Neal, Gerber & Eisenberg partners Marshall Eisenberg and Earl Melamed last week struck back at Mary Bucksbaum Scanlan, heir to a founder of mall owner General Growth Properties Inc., who sued them and their Chicago-based law firm for alleged malpractice.
Bucksbaum in August sued a general trust and the lawyers as officers of that trust in the U.S. District Court for Northern Illinois, alleging that they "breached their fiduciary duty of loyalty" when the trust entered certain loan transactions and purchased General Growth shares that dropped in value as the company moved toward an April bankruptcy.
Bucksbaum alleged that the moves cost trusts in which she is a beneficiary hundreds of millions of dollars.
Eisenberg and Melamed, represented by Chicago-based Novack & Macey, said in their Oct. 28 motion to dismiss that the court lacks jurisdiction because the trusts for which Bucksbaum was a beneficiary weren't required to make any principal or interest distributions to her. Stephen Novack, who also represents the law firm, couldn't be reached for further comment.
"There are no circumstances under which plaintiff has a right to compel a distribution to herself of any of the trusts' assets," the defendants wrote in urging dismissal of three of the four counts lodged against the lawyers and law firm.
Sidley Austin lawyers representing the general trust argued in a separate motion to dismiss the only other outstanding count that there was no breach of duty by the general trust. The alleged breach -- specifically that Eisenberg had conflicts of interest in being legal counsel of the general trust and counsel to and a shareholder of the General Growth -- was "entirely proper under terms of the trust," they said.
The lawsuit is a "study in sensationalism" that is "peppered with gratuitous allegations," they added. Sidley Austin attorney Rachel Niewoehner declined comment.
Bucksbaum, who is represented by lawyers at Chicago-based Schiff Hardin, is seeking unspecified monetary damages, disgorgement of fees paid to Neal Gerber and removal of the trustee.
She is the daughter of the late Martin Bucksbaum, who with his brother Matthew expanded General Growth into a major real estate firm that eventually became a publicly traded company.