United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JOHN W. DARRAH, District Judge
Plaintiff, Southport Bank ("Southport"), filed a Motion to Compel and for Rule to Show Cause  why Randolph S. Miles ("Randolph") and Charles V. Miles ("Charles") should not be held in contempt of court for: their failure to comply with the Court's June 26, 2014 order and their failure to respond to Citations to Discover Assets. Southport also seeks an award of fees, expenses and costs in compelling compliance. Charles has filed a Motion to Stay the Proceedings  against him due to his filing a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Northern District of Illinois. For the reasons stated below, Southport's Motion to Compel and Rule to Show Cause  is granted in part and denied in part; and Charles' Motion to Stay the Proceedings  is granted.
Southport began this action to recover payment under two "Commercial Guaranty" contracts executed by Randolph and Charles. A jury trial was held, and the Court entered judgment on the jury's verdict in favor of Southport. On October 25, 2013, a judgment was entered against Randolph in the amount of $7, 061, 784.84 and against Charles in the amount of $5, 429, 916.71. On November 25, 2013, Southport issued Citations to Discover Assets and Citation Notices. The next day, citations were issued to Defendants' attorneys Stephen F. Boulton ("Boulton") and Richard F. Ehrenreich.
On February 27, 2014, Southport filed a Motion For Rule to Show Cause Against Randolph S. Miles and Charles V. Miles and for Fees and Costs Pursuant to 28 U.S.C. § 1927, (Dkt. 245), for failure to respond to the citations. Defendants contested service of those citations; however that issue is not pertinent to this order. On June 24, 2014, Charles signed a declaration, declaring Boulton as his counsel for post-trial and post-judgment enforcement matters and agreed that "service of notice of any such post-trial/post-judgment proceedings upon Mr. Boulton shall constitute service upon me." (Dkt. 290.) On June 26, 2014, this Court ordered Charles and Randolph to comply with the Citations to Discover Assets by July 11, 2014:
Plaintiff's motion for a rule to show cause and for fees  is granted as to the rule to show cause; compliance ordered by 7/11/14 and entered and continued for a ruling by mail re: the issue of fees.
(Dkt. 289.) On August 11, 2014, Southport filed another Motion to Compel for Rule to Show Cause against Randolph and Charles. This motion alleged that they had not complied with the Court's June 26, 2014 order to comply with the citations. The motion also raised the issue of sanctions for non-compliance with the June 26 order. The Court ordered the following on August 11, 2014:
On 6/26/14, Plaintiff's motion for rule to show cause was granted with respect to Randolph and Charles Miles. Plaintiff's request for sanctions was included in that motion, but the briefs focused primarily on the issue of service, which was waived by Randolph Miles on 3/27/14 and by Charles Miles, through his counsel, on 6/26/14. Additionally, new grounds for sanctions were raised in Plaintiff's reply brief. Therefore, to aid the Court, the parties shall contact the Court Deputy forthwith to schedule an evidentiary hearing on the issue of sanctions.
The evidentiary hearing took place on August 2, 2014. Randolph testified, but Charles did not appear. Southport was ordered to file a proposed order and findings and did so on November 14, 2014. The proposed order requested incarceration for Charles and Randolph until: each fully complies with the Court's June 26 order; the Court finds that continued incarceration no longer serves a coercive purpose; or Randolph and Charles each completes a full accounting and discloses all assets that each controls either directly or indirectly. The proposed order requested sanctions against Randolph, Charles, and Boulton. All three filed objections to the proposed order. Charles also filed a Motion to Stay the Proceedings, pending his bankruptcy petition.
"Judges have inherent authority to impose sanctions for misconduct by litigants, their lawyers, witnesses, and others who participate in a lawsuit over which the judge is presiding." S.E.C. v. First Choice Management Services, Inc., 678 F.3d 538, 544-45 (7th Cir. 2012). An award of sanctions under a court's inherent authority can be assessed against an attorney, a party, or both, while an award of sanctions under Section 1927 may only be levied against attorneys. Goldberg v. 401 N. Wabash Venture LLC, Case No. 09 C 6455, 2013 WL 5376556, at *1 (N.D.Ill. Sept. 25, 2013) (citation omitted).
"Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. An attorney's liability under Section 1927 is appropriate where an attorney's conduct is marked by bad faith. Pacific Dunlop Holdings, Inc. v. Barosh, 22 F.3d 113, 120 (7th Cir. 1994). "The Seventh Circuit has concluded that such sanctions are appropriate (1) in instances of a serious and studied disregard for the orderly processes of justice, (2) when an attorney pursues a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound, and/or (3) where a claim is without a plausible legal or factual basis and lacking in justification." Krukowski v. Omicron Technologies, Inc., Case No. 10 C 5282, 2013 WL ...