IL. Procedural History

On August 14, 2001, ZCM moved for a temporary restraining order and a preliminary
injunction against the funds involved in this motion. (R. 2-1.) On August 22, 2001, Judge
Lindberg granted ZCM’s motion for a temporary restraining order, and scheduled a hearing on
the preliminary injunction motion for October 3, 2001. (R. 7-1) On September 28, 2001, ZCM
and the PI Defendants agreed to a preliminary injunction and submitted an agreed injunction
order to Judge Lindberg. On October 2, 2001, Judge Lindberg entered the agreed preliminary
injunction enjoining the PI Defendants from transferring or disposing of any funds “obtained
from, resulting from or traceable to, the redemption of the interest of Plaintiff[s] .. . in MJD,
MIFA or M.J. Select Global, Ltd. . . . or any other interest of Plaintiff[s] or any affiliate of
Piaintiff[s], and from interfering with any effort by Plaintiff, or any affiliate of Plaintiff, to
redeem its direct and indirect interests in M.J. Select.” (R. 43-1, 4 1.) The Preliminary
injunction ordered that the P.I. Defendants “shall redeem at the earliest possible date any and all
other investments of Asset Allocation, L.P., and shall transfer the proceeds from such
redemption, as well as any funds in any bank accounts of Asset Allocation, L.P., to a segregated
interest-bearing escrow account . . . and hold such funds . . . in the Escrow Account pending a
final resolution of the case on the merits, or to Plaintiff.” (/d. { 2.) Furthermore, “[a]ny
proceeds received from partial or whole redemptions, or otherwise, including assignments of
underlying investments, of any interests in the Funds must be transferred immediately to the
Escrow Account on the terms specified above for other transfers to the Escrow Account, or to
Plaintiff.” (/d., 13.)

On August 1, 2002, the Intervenors moved to clarify or modify the October 2, 2001
Preliminary injunction. The Intervenors were not a party to the October 2, 2001 preliminary

4



The Interveners have failed to satisfy their preliminary injunction burden of establishing
irreparable harm. Accordingly, they are not entitled to a modification of the August 1, 2001
preliminary injunction order.*

CONCLUSION

ZCM’s Motion for Reconsideration of Order Granting Emergency Motion of Intervenor
Limited Partners to Clarify or Modify Preliminary Injunction is granted. The Intervenors’
motion to modify the preliminary injunction is denied. The court's order of August 1, 2002
modifying the preliminary injunction is hereby vacated, and the order of October 2, 2001 is

reinstated.

Dated: December 19, 2002 ENTERED:

United States District Judge

* The PI Defendants and Defendants Robert Paszkiet, Jean Manning, Joseph Allamian, Martin
James & Company, Inc. and Asset Allocation have also moved with ZCM for approval of the
transfer of $2 million of the funds subject to the preliminary injunction. Although this motion is
moot in light of the findings above, given the reasoning above and because ZCM showed that it
was entitled to the funds, the Court would have granted the joint motion.



arguments.”). Accordingly, a court generally will entertain a motion for reconsideration only
where the moving party can establish that the law or facts have changed significantly since the
issue was presented, or the court has “patently misunderstood a party,” has “made a decision
outside the adversarial issues presented,” or has “made an error not of reasoning, but of
apprehension.” Bank of Waunakee v. Rochester Cheese Sales, 906 F.2d 1185, 1191 (7 Cir.
1990).
IL Modification of the August 1, 2002 Order

ZCM seeks reconsideration of Judge Lindberg’s August 1, 2002 order’ on the basis that
Judge Lindberg did not apprehend all of the issues surrounding the Intervenors’ motion because
ZCM did not have an opportunity to raise the arguments before Judge Lindberg. Indeed, Judge
Lindberg noted that he should have heard ZCM’s arguments before entering the order.

Specifically, ZCM argues that the Court should reconsider the August 1 order because:
(1) the Intervenors do not have standing to challenge the Preliminary injunction; and (2) the
Intervenors cannot meet the standards for the injunctive relief they received through Judge
Lindberg’s modification to the Preliminary injunction. The Intervenors counter that (1) Judge
Lindberg intended the August 1 order merely clarified, rather than modified, the Preliminary
injunction and therefore was not affirmative injunctive relief:. (2) they have standing to seck
clarification of the Preliminary injunction; and (3) they can meet the requirements for injunctive

relief. The Court agrees with ZCM.

3 In addition, ZCM and the Allamian Defendants have moved the Court for approval of the
transfer of funds currently subject to the preliminary injunctions pursuant to the terms of a
settlement agreement between them.



injunction order. Noting that Plaintiff ZCM and certain Defendants were in settlement
negotiations, the Intervenors argued that Plaintiffs and Defendants “may attempt to dissipate the
frozen funds by written agreement but without court approval or notice to Intervenors.” On
August 1, 2002, Judge Lindberg granted the Intervenor’s motion and ordered that “all funds and
assets resulting from, or traceable to, the redemption of the interests of Plaintiff or any affiliate
of Plaintiff, including funds and assets frozen thereunder and currently in escrow, should be
considered under the control of the Court and shall not be transferred or disposed of unless by
order of the Court unless all issues relating to the funds have been resolved.” (R.196-1.)

Plaintiff did not have a chance to respond to the motion prior to Judge Lindberg’s ruling.
Accordingly, Plaintiffs filed a motion to reconsider the August 1, 2002 order granting the
Intervenors’ emergency motion to clarify or modify the preliminary injunction. On August 14,
2002, Judge Lindberg held a hearing regarding ZCM’s motion to reconsider. During the
hearing, Judge Lindberg noted that he “probably should not have entered [the order] without
hearing an objection from the other side.” (R. 230-1, at 17). Judge Lindberg ordered the parties
to meet and attempt to resolve their issues. Before Judge Lindberg ruled on Plaintiffs’ motion to
reconsider, the case was transferred to this Court by executive order.

ANALYSIS

I. Legal Standard

“Motions for reconsideration serve a limited function: to correct manifest errors of law or
fact or to present newly discovered evidence.” Publishers Res., Inc. v. Walker-Davis
Publications, Inc., 762 F.2d 557, 561 (7" Cir. 1985) (quotation omitted); see also In re Oil Spill
by “Amoco Cadiz” Off Coast of France on March 16, 1978, 794 F.Supp. 261, 267 (N.D. Il.
1992) (“motions to reconsider are not at the disposal of parties who want to ‘rehash’ old

5



The Intervenors seek to assert claims against ZCM. They clearly cannot show irreparable
harm regarding these claims. It is undisputed that ZCM is backed by the credit of Zurich
Financial Services Group of Switzerland, and could satisfy any judgment against it. ZCM
acknowledges that it “could easily return the $2 million to Asset Allocation upon a successful
adjudication of any such claim.” (R. 239-1, at 11.)

In addition, the Interveners have asserted a claim against Asset Allocation for
approximately $1.1 million in their cross claim. The Interveners argue that they would be
irreparably harmed if the frozen funds are transferred to ZCM because Asset Allocation would
not have sufficient funds to satisfy an adverse judgment on the Intervenors’ cross claim.
Irreparable harm might be established by showing that a party might be judgment-proof at the
end of the litigation. See Cordis Corp. v. Medtronic, Inc., 780 F.2d 991, 996 (Fed. Cir.1985).
The Intervenors, however, have not proven that Asset Allocation will be judgment proof at the
end of this case. This is especially true in light of the proposed settlement involving the funds at
issue here. Under the settlement, ZCM will receive
$2 million of the funds at issue and Asset Allocation will keep $420,000. (R. 239-1, at 2-3). In
addition, ZCM will pay Asset Allocation any amounts that it recovers in excess of $12,375,000
from MJ Select Global and/or Six/Sigma LLC.

Furthermore, Asset Allocation is a limited partnership. Under Ilinois law, the general
partners of Asset Allocation are liable for the debts of the limited partnership. 805 ILCS
§ 210/101. The Interveners fail to allege or establish that the general partner does not have

sufficient funds to satisfy any judgment against Asset Allocation.



‘Minute Order ttm (06/97) .

United States District Court, Northern District of Illinois

Namcotantenaete | Amy I. St. Eve Stn Soe Oe

CASE NUMBER 01 C 6250 DATE 12/19/2002

CASE ZCM Asset Holding vs. Allamian

TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}
DOCKET ENTRY:
(1) Qo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due __.
(3) a Answer brief to motion due___. Reply to answer briefdue__.
(4) im} Ruling/Hearingon___—sset for__——_at
(5) QO Status hearing[held/continued to} (set for/re-set for]on__set for at
(6) Qo Pretrial conference[held/continued to] [set for/re-set for] on set for at_
(7) oO Trial[set for/re-set for] on at
(8) im) [Bench/Jury trial] [Hearing] held/continuedto___—_at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4m) DLocal Rule 41.2. OFRCP4i(a)(1) CI FRCP41(a}(2).

Qo [Other docket entry] Enter Memorandum Opinion and Order. ZCM’s Motion for Reconsideration

of Order Granting Emergency Motion of Intervenor Limited Partners to Clarify or Modify Preliminary
Injunction is granted. The Intervenors’ Motion to Modify the Preliminary Injunction is denied. The
Court’s Order of August 1, 2002 modifying the preliminary injunction is hereby vacated, and the Order

of October 2, 2001 is reinstated.

(a1) @ (For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required. umber of notices
Notices mailed by judge’s staff.
Notified counsel by telephone. DEC 2 0 2002
a | Docketing to mail notices.
Mail AO 450 form. funod 1amisia-sa
Copy to judge/magistrate judge. ETT)
courtroom ZTL Nd GE T3020} suomi soce
THY deputy's
initials Bt
Date/tithe received it ;
centrat Clerk's Office railing deputy initials



As an initial matter, the Court finds that on its face the August 1, 2002 Order materially
modifies the preliminary injunction. Indeed, Judge Lindberg’s August 1, 2002 Order withdrew
the PI Defendants’ ability to transfer the designated assets directly to ZCM.

Because the Intervenors seek to modify the October 2, 2001 Order, the Intervenors must
satisfy the standards for a preliminary injunction. See Shared Services, Inc. y. Shared Tech.,
Inc., No. 90 C 753, 1990 WL 72098, at * 3 (N.D. Ill. May 14, 1990). Specifically, the
Intervenors must initially demonstrate that they: (1) have a reasonable likelihood of success on
the merits of their underlying claim; (2) have no adequate remedy at law; and (3) will suffer
irreparable harm without the preliminary injunction. Anderson v. U.S.F. Logistics (IMO), Inc.,
274 F.3d 470, 474 (7" Cir. 2001); Re/Max North Central, Inc. v. Cook, 272 F.3d 424, 429-30 (Ce
Cir. 2001). Once these elements are met, the Court will analyze any irreparable harm that the
preliminary injunction might impose upon the party against whom the injunction is sought and
whether the preliminary injunction would harm or foster the public interest. Jd.; see also AM
General Corp. v. Daimler Chrysler Corp., 311 F.3d 796, 803 (7" Cir. 2002). If the Intervenors
fail to satisfy any element of this standard, the preliminary injunctive relief originally granted by
Judge Lindberg on October 2, 2001 should not have been modified.

The Court will first address the issue of irreparable harm. The Intervenors must show
that they will suffer irreparable harm if the modification to the injunction is denied. Ineparable
harm is harm “which cannot be repaired, retrieved, put down again, atoned for . . . [T]he injury
must be of a particular nature, so that compensation in money cannot atone for it.” Graham v.
Medical Mut. Of Ohio, 130 F.3d 293, 296 (7" Cir. 1997) (quotations and citations omitted). See
also Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 (7" Cir. 1984) (irreparable
harm is “harm that cannot be prevented or fully rectified by the final judgment after trial”).

7


partnership with Martin James Capital as its general partner.!

The Intervenors are John Mather and Susan Mather, individually and as Trustees of the
Peninsula Ear Nose & Throat, Facial Plastic Surgery Pension Plan Trust; Salateen international
Ltd; The James F. Boughner Foundation; and 766347 Ontario Ltd. (the Intervenors”). The
Intervenors are limited partners in Defendant Asset Allocation who elected not to redeem their
investments in the limited partnership.

ZCM alleges that it purchased common shares and limited partnership interests from
some of Defendants. ZCM argues that Defendants made material false representations in
connection with the sale of these securities to Plaintiffs. In April 2001, ZCM alleges that they
attempted to redeem their interests in most of these securities, but Defendants refused. Instead,
ZCM alleges that Defendants fraudulently converted and transferred ZCM’s interests to
themselves by liquidating certain of Plaintiffs’ limited partnership interests and placing the
proceeds in accounts for Defendant Asset Allocation and/or transferring the proceeds to other
Defendants.

The Intervenors filed a cross claim against Asset Allocation for breach of contract
seeking recovery of their investments in the limited partnership. These investments amount to

approximately $1.1 million. They also seek to assert a counterclaim against ZCM2

' Other defendants are not relevant to this opinion.

? On August 13, 2002, the Intervenors sought to amend their cross claim to assert claims for
fraudulent transfer and constructive trust against ZCM and others. (R. 205-1.) ZCM and others
filed a motion strike the cross claim. This motion is still pending.

3



BACKGROUND
I. The Parties

Plaintiff ZCM Asset Holding Ltd. is a Bahamian corporation and an affiliate of ZCM Inc.
that operates as a holding company for offshore investments. ZCM Inc. is a Delaware
corporation that is one of the world’s largest custodians of hedge funds. ZCM MFC is a
Delaware corporation and a wholly owned subsidiary of ZCM Inc. Finally, Plaintiff ZCM Asset
Holding LLC is a Delaware corporation and a wholly owned subsidiary of ZCM Inc. that
operates as a holding company for offshore investments. (These five plaintiffs are collectively
referred to as “ZCM”).

Defendant Martin J. Allamian is a citizen of Ilinois and the president and sole owner of
Defendant Martin James Capital Management, Inc. (“Martin James Capital”). Martin James
Capital was a general partner of Defendants M.J. Diversified Fund, L.P. (“MJD”) and M.J.
Financial Arbitrage, L.P. (“MJFA”) and the investment manager of M.J. Select. Martin James
Capital is also the general partner and a limited partner of Defendant Asset Allocation.
Defendant Andrew M, Allamian is counsel and business advisor to Martin James Capital and
Martin Allamian. Defendant James J. Manning is the senior vice president of Martin James
Capital and a limited partner of Asset Allocation. MJD was an Illinois limited partnership with
Martin James Capital as its general partner. MJFA was a Nevada limited partnership with
Martin James Capital as its general partner. (Collectively, Martin J. Allamian, Andrew M.
Allamian, James J. Manning, Martin James Capital, MJD and MJFA are “PL. Defendants.”)

Finally, Defendant Asset Allocation Fund, L.P. (“Asset Allocation”) is an Illinois limited



IN THE UNITED STATES DISTRICT COURT DOCKETED
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION DEC 2 0 2002

ZCM ASSET HOLDING COMPANY (BERMUDA)
LIMITED, et al.,

Plaintiffs,
v.
MARTIN JAMES ALLAMIAN, et al.,
Defendants,

No. 01 C 6250

JOHN H. WALDOCK, solely as Trustee of the JOHN H.

)

)

)

)

)

)

)

)

)

)

)
WALDOCK TRUST U/A/D 12/1/88, et al., ) Honorable Amy J. St. Eve
)
Counter-claimants/Cross-claimants, )

)

v. )

)

ZURICH CAPITAL MARKETS INC., et al., )
)

Counter-defendants, )

)

and )
)

M.J. DIVERSIFIED FUND, LP., et al., )
)
)

Cross-defendants.

MEMO PINIO ID ORDE:
Plaintiffs have moved for reconsideration of Judge Lindberg’s August 1, 2002 order
modifying the October 2, 2001 preliminary injunction order. For the reasons set forth below,

Plaintiffs’ motion is granted.

an