United States District Court, N.D. Illinois, Eastern Division
William J. Stevens, Plaintiff,
Richard Sharif, Defendant.
MEMORANDUM OPINION AND ORDER
Honorable Thomas M. Durkin United States District Judge.
Stevens, an attorney, alleges that his former client, Richard
Sharif, failed to pay him for legal services. R. 1. Sharif
has filed a counterclaim for malpractice against Stevens. R.
51. Sharif's sister, Haifa Sharifeh,  has filed a
motion to intervene in Sharif's malpractice claim on
behalf of the Estate of Sharif's mother (the
“Estate”). R. 88. Stevens has objected to
intervention, and made arguments that the Estate has failed
to state a claim. R. 94. For the following reasons, the Court
grants the Estate's motion to intervene, but dismisses
agreed to represent Sharif in bankruptcy proceedings and
subsequent appeals. R. 1 ¶ 7. Although neither party
addresses the details of the bankruptcy proceedings in this
case, the Supreme Court reviewed the facts in Wellness
Int'l Network, Ltd. v. Sharif, 135 S.Ct. 1932, 1940
(2015). According to the Supreme Court, Sharif entered into a
business contract with Wellness International Network but
later sued the company in a federal court in Texas.
Id. “Sharif repeatedly ignored Wellness'
discovery requests and other litigation obligations,
resulting in an entry of default judgment [and an award of
attorney's fees] for Wellness.” Id.
as a result of the debt he incurred in the Wellness
case, Sharif filed for Chapter 7 bankruptcy in the Northern
District of Illinois in 2009. Id. Sharif was unable
to discharge his debts, in part, because Wellness discovered
a loan application document in which Sharif purported to own
over $5 million in assets in a trust established in the name
of Sharif's mother (the “Trust”).
Id. On July 6, 2010, the bankruptcy court found that
the Trust's assets were property of Sharif's
bankruptcy estate and subject to Sharif's creditors.
See R. 94-1 at 238-55; see also Wellness
Int'l, 135 S.Ct. 1932 at 1941. Haifa was listed as
one of Sharif's creditors in the bankruptcy proceedings.
See R. 94-1 at 319.
alleges Stevens committed malpractice when he failed to
present evidence that Sharif did not own the Trust. R. 51
¶ 3. Haifa and the Estate seek to intervene in this
claim on the basis that the evidence Stevens allegedly failed
to present to the bankruptcy court were documents that
Sharif's mother provided to Stevens. See R. 88-1
¶ 6. Sharif, Haifa and the Estate contend that these
documents would have demonstrated that Sharif was not the
alter ego of the Trust such that it was not a part of
Sharif's bankruptcy estate.
Haifa and the Estate also allege that Stevens committed
malpractice when he failed to raise an objection to the
bankruptcy court's jurisdiction on appeal based on the
Supreme Court's decision in Stern v. Marshall,
564 U.S. 463 (2011). R. 51 ¶ 4. Stevens failed to cite
Stern in the initial brief he filed on Sharif's
behalf in the district court on August 9, 2011. See
Sharif v. Wellness Int'l Network, Ltd., 10 C 5303,
R. 17 (N.D. Ill. Aug. 9, 2011). Stevens also failed to cite
Stern in the reply brief he filed on September 21,
2011. See 10 C 5303, R. 24. Stevens did, however,
move to file a supplemental brief addressing Stern
on January 12, 2012, after the Seventh Circuit issued its
decision in In re Ortiz, 665 F.3d 906 (7th Cir.
2011), which explained Stern's impact.
See 10 C 5303, R. 28. The district court denied this
motion and affirmed the bankruptcy court's decision.
See Sharifeh v. Fox, 2012 WL 469980 (N.D. Ill. Feb.
sister Ragda, purportedly acting on behalf of the Trust,
joined Sharif's district court appeal, represented by
attorney Garett Reidy. Ragda, through Reidy, filed a motion
in the district court to withdraw the reference to the
bankruptcy court, which was denied. See 10 C 5303,
R. 30. Reidy also represented Haifa and Ragda in a state
court action attempting to protect the Trust's assets
from the bankruptcy court's order, which was filed on
July 30, 2010. See R. 94-1 at 258-66.
again represented by Stevens, appealed the district
court's decision. See R. 68-1. In his opening
brief filed in the Seventh Circuit on April 10, 2012, Stevens
again failed to make an argument based on Stern.
See Sharif v. Wellness Int'l Network, 12-1349,
R. 13 (7th Cir. Apr. 10, 2012). He did, however, include this
argument in his reply brief filed on May 30, 2012.
See 12-1349, R. 29. Despite Steven's failure to
raise a Stern objection in his opening brief, the
Seventh Circuit held on August 21, 2013 that a Stern
objection could not be waived, and reversed the district
court, holding “the bankruptcy court lacked
constitutional authority to enter final judgment.”
Wellness Int'l Network, Ltd. v. Sharif, 727 F.3d
751, 775-76 (7th Cir. 2013).
again purportedly on behalf of the Trust, also participated
in the proceedings in the Seventh Circuit, again represented
by Reidy. Ragda argued that she should be a party to the
appeal on behalf of the Trust, because the Trust was a party
to the bankruptcy court proceedings through Sharif as
trustee, and Sharif had resigned his position as trustee.
See 12-1349, R. 8-1 (April 9, 2012). The Seventh
Circuit denied Ragda's motion to substitute herself as a
party on behalf of the Trust in the appeal, see
12-1349, R. 15 (April 23, 2012), and denied Ragda's
subsequent motion for reconsideration holding that the
“failure to identify a party as an appellant in the
notice of appeal is a jurisdictional bar to hearing that
party's appeal.” See 12-1349, R. 30 (June
2015, the Supreme Court reversed the Seventh Circuit's
reversal of the bankruptcy court's order, holding that
adjudication by an Article III judicial body was a personal
right and could be waived by a litigant, as opposed to a
constitutional right that cannot be waived. Wellness
Int'l, 135 S.Ct. at 1942-47. It remanded the case to
the Seventh Circuit, with instructions to decide whether
Sharif waived this jurisdictional right by failing to raise a
Stern objection until his reply brief. Id.
at 1949. On remand, the Seventh Circuit held on August 4,
2015 that Sharif “waited too long to raise his
Stern objection because he did not mention the issue
until his reply brief, ” and on that basis, the court
affirmed the district court's decision against Sharif.
Wellness Int'l Network, Ltd. v. Sharif, 617 Fed.
App'x 589, 590-91 (7th Cir. 2015).
September 16, 2015, Haifa, represented by Maurice Salem (who
also represents Sharif and Haifa in this case), brought a
motion in the bankruptcy court seeking to vacate the
bankruptcy court's order for turnover of the trust's
assets to Sharif's creditors. See R. 94-1 at 1. The
bankruptcy court denied that motion, stating that it was
“not convinced based on the scant record herein that
the movant is a party entitled to notice of the motion on
which the [turnover] order was based.” Id. at
5. The bankruptcy court continued, “[t]here isn't
even a suggestion of evidence or information that the
property of the bankruptcy estate dealt with in the
[turnover] order belonged to a person or entity not then
before the court.” Id. The bankruptcy court
noted further that if Haifa disagreed with the turnover
order, she should have opposed it at the time, since she was
listed as one of Sharif's creditors, and as such would
have received notice of the order. Id. The
bankruptcy court held that Haifa had failed to “show
that she has standing to seek anything from the bankruptcy
estate and has not explained what property the trustee holds
that rightfully belongs to an entity she represents.”
R. 94-1 at 23.
November 30, 2015, Haifa, again represented by Mr. Salem,
filed an appeal in the district court of the bankruptcy
court's order denying the motion to vacate. See
Sharifeh v. Sharif, 15 C 10694, R. 1 (N.D. Ill. Nov. 30,
2015). Judge Dow recently denied that appeal on September 26,
2016. See Sharif, 2016 WL 5373199. Haifa has filed a
motion to reconsider that is pending as of the date of this
be deterred, on February 25, 2016, Haifa, again represented
by Mr. Salem, brought another motion in the bankruptcy court
challenging the July 6, 2010 ruling. See R. 94-1 at
25-105. The motion was based in part on a purported will by
Sharif's mother naming Haifa as executrix. This will
contradicted the will produced during the bankruptcy
proceedings in 2010, and the bankruptcy court found it
“highly suspect” and disregarded it. R. 94-1 at
81. The bankruptcy court's order also described other
suspicious activity by Haifa, Ragda, and Mr. Salem in
connection with their efforts to reclaim the Trust's
assets. The bankruptcy court found that Haifa, Ragda, and Mr.
Salem had “shown a complete disregard for the judicial
system and blatant attempts at circumventing it, ” by
inappropriately repeatedly challenging the
“settled” finding that ...