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Hammer & Steel, Inc. v. K & S Engineers, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 17, 2015

HAMMER & STEEL, INC., Plaintiff,
v.
K & S ENGINEERS, INC., EDWARD KRAEMER & SONS, INC., KENNY CONSTRUCTION COMPANY, FEDERAL INSURANCE COMPANY, TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, FIDELITY AND DEPOSIT COMPANY OF MARYLAND, AND LIBERTY MUTUAL INSURANCE COMPANY, Defendants.

MEMORANDUM OPINION AND ORDER

JOAN B. GOTTSCHALL, District Judge.

Plaintiff, Hammer & Steel, Inc. ("Plaintiff" or "H&S") and Imperial Crane Services, Inc. ("Imperial") bring cross-motions for sanctions against each other arising from their failed settlement agreement. Imperial seeks an award of fees and costs against Plaintiff's counsel, David M. Duree, pursuant to 28 U.S.C. § 1927. Plaintiff requests an award of fees against Imperial and its attorneys, Ryan Warren and Dmitry Shifrin, jointly and severally, pursuant to Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927. For the reasons set forth herein, Plaintiff's motions for sanctions are denied, and Imperial's motion for sanctions is granted in part and denied in part.

I. BACKGROUND

Two periods in time are at issue in the parties' cross-motions for sanctions: (1) Plaintiff's filing of a complaint against Imperial; and (2) Plaintiff's and Imperial's execution of a settlement agreement. Before addressing the parties' pending motions for sanctions, the court provides a brief timeline of events surrounding these periods.

The genesis of this lawsuit is a construction accident allegedly involving Plaintiff's "Model 58 HS Vibratory Driver/Extractor System" (hereinafter referred to as Plaintiff's "equipment" or "hammer") and Imperial's crane. ( See Compl. ¶ 5.) Several different companies-including K&S, Engineers, Inc. ("K&S"), which had leased Plaintiff's equipment, and Imperial-were performing work at the job site when the accident occurred on December 1, 2014.

On December 5, 2014, the project manager of Edward Kraemer & Sons, Inc. ("Kraemer"), one of the general contractors for the construction project, emailed Imperial and K&S that Plaintiff's equipment would be removed from the scene on December 8, 2014 to another location, where it could be inspected. ( See Imperial's Mot. to Dismiss, Ex. B.) That same day, Imperial's counsel, Ryan Warren ("Warren"), sent a letter to Plaintiff's president, Joe Dittmeier ("Dittmeier"), and to representatives of other participants in the construction project. ( See Compl. Ex. B.) The letter advised of the parties' obligations to avoid spoliation of evidence related to the incident. Warren further wrote, "It [was] Imperial's plan to collect and maintain the job storage connection assembly this coming Monday morning." (Id. )

Over the next several days, Warren and Kraemer's counsel exchanged emails to secure the property off-site and to coordinate inspections. Dittmeier was carbon copied on these emails. In one email, dated December 8, 2014, Warren objected to a proposal by Kraemer's counsel to store the equipment uncovered at the address, 15 N 320 Route 25, East Dundee, IL 60118-a property that Kraemer had leased. ( See Imperial's Mot. to Dismiss, Ex. H.) Imperial's counsel reasoned that "all of the equipment... will be left completely exposed to weather during what may very well be years of controversy." (Id. ) Warren listed a series of conditions, including obtaining a valid travel permit and permission from the Occupational Safety and Health Administration, which Imperial suggested needed to be met before Imperial would participate in moving and storing the equipment. The correspondence concluded by proposing a conference call to discuss Imperial's concerns so that "all parties, including K&S' injured employee, can be fully protected." (Id. )

On December 9, 2014, Plaintiff's counsel, David M. Duree ("Duree"), sent a letter to K&S terminating the rental agreement and seeking the return of Plaintiff's equipment. (Compl. Ex. D.) Duree stated, "It is my understanding that the vibratory driver/extractor system is currently located at 15 N. 320 Route 25, East Dundee, Illinois 60118." (Id. ) Duree asked K&S to arrange for Plaintiff's retrieval of the equipment, after which Plaintiff would make the equipment "available for inspection, upon request, at the expense of the requesting parties" at Plaintiff's yard in Hazelwood, Missouri. (Id. ) Duree concluded the letter by notifying K&S that a"[f]ailure to return the equipment will be an act of conversion." (Id. )

Also on December 9, 2014, Kraemer's project manager sent an email at 5:51 a.m. to counsel for Imperial and Kraemer. Dittmeier and other individuals were carbon copied on the email. The project manager circulated the email to set up a conference call for later in the morning to discuss inspection and storage protocol of the equipment. The email contained the information necessary to dial into the conference bridge.

Immediately after the call concluded, Imperial's counsel sent a follow-up email to memorialize the discussion. Imperial's counsel wrote: "Below I attempt to list what we have all agreed to at this point. If anyone disagrees, please reply to all with your suggested correction." (Imperial's Mot. to Dismiss, Ex. K.) Among the bullet points was Imperial's representation that it would "work to find a more permanent, secure, and weather-safe storage facility." (Id. )

On December 11, 2014, Imperial's counsel, Warren, and Plaintiff's counsel, Duree, conferred by phone. According to Imperial's motion for sanctions, Warren requested ten additional days on behalf of Imperial to inspect Plaintiff's equipment. Warren claims that Duree promised to confer with his client and call Warren back.

Instead, Plaintiff filed suit on December 12, 2014. Upon receiving a copy of the complaint, Warren sent an email to Duree and representatives of the other interested parties. The email informed the group that Imperial offered to cover "five-days' rent at the rate paid by K&S for the hammer in order to allow for Imperial's (and other's) inspections." (Imperial's Mot. to Dismiss Ex. M.) The email continued: "This rent would start on the day following H&S' agreement to this offer." (Id. )

On December 17, 2014, Plaintiff, Imperial, and Kraemer reached a settlement agreement ("Agreement") that incorporated Imperial's December 12, 2014 offer. The Agreement, in pertinent part, provided for a storage and inspection protocol, as well as the following terms:

2. H & S will provide an employee to provide access to H &S facilities upon equipment arrival.
3. H & S will dismiss the Complaint against Imperial, without prejudice, with each party to bear their own court costs. The Complaint against K & S will remain pending.
4. H & S covenants not to sue Imperial or Kraemer for any claims asserted in the Complaint; however, H & S, Kraemer and Imperial each reserve the right to assert any other claims, including claims for contribution and indemnity, against one another in any personal injury ...

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