Dillon v. Warren

CourtDistrict Court, N.D. Illinois
DecidedJune 12, 2018
Docket1:18-cv-00470
StatusUnknown

This text of Dillon v. Warren (Dillon v. Warren) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dillon v. Warren, (N.D. Ill. 2018).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION JEFF DILLON and DILLON ) TRANSPORT, INC., ) ) Plaintiffs, ) ) No. 18-CV-00470 v. ) Judge John J. Tharp, Jr. ) NAMAN, HOWELL, SMITH & LEE, ) PLLC; LARRY D. WARREN; ) MICHAEL TANNEN; and TANNEN LAW GROUP, P.C., Defendants. MEMORANDUM OPINION AND ORDER After Dillon Transport, Inc. was found liable for a $32 million verdict in a personal injury lawsuit in Texas, the trucking company and its principal, Jeff Dillon, sued the lawyers and law firms that provided the company legal advice in connection with the lawsuit. Dillon and the company filed their case in the Circuit Court of Cook County, alleging that due to the defendants’ professional negligence Dillon and Dillon Transport had to pay $2.5 million beyond their insurance coverage as part of a post-verdict settlement. Defendant attorney Larry Warren removed the case to federal court, claiming that two other defendants, Michael Tannen and Tannen Law Group, P.C. (“TLG”), had been fraudulently joined to destroy diversity. After removal, the plaintiffs moved to remand the case to the state court, arguing that the defendants have not established fraudulent joinder. The Court agrees. Because the defendants have failed to show that Tannen and TLG were fraudulently joined, complete diversity among the parties does not exist and the Court lacks subject matter jurisdiction over this case. Accordingly, the Court grants the plaintiffs’ motion to remand. BACKGROUND1 Jeff Dillon and the trucking company Dillon Transport are citizens of Illinois. Michael Tannen is a lawyer and the owner of the Chicago law firm Tannen Law Group, P.C. (“TLG”). Tannen and TLG are also Illinois citizens. Larry Warren is a lawyer for Naman, Howell, Smith & Lee PLLC (“NHSL”), a law firm located in San Antonio, Texas. Warren and NHSL are

citizens of Texas. At various times, Tannen and TLG (collectively, the “Tannen defendants”) and Warren and NHSL (collectively, the “Warren defendants”) provided legal counsel to Dillon Transport. In 2015, Dillon Transport was sued in Nueces County, Texas (the “Texas lawsuit”) for its role in an accident that caused permanent injuries to two individuals (the “Texas plaintiffs”) who were riding a motorcycle that collided with a Dillon Transport truck. The Texas lawsuit alleged that Dillon Transport was liable for its own negligence and vicariously liable for the negligent acts of its employee who operated the truck. Dillon Transport hired the Warren defendants to represent it in the case, up to the extent of the trucking company’s $5 million liability insurance coverage. In September 2015, Warren authored a pre-trial and pre-mediation evaluation report on

1 The facts are taken from the plaintiffs’ complaint and the declarations and affidavits submitted by the Warren and the Tannen defendants. On a motion to remand, the Court may consider the allegations in the plaintiff’s complaint and “summary judgment-type evidence,” such as affidavits and deposition testimony, so long as the evidence relates to jurisdictional facts rather than substantive facts going to the merits of the plaintiffs’ claims. See Peters v. AMR Corp., No. 95 C 588, 1995 WL 358843, at *3-4 (N.D. Ill. June 13, 1995); Momans v. St. John’s Nw. Military Acad., Inc., No. 99 C 8510, 2000 WL 33976543, at *3-4 (N.D. Ill. Apr. 20, 2000); CC Indus., Inc. v. ING/Reliastar Life Ins. Co., 266 F. Supp. 2d 813, 815-16, 817 (N.D. Ill. 2003). For the purposes of resolving the motion to remand, the Court accepts as true the factual allegations in the plaintiffs’ complaint and draws all reasonable inferences from those facts in favor of the plaintiffs. Denton v. Universal Am-Can, Ltd., 12 C 3150, 2012 WL 3779315, at *1 (N.D. Ill. Aug. 30, 2012); Blockinger v. Reach Med. Holdings, Inc., No. 09-cv-1805, 2009 WL 3617530, at *1 (N.D. Ill. Oct. 28, 2009). Because the plaintiffs’ complaint provides only the residence of each party, the citizenship of each party is taken from Warren’s notice of removal. None of the parties contested the citizenship allegations included in Warren’s notice of removal. the lawsuit, stating that it was defensible at trial and that the evidence indicated that the plaintiff was the sole cause of the accident. In October 2015, a mediation was held, but Warren made no serious offers of settlement to the plaintiffs. Thereafter, the Texas plaintiffs amended their complaint to add claims of gross negligence and institutional negligence against Dillon Transport. The plaintiffs also succeeded in barring the trial testimony of a critical defense

witness. On December 2, 2015, the Texas lawsuit went to trial, during which Dillon Transport suffered several setbacks. Closing arguments concluded on December 16, 2015, and the jury began its deliberations on that day. After deliberations commenced, the jury raised questions that indicated they were leaning toward a significant verdict in favor of the plaintiffs. Early the next morning, December 17, 2015, Warren contacted Dillon Transport and its insurance carriers to discuss a potential settlement offer to the Texas plaintiffs. Decl. of Larry Warren (“Warren Decl.”) ¶ 7, ECF No. 1-6. Later that day, in the evening, Dillon Transport executives contacted Tannen and requested his legal advice regarding the trial and the expected verdict. Aff. of TLG

and Tannen in Supp. of Pet. for Removal (“Tannen Aff. I”) ¶¶ 22-32, ECF No. 23-2. Tannen began working on the case that night. Id. Dillon Transport retained Tannen and TLG to review the case, to advise it of its exposure and risk above the $5 million liability insurance policy limit, and to take action to protect it against an adverse verdict.2 Comp. Counts I-IV ¶ 15, ECF No. 1- 1.3 While the jury continued to deliberate, Dillon Transport attempted to settle the case within its insurance policy limit, but the Texas plaintiffs rejected the company’s settlement offer.4 On December 18, 2015, the jury returned a $32 million verdict against Dillon Transport.

Dillon Transport submitted post-trial briefs and appeals, and engaged in post-trial mediation and settlement negotiations. See Aff. of TLG and Tannen in Resp. to Mot. for Remand (“Tannen Aff. II”) n.3-5, Exs. F-J, ECF No. 24-1. Tannen was involved in these efforts, which continued throughout 2016. See id. The company also issued a 50,000-page financial disclosure regarding its corporate assets. On December 19, 2016, about a year after the verdict, the parties reached a settlement that required Dillon and Dillon Transport to pay $2.5 million above the limits of Dillon Transport’s insurance coverage. In December 2017, Dillon and Dillon Transport filed a complaint against the Tannen defendants and the Warren defendants in the Circuit Court of Cook County alleging professional

negligence related to the Texas lawsuit. On January 22, 2018, Warren filed a timely notice of

2 In their complaint, the plaintiffs allege that both Dillon Transport and Dillon retained Tannen and TLG to provide these legal services. Tannen and TLG, however, state in their affidavit that they did not provide legal services to Dillon in relation to the Texas lawsuit. Tannen Aff. I ¶¶ 16-18, ECF No. 23-2. Dillon does not present any sworn statements or other evidence to dispute this assertion. 3 The plaintiffs’ complaint includes paragraphs numbered 1 through 29 under “Counts I, II, III & IV” and paragraphs numbered 1 through 38 under “Counts V, VI, VII & VIII.” Citations to the plaintiffs’ complaint, therefore, identify the counts and the paragraph number. 4 The complaint allegations, Warren’s declaration, and Tannen’s affidavits offer varying accounts of exactly when and how the settlement offer was extended. See Compl. Counts V-VIII ¶ 29, ECF No. 1-1; Warren Decl. ¶¶ 8-10, ECF No. 1-6; Tannen Aff.

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