January 23, 2018

Research Plus Strategy Delivers a Win in Commercial Litigation Case

Sam Schumer’s deft skills in litigation, investigatory research, and case strategy delivered two wins for one of his clients.

The case involved two business partners who jointly owned a portfolio of restaurant franchises located throughout the Chicagoland area. The partners’ relationship significantly deteriorated over personal issues, with the partners ultimately agreeing to part ways through an equity buyout that closed in 2016.

Pursuant to the buyout deal, the equity seller, who later would become Sam’s client, agreed to sell his 50% interest in the restaurant portfolio to the other partner. The deal included a seller-financing component; therefore, the sale agreement required the buyer to tender installment payments for the equity paid out over two years.

The Buyer Skipped the Final Payment
As Sam recalled, “The buyer, our opposition, essentially welched on the deal before the last installment was due and never paid that final installment.” The aggrieved party was not happy, contacted Sam, and decided to sue.

That was in 2018. Fast forward to Oct. 20, 2023.

Sam describes the outcome. “We moved for summary judgment on the claim involving the buyer’s failure to make the final payment due under the stock sale contract. We were awarded summary judgment in the amount of $335,000 in principal, almost $90,000 in prejudgment interest, and over $50,000 representing a one-time 15% late fee pursuant to the parties’ contract. So that claim is now fully adjudicated in my client’s favor.”

In addition, there was more good news that day for Sam’s client—and for Sam.

A Fraudulent Email
Sam recounted what happened. “After taking and defending several depositions and conducting voluminous amounts of investigation and research, including the issuance of a subpoena to Microsoft, I became convinced that one specific email produced by the opposition in discovery was ‘problematic’ and likely fraudulently doctored or forged by the equity purchaser,” said Sam.

As part of his legal strategy, and leaning on the intensive investigative work, Sam filed a motion for sanctions against his opposition. This motion asserted that the email in question was, in fact, fraudulently manufactured by the equity purchaser for purposes of defending the lawsuit and undermining Sam’s client’s claims. After extensive briefing of the sanctions issue, as well as multiple oral arguments in court before the judge, the court agreed with Sam.

The court ultimately entered a sanction award of slightly more than $27,000, which constitutes the entirety of the costs and fees expended in connection with the sanctions motion and the related investigatory work, to be paid by the opposing party directly to MPS. The court’s order granting the motion mandated that the sanction be paid within 30 days, which it was. In addition, and most importantly for the future of the case, the court held that the subject email is now barred from use as evidence in the lawsuit.

“My motion for sanctions was sufficient for the court to find that the email was problematic and could not be used at the trial. It is no longer usable or admissible as evidence in the case. This was a nice victory for my client, especially because the parties’ equity sale contract does not have an attorneys’ fee provision. My client would have been out of pocket for that $27,000 and change.”

Where do things stand now? Sam and his client are due back in court in January to continue litigating the balance of the claims remaining in the case. But, at present, Sam’s opposition already owes his client nearly $475,000 based on the entry of summary judgment, and that sum accrues interest at 9% per annum until paid in full.

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