Exchange National Bank v. Abramson

45 F.R.D. 97, 12 Fed. R. Serv. 2d 606, 1968 U.S. Dist. LEXIS 12727
District Court, D. Minnesota·Decided August 20, 1968·No. No. 3-68 Civ. 24·Published·Cited by 17 cases

Opinion

NEVILLE, District Judge.

This case raises the interesting question as to whether an intervenor who has filed a counterclaim against the plaintiff prior to an involuntary dismissal of plaintiff’s complaint is entitled to proceed thereafter on his counterclaim, which independently meets jurisdictional requirements, despite plaintiff’s objection. Several collateral and subsidiary questions first must be answered to arrive at the conclusion reached by this court to the effect that the intervenor here has such a right and may proceed to trial on his counterclaim.

When this matter first came before this court, plaintiff Exchange National Bank of Chicago argued vehemently and at great length that the threatened filing of a suit in Chicago, Illinois for $10,-500.000. 00 by the intervenor, the Receiver for American Allied Insurance Company, would cause it irreparable harm. See Exchange Nat. Bank of Chicago v. Abramson, 278 F.Supp. 849 (D. Minn.1968). Now that the intervenor has obliged and has filed his $10,500,000 suit in the District of Minnesota by way of a counterclaim, plaintiff is arguing just as vehemently and lengthily that such is an improper venue and the counterclaim legally will not lie. It now in effect urges that suit, if to be brought, should be venued in Chicago. The court cannot blame the plaintiff nor its counsel for not wanting to be sued, but it is obvious that sooner or later plaintiff is going to become a defendant and be required to answer in a suit. This court believes that the District of Minnesota is the proper forum and that the case should proceed here forthwith on the Receiver’s counterclaim. A short review of the history of the case is necessary to an understanding of the court’s ruling.

Plaintiff is a national banking institution with its principal place of business at Chicago, Illinois. Defendant Abram-son is an attorney at law and a citizen of Minnesota. American Allied Insurance Company (Allied) is incorporated under Minnesota law and maintained its principal place of business therein. Its court appointed Receiver, Homer A. Bonhiver, also is a Minnesota citizen.

In 1965 a federal grand jury sitting in Minnesota returned indictments against some 14 or more individuals for alleged criminal activity involving the failure and ultimate insolvency of Allied. Three former employees of the plaintiff Bank were among those so indicted. Abramson, an attorney at law and a member of the Minnesota Bar, had been an Assistant United States Attorney when the indictments were returned, though he was not involved with the matter at that time. Subsequently, as a Special Assistant United States Attorney he aided and assisted the United States Attorney in prosecuting the criminal case. He sat through the entire lengthy trial held at Bismarck, North Dakota, culminating in verdicts of acquittal. The charges there were in the nature of criminal fraud and in part related to various transactions between the Exchange National Bank and Allied. Numerous lesser charges were also made. Abramson returned to the private practice of law in Minnesota upon completion of the criminal trial. His knowledge of the Allied-Exchange Bank transactions apparently motivated the Receiver to offer Abram-son a position as co-counsel in winding up Allied’s affairs. Thereafter, he was duly appointed as an attorney for the Receiver by the Ramsey County Court and [100]*100has since served as a co-counsel. Abram-son proceeded to give legal advice regarding divers matters, one of which culminated in a proposed and so-called “draft complaint” venued in Federal District Court in Illinois naming the Receiver as plaintiff and the Exchange National Bank (plaintiff here) as defendant. This was submitted as a courtesy between counsel to advise of the nature of the action to be instituted and apparently as a part of preliminary settlement negotiations. The Receiver gave notice that suit would be commenced upon expiration of a given period of time. Prior to such date, however, and on January 25, 1968, the plaintiff Bank filed its complaint in the above action with this court in Minnesota naming Abramson as defendant attaching a copy of the “draft complaint” and seeking injunctive relief for an alleged continuing violation of Canon 36 of the American Bar Association Canons of Professional Ethics. The complaint sought relief enjoining Abram-son:

“his agents, servants, employees and attorneys, and all persons in active concert or participation with him or with them who receive actual notice of the order * * * ”
from (1) “filing in the United States District Court in Chicago or elsewhere the draft complaint * * * or any other complaint involving any of the same matters alleged in said draft complaint and prepared by or with the assistance (whether direct or indirect) of Defendant;”
(2) “using in any manner adverse to Plaintiff, or disclosing or transmitting to any other person or persons for such use, any and all documents, correspondence, Grand Jury minutes, evidence, knowledge, information or background materia) learned about, examined or obtained by Defendant * * *”
and (3) “further participation as or with counsel or co-counsel for Homer A. Bonhiver as Receiver * * * and whether such participation be in the form of attendance at meetings, appearances in Court, advice or assistance (whether direct or indirect) to counsel or co-counsel of record, or otherwise.”

Abramson duly answered, opposing the action and counterclaims for damages for abuse of process. This counterclaim is not now before this court.

Plaintiff’s motion for a temporary injunction was heard on January 27, 1968. Allied, by and through its Receiver, appeared at this hearing and requested leave to participate in the proceedings as an intervenor. Such leave was conditionally granted with the plaintiff reserving its objection until subsequent production and review of the intervenor’s proposed answer and counterclaim. Intervenor served the same upon the plaintiff on January 31, 1968. The counterclaim therein sought declaratory relief against the plaintiff to the effect that Abramson was properly employed and was not in contravention of Canon 36. Without objection of plaintiff, the Receiver was allowed to intervene as a matter of right pursuant to Rule 24(a), Fed. R.Civ.P., by an order of this court dated January 31, 1968.

By order filed February 5, 1968, this court denied plaintiff’s motion for a temporary injunction. The intervenor, Allied, on February 5, 1968 filed an “Amended Answer and Counterclaims,” restating in substance the prior answer and counterclaim, but additionally alleging a counterclaim against the plaintiff seeking recovery of $10,500,000.00 damages. This counterclaim is substantially identical to the so-called “draft complaint” annexed as Exhibit D to the plaintiff’s complaint in this action against [101]*101Abramson. This counterclaim was stated not to have been submitted to plaintiff’s counsel or the court with the original proposed answer and counterclaim because of a stipulation between counsel prohibiting such filing before the expiration of an agreed time lapse. Like the “draft complaint”, the counterclaim alleges rights to recover damages for losses occurring in the Allied-Exchange Bank transactions which formed the basis of many charges underlying the criminal trial at Bismarck.

Plaintiff filed an appeal and an aplication for stay and injunction pending appeal from the order of this court filed January 5th and denying temporary injunctive relief. See Exchange Nat. Bank of Chicago v.

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Exchange National Bank v. Abramson, 45 F.R.D. 97, 12 Fed. R. Serv. 2d 606, 1968 U.S. Dist. LEXIS 12727 (mnd 1968).

45 F.R.D. 97 (Exchange National Bank v. Abramson) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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