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Sanchez & Daniels v. Koresko & Associates

November 8, 2006

SANCHEZ & DANIELS, ET AL., PLAINTIFFS AND COUNTERCLAIM DEFENDANTS,
v.
KORESKO & ASSOCIATES, ET AL., DEFENDANTS AND COUNTERCLAIM PLAINTIFFS, CLINTON KRISLOV, ET AL., ADDITIONAL COUNTERCLAIM DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Chicago law firm Sanchez & Daniels and its partners (collectively, S&D) sued Pennsylvania law firm Koresko & Associates, P.C. and John Koresko (collectively, Koresko), invoking the Court's diversity jurisdiction. S&D sought a declaratory judgment that it was not obligated to pay Koresko for legal services performed for S&D from 2002 through 2004, some of it in connection with another lawsuit over which this Court presided, Daniels v. Bursey, Case No. 03 C 1550 (N.D. Ill.). S&D asserted that Koresko had breached an agreement between the parties and had committed misconduct in the course of the representation.

Together with his answer to S&D's claims, Koresko filed an extensive pleading that he denominated as "counterclaims and third party complaint." In that pleading, Koresko brought claims against S&D and against numerous other parties -- his former co-counsel, the defendants in Daniels v. Bursey, and those defendants' attorneys -- that he called "third party defendants." Though, as will become clear, the Court does not believe that Koresko used the correct terminology for these claims and new parties, for purposes of this decision the Court adopts the terms Koresko used.

Koresko asserted counterclaims against S&D for breach of contract, unjust enrichment, conversion, quantum meruit, and breach of fiduciary duty. Counterclaim, Counts 1-5. He also asserted claims against S&D for violating, together with the so-called "third party defendants," two federal statutes: the Employee Retirement Income Security Act and the Racketeer Influenced and Corrupt Organizations Act. Third Party Complaint, Counts 11-14. In addition, Koresko alleged that S&D conspired with and aided and abetted these same other persons and entities in committing various common law torts, including intentional interference with contract, defamation, and abuse of process. Counterclaim, Counts 6-7. As additional defendants on these same tort claims (though in separate "counts"), Koresko named Clinton Krislov, the lawyer who was Koresko's co-counsel in representing S&D in Daniels v. Bursey; the Daniels v. Bursey defendants; and those defendants' legal counsel. Third Party Complaint, Counts 3-10. Koresko also asserted claims against Krislov for breach of fiduciary duty and conversion.

Id., Counts 1-2.

The Court determined to split the case into two parts for purposes of pretrial proceedings and trial, pursuant to Federal Rule of Civil Procedure 42(b). The first part consisted of S&D's claims against Koresko, and certain of Koresko's claims against S&D: his breach of contract, conversion, unjust enrichment, quantum meruit, and fiduciary duty claims. The second part consisted of Koresko's remaining claims against S&D and his claims against the so-called third party defendants. See Order of Aug. 17, 2005.

The Court stayed proceedings on the second part of the case pending determination of the first part, and S&D and Koresko proceeded with discovery and trial preparation. On December 1, 2005, the Court granted summary judgment in S&D's favor on Koresko's claims against S&D except for his quantum meruit claim (and, of course, the statutory and common law tort claims the Court had severed). See Sanchez & Daniels v. Koresko & Assocs., No. 04 C 5183, slip op. (N.D. Ill. Dec. 1, 2005) ("Sanchez & Daniels I"). In April 2006, the Court held a bench trial on S&D's declaratory judgment claim and Koresko's quantum meruit claim. On August 21, 2006, the Court found in favor of Koresko on S&D's claim for a declaratory judgment of non-liability and on Koresko's quantum meruit claim. Sanchez & Daniels v. Koresko & Assocs., No. 04 C 5183, slip op. (N.D. Ill. Aug. 21, 2006) ("Sanchez & Daniels II"). The Court awarded Koresko $83,000 on the quantum meruit claim, significantly less than the amount Koresko sought.

The Court entered a judgment on the first part of the case, but we did not make an "express determination that there is no just reason for delay," as Rule 54(b) requires as a prerequisite to entry of final judgment. Despite the absence of a final judgment, Koresko filed a notice of appeal.

In the meantime, the Court resumed consideration of the second, severed part of the case. The counterclaim defendants had filed motions to dismiss. Supplemental briefs were filed by the parties, and the counterclaim defendants' motions are now ripe for decision.

Discussion

1. Jurisdiction

Though neither party has raised the issue of the Court's jurisdiction, we do so on our own motion. The issue is whether the Court may proceed with determination of matters relating to the second, severed part of the case even though Koresko has filed a notice of appeal on the first part of the case. The answer is yes. The filing of a notice of appeal deprives the district court of jurisdiction only over those aspects of the case involved in the appeal. See, e.g., Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982). The remaining claims are not at issue in Koresko's appeal (which, in any event, was filed prematurely in light of the absence of a Rule 54(b) finding by this Court, or even a request for such a finding by Koresko).

The Court therefore proceeds to address the issues raised by the counterclaim defendants' motions.

2. Federal Rule of Civil Procedure 14

The "third party defendants" argue that they are not properly joined under Federal Rule of Civil Procedure 14(a) because that rule permits only those third party claims that are derivative of the plaintiff's claim against the defendant. In a related argument made following the Court's ruling on S&D and Koresko's claims against each other relating to attorney's fees, the "third party defendants" argue that because Koresko was found not liable to S&D, they cannot be liable to Koresko.

This argument misses the mark. Koresko's claims against the parties he has named other than S&D are not made pursuant to Rule 14(a). Rather, they ...


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