As a current Cook County judge stands poised to receive millions of dollars in fees for his work on a lawsuit nearly two decades ago, the business partners who would pay those fees have asked a different Cook County judge to send the case and the fee request to a court outside Cook County, asserting all Cook County judges are too close to their colleague to rule in the case.
On Feb. 18, attorneys for a group of defendants filed a motion in Cook County Circuit Court, asking the judge hearing their case, Cook County Circuit Judge Neil H. Cohen, to recuse not only himself, but every other judge in Cook County from hearing the remainder of the case in which Cohen’s colleague, Cook County Judge Patrick Sherlock, and another attorney Peter B. Carey, have together requested potentially much more than $2.4 million in fees.
“…Whoever presides over the remainder of this case will adjudicate issues concerning the final judgment that have the potential to deny, decrease, or increase any fee award to Judge Sherlock and Carey,” the defendants wrote. “Regardless of when a fee award is made, the very pendency of the Fee Petition creates an inescapable ‘appearance of impropriety’ that requires the Court to recuse itself from these proceedings.
Cook County Judge Patrick Sherlock
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“Absent recusal, despite every effort to be impartial, a reasonable person would certainly question whether any ruling granting the Fee Petition or a ruling that increases the amount of the final judgment was influenced by Judge Sherlock's professional and personal familiarity with the Court.”
17 YEARS IN COURT
The case at the heart of the matter landed in Cook County court in 2001, when a group of investors filed suit against a group that ran partnerships incorporated in the 1990s to invest in bonds issued by the suburban villages of Broadview and Bedford Park.
According to the lawsuit, the villages paid the bond investors from certain of those villages’ Tax Increment Financing (TIF) funds, which are, in turn, funded from property tax revenue.
According to the lawsuit, which was most recently amended in 2015, the defendants, including Dennis Hiffman, John Shaffer, E. Thomas Collins Jr. and Richard Hulina, allegedly redirected the proceeds away from the partnerships and to themselves. The plaintiffs alleged the defendants amassed as much as $24 million to $50 million in the process.
The defendants have contested the allegations in court for more than 17 years.
Initially, plaintiffs were represented in the action by Carey and Sherlock.
However, in 2003, Carey and Sherlock stepped away from the case. The plaintiffs are currently represented by lawyers with the firm of Edward T. Joyce & Associates, of Chicago.
In the intervening years, Sherlock became a judge in Cook County. In 2007, the Illinois Supreme Court appointed Sherlock to the bench to fill the vacancy of David Donnersberger. And in the 2014 election, Cook County voters chose to retain Sherlock as a judge in Cook County’s 3rd Judicial Subcircuit. That subcircuit includes portions of Chicago’s Southwest Side, near Bedford Park, Oak Lawn, Burbank and Evergreen Park.
Judge Sherlock is assigned to the Cook County Circuit Court’s Law Division.
The lawsuit over the Broadview and Bedford Park TIF funds are assigned to the county courts’ Chancery Division.
$116 MILLION OR MORE
After 17 years of litigation, Judge Cohen in late December entered a judgment in favor of the plaintiffs. In the Dec. 21 decision, Judge Cohen ordered Hiffman, Collins and Hulina to pay more than $116 million, including interest, finding they breached their fiduciary duty to the other investors.
However, the judge also ordered further hearings for potential punitive damages, which potentially could increase the final payout by hundreds of millions dollars more. And he ordered further hearings on how much the plaintiffs’ lawyers should be paid for their work on the case.
On Jan. 25, attorney Peter Carey filed a motion for fees for him and Judge Sherlock for their work on the case from 2001-2003.
In that fee petition, Carey told Judge Cohen he and Sherlock withdrew from the case in 2003 after they refused the request from their client at the time, identified as Melissa Pielet, to submit a “wholly inadequate” settlement deal.
Carey said that deal was later filed by another plaintiff, but was withdrawn amid a fairness hearing and objections from attorneys from the Joyce firm, who intervened in the matter on behalf of other investors Carey said he and Sherlock had also represented earlier.
In their fee request, Carey and Sherlock asked Judge Cohen to award them $2.4 million or 3 percent of the final judgment.
Carey said their “fee petition recognizes their substantial efforts and contributions to the results in this case, while at the same time acknowledging that the bulk of the efforts in producing the result her came from the Law Offices of Edward T. Joyce & Associates.”
APPEARANCE OF IMPROPRIETY
Following that fee request, the defendants asked Judge Cohen to step aside from the case. However, they also asked him to send the matter to the Chancery Division’s presiding judge, who could then transfer the case to another county’s courts entirely.
In their motion, the defendants pointed to Illinois Supreme Court Rule 63, which says “’a judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned,’ including situations involving even the ‘appearance of impropriety.’”
In this case, the defendants said Judge Sherlock’s position as a Cook County judge makes it all but impossible for any judge in Cook County to avoid the “appearance of impropriety.”
The defendants also asserted such an appearance of impropriety could violate their rights to due process under the U.S. Constitution’s 14th Amendment.
“Here, ‘a fully informed and objective observer’ could certainly wonder whether the (Cook County Circuit) Court could make any further decisions in this lawsuit ‘with the requisite aloofness and disinterest’ required of the Court, knowing that millions of dollars are at stake for a colleague,” the defendants wrote.
“The Due Process Clause requires that the Court avoid situations that will raise the question of ‘possible temptation[s]’ for bias in favor of Judge Sherlock or that otherwise might compromise the public's faith in the integrity of the judiciary.
“Recusal and transfer will reassure the parties, the bar, and public at large in the Court's strict impartiality in the administration of justice.”
The defendants are represented in the action by attorneys from the firms of Thompson Coburn LLP, Locke Lord LLP, Ice Miller LLP and Tabet DiVito & Rothstein LLC, all of Chicago.
MISSED OPPORTUNITY?
Attorneys for the plaintiffs from Edward T. Joyce & Associates fired back on Feb. 20 with a response, asking the court to refuse the defendants’ recusal request.
In a brief signed by attorney Robert D. Carroll, of the Edward Joyce firm, the plaintiffs argued the defendants have attempted to stretch Supreme Court Rule 63 too far, in demanding Judge Cohen determine no judge in Cook County is far enough removed from Judge Sherlock to complete proceedings in the case and decide Sherlock’s fee request.
Carroll asserted such a motion for mass recusal should have come under a state law, which, they said, would require the defendants to “demonstrate actual specific prejudice” in a motion filed “at the earliest practical moment once prejudice is discovered.”
The plaintiffs said the defendants can’t meet that standard.
Carroll also argued the defendants missed their opportunity years earlier to object when they withdrew an objection to Sherlock’s petition for fees as part of a settlement with defendant Shaffer.
“Defendants cannot lie in the weeds and ‘test the water’ and then petition for a change of venue after an unfavorable outcome,” Carroll wrote.
Judge Cohen has yet to rule on the request.
A hearing is scheduled for Feb. 28.