Trials & Litigation

Northwestern law prof’s federal case is ‘the definition of vexatious and wasteful,’ judge says in ordering sanction

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A federal judge in Colorado has ordered a professor at the Northwestern University Pritzker School of Law to pay attorney fees as a sanction for a federal action that is “the definition of vexatious and wasteful.”

In an April 5 decision, U.S. District Judge Daniel D. Domenico of the District of Colorado ordered the professor, Bernard Black, to pay attorney fees incurred by Black’s sister in opposing the action—which was an attempt to remove a motion filed in state probate court to federal court.

The probate court had found that Black improperly diverted funds from his sister while serving as executor of his mother’s estate. The probate court removed Black as his sister’s conservator, ordered him to repay her $1.5 million, and trebled the damages to a total of $4.5 million under a Colorado theft statute.

Domenico remanded the case to probate court and imposed the sanction as recommended in February by U.S. Magistrate Judge N. Reid Neureiter of Colorado. Domenico is an appointee of former President Donald Trump.

“This entire federal case has been the definition of vexatious and wasteful,” Domenico wrote. “It would warrant the sanctions Judge Neureiter recommended no matter the context. That the other side of the underlying matter is a disabled sibling seeking what court after court has recognized is rightfully hers does not change the result of this order, but, one must assume, will be taken into account by that higher authority when the time comes.”

Black wanted to remove a state court motion that sought to remove him as a trustee for the conservatorship estate of his sister, who is mentally ill and unable to manage her affairs. Black had argued that he could remove a motion, rather than an entire case, to federal court because it named new people and made new claims, essentially constituting a new lawsuit.

But Domenico said Black couldn’t remove the motion to federal court for two reasons. First, a motion can’t be removed to federal court under the removal statute, which applies to civil actions and proceedings. Second, removal isn’t allowed because the underlying matter—which involves probate issues—couldn’t have been brought in federal court.

Domenico cited a “probate exception” that bars federal courts from deciding matters regarding probate of a will and the administration of estates.

Domenico also said Neureiter did not err by looking beyond the filings in the removal case to determine whether Black was abusing the court system in general.

“Indeed,” Domenico wrote, “even a mere adjunct professor can recognize that part of Mr. Black’s strategy in dragging this case out and avoiding sanctions is to file discrete motions and actions in different courts around the country, effectively to see what he can get away with.”

Domenico is identified online as an adjunct professor at the University of Colorado Law School.

Black told the ABA Journal in a phone interview that he will “for sure” appeal the decision on the sanction, and it’s “highly likely” that he will appeal the decision barring removal.

Domenico “clearly got the law wrong on the probate exception,” and it’s not nearly as broad as the judge thinks, Black says. And Domenico “didn’t even pretend” to give the required de novo review of the magistrate judge’s findings, Black adds. He thinks that there is “solid ground” for appeal, even though the removal statute limits appeal rights.

Asked whether he could face the prospect of paying even more attorney fees if he loses on appeal, Black says he didn’t know.

“I haven’t thought about it,” he says. “But I think that the sanction is just so clearly wrong under the law that, look, I have to appeal it.”

He also pushed back against Domenico’s statements that the federal case is vexatious.

“It is a serious, well-thought out-effort to remove a case to federal court, so that we can get a fair hearing that we cannot get before the Denver probate court,” he says.

The dispute began after the mother of Black and his sister died in 2012. She gave two-thirds of her estate to a special needs trust for Black’s sister and a third to a trust for Black and his children, according to Neureiter’s prior decision.

But the mother’s brokerage accounts, which contained about $3.5 million, included payable-on-death benefits that required almost all the funds to pass directly to the sister, bypassing the trusts. Because of the designation, nearly a third of the money that should have gone to the trust for Black and his children was designated directly for the sister.

Black, acting as his sister’s conservator, disclaimed the money in the payable-on-death accounts, which meant that the funds reverted to the estate, Neureiter said. That meant that more than $1 million in funds went to the trust for Black and his children. He also moved a $300,000 Roth individual retirement account designated for his sister, Joanne Black, into new accounts in the name of his children, according to Neureiter’s opinion.

Black says he had spent all his money on litigation because his opponents don’t want to settle. He can’t pay the $4.5 million ordered by the probate judge.

“I’m a law professor; I’m not a hedge fund manager,” he says.

He owns a home with his wife and has retirement funds, but he has no plans to give them away, he says.

Black says he has offered to move the money that is in the trust that benefits him and his children into his sister’s special needs trust.

“The money that is left over when she dies would come back to my kids under the terms of the [special needs trust], so it’s not a crazy thing to do,” he says. “So, gee, I’m really trying to get away with something there, haven’t I?” he says sarcastically.

He is trying to keep the money in the trust for the beneficiaries, and that’s what trustees are supposed to do, he says.

In an email, Black told the Journal that references to “supposed lawsuits I’ve been filing here, there and everywhere” fail to state specifics and fail to explain why they weren’t well grounded. Black expanded on his on those comments in the phone interview with the Journal.

“It’s not like there’s a dozen of them,” he says in regarding suits that he filed elsewhere. “In substance, they are well grounded.”

He cited suits that he filed in Illinois and says he filed there because the Colorado probate judge “will rule against me and every member of my family no matter what.” One of the suits sought a decision that his disclaimer was valid and irrevocable under Illinois law.

Has the litigation affected his job at Northwestern University?

“Let me say yes, and I think that I’m not sure I would want to go into details in print,” Black says as his voice wavered. “I view that as a private matter. I am still employed, I am still tenured, I am still teaching.”

Hat tip to Law360, which covered Domenico’s decision.

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