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Priddle v. Malanis

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

March 15, 2017



          AMY J. ST. EVE, District Court Judge:

         Defendants Dean Malanis and Great Lakes Service II, Inc. have filed a petition for attorneys' fees and costs pursuant to the Federal Rule of Civil Procedure 11. For the following reasons, the Court denies Defendants' petition.


         Plaintiff lives in Norwalk, Wisconsin, but works as an airline pilot at O'Hare Airport. (12-cv-5831, R. 158, Third Amended Complaint, ¶¶ 1, 9.) Defendants reside or are incorporated in Illinois. (Id. ¶¶ 2-4.) Plaintiff was driving to work at O'Hare Airport at approximately 5:30 a.m. on July 24, 2010. (Id. at ¶ 10.) That morning there were heavy rains and areas of localized flash flooding. (Id. at ¶ 11.) Due to a police barricade on Thomas Drive, Plaintiff was directed into a parking lot. (Id. at ¶ 19.) While stopped in the parking lot, a surge of water swept Plaintiff's vehicle into a drainage canal. (Id. at ¶ 21.) The items in Plaintiff's vehicle, a Dodge Ram truck, included: farm equipment, emergency equipment, personal supplies, pet supplies, law school materials, and materials containing Security Sensitive Information (“SSI”). (Id. at ¶¶ 24, 26-27). Plaintiff escaped the vehicle by breaking through a metal safety barrier and a rear sliding window but could still see her belongings in the vehicle after it was carried some distance. (Id. at ¶¶ 28, 29.) Plaintiff attempted to retrieve her belongings that day, but she was informed by the Bensenville Police the water was still too dangerous and told to return after at least twenty-four hours. (Id. at ¶¶ 31-32.)

         Plaintiff came back to retrieve her vehicle the next day, but she could not find it and reported the truck as missing. (Id. at ¶¶ 35, 37.) The Bensenville Police Department located Plaintiff's vehicle in the possession of Defendants. (Id. at ¶ 37.) Malanis refused to return Plaintiff's truck that day. (Id. at ¶¶ 38-39.) On July 26, 2010, Plaintiff went to Malanis's lot and saw that most of the contents within the vehicle were missing. (Id. at ¶¶ 41, 45.) Malanis denied any knowledge of how the items in the truck went missing. (Id. at ¶¶ 47-49.) Malanis then asked Plaintiff for $2, 400.00 to release her vehicle but, after Plaintiff had paid, refused to release the vehicle until the next day. (Id. at ¶¶ 50, 53-54, 56.) Malanis finally released Plaintiff's vehicle on July 27, 2010, after demanding an additional $150.00 in cash. (Id. at ¶ 60.)

         When asked by Bensenville Police who authorized the tow of Priddle's vehicle, Malanis initially stated that he could not remember. (Id. at ¶ 61.) After further investigation, Malanis told police that he was authorized by a person named “George” at an address near the final location of Plaintiff's vehicle. (Id. at ¶ 62.) The address, however, did not correspond to a building, and no one named “George” was located at the nearby building. (Id.)

         Plaintiff filed two pro se Complaints, 12-cv-5831 and 15-cv-5833, against Dean Malanis and Great Lakes Service II, Inc. and Darwin Asset Management, Thomas Drive Partnership, and the owner of record of 705-715 Thomas Drive, Bensenville, Illinois, on July 24, 2012. On February 6, 2013, the court consolidated the two cases and dismissed both Complaints without prejudice. The court dismissed Plaintiff's Amended Complaints without prejudice on June 26, 2014. Plaintiff filed Second Amended Complaints on July 17, 2014, which the court dismissed without prejudice on February 4, 2015. Plaintiff filed two Third Amended Complaints on February 25, 2015. Plaintiff's Third Amended Complaint against Darwin Asset Management, Thomas Drive Partnership, and the owner of record of 705-715 Thomas Drive, Bensenville, Illinois, (12-cv-5833, R. 88), was dismissed for lack of subject-matter jurisdiction. The court referred Plaintiff's Third Amended Complaint against Dean Malanis and Great Lakes Service II, Inc., (12-cv-5831, R. 158), to the magistrate judge for a final jurisdictional hearing.

         Magistrate Judge Weisman issued his Report and Recommendations on September 14, 2016, and found that Plaintiff properly alleged only $49, 571.52 in damages. Plaintiff objected to Magistrate Judge Weisman's findings. On January 25, 2017, Plaintiff's objections were denied, the Report and Recommendations were adopted, and the case was dismissed for lack of subject-matter jurisdiction.[1] On February 10, 2017, Defendants filed the present petition.


         In the Seventh Circuit, “an attorney violates Rule 11 in maintaining a claim that is unwarranted by existing law or has no reasonable basis in fact.” Fabriko Acquisition Corp. v. Prokos, 536 F.3d 605, 610 (7th Cir. 2008) (quoting Fed.R.Civ.P. 11(b)). Specifically, a court “may impose Rule 11 sanctions for arguments ‘that are frivolous, legally unreasonable, without factual foundation, or asserted for an improper purpose.'” Indep. Lift Truck Builders Union v. NACCO Materials Handling Grp., Inc., 202 F.3d 965, 968-69 (7th Cir. 2000) (quoting Fries v. Helsper, 146 F.3d 452, 458 (7th Cir. 1998)); see also Jimenez v. Madison Area Tech. College, 321 F.3d 652, 656 (7th Cir. 2003) (“Rule 11 requires that an attorney or party, certify to the best of his knowledge, information, and belief, formed after an inquiry reasonable under the circumstances that any pleading presented to the court is not presented for an improper purpose, that the claims therein have a legally sufficient basis, and that the allegations and other factual contentions have evidentiary support.”); Brunt v. Serv. Emp. Int'l Union, 284 F.3d 715, 721 (7th Cir. 2002) (“Sanctions will be imposed if counsel files a complaint with improper motives or without adequate investigation.”). Under Rule 11(c)(4), sanctions may include “part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.” Fed.R.Civ.P. 11(c)(4).

         “The burden of proof is on the Rule 11 fee opponent to establish objective reasonableness and adequate pre-filing investigation once a prima facie showing of sanctionable conduct has occurred.” Lord v. High Voltage Software, Inc., No. 09 CV 04469, 2017 WL 1178147, at *5 (N.D. Ill. Mar. 30, 2017) (citing Smart Options, LLC v. Jump Rope, Inc., No. 12 CV 2498, 2013 WL 500861, at *3 (N.D. Ill. Feb. 11, 2013)). Specifically, “[o]nce a litigant moves based upon non-frivolous allegations for a Rule 11 sanction, the burden of proof shifts to the non-movant to show it made a reasonable pre-suit inquiry into its claim.” Digeo, Inc. v. Audible, Inc., 505 F.3d 1362, 1368 (Fed. Cir. 2007); see also Bannon v. Joyce Beverages, Inc., 113 F.R.D. 669, 674 (N.D. Ill. 1987) (“Once the movant puts forth a prima facie showing that the facts as known to the plaintiff before he filed the complaint were not consistent with allegations in the complaint, certainly the burden shifts to the non-movant to explain that either the facts are not as they have been presented or that in spite of the facts the circumstances at the time the pleading was filed, reasonable inquiry having been made, justified making the allegations.”).

         The Supreme Court has instructed that Rule 11 “requires a court to consider issues rooted in factual determinations” and has explained, as an example, that “to determine whether an attorney's prefiling inquiry was reasonable, a court must consider all the circumstances of a case.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 401 (1990). “The court must undertake an objective inquiry into whether the party or his counsel should have known that his position is groundless.” Cuna Mut. Ins. Soc. v. Office and Prof. Emps. Int'l Union, Local 39, 443 F.3d 556, 560 (7th Cir. 2006) (citing Nat'l Wrecking Co. v. Int'l Bhd. of Teamsters, Local 731, 990 F.2d 957, 963 (7th Cir. 1993). A court may impose sanctions on pro se litigants, though the court can consider pro se status when determining if sanctions are appropriate. Ochs v. Hindman, 984 F.Supp.2d 903, 912 (N.D. Ill. 2013) (citing Vukadinovich v. McCarthy, 901 F.2d 1439, 1445 (7th Cir. 1990)). Furthermore, the Seventh Circuit requires that “district judges reflect seriously, and consider fully, before imposing (or denying) sanctions.” Malec Holdings II Ltd. v. Eng., 217 F. App'x 527, 529 (7th Cir. 2007) (citing Mars Steel Corp. v. Cont'l Bank N.A., 880 F.2d 928, 936 (7th Cir. 1989)).


         By signing and presenting a paper to the court, a party is certifying that “(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; [and] (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery. . . .” Fed.R.Civ.P. 11(b)(1)-(3). “Rule 11 of the Federal Rules of Civil Procedure imposes on any party who signs a pleading, motion, or other paper whether the party's signature is required by the Rule or is provided voluntarily an affirmative duty to conduct a reasonable inquiry into the facts and the law before filing, and that the applicable standard is one of reasonableness under the circumstances.” Bus. Guides Inc. v. Chromatic Comm., Ent. Inc., 498 U.S. 533, 550 (1991).[2] Defendants argue that Plaintiff violated Rule 11 because (1) “Plaintiff's repeated filings . . . were filed solely for the purpose of harassing these Defendants and increasing the costs of this litigation”, (2) “Plaintiff's pleadings were not warranted by existing law or by a nonfrivolous argument for extending, modifying, or ...

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