Stove Builder International, Inc. v. GHP Group, Inc.

Filing 71

MEMORANDUM Opinion and Order Signed by the Honorable Milton I. Shadur on 7/24/2012:Mailed notice(srn, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
STOVE BUILDER INTERNATIONAL,
INC.,
Plaintiff,
v.
GHP GROUP, INC.,
Defendant.

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No.

11 C 1098

MEMORANDUM OPINION AND ORDER
During the July 19, 2012 status hearing that had been set by
this Court, it acknowledged its earlier error in having failed to
do what it always seeks to do by way of management of its court
calendar:

that is, to set a next court date, whether for a

status hearing or otherwise.

This memorandum opinion and order

is issued to cure that oversight.1
In response to this Court’s inquiry during the course of
that July 14 status hearing, counsel for the parties responded
that they had been awaiting this Court’s ruling on the
controverted Fed. R. Civ. P. (“Rule”) 11(b)(3) motion filed by
GHP Group, Inc. (“GHP”) that had culminated in this Court’s
February 14, 2012 memorandum opinion and order (“Opinion”).

But

a review of the bidding discloses that any “mea culpa” on this

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This Court discovered the oversight when it recently
performed the time-consuming process of examining, case by case,
its “bible” sheets that it maintains in a three-ring binder that
contains a single sheet for each of the undisposed-of cases
pending before it.

Court’s part was really inappropriate--here is how the Opinion
concluded:
Under these circumstances, a final decision as to the
imposition of Rule 11 sanctions will be deferred:
1. As stated earlier, no sanctions will
attach to the filing of the original Complaint,
for counsel’s initial reliance on an apparently
plausible account by their client has met the
reasonable inquiry standard.
2. By contrast, if GHP’s account proves out
on the basis that further reasonable investigation
after the filing of the original Complaint would
have disclosed Stove Builder’s version to be
unfounded, Rule 11 sanctions will be awarded for
Stove Builder’s unjustified filing of the Amended
Complaint and Second Amended Complaint.
If this Court had intended to rule on the disputed
Rule 11(b)(3) motion filed by GHP without any further input from
either of the litigants, why would it have said that a final
decision on the imposition of such sanctions would be “deferred”?
Both that and the reference to “proves out” in the second of the
above-quoted paragraphs from the Opinion, when coupled with the
Opinion’s discussion that had preceded that concluding statement,
should have been understood as signaling that unless Stove
Builder were to report that further investigation had taken place
and had disclosed a reasonable foundation for its earlier
version, this Court’s ruling on the Rule 11 motion would go
against Stove Builder.
With nothing having been forthcoming from Stove Builder
following the issuance of the Opinion, this Court grants GHP’s
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motion to the extent indicated there--it finds that Stove
Builder’s filing of the Amended Complaint and Second Amended
Complaint without having withdrawn its original charge against
GHP was indeed a violation of Rule 11(b)(3).

And it further

finds that the appropriate sanction for that violation is fee
shifting:

that is, an award to prevailing party GHP of its

“reasonable expenses, including attorney’s fees, incurred for the
motion” (see Rule 11(c)(2)).
It is to be hoped that the quantification of that award can
be determined without any meaningful increase by the fees-on-fees
factor.

This Court will expect a report from counsel for the

parties at the status hearing to be held on August 3, 2012 at
8:45 a.m.

________________________________________
Milton I. Shadur
Senior United States District Judge
Date:

July 24, 2012

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