In re Interstate Steel Setters, Inc.
| Decision Date | 09 October 1986 |
| Docket Number | Adv. No. 82 A 2308,82 A 2309.,Bankruptcy No. 81 B 1806 |
| Parties | In re INTERSTATE STEEL SETTERS, INC., Debtor. INTERSTATE STEEL SETTERS, INC., Plaintiff, v. A.J. MAGGIO COMPANY, Inryco, Inc., and American National Bank and Trust Company of Chicago, as Trustee u/t/a dated February 14, 1978 and known as Trust No. 42194, Defendants. INTERSTATE STEEL SETTERS, INC., Plaintiff, v. CRANE CONSTRUCTION CO., INC., Inryco, Inc., and American National Bank and Trust Company of Chicago, as Trustee u/t/a dated March 3, 1978 and known as Trust No. 42275, Defendants. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
Philip S. Aimen, Chicago, Ill., for plaintiff/debtor.
Leonard S. Shifflett, Cynthia A. Bergmann, Wilson & McIlvaine, Chicago, Ill., for defendants.
MEMORANDUM ON CROSS MOTIONS TO ASSESS SANCTIONS AGAINST RESPECTIVE COUNSEL FOR PLAINTIFF AND DEFENDANTS AND ORDER GRANTING BOTH MOTIONS UNDER 28 U.S.C. § 1927
In this case, Debtor sued several parties for the balance due under a construction subcontract. There was a hard fought issue as to whether Plaintiff had properly performed or performance had been waived or the contract modified or whether Defendant was estopped to deny performance.
The attorneys battled vigorously and often bitterly throughout the long period of trial preparation. Their vigorous work and bitterness continued into the trial. They harassed each other. The Court was required repeatedly to admonish and warn them about their conduct toward each other, and cautioned them that sanctions would be entertained against them individually under 28 U.S.C. § 1927 if they continued.
They strove at each step to achieve the tactical edge. To prevent their opponent from learning of their trial theory, they each even held back the legal authority relied on and their respective legal theories until the very hour that final argument began. The latter tactic violated the final pretrial order.
The Court was of course given a more difficult task by reason of such tactics.
Because the consolidated cases were each four years old, the Court pressed counsel to trial on the dates set months earlier despite the foregoing delay in complying with pretrial order. The trial was concluded. The Court has this day entered Recommended Findings of Fact and Conclusions of Law for the District Court, since for the merits of the case this Court only has related jurisdiction.
There remain cross motions filed by each side against counsel for the other for sanctions under Title 28 U.S.C. § 1927 by reason of conduct of counsel in certain events that occurred during the trial. This Court has core jurisdiction to consider and impose sanctions under Title 28 U.S.C. § 1927 for trial related conduct of counsel. See 28 U.S.C. § 157(b)(2)(0), 11 U.S.C. § 105, In re TCI Ltd., 769 F.2d 441, 448 (7th Cir.1985), and General Order of Reference (July 10, 1984) of the District Court for the Northern District of Illinois to the Bankruptcy Court.
For the reasons stated below, both cross motions are granted. Separate judgment orders are entered this date in favor of each respective party and against its respective opponent's individual attorney.
The following facts are found from the Court's personal observation during trial and from the Court file and record of proceedings:
1. On January 14, 1986, pursuant to earlier court order for production and Plaintiff's Second Request for Production of Documents from Defendant Crane Construction Company ("Crane"), Defendants' attorney Leonard S. Shifflett produced the requested documents of Crane at the office of the Plaintiff's attorney for inspection and photocopying. Plaintiff's trial exhibits, PX-4, PGX-5 and PX-7, were the copies made that day by Plaintiff's counsel Mr. Aimen from the original documents of Crane so produced and copied.
2. Mr. Shifflett objected at trial to the authenticity and genuineness of Plaintiff's exhibits, PX-4, PGX-5 and PX-7. Defendants' objections to the authenticity and genuineness of those documents at trial were then unreasonable and vexatious, and were motivated by Leonard S. Shifflett's vexatiousness, obduracy and bad faith. He knew that said exhibits were authentic and genuine and were prepared and maintained by Crane in the ordinary course of Crane's business because he (Mr. Shifflett) had personally furnished the originals of those very documents to Plaintiff's attorney for inspection and photocopying pursuant to the aforesaid request for production of Crane documents and prior court order for production of those documents. Indeed, he held the originals of those documents in his office and produced them at trial after the copies (PX-4, PGX-5, PX-7) were admitted. However, until those exhibits were admitted he misrepresented to the Court that he did not know whether or not the documents were authentic and therefore resisted their admission.
3. By reason of Mr. Shifflett's objections as aforesaid, Plaintiff was required to subpoena the President of Crane Construction Company to appear as a witness at trial on August 25, 1986, for the sole purpose of taking his testimony as to the authenticity and genuineness of Plaintiff's exhibits, PX-4, PGX-5 and PX-7. To lay the necessary foundation, Plaintiff's counsel was also required to take the stand to recount the circumstances of his obtaining the copies of exhibits. All of that testimony multiplied the proceedings and delayed the trial.
4. The multiplication of proceedings and trial delay were further compounded and aggravated by Mr. Shifflett when he filed a motion to quash said subpoena, and by his failure to tell his client the President of Crane of the necessity to appear in Court pursuant to said subpoena until after the Court denied that motion to quash. The Court then was required to order Mr. Shifflett to telephone the Crane President and inform him that the Court ordered that he appear forthwith that day to testify. The person did not appear in court until about 4:00 P.M. on August 25, 1986. At that time his testimony was finally taken in which he gave support for the authenticity and genuineness of Plaintiff's exhibits, PX-4, PGX-5 and PX-7. Those exhibits were admitted into evidence after Plaintiff's counsel testified to their origin. An otherwise necessary four hours was required in open court to prove the authenticity and genuineness of Plaintiff's exhibits, PX-4, PGX-5 and PX-7.
5. Plaintiff's attorney said he expended the sum of $188.40 to serve the subpoena upon Crane's President and to pay to him a statutory witness fee and mileage charge, and those expenses are found to have been both necessary and reasonable. Plaintiff's attorney claimed that he expended about two hours in making the necessary arrangements to serve the subpoena upon Crane's President. The Court finds that one hour should have sufficed therefore.
6. The Court further finds that during the trial Mr. Shifflett at all times mentioned above possessed in his office the originals of documents in question that he had produced to Plaintiff's counsel during discovery; that he had obtained those documents from his client Crane and knew they were authentic; that after the copies made by his opponent were authenticated and admitted, he then produced the originals in open court. At all times he knew the Plaintiff's exhibits were authentic but required the subpoena of his client and a long and cumbersome prove up of authentication despite that knowledge. Therefore his objection to authentication and foundation were unreasonable and vexatious, and multiplied the trial preparation and trial proceeding itself by four hours of otherwise unnecessary trial time and required Plaintiff's counsel to expend an additional hour of office time and incur expenses otherwise unnecessary.
7. Plaintiff's trial counsel is seasoned and experienced. While he filed no affidavit as to billing rates his time is worth $125/hour; and therefore the total of five hours required of him as aforesaid as a result of Mr. Shifflett's conduct had a reasonable time value of $625.00. Adding to that the $188.40 related to service of subpoena, the total sanction to be awarded will be $813.40.
8. Mr. Shifflett's argument is that Plaintiff should have served a timely Notice to Admit authenticity of the documents, to obviate the dispute of which he had given earlier notice. But failure of one's opponent to use an efficient pretrial device does not justify playing the type of game played by Mr. Shifflett here. Nor does it justify the extra trial time that resulted. This Judge must adjudicate the disputes that arise in over 5,200 cases assigned, a load similar to that of most of the other Bankruptcy Judges in this District. It is an imposition on the Court as well as the parties to require litigation over such phony issues as that forced on the Court and parties by Mr. Shifflett.
The following facts are alleged and from this Court's observation and the Court file are found to be true:
1. On June 12, 1986, this Court entered a pretrial order requiring both parties to exchange and file with the Court lists of exhibits and witnesses on or before August 4, 1986. On August 4, 1986, Defendant filed its list of witnesses and exhibits with the Court. Mr. Aimen did not exchange his list of witnesses and exhibits until August 15, 1986, the eve of trial.
2. As a result of Mr. Aimen's failure to comply with the Court's order, the attorneys for the Defendant and this Court were forced to expend more than an hour at the outset of this trial reviewing the Plaintiffs exhibits and the defense objections thereto. Mr. Aimen knew or should have known that his delay in compliance with the Court's pretrial order would thereby prolong the trial of this matter.
3. On August 19, 1986, couns...
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