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UNITED STATES v. ROBERT R. KRILICH

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION


August 27, 1996

UNITED STATES OF AMERICA, Plaintiff,
v.
ROBERT R. KRILICH, KRILICH COMPANIES, INC., RIVERWOODS DEVELOPMENT CORP., LAKEMOOR CLUB, INC., AUSTIN STATE BANK TRUST, etc., and MANUFACTURERS AFFILIATED TRUST CO., etc., Defendants.

The opinion of the court was delivered by: HART

MEMORANDUM OPINION AND ORDER

 In 1992, the parties in this case entered into a consent decree (the "Decree") that was approved by the court. Approximately three years after the decree was entered, the government moved for enforcement of two provisions contained in the Decree. Defendants answered that motion and also filed a surreply to the government's reply. From an initial examination of those briefs, it appeared there were material disputed facts that would require a hearing and the parties were ordered to filed a stipulation of uncontested facts, a statement of contested facts, and proposed findings of fact and conclusions of law. The government did not file a statement of contested facts and represented at a status hearing that it did not believe any further hearing was required because any contested facts were immaterial to the issues before the court. No party objected to the court's statement that it would examine the briefs on the motion and the additional filings to determine what issues, if any, required a hearing on contested facts. No party complained that it had not had an opportunity to place all possible issues and arguments before the court. *fn1" Following examination of the parties' filings, it was held that no material factual dispute existed and that the government was entitled to penalties on only one of the two grounds it raised. See United States v. Krilich, 948 F. Supp. 719, 1996 U.S. Dist. LEXIS 7693, 1996 WL 308289 (N.D. Ill. June 4, 1996 *fn2" ) ("Krilich I"). Defendants timely moved for reconsideration of the holding that the government was entitled to penalties totaling $ 1,307,500 for a 523-day delay in meeting deadlines set forth in § 30 of the Decree. See Krilich I at *6-9. Familiarity with Krilich I is presumed.

 It is undisputed that defendants missed certain deadlines contained in § 30 of the Decree. It is also undisputed that the parties agreed to changes in the actual mitigation work to be done. The disputed legal question is defendants' obligation to pay penalties because the deadlines in the Decree were not satisfied. In their response to the government's motion and in their proposed conclusions of law, defendants made a number of arguments. They contended the deadlines should be considered to be modified based on the course of dealing modifying the mitigation plan or waived by this course of dealing. Alternatively, it was contended the stipulated penalties were an unenforceable liquidated penalties provision of a contract or at least that the penalties should be limited to an amount commensurate with the actual violation that occurred. Krilich I at *7-9 rejects each of these arguments. On the other issue raised by the government, it was held that an area known as W9 was not a wetland under the terms of the Decree and therefore defendants did not violate the Decree by filling W9. See Krilich I at *1-6.

 At various points before the government returned to court to seek enforcement of the Decree's penalty provisions, the parties sought to reach a compromise on defendants' violations of the Decree. As part of a proposed settlement, the government had been willing to accept $ 150,000 in penalties for violation of the deadlines and a new schedule for the revised mitigation plan. However, the parties could not agree on a resolution of the W9 issues (and possibly other issues as well) and no new schedule or penalty amount was ever agreed upon. Defendants contend they could prove that the government would have accepted the $ 150,000 penalty and new schedule if not for its view that W9 was a wetland under the terms of the Decree. Defendants contend a hearing on this factual contention is necessary because, accepting this contention as true, defendants argue that the government should be forced to accept the $ 150,000/new schedule proposal because Krilich I holds that the government was incorrect as to W9.

 Defendants, of course, cite no legal support for their argument that once one part of a proposed settlement of a legal dispute is ruled upon on the merits, the party that lost the first part on the merits is obliged to accept the other part of the proposal. The parties did not reach an accord on the deadline issue while leaving the W9 issue to be resolved separately; they reached no accord on either issue. There is no basis for requiring the government to accept a prior proposal on the deadline issue because a subsequent ruling on the merits of the W9 issue went against the government. Defendants' motion for reconsideration will be denied.

 IT IS THEREFORE ORDERED that defendant's motion to alter or amend judgment [42-1,2] is denied.

 ENTER:

 William T. Hart

 UNITED STATES DISTRICT JUDGE

 DATED: AUGUST 27, 1996


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