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PharMerica Chicago, Inc. v. Meisels

October 5, 2010

PHARMERICA CHICAGO, INC.
v.
MEISELS, ET AL.



Name of Assigned Judge Nan Nolan Sitting Judge if Other or Magistrate Judge than Assigned Judge

DOCKET ENTRY TEXT

Defendants' Motion to Disqualify Plaintiff's Counsel Pursuant to Local Rule 83.53.7 [Doc. 38] is denied without prejudice.

O[ For further details see text below.]

STATEMENT

This case is an action to collect on a $249,373.16 default judgment obtained by Plaintiff against nonparty West Suburban Care Center, LLC ("West Suburban") on September 9, 2008, in PharMerica Chicago, Inc. v. West Suburban Care Center, LLC, 08 C 3775. Plaintiff has been unable to collect the judgment from West Suburban. Plaintiff alleges that much of the funds from the operations of West Suburban were siphoned off by Defendants, who are alter egos of one another. Plaintiff asserts claims for fraud, breach of fiduciary duty, conspiracy to breach fiduciary duty, inducement to breach fiduciary duty, fraudulent transfer, unjust enrichment, and tortious interference with contract. These claims hinge on alleged misrepresentations made by agents of Defendants, in furtherance of an alleged conspiracy to divert funds away from Plaintiff. One of the alleged misrepresentations-that West Suburban was unrelated to Defendant David Meisels and the other Corporate Defendants-was communicated to Benjamin C. Fultz, who is Plaintiff's lead counsel.

Presently before the Court is Defendants' Motion to Disqualify Plaintiff's Counsel Pursuant to Local Rule 83.53.7 [Doc. 38]. Defendants argue that Fultz should be disqualified as counsel pursuant to the "advocate-witness" rule because "Fultz's testimony will be required to prove the content of the false statements." (Motion at ¶ 6.)

Motions for disqualification "should be viewed with extreme caution for they can be misused as techniques of harassment." Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 722 (7th Cir. 1982). Because a party is "entitled to a degree of deference in the prerogative to proceed with counsel of her choice, . disqualification is a drastic measure which courts should hesitate to impose except when absolutely necessary." Owen v. Wangerin, 985 F.2d 312, 317 (7th Cir. 1993) (internal citation and quotation marks omitted). Furthermore, "the district court possesses broad discretion in determining whether disqualification is required in a particular case." Whiting Corp. v. White Machinery Corp., 567 F.2d 713, 715 (7th Cir. 1977) (internal citation and quotation marks omitted).

"Under the advocate-witness rule, counsel is barred from acting as both an advocate and a witness in a single proceeding except under special circumstances." United States v. Marshall, 75 F.3d 1097, 1106 (7th Cir. 1996). This rule (1) eliminates the possibility that counsel will not be a fully objective witness; (2) reduces the risk that the trier of fact will confuse the roles of advocate and witness and erroneously grant testimonial weight to counsel's arguments; and (3) avoids the appearance of impropriety. United States v. Morris, 714 F.2d 669, 671 (7th Cir. 1983); Mercury Vapor v. Village of Riverdale, 545 F. Supp.2d 783, 787 (N.D. Ill. 2008). In this Court, the Local Rules provide:

(a) A lawyer shall not act as an advocate in a trial or evidentiary proceeding if the lawyer knows or reasonably should know that the lawyer may be called as a witness therein on behalf of the client, except that the lawyer may do so and may testify:

(1) if the testimony will relate to an uncontested matter;

(2) if the testimony will relate to a matter of formality and the lawyer reasonably believes that no substantial evidence will be offered in opposition to the testimony;

(3) if the testimony will relate to the nature and value of legal services rendered in the case by the lawyer or the firm to the client; or

(4) as to any other matter, if refusal to act as an advocate would work a substantial hardship on the client.

(b) If a lawyer knows or reasonably should know that the lawyer may be called as a witness other than on behalf of the client, the lawyer may act as an advocate in a trial or evidentiary proceeding unless the lawyer knows or reasonably should know ...


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