'Out of control' Carr may still be owed money by Tillery and others, judge says

Steve Korris Jan. 22, 2010, 6:00am



CHICAGO – Federal appeals judges who blasted lawyer Rex Carr for litigating out of control conceded that his former partners apparently still owe him money.

Three Seventh Circuit judges recommended an injunction against further suits from Carr on Jan. 12, but they warned they can't stop him from suing again if Stephen Tillery and others haven't paid what they owe him under a memorandum of understanding.

"Such injunctions permit the person enjoined to ask the court's permission to lift the injunction for good cause," Circuit Judge Richard Posner wrote.

"We mention this because some of the fees to which Carr may be entitled under the memorandum of understanding have not yet been paid," he wrote.

Along with Judges Kenneth Ripple and Diane Wood, Posner affirmed U.S. District Judge David Herndon of East St. Louis in dismissing Carr's case.

Carr claims he has not received a fair share of fees from cases that began prior to the breakup of his firm, Carr Korein Tillery, in 2003.

"This is Carr's eighth suit against the defendants complaining about the division of fees; a ninth is pending in Missouri," Posner wrote.

Posner wrote that although the memorandum of understanding apparently resolved the dispute in 2004, Carr now claims his former partners executed it fraudulently.

Carr's suit sought $20 million in damages under the federal Racketeering Influenced and Corrupt Organizations act, nicknamed RICO.

"The fact that the present suit redescribes the wrongful acts alleged in the earlier ones as predicate acts in the RICO claim is irrelevant," Posner wrote.

"You cannot maintain a suit, arising from the same transaction or events underlying a previous suit, simply by a change of legal theory," he wrote.

"His multiplication of suits all arising from the same dispute was classic claim splitting, which the doctrine of res judicata bars," he wrote.

He wrote that although it made no practical difference whether to dismiss the claim for lack of jurisdiction or lack of merit, he had to decide which it should be.

"A suit that is utterly frivolous does not engage the jurisdiction of the federal courts," he wrote.

"What that means as a practical matter is that if it is clear beyond any reasonable doubt that a case doesn't belong in federal court, the parties cannot by agreeing to litigate it there authorize the federal courts to decide it," he wrote.

He quoted a quip from another case about parties to a dispute over bananas defining them as securities in order to litigate under federal securities law.

"Congress would not have wanted the federal courts to waste their time with such a case, and the courts therefore have an independent duty to refuse to entertain it," Posner wrote.

Still, he presumed that dismissal should be on merits rather than jurisdiction.

"The RICO claim in this case is weak, indeed feeble," he wrote.

"RICO is not a proper vehicle for levering a breach of contract suit between citizens of the same state into federal court, and under a statute that entitles a successful plaintiff to treble damages and attorneys' fees," he wrote.

To satisfy RICO by renaming a claim would start "wholesale migration of breach of contract suits into the federal courts," he wrote.

He wrote that if a plaintiff files the same suit over and over, a point would be reached at which litigation is too frivolous for jurisdiction.

"Carr has not quite reached that point in this case," Posner wrote.

Although Seventh Circuit judges affirmed Herndon in dismissing the claim, they reversed his denial of sanctions against Carr.

Posner marveled that a suit bordering on frivolous came from "an immensely successful lawyer represented on appeal by one of the nation's premier law firms, Kirkland and Ellis, as well as by his son Bruce Carr of the Rex Carr Law Firm."

He wrote that a rule against unreasonable and vexatious proceedings applies to a lawyer who represents himself, as Carr did in Herndon's court.

He found Carr's suit so lacking in merit that its pursuit indicates a motive to harass.

"The indication is made conclusive by the vitriolic tone of the complaint, which was drafted by Carr himself, and by the character of his lawyers' briefs and oral argument in this court," he wrote.

The Seventh Circuit sanctioned Carr two years ago for a frivolous appeal, he wrote.

"The plaintiff is out of control and his lawyers are neglecting their duties as officers of the state and federal courts by failing to rein him in," he wrote.

He directed Herndon to assess a proper monetary sanction.

"The district court should also consider whether to enjoin Carr from conducting further litigation arising from actions by the defendants of which he has complained in his voluminous filings to date," Posner wrote.

"The unlikelihood, in view of the history of Carr's litigation with the defendants, that he will accept defeat gracefully suggests that the remedy may be needed in this case."

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