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Mac Naughton v. Harmelech

United States Court of Appeals, Seventh Circuit

July 31, 2019

W. James Mac Naughton, Plaintiff-Appellant,
Ishaihu Harmelech, et al., Defendants-Appellees.

          Argued May 17, 2019

          Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 C10016 - Gary Feinerman, Judge. Nos. 17-cv-227 & 06-cv-3578 - Thomas M. Durkin, Judge. No. 16 C 9027 - John Robert Blakey, Judge.

          Before Ripple, Manion, and Sykes, Circuit Judges.

          Manion, Circuit Judge.

         The complex background of these consolidated appeals burrows through over a decade of litigation. Russian Media Group sued Ishaihu Harmelech and his company ("Harmelech Defendants") in 2006. Attorney W. James Mac Naughton actively represented the Harmelech Defendants in this case ("RMG Action") for ten weeks ten years ago. The relationship ended in a dispute over his fees. After he withdrew, the case settled with the entry of a consent judgment against his former clients.

         Mac Naughton then pursued his former clients for money in myriad ways. One maneuver he used was acquiring rights to the judgment entered against his former clients in the RMG Action, the very matter in which he previously represented them. He then sought to collect this judgment by filing multiple other cases and by seeking to reopen the RMG Action.

         In December 2014, Mac Naughton and Casco Bay (his company) sued Harmelech and his son to collect the RMG Judgment and to set aside the conveyance of property on Sunnyside Avenue ("Sunnyside Action"). In March 2015, Judge Holderman disqualified Mac Naughton from attempting to collect this judgment personally and from representing Casco Bay in its attempts to collect it. But Mac Naughton defied that order and continued his efforts. In June 2018, Judge Feinerman (to whom this case had been transferred) dismissed the claims predicated on this judgment as a sanction for Mac Naughton's willful defiance of the Holderman Order.

         In September 2016, Mac Naughton sued Alden Management and others to collect for himself money owed to his former client ("Alden Action"). Judge Blakey dismissed this case as a sanction for violating court orders.

         In January 2017, Mac Naughton sued his former clients to set aside a conveyance of property in Palm Harbor ("Palm Harbor Action"). Judge Durkin dismissed this case on the same grounds as Judge Feinerman dismissed the Sunnyside Action. Judge Durkin also rejected Mac Naughton's attempt to reopen the RMG Action.

         In sum, the district judges in the four cases consolidated here rejected Mac Naughton's efforts to collect the RMG Judgment entered against his former clients. We affirm.

         I. Background

         As warned, the tangled details of these consolidated appeals and related cases twist through thirteen years of federal and state litigation. Multiple courts summarized this history. A brief account suffices here. We sort the history by case.

         A. RMG Action

         Russian Media Group ("RMG") provided Russian-language satellite television programming to subscribers. In 2006, it sued Ishaihu Harmelech and Cable America, predecessor of USA Satellite & Cable (collectively "Harmelech Defendants") in the Northern District of Illinois for unfair competition involving Russian television in Chicago-area apartments and violations of the Illinois Cable Piracy Act ("RMG Action"). In April 2009, the court ordered that all payments received by the Harmelech Defendants from certain apartment tenants must be held in escrow pending further order. On May 8, 2009, Mac Naughton began representing the Harmelech Defendants in this case. In the process, he learned confidential information about them. On July 16, 2009, he "stopped actively representing" them (his words) because they owed him attorney's fees and costs. He finally received leave to withdraw in January 2011. The case settled in his absence. In May 2011, the court entered a $286, 374.76 stipulated judgment ("RMG Judgment") for RMG against the Harmelech Defendants and ordered the release of escrow funds to RMG. Harmelech claims he paid some of the RMG Judgment.

         As discussed below, in August 2014, RMG assigned the unpaid part of the RMG Judgment to Casco Bay Holdings, owned and controlled by Mac Naughton, as part of a settlement in a New Jersey state court case. In September 2016, Casco Bay assigned its rights in the RMG Judgment to Mac Naughton personally.[1] In December 2017, Mac Naughton moved to reopen the RMG Action against his former clients. On June 22, 2018, Judge Durkin rejected this. He noted Judge Feinerman in the Sunnyside Action (discussed below) ruled Mac Naughton was violating a court order by continuing to pursue the RMG Judgment. Judge Feinerman dismissed the Sunnyside Action as a sanction for this continuing violation. In the RMG Action, Judge Durkin adopted Judge Feinerman's reasoning and ruled the RMG Action remained closed.

         B. Federal N.J. Action

         On August 11, 2009, the Harmelech Defendants gave Mac Naughton a promissory note for $65, 879 for the attorney's fees in the RMG Action. According to Mac Naughton, the Harmelech Defendants defaulted in September 2009. So he sued them in the District of New Jersey in October 2009 ("Federal N.J. Action"). In September 2016, Mac Naughton won a $77, 679 judgment against the Harmelech Defendants in the Federal N.J. Action. The Harmelech Defendants satisfied this judgment. But Mac Naughton wanted more. He argued he was entitled to attorney's fees for his pro se representation in the Federal N.J. Action. The New Jersey district court rejected that argument because a pro se attorney ...

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