Witness on stand for fifth day in Thompson Coburn trial

Ann Knef Feb. 27, 2008, 12:46am


If anyone in Judge Daniel Stack's courtroom had been praying for divine intervention it may have arrived Tuesday via comic relief in a drawn-out legal malpractice trial against Thompson Coburn.

On the stand for the fifth consecutive day in Madison County Circuit Court, plaintiff's witness-turned-adverse witness Thomas "Skip" Hennessy, III, appeared to grow impatient with attorney Rex Carr's line of questioning.

In its fourth week, the trial pits Magna Bank (now Regions) against its former counsel Thompson Coburn over legal advice that allegedly cost the bank millions after businessman James Gibson was able to steal structured settlement funds from children and widows.

Tension escalated on redirect after Carr, who represents Magna Bank, repeatedly asked Hennessey about the law and the finer points of constructive trusts, among many other things.

Carr, who at one point pleaded for Stack to "step in" and instruct Hennessy not to address him in such an adversarial tone, asked Hennessy whether it would have been appropriate for him, as Magna's counsel, to file for declaratory judgment over control of the structured settlement funds in question.

The complaint against Thompson Coburn in part alleges the firm failed to appeal a Fifth District Appellate Court decision with the Illinois Supreme Court and failed to file declaratory judgment against Gibson's company, SBU.

Hennessy -- who testified earlier under cross examination that it would have been "frivolous" and an "embarrassment" to lawyers and their clients to appeal lower court rulings that determined Gibson was sole beneficiary of the funds and not the injured parties -- repeated to Carr that Magna's attempt to block Gibson had been denied at the circuit and appellate level.

"Ignorance of the law is not a defense, especially for a lawyer," Carr said.

Carr, who has asked witnesses to accept hypothetical situations throughout the four-week-long trial, used allegory to drive home his point about ignorance of the law.

Originally scheduled to last four-to-six weeks -- the trial is likely to take up to six-to-nine weeks, given heretofore drawn-out witness testimony, frequent objections, sidebars and jury recesses for lawyer arguments.

"Lawyer Jones is at the Pearly Gates," Carr started. Tension eased.

"St. Peter asks him if he's followed the Ten Commandments," Carr said, naming a few at the top of the list.

"(Jones) says, I didn't know about those Commandments...

"You think he would get into heaven?" Carr said.

Defense objections over that question, as well as one regarding a distracted driver who blew through a stop sign and then pleaded, "I didn't know there was a stop sign there," were sustained by Stack as lacking relevance.

Under cross examination by attorney Morgan Hirst of Jones Day in Chicago, Hennessy testified that Thompson Coburn did not file a petition for leave to appeal a Fifth Appellate Court decision that allowed Gibson to take control of funds because "it would have been a frivolous undertaking."

"We already had a definitive ruling," Hennessy said.

Hirst asked Hennessey if any lawyer would advise Magna to appeal the decision.

"In my opinion, no," Hennessy said.

He also testified that Thompson Coburn could not have filed an appeal without its client's consent.

"If you do it without authority, you're in a very serious ethical situation," Hennessy said.

Last week former Thompson Coburn attorney Kurt Schroeder was finally excused after providing testimony eight separate days over three weeks totaling nearly 30 hours.


The crux of the case goes back to 1985 when Gibson, now in prison, took up the business of structuring settlements under an agreement with a bank that Magna later acquired.

Personal injury lawyers who represented clients that received jury awards or settlements would advise their clients to enter into a structured settlement with Gibson's company, SBU.

Carr has told jurors that Gibson used government bonds instead of an annuity, like most structured settlements at that time used, which made Gibson's pitch unique.

In 1993 Gibson told Magna Bank that pursuant to contract, he would terminate the agreement and take the money elsewhere.

Magna Bank refused to turn the money loose, so Gibson sued the bank.

St. Clair County Circuit Judge Robert Hillebrand ruled that the agreement allowed termination. He granted summary judgment to SBU. Magna appealed to the Fifth District, when Gordon Maag was a justice, but the summary judgment was affirmed.

After several more years of litigation, Magna gave possession of the government bonds to Flag Financial, a shell corporation Gibson owned in Missouri.

Carr claims that based on the advice of Thompson Coburn, Magna did not file an appeal with the Illinois Supreme Court because the law firm allegedly advised the bank that it had no grounds to resist SBU's termination of Magna's trusteeship and joined in a stipulation with SBU by appointing Flag Finance as the successor trustee which allowed Gibson to have possession of the bonds.

Gibson eventually stole the money and purchased homes, cars and yachts.

Steve Gonzalez contributed to this report

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