United States District Court, Northern District of Illinois, E.D
January 20, 1983
KNORR BRAKE CORPORATION, PLAINTIFF,
HARBIL, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Knorr Brake Corporation ("Knorr Brake") initially sued
Harbil, Inc. ("Harbil") and P.E.P. Industries, Ltd. for
rescission, breach of contract and injunctive relief based on
their alleged breach of an agreement between Knorr Brake and
Harbil. Harbil responded with a counterclaim charging Knorr
(the collective term used in this opinion to denote Knorr
Brake and its corporate parent, Knorr-Bremse GmbH
("Knorr-Bremse")) with various torts and breaches of contract
and fiduciary duties. Harbil also moved to join seven
individuals as additional counterdefendants,*fn1 but this
Court denied that motion, 550 F. Supp. 476 (N.D.Ill. 1982).
Knorr have now moved:
(1) under Ill.Rev.Stat. ch. 110, § 2-611 ("Section
2-611")*fn2 for an assessment
against Harbil of the reasonable expenses and attorneys' fees
actually incurred by Knorr in opposing Harbil's motion; and
(2) under 28 U.S.C. § 1927 ("Section 1927")*fn3 for an
assessment against Harbil's attorneys requiring them to satisfy
personally the excess costs, expenses and attorneys' fees
reasonably incurred by Knorr in opposing Harbil's motion. For
the reasons stated in this memorandum opinion and order,
Knorr's motion for an assessment against Harbil is denied and
for an assessment against Harbil's counsel*fn4 is granted.
This opinion need not recount the procedural history of this
action. See 550 F. Supp. at 477-78. Only Harbil's joinder
motion is relevant here.
Harbil's Counter-Complaint Count V (¶ 39) alleged the seven
individuals had conspired with Knorr to cause the injuries
Harbil had asserted against Knorr in the four preceding counts.
When that pleading was first tendered to this Court at one of
its daily motion calls, this Court (having reviewed Count V in
a preliminary way) directed Harbil to address two issues in its
(1) whether this Court could exert personal
jurisdiction over those individuals; and
(2) whether under Illinois law*fn5 a
conspiracy claim will lie against individuals for
allegedly conspiring with their own corporation.
See 550 F. Supp. at 478.
Despite that clear directive Harbil initially failed to
address the personal jurisdiction issue at all, and then its
later memorandum ignored Knorr's answering citation of
controlling Illinois law. 550 F. Supp. at 479 & n. 8. On the
intracorporate conspiracy issue Harbil was largely evasive,
and insofar as it addressed even a tangential issue it
persisted in misciting and misusing precedent. Id. at 479-80 &
To compound its sins Harbil also unilaterally delayed
completion of the briefing on Knorr's motion for attorneys'
fees, filed in response to Harbil's joinder motion.
Id. at 477-78 n. 3. In fact Harbil failed to respond to Knorr's
fees motion despite this Court's specific orders to address
Harbil has now filed its belated answering brief on Knorr's
fees motion, and Knorr has filed an additional reply brief.
Thus the issue is now ripe for resolution.
Assessment Against Harbil
Section 2-611 embodies a 1976 amendment to its statutory
That amendment eliminated the moving party's need to show an
absence of good faith to recover from a party who has pleaded
"[a]llegations and denials, made without reasonable cause and
found to be untrue." See Jenner & Martin, "Supplement to
Historical and Practice Notes," Ill. Ann.Stat. ch. 110, § 41
(Smith-Hurd 1982 Supp., at 20). Nevertheless Section 2-611
remains penal in nature and is to be strictly construed.
Szymkowski v. Szymkowski, 104 Ill. App.3d 630, 635, 60 Ill.Dec.
310, 314, 432 N.E.2d 1209, 1213 (1st Dist. 1982); Tower Oil &
Technology Co. v. Buckley, 99 Ill. App.3d 637, 650, 54 Ill.Dec.
843, 853, 425 N.E.2d 1060, 1070 (1st Dist. 1981).
Knorr's memoranda have not directly addressed any claimed
infirmity in Harbil's pleadings. Instead Knorr have argued the
many deficiencies in Harbil's memoranda. See Knorr's Sept. 13,
1982 Mem. 9-10; Oct. 13, 1982 R.Mem. 3-8; Nov. 24, 1982 Add.R.
Knorr does make one implicit charge as to Harbil's
pleadings: It argues (Oct. 13 R.Mem. 8) Harbil moved to join
the individuals as counterdefendants simply to harass Knorr and
to gain litigation leverage. Yet that assertion, even if
Knorr's surmise were indulged, does not amount to a claim (let
alone a showing) Harbil's pleadings contained allegations "made
without reasonable cause and found to be untrue." This Court
made clear (550 F. Supp. at 478-81) Harbil's motion failed not
because its allegations were factually frivolous or
duplicitous, but rather because those allegations did not meet
the legal tests for establishing personal jurisdiction over the
individuals and for stating a conspiracy when they allegedly
had acted only in concert with their own corporations.
In any case Knorr have not borne the burden of showing
Section 2-611 applicable to Harbil's pleadings. Knorr's motion
for a Section 2-611 assessment against Harbil must be denied.
Assessment Against Harbil's Counsel
As already remarked, Knorr have concentrated on Harbil's
memoranda — and therefore on Harbil's counsel's failings.
Indeed Knorr's final memorandum stresses its entitlement to an
award under Section 1927, to the near exclusion of reliance on
Section 2-611. See Nov. 24 Add.R.Mem. 11-12.
Harbil's counsel has done nothing to lead this Court to take
a more charitable view of the submissions filed on behalf of
his client. Counsel was utterly unresponsive to this Court's
direct requests that certain issues be briefed, and he played
fast and loose with precedents even after his oversights were
called to his attention. 550 F. Supp. at 478-80.
Counsel's ultimately-filed memorandum on the fees issue
aggravates rather than tempers the situation. It first
suggests (Nov. 5, 1982 Mem. 1) counsel's memory failed him on
what had happened at the original hearing on Harbil's joinder
motion — apparently to excuse counsel's delinquency in not
briefing the personal jurisdiction issue in his Sept. 1, 1982
supporting memorandum. That is a lame argument at best, given
this Court's briefly-stated and clear instructions at the time
of counsel's initial appearance. Moreover the plausibility of
counsel's present position is undercut by his performance (or
more accurately lack of performance) once the jurisdictional
issue was outlined for him by Knorr. Counsel simply persisted
in ignoring the real legal questions and controlling
precedents. 550 F. Supp. at 479 & n. 8.
At this point counsel's only real response (Nov. 5 Mem.
10-13) is that neither Knorr nor this Court cited for him a
case that would have educated him on the issue posed! And in
the process counsel repeats arguments rejected by this Court —
arguments that reveal only continuing confusion or
In like manner, counsel "defends" his performance on the
intracorporate conspiracy issue only by repeating his prior
assertions (Nov. 5 Mem. 4-10). He has made no effort to show
his misuse of precedent indicates anything other than a
refusal to admit the positions he advanced were either
irrelevant or legally indefensible. See 550 F. Supp. at 480.
Harbil's counsel's real defense is to take the offensive
— or rather to become offensive to this Court. He suggests
(Nov. 5 Mem. 4) this Court has predetermined the questions here
against him. That charge is based on this Court's having
corrected counsel's misuse of precedent in open court. See 550
F. Supp. at 477 n. 2. But the incident reveals not this Court's
prejudice but counsel's resentment at being caught.*fn7
This Court finds counsel repeatedly staked out positions
that were quickly revealed as legally indefensible.
Nonetheless he persisted in arguing those positions in
defiance of precedent and in disregard of the issues as
properly posed by this Court and Knorr.
This case may profitably be contrasted with last week's
decision by our Court of Appeals construing and applying
Section 1927, Overnite Transportation Co. v. Chicago Industrial
Tire Co., 697 F.2d 789 at 794-95 (1983). Overnite recognizes
the applicability of Section 1927 to the situation where a
proposed lawsuit "was without either a legal or factual
basis*fn8 and the attorney was or should have been aware of
this fact" (id. at 794). That was precisely the case as to
Harbil's Counter-Complaint against the individuals. And
counsel's proposed institution of that Counter-Complaint did
not even begin to approach "the good faith filing of a claim
supported by an arguable legal theory . . ." (id. at 795).
Finally it is not necessary to find counsel guilty of
subjective bad faith to invoke Section 1927 (see discussion by
our Court of Appeals in another of its decisions of last week,
McCandless v. Great A & P Tea Co., 697 F.2d 198 at 200-01 & n.
By definition then Harbil's counsel has "both (1)
multiplie[d] the proceedings, and (2) do[ne] so in a vexatious
and unreasonable fashion" (Overnite, at 794). Section 1927 is
Knorr's motion for an assessment against Harbil is denied.
Harbil's counsel*fn10 is required personally to satisfy "the
excess costs, expenses, and attorneys' fees reasonably
incurred" by Knorr because of Harbil's motion to join the
additional individual counterdefendants. Knorr is ordered to
submit affidavit evidence as to those expenses and fees (in
the latter respect, showing the time spent by counsel, the
claimed hourly rates, the credentials of counsel supporting
those rates and any other facts relevant to the fees
requested) on or before January 28, 1983. Harbil's counsel are
ordered to file a response on or before February 7, 1983
identifying the issues if any that they wish to contest and
stating whether they request an evidentiary hearing or are
prepared to submit the matter on the papers filed by the
parties. This action is set for a status hearing February 9,
1983 at 9 a.m.