Court Opinion

ID: 4664675
Source: CourtListenerOpinion
Date Created: 2021-03-03 22:00:33.003616+00
Date Added: 2024-06-11T08:02:37.511733
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                       To be cited only in accordance with Fed. R. App. P. 32.1

                   United States Court of Appeals
                                 For the Seventh Circuit
                                 Chicago, Illinois 60604
                                 Argued November 2, 2020
                                  Decided March 3, 2021

                                            Before

                            DIANE S. SYKES, Chief Judge

                            FRANK H. EASTERBROOK, Circuit Judge

                            DIANE P. WOOD, Circuit Judge

No. 19-3149                                                   Appeal from the United
                                                              States District Court for the
WILLIAM J. STEVENS,                                           Northern District of Illinois,
      Plaintiff-Appellee,
                                                              Eastern Division.
              v.
                                                              No. 15 C 1405
RICHARD SHARIF, et al.,                                       Thomas M. Durkin, Judge.
     Defendants-Appellants.

                                             Order

    We have for decision the final issues in a lengthy litigation that reached the Supreme
Court as Wellness International Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015). Richard Sha-
rif agreed to distribute some of Wellness’s products, but a dispute soon was litigated in
Texas. Sharif’s failure to cooperate in discovery led to a default judgment against him.
Seeking a way to avoid paying, Sharif filed a bankruptcy proceeding in the Northern
District of Illinois. There, too, Sharif failed to satisfy his obligations in discovery. One
consequence was a judgment in Wellness’s favor in an adversary proceeding that it had
commenced to collect some of what it owed from a trust that Sharif administered for his
No. 19-3149                                                                             Page 2

mother. The bankruptcy court held that the trust is Sharif’s alter ego and that its assets
may be used to satisfy Sharif’s obligations to Wellness.

    Wellness learned about the trust after Sharif attempted to conceal its existence. The
discovery took some doing. Wellness found that, when seeking a bank loan, Sharif had
represented that he owned assets worth more than $5 million. In the bankruptcy court
Sharif told the judge that he had lied to the bank and that the money actually belonged
to the trust. Having confessed to bank fraud, Sharif found it hard to explain why he
should not be treated as the assets’ owner for other purposes. And he scarcely tried to
do so, retreating into his pattern of failing to produce documents in discovery.

    Represented by attorney William Stevens, Sharif did not contend in the bankruptcy
court that these issues, which concern rights under state law, must be decided by a
judge holding tenure under Article III of the Constitution. See Stern v. Marshall, 564 U.S.
462 (2011). Nor did Stevens make such an argument in the briefs he filed on appeal in
the district court. Eventually, however, Stevens asked the district judge for leave to raise
this issue belatedly. The judge said no and affirmed the bankruptcy judge’s decision.
Sharif, again through Stevens, repeated this performance on appeal. His opening brief
did not mention Stern, but his reply brief relied on it. We observed that this normally
would forfeit the point, but we held that an argument under Stern may not be waived
or forfeited. Wellness International Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013). The
Supreme Court reversed, holding that waiver and forfeiture are possible. On remand
we held that all benefits of Stern had been forfeited by the omission from Sharif’s open-
ing brief. No. 12-1349 (7th Cir. Aug. 4, 2015) (nonprecedential disposition).

    Just as Sharif did not pay Wellness International, he failed to pay Stevens, who filed
this suit under the diversity jurisdiction seeking about $250,000 for legal services. Sharif
contended that he need not pay, because Stevens committed malpractice. He main-
tained that Stevens failed to file in the bankruptcy court vital documents in his posses-
sion. Sharif also contended that Stevens’s forfeiture of the Stern issue cost him a de novo
decision by a district judge. The district judge held a bench trial and found that Stevens
had turned over in discovery all of the documents that Sharif had supplied; Sharif’s
contrary assertion, the judge held, is not credible. The judge also held that the forfeiture
on appeal did not injure Sharif, because any district judge would have reached the same
conclusion as the bankruptcy judge did. The judge then held that Sharif must pay
$150,000 of Stevens’s bill. 2019 U.S. Dist. LEXIS 173200 (N.D. Ill. Sept. 30, 2019).

    The appeal has been complicated by language in the district court’s judgment mak-
ing the trust liable to Stevens. Sharif observes on appeal that Stevens did not seek any
relief against the trust, which was not a party to this suit (though it has since intervened
No. 19-3149                                                                          Page 3

to protect its interests). Stevens agrees with Sharif on this point. The parties should have
pointed this problem out to the district judge rather than waiting until appellate brief-
ing. Nonetheless, we grant their mutual wish to vacate this aspect of the judgment.

   Illinois requires the plaintiff in a legal-malpractice case (which is what this suit
turned into, with Sharif as counterplaintiff) to show, among other things, that counsel
breached a duty to the client and that this breach caused injury. See, e.g., Stevens v.
McGuireWoods LLP, 2015 IL 118652 ¶12 (S. Ct. Ill. Sept. 24, 2015).

   The district judge held that, by turning over to Wellness all of the documents fur-
nished by Sharif, Stevens fulfilled his duty in that respect. Sharif wants us to hold that
the judge should have believed him and disbelieved Stevens, but the judge’s findings
are not clearly erroneous. See Anderson v. Bessemer City, 470 U.S. 564 (1985).

   The district judge concluded that Stevens did breach a duty by raising the Stern ar-
gument too late. But the judge added that this did not injure Sharif, who was bound to
lose even if the initial decision had been made by a district judge rather than a bank-
ruptcy judge. That conclusion followed directly from the judge’s finding that Sharif
himself is responsible for the failure to produce documents in discovery. Given Sharif’s
defiance of multiple judicial commands to turn over information, his legal position was
doomed no matter who served as the judge. That conclusion, too, is not clearly errone-
ous. No more need be said.

   The judgment is vacated to the extent it requires the trust to pay anything to Stevens
and otherwise is affirmed.