A group of Chicago lawyers have continued and now expanded their efforts to claim $15 million in fees, including at least $2 million for a sitting Cook County judge and his former law partner, in a court fight that has ground on for more than two decades, as the lawyers now accuse the defendants and their lawyers of improperly executing a plan to sidestep paying $87 million from themselves to a fund intended to benefit partnerships that are almost entirely owned by the defendants – a fund that would also be used to pay the $15 million attorney fees.
On April 8, attorneys with the firm of Edward T. Joyce & Associates, of Chicago, filed suit in Cook County Circuit Court, on behalf of plaintiff Marc Munaretto, against investors E. Thomas Collins Jr. and Richard Hulina, and the law firm of Much Shelist.
The complaint accuses the Much Shelist firm, and attorney Jason Rosenthal, of improperly assisting Collins and Hulina in alleged efforts to sidestep paying an $87 million judgment, allegedly to benefit corporations controlled by Collins and Hulina.
The lawsuit specifically accuses Much Shelist and Rosenthal of legal malpractice and of breaching their fiduciary duty to the corporations the firm and lawyer were hired to represent.
“Much Shelist and Rosenthal were hand-picked and paid for by Defendants Collins and Hulina to prevent Plaintiff (Munaretto) and the other limited partners from collecting monies Defendants owed to the Limited Partnerships and in turn preventing the Joyce Firm getting paid the fee they earned from the common fund it created,” attorney Edward Joyce wrote in Munaretto’s complaint.
Munaretto is identified as a limited partner in those partnerships run by Collins and Hulina.
The filing comes as a new point of conflict in long-running litigation that began as a dispute between partner investors over bond proceeds.
The case first landed in Cook County court in 2001, when minority partners in the investment group accused Collins and Hulina and other majority partners of improperly steering as much as $50 million to themselves from the proceeds of bonds the partnership had purchased from the suburban communities of Broadview and Bedford Park in the 1990s.
The lawsuit included claims on behalf of the individual named plaintiffs and a so-called derivative claim, brought on behalf of the corporate entities, identified as IBP Limited Partnership and TB Limited Partnership.
Named defendants in that litigation included Collins, Hulina and businessman Dennis Hiffman, collectively known in court documents as “HCH.”
The HCH partners have consistently contested the claims against them.
However, in 2018, Cook County Judge Neil Cohen ruled against HCH, ordering them to pay damages of about $80 million.
Sherlock and Carey initially filed the case 20 years ago.
However, they withdrew from the case in 2003, after they disagreed with the desire of one of the initial plaintiff investors to accept what they believed to be an inadequate settlement.
The Joyce firm then replaced Sherlock and Carey, and continued to represent the minority investor partners and the derivative claim on behalf of the corporate entities.
Edward Joyce has since become Sherlock’s father in law. And Sherlock has since been elected as a judge in Cook County, assigned to cases in the Cook County circuit’s Law Division.
After ruling in favor of the plaintiffs against HCH, Judge Cohen ordered 20% of the funds to be paid to the Joyce firm. According to court documents, Joyce has also agreed to pay 7% of any fee award to Sherlock and Carey, or about $1 million each, for the work they performed in the first two years of the litigation.
The HCH defendants had pressed Cohen to recuse himself, and potentially transfer hearings over the attorney fee awards out of Cook County. They argued it was unseemly for a judge to award his colleague money from a judgment.
Judge Cohen, however, said he had no personal or business relationship with Sherlock. He also said he would not insert himself into a law firm’s internal decision of how to spend any fees that may be awarded.
They pointed to an earlier settlement with another named defendant, John Schaffer, which included $2 million in fees to the Joyce firm. They noted the judge had ruled the proceeds from that settlement should be setoff from the overall judgment.
With that setoff, they said, the individual minority investors would actually gain nothing from the judgment. And that means the only real money at stake is the $15 million in fees for the Joyce firm, HCH argued.
Judge Cohen, however, again ruled against HCH’s position in August 2021, entering final judgments totaling $87.3 million, to be paid into a common fund to benefit both the IBP and TB partnerships.
That judgment further confirmed a fee award of $15.87 million to the Joyce firm.
However, before that judgment, according to Munaretto’s lawsuit, Collins and Hulina created an agreement with the partnerships they control to “forgo collection of any derivative claim amounts from HCH.”
This was to “avoid circular payments,” from Collins and Hulina back to themselves, through the partnerships.
The complaint asserts attorney Rosenthal and the firm of Much Shelist assisted Collins and Hulina in drafting and executing that agreement, dated April 3, 2021.
The complaint notes Rosenthal and Much Shelist were hired to represent the partnerships.
In the complaint, Munaretto asserts that agreement violated the fiduciary duty owed by Collins and Hulina as majority partners, and Rosenthal and Much Shelist as attorneys, to the two partnerships.
The complaint claims the agreement would place the partnerships at “substantial tax liability” because it will mean about $70 million awarded under the final judgment would not be reported to the government as income.
They further specifically alleged Collins and Hulina were using the agreement to sidestep the judgment awarding the $15 million fees to the Joyce firm.
When the agreement was assailed in court, Much Shelist argued on behalf of the partnerships that the agreement was proper, because the partnerships “did not want to bear the responsibility for administering the collection of tens of millions of dollars from their general partners, only to be possibly distributed back to these general partners.”
Munaretto and his lawyers from the Joyce firm are asking the court to appoint a receiver to oversee the partnerships and enter judgment against Collins, Hulina, Rosenthal and Much Shelist. They are asking for unspecified damages from all involved, including the attorneys, “in an amount to be proven at trial.”