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Seamans v. Hoffman, Swartz And Associates, Inc.

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

August 31, 2017

LEE SEAMANS, Plaintiff,
v.
HOFFMAN, SWARTZ AND ASSOCIATES, INC., PARIS TAURIAC, and LES COVINGTON, Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN Z. LEE UNITED STATES DISTRICT JUDGE.

         Plaintiff Lee Seamans (“Seamans”) brought this action against Hoffman, Swartz and Associates (“HSA”), Paris Tauriac (“Tauriac”) and Les Covington (together, “Defendants”), alleging a violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. After succeeding on a motion for summary judgment, Tauriac filed a post-judgment motion for sanctions pursuant to Federal Rule of Civil Procedure (“Rule”) 11. For the reasons set forth herein, Tauriac's motion [102] is denied.

         Factual and Procedural Background

         Seamans filed his initial complaint against Defendants on August 26, 2013. See Compl., ECF No. 1. In this complaint, Seamans alleged that HSA contacted him by telephone on June 11, 2013, about a previously discharged debt, in violation of the Fair Debt Collection Practices Act (FDCPA). See generally id. Seamans alleged that Tauriac and Covington were “the managers, operators, supervisors, and/or owners of [HSA] and ha[d] direct control over the operations of HSA.” Id. ¶ 6.

         None of the Defendants responded to the initial complaint, and this Court entered a default judgment against all three on November 20, 2013. See Order of 11/20/13, ECF No. 16. Seamans thereafter seized approximately $50, 000 from two bank accounts that he believed belonged to HSA. See Mot. Vacate ¶ 6, ECF No. 23.

         Tauriac promptly filed a motion to vacate the default judgment, arguing that she had not been properly served with the complaint, and that the funds were seized from bank accounts belonging to her, not HSA. See id. She also filed a motion to dismiss, in which she argued that she had sold her ownership interest in HSA via a Stock Purchase Agreement dated May 15, 2013, several weeks before the phone call at issue. 1st Mot. Dismiss ¶ 2, ECF No. 36. Tauriac attached the Stock Purchase Agreement as an exhibit to her motion to vacate, and she referenced it repeatedly in her motion to dismiss. See Mot. Vacate, Ex. B; 1st Mot. Dismiss ¶ 2. This Court granted both motions. See Order of 5/29/14, ECF No. 29; Order of 1/13/15, ECF No. 54.

         Seamans subsequently filed an Amended Complaint on January 26, 2015, in which he argued that Tauriac was either still an owner of HSA, or alternatively, that she had commingled her assets with HSA's, rendering her liable to corporate veil piercing. Am. Compl. ¶¶ 54-62 ECF No. 55. In support of the veil piercing contention, Seamans argued that a bank account titled “Paris Tauriac d/b/a Hoffman, Swartz & Associates, ” in combination with Tauriac's own testimony regarding her handling of HSA's funds, could establish that Tauriac had commingled her personal assets with HSA's. Id. In addition, a document from the Georgia Secretary of State listed Tauriac as HSA's owner as of June 13, 2013, two days after the alleged phone call, and nearly a month after the date of the alleged Purchase Agreement. Pl.'s Resp. Mot. Sanctions, Ex. C, ECF No. 108.

         Tauriac sought to dismiss the Amended Complaint on the same grounds as her first motion to dismiss. See 2d Mot. Dismiss, ECF No. 58. The Court denied the second motion, finding that “Plaintiff Seamans has alleged sufficient facts to state a plausible claim to pierce [HSA's] corporate veil based on [Tauriac's] alleged commingling of HSA and Tauriac's property.” Order of 7/27/15, ECF No. 80.

         Both parties eventually filed cross-motions for summary judgment, and the Court found in favor of Tauriac, entering final judgment on September 29, 2016. See Seamans v. Hoffman, No. 13 C 6027, 2016 WL 5476249 (N.D. Ill. Sept. 29, 2016). The Court concluded that Seamans had not pointed to evidence from which a reasonable jury could find that “Tauriac controlled or improperly dealt with HSA after it was sold.” Id. at *3. In so ruling, the Court also denied Seamans's claim that Tauriac misrepresented that the accounts seized in executing the default judgment belonged to her, and not HSA. Id. at *3-4.[1]

         Tauriac subsequently filed a motion for sanctions, Def.'s 1st Mot. Sanctions, ECF No. 96, which was stricken for failure to comply with Rule 11's safe-harbor requirement. See Order of 11/02/16, ECF No. 101. Tauriac mailed a letter notifying Seamans of her second motion for sanctions on November 17, 2016, and she filed it twenty-one days later. Def.'s 2d Mot. Sanctions ¶ 7, ECF No. 102.

         Analysis

         In her motion for sanctions, Tauriac asserts that Seamans lacked a factual basis for including her as a Defendant in his Amended Complaint, and she further asserts that he pursued the action against her with an improper purpose. Def.'s 2d Mot. Sanctions ¶¶ 2, 6.[2] Seamans raises both procedural and merit-based objections to Tauriac's motion. First, Seamans contends that Rule 11 does not allow for post-judgment motions for sanctions, and he requests that this Court deny the motion as untimely. Pl.'s Resp. Mot. Sanctions at 2-3, ECF No. 108. Seamans also argues that Tauriac's motion fails to raise an adequate basis for imposing sanctions, and so cannot succeed regardless of its procedural deficiencies. Id. at 3-5.

         I. Defendant's Procedural Compliance with Rule 11

         Defendant Tauriac's first motion for sanctions, filed on October 31, 2016, was stricken for failure to comply with Rule 11(c)(2)'s twenty-one-day safe-harbor provision. See Order of 11/02/16. Tauriac sought to alleviate this deficiency by notifying Seamans of the present motion on November 17, 2016, twenty-one days before she filed it with this Court. Def.'s 2d Mot. Sanctions ¶ 7. Seamans concedes that Tauriac waited twenty-one days after service before filing her motion, but he nevertheless contends that a post-judgment motion for sanctions is necessarily untimely where no notice of the motion was given prior to judgment.[3] Pl.'s Resp. Mot. Sanctions at 2-3. In response, ...


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