Knorr Brake Corp. v. Harbil, Inc.

Decision Date20 January 1983
Docket NumberNo. 81 C 6842.,81 C 6842.
Citation556 F. Supp. 484
CourtU.S. District Court — Northern District of Illinois
PartiesKNORR BRAKE CORPORATION, Plaintiff, v. HARBIL, INC., et al., Defendants.

Richard M. Franklin, Baker & McKenzie, Chicago, Ill., for plaintiff.

Kirkpatrick W. Dilling, Dilling, Dilling & Gronek, Chicago, Ill., for defendant Harbil, Inc.; J.D. McLeod, Dahlberg, Mallender & Gawne, Detroit, Mich., of counsel.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Knorr Brake Corporation ("Knorr Brake") initially sued Harbil, Inc. ("Harbil") and P.E.P. Industries, Ltd. for rescission, breach of contract and injunctive relief based on their alleged breach of an agreement between Knorr Brake and Harbil. Harbil responded with a counterclaim charging Knorr (the collective term used in this opinion to denote Knorr Brake and its corporate parent, Knorr-Bremse GmbH ("Knorr-Bremse")) with various torts and breaches of contract and fiduciary duties. Harbil also moved to join seven individuals as additional counterdefendants,1 but this Court denied that motion, 550 F.Supp. 476 (N.D.Ill.1982).

Knorr have now moved:

(1) under Ill.Rev.Stat. ch. 110, § 2-611 ("Section 2-611")2 for an assessment against Harbil of the reasonable expenses and attorneys' fees actually incurred by Knorr in opposing Harbil's motion; and

(2) under 28 U.S.C. § 1927 ("Section 1927")3 for an assessment against Harbil's attorneys requiring them to satisfy personally the excess costs, expenses and attorneys' fees reasonably incurred by Knorr in opposing Harbil's motion. For the reasons stated in this memorandum opinion and order, Knorr's motion for an assessment against Harbil is denied and for an assessment against Harbil's counsel4 is granted.

Background

This opinion need not recount the procedural history of this action. See 550 F.Supp. at 477-78. Only Harbil's joinder motion is relevant here.

Harbil's Counter-Complaint Count V (¶ 39) alleged the seven individuals had conspired with Knorr to cause the injuries Harbil had asserted against Knorr in the four preceding counts. When that pleading was first tendered to this Court at one of its daily motion calls, this Court (having reviewed Count V in a preliminary way) directed Harbil to address two issues in its supporting memorandum:

(1) whether this Court could exert personal jurisdiction over those individuals; and
(2) whether under Illinois law5 a conspiracy claim will lie against individuals for allegedly conspiring with their own corporation.

See 550 F.Supp. at 478.

Despite that clear directive Harbil initially failed to address the personal jurisdiction issue at all, and then its later memorandum ignored Knorr's answering citation of controlling Illinois law. 550 F.Supp. at 479 & n. 8. On the intracorporate conspiracy issue Harbil was largely evasive, and insofar as it addressed even a tangential issue it persisted in misciting and misusing precedent. Id. at 479-80 & nn. 9-10.

To compound its sins Harbil also unilaterally delayed completion of the briefing on Knorr's motion for attorneys' fees, filed in response to Harbil's joinder motion. Id. at 477-78 n. 3. In fact Harbil failed to respond to Knorr's fees motion despite this Court's specific orders to address that issue.6

Harbil has now filed its belated answering brief on Knorr's fees motion, and Knorr has filed an additional reply brief. Thus the issue is now ripe for resolution.

Assessment Against Harbil

Section 2-611 embodies a 1976 amendment to its statutory predecessor. That amendment eliminated the moving party's need to show an absence of good faith to recover from a party who has pleaded "allegations and denials, made without reasonable cause and found to be untrue." See Jenner & Martin, "Supplement to Historical and Practice Notes," Ill. Ann.Stat. ch. 110, § 41 (Smith-Hurd 1982 Supp., at 20). Nevertheless Section 2-611 remains penal in nature and is to be strictly construed. Szymkowski v. Szymkowski, 104 Ill.App.3d 630, 635, 60 Ill.Dec. 310, 314, 432 N.E.2d 1209, 1213 (1st Dist.1982); Tower Oil & Technology Co. v. Buckley, 99 Ill. App.3d 637, 650, 54 Ill.Dec. 843, 853, 425 N.E.2d 1060, 1070 (1st Dist.1981).

Knorr's memoranda have not directly addressed any claimed infirmity in Harbil's pleadings. Instead Knorr have argued the many deficiencies in Harbil's memoranda. See Knorr's Sept. 13, 1982 Mem. 9-10; Oct. 13, 1982 R.Mem. 3-8; Nov. 24, 1982 Add.R. Mem. 2-10.

Knorr does make one implicit charge as to Harbil's pleadings: It argues (Oct. 13 R.Mem. 8) Harbil moved to join the individuals as counterdefendants simply to harass Knorr and to gain litigation leverage. Yet that assertion, even if Knorr's surmise were indulged, does not amount to a claim (let alone a showing) Harbil's pleadings contained allegations "made without reasonable cause and found to be untrue." This Court made clear (550 F.Supp. at 478-81) Harbil's motion failed not because its allegations were factually frivolous or duplicitous, but rather because those allegations did not meet the legal tests for establishing personal jurisdiction over the individuals and for stating a conspiracy when they allegedly had acted only in concert with their own corporations.

In any case Knorr have not borne the burden of showing Section 2-611 applicable to Harbil's pleadings. Knorr's motion for a Section 2-611 assessment against Harbil must be denied.

Assessment Against Harbil's Counsel

As already remarked, Knorr have concentrated on Harbil's memoranda—and therefore on Harbil's counsel's failings. Indeed Knorr's final memorandum stresses its entitlement to an award under Section 1927, to the near exclusion of reliance on Section 2-611. See Nov. 24 Add.R.Mem. 11-12.

Harbil's counsel has done nothing to lead this Court to take a more charitable view of the submissions filed on behalf of his client. Counsel was utterly unresponsive to this Court's direct requests that certain issues be briefed, and he played fast and loose with precedents even after his oversights were called to his attention. 550 F.Supp. at 478-80.

Counsel's ultimately-filed memorandum on the fees issue aggravates rather than tempers the situation. It first suggests (Nov. 5, 1982 Mem. 1) counsel's memory failed him on what had happened at the original hearing on Harbil's joinder motion —apparently to excuse counsel's delinquency in not briefing the personal jurisdiction issue in his Sept. 1, 1982 supporting memorandum. That is a lame argument at best, given this Court's briefly-stated and clear instructions at the time of counsel's initial appearance. Moreover the plausibility of counsel's present position is undercut by his performance (or more accurately lack of performance) once the jurisdictional issue was outlined for him by Knorr. Counsel simply persisted in ignoring the real legal questions and controlling precedents. 550 F.Supp. at 479 & n. 8.

At this point counsel's only real response (Nov. 5 Mem. 10-13) is that neither Knorr nor this Court cited for him a case that would have educated him on the issue posed! And in the process counsel repeats arguments rejected by this Court—arguments that reveal only continuing confusion or recalcitrance.

In like manner, counsel "defends" his performance on the intracorporate conspiracy issue only by repeating his prior assertions (Nov. 5 Mem. 4-10). He has made no effort to show his misuse of precedent indicates anything other than a refusal to admit the positions he advanced were either irrelevant or legally indefensible. See 550 F.Supp. at 480.

Harbil's counsel's real defense is to take the offensive—or rather to become offensive to this Court. He suggests (Nov. 5 Mem. 4) this Court has predetermined the questions here against him. That charge is based on this Court's having corrected counsel's misuse of precedent in open court. See 550 F.Supp. at 477 n. 2. But the incident reveals not this Court's prejudice but counsel's resentment at being caught.7

This Court finds counsel repeatedly staked out positions that were quickly revealed as legally indefensible. Nonetheless he persisted in arguing those positions in defiance of precedent and in disregard of the issues as properly posed by this Court and Knorr.

This case may profitably be contrasted with last week's decision by our Court of Appeals construing and applying Section 1927, Overnite Transportation Co. v. Chicago Industrial Tire Co., 697 F.2d 789 at 794-95 (1983). Overnite recognizes the applicability of Section 1927 to the situation where a proposed lawsuit "was without either a legal or factual basis8 and the attorney was or should have been aware of this fact" (id. at 794). That was precisely the case as to Harbil's Counter-Complaint against the individuals. And counsel's proposed institution of that Counter-Complaint did not even begin to approach "the good faith filing of a claim supported by an arguable legal theory..." (id. at 795). Finally it is not necessary to find counsel guilty of subjective bad faith to invoke Section 1927 (see discussion by our Court of Appeals in another of its decisions of last week, McCandless v. Great A & P Tea Co., 697 F.2d 198 at 200-01 & n. 4 (1983).9

By definition then Harbil's counsel has "both (1) multiplied the proceedings, and (2) done so in a vexatious and unreasonable fashion" (Overnite, at 794). Section 1927 is plainly applicable.

Conclusion

Knorr's motion for an assessment against Harbil is denied. Harbil's counsel10 is required personally to satisfy "the excess costs, expenses, and attorneys' fees reasonably incurred" by Knorr because of Harbil's motion to join the additional individual counterdefendants. Knorr is ordered to submit affidavit evidence as to those expenses and fees (in the latter respect, showing the time spent by counsel, the claimed hourly rates, the credentials of counsel supporting those rates and any other facts relevant to the fees requested) on or before January 28, 1983. Harbil's counsel are ordered to file a response on...

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  • Hill v. United States, Civ. A. No. 3:84-0722.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • 13 Noviembre 1984
    ...§ 1927.10 That statute, however, "* * * permits assessing fees against lawyers, not litigants * * *." Knorr Brake Corp. v. Harbil, Inc., 556 F.Supp. 484, 4861, n. 3 (D.C.Ill. 1983), rev'd. (on other grounds) 738 F.2d 223 (7th Cir.1984); accord: Chicago Regional Port Dist. v. Ferroslag, Inc.......
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    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • 12 Diciembre 1983
    ...facts, his legal theory was ineffective, but section 2-611 applies to lying, not faulty legal reasoning. Knorr Brake Corporation v. Harbil, 556 F.Supp. 484, 486-88 (N.D.Ill.1983) (finding no liability under § 2-611); see also Szymkowski v. Szymkowski, 104 Ill.App.3d 630, 635, 60 Ill.Dec. 31......
  • Knorr Brake Corp. v. Harbil, Inc., 83-1318
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • 29 Junio 1984
    ...court awarded attorneys' fees to Knorr and ordered appellants personally to satisfy the award. Knorr Brake Corp. v. Harbil, Inc., 556 F.Supp. 484 (N.D.Ill.1983) [hereinafter cited as Knorr II ]. The court fixed the amount of the award at $6,914.50. At some later point, Knorr and Harbil sett......
  • Knorr Brake Corp. v. Harbil, Inc., 81 C 6842.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
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    ...550 F.Supp. 476 (N. D.Ill.1982). As a sequel to that episode this Court's January 20, 1983 memorandum opinion and order (556 F.Supp. 484, at 487-88) granted Knorr's motion for an assessment under 28 U.S.C. § 1927 against Harbil's original counsel in the amount of "the excess costs, expenses......
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