Steven N.

Malitz Litigation Victories

Steven N. Malitz
Litigation Victories

The following are selected litigation successes in various areas of the law. These victories do
not include all of Mr. Malitz’ 60+ trials before juries or judges, arbitrations, or appeals to state
and federal courts of appeal.

Commercial Litigation

Obtained Rare Pre-Judgment Injunction Freezing Bank Accounts. Malitz obtained a unique
and valuable victory for his entrepreneurial client. The client in the business of purchasing
excess inventory from various businesses at large discounts, usually for cash. In order to raise
the capital for these transactions, the client solicits investors who receive interest on the
invested sums. Although the client may have substantial funds on deposit with one or more
banks, banks are slow or otherwise unable to immediately convert such deposits to cash.
Such cash is necessary to expeditiously close on these purchases before the opportunity
vanishes. The client engaged the services of a licensed private security firm and attorney
who represented that they had strong relationships with various banks which would allow
the speedy conversion of bank funds to cash to facilitate the inventory purchases the client
planned to make; that their bank accounts were “escrow” accounts such that our client’s
funds would be protected; as owner of a private security firm, one of the defendants had
the ability to safely and quickly transport the cash to closing; and, that after they completed
the cash conversion, the attorney defendant could handle the purchase transaction.
After wiring substantial funds into defendants’ escrow account, defendants contended
that a large portion of our client’s funds have been “seized” by the government and that
the remaining funds had been “frozen” by the bank. Defendants failed to furnish any
documentation supporting these claims. Having no luck recovering the funds, the client
turned to Malitz who instantly obtained a temporary restraining order freezing the bank
accounts. What was extraordinary about this result was that in order to freeze assets of a
defendant at the beginning of litigation and before entry of judgment, the plaintiff generally
must seek a pre-judgment attachment. Such an attachment requires sworn, detailed proof
of fraud and a bond in twice the amount of the assets to be attached. Therefore, in order
to attach assets before judgment, the claimant would be required to essentially post cash
in twice the amount to be seized. In order to avoid the inflexible bond requirement which,
given the sums at issue could prevent the client from obtaining effective and fast legal relief,
Malitz instead sought a temporary restraining order. In the context of a temporary restraining
order, the judge has discretion on whether or not to require a bond. In presenting the
motion for TRO, the judge agreed that no bond was required and entered the TRO freezing
the accounts. Another unique aspect of the case was that Malitz obtained the injunction
without first notifying the defendants, for fear that they would deplete the accounts if
notified of the motion for injunction. The sophisticated chancellor presiding over the case
entered the TRO without notice despite that he had only entered such an ex parte TRO once
before in his long legal career. After Malitz obtained the ex parte TRO, he expeditiously
notified all defendants at which time they engaged an attorney who appeared in court
for the second hearing on entry of the temporary injunction. At the second hearing, Malitz
persuaded the judge to preserve the injunction freezing the accounts and also permitted
them to take expedited discovery on the bank to determine if the funds were still on deposit.

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 Steven N. Malitz Litigation Victories

The case is currently pending as Malitz and team attempt to trace the assets. Cooper v.
Sedona and Wolverine World Wide (U.S. District Court for the Northern District of Illinois) Mr.
Malitz handled a multi-million dollar claim on behalf of a sales representative against several
publicly traded corporations accused of conspiring to induce breach of contract and
fraud. Mr. Malitz successfully argue that as soon as his client procured a large retailer as
an account, his firm improperly discharged him and failed to pay him commissions due for
pending and subsequent sales to the retailer. The matter settled for a substantial sum before
trial.

MCI Worldcom v. FSB (Circuit Court of DuPage County, Illinois) Mr. Malitz successfully
defended a merchant bank in a suit brought by a telecommunications carrier for breach
of contract. Despite the fact that the contract between the parties prohibited any claim
for setoff or damages by the merchant bank, Mr. Malitz persuaded the arbitration panel
that the provider, by arbitrarily interrupting service, breached the contract and the Federal
Communications and Illinois Public Utilities Acts. Mr. Malitz obtained a unanimous, zero-
liability finding in arbitration.

Sun Process Converting v. Knight Printing (Circuit Court of Cook County, Illinois) Mr. Malitz’
client was sued for failing to pay for printing services rendered. Mr. Malitz counterclaimed
for breach of warranty because the printing was defective and caused our client to lose
substantial business. Mr. Malitz thereafter moved for summary judgment and forced the
printer to drop its claim and to pay his client its lost profits.

City Metals v. Columbus Baler (Circuit Court of Fulton County, Illinois) Mr. Malitz represented a
California resident who was sued by an Illinois business for failing to pay for repair services to
equipment and for failing to purchase specially-manufactured goods. Mr. Malitz successfully
moved to dismiss the claim because the Illinois courts lacked jurisdiction over the California
resident, which effectively forever terminated the litigation.

General Electric v. Rahimi (Circuit Court of Cook County, Illinois) Our client, a Maryland
physician, was sued in Illinois for failing to pay for medical equipment his alleged partner had
leased from an Illinois business, and for failing to honor his personal guaranty to pay on the
lease. Mr. Malitz moved to dismiss for lack of personal jurisdiction and forum non conveniens.
On reconsideration, the motion to dismiss was granted and the lawsuit was dismissed with
prejudice.

Genera v. SAI (Circuit Court of Cook County, Illinois) Mr. Malitz represented a foreign
manufacturer of truck head lamps and accessories in a suit against a distributor which had
failed to remit several million dollars for goods sold and delivered to a truck manufacturer.
Mr. Malitz obtained the extraordinary relief of a pre-judgment attachment freezing the assets
of, and further spending by, the distributor. On the eve of trial, Mr. Malitz forced a sizeable
monetary settlement.

In re Mpower Communications (Circuit Court of Cook County, Illinois and U.S. Bankruptcy
Court, Delaware) Mr. Malitz represented a business in an Illinois state court fraud action
against a national telecommunications carrier. The carrier went bankrupt in Delaware. Mr.
Malitz filed a claim in the bankruptcy court. The carrier moved for disallowance of the claim,
arguing that its tariff prohibited our client from pursuing its fraud claim. Mr. Malitz produced
substantial documentation proving that the tariff provided by the carrier was inapplicable

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and that, regardless, the applicable tariff and law permitted our client to pursue its fraud
claim. Mr. Malitz persuaded the carrier to withdraw its objection to our fraud claim and
agree to pay the entire claim once judgment was entered in the state court action.
Thereafter in Illinois State court, Mr. Malitz forced a substantial settlement before trial.

Prairie State Screw & Bolt v. Opportunity Center-Easter Seal (Circuit Court of Cook County,
Illinois) Mr. Malitz defended a charity in a breach of contract action brought by a vendor
of fasteners. The charity, which is in the business of assembling fan devices, provided
the vendor with a sample fastener for reproduction. The vendor promised to calculate
the specifications of the sample and deliver 700,000 in quantity. The vendor incorrectly
calculated the specifications of the sample but the charity approved the vendor’s incorrect
specifications of the sample. When the charity rejected the fasteners upon delivery, the
vendor sued the charity for the contract price. Due to the mutual mistake between the
parties as to the correct specifications of the sample fastener, Mr. Malitz moved for summary
judgment and forced a nuisance settlement on the eve of trial. Mr. Malitz persuaded the
charity’s insurer to pay the settlement, despite its initial denial of coverage.

Imperial Zinc Corp. v. Able Casting (Circuit Court of Cook County, Illinois and Superior Court
of New Jersey) On behalf of a substantial creditor, Mr. Malitz obtained a judgment against
an insolvent debtor which owed its banks substantial sums and had given its banks a lien on
all its assets. Due to the bank liens, the debtor could pay no creditors. To repay the debt
owed to its banks, the debtor, by agreement with its banks, assigned its brass molds to a New
Jersey entity which was using the molds to produce goods. The debtor would then distribute
those goods and earn commissions from the New Jersey entity. The debtor’s commissions
from its sales of goods produced by the New Jersey entity with debtor’s molds, would
then be paid by the New Jersey entity directly to the debtor’s banks. Mr. Malitz seized the
debtor’s molds from the New Jersey entity, effectively halting production of goods and the
resulting commissions flowing to the debtor’s banks. Although the banks were fully secured
and had no obligation to pay the judgment creditor, Mr. Malitz nonetheless forced the
debtor’s banks to share the debtor’s commissions with the judgment creditor on a monthly
basis until the judgment was paid in full.

Imperial Zinc Corp. v. Electric Coating Technologies (Circuit Court of Cook County, Illinois)
Our client sold goods to a corporation which, unbeknownst to our client, was insolvent, was
about to be foreclosed upon by its lender, and was under contract to sell all its assets. The
lender conducted a foreclosure and sale of debtor corporation’s assets yielding no surplus
to satisfy the debt to our client. A new entity, consisting of several of debtor corporation’s
officers, directors and shareholders, purchased the assets at the sale. Mr. Malitz brought
a fraud suit against the debtor corporation; its officers, directors and shareholders; and,
the new entity. Mr. Malitz argued that the officers, directors and shareholders–whom had
personally guaranteed loans to the lender–caused the debtor corporation to purchase
goods from our client in order to artificially maintain and inflate its assets in the eyes of its
lender and the asset purchaser. Despite that the debtor corporation had no assets; none of
the officers, directors and shareholders of the old entity owned stock in the new entity; and
that the sale was commercially reasonable; Mr. Malitz forced a substantial settlement from
the individual defendants.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

Freight forwarder litigation (Circuit Court of Cook County, Illinois, U.S. Bankruptcy Court for
the Northern District of Illinois and U.S. District Court for the Northern District of Illinois) Mr.
Malitz obtained multiple, significant victories on behalf of our domestic and international
freight forwarder client. Our client provides air, ground and marine transportation services
to its customers both directly and through a network of independent contractor-licensees.
Our client licensed the coveted, exclusive territory of Northern Illinois to one such licensee.
The licensee violated the license agreement by directly competing with our client, by
diverting customers to a competitor, and by assigning its duties to an affiliated corporation,
all threatening the viability of the licensed business. Mr. Malitz obtained two, separate
injunctions prohibiting the licensee from interfering with our client taking over and operating
the licensee’s business, from conducting any further business under the license agreement,
and from conducting any business whatsoever in the freight forwarder business. To avoid
entry of the injunctions, the licensee filed for bankruptcy. Mr. Malitz had the bankruptcy
dismissed within 30 days, as a bad faith filing. To further avoid entry of the injunctions, the
licensee removed the matter to federal court. Mr. Malitz had the matter remanded to state
court within 24 hours. The injunctions stood and our client had the opportunity to rebuild its
business in its Northern Illinois territory.

Pearson v. Eyre (Circuit Court of Cook County, Illinois) Mr. Malitz defended sculptors in multi-
million dollar action for breach of contract, interference with contract and injunctive relief.
In connection with the suit, plaintiff, art collector and gallery owner, began defaming the
good name of the sculptors on the Internet. Mr. Malitz counterclaimed for commercial
disparagement and breach of contract for royalties owed. Mr. Malitz subsequently had
plaintiff’s action dismissed for discovery violations and for want of prosecution, and forced
plaintiff to pay out on the counterclaim.

Currency Exchange License Law Violation Litigation (Circuit Court of Lake County, Illinois)
Mr. Malitz lead a team of attorneys in achieving a significant victory in the first of a number
of such actions to be filed against rogue businesses acting as currency exchanges without
licensure by the Illinois Department of Financial Institutions. The Firm represents many Illinois-
licensed Community currency exchanges. On behalf of one such Community currency
exchange, Malitz sought injunctive relief and damages for unfair competition against a
business operating in its community as a currency exchange, but without a license to do so.
The unlicensed business was cashing checks for a fee in violation of the Currency Exchange
Act. The business claimed that it was exempt under the Act, because it was engaged in the
business of selling tangible personal property at retail--the so called “merchant’s exemption.”
Despite the claimed exemption, Malitz argued that the business had admitted under oath
that it was principally engaged in the business of wiring funds for a fee and, therefore,
could not meet the statutory definition of a merchant. The judge agreed and granted the
requested extraordinary injunctive relief restraining the business from cashing checks for a
fee or otherwise rendering any services requiring licensure under the Currency Exchange
Act. The injunction is now pending while the Firm attorneys litigate the money damages its
client is entitled to receive as a result of the unfair competition by the unlicensed business.

Employment Litigation

Defense of Employer in Race and Disability Discrimination Case; Forced Nuisance Settlement
before Discovery. Malitz defended a large metals manufacturer in a federal suit for
discrimination and retaliation based on disability and race. Employer hired employee to

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 Steven N. Malitz Litigation Victories

operate a furnace which produced molten material. Employee allegedly suffered an on-
the-job injury which limited his movement and his ability to lift objects. Employee alleged
that he was subjected to hostile, abusive, harassing and discriminatory conduct by his
supervisors which included the refusal to change employee’s employment status after
completion of a probationary period, undue scrutiny, refusal to provide employee with
reasonable accommodations, and more difficult assignments than his similarly situated non-
disabled, Hispanic coworkers. With an eye toward avoiding costly discovery and motion
practice for their employer client (which is endemic in defending such federal employment
suits), Malitz performed his own investigation which revealed that employee, pursuant to
published Job Description, “Must be able to lift 75 pounds” and be “Willing to do manual
labor”; employee complained of no back injury or other disability in his pre-employment
physical; employee’s probationary period was extended on one occasion, only, because
he was underperforming and required improvement in both the quality and quantify of
his work; employer terminated employee after a mere two months and 11 days due to his
repeated lack of productivity and overall poor job performance; and, employee was hired
and terminated by the same supervisor at employer. Armed with this damning information,
Malitz forced a settlement for nuisance money before any depositions were taken. This result
demonstrates the efficiency and “cost-conscious” litigation strategy employed to maximize
value to the client.

Electrical contractor employment litigation (American Arbitration Association) Mr.

Malitz defended a large Chicago contractor in an action for breach of employment
contract brought by a discharged employee. The employment contract--which was
drafted by another law firm--prohibited the contractor from firing the employee for any
grounds other than willful misconduct or gross negligence. The contract further provided
that if the contractor wrongfully terminated the employee, he would be entitled to his
entire compensation for the multi-year term of the agreement. The contractor, and its
shareholders, officers and directors, faced personal liability of $600,000 in compensation
under the contract, plus treble damages and attorneys’ fees pursuant to state employment
law. Despite the fact that the client’s employment practices liability insurance policy
expressly denied coverage for any breach of the employment agreement, Mr. Malitz
persuaded the insurer to defend and indemnify the claim, then forced a settlement from the
insurer for the malpracticing attorney who drafted the employment agreement, and finally
convinced the discharged employee to accept a low settlement. Mr. Malitz’ creativity
effectively saved the client’s business.

Sexual Harassment Litigation (Illinois Department of Human Rights/Illinois Department of

Labor) Malitz lead a team of employment and corporate lawyers in obtaining a favorable
settlement in a collective series of administrative charges filed by a shareholder and former
officer of a security consulting company. The shareholder and officer brought charges in the
Illinois Department of Human Rights (IDHR) and in the Illinois Department of Labor claiming
that she was unlawfully terminated and retaliated against for complaining about several
alleged acts of criminal activity and/or sexually harassing behavior, all of which allegedly
occurred years before she filed her charges. The shareholder also sought an exorbitant
amount in bonuses, distributions, commissions and for the repurchase of her shares. In reality,
the shareholder was justifiably terminated for repeatedly breaching her fiduciary duties
to the company and to her fellow shareholders. She was also directly responsible for the
drastic decline in sales in the division she managed. In the responsive pleadings, Malitz and
his team first demonstrated that the IDHR had no power to adjudicate her claims, and then

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 Steven N. Malitz Litigation Victories

painstakingly detailed all instances of her fiduciary breaches (which were supported and
documented in her own emails), as well as her many instances of poor work performance.
As a direct result of the voluminous evidence and arguments raised in the response, Mr.
Malitz forced the matter into a settlement posture, doing away with the need for a fact-
finding conference. And, at the settlement conference, the shareholder agreed to a huge
reduction in her claim, and the firm attorneys achieved a global settlement of her retaliation,
harassment, commission, bonus, wage and distribution claims together with a repurchase
of her shares. The total payout consisted of a nominal amount over what she was entitled
to receive for the value of her shares in the company. The efforts of Malitz and his team
enabled the client to effectively, quickly and economically sever the relationship with the
non-performing shareholder and officer.

General Discrimination Litigation (U.S. District Court for the Northern District of Illinois) Mr.
Malitz recently obtained summary judgment on a Title VII sexual harassment and retaliation
lawsuit filed against a large plastic bottle manufacturer in federal court. The plaintiff, a
current employee of the company, was the only female in its apprenticeship program.
While her work performance was poor, she was ultimately removed from the apprenticeship
program because she violated the attendance policy. In her complaint, however, the
plaintiff claimed she was denied training opportunities, disciplined more frequently than
males, and removed from the apprenticeship program because she was female. She
additionally alleged that she was subjected to a sexually hostile work environment and was
retaliated against for complaining to management about her treatment in the program.
After more than a year of extensive discovery (including 10 depositions and numerous
discovery-related motions), the district judge granted Arnstein & Lehr’s motion for summary
judgment on behalf of the company and dismissed all of the plaintiff’s claims against it with
prejudice. In so holding, the court ruled that the evidence was convincing that the plaintiff
was treated “more favorably, not less favorably” than male workers and that our client was
therefore “clearly” entitled to summary judgment based on the extensive record.

Successful Representation of Departed Employee in Large Claim for Compensation. Malitz

successfully represented an employee against his former employer and its decision-maker for
unpaid bonuses, equalized income taxes and other non-wage sums. The employee entered
into a written secondment agreement with his employer by which the employer assigned
the employee to its German subsidiary, where he would serve in Germany for an extended
period as a senior market maker and trade equity and index derivatives, and recruit and
train German traders. The agreement provided for the employee’s compensation and that
the employer would be responsible for equalizing employee’s income tax such the employer
would cover employee’s heightened “assignment related” excess German income tax
liability over and above any “hypothetical tax” owed by employee had he worked in the
United States during the secondment period. The employee contended that the employer
breached the contract, committed fraud and violated certain wage statutes by failing to
pay bonuses, investment income and heightened income tax assessed by German taxing
authorities. Besides these damages, the employee was required to take loans to pay the
tax liability, he lost an employment opportunity with another prestigious firm and he incurred
professional fees and penalties. In defense, the employer claimed that it did not agree
to equalize tax on bonuses, it paid the employee all sums to which he was entitled, the
employee caused his own tax liability by failing to pay income tax, and employee’s tax,
conversion and exchange rates were incorrectly calculated. After prolonged negotiations,
Malitz forced a substantial settlement at mediation without the expense of filing suit.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

Shareholder Litigation

Represented Corporation in Expelling Rogue Shareholder. Malitz has a knack for obtaining
fantastic results for his business clients in heated shareholder disputes. In one such matter,
Malitz took over for prior counsel who had failed to successfully defend a home healthcare
business in a suit brought by a disgruntled shareholder alleging waste and seeking corporate
documents. In a companion suit, the rogue shareholder’s wife--who was previously a
consultant and landlord of the company--sued for rent and claimed compensation for
services rendered. In reality, the shareholder sought an exorbitant sum for a buy-out of his
shares, and based his demand on an inflated valuation of the company. There were minimal
corporate documents and no shareholders agreement. As new counsel, Malitz immediately
stepped in and defended both suits, demonstrating that the shareholder and his wife
breached fiduciary duties to the company by failing to work and devote time and attention
to the company, by diverting patients to a competitor and by making unauthorized
expenditures. In beating down the buy-out demand, Malitz also showed that the valuation
was unreasonable and unsubstantiated. Despite the absence of any corporate documents,
Malitz quickly and ably forced a settlement whereby the Company repurchased the
shares for a minimal buy-out, the shareholder and his wife permanently separated from the
company, both suits were forever dismissed and all claims of any kind and type were forever
released. Thereafter, Malitz and team prepared the proper corporate documents to ensure
that all formalities were observed and to avoid future shareholder litigation. By achieving this
total separation of the shareholder and wife, and by removing the distraction and expense
of languishing litigation, the company was able to begin an intense marketing campaign
and reclaim its market share.

Represented Officers Bound by Restrictive Covenants in Separating from Majority

Shareholder, and Maintained Office, Employees and Assets of Business. Malitz represented
four officers of a corporation who were held hostage by the purported sole shareholder
of a real estate and mortgage brokerage business. Although the officers were promised
shares in the business, the corporate documentation was lacking. Further, the officers were
prevented from practicing their professions elsewhere due to onerous restrictive covenants
contained in one-sided employment agreements. As a result, the officers were working
tirelessly to cultivate another’s business for nearly no remuneration or stake, and feared that
their departure and competition would result in suit. Malitz and team devised and executed
a plan by which the officers lawfully separated from the business; terminated liability from
third parties or from the state for acts or transactions done in the name of the business;
staved off eviction from the office suite; obtained a novation of the lease through extended
negotiations with the landlord thereby maintaining the coveted office suite; maintained
the employees and assets of the business; and continued in the practice of their profession.
Through their efforts, the Malitz team enabled their clients to start their professional lives anew
without the stress or specter of viable suit from the owner of the former business.

Successful Prosecution of Claim for Seller against Buyer to Force Closing on Stock Purchase.
Malitz represented a prominent business seller in contentious litigation pending on three
fronts. The client --through prior counsel --contracted to sell his multi-tenant office building
and business located in the building. After closing on the purchase of the building, buyer
took control of the business and barred our seller client from physical, computer and
financial access to the business, while simultaneously refusing to close on the purchase of
the business or make agreed payments pending the closing. Buyer contended that the

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 Steven N. Malitz Litigation Victories

stock purchase agreement made closing on the purchase of the business contingent on
seller obtaining licensure for buyer to operate the business. However, by law, a license
could not be issued to buyer until buyer owned at least 25% of the stock in seller’s business.
Meanwhile, the stock purchase agreement did not require seller to transfer any stock until
buyer paid for it. So, as drafted, the contract documents put the parties in a “Catch-22.”
Buyer also refused to close, claiming substantial credits for alleged defects in the building.
For two years, our client was denied access to the business he owned. Malitz then entered
the cases, made demand for an immediate closing and sought an emergency injunction
preventing buyer from denying seller access to his business pending the requested court-
ordered closing. Realizing that he could no longer stave off closing, buyer agreed to close
on the purchase of the business. In a compact period, Malitz amended the suit drawn
by prior counsel to now seek specific performance of buyer’s obligations under the stock
purchase agreement to force him to close , reform the agreement to provide for an escrow
of stock and purchase price pending the issuance of buyer’s license to operate the business,
injunctive relief due to buyer’s denying seller access to the business, and substantial money
damages for buyer’s failure to pay seller the stock purchase price or any interest on th e
purchase price pending the closing. Once Malitz’ litigation strategy forced buyer to close,
Malitz and team then revised the stock sale transactional documents to accurately reflect
the agreement of the parties, researched, counseled and documented the complex tax
ramifications and realities of a stock sale which pended for two years where the buyer-
-to seller’s exclusion--enjoyed the benefits and burdens of the business for that period,
documented myriad other collateral issues bound up in this nearly-failed transaction, and
then obtained a court order requiring the recalcitrant buyer to appear in court and attend
the closing in the judge’s chambers. This exhibition in creativity, teamwork , depth in various
practice areas and rapid-fire reaction to a would-be financial disaster enabled the business
client to obtain the benefit of his bargain and move on to new and better ventures.

Shareholder litigation (Circuit Court of Cook County, Illinois) Mr. Malitz defended a client
who resigned as manager of an LLC and transferred his membership interest to a third
party. Claiming that our client’s exit from the LLC was unauthorized, a disgruntled member/
manager sued our client, the other members and managers of the LLC and the LLC itself,
seeking to undo our client’s resignation and transfer of interest, and for oppression, fraud,
waste and breach of fiduciary duty. Mr. Malitz obtained successive dismissals of the
complaint and finally forced the claimant to dismiss our client from the suit.

Real Estate Litigation

Protection of Buyers of Real Estate; Obtained Cancelation of Real Estate Contract Due to
Developer Breach and Fraud. Malitz and his team obtained an amazing result for their real
estate investor clients. In 2005, the clients contracted to purchase investment condominiums
in the robust Las Vegas real estate market offered by a large Chicago developer. Both
before and after contract, the developer’s agents and marketing brochures promised that
the development would consist of two, identical towers, and that the purchase prices for
tower I units would be far less than the purchase prices for identical tower II units. In light of
the higher purchase prices for tower II units, our clients were promised that they would garner
tremendous upside in purchasing units in tower I. Developer’s agents further promised that
the development would be a stand-alone residential community (which is rare in Las Vegas),
with no condotels, gaming or restaurants. In late 2007 upon receiving notices to close, the
clients learned that a second tower would not be constructed and that the tower II land

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had been sold off for condotel, restaurant and gaming. The clients then sought assistance
from Malitz in terminating the real estate contracts. The real estate contracts signed by our
clients plainly read that pre-contract promises from the developer and its agents were not
part of the contract, that the clients were purchasing one unit in only one tower, and that
the developer had the right to build or not build at its whim. Finally, the contract documents
provided that if our clients refused to close, they would forfeit their earnest money and
lose the right to purchase the units. In demanding rescission, Malitz argued that had the
developer disclosed to the clients that tower II would not be built and that their “neighbors”
would be a casino, hotel and restaurant, they would have rescinded long ago, before
the deadline to do so expired. Malitz’ team further argued that the real estate contracts
required that the developer give notice of such material modifications to the offering such
that our clients could rescind. Malitz further argued that as a result of massive cost overruns,
as far back as 2005 the developer knew that tower II would not be built. Under threat of
bringing a class action suit for fraud, Malitz persuaded one of the developer’s officers to
meet with the clients, and thereafter forced the developer to terminate the real estate
contracts and refund a large portion of the earnest money. In obtaining this result, the
clients avoided purchasing condominium units which had drastically fallen in value, and
paying large mortgages, taxes and assessments on what turned out to be poor investments.
Further, in receiving back their earnest money, the clients now had substantial sums to invest
in other projects. Finally, the clients were the only ones who avoided closing on units in a
doomed market.

Protected Rights of Junior Lender in Foreclosure Litigation. Malitz and his team obtained a
very favorable settlement for their junior lender client, even though the value of the senior
mortgage far exceeded the secured property’s value. Simply put, this victory was the
result of keen attention to detail. Following is a brief statement of the facts which led to this
victory.

On August 24, 2006, the senior lender loaned a substantial sum to the borrower and took
back a mortgage secured by the subject property. One day later, the same borrower
obtained a loan from our client and gave a second mortgage. However, the client “won
the race” to the recorder’s office, recording its mortgage on September 5, 2006. The senior
lender did not record its mortgage until October 2006. Thereafter, the borrower defaulted
on the two loans and left the country, leaving only the subject property to compensate
the two lenders. As a result of the property condition and the downturn in the real estate
market, the value of the subject property was less than the amount owed to the senior
lender.

The senior lender filed its foreclosure suit on December 29, 2006 through its first set of
attorneys. The senior lender’s attorneys failed to name our client as junior lender because
they thought our client had a senior mortgage based on its prior recording of its mortgage.

Thereafter, on April 6, 2007, Malitz filed a foreclosure suit on behalf of our client, naming
the senior lender as a defendant. The senior lender appeared through a second set
of attorneys, who defended the case by arguing that the senior lender had priority.
Specifically, the senior lender contended that our client had actual notice of the first
mortgage (even though the client recorded its mortgage first). Discovery revealed that this
was likely a valid affirmative defense, and if forced to go to trial, the client almost certainly
would have been relegated to a junior position (i.e., it would receive no money at a
foreclosure sale).

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That said, when Malitz filed the client’s foreclosure action, they both expected the senior
lender’s two sets of attorneys to consolidate the two foreclosure cases and press the
“priority” defense. However, they never did so and it became clear to Malitz that the senior
lender’s various attorneys had made a critical error. Immediately, Malitz and team devised
a strategy to extend the client’s foreclosure suit so that the senior lender would foreclose its
own mortgage, without foreclosing the client’s mortgage. Malitz sought to force the senior
lender to “shoot itself in the foot.”

The strategy worked perfectly. Unbeknownst to the senior lender’s second set of attorneys,
on March 4, 2008, the first set of attorneys foreclosed the senior lender’s mortgage, without
touching or impacting the client’s mortgage. Malitz sprang this fact on the second set of
attorneys, who were left scrambling and immediately requested a settlement conference.
Of particular note, the senior lender had spent the previous year adamantly refusing to
entertain any settlement talks. The settlement conference resulted in a very favorable
buyout for the client, which most likely had no right to any payout on its mortgage.

There were a number of important lessons from this case—the key one being that mortgage
foreclosures are not routine matters. Many banks and attorneys believe that foreclosures are
“form” cases. However, treating a foreclosure as routine can have devastating results. In
this case, the senior lender and its attorneys made a number of mistakes. First, they failed to
properly review all of the documents on the subject property’s title tract. Second, the senior
lender and its attorneys failed to communicate. All of the information needed to protect the
senior lender could have been obtained with a simple phone call, or even a review of public
records on the Internet. The Malitz team seized on these failures, and turned them into a
victory for the client.

Versgrove v. Pawlenko (Circuit Court of Lake County, Illinois) Mr. Malitz represented the
purchaser of a farm in Northern Illinois who sought to develop the coveted property.
Through former counsel, our client purchased the farm from a distressed seller, whose family
had owned the farm for many years. Post-closing seller held over and Mr. Malitz sought to
evict the seller from the farm. Seller evaded service requiring service by special order of
court. After seller’s motion to quash service was denied, seller then claimed that without
disclosure and consent, both he and purchaser were represented by the same attorney in
the real estate transaction, requiring rescission. When his client’s ownership was challenged,
Mr. Malitz successfully tendered the matter to the title insurer. After extensive multi-party
discovery (and disciplinary proceedings against the attorney who allegedly acted as
undisclosed dual agent), Mr. Malitz forced the title insurer to pay the seller additional sums
such that Mr. Malitz’ purchaser could retain the farm and realize his investment.

Gordon v. Gustafson (Circuit Court of Cook County, Illinois) Our client, through its former
counsel, mistakenly conveyed a portion of real property to a purchaser that our client never
intended to sell and purchaser never intended to purchase. Despite our client’s demands,
purchaser refused to surrender the property, claiming that the parties had intended the
transfer. Mr. Malitz sued to reform the deed and forced the purchaser to deed the property
back to our client.

Chicago Pizza litigation (Circuit Court of Cook County, Illinois) Mr. Malitz represented
a landmark Chicago pizzeria in a suit against its landlord which claimed that the lease
between the parties was invalid. Mr. Malitz proved that the lease was valid and obtained an
injunction restraining the landlord from evicting our client.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

Major real estate investment litigation (Circuit Court of Cook County, Illinois and Illinois
Appellate Court, First District) Mr. Malitz represented a purchaser under a multi-million
dollar commercial real estate contract in a suit against the contract seller where the
contract seller attempted to nullify the contract, claiming that our client failed to deposit
the purchase price in an escrow account controllable by the contract seller. Mr. Malitz
obtained a temporary restraining order, and an extension of that order, preventing the
contract seller from exercising any rights in its real estate contract with the underlying seller,
and from assigning to a third party its rights in its contract with our client. Both the temporary
restraining order, and the order extending it, were affirmed on two separate appeals. The
matter subsequently settled with our client consummating the purchase of the property.

Home defect litigation (Circuit County of Lake County, Illinois) Mr. Malitz represented a home
buyer in a lawsuit against an architect/construction manager. The home buyer contracted
with the architect/construction manager to demolish an existing structure, and design and
build a new home. The as-built home contained numerous, hidden design and construction
defects which the architect/construction manager refused to correct. The matter settled for
a substantial sum at mediation enabling our client to correct any defects.

Mortgage fraud litigation (Circuit Court of Cook County, Illinois) Mr. Malitz defended a
client in a suit where the plaintiffs sought a ruling that they were the exclusive titleholders to
certain real estate. Plaintiffs sought to rescind the series of transactions which vested title
in our client and, in turn, in our client’s purchaser. The plaintiffs sought to restore title in their
name, claiming that our client and other previous and subsequent purchasers fraudulently
purchased and sold the property, and unjustly profited from such purchases and sales. Mr.
Malitz successfully moved to dismiss several claims. However, the current title holder (which
purchased the real estate from our client) sued our client seeking repayment in the event
that it was required to return the property, or pay damages, to the plaintiffs. Mr. Malitz
successfully tendered the suit to the client’s title insurer who had initially denied coverage but
then agreed to fully defend and indemnify our client. The matter ultimately settled with no
payment by, or exposure to, our client.

Developer fraud litigation (Circuit Court of Cook County, Illinois) Mr. Malitz obtained a
victory for purchasers of a fully-rehabilitated Victorian mansion. After closing, our clients
discovered numerous, serious structural and other construction defects in their new home.
Mr. Malitz sued to rescind the purchase, or, alternatively, for money damages, due to the
construction defects and fraud committed by the builder. Despite contending that the
home was essentially defect-free, after numerous mediation sessions the builder agreed to
repurchase the property for the purchase price plus a premium based on appreciation. The
builder further agreed that if it did not timely repurchase the property, judgment would be
entered against the builder and its principals, personally, for a significant sum, to correct the
construction defects. When the builder failed to repurchase the property, Mr. Malitz sought
judgment, forcing the builder to pay the clients the substantial, agreed sum to repair the
property.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

IP Litigation

Fortune 500 litigation (U.S. District Court for the Northern District of Illinois) Mr. Malitz
represented a publicly traded corporation which contracted in writing for photography
services in connection with its marketing promotion. The photographer sued for copyright
infringement due to our client’s use of the photographs in national advertising, claiming the
use exceeded the license granted to our client. Despite the specter of a multi-million dollar
copyright damage award, Mr. Malitz sought summary judgment and forced a nuisance
settlement just before ruling.

“You Don’t Know Jack” litigation (U.S. District Court for the Northern District of Illinois) Mr.
Malitz defended a game manufacturer in a trademark infringement suit brought by the
maker of the computer game, “You Don’t Know Jack.” The plaintiff claimed that our client
copied every aspect of its game, which our client vigorously denied. Despite plaintiff’s
enormous money demand and request for injunctive and other relief, Mr. Malitz forced a
minimal settlement before trial.

HIT Litigation (U.S. District Court for the Northern District of Illinois) Mr. Malitz successfully
prosecuted a trademark infringement suit on behalf of a Chicago businessman. Mr. Malitz’
client conducted motivational seminars in interstate commerce under a registered service
mark. A competing motivational seminar business--of international repute and with world-
famous speakers--was using the same mark worldwide and served a cease and desist
letter on our client. Mr. Malitz filed a preemptive infringement suit seeking temporary and
permanent injunctive relief, and money damages. Before trial, Mr. Malitz forced a sizeable
monetary settlement and obtained extraordinary equitable relief for the client, catapulting
his motivational speaking business.

Business Tort Litigation

Glenbrook North High School Hazing Litigation (Board of Education of Northfield School
District #225, Circuit Court of Cook County, Illinois) Mr. Malitz successfully defended
numerous senior high school students present during the hi-profile hazing incident in criminal,
administrative and civil proceedings.

Major retailer litigation Circuit Court of Will County, Illinois): Mr. Malitz defended a major
retailer in a defamation action. Plaintiff sued the retailer and its asset protection associate
for slander per se when the asset protection associate allegedly telephoned plaintiff’s
supervisor and accused plaintiff of stealing. Despite the fact that two, unbiased non-parties
(one of whom being another asset protection associate) corroborated plaintiff’s allegations,
and plaintiff demanded an exorbitant sum from the retailer, Mr. Malitz forced a minimal
settlement before trial, uncovering evidence that plaintiff did indeed steal and that the asset
protection associate may not have been working on the day of the alleged call.

Geiger v. AA&A (Circuit Court of Cook County, Illinois) Mr. Malitz successfully represented
real estate developer clients in a malpractice action against their insurance brokers and
insurer. The clients sought vacancy coverage for real estate they were rehabilitating and
selling. Although the insurance brokers represented that coverage was bound, they failed to
procure coverage leaving the clients unprotected when the property was destroyed by fire.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

Because the brokers failed to procure coverage, the clients were required to borrow money
to complete the rehabilitation of the property, they lost profits on their subsequent sale of
the property, and they lost profits on another property they contracted to purchase (and
intended to rehabilitate) when they lacked the funds to close. The brokers denied liability,
and argued that the clients’ damages were speculative and were not caused by broker
negligence. In court-annexed mediation, Mr. Malitz garnered a large settlement in excess of
the limits of the policy the brokers should have procured.

Insurance broker litigation (Circuit Court of Cook County, Illinois, U.S. District Court for
the Northern District of Illinois and U.S. Court of Appeals for the Seventh Circuit) Mr. Malitz
successfully represented a business owner in a malpractice action against his insurance
broker and insurer. The client sought long term disability coverage for his total compensation
from his business consisting of his salary and rent charged to his business, which occupied
the building he owned. Although the insurance broker represented that coverage was
bound, he failed to procure the proper coverage leaving the client unprotected when
he became ill. Suit against the insurer for breach of insurance contract was unsuccessful
at the trial and appellate levels given the deference afforded insurers under ERISA. In the
separate state court action against the broker, the broker denied liability, arguing that he
never represented he could obtain the requested coverage and that our client sustained no
damages because he sold his building for a profit. After receiving a summary determination
that the proceeds from the client’s sale of his building were collateral source payments, Mr.
Malitz garnered a large settlement in court-annexed mediation which enabled his client to
convalesce and retire with security.

Corporate investigation litigation (Circuit Court of Cook County, Illinois) Mr. Malitz
successfully defended his client against a large damage claim for intentional interference
with contract, assault, false imprisonment and invasion of privacy. Mr. Malitz’ nationally-
recognized client provides forensic investigation, loss prevention, consulting, interview
and interrogation training services to national retailers, and to the FBI and other federal,
state and local offices. A consulting firm entered into a multi-million dollar consulting
contract with a national retailer. Our client was retained by the retailer to investigate
one of its own corporate officers, who was suspected of accepting secret payments in
exchange for entering into the consulting contract and approving large invoices for such
services. After our client rendered its investigative report, the officer was removed and
the consulting contract was terminated. The consultant sued the retailer for breach of
contract, and our client for intentionally interfering with the consulting contract, causing
its termination. Additionally, one of the consultant’s employees sued our client for assault,
false imprisonment and invasion of privacy in connection with the investigation. Our
client’s insurer denied coverage for these claims due to a policy exclusion for allegations
of intentional acts. Regardless, and after extensive negotiations, Mr. Malitz persuaded the
insurer to pay for our client’s defense. Through extensive discovery (including the deposition
of a TV personality), Mr. Malitz all but proved that the client had conducted a lawful
investigation and that the consulting contract was justifiably terminated for reasons having
nothing to do with the investigation. On the eve of trial, Mr. Malitz then forced the consulting
firm to accept a small settlement, and convinced the insurer to pay the entire settlement.
Further, the claims for assault, false imprisonment and invasion of privacy were dismissed,
with no payout to the consultant’s employee. This victory vindicated the rights of the client
which had undoubtedly conducted a lawful and accurate investigation and fulfilled its
duties under the law.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

Condominium Litigation

315 Marengo Condominium v. Farooqui (Circuit Court of Cook County, Illinois) Mr. Malitz
represented plaintiff condominium association in an injunction action against defendant unit
owner who was caught performing indecent acts in the condominium and then fought with
the condominium board president. Mr. Malitz persuaded the court to enter an injunction
confining defendant to his condominium which forced him to move from the building.
On the eve of the closing, Mr. Malitz then successfully opposed defendant’s motion for
temporary restraining order in which he requested that the court compel the condominium
to issue a paid assessment letter and nullify a special assessment levied by on defendant’s
unit for attorneys’ fees incurred in bringing the injunction action.

33 East Cedar Condominium v. Harris (Circuit Court of Cook County, Illinois) Mr. Malitz
represented plaintiff condominium association in an injunction action against a Broadway
star who was caught attempting to break into another condominium unit with a knife and
who assaulted a condominium employee. Mr. Malitz persuaded the court to enter an
injunction confining defendant to her condominium which forced her to move from the
building.

Oakbrook Towers Condominium Association v. Lalagos (Circuit Court of DuPage County,

Illinois) Mr. Malitz represented a condominium association in an injunction action against
a unit owner who unjustifiably recorded a 57-page document, entitled “Health Hazard”,
against title to all 367 units in the condominium. The recording of this document forced
condominium sales and purchases to be cancelled. In a matter of first impression, Mr.
Malitz persuaded the court to order the DuPage County Recorder to permanently expunge
the document from the public record, and after trial, obtained sizable compensatory and
punitive damage awards against the unit owners who recorded the document.

Broker Litigation

Schultz v. Ott (Circuit Court of Lake County, Illinois and Second District Appellate Court)
Plaintiff claimed that Mr. Malitz’ real estate broker client committed fraud by misrepresenting
which school district served the home plaintiff purchased. The school district was crucial
to the plaintiff home buyer as her daughter was a scholar. Mr. Malitz obtained summary
judgment by persuading the court that there was no fraud because which school district
served a particular property was a matter of public record. Summary judgment was
affirmed on appeal to the Second District Appellate Court.

(Various Illinois state courts)

Plaintiffs claimed that our clients committed statutory and common law fraud, negligent
misrepresentation, engaged in the unauthorized practice of law and violated the license law
by failing to disclose certain defects in real property plaintiffs purchased. Mr. Malitz either
won outright dismissals or summary judgments, or forced minimal settlements before trial.

Guardianship Litigation

Mr. Malitz represented one brother in a contested guardianship suit. The client’s mother
appointed him power of attorney for healthcare and property, to the exclusion of his brother.
For many years, the client faithfully handled mother’s financial and healthcare affairs.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com

 Steven N. Malitz Litigation Victories

The client’s brother filed a petition with the probate court alleging that mother required a
guardian due to our client’s abuse of the powers of attorney. Mr. Malitz successfully moved
to dismiss the petition for guardianship arguing that mother did not need a guardian in light
of the powers of attorney executed by mother in favor of the client and that, nonetheless,
the client had fulfilled his duties as agent for healthcare and property. Six months later,
the client’s brother filed a petition to revoke the client’s powers of attorney arguing for the
second time that the client abused the agency. Mr. Malitz obtained the dismissal of this
second petition arguing that in dismissing the first petition, the court had found that the client
had fulfilled his duties as agent. Three months thereafter, the client’s brother filed yet another
petition to revoke the powers of attorney, arguing the same abuse by the agent. Mr. Malitz
won the dismissal of this petition. After having suffered three defeats in court, the brother
filed another suit against the client seeking reimbursement for healthcare services rendered
to mother. In connection with this suit, the brother subpoenaed his mother for deposition.
Mr. Malitz had the subpoena quashed, under threat of sanctions against the brother and his
counsel. Through his efforts, Mr. Malitz succeeded in preserving mother’s wishes regarding
her care.

Steven N. Malitz 312.876.7134 p | 312.876.6234 f | snmalitz@arnstein.com | www.arnstein.com