Carr insists one more lawsuit will prove former partners owe more than $1 million

Steve Korris Dec. 16, 2010, 7:16am



CHICAGO – Rex Carr concedes he owes Stephen Tillery and other former partners $635,171.21 for harassing them with lawsuits, but Carr insists one more suit would prove they owe him more than $1 million.

Carr wants U.S. Fifth Circuit appeals judges to reverse District Judge David Herndon, who blocked him from suing Tillery, Steven Katz and Douglas Sprong over fees.

He doesn't contest the sanction Herndon imposed in May, but claims he can't pay until he collects his fair share of fees from cases he filed with Tillery, Katz and Sprong.

In a brief he filed as his own counsel on Nov. 19, he told the Fifth Circuit that Tillery, Katz and Sprong calculated his fee in the Clevenger case at $727,156.27.

He wrote that they calculated his fee in Call v. Ameritech at $315,364.93, and his fee in Little v. Brinker at $12,776.46.

"Carr should have been paid all such fees promptly and without objection," he wrote.

Herndon found his claim arose from the same transaction as a suit Carr dismissed in Madison County, but Carr suggest Herndon made a mistake.

"These claims weren't even mentioned in that litigation – they had not yet come into existence," he wrote.

Tillery, Katz and Sprong appealed Herndon's order too, because he disallowed most of the fees they claimed they incurred in opposing Carr's suits.

They seek a sanction near $1.5 million.

On Dec. 9, the Fifth Circuit ordered Tillery, Katz and Sprong to file a response brief in Carr's appeal and an opening brief in their cross appeal on Feb. 2.

The court ordered Carr to file a reply brief in his appeal and a response in the cross appeal on March 4.

The court ordered Tillery, Katz and Sprong to reply in the cross appeal on March 18.

Carr led the firm of Carr Korein Tillery, which broke up in 2003.

He and lawyers at the new Korein Tillery agreed on terms for dividing fees in pending cases, but disputes arose and Carr filed a series of suits in different courts.

In a suit at federal court in East St. Louis, alleging violation of "RICO" racketeering law, Herndon ruled he lacked jurisdiction but denied a motion for sanction.

On appeal, Seventh Circuit judges ordered him to sanction Carr.

"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," Judge Richard Posner wrote.

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

Posner wrote that Carr's suit "borders on the frivolous, even though he is 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 directed Herndon to consider an injunction against further litigation, but his next paragraph practically guaranteed further litigation.

"Such injunctions permit the person enjoined to ask the court's permission to lift the injunction for good cause," he 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.

"Should the defendants refuse to pay him his share on a ground not placed at issue in this case or any of the previous litigation between Carr and the defendants, he will be entitled to bring a new suit," he wrote.

Carr, no longer represented by Kirkland and Ellis, told Herndon he needed to file a suit for accounting against Tillery, Katz and Sprong in St. Louis city.

Herndon turned Carr down and enjoined him from suing them anywhere.

Now Carr tells the Seventh Circuit their decision means he can sue again, regardless of the outcome of the Madison County action.

"If this court believed the dismissal of that action would cause Carr to forfeit his right to future relief, it would have never found that Carr had a right to file an action for fee matters not resolved in the RICO action or in the state court actions," he wrote.

"There is no case which has ever held that a cause of action not in existence at the time the underlying action was determined could be barred by a judgment in that underlying action," he wrote.

"A party is not required to keep his initial action on file until all possible claims have ripened into causes of action; and he is not required to amend his existing case to include newly occurring causes of action," he wrote.

"An action for a share of the fees in these three cases was never filed in any state court," he wrote.

Carr suggested they may owe him a share of fees they received since they sent him a spread sheet in 2008.

He wrote that he has no way of determining the amount of fees they received without an accounting action.

In September, he told Herndon financial ruin and old age would prevent him from paying the full sanction.

He moved to reduce the judgment, pleading that misplaced reliance on former partners forced him to borrow millions.

Carr wrote that he borrowed all he could from banks, friends, relatives and former partners, and cashed in all available assets including GI life insurance.

Herndon let the sanction stand.

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