute between
$75,000 to $100,000 to the settlement with NBD. Dalen refused,
stating that (1) he had no intention of paying any money to the
Clamages, (2) that, in any event, he had no money to contribute
towards a settlement, and (3) that he wanted the Clamages to pay him.
Dalen informed Kubiesa of the phone call by facsimile and
reiterated his position that "I had no money. Had no intention of
paying any money and I wanted this settled." (Def. Ex. 9.)
Ultimately, Dalen's defense of the Clamages' adversary action
was unsuccessful. On April 17, 1998, Judge Sonderby entered
summary judgment against Dalen in the amount of $1.9 million.
Dalen entered into an agreement to satisfy the judgment for
$525,000. However, Dalen was unable to come up with the necessary
funds to pay the settlement and eventually filed for bankruptcy
To succeed in his malpractice claim, Dalen must prove (1) the
existence of an attorney-client relationship giving rise to a
duty owed to Dalen by Kubiesa, (2) a breach of that duty by
Kubiesa, (3) injuries which were proximately caused by Kubiesa's
breach, and (4) damages resulting from the injuries. Barth v.
Reagan, 564 N.E.2d 1196, 1200 (Ill. 1990). An attorney commits
actionable malpractice only if he or she fails to exercise a
reasonable degree of care and skill. Conduct alleged to
constitute legal malpractice must be measured against a standard
of care that normally must be established by expert testimony.
Id. at 1199-1200.
In spite of the somewhat complex transactions that form the
backdrop of this case, plaintiff's sole remaining malpractice
claim boils down to one simple factual dispute: did Kubiesa
inform Dalen of his potential liability in Metropolitan's
adversary action and the opportunity to settle that claim by
paying the Clamages less than $100,000? Dalen testified that he
was never told about the settlement opportunity and that he would
have agreed to settle had he known of his potential exposure. Of
course, Kubiesa provided conflicting testimony on this point.
Therefore, the court's resolution of this factual dispute depends
largely on a determination of the credibility of the witnesses.
United States v. Woods, 233 F.3d 482, 484 (7th Cir. 2000) (at a
bench trial the "trial judge is in the best position to judge the
credibility of witnesses who offer conflicting
testimony. . . ."). Dalen's case hinges on his testimony that Kubiesa never
informed him about any settlement opportunity with the
Clamages.*fn2 However, after observing Dalen's demeanor and
weighing the substance of his answers, the court does not find
this testimony credible. Dalen, at times, appeared evasive and
his answers reflect that he was concerned with little other than
getting paid by the Clamages and often did not pay attention to
other matters in the bankruptcy. The court notes also what
appears to be a pattern of deceptive and evasive behavior by
Dalen during the events underlying this case. For example, Dalen
readily admits that he lied to the Clamages during settlement
negotiations by falsely telling them that he had no money for a
settlement (while at the same time falsely telling the Clamages
that he had opened a new flower store that could fund a
protracted court battle). Moreover, Dalen admits that after the
bankruptcy court entered the $1.9 million judgment against him,
Dalen transferred his assets to his wife. While Dalen denies that
he was trying to hide his assets from his creditors, he provided
no other reasonable explanation. In a January 1997 fax to
Kubiesa, Dalen boasts that he is "uncollectible," and that his
cash assets "will be in Grand Cayman in my wives (sic) name. I
will claim I gambled it away." Dalen's admitted pattern of
evasive behavior undermines his credibility in the eyes of the
By contrast, the court attaches great weight to Kubiesa's
testimony regarding the Clamages' settlement offer. Kubiesa
testified that he attended the first day of the settlement
conference along with the Clamages and representatives from NBD.
He testified that an associate from his firm attended the second
day of the conference and reported to Kubiesa after the
conference was over. Kubiesa testified that (1) the Clamages
approached him on the first day of the conference to discuss the
possibility of a global settlement with a $100,000 contribution
from Kubiesa, (2) because Dalen had repeatedly told Kubiesa that
he had no intention of paying any money, Kubiesa told the Clamages that the settlement scenario would not work, and (3)
Kubiesa called Dalen the day of the conference to discuss the
settlement scenario advanced by the Clamages.*fn3 Kubiesa
testified further that he told Dalen to accept the Clamages'
settlement demand to avoid a possible $1.9 million liability.
Dalen refused, and repeated his position that he did not want to
settle unless he was paid.
Significantly, Kubiesa's testimony that he informed Dalen of
the settlement offer is supported by contemporary billing records
that were part of an invoice sent to Dalen in late May of 1996.
Kubiesa's time records indicate that (1) Kubiesa called Dalen on
the day that Kubiesa attended the first day of the settlement
conference (Def. Ex. 3), and that (2) Kubiesa had several phone
conversations with Dalen during the settlement negotiations,
including one May 9, 1996 phone call that is recorded as
"telephone conference with Mark Dalen regarding settlement
possibilities." (Def. Ex. 4.) There is no evidence that Dalen
ever complained to Kubiesa about these entries. The court finds
Kubiesa's testimony credible and, in the main, supported by the
In short, the court finds that Dalen has failed to present the
court with sufficient credible evidence to carry his burden of
proof on a critical threshold element of his claim. He simply has
not proven that Kubiesa engaged in misconduct constituting a
breach of his duties to his client. Dalen's malpractice claim,
therefore, cannot succeed. CONCLUSION
For the foregoing reasons, the court finds in favor of
defendants on Count III of plaintiff's complaint.