MB Financial Bank, N.A. v. Stevens et al

Filing 90

MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 7/5/2011:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

MB FINANCIAL, N.A., as
Guardian of the ESTATE OF
CHRISTINA ZVUNCA, a Minor,
Case No. 11 C 798
Plaintiff,
v.

Hon. Harry D. Leinenweber

JEANINE L. STEVENS, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
Before the Court are Motions for Sanctions from Cristina
Zvunca (“Zvunca”) and Jeanine Stevens (“Stevens”). For the reasons
stated herein, the Motions are granted in part and denied in part.
I.
Completely

untangling

INTRODUCTION
the

convoluted

attorney-created

procedural labyrinth from which these motions emerge is unnecessary
to rule on the pending sanctions motions. However, some background
on the route by which this morass developed is proper.

Attorney

David Novoselsky (“Novoselsky”) filed a lawsuit in the Circuit
Court of Cook County (The Estate of Cristina Zvunca v. Stevens,
No. 09 L 6397), which contained numerous allegations, including
that attorney Stevens abused Zvunca, who is a minor.

Novoselsky

dismissed this Illinois case with prejudice on July 13, 2010.

On August 11, 2010, two of the defendants in the Illinois
case, Stevens and John Cushing, filed a timely motion for sanctions
pursuant to Illinois Supreme Court Rule 137.

Cook County Circuit

Judge Daniel Pierce denied Novoselsky’s motion to strike this
sanctions motion on January 18, 2011. On February 3, 2011, Zvunca,
through her appointed plenary guardian, Tiberiu Klein, and attorney
John Xydakis (“Xydakis”), filed a motion to intervene in the
sanctions motion. On February 4, 2011, Novoselsky filed the Notice
of Removal from Cook County Circuit Court, which occurred prior to
Judge Pierce’s ruling on Zvunca’s motion to intervene.
Thereafter, the floodgates burst, bringing a deluge of motions
in federal court. Novoselsky filed:

(1) Motion for Leave to File;

(2) Motion to Disqualify; (3) Motion to Supplement Motion to
Disqualify; (4) Counterclaim; (5) Motion to Dismiss; (6) 28 U.S.C.
§ 1927 Sanctions Motion against Stevens and Cushing; and (7) ThirdParty Complaint brought on his own behalf against MB Financial
Bank, Stevens,
assigned

to

and

Judge

Zvunca.
Grady,

(Also, this
but

reassigned

case

was

to

this

originally
Court

on

February 22, by way of Novoselsky’s Motion to Reassign, as the
Executive

Committee

found

it

related

to

Case

No.

08

C

4507

previously before this Court.) In addition to Novoselsky filing an
appearance on behalf of himself, Brian Schroeder and Mark Johnson
have filed appearances on behalf of Novoselsky.

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On March 2, the Court granted Zvunca’s Motion to Remand, which
Stevens had joined, as the Court lacked subject matter jurisdiction
because no action existed in state court that Novoselsky could
remove to federal court.

The Court later denied Novoselsky’s

Motion to Reconsider, and gave Stevens and Zvunca until March 31,
2011, to file their sanctions Motions.
II.
A.

ANALYSIS

28 U.S.C. § 1927 Sanctions

Zvunca moves for sanctions against Novoselsky pursuant to 28
U.S.C. § 1927.

Under § 1927, an attorney “who so multiplies the

proceedings

any

in

case

unreasonably

and

vexatiously

may

be

required by the court to satisfy personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of such
conduct.” 28 U.S.C. § 1927.

The Seventh Circuit has set forth

reasons to impose such sanctions:
[A] court has discretion to impose § 1927 sanctions when
an attorney has acted in an objectively unreasonable
manner by engaging in serious and studied disregard for
the orderly process of justice; pursued a claim that is
without plausible legal or factual basis and lacking in
justification; or pursue[d] a path that a reasonably
careful attorney would have known, after appropriate
inquiry, to be unsound.
The Jolly Grp., Ltd. v. Medline Indus., 435 F.3d 717, 720 (7th
Cir. 2006)(quotations and internal citations omitted).

The party

moving for sanctions must show subjective bad faith “only if the
conduct under consideration had an objectively colorable basis.”
Dal Pozzo v. Basic Mach. Co., Inc., 463 F.3d 609, 614 (7th Cir.
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2006).

Objective bad faith requires only reckless indifference to

the law, not malice or ill will. See id.
Zvunca

argues

that

such

sanctions

are

warranted

because

Novoselsky pursued claims that had no legal or factual basis when
he removed the Rule 137 proceeding from state court.

In part,

Illinois Supreme Court Rule 137 reads: “All proceedings under this
rule

shall

be

brought

within

the

civil

action

in

which

the

pleading, motion or other paper referred to has been filed, and no
violation or alleged violation of this rule shall give rise to a
separate civil suit, but shall be considered a claim within the
same civil action.” ILL. SUP . CT . R. 137 (emphasis added); see also
Tech. Innovation Ctr., Inc. v. Advanced Multiuser Techs. Corp., 732
N.E.2d 1129, 1133 (Ill. App. 2000)(“A Rule 137 petition is part of
the underlying action and not a separate action.”).
A plain reading of rule shows that Novoselsky’s removal was
meritless.

This does not require a complex legal analysis.

The

crux of Novoselsky’s argument for removal was that once Zvunca
attempted to intervene in the state case, diversity existed.

This

is a curious argument for Novoselsky to make to support removal, as
he states that he is a citizen of Wisconsin, and as such, there was
no need for Zvunca to intervene for diversity to exist.

Further,

Novoselsky admits that the state court had not yet granted Zvunca’s
petition to intervene prior to him seeking removal.

See Resp. to

Petition for Attorney Fees and Costs, ECF No. 54, Apr. 12, 2011.
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Novoselsky succeeds, through his own convoluted arguments, in
demonstrating that an objectively reasonable attorney who undertook
a cursory review of case law and the facts of the case would have
never attempted to remove the Rule 137 proceeding from state court.
Thereafter, Novoselsky’s extensive arguments against remanding
the case cite no case law to support his position.

This is because

no case law exists holding that a Rule 137 motion is a separate
action.

Novoselsky tendered meritless arguments in his desperate

attempt to keep the case here.

Also, once he got the case into

federal court, he used the window of time he had here to file a
motion to dismiss the state court sanctions proceedings, as well as
a counterclaim, third-party complaint, and even a frivolous § 1927
motion, which argues that Stevens and Cushing should be sanctioned
for their state court filings.

Such unreasonable actions burdened

the parties and constitute objective bad faith.
Novoselsky argues that Zvunca was not a party to this case,
while

ignoring

complaint
arguments.

that

against

he

her.

filed

a

Again,

counterclaim
his

own

and

actions

third-party
defeat

his

His rationale ignores his past filings, and appears to

be a desperate attempt to maintain baseless arguments.

In this

end, Novoselsky cannot argue around the fact that the state-court
sanctions motion was not a separate cause of action, so his actions
here constitute vexatious and unjustified litigation.

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Novoselsky created and unreasonably multiplied the proceedings
in federal court, and must pay the consequences.
Sanctions Motion is granted.
however,

that

excessive.

Zvunca’s

Zvunca’s § 1927

The Court agrees with Novoselsky,

claim

for

$20,310.00

in

sanctions

is

Contrary to Novoselsky’s argument, an evidentiary

hearing is not necessary to determine the appropriate sanctions, as
such a hearing would not assist the Court in its decision.

See

Kapco Mfg. Co., Inc. v. C & O Enters., Inc., 886 F.2d 1485,
1495 (7th Cir. 1989). Novoselsky has been afforded the opportunity
to respond to Zvunca’s demand through court filings.

No further

information is necessary for this ruling.
Zvunca’s claim appears excessive considering Stevens’ demand
for only $2,432.00.

Stevens’ Motion, however, includes time spent

for drafting only one motion.

Zvunca’s Motion includes work by

Xydakis on multiple motions and briefs.

Xydakis appears to have

taken the lead in this matter, and his claim for sanctions is
supported

with a

declarations.

detailed accounting

of

his

time

and

signed

The Court believes Xydakis’s representation that he

worked extensively on this matter and spent the time he claims on
this case.

The Court also believes, however, that the appropriate

sanctions should not be as high as Zvunca seeks.
Court

cuts

Zvunca’s

requested

sanctions

in

Accordingly, the
half,

and

finds

Novoselsky personally liable for $10,155.00 for violating § 1927.
Also, because all filings were signed by Novoselsky, and he appears

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to be the motivating force behind this litigation, attorneys Brian
Schroeder

and

Mark

Johnson

are

not

liable

for

these

§

1927

sanctions.
Further, the Court may sanction Novoselsky sua sponte pursuant
to § 1927, “as long as it provides [him] with notice regarding the
sanctionable conduct and an opportunity to be heard.”
435 F.3d at 720.
Motion.

Jolly Grp.,

The analysis above also pertains to Stevens’

While Stevens did not file her Motion pursuant to § 1927,

Novoselsky has been given notice of such sanctionable conduct and
a chance to respond to it through Zvunca’s Motion.

Accordingly,

the Court sanctions Novoselsky pursuant to § 1927 for his actions
relating to Stevens, and finds him liable to her for $2,432.00.
Again, Schroeder and Johnson are not liable for this amount.
B.

28 U.S.C. § 1447(c) Sanctions

Both Zvunca and Stevens also move for sanctions pursuant to 28
U.S.C. § 1447(c), which provides that “[a]n order remanding the
case may require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of the removal.”
Such expenses stretch from the commencement of the removal process
until

eventual

remand,

and

are

directly to the removal action.
330 (7th Cir. 1999).

limited

to

expenses

relating

See Tenner v. Zurek, 168 F.3d 328,

Such an award is discretionary.

See

Castellanos v. U.S. Long Distance Corp., 928 F.Supp. 753, 756 (N.D.
Ill. 1996).
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For the reasons stated in the § 1927 analysis, the Court
exercises its discretion and sanctions Novoselsky pursuant to
§ 1447(c) as to both Zvunca and Stevens.

The Court will not permit

double recovery, however, as the § 1927 sanctions more than cover
the amounts that would have been recoverable under § 1447(c).
C.

Rule 11(c) Sanctions

Finally, both Zvunca and Stevens move for sanctions for
Novoselsky’s

alleged

Procedure 11(b).

violations

of

Federal

Rule

of

Civil

Procedurally, such sanctions would be improper,

as the motions do not comply with the Rule 11(c)(2) requirement
that the motion be separate from any other motion.
Solfaro, 223 F.R.D. 184, 187–88 (S.D.N.Y. 2004).

See Avent v.

Accordingly, the

motions for Rule 11(c) sanctions are denied.
D.

Other Pending Motions

A number of motions in this case remain open.

As a matter of

housekeeping, in regard to motions filed prior to when this case
was remanded back to state court, Novoselsky’s Motion for Leave to
File is granted; Novoselsky’s Motion to Disqualify Counsel John
Xydakis is denied; Novoselsky’s Motion to Supplement is denied;
Novoselsky’s Motion to Dismiss is denied as moot; Novoselsky’s
Motion for Award of Fees, Expenses and Costs Pursuant to 28 U.S.C.
§ 1927 is denied, as it sought sanctions for actions that the
attorneys took in state court; Stevens’ Motion for Joinder is

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granted, nunc pro tunc, to March 2, 2011; and Zvunca’s Motion to
Stay is denied as moot.
Several motions have also been filed after Zvunca and Stevens
filed their March 31, 2011, sanctions motions. First, Zvunca filed
another sanctions motion against Novoselsky, James Dahl, and MB
Financial Bank on May 20, 2011.

The motion reads like a Rule 11

motion, but does not specifically seek sanctions pursuant to
Rule 11 and does not comply with the Rule 11 safe harbor provision.
Rather, it appears to ask the Court to exercise its inherent power
to invoke sanctions.

See Corley v. Rosewood Care Ctr., Inc., 142

F.3d 1041, 1058–59 (7th Cir. 1998). Such sanctions, however, “must
be invoked with the utmost caution.” Id. at 1059.

The Court will

not invoke sanctions for the false statements Zvunca alleges, and
accordingly denies Zvunca’s second sanctions motion.

The Court

also denies MB Financial Bank’s Motion to Strike Zvunca’s May 20
motion, and denies Novoselsky’s Motion for Sanctions that relates
to Zvunca’s May 20 motion.

Further, Novoselsky’s Motion to Quash

Notice of Subpoena is granted.
at this point.

There is no need for any discovery

It is time for the parties to disperse, settle

their remaining issues in state court, and bring an end to what has
become an unreasonable and unnecessary drain on judicial resources.
III.

CONCLUSION

For the reasons stated herein, Stevens’ March 31, 2011, Motion
for Sanctions is granted in part and denied in part, and Zvunca’s
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March 31 Motion for Sanctions is granted in part and denied in
part.

Novoselsky is personally liable to Zvunca for $10,155.00,

and personally liable to Stevens for $2,432.00.
The other open motions in this case are granted and denied as
set forth in Section II.D. above.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE: 7/5/2011

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