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Client Funding Solutions Corp v. Debbie Crim A/K/A/ Debbie Crim Clark

July 23, 2012

CLIENT FUNDING SOLUTIONS CORP., PLAINTIFF,
v.
DEBBIE CRIM A/K/A/ DEBBIE CRIM CLARK, DEFENDANT. DEBBIE CRIM A/K/A DEBBIE CRIM CLARK, THIRD-PARTY PLAINTIFF,
v.
THE VRDOLYAK LAW GROUP, LLC, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

In this diversity case, Third-Party Plaintiff Debbie Crim filed a second amended third-party complaint against Third-Party Defendant The Vrdolyak Law Group ("VLG"), alleging conversion, accounting, breach of fiduciary duty, conspiracy, and intentional infliction of emotional distress. Before the Court is VLG's motion for summary judgment [197] as to all counts against it. For the reasons stated below, the motion [197] is granted in part and denied in part.

I. Background*fn1

In 2001, Crim, a Florida resident, suffered significant injuries resulting from an accident while aboard a Metra train. [208 at ¶¶ 1, 6, 215 at ¶ 10.] Crim hired VLG, an Illinois limited liability corporation, to file suit against the allegedly culpable parties. [208 at ¶¶ 2, 7.] By early 2005, Crim had been unemployed for three years and needed money. [208 at ¶ 9.] Crim approached Peter Vrdolyak, who referred her to Client Funding Solutions ("CFS"). [208 at ¶¶ 10, 14, 215 at ¶ 14.] Between March 2005 and December 2009, Crim borrowed a total of $102,000 from CFS and another $6,500 from W&M Trading Corp. [208 at ¶ 17.] With each transaction, Crim signed and returned promissory notes, which bear an interest rate of 60% or 45%. [208 at ¶ 19.] The parties dispute the extent of Vrdolyak's involvement in Crim's loan transactions. [208 at ¶¶ 18, 66, 215 at ¶ 16.]

CFS is a litigation lending company, providing loans to individuals in, among other things, personal injury matters. [208 at ¶ 16.] Vrdolyak had known of CFS for under a year when he referred Crim. [208 at ¶ 15.] He thought CFS would be the best company to help Crim because his brother, Eddie, knew the principals of CFS-including Miles Lustig and Wayne Cohen-and told Vrdolyak that they were "pretty good guys." [208 at ¶ 15, 215 at ¶¶ 1-2.] No member of the Vrdolyak family has ever loaned any funds to CFS, and CFS has never invested any money in any business owned by any member of the Vrdolyak family. [208 at ¶ 64.] But Vrdolyak did refer other VLG clients to CFS, primarily after he referred Crim. [215 at ¶¶ 8, 15.]

In October 2009, Crim settled one of the Metra-related claims for $2.4 million. [208 at ¶ 20.] VLG advanced Crim a total of $16,000 before receiving the settlement proceeds from Safeco Insurance Company on December 9. [208 at ¶¶ 21-22.] On December 14, Vrdolyak sent a settlement statement to Crim, which noted that her debt to CFS was reduced by $25,000, making the outstanding total around $386,000. [208 at ¶ 24, 215 at ¶ 21.] On December 15, Vrdolyak drafted checks to all lienholders and was prepared to issue Crim a check for the balance of the settlement funds. [208 at ¶¶ 26-27.] Crim, however, asked Vrdolyak to wait, as she wanted to talk to a financial advisor first. [208 at ¶ 27.] But Crim did ask Vrdolyak to deposit $15,000 into her account at Great Lakes Bank, which he did. [208 at ¶ 28.] Crim subsequently told Vrdolyak to pay the other liens but to withhold payment to CFS because she wanted to conduct an audit of the loan documents. [208 at ¶ 30.] Vrdolyak relayed this information to Lustig. [208 at ¶ 31.] Lustig, in turn, prepared for legal action against Crim because CFS was not being paid. [208 at ¶ 53.]

On December 23, CFS filed a complaint for breach of contract and attachment in the Circuit Court of Cook County, alleging that Crim intended to "fraudulently conceal, assign or otherwise dispose of" the settlement funds to her creditors' detriment. [1-2 at 6, 208 at ¶ 33.] A notice of this lawsuit was sent via facsimile to VLG that day. [215 at ¶ 24.] The next day, Vrdolyak sent Crim an e-mail asking what he should do with the settlement proceeds. [208 at ¶ 32.] On December 27, Crim sent Vrdolyak an e-mail, instructing him to place the amount claimed by CFS in escrow pending completion of the audit and to distribute the remaining proceeds to her. [208 at ¶ 34.] Vrdolyak testified that he did not see Crim's e-mail until the next day, when he was out of town (but had access to e-mail and telephone). [208 at ¶ 35, 215 at ¶ 22.] The parties dispute whether other VLG attorneys could have authorized a wire transfer that day. [208 at ¶ 36, 215 at ¶ 25.] Vrdolyak also testified that he was unaware of the CFS complaint until December 29 or 30. [223 at ¶ 38.]

On December 29, CFS obtained an order for attachment and summons from the Circuit Court. [208 at ¶ 40.] The order indicates that the amount claimed is $413,838.99 plus $340.78 per diem and costs. [208 at ¶ 41.] The order also states:

IT IS ORDERED that the Sheriff of Cook County attach so much of the estate, real or personal of the defendant as may be found in your county, as shall be of value sufficient to satisfy the debt and costs, according to the affidavit, but in case any specific property of the defendant found in your county shall be described herein, then you shall attach the described property only, and no other property, the said specified property to be so attached, being described as follows: settlement proceeds of Cook County Case Number 2001M6-6170, case entitled Clark Debbie Crim v. Deboer Jennifer S., et al. [198-6 (emphasis added).]

Vrdolyak read the order as prohibiting any distributions of the settlement funds. [208 at ¶ 42.] He did not file a motion to vacate or amend the order. [215 at ¶ 31.] Rather, Vrdolyak confirmed his understanding of the order with the attorney for CFS. [208 at ¶ 43.] He later had several other conversations with CFS's attorneys about getting funds to Crim and resolving the dispute. [208 at ¶ 44.] Vrdolyak also asked an accountant friend, Kevin Pierce, to review Crim's loan documents. [208 at ¶ 47.] Pierce's calculations-which took about five minutes to complete-were within $600 of CFS's amount claimed. [208 at ¶ 47, 215 at ¶ 29.] Vrdolyak ultimately "suggested" that Crim settle the CFS matter "ASAP." [215 at ¶ 30.] Crim testified that she felt "pressured" by Vrdolyak to pay CFS. [215 at ¶ 30.]

In January 2010, Crim terminated VLG. [208 at ¶ 54.] She then removed the CFS lawsuit against her to this Court and added a counterclaim against CFS and a third-party complaint against VLG and W&M. [170 at 3, 208 at ¶ 55.] Shortly thereafter, Crim sought a temporary restraining order to secure the settlement proceeds. [170 at 3.] At a hearing on the matter, the Court explained its view that the Circuit Court attachment pertained only to the $413,838.99 (plus the per diem and costs) claimed by CFS; thus, Crim was still entitled to a sizeable distribution. [170 at 3.] Crim agreed to withdraw her motion, and VLG agreed to 1) deposit $550,000 with the Clerk of the Court as security for any potential recovery by CFS; and 2) immediately transfer the balance of the settlement funds (about $816,000) to Crim. [170 at 3-4, 208 at ¶ 56.]

In February 2010, Crim settled with CFS for $225,000; thus, only Crim's third-party complaint remained. [170 at 4, 208 at ¶ 59.] VLG then sought to dismiss Crim's intentional infliction of emotional distress claim. The Court denied the motion, finding that Vrdolyak's alleged conduct in intentionally withholding the settlement proceeds despite Crim's medical needs and in pressuring her to repay CFS sufficiently stated a claim for extreme and outrageous conduct. [170 at 5-7.] The Court cautioned, however, that Crim's claim might be vulnerable at summary judgment if discovery confirmed that Crim received sufficient proceeds to take care of her daily needs. [170 at 7.] VLG subsequently filed a motion for summary judgment. [197.]

II. Legal Standard

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether there is a genuine issue of fact, the Court "must construe the facts and draw all reasonable inferences in ...


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