CAPITAL GROUP, INC. v. Gaston & Snow, 91-C-442.

778 F. Supp. 1011

The CAPITAL GROUP, INC., a Domestic Corporation, and Douglas Gowan, an individual, Plaintiffs, v. GASTON & SNOW, a Foreign Partnership, and Richard Santagati, an individual, and Roger D. Feldman, an individual, Defendants.

No. 91-C-442.

United States District Court, E.D. Wisconsin.

December 9, 1991.

Richard A. Kranitz, Grafton, Wis., for plaintiffs.

Douglas Gowan, pro se.

Friebert, Finerty & St. John by David S. Branch, Milwaukee, Wis., for Santagati and Feldman.

DECISION AND ORDER

MYRON L. GORDON, Senior District Judge.

This is a civil action brought on behalf of a Wisconsin corporation named "The Capital Group, Inc." and Douglas Gowan, who is the president and sole shareholder of the corporation. The defendants are a large Boston, Massachusetts, law partnership and two of its individual partners. The lengthy complaint alleges some fifteen claims under the following basic theories: breach of contract, fraud, negligent misrepresentation, and racketeering. At its core, the complaint charges that the defendants enlisted the consulting services of the plaintiffs, who provided "substantial and valuable" litigation support services for the defendants, who have failed to pay the plaintiffs as agreed.

The action was assigned to another branch of this court, Senior Judge John W. Reynolds, presiding, where it is now pending. However, on July 25, 1991, in my capacity as duty judge, I presided over a hearing on the plaintiffs' application for the emergency appointment of a receiver.

In support of the application, the plaintiffs proffered affidavits of Mr. Gowan, who stated his belief that the defendant law partnership was in the midst of dissolution — suffering from employee and shareholder defections, cutting its staff and other operating costs, and making "accommodations" with its creditors. Mr. Gowan stated his belief that the firm was "technically insolvent on a cash basis." However, to corroborate his personal beliefs, Mr. Gowan proffered a single newspaper article entitled "Summer Turns Chilly at Gaston & Snow," published in the Boston Globe on July 9, 1991. The article, itself rank hearsay, consisted almost exclusively of hearsay statements by various persons inside and outside of the defendant law partnership.

The defendants proffered two affidavits of Roger D. Feldman, a partner with the defendant law partnership who had been the chairman of its executive committee, and an affidavit of Cameron Read, who is also a partner of the defendant law firm. In contrast to those of Mr. Gowan, Mr. Feldman's sworn representation was based upon direct personal knowledge. Cf. Rule 602, Federal Rules of Evidence. Mr. Feldman represented that certain partners have withdrawn but that the partnership is not "splitting up," that the present lawsuit is the only pending action against the partnership by any creditor or alleged creditor, and that the firm is "current in its obligations to employees." Mr. Feldman further stated that the plaintiffs' reference to pending lawsuits against the defendant law partnership is inaccurate...