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SCHMUDE v. SHEAHAN

May 4, 2004.

JOAN SCHMUDE, Administrator of the Estate of Louis Schmude Plaintiff, V. MICHAEL SHEAHAN, in his official capacity as Cook County Sheriff, WILLIAM SPATZ, PATRICIA PULTZ, and LAWRENCE KOSCIANSKI Defendants


The opinion of the court was delivered by: CHARLES NORGLE, District Judge

FINAL JUDGMENT IMPOSING SANCTIONS AGAINST ANTHONY PINELLI, ALAN R. BRUNELL AND EDWARD R. THEOBALD
This matter comes before the court upon the court's Opinion and Order of March 29, 2004, which, infer alia, ordered Anthony Pinelli, Alan R. Brunell and Edward R. Theobald to submit detailed accountings of improperly obtained attorneys fees in order that a final sanction could be imposed.

I. INTRODUCTION

  In an order dated October 2, 2003, the court advised and gave notice to attorneys Edward R. Theobald, Alan R. Brunell and Anthony Pinelli (collectively "counsel") that the court intended to proceed on a Rule to Show Cause as to why sanctions should not issue. See Minute Order of October 2, 2003 [116-1]. In that order the court stated that a Rule to Show Cause would be issued expeditiously. On October 8, 2003, the court issued the Rule to Show Cause, detailing the allegedly sanctionable conduct of counsel, and allowed counsel 45 days to respond in writing. See Rule to Show Cause [117-1].

  On November 24, 2003, counsel filed their responses to the Rule to Show Cause, as well as numerous motions to dismiss the Rule to Show Cause and a motion for recusal. On March 29, 2004, the court denied counsels' motions to dismiss the Rule to Show Cause and the motion for recusal. See Schmude v. Sheahan. ___ F. Supp.2d ___, 2004 WL 718501 (N.D. Ill. March 29, 2004). In that order the court proceeded to find that counsels' conduct was sanctionable, stating:
The court finds that attorneys Edward R. Theobald, Alan R. Brunell and Anthony Pinelli have disobeyed the orders of the United States District Court and acted improperly by seeking and obtaining numerous awards of attorney fees, as improperly appointed counsel, in the Circuit Court of Cook County, after the entire cause of action had been removed to the United States District Court, Further, counsel proceeded with that conduct after a motion to remand had been denied, while that issue of remand was on appeal in the Seventh Circuit and after the Seventh Circuit's decision, after they were aware that the court was handling issues of appointments and awards of attorney fees pursuant to 55 Ill. Comp. Stat. § 5/3-9008 for other attorneys in the case, and despite the court's repeated admonitions that further litigation in the state court would be in contravention of the federal court's jurisdiction and improper. Additionally, the court finds that the statements and actions of each attorney violated then-duty of candor to the court. The sanctionable conduct of each officer of the court was willful, intentional and repeated, and was an attempt to circumvent the United States District Court's removal jurisdiction. Attorneys Edward R. Theobald, Alan R. Brunell and Anthony Pinelli are hereby sanctioned pursuant to the court's inherent powers.
Id. at * 43. The court sanctioned counsel, ordering disgorgement of all improperly acquired attorney fees and payment of a $5,000.00 fine. See id. at * 44. In order to assess the exact amount of disgorgement, the court ordered that counsel file "a detailed accounting of all fees requested and received in the Circuit Court of Cook County which relate to this civil matter, including copies of all pleadings filed by counsel orders entered by the Circuit Court of Cook County, and all fee petitions submitted to date" within 28 days of the court's order. See id. (emphasis added). The court stated that "[o]nce counsel submit such accountings, the court will enter an order requiring counsel to disgorge those improperly acquired attorney fees in a specific dollar amount to the source of such funds by May 28, 2004." See id.

  On April 26, 2004, counsel submitted their accountings to the court. See Accounting of Fees, Expenses and Costs Requested and Received by Anthony Pinelli [168-1]; Accounting of Fees, Expenses and Costs Requested and Received by Alan R, Brunell [170-1]; Accounting of Fees, Expenses and Costs Requested and Received by Edward R. Theobald [169-1].

  In order to fully understand the sanctionable conduct underlying this judgment and the protracted nature of this matter, with an abundance of caution, the court finds that a recitation of the facts underlying the Rule to Show Cause is again necessary.

  II. BACKGROUND OF RULE TO SHOW CAUSE

  This case arises out of the death of Louis Schmude. Schmude died on May 7, 2000, while in the custody of the Cook County Sheriff's Department. In the resultant lawsuit, Plaintiff (hereinafter "the Estate") claimed that Defendants*fn1 were liable under 42 U.S.C. § 1983 and various state law theories for damages arising out of Schmude's death. A detailed background concerning the procedural history of this case is necessary to place the Rule to Show Cause and the instant judgment in context.

 A. The State Court Civil Action and Subsequent Removal to Federal Court

  On June 20, 2000, the Estate filed its original complaint in the Circuit Court of Cook County, naming only one Defendant, Cook County Sheriff Michael Sheahan (hereinafter "the Sheriff). On June 27, 2000, the Sheriff was served with process. The Cook County State's Attorneys Office determined that a conflict of interest would exist if it represented the Sheriff, and so on July 6, 2000, Tyrone C. Fanner, Brian F. Hynes and Michael K. Forde of the law firm of Mayer, Brown & Platt were appointed to represent the Sheriff as Special State's Attorneys in the Circuit Court of Cook County by the Honorable David R. Donnersberger, the judge before whom the case was pending.

  On July 26, 2000, a Cook County Circuit Court judge granted the Estate leave to file an amended complaint, naming three individual Sheriff's Deputies, William Spate, Patricia Pultz and Larry Koscianski, as additional Defendants. On that same day, the Estate had summonses issued for all three additional Defendants.

  On July 27, 2000, one day after the Estate filed its amended complaint, the Sheriff filed a Notice of Removal in the United States District Court for the Northern District of Illinois. Attached to the Sheriff's Notice of Removal was a copy of the original complaint, which named only the Sheriff as Defendant. At the time of removal, the Sheriff was the only Defendant served with process. Several weeks after the removal, the Cook County Sheriff's Department served Koscianski and Pultz with notice of the state court proceeding and a copy of the amended complaint Spatz was never formally served with process in this case.

  After removal, on December 22, 2000, attorneys Theobald and Brunell filed their personal appearances in the federal court, along with motions to be appointed as Special State's Attorneys to represent Defendants Spatz and Koscianski. One week later, on December 27, 2000, attorney Michael Ficaro filed his personal appearance in the federal court, along with a motion to be appointed as a Special State's Attorney to represent Defendant Pultz. In these motions, counsel indicated that the individual Defendants would ordinarily have been represented by the Cook County State's Attorneys Office; however, due to a conflict of interest, the Cook County State's Attorneys Office could not represent them. Counsel further indicated that an Illinois statute provided that the court in which a case is pending may appoint an attorney as a Special State's Attorney for the limited purpose of representing a party in that case. On December 27, 2000, the court took these motions under advisement. The Rule to Show Cause had its roots in these motions.

 B. The State Court Criminal Action and Resultant Stay of Proceedings in Federal Court

  One month before removal, on June 22, 2000, Spatz, Pultz and Koscianski were indicted and charged with first-degree murder in connection with the death of Louis Schmude. Thus, in addition to defending themselves against civil claims in the federal court, all three individual Defendants were defending themselves against criminal charges brought by the Cook County State's Attorneys Office in the Circuit Court of Cook County. On December 29, 2000, the federal court stayed all proceedings in the civil case pending the outcome of the criminal prosecution.

  On January 22, 2002, the criminal trial began. On March 12, 2002, in a bench trial before the Honorable Ronald A. Himel, all three Sheriff's Deputies were acquitted of the charges against them.

 C. The Stay of Proceedings in Federal Court Lifted

  With the criminal trial concluded, the court returned to the civil matter. On March 18, 2002, after the conclusion of the criminal prosecution, attorney Theobald, on behalf of Spatz, filed a Renewed Motion to Remand to the Circuit Court of Cook County. At the March 22, 2002 hearing on the matter, the following exchange took place:
COURT:
One of the issues the Court must deal with before deciding to lift the stay is who it is who will represent the defendants in this case, the individual defendants Spatz, Pultz and Koscianski.
Three attorneys have asked this Court to appoint them Special Assistant State's Attorneys pursuant to some Illinois statute, And I have some doubts about the applicability of that statute to this situation. . . .
But I am going to ask that the plaintiffs and all counsel brief this issue of the applicability of the Illinois statute, which counsel suggests applies here.
But beyond that, if the Court does have the obligation or the discretion to appoint counsel as Special Assistant State's Attorneys, I will be candid with you and tell you that it is not likely that the Court would appoint any attorney who has previous experience with the State's Attorneys office. And each of the movants here who are asking to be appointed attorneys, Special Assistant State's Attorneys, in their curricula vita or resume make a point of saying that they were in that office at some point in time or for some extended period of time.
And I will take this position initially, without ruling on it today, that it would be better to start, if at all, with attorneys who have not had experience in that office because of the particular relationship between the Sheriff and the State's Attorney's Office, given the background in this case, which involves the recent criminal prosecution.
So the first issue is whether that Illinois statute pertains. There is no Sixth Amendment right to counsel in a civil matter. Each one of the defendants here has the right to employ his or her own attorney, if he or she chooses to do so.
But the motions are brought by individual attorneys who are asking to be appointed Special Assistant State's Attorneys.
And so that's the issue to brief.
The plaintiff certainly should be heard on this, the Sheriff should be heard, and each individual movant also should be heard.
And so you can submit simultaneous briefs on this issue within 21 days.
MR. THEOBALD:
Judge, I'd like to point out that that is not before the Court right now. The motion that I filed on behalf of William Spatz is to remand this case back to state court because —
COURT:
Well, you're not in the case. You have filed an appearance, but along with that appearance you have filed a motion to be appointed a Special Assistant State's Attorney to represent Spatz. And what I'm saying is that motion may not be granted.
. . .
MR. THEOBALD:
. . . But notwithstanding any ruling, my client wants me as his attorney, regardless of any appointment by the State's Attorney's Office or not. And I'm asking under the law that the case go back to state court, because it was clearly improperly removed.
COURT:
Well, if you are withdrawing — are you withdrawing your motion to be a Special Assistant State's Attorney in this case?
. . .
MR. THEOBALD:
At this particular time, sure.
The motion I presented today was to remand back to state court. Not to be appointed anything.
COURT:
Are you making a motion to withdraw your motion to be appointed as Special Assistant State's Attorney?
MR. THEOBALD:
Well, the: motion I filed today, Judge, is to remand it. So that's — 1 don't know how to respond to that.
COURT:
Well, I construe your answer is that you are not making a motion the [sic.] withdraw the motion.
MR. THEOBALD:
Well, I —
COURT:
So to deal with this, you have 21 days to submit simultaneous briefings on the issue that I have discussed. And we will take it one step at a time. And so —
MR. FICARO:
Judge, if Imay speak on behalf of Miss Pultz. My name is Michael Ficaro. Before the Court was my petition. I would withdraw my petition to be appointed Special Assistant State's Attorney by this Court and join in the motion for remand to state court.
. . .
COURT:
We will get to that in due course.
But if you are making a motion to withdraw your motion to be appointed a Special Assistant State's Attorney, your motion is granted. And if you want your appearance to be as private counsel — for Pultz is it?
MR. FICARO:
Yes, your Honor.
COURT:
— certainly your appearance would be received.
So are you filing an appearance as her private attorney in this matter?
MR. FICARO:
I have not yet filed an appearance in the court.
I'm here on the remand, your Honor. And most respectfully, I don't know if the Court has had the opportunity to review Mr. Theobald's remand motion. It appears —
COURT:
So are you making a motion to withdraw your motion to be appointed a Special Assistant State's Attorney? MR. FIGARO:
Yes.
MR. THEOBALD:
And on behalf of Mr. Spate I will withdraw the motion — the petition that I filed, and in Mr. Brunell's stead we will withdraw on Mr. Koscianski's behalf. So that issue is no longer before the Court.
. . .
COURT:
All right. So very well.
Then there no longer is the issue of die appointment of Special Assistant State's Attorneys.
Then what is before the Court is a motion to vacate the stay. That motion is granted and we will brief the issue of remand,
. . .
So the stay is granted only to the extent now to deal with the issue of remand.
Trans, of March 22, 2002 Hearing, pg. 3-10.

  At this hearing, counsel for the individual Defendants withdrew their motions to be appointed as Special State's Attorneys. Attorney Brunell was not personally present, but attorney Theobald represented that he had the authority to appear in attorney Brunell's stead and to withdraw the motion. Thus, attorneys Theobald, Ficaro and Brunell appeared in this matter solely as private attorneys representing Defendants Spatz, Pultz and Koscianski, respectively.

 D. Proceedings in Federal Court Subsequent to the Stay Being Lifted

  With the matter of representations seemingly settled, the court and the parties then proceeded with Defendant Spate's March 18, 2002 Motion to Remand to the Circuit Court of Cook County. On April 22, 2002, the court issued an eight-page opinion denying Defendant Spate's Motion to Remand to the Circuit Court of Cook County. See Schmude v. Sheahan, 198 F. Supp.2d 964, 968 (N.D. 111. 2002). On April 24, 2002, Defendant Spate filed a Motion to Reconsider the Court's April 22, 2002 Ruling, which the court subsequently denied. Thereafter, on May 17, 2002, Defendant Spate filed a Motion to Certify the Court's April 22, 2002 Ruling Pursuant to 28 U.S.C. § 1292(b), which the court granted. On June 14, 2002, the Seventh Circuit denied Defendant Spate's Petition for Leave to Appeal. Thus, these rulings conclusively stated that the court had jurisdiction over the entire matter.

  On May 8, 2002, the court completely lifted the stay of proceedings in this matter. On that same day, Defendant Pultz filed a motion for leave to file the personal appearance of Anthony Pinelli as additional counsel, which the court routinely granted. Defendant Pultz had two private attorneys.

  Again, at this time, the individual Defendants were represented by private counsel, as the motions to be appointed as Special State's Attorneys had been withdrawn. On July 15, 2002, Defendants Spatz, Koscianski and Pultz filed a Motion to Dismiss pursuant to Federal Rules of Civil Procedure 4(m), 12(b)(4), 12(b)(5) and 12(b)(6). On December 6, 2002, the court denied the Motion to Dismiss for failure to state a claim under Rule 12(b)(6). On April 23, 2003, the court denied the remaining grounds raised in the Motion to Dismiss. See Schmude v. Sheahan, 214 F.R.D. 487 (N.D. 111. 2003).

 E. The Issue of Being Appointed as Special State's Attorneys Arises Again

  On May 20, 2003, attorney Ficaro filed a motion to withdraw as counsel for Defendant Pultz. On May 23, 2003, a hearing on the matter was held. At that tune, the following exchange took place:
COURT: . . .
Now who is moving to withdraw?
MR. THEOBALD:
Mr. Ficaro is moving to withdraw for Patricia Pultz, . . .
COURT:
Where is Mr. Ficaro?
MR. THEOBALD: He has a hearing in the Daley Center, Judge.
COURT:
Mr. Ficaro is not here,
MR. THEOBALD:
I'm standing in in his stead. He has got two hearings over there.
COURT:
If he withdraws, who is coming in?
MR. PINELLI:
Judge, I already have an appearance on file as co-counsel for Miss Pultz, and I will remain.
COURT:
You are her private attorney?
MR. PINELLI:
Yes.
No. Judge, I am appointed by the Circuit Court of Cook County.
COURT:
What makes you think so?
MR. PINELLI:
I'm sorry?
COURT:
What makes you think so?
MR. PINELLI:
I have an order from Judge Lott in Chancery Court appointing me.
COURT:
When did that occur?
MR. PINELLI;
Last May, Judge.
COURT:
In this case?
MR. PINELLI:
Yes. No, not in this case.
We filed a petition with the agreement of the Cook County State's Attorney seeking to be appointed and seeking to represent Miss Pultz, and they agreed to that order.
COURT:
The order was entered on July 6, 2000, with respect to Special State's Attorneys by Judge Donnersberger, or someone with that name.
MR. PINELLI:
With respect to the Sheriff, yes, your Honor not the individual defendants.
COURT:
Okay. But you are not appointed counsel in this case.
MR. THEOBALD:
Yes.
MR. PINELLI: Yes, I am. Yes, Judge.
COURT:
Let me see a copy of the order.
MR. PINELLI:
Judge, I didn't bring it with me today. I will have it here in half an hour.
COURT:
Once this case was removed, then no Judge in the state court could issue any orders in this case.
MR. PINELLI:
Judge, we didn't file this case or indicate that we were seeking any order with respect to any matter before your Honor. We filed the petition in the Circuit Court of Cook County seeking to have counsel appointed.
COURT:
Not in this case.
MR. THEOBALD:
Yes.
MR. PINELLI:
On behalf of the defendants.
COURT:
After it was here? After it was here?
MR. THEOBALD:
Yes.
MR. PINELLI:
After this case was removed, yes, sir.
COURT:
Then you cannot do that.
MR, THEOBALD:
Judge —
COURT:
I'm talking to one attorney at a time.
MR. THEOBALD:
Well, I'm the same thing.
COURT:
Well, no you are not. You are not special attorneys appointed to this case. Once this case was removed, it was removed, and no attorney, once removed, could go before any state judge and file a motion. And any order that would be entered under those circumstances would be an improper order and unenforceable. Once the case is removed, just this Court makes such decisions. You are not an appointed attorney in this case, nor is Mr. Theobald. If you are here, it is because you are employed by individuals.
MR. PINELLI:
Judge, I have my appearance on file on behalf of Miss Pultz, and I intend to litigate this matter and I will consider what you have said. COURT:
Are you telling me that once this case was removed to the federal court, notwithstanding removal that you went before a state judge and filed a motion?
MR. PINELLI:
Not a motion, a petition.
COURT:
A petition. A pleading.
MR. PINELLI:
A separate lawsuit by Miss Pultz seeking to have counsel appointed on her behalf.
MR. THEOBALD:
Could I explain, Judge?
COURT:
Not you.
MR. THEOBALD:
I am involved in this too.
COURT:
We will get to you, Mr. Theobald.
MR. THEOBALD:
All right.
COURT:
Any order that was entered by any state judge appointing an attorney to represent a party in this case, once this case was removed to the federal court, is void. That applies — if that is what you did, if you, knowing of the removal, filed a petition or a motion before a state judge, that was improper conduct. And any order that a judge entered, once this case was removed to the federal court, was an improper order.
He or she acted without jurisdiction.
You did the same, Mr. Theobald?
MR. THEOBALD:
Yes, Judge. . . .
A new independent action was filed, with the agreement of the Circuit Court, with the agreement of the State's Attorney of Cook County. I, Mr. Pinelli, Mr. Brunell and Mr. Ficaro were appointed as Special State's Attorneys under a State Statute to represent them here. And this has been going on for probably — well, I have been practicing for 29 years, and that's been the procedure, to go before a state court judge. The only time that a federal court judge appointed a Special State's Attorney that I know of is when Judge Bua appointed me to represent the Sheriff 15 years ago.
COURT:
Once the case is remanded [sic.] to the federal court, the state court loses jurisdiction and cannot act with respect to that case any longer.
If you want to be here in this case, it is only as private counsel. As a matter of fact, several hearings back, when you filed a motion here with respect to being appointed a Special State's Attorney, the Court made some comments, and you then withdrew the motion,
I don't know if you then went to the state court. I don't know if you did that. But once the case is in the federal court, no state judge can enter any order in that case. The state court has lost its jurisdiction.
And so if you are — if you think that you are Special State's Attorneys in this case, that is not the case.
MR. THEOBALD:
. . .
But we — I would disagree — we have been appointed, we are here as private counsel, whatever, and we are — we are here.
COURT:
Well, you are here only if you choose to act as private attorneys. And if that's what you want to do in this Court, you can be here as private attorneys.
But you are not special attorneys as far as this Court is concerned.
MR. THEOBALD:
We are just asking that Mr. Ficaro's appearance be withdrawn and —
MR. PINELLI:
My appearance has been on file. You gave me leave to appear as Anthony Pinelli, Attorney at Law, sometime ago.
COURT:
You want to appear as a private attorney?
MR. PINELLI:
I want to continue in this matter. I will consider what your Honor has said today.
COURT:
It's not consideration, it's an order
MR. PINELLI:
I understand it's an order.
COURT:
Who is going to pay your bill?
MR. PINELLI:
Idon't know the answer to that as I stand here.*fn2
COURT:
But it will not be Cook County and it will not be the State's Attorney.
Do you want to —
MR. PINELLI:
...

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