Carr
Tillery
Herndon
Rex Carr has lost his federal court battle against his former law partners.
U.S. Chief District Judge David Herndon issued a 25 page order on July 17, dismissing with prejudice Carr's civil RICO complaint against lawyers Stephen Tillery, Stephen Katz and Douglas Sprong.
Carr filed suit April 25, 2007, alleging he was cheated out of class action legal fees and $10 million from an IBM Personal Pension Plan lawsuit.
Carr claimed he had been deprived of a portion of $5,842,274.36 in attorneys' fees paid by IBM in settlement of Cooper v. IBM, a St. Clair County case.
He said it was a "sham" that the court entered an order April 2, 2007, to hold his share of fees that had been deposited into a "phony" escrow account.
The suit claimed that some time after the firm Carr Korein Tillery dissolved on March 10, 2003, Tillery entered into a conspiracy to fraudulently deprive him of his rightful share of fees generated from class action cases, including Dunn v. BOC, Miller v. Hutchins, Berger v. Xerox and Prather v. Pfizer.
Carr, who represented himself in the lawsuit, sought $20 million in compensatory damages and $20 million in punitive damages from Tillery.
He claimed Tillery engaged in "secret dealings" with other members of the firm, including Steven Katz and Douglas Sprong, to exclude him for the purpose of enhancing their share of fees.
According to the complaint, Carr and the partners agreed on Oct. 7, 2003, that Carr Korein Tillery would continue for the purpose of winding up the partnership's affairs and receiving fees from cases assigned to each dissolving member of the firm.
Carr claimed that from 1988 through March 10, 2003, he and Tillery were members of various partnerships including Carr Korein Tillery LLC.
According to Carr, beginning on June 14, 2001, until April 21, 2004, members of the firm entered into agreements which required the parties to act in the "utmost good faith and honesty in all dealings between them."
Carr claimed to further the conspiracy Tillery performed, among other things, the following overt acts:
Shortly after the suit was filed, Tillery filed a Rule 12(b)(6) motion to dismiss, arguing that Carr's suit was nothing more than a contract dispute between former law partners and also notes this is Carr's seventh "of a parade of lawsuits."
Tillery claims the other lawsuits filed by Carr were all in state courts and were all voluntarily dismissed by Carr, two over his objection.
"Dissatisfied with the previous outcomes, Plaintiff now repackages the same tired allegations as a purported federal racketeering claim," Tillery's motion stated.
"...Carr transmogrifies his previous state contract and tort claims into accusations that Defendants committed federal crimes by not paying him the amount of fees to which he claims to be entitled," Tillery wrote.
Tillery claimed Carr's allegations were without merit and should be dismissed on multiple independent grounds.
He claimed Carr was barred by res judicata because Illinois state courts have dismissed with prejudice suits Carr filed with the same allegations.
He also claimed Carr violated the "one refiling" rule in Illinois because he voluntarily dismissed claims arising from the same allegations numerous times.
Tillery also argued that Carr did not state a valid claim under RICO.
"Even taking all of Carr's allegations of fact as true for the purposes of the motion to dismiss, he cannot establish a 'pattern' of repeated acts of criminal racketeering, amounting to or posing a threat of long term criminal activity, that is an essential element of any Rico claim," the motion stated.
Tillery added that Carr failed to allege a single instance of criminal racketeering that could "predicate" a RICO claim.
He also argued that sanctions should be placed against Carr because he continued to file lawsuits over allegations that have been dismissed several times with prejudice.
Tillery also argued that Carr had filed meritless motions for liens in cases that Tillery is currently litigating, all having been dismissed.
He also pointed out that the Seventh Circuit of Appeals imposed sanctions against Carr.
Tillery was represented by Adam Proujansky of Washington D.C., Bob Sprague of Belleville and Aaron Zigler of St. Louis.
In his order, Herndon noted that motions to dismiss are intended only to test the legal sufficiency of the plaintiff's complaint, not to address the claims on their merits.
Herndon said that summary judgment motions are the proper vehicles to consider legal arguments and evidence.
He also noted that last year the United States Supreme Court ruled that a complaint must allege "enough facts to state a claim to relief that is plausible on its face" in order to survive a Rule 12(b)(6) motion to dismiss.
"In other words, the Supreme Court explained it was 'a plaintiff's obligation to provide the grounds of his 'entitle[ment] to relief' by providing 'more than labels and conclusions,' because 'a formulaic recitation of the elements of a cause of action will not do,'" Herndon wrote.
Herndon said a plaintiff must plead factual allegations which show the right to relief exists beyond mere speculation by raising a reasonable expectation that discovery will reveal evidence to substantiate the plaintiff's claims.
He also ruled that res judicata applies in this case because all of the parties in the suit have been previously named in other suits, there was a final judgment on the merits in previous suits and that Carr's allegations arise from the same "group of operative facts" as the previous suits.
Herndon writes, "To summarize, the Court finds that Carr's claims are barred by res judicata."
"Carr has repeatedly brought claims in state court arising from the same group of operative facts as the claims alleged in this case," Herndon wrote.
"Peppered throughout his state court complaints and counterclaims as well as in the Second Amended Complaint at bar are allegations of conspiracy and fraud by the Defendants in their interpretation/ distribution and the alleged failure to pay Carr the full amount of legal fees. The state court suits brought by Carr in 2004 resulted in dismissals with prejudice and thus final judgments on the merits."
"Further, Carr's voluntary dismissal of the state court suits he brought in 2007 also resulted in judgments on the merits pursuant to 735 ILCS 5/13-217, which bars more than one refiling of a dismissed claim."
"Thus, the Court dismisses with prejudice Carr's complaint."