Siddle v. Crants
| Decision Date | 26 March 2013 |
| Docket Number | Case No. 3:09-cv-01137,Case No. 3:09-cv-00175 |
| Parties | BRUCE K. SIDDLE, ET AL., Plaintiffs, v. DOCTOR R. CRANTS, JR., ET AL., Defendants. BRUCE K. SIDDLE, ET AL., Plaintiffs, v. CONNECTGOV, INC., ET AL., Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
MEMORANDUM
Pending before the court in two related cases are numerous motions concerning the assessment of attorney's fees and expenses against the plaintiffs under Fed. R. Civ. P. 54 (collectively, "Rule 54 Motions") and potential sanctions against their former attorneys under 28 U.S.C. § 1927 (collectively, "Motions for § 1927 Sanctions"). For the reasons stated herein, the Rule 54 Motions will be granted, the Motions for § 1927 Sanctions will be granted in part and denied in part, and the plaintiffs' request for a hearing in both cases will be denied. The plaintiffs will be jointly and severally liable to the defendants for all allowable attorney's fees and expenses in both cases. The court will sanction attorney Bruce Carr in both cases, the court will sanction attorney Rex Carr in the earlier-filed case only, and the court will not sanction attorney MaryParker in either case.
Also, acting sua sponte, the court will dismiss the Third-Party Complaints filed by the plaintiffs against Bruce Carr and Rex Carr without prejudice for failure to seek leave of court under Fed. R. Civ. P. 14, the court will dismiss the Counterclaim filed by defendant Crants III as moot, and the court will deny the plaintiffs' Motion to Dismiss Crants III's Counterclaim as moot.
This opinion concerns pending motions in two related cases: (1) Bruce K. Siddle, et al. v. Doctor Crants, Jr, et al., No. 3:09-cv-0175 (filed September 30, 2008) ("Siddle I"); and (2) Bruce K. Siddle, et al. v. Connectgov, Inc., No. 3:09-cv-01137 (filed May 19, 2009) ("Siddle II").1 Both cases were filed by Bruce K. Siddle and his wife Sandra K. Siddle, individually and as trustees of the Bruce K. Siddle and Sandra K. Siddle Trusts, and by PPCT Management Systems, Inc. (collectively, "the Siddles").
In two previous opinions, the court has detailed the factual background of Siddle I and Siddle II. See Siddle v. Crants, No. 3:09-0175, 2010 WL 424906 (M.D. Tenn. Jan. 25, 2010) [Siddle I Docket No. 285] (); Siddle v. Crants, Nos. 3:09-0175, 3:09-1137, 2010 WL 2570145 (M.D. Tenn. June 22, 2010) [Siddle I Docket No. 336; Siddle II Docket No. 251] (opinion referred to hereinafter as "Crants II").2 Briefly, the casesbroadly concern a business partnership gone awry, in which the Siddles acquired business interests in the "Homeland Security Company" ("HSC"), a company that competed for post-9/11 government security contracts. The Siddles had invested in HSC with Doctor R. Crants, Jr. ("Crants") and his son Doctor R. Crants, III ("Crants III"), whom the Siddles alleged operated HSC in a manner that cheated the Siddles in favor of certain third-party companies in which Crants and Crants III had a controlling interest.
As explained in Crants I and Crants II, the Siddles initially retained a major law firm, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC ("Baker Donelson") to investigate the Siddles' claims of impropriety in 2005 and 2006. See Crants I, 2010 WL 424906, at *2-*3. After that investigation, the Siddles executed two broad binding releases ("Releases") that, in combination, released various entities, including Crants and Crants III, from any potential liability for the claimed wrongdoing. (See Siddle I Docket No. 152, Exs. 2 (April 6, 2006 Mutual Release and Settlement Agreement, ¶ 2) (hereinafter "April 6 Release") and 3 (October 3, 2006 Stock Purchase Agreement, at ¶ 13.10) (hereinafter, "SPA")); Crants I, 2010 WL 424906, at *10( )
Furthermore, the April 6 Release contained a forum selection clause, which obligated the parties to litigate any challenges related to that agreement in Nashville, Tennessee. (See April 6 Release ¶ 3(a) () The April 6 Release also specified that, "[i]n the event any action, suit, or other proceeding is instituted concerning or arising out of this Agreement, the prevailing party shall recover all of such party's costs and attorney's fees incurred in such action, suit, or other proceeding, including any and all appeals therefrom." (Id. ¶ 3(b).)
On September 30, 2008, notwithstanding the Releases, the Siddles filed Siddle I in the United States District Court for the Southern District of Illinois. As stated in the Amended Complaint (see Siddle I Docket No. 6, Am. Compl.), the Siddles alleged 19 combined counts against Crants, Crants III, attorney Linda Cooper ("Cooper") (an attorney for HSC and Crants) and George Crawford ("Crawford") (outside corporate counsel for HSC and/or Crants), accountant Roy W. Oaks ("Oaks") (outside accountant for HSC and Crants) and Lee Booth (an "associate" of HSC and Crants). The Siddles alleged, inter alia, racketeering claims under 18U.S.C. § 1962 ("RICO"), violations of § 10(b) of the Securities and Exchange Act of 1934 ("Exchange Act"), and copyright infringement, as well as state law claims for unfair and deceptive business practices, breaches of fiduciary duty, tortious interference, unjust enrichment, fraudulent misrepresentation, and conversion in connection with HSC's business operations. At the time they filed Siddle I on September 30, 2008, the Siddles were represented by attorneys Bruce Carr and Rex Carr of the Rex Carr Law Firm, located in East Saint Louis, Illinois.
The defendants collectively filed a host of motions to dismiss and/or transfer the case, which, in relevant part, argued that the Releases either barred the claims or at least required the parties to litigate the enforceability of the Releases in the Middle District of Tennessee. Supported by an accompanying declaration from Bruce Siddle, the Siddles opposed these motions, arguing, inter alia, that the Releases were unenforceable because they lacked consideration and/or were the product of fraud and coercion. (See, e.g., Siddle I Docket No. 77, at p. 7, and Exs. 1-2 (Declaration of Bruce Siddle).) On February 17, 2009, the Illinois court found that, under binding Seventh Circuit precedent in Am Patriot Ins. Agency v. Mut. Risk Mgmt., 364 F.3d 884 (7th Cir. 2004), the forum selection clause in the April 6 Release was enforceable, regardless of the Siddles' fraud allegations and other defenses to enforcement of the contract. (See Siddle I Docket No. 94) (Murphy, J.) Judge Murphy therefore transferred the case to this court without addressing its merits. (Id.)
Upon transfer, Mary Parker ("Parker"), a Nashville-based attorney, filed a notice ofappearance as local counsel for the Siddles.3 (Siddle I Docket No. 108.) With the court's permission, Bruce Carr then appeared pro hac vice as lead counsel for the Siddles. (Siddle I Docket No. 126.) Although attorney Rex Carr had appeared as counsel for the Siddles when they filed Siddle I in Illinois, Rex Carr did not file an appearance as counsel of record for the Siddles after transfer.
On April 20, 2009, Crants and Crants III each moved to dismiss the Siddle I Complaint, arguing, inter alia, that the Releases barred the Siddles' claims. (Siddle I Docket Nos. 150-51 (Crants) and 156-57 (Crants III).) On May 4 and May 13, 2009, the Siddles filed Responses in opposition, in which they argued, inter alia, that the Releases were unenforceable because they (1) were unsupported by consideration and/or (2) were essentially the product of fraud or economic duress. (See Siddle I Docket Nos. 165 and 168.) The briefs contained inflammatory rhetoric and serious accusations of perjury against the defendants, stating, among other things, that Crants "simply lied to Judge Murphy about issuing real stock certificates to Bruce K. Siddle on April 6, 2006 . . . ," and that Crants had engaged in the "use of falsehoods for the purpose of manufacturing evidence to influence federal courts." (Siddle I Docket No. 165 at pp. 16-17.) The Siddles' briefing characterized the Releases as "fraudulent," "not worth the paper on which they were written," and as having "the same effect as a phony deed to the Brooklyn Bridge." (Id. at p. 2.) Among other things, the briefing also accused Crants of having "drafted new fraudulent [stock] certificates to deceive Siddle into signing the fraudulent releases . . . ." (Id. at p. 3; see also Siddle II Docket No. 168 at p. 15 ().)
While Siddle I was pending, Bruce Siddle and Sandra Siddle (represented by Bruce Carr) filed a lawsuit against HSC ("Siddle, et al. v. Homeland Security Corp., No. 3:09-cv-00400 (S.D. Ill. removed Dec. 12, 2008)) ("HSC"). After removal from Illinois state court to the Southern District of Illinois, Judge Murphy transferred HSC to this court on May 4, 2009 pursuant to the terms of the April 6 Release. (See HSC Docket No. 36, Order.)4
On May 19, 2009, just two weeks after Judge Murphy had enforced the forum...
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