State law conversion claim allowed for improper disposition of attorney's fees

In Deborah K. Ebner, as Chapter 7 Trustee for the Bankruptcy Estate of Santilli Law Group, Ltd.Plaintiff, v. Alfred Vano, Case 17-00293, (Bankr. N.D. Ill. 06/15/18), Judge Cox of the Northern District of Illinois held that an attorney that improperly deposited a settlement check from his former law firm, was liable to the former law firm (through its bankruptcy trustee) for the value of the check under a state law conversion theory. Trustee, Deborah Ebner, was appointed trustee for the bankruptcy estate of Frank Santilli, after Mr. Santilli filed a chapter 7 proceeding. Mr. Santilli's firm specialized in personal injury and wrongful death cases, as well as Worker's Compensation matters. The defendant, Alfred Vano, was an employee of the law firm. The Trustee sued Mr. Vano, after he deposited a settlement check for $333,000 into his own IOLTA account. The settlement check was for a case that belonged to the law firm (the wrongful death lawsuit stemming from the deadly 2003 stampede at Chicago's E2 night club), and thus Judge Cox held that Mr. Vano exercised unauthorized and wrongful control over the debtor's personal property. The case is notable because the Court held that typically a conversion claim does not exist for intangible rights, but that the property converted was the settlement check, which was a form of commercial paper and thus subject to a claim.

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