Blitz Telecom Consulting, LLC v. Peerless Network, Inc.
Filing
297
ORDER denying 293 Defendant's Motion to Void Second Amended Judgment and ORDER TO SHOW CAUSE as to Peerless Network, Inc., Kelley Drye & Warren, LLP, Pearson Bitman, LLP, Henry T. Kelly, Matthew Charles Luzadder, Michael R. Dover, Ronnie J. Bitman, and Karl E. Pearson. Show cause responses are due on or before October 28, 2016. Signed by Judge Paul G. Byron on 10/20/2016. (SEN)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
BLITZ TELECOM CONSULTING, LLC,
Plaintiff/Counter-Defendant,
v.
Case No: 6:14-cv-307-Orl-40GJK
PEERLESS NETWORK, INC.,
Defendant/Counter-Plaintiff.
ORDER ON DEFENDANT’S MOTION TO VACATE SECOND AMENDED JUDGMENT
AND ORDER TO SHOW CAUSE
This cause comes before the Court on Defendant’s Motion to Void Second
Amended Judgment (Doc. 293), filed October 17, 2016. The Court does not require the
benefit of Plaintiff’s response to duly resolve the motion. Upon consideration, Defendant’s
motion will be denied. Additionally, Defendant and its counsel will be ordered to show
cause why sanctions should not be imposed against them pursuant to Federal Rule of
Civil Procedure 11, 28 U.S.C. § 1927, and/or this Court’s inherent authority for forwarding
a factually meritless argument in bad faith and for vexatiously multiplying these
proceedings.
I.
BACKGROUND
This lawsuit arose out of a contract dispute between Plaintiff and Defendant over
Defendant’s nonpayment of commissions owed to Plaintiff for telecommunications traffic
Plaintiff placed on Defendant’s networks. The matter proceeded to a jury trial, following
which the jury returned a verdict in favor of Plaintiff. After post-trial motions to assess
pre-judgment interest and taxable costs, the Court entered a Second Amended Judgment
1
in favor of Plaintiff in the amount of $2,658,279.86, which remains the operative judgment
in this case. Defendant now moves to vacate the Second Amended Judgment as a void
judgment under Federal Rule of Civil Procedure 60(b)(4).
II.
DISCUSSION
A.
Defendant’s Motion to Vacate Second Amended Judgment
Defendant moves to vacate the Second Amended Judgment on the ground that
this Court has never had subject matter jurisdiction over this case, as the allegations in
Plaintiff’s Complaint are insufficient to allege diversity jurisdiction under 28 U.S.C. § 1332.
Specifically, Defendant asserts that Plaintiff failed to adequately allege the citizenship of
Plaintiff’s members, James Finneran, Neil Rosenblit, and Robert Russell. See Rolling
Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir.
2004) (per curaim) (explaining that, for diversity purposes, a limited liability company like
Plaintiff is a citizen of each state in which any of its members are citizens).
While Defendant is correct on the legal proposition that the jurisdictional
allegations in Plaintiff’s Complaint are technically deficient, Defendant’s position that the
Court has never had subject matter jurisdiction over this dispute and that the Second
Amended Judgment must be vacated as a result is incorrect. This lawsuit is the first of
two between Plaintiff and Defendant, both of which are assigned to the undersigned
district judge. 1
In the second lawsuit, Plaintiff’s complaint suffered from the same
jurisdictional deficiency Defendant now raises here—Plaintiff failed to adequately allege
the citizenship of Mr. Finneran, Mr. Rosenblit, and Mr. Russell. However, instead of
1
Pursuant to Federal Rule of Evidence 201, the Court takes judicial notice of the second
lawsuit, Blitz Telecom Consulting, LLC, et al. v. Peerless Network, Inc., No. 6:14-cv399-Orl-40TBS (M.D. Fla.), and all documents filed therein.
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moving to dismiss that case for lack of subject matter jurisdiction, Defendant, who is
represented by the same counsel in both cases, agreed to allow Plaintiff to amend its
complaint through interlineations in order to remedy the jurisdictional allegations. 2 In
support of Plaintiff’s agreed motion to amend, Plaintiff supplied the sworn declarations of
Mr. Finneran, Mr. Rosenblit, and Mr. Russell, all of whom affirmed that they had never
been citizens of Illinois—Defendant’s state of citizenship for diversity purposes—at any
time in their lives. 3 Defendant therefore conceded that diversity existed between it and
Plaintiff. Based on the undisputed facts contained in these sworn declarations, the Court
likewise finds that diversity has always existed between Plaintiff and Defendant in this
case, as Defendant is an Illinois corporation with its principal place of business in Illinois
and none of Blitz’s members have ever been Illinois citizens. The Court therefore had
subject matter jurisdiction at all times during the litigation. Plaintiff’s motion to vacate the
Second Amended Judgment must be denied as a result.
B.
Sanctions Against Defendant and Defendant’s Counsel
The position forwarded by Defendant and its counsel in the motion to vacate that
there was never a basis for the Court to exercise subject matter jurisdiction over this
dispute appears to have been taken without any factual merit. In the parties’ other case
before the undersigned district judge, Defendant and its counsel agreed that Mr.
Finneran, Mr. Rosenblit, and Mr. Russell have never been citizens of Illinois and that, as
a consequence, diversity existed between Plaintiff and Defendant. In fact, the sworn
declarations filed in the parties’ other case specifically reference this case, explaining that
2
3
See Blitz Telecom Consulting, LLC, et al. v. Peerless Network, Inc., No. 6:14-cv-399Orl-40TBS (M.D. Fla.), Docs. 244, 247.
See id. Doc. 244, Exs. A, B, C.
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they were citizens of Florida and Maryland at the time this case was filed. 4 Despite their
knowledge that diversity has always existed between the parties in this case, Defendant
and its counsel maintained a contradictory position in the motion to vacate. Because
Defendant is represented by the same counsel in both cases, all of whom were therefore
aware of the factual basis establishing diversity in this case, it appears that Defendant
took its factually meritless and contradictory position in bad faith. The Court’s conclusion
on this point is further supported by the circumstances surrounding Defendant’s filing of
the motion to vacate. Specifically, the timing of Defendant’s motion to vacate coincided
with Plaintiff’s attempt to enforce the Second Amended Judgment through a writ of
garnishment.
Indeed, in its response to Plaintiff’s motion for writ of garnishment,
Defendant urged the Court to deny issuance of the writ in part due to its pending motion
to vacate the Second Amended Judgment, again taking the baseless position that the
judgment was entered without subject matter jurisdiction. 5 As a result, it appears to the
Court that Defendant and its counsel filed the motion to vacate for the sole purpose of
delaying Plaintiff’s lawful execution of the Second Amended Judgment.
Accordingly, the Court will order Defendant and its counsel, Kelley Drye & Warren,
LLP, Pearson Bitman, LLP, Henry T. Kelly, Matthew Charles Luzadder, Michael R. Dover,
Ronnie J. Bitman, and Karl E. Pearson, to show cause why sanctions should not be
imposed against them pursuant to Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927,
and/or this Court’s inherent authority.
4
5
See id.
(Doc. 295, p. 2).
4
Rule 11 permits the Court to impose an appropriate sanction against any attorney,
law firm, or party who presents an argument that is factually meritless or who presents an
argument for the improper purpose of harassing, causing unnecessary delay to, or
needlessly increasing the cost of litigation for an opponent. See Fed. R. Civ. P. 11(b),
(c). The Court intends to rely on its above discussion as the basis for imposing sanctions
against Defendant and its counsel under Rules 11(b)(1) and 11(b)(4). Title 28 U.S.C.
§ 1927 permits the Court to require any attorney who unreasonably and vexatiously
multiplies the proceedings to personally satisfy all attorney’s fees, costs, and expenses
reasonably incurred because of such conduct. The Court intends to rely on its above
discussion as the basis for imposing sanctions against Defendant’s counsel under
28 U.S.C. § 1927. Finally, the Court has inherent authority to sanction any attorney or
party who acts in bad faith. Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230, 1251
(11th Cir. 2006). The Court intends to rely on its above discussion as the basis for
imposing sanctions against Defendant and its counsel under the Court’s inherent
authority.
Defendant and its counsel will therefore be given an opportunity to explain why
sanctions, including an award of attorney’s fees and costs to Plaintiff and the imposition
of monetary fines, should not be imposed against them for the reasons stated in this
Order. The Court additionally notes that some of Defendant’s attorneys have been
permitted to appear pro hac vice. The ability to appear pro hac vice is a privilege, not a
right, and may be revoked by the Court upon a finding of misconduct. Those attorneys
appearing pro hac vice shall therefore additionally explain why the Court should not
revoke the privilege given to them to practice in this Court. Local counsel for Defendant
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shall also explain their oversight of the attorneys appearing pro hac vice in relation to
Defendant’s motion to vacate. The failure of any person or party to respond will result in
the imposition of sanctions without further notice.
III.
CONCLUSION
For the aforementioned reasons, it is ORDERED AND ADJUDGED as follows:
1. Defendant’s Motion to Void Second Amended Judgment (Doc. 293) is
DENIED. The Court finds that it had subject matter jurisdiction over this
dispute at the time it was filed through the entry of the Second Amended
Judgment.
2. Defendant, Peerless Network, Inc., and Defendant’s counsel, Kelley Drye
& Warren, LLP, Pearson Bitman, LLP, Henry T. Kelly, Matthew Charles
Luzadder, Michael R. Dover, Ronnie J. Bitman, and Karl E. Pearson, are
ORDERED TO SHOW CAUSE by filing written responses on or before
October 28, 2016 explaining why sanctions, including an award of
reasonable attorney’s fees and costs to Plaintiff, the revocation of any
attorney’s pro hac vice status, and/or the imposition of monetary fines,
should not be imposed against them pursuant to Federal Rule of Civil
Procedure 11, 28 U.S.C. § 1927, and/or this Court’s inherent authority for
the reasons stated in this Order. No response shall exceed twenty (20)
pages in length. If necessary, the Court will conduct an evidentiary hearing
on the issue of sanctions at a later date.
3. On or before October 28, 2016, Plaintiff shall file a properly supported
memorandum explaining all reasonable attorney’s fees, costs, and
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expenses incurred due to Defendant’s Motion to Void Second Amended
Judgment. Counsel for Plaintiff is relieved of its duty under Local Rule
3.01(g) to confer with counsel for Defendant before filing this memorandum.
DONE AND ORDERED in Orlando, Florida on October 20, 2016.
Copies furnished to:
Counsel of Record
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