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Hilbert-Menard legal brawl showing no sign of let-up

September 20, 2014

A year and a half after John Menard ousted Steve and Tomisue Hilbert as the managers of the private equity firm they all started, attorneys for the two sides continue to fight bitterly for every tactical advantage in a dozen lawsuits between them.

John Menard and his wife, Fay, tried desperately this summer to avoid being deposed—hiding in their house from sheriff’s deputies and treating gruffly the private firms hired to serve them a subpoena, according to attorneys for the Hilberts.

Steven Hilbert Hilbert

But attorneys for the Menards say the Hilberts are trying to “humiliate” and “demonize” the Menards. They argue the Hilberts have unleashed aggressive tactics because they no longer control the businesses the private equity firm acquired—with Menard money—and which were their chief source of income.

Menard, 75, the founder of the Menards hardware store chain, has accused his longtime friend Steve Hilbert, 68, of losing hundreds of millions of dollars while managing MH Private Equity, the $400 million investment entity created in 2005.

But the Hilberts say the real reason Menard sued them was because he tried to extort sex from Tomisue, 44—even sex that would have included Fay—and that Tomisue rebuffed him.

The main business case, which Menard filed, is pending in a court in Eau Claire, Wisconsin—where the Menards live. A judge in that case allowed John Menard to take control of MH Private Equity in March 2013, while the two sides argue over whether either one breached their contract with the other and, if so, how much money they are owed.

The case about sexual extortion is in Hamilton County, Indiana—the Hilberts’ home turf.

John Menard Menard

In April, Hamilton County Judge Steve Nation stayed Tomisue Hilbert’s lawsuit against John Menard, because most of the legal claims she made are very similar to the issues being sorted out in Wisconsin. Nation, however, allowed the two sides to still conduct “discovery,” including the taking of depositions.

But the two sides couldn’t even agree on that. They fought for three months—including more than 22 hearings, motions and court orders—before John and Fay Menard finally sat down in late August to be deposed for four of the 12 lawsuits pending between the two sides.

The Hilberts’ attorneys hired four separate firms to deliver a subpoena to Fay Menard and even had the sheriff’s office try to deliver it. Ron Cramer, the Eau Claire County sheriff, declared in an affidavit that, “It appears that she/they may be avoiding service.”

Linda Pence, the Indianapolis attorney for Tomisue Hilbert, said the attorneys for Menard were being “obstructionist” and employing a “scorched earth” litigation strategy that called for filing as many lawsuits and as many motions as possible, in order to wear down their opponents.

“This has been horrible. Just to get two lousy depositions,” Pence told Nation in June.

Two months later, while the two sides were still fighting about the depositions, Pence accused the attorneys for Menard of employing a series of delay tactics—including “manufacturing” a conflict-of-interest issue with the Wisconsin law firm that does estate planning for Fay Menard. Fay Menard is considering filing a lawsuit against that firm, Ruder Ware. It did not return a phone call seeking comment.

“I thought that I had seen everything in my life to try to get out of deposition,” Pence told Nation in August.

But lawyers representing the Menards say it is Pence who made an issue out of nothing, demanding the depositions be conducted immediately for the case in Hamilton County—even though it was stayed. They assert—and Pence denies—that Pence has been angling to add Fay Menard as a plaintiff in Tomisue Hilbert’s lawsuit against John Menard.

The Menard attorneys also accuse Pence of escalating the conflict, “harassing” Fay Menard by telling the subpoena-servicing firms to make repeated visits to the Menards’ house.

“She wants to demonize Fay Menard and John Menard,” said Michael Freeborn, a Chicago attorney representing Menard, in a June hearing with Nation.

“And she says that we’ve engaged in obstruction,” Freeborn said, an assertion he contends is contradicted by the fact Tomisue Hilbert’s side has received more than 10,000 pages of documents in the Wisconsin litigation.

The animus has been particularly high between Pence and Michael Wukmer, an Ice Miller LLP attorney who joined the case in July as Fay Menard’s counsel. Wukmer declined to comment for this story.

On July 30, Wukmer sent a letter to Pence, saying Fay Menard could not do her Aug. 19 deposition unless the Hilbert side hired an interpreter to be there and translated all documents used in the deposition into Syrian Arabic at least 10 days before the deposition. Fay Menard is from Syria.

In an Aug. 1 letter, Pence declined those requests. She also declared it “inappropriate” that Ice Miller even represent Fay Menard, since the firm’s lawyers had also represented some of the companies in which MH Private Equity had invested, including Indianapolis-based casino operator Centaur Inc.

Wukmer, in an Aug. 8 letter called a “litigation hold request,” said Fay Menard is investigating claims of defamation because of the “false statements” made about her during the litigation with the Hilberts.

Pence took that as a threat of a lawsuit against her, since she wrote Tomisue Hilbert’s lawsuit, which claims that Fay Menard also tried to get Tomisue to have sex with John Menard.

Pence said the perceived lawsuit threat made it far more difficult to negotiate a settlement on the case, something the two sides have discussed since last summer. The Menard attorneys proposed this summer that they work with a mediator to achieve a settlement—as long as doing so meant delaying the Menards’ depositions by 30 days. But Pence called that another delay tactic.

“It’s kind of hard to deal with someone that wants to sue you,” Pence said during an Aug. 12 phone call with Nation.•

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