United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JOHN W. DARRAH, District Judge.
Defendants Paul Godfread and Alan Cooper filed a Motion for Sanctions against Plaintiff Prenda Law, Inc. ("Prenda") pursuant to Fed.R.Civ.P. 11. For the reasons stated below, this Motion  is granted.
Prenda, an Illinois corporation, filed suit against Defendants Paul Godfread, Alan Cooper (both citizens of Minnesota), and John Does 1-10, in the Circuit Court for the Twentieth Judicial Circuit, State of Illinois, St. Clair County, on February 12, 2013. (Petition for Removal at 1.) Prenda alleges claims of libel, defamation, and tortious interference with contractual relationships against Defendants Godfread and Cooper and unidentified John Doe Defendants. Thereafter, on March 1, 2013, Defendants removed the case to the Southern District of Illinois on the basis of diversity, 28 U.S.C. § 1441. Counsel for Prenda is attorney Paul A. Duffy.
Prenda filed a motion to remand the case to state court in the Southern District of Illinois. In this first motion for remand, Prenda asserted that an Amended Complaint was filed on February 21, 2013, which included Alpha Law Firm, LLC ("Alpha") as a Plaintiff. (First Motion for Remand at 2.) However, because Alpha is a Minnesota company, Prenda asserted, diversity was destroyed and remand was proper. That Amended Complaint never appeared on the docket of this federal case.
On June 6, 2013, the Honorable David R. Herndon, Chief Judge of the Southern District of Illinois, entered an order transferring this action to the Northern District of Illinois, noting that "a virtually identical, first-filed action is currently pending in the Northern District of Illinois." (June 6, 2013 Opinion at 2.) See Duffy v. Godfread, Case No 13-cv-1569. In that Opinion, Judge Herndon further noted, "[P]laintiff has filed a motion to remand (Doc. 12). The Court adopts the reasoning and assertions of defendants' response in opposition to remand (Doc. 24) and accordingly denies plaintiff's motion to remand." (June 6, 2013 Opinion at 1 n.1.) The Defendants' reasoning for rejecting Prenda's motion for remand based on the lack of diversity was as follows:
The crux of Plaintiff's argument in support of remand is that, prior to removal, they allegedly filed an amended complaint in St. Clair County that would destroy diversity by adding a Minnesota plaintiff, Alpha Law Firm. [ECF No. 12, p. 4]. However, the amended complaint referred to by Plaintiff is a legal nullity, and cannot be considered for the purposes of assessing diversity, or for any other purpose.
Under Illinois law, unlike under the Federal Rules of Civil Procedure, the court must authorize all amendments to pleadings, except those made to conform pleadings to the proof. Plaintiff never filed a motion for leave to amend the St. Clair County complaint, and no order granting such relief was ever issued. Instead, their counsel, Kevin Hoerner, personally delivered the amended complaint to the clerk's office and falsely represented to a supervisor in the clerk's office that no motion to amend was required because none of the defendants had yet been served. Based on that representation, the supervisor accepted the amended complaint and stamped it. However, at the time the amended complaint was filed with the clerk's office, both Defendant Godfread and Defendant Cooper had been served with summons and copies of the original complaint, a fact that was known to Prenda.
(Dkt. No. 24 at 1-2.) Additionally, Defendants assert that Prenda knew Defendants had been served with the original complaint but represented to the Clerk of the St. Clair County Court that Defendants had not yet been served in order to file the Amended Complaint, naming Alpha as a Plaintiff, without leave of the court. The supervisor in the Clerk's Office stated in a sworn affidavit that she was informed by one of Prenda's lawyers, Hoerner, on February 21, 2013, that no one had been served with the Original Complaint, and that she stamped the Amended Complaint without a motion for leave to file based on Hoerner's representations. However, it is evident from the affidavits of service that Defendants had been served prior to February 21, 2013, in direct contradiction of Hoerner's representations to the Clerk's Office.
Moreover, Defendants assert that "there is not a single substantive difference between the sham amended complaint and the original complaint other than counsel for Plaintiff having slapped the name Alpha Law on the caption of the case and at the beginning of the document as a party. Not a single factual allegation was changed or added to reflect any reason for Alpha to be added as a party." (Motion for Sanctions at 4 n.2.) Judge Herndon adopted Defendants' "reasoning and rationale" and rejected Prenda's motion to remand the case to state court. (June 6, 2013 Opinion at 1 n.1.)
Upon transfer of the case to the Northern District of Illinois, it was reassigned to this Court. At the first status hearing here, on August 14, 2013, Prenda presented a motion for remand that was essentially identical to the motion that had been denied by Judge Herndon in his June 6, 2013 Opinion. In the renewed remand motion, Prenda changed the caption of the motion to indicate that "Alpha Law Firm" was a named Plaintiff, though counsel for Prenda knew Alpha was not properly named as a Plaintiff in this case. At that hearing, Paul Duffy, attorney and sole officer of Prenda, stated to the Court that the Southern District "denied the motion. They indicated - the Court indicated that on the four corners of the complaint, it stated that it was a Minnesota corporation. However, the complaint also states that its principal place of business is in Minnesota." (Mot. for Sanctions, Ex. B, 4:18-4:22.) Counsel for Defendants addressed the Court and explained its position and the facts and reasoning previously adopted by Judge Herndon (set out above) when he denied Prenda's motion for remand. Nowhere in the record does the Southern District of Illinois Court address Alpha and whether or not it was a Minnesota corporation, contrary to Duffy's statement before this Court.
Prenda then filed a motion to withdraw this "Renewed Motion to Remand" and stated, "Plaintiff vehemently disagrees with representations made by Defendants [sic] counsel at the August 14, 2013 hearing regarding its Motion, but nevertheless due to the apparent confusion arising from Plaintiff's Motion, Plaintiff seeks to withdraw it [sic] motion. Rather than renew its motion, Plaintiff intends to, at the appropriate time if any, amend its complaint to ad [sic] Alpha Law Group LLC as a Plaintiff." (Motion to Withdraw Renewed Mot. to Remand ¶ 2.)
Thereafter, Defendants filed a Motion for Sanctions. The Motion has been fully briefed. Prenda filed a motion for leave to file a surreply on November 4, 2013, but did not provide proper notice or notice of presentment. Local Rule 78.2 states: "Where the moving party, or... counsel for the moving party, delivers a motion... without the notice required by LR 5.3(b) and fails to serve notice of a date of presentment within 14 days of delivering the copy of the motion... to the court as provided by LR ...