Case Studies / Case Studies

Case Studies

Arthur Rosenson is primarily responsible for all bench and jury trials conducted by our firm. His talent and experience in handling all varieties of commercial disputes is best evidenced by his success rate. Here are highlights of the firm's recently resolved contested matters:

 

$1.2 Million Personal Judgment Reversed on Appeal

In 2009, the Federal District Court for the Northern District of Illinois entered a $1.2 million judgment in favor of a venture capital firm and against an insolvent corporate entity on a contract claim. The District Court then pierced the entity's corporate veil and held its two principal shareholders liable to pay that judgment despite their never having signed personal guaranties. On behalf of the shareholders, we appealed that decision to the Seventh Circuit Court of Appeals. We conceded that the shareholders had governed and controlled the entity while failing to follow corporate formalities and commingling their assets with those of the entity. Nonetheless, we argued that the corporate veil should not have been pierced because the venture capital firm had not been unfairly harmed or prejudiced by virtue of the fact that it had known from the onset of the parties' relationship that the entity was insolvent. As a result, the venture capital firm was at fault for not having protected itself by obtaining personal guaranties from the shareholder. Accepting this argument, the Seventh Circuit reversed the District Court's decision in full and vacated its judgment. (2010)

Contract for Professional Services Enforced

On behalf of a contractor that performs remediation and clean-up work, we prevailed in a bench trial on a claim agains a major Chicago retailer whose premises suffered extensive damages due to a natural gas explotion. While the contractor was rendering its clean-up services, the retailer also was remodeling its premises. After the retailer's insurer refused to pay for costs associated with that remodeling (and certain of the remediation and clean-up work), the retailer balked at paying the contractor. The retailer asserted that the parties had agreed that a pre-requisite to the contractor being paid was the retailer first obtaining coverage from its insurer for the clean-up work. After a trial on various claims and crossclaims between the contractor, retailer, and insurance carrier, the trial court rejected the retailer's position and ordered it to pay all of the contractor's charges, plus interest at 18% on that sum and all of the contractor's attorneys' fes. To pour salt on the wound, the trial court then found in favor of the insurance carrier on the retailers's third-party claim for indemnification. (2010)

 

Independent Contractor Prevails on Claim for Equity Interest

We represented an independent contractor who worked for a real estate development entity that subsequently went out of business. On behalf of our client, we prevailed in a bench trial on a claim for unjust enrichment against a successor entity that later developed the deals that our client had presented. The litigation was vigorously contested over ten years and, on the evening before trial commenced, our client died after a bout with cancer. (Fortunately, two weeks earlier, we had completed his evidence deposition.) Although the entity with whom our client had contracted did not develop any of the deals that our client presented, we proved at trial that these deals were later secretly developed by the brother of the defunct entity's president. Although there was no contract between our client and the brother's entities, we proved that the brother's entities were being unjustly enriched by benefiting from our client's work without compensating him with the commissions and equity interests that the defunct entity had promised to pay and transfer to him. The trial court awarded our client's widow approximately $500,000. That judgment is now being appealed. (2009)

Jury Finds for Commercial Landlord in Complex Dispute

We represented a landlord-builder in a lawsuit filed against it by a commercial tenant operating a mortgage brokerage business. The tenant claimed to have suffered damages in excess of $3 million due to undisputed defects that were present in its leased space that, allegedly, caused it to suffer lost profits (due to interruptions to its operations), lost improvements (due to it having to leave behind personal property and then furnish a new premises), and the lost value of an option to purchase. The tenant sued our client for breach of contract, breach of the covenant of quiet enjoyment, fraud, negligence, and under the Illinois Fraudulent Conveyance Act. In response, our client raised the affirmative defenses of waiver, failure to mitigate, and estoppel and it filed a counterclaim seeking approximately $100,000 in unpaid rent. At trial, the Curt rejected both the tenant's claim for lost profits because the evidence reflected that our client had not contemplated being responsible for business interruption losses and the tenant's claim for the lost option to purchase because it had failed to prove that these damages were foreseeable. After extensive motion practice and a week-long trial, the jury awarded the tenant just $5,510 on its claim and awarded our client all of the rent it was seeking. (2008)

 

Defense of Marital Fraud Claim

On behalf of a corporation and its president (who was sued personally), we successfully defended a third-party claim in a divorce proceeding. In the action, the wife alleged that the corporation had defrauded her by reclaiming title to stock owned by her husband in order to deprive her of her one-half interest in that marital asset. (The stock's claimed value was $800,000.) The wife pointed to the fact that the corporation's president was her husband's cousin, the stock was reclaimed by the corporation just weeks prior to when the wife filed for divorce, and the corporation had treated her husband as an owner for many years by issuing to him a stock certificate, disbursing to him profits, and listing him as an owner on its tax returns. In response, we argued that the corporation had only "conditionally" treated her husband as an owner, subject to him paying for the stock pursuant to the terms of an oral agreement. After proving that the husband had failed to pay for the stock and that the president was unaware that the wife and husband were contemplating a divorce, we successfully argued that the corporation rightfully reclaimed the stock notwithstanding that it had coincidentally done so in the same month that the wife had filed for a divorce. (2008)

 

Jury Verdict in Written Contract Action

Representing a Canadian manufacturer of plastics, we successfully defended a suit seeking over $1 million. The suit was filed by an Illinois vendor in Federal Court in the Northern District of Illinois. The vendor had sold certain goods to a North Dakota entity but claimed that our Canadian client should be held liable for the debt because the two entities had common owners and our client had benefited from the sale of the goods. In response, we asserted that the Canadian company was distinct and should not be considered the "alter ego" of the North Dakota entity. After a four day trial, the jury deliberated for six hours prior to rendering its verdict. In addition, the jury rejected the vendor's claim that our client had wrongfully destroyed evidence. (2007)

 

Escrow Refund Obtained

On behalf of a Chicago real estate developer, we prevailed in a bench trial and obtained a refund of $100,000 deposited into escrow by the developer in connection with a $3 million real estate deal that never closed. The developer had terminated the deal and sought the return of his escrow deposit after his inspection of the property disclosed material defects. The seller refused to return the escrow deposit and claimed that the developer had (belatedly) terminated the contract in an improper attempt to negotiate a lower sales price. (2007)

 

Arbitration of Construction Dispute

In an arbitration hearing on behalf of a general contractor, we successfully defended a claim filed by a subcontractor who asserted that it had not been fully paid on its $100,000 contract for brickwork performed on a new home. In addition, the subcontractor claimed that the president of the general contractor was personally liable on the debt. The arbitration panel rejected the claim after we proved that the subcontractor had performed its extra work as a "volunteer" due to the fact that it had failed to first obtain the required written consent from the general contractor to do the work. (2007)

 

Forged Deed Annulled

Representing a senior citizen now living in an assisted living facility, we succeeded in causing a court to void two deeds that the defendants had forged and recorded with the Cook County Recorder's office, which deeds fraudulently reflected that our client had transferred to them title to her home. One of the defendants was a notary and had notarized the deeds. The defendants were able to obtain a mortgage from a third-party lender using the "stolen" home as security. After vacating the deeds, we also prevailed against the lender even though it, too, had been defrauded by the defendants. (2007)

 

Insurance Company Defeated on Claim Denial

On behalf of a client that suffered embezzlement by its comptroller, we successfully sued the client's insurance carrier after it refused to find that the employee's theft was a "covered loss". The insurance company contended that an exclusion in the policy enabled it to avoid paying for this act of employee dishonesty because the comptroller had embezzled the funds from a payroll account and thefts of "salary" were not covered. After noting that similar cases in other jurisdictions had been decided both for and against an insurer, the Court granted summary judgment in our client's favor. It held that money stilen from a payroll account through artificially inflated payroll checks are not thefts of "salary". The insurance carrier's appeal is now pending. (2005)

 

Jury Verdict in Written Contract Action

On behalf of a seller of Real Estate, we prevailed at a jury trial in Lake County and prevented the plaintiff/land developer from obtaining specific performance of two written contracts to purchase 108 single family home sites from our client. We argued that our client properly exercised its right to terminate under the contracts even though, by doing so, it deprived the plaintiff of earning over $1 million based on the value of the land having appreciated while it was under contract. After a week long trial and jury deliberations that lasted late into the night, the jury (on the breach of contract claim seeking $5 million in damages) and the Court (on the equitable claim seeking specific performance of the contracts) both ruled that our client had acted within its rights notwithstanding the plaintiff's continued desire to close. (2004)

On appeal, the jury's verdict was affirmed. (2005)

 

 

Arbitration of Physicians Shareholder Dispute

We prevailed in an arbitration hearing where we represented a plastic surgeon who owned a minority interest in a certain medical practice. Claims seeking in excess of $1 million were filed against our client due to his alleged breach of a stock purchase agreement, expense sharing agreement, and non-compete agreement. In response, we asserted the practice had materially breached the parties' agreements by wrongfully locking our client out of his office without "good cause," thereby excusing him from having to honor his non-compete and stock purchase agreements. Ultimately, the arbitrator denied the practice any of the relief it had sought and reimbursed our client for a portion of the stock purchase price and all of his attorney's fees. Over the objection of the practice, the Circuit Court of Cook County confirmed the arbitrator's award and our client was paid the full judgment amount. (2003)

 

Jury Verdict in Oral Contract Action

In defense of one of Illinois' leading concrete contractors, we successfully defended a suit filed against it by a developer who asserted claims for breach of oral contract and promissory estoppel. The developer claimed it suffered $500,000 in losses when it relied on a bid proposal submitted by our client. In defense, we argued there was no "meeting of the minds" between the parties because each party was proposing different terms to describe the scope of the work to be performed. After a week of trial and an entire day of deliberations, the jury returned a favorable verdict. (2003)

 

Water Damage Claim Defeated

Following a bench trial in Kane County involving water resource experts, architects, and private and public engineers, we successfully defended a developer from a claim that its 77 acre industrial park was improperly changing the natural flow of water, thereby flooding and damaging downstream properties. Using hydrologic maps, historic aerial photos, topographies, and other reports and analyses, we proved that, historically, plaintiffs' property had always flooded. At the conclusion of the two-week trial, plaintiffs were denied their demand for damages and the right to compel our clients to redesign the development's water retention system. (2002)

 

Accountants' Accounting Dispute

In a case now pending on appeal, we prevailed on behalf of an accounting firm that was a party to a series of claims and cross-claims with two other accounting firms with whom it had been in a partnership. Each side claimed they were owed several hundred thousands of dollars. After being sporadically tried over a seven month period, the trial court held that the other accounting firm had failed to accurately account for the assets contributed by and distributed to our client. Instead, the court adopted the computations that our client offered into evidence and which we had supported with dozens of charts and hundreds of records. (2002)

 

Successful Settlement of Real Estate Dispute

On behalf of a young professional couple, we settled a dispute where both they and the defendant claimed to purchase the same piece of residential property under two different contracts. After the seller suffered a stroke rendering her incompetent, the matter went to trial on issues related to forgery and agency. In the midst of presenting our clients' case, the defendant offered to settle by paying our client a six figure sum in return for him receiving title to the property. (2001)

 

NASD Arbitration

We prevailed in an NASD arbitration where our client claimed he had been defrauded by an account representative of a brokerage firm. Though the representative had no assets, we prevailed against his employer on the ground it negligently hired and retained its employee. In addition to awards of compensatory and punitive damages, we recovered the attorneys fees incurred by our client under the Illinois Consumer Fraud Act. (2001)

 

Jury Verdict on Rent Claim

The Firm obtained a jury verdict on behalf of a commercial property owner in a suit for rent and other damages. The tenant, a mid-sized Chicago law firm, contested the suit bitterly and employed a three attorney team at trial to advance defenses ranging from constructive eviction and accord and satisfaction to oral modification of the parties' written lease. All were rejected by the jury (on unrelated grounds, though, the trial court granted defendant a new trial). (2001)

 

Summary Judgement Award

We represented a small business owner who purchased an insurance policy on the life of a customer who was indebted to both our client and his business. When the customer died, we successfully defended a lawsuit filed by the customer's family to recover the $500,000 of policy proceeds that the insurance carrier had paid out to our client. The Court found that not only could our client keep all of the policy proceeds, he could also collect on the customer's still outstanding business debt. This suit was decided on cross-motions for summary judgment. (2001)

 

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