Trade Well Int'l v. United Cent. Bank
| Decision Date | 10 February 2015 |
| Docket Number | No. 14–1907.,14–1907. |
| Parties | TRADE WELL INTERNATIONAL, Plaintiff, v. UNITED CENTRAL BANK, Defendant–Appellee. Appeal of Maurice J. Salem, Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
OPINION TEXT STARTS HERE
Maurice J. Salem, Palos Heights, IL, pro se.
Timothy J. Casper, Murphy & Desmond S.C., Madison, WI, Brian Patrick Thill, Murphy & Desmond S.C., Madison, WI, for Defendant–Appellee.
Before WOOD, Chief Judge, and KANNE and TINDER, Circuit Judges.
Maurice Salem, a member of the New York Bar, was admitted pro hac vice in the U.S. District Court for the Western District of Wisconsin in connection with some commercial litigation. Salem represents Trade Well International, a Pakistani company, which was suing United Central Bank (the Bank) for damages and the return of property that was left behind in a hotel that the Bank owned. Problems arose when Salem filed a Notice of Lien on behalf of his client; the Notice stated that there was a lien on the hotel and purported to provide notice of the litigation. The district court, concluding that the Notice was defective in several ways, held Salem in contempt of court, revoked his pro hac vice status, barred him from practicing in the Western District of Wisconsin for three years, and imposed a $500 fine. Salem, representing himself, has appealed. The Bank argues that we have no jurisdiction to entertain his appeal, but we conclude otherwise. On the merits, we find that the court's orders must be set aside: nothing Salem did warranted a finding of contempt, nor these sanctions.
Because we are reversing the district court in spite of the substantial discretion the court possesses in this kind of matter, we think it useful to include a full explanation of the underlying facts. Trade Well is a company that provides furnishings for hotels. In February 2010, it entered into a lease with Dells Estate LLC, a Wisconsin company that owned a hotel called the Dells Island Resort (the Hotel). The lease agreement states that Trade Well was to provide certain goods and movable items to the Hotel for four years, for a fee of $250,000 per year. An inventory of the items to be provided lists furnishings, various linens (mattresses, curtains, sheets, towels, bath mats, and table cloths), fixtures (chandeliers, wall-mounted lamps, Jacuzzis, an LED light, signs), a reservation system, and remodeling services for several rooms. The agreement specified that it is “binding upon” the parties' successors and that at the termination or expiration of the lease, “any or all goods/movable properties ... shall constitute the property of and be handed over to” Trade Well.
Dells Estate had financed its purchase of the Hotel with a mortgage from United Central Bank, a Texas corporation. It defaulted on the mortgage in 2010, shortly after Trade Well had provided the items called for by the lease. The Bank eventually obtained a foreclosure judgment and purchased the Hotel at a sheriff's sale in 2012. At that time, all of the leased items were still inside the Hotel. Because the Bank did not want to hold the Hotel indefinitely, it promptly started looking for a buyer. Trade Well demanded the return of the leased property, but the Bank refused.
When its demands were spurned, Trade Well sued the Bank for replevin in federal court (invoking the diversity jurisdiction, 28 U.S.C. § 1332). As a preliminary matter, it moved for an order compelling the Bank to permit inspection of the leased items for purposes of taking an inventory and ensuring proper storage. The district court granted that motion. The inspection revealed that many of the items were missing, some were damaged, and some were moldy.
In October 2013 (approximately a year after the suit was filed), Trade Well moved to stay the Bank's sale of the Hotel. Salem, its attorney, informed the court that he recently had learned from a potential buyer, Edward Krause, that the Bank was trying to sell the Hotel along with the leased items. Trade Well argued that a stay was warranted, because a sale to a third party would transfer possession of the leased items and would complicate matters.
The Bank opposed the motion and asked instead that the court order Trade Well to take possession of the latter's property. Critically, however, the Bank's motion was expressly limited to “personal property”; the Bank maintained that it owned the hotel's fixtures, including some installed Jacuzzis. It argued in the alternative that Trade Well should pay it for storing the personal property until it was removed and post a bond for the estimated storage costs. The Bank did not, however, file a counterclaim.
Trade Well responded that its motion was intended only to “stop the transfer of possession of the damaged equipment” (emphasis added), because a transfer would make it “very difficult, or impossible to determine who caused the damage.” Trade Well also charged that the Bank had converted some of the leased items into fixtures (though it did not specify which ones it meant). Once again, Salem filed a supporting declaration, in which he stated that Trade Well sought only to take immediate possession of undamaged goods, while leaving the damaged items and fixtures in place pending resolution of the suit. While these motions were pending, Trade Well amended its complaint to add claims of negligence and conversion. It repeated its assertions that the Bank had damaged Trade Well's property through improper storage and had converted some of it.
At that point, the district court ruled on the pending motions. It stayed the sale of the hotel for 30 days so that Trade Well could remove everything listed in the inventory attached to its complaint, with the exception of the Jacuzzis and materials related to the remodeling. The order continued, “All items on [the inventory] other than the Jacuzzis and remodeling that have not been removed within 30 days shall be deemed abandoned by Trade Well absent an extension of this deadline by the court upon good cause shown.”
About two weeks later, Trade Well asked the court to extend the deadline for moving the items and to compel the Bank to pay for the moving and storage of damaged items. Salem supported the latter part of the motion with a declaration and copies of emails showing that he had contacted three moving companies, none of which would take the job because some items were moldy. In an order issued in January 2014, the court extended the moving deadline by 21 days, but it denied the request to compel the Bank to pay for moving and storage. This order clarified that Trade Well was not required to pick up its personal property; it could also opt to abandon the property and then claim damages with respect to the abandoned property, subject to the Bank's defense of failure to mitigate. Trade Well chose the second option and left all of the personal property in the hotel.
This is where matters stood at the time the issues involved in this appeal arose. We take the facts from a declaration that Salem filed in March 2014 in response to an inquiry from the district court, as we do not understand anything material to be contested. On March 12, Salem went to the Register of Deeds in Sauk County, Wisconsin, intending to file a “Lis Pendence/Lien” on the hotel. The Register of Deeds is an elected county official; Wisconsin law provides that any plaintiff who brings “an action where relief is demanded affecting ... real property which relief might confirm or change interests in the real property” must file a lis pendens “in the office of the register of deeds of each county where any part [of the real property] is situated.” Wis. Stat. § 840.10(1)(a). Fixtures are classified as real property by Wisconsin law. See Wis. Dep't of Revenue v. A.O. Smith Harvestore Prods., Inc., 72 Wis.2d 60, 240 N.W.2d 357, 360–62 (1976); Premonstratensian Fathers v. Badger Mut. Ins. Co., 46 Wis.2d 362, 175 N.W.2d 237, 239 n. 1 (1970). When a lis pendens is filed, “a subsequent purchaser or encumbrancer [is] bound by the proceedings in the action to the same extent and in the same manner as if a party thereto.” Belleville State Bank v. Steele, 117 Wis.2d 563, 345 N.W.2d 405, 407 (1984) (citing Wis. Stat. § 840.10(1)). The statute specifies that it applies to actions filed in all courts in Wisconsin, “including United States district courts.” Wis. Stat. § 840.10(4).
The Register of Deeds, Brent Bailey, at first refused to accept Salem's filing, telling him that he needed a Wisconsin attorney to file the document. That advice was not accurate. In fact, the statute says only that a lis pendens that is prepared by a member of the State Bar of Wisconsin need not be authenticated. Id. § 840.10(1)(b). It does not prohibit filings submitted by others. They need only authenticate the document; this can be done by “[a]ny public officer entitled by virtue of his or her office to administer oaths, and any member in good standing of the State Bar of Wisconsin.” Id. § 706.06(2). At the time, however, no one spotted the error. Salem responded instead by accurately informing Bailey that the district court had admitted him pro hac vice. With that information in hand, Bailey said that Salem could file the document himself so long as he had “a number from the Court identifying him.” Not sure what number to use, Salem called the clerk of the district court, who told him that the only identifier for an attorney admitted pro hac vice is the date of admission and the attorney's name. Salem furnished that information to Bailey, who then accepted the paper.
The actual document Salem prepared, and Bailey filed, is entitled “Notice of Lien.” It refers to the Wisconsin statute governing construction liens. See id. §§ 779.01, 779.06. The content of Salem's notice, however, more closely resembles a lis pendens under § 840.10 than a lien under § 779.06. As required by § 840.10(1)(a), Salem's Notice identifies the parties to the...
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