LeBlang Motors, Ltd. v. Subaru of America, Inc.
| Decision Date | 08 June 1998 |
| Docket Number | Nos. 96-3034,97-2045 and 97-2874,s. 96-3034 |
| Parties | LeBLANG MOTORS, LTD. and Wayne A. LeBlang, Plaintiffs-Appellants, v. SUBARU OF AMERICA, INC., Defendant-Appellee. LeBLANG MOTORS, LTD. and Wayne A. LeBlang, Plaintiffs-Appellants, v. SUBARU OF AMERICA, INC., Timothy Wright and Larry Knight, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Stephen Schostok, Michael L. Tinaglia (argued), William M. Dunn, Jeffrey S. McDonald, DiMonte, Schostok & Lizak, Park Ridge, IL, for Plaintiff-Appellant in No. 96-3034.
Stephen Schostok, Michael L. Tinaglia (argued), DiMonte, Schostok & Lizak, Park Ridge, IL, for Plaintiff-Appellant in Nos. 97-2045 & 97-2874.
William J. Gibbons (argued), Joseph A. Sullivan, Robin M. Hulshizer, Latham & Watkins, Chicago, IL, for Defendant-Appellee in No. 96-3034.
William J. Gibbons (argued), Latham & Watkins, Chicago, IL, for Defendant-Appellee in Nos. 97-2045 & 97-2874.
Before BAUER, COFFEY and KANNE, Circuit Judges.
This case consists of three consolidated appeals involving LeBlang Motors, Ltd. and Wayne A. LeBlang (collectively "LeBlang"), and Subaru of America. LeBlang challenges the amount of attorneys' fees awarded to Subaru, the dismissal of a stay of enforcement against the order to pay the attorneys' fees, the involuntary dismissal of one of its actions, two pretrial orders, and the dismissal of two individual defendants, Timothy Wright and Larry Knight. Because we find no error in the district court's management of this case, we affirm its orders and decisions.
This case has a long and complex history. We set forth here only those facts relevant to the present appeals.
In March 1989, LeBlang purchased the assets of Ray Subaru, Ltd., and became a Subaru franchise dealer. LeBlang operated this Subaru dealership in Park Ridge, Illinois from September 1989 to November 1993, when LeBlang sold the dealership. In March 1995, LeBlang filed its first lawsuit ("LeBlang I") against Subaru, alleging violations of various state and federal statutes as well as breach of contract and fraud.
LeBlang's claims relate to alleged misrepresentations Subaru representatives made regarding the planning volume 1 for the LeBlang dealership. Subaru, through its agent Timothy Wright, told LeBlang that the planning volume number for his dealership was 299. This number dictates net working-capital requirements, inventory, facility space, and personnel requirements for Subaru franchisees. Given the dealership's existing size, the planning volume number provided by Subaru for LeBlang's franchise precluded LeBlang from offering another car manufacturer's product line at the dealership. After LeBlang committed to the capital, inventory, and personnel requirements prescribed by the planning volume number, another Subaru employee, Larry Knight, informed LeBlang that Subaru reduced LeBlang's planning volume number to 217. At that level, LeBlang could have provided another product line. LeBlang alleged that Subaru knowingly misrepresented the original planning volume number, and as a result of his reliance on that number, LeBlang suffered damages of $1,350,000.
LeBlang filed LeBlang I in state court. Subaru removed the case to the United States District Court for the Northern District of Illinois on the basis of diversity of citizenship. LeBlang I proceeded unremarkably toward trial until, in January 1996, the court determined that LeBlang's expert report was inadequate. The court prohibited LeBlang from supplementing its expert report on the ground that Subaru would be prejudiced. LeBlang responded by filing successive motions for reconsideration, each of which the trial court denied. The district court sanctioned LeBlang for its final motion for reconsideration, requiring LeBlang to pay Subaru the amount of its attorneys' fees incurred in responding to the renewed motion for reconsideration. Thereafter, a few weeks before the scheduled trial date, LeBlang moved for a continuance. The trial court denied this motion. LeBlang responded by seeking a voluntary dismissal nine days prior to the set trial date. The court granted the voluntary dismissal subject to the following agreed terms and conditions: "that plaintiffs pay defendant's reasonable attorneys' fees and costs incurred in trial preparation; that all rulings and orders in this case apply in any subsequent refiled action; that the parties will stand ready for trial upon the refiling of this case." Order, Le Blang Motors, Ltd. v. Subaru of America, No. 95 C 2693 (N.D. Ill. April 12, 1996).
The trial court subsequently issued an order fixing the amount of attorneys' fees and costs owed to Subaru at $89,032.29. LeBlang appealed that order, and at the same time tried to appeal several pretrial orders from LeBlang I, including the court's denial of LeBlang's motion to supplement its expert report. In April 1997, we dismissed LeBlang's appeals of the pretrial orders for lack of jurisdiction because the notice of appeal was filed late. The appeal regarding the amount of attorneys' fees was timely filed, and is now properly before us.
In November 1996, while the appeal of LeBlang I was pending and prior to our partial dismissal of that appeal, LeBlang filed a second lawsuit ("LeBlang II") in the United States District Court for the Northern District of Illinois. LeBlang II consisted of six of the seven original counts in LeBlang I. In March 1997, the district court dismissed LeBlang II because of LeBlang's failure to comply with the conditions imposed upon the voluntary dismissal of LeBlang I. Specifically, the court found that LeBlang had failed to pay the attorneys' fees as set by the court, and in fact had appealed the order setting the amount of the fees. In addition, the court noted that LeBlang had appealed two discovery-related orders from LeBlang I in contravention of the agreed-upon condition that all rulings and orders from LeBlang I would apply in any refiled action. After dismissing LeBlang II under Fed.R.Civ.P. 41(b), the court turned to a motion filed by LeBlang for a stay of enforcement of the LeBlang I fee award. The court dismissed this motion as moot. In April 1997, LeBlang appealed from the dismissal of LeBlang II, challenging the dismissal itself, the court's dismissal of the stay of enforcement, and two of the pretrial orders from LeBlang I.
LeBlang filed a third lawsuit in January 1997 in state court. This last action ("LeBlang III") consisted of the seventh and final remaining count from LeBlang I. LeBlang III, unlike LeBlang I or II, named two former Subaru employees, Tim Wright and Larry Knight, as defendants. LeBlang, Knight, and Wright are all citizens of Illinois. Subaru removed the action to the United States District Court for the Northern District of Illinois, claiming that Wright and Knight were fraudulently joined in an effort to defeat diversity jurisdiction. In March 1997, LeBlang moved to remand LeBlang III to state court. In April 1997, the district court granted Subaru's motion to dismiss Wright and Knight as fraudulently joined, finding that the action against them was barred by the applicable statute of limitations. The court then denied LeBlang's motion to remand.
In May 1997, the district court dismissed LeBlang III pursuant to Fed.R.Civ.P. 41(b) for failure to comply with the agreed-upon conditions imposed upon the voluntary dismissal of LeBlang I. LeBlang appealed this dismissal claiming that the district court erred in dismissing individual defendants Wright and Knight as fraudulently joined.
We have consolidated the appeals from LeBlang I, II, and III. Presently before us are the following issues: (1) whether the district court abused its discretion in setting the amount of attorneys' fees owed to Subaru in LeBlang I; (2) whether the district court abused its discretion in dismissing LeBlang II; (3) whether the district court abused its discretion in dismissing the stay of enforcement in LeBlang II; (4) whether the district court abused its discretion in denying two pretrial motions in LeBlang I--one regarding the supplementation of LeBlang's expert report and the other regarding a continuance of the trial date; and (5) whether the district court erred in LeBlang III by dismissing Wright and Knight as fraudulently joined.
As a condition of the district court's grant of LeBlang's motion for a voluntary dismissal of LeBlang I, LeBlang agreed to pay Subaru its reasonable attorneys' fees and costs incurred in "trial preparation." In its Motion for Fees and Costs Pursuant to April 12, 1996 Order [hereinafter Fees Motion], Subaru requested $127,188.98. This amount reflected all of the attorneys' fees and costs it incurred subsequent to the close of discovery, in other words, all fees charged after February 21, 1996. LeBlang responded to Subaru's motion, calling the requested fee amount "inappropriate" and "absurd." LeBlang, relying on Marlow v. Winston & Strawn, 19 F.3d 300 (7th Cir.1994) and Cauley v. Wilson, 754 F.2d 769 (7th Cir.1985), argued that the court could only award expenses incurred in preparing work product that will not be useful in subsequent litigation. Because LeBlang claimed that most of the work Subaru's attorneys did in the post-February 21 period would be useful in subsequent litigation, LeBlang argued that the fee request was excessive.
The district court reviewed the motions and the time sheets for Subaru's attorneys. It found that while Cauley and Marlow suggest that an award of attorneys' fees should compensate the other party for work that would not be useful in subsequent litigation, an award of fees and costs need not necessarily be so limited. The court determined that 70% of the work reflected on the time sheets was properly characterized as "trial preparation," and therefore granted Subaru 70% of its fee request. LeBlang appeals...
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