Priddle v. Malanis et al

Filing 223

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 5/15/2017:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SOMA GETTY PRIDDLE,

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Plaintiff,
v.
DEAN MALANIS and
GREAT LAKES SERVICE II, INC.,
Defendants.

No. 12-CV-5831
Hon. Amy J. St. Eve

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Defendants Dean Malanis and Great Lakes Service II, Inc. have filed a petition for
attorneys’ fees and costs pursuant to the Federal Rule of Civil Procedure 11. For the following
reasons, the Court denies Defendants’ petition.
BACKGROUND
Plaintiff lives in Norwalk, Wisconsin, but works as an airline pilot at O’Hare Airport.
(12-cv-5831, R. 158, Third Amended Complaint, ¶¶ 1, 9.) Defendants reside or are incorporated
in Illinois. (Id. ¶¶ 2-4.) Plaintiff was driving to work at O’Hare Airport at approximately 5:30
a.m. on July 24, 2010. (Id. at ¶ 10.) That morning there were heavy rains and areas of localized
flash flooding. (Id. at ¶ 11.) Due to a police barricade on Thomas Drive, Plaintiff was directed
into a parking lot. (Id. at ¶ 19.) While stopped in the parking lot, a surge of water swept
Plaintiff’s vehicle into a drainage canal. (Id. at ¶ 21.) The items in Plaintiff’s vehicle, a Dodge
Ram truck, included: farm equipment, emergency equipment, personal supplies, pet supplies,
law school materials, and materials containing Security Sensitive Information (“SSI”). (Id. at ¶¶

24, 26-27). Plaintiff escaped the vehicle by breaking through a metal safety barrier and a rear
sliding window but could still see her belongings in the vehicle after it was carried some
distance. (Id. at ¶¶ 28, 29.) Plaintiff attempted to retrieve her belongings that day, but she was
informed by the Bensenville Police the water was still too dangerous and told to return after at
least twenty-four hours. (Id. at ¶¶ 31-32.)
Plaintiff came back to retrieve her vehicle the next day, but she could not find it and
reported the truck as missing. (Id. at ¶¶ 35, 37.) The Bensenville Police Department located
Plaintiff’s vehicle in the possession of Defendants. (Id. at ¶ 37.) Malanis refused to return
Plaintiff’s truck that day. (Id. at ¶¶ 38-39.) On July 26, 2010, Plaintiff went to Malanis’s lot and
saw that most of the contents within the vehicle were missing. (Id. at ¶¶ 41, 45.) Malanis denied
any knowledge of how the items in the truck went missing. (Id. at ¶¶ 47-49.) Malanis then
asked Plaintiff for $2,400.00 to release her vehicle but, after Plaintiff had paid, refused to release
the vehicle until the next day. (Id. at ¶¶ 50, 53-54, 56.) Malanis finally released Plaintiff’s
vehicle on July 27, 2010, after demanding an additional $150.00 in cash. (Id. at ¶ 60.)
When asked by Bensenville Police who authorized the tow of Priddle’s vehicle, Malanis
initially stated that he could not remember. (Id. at ¶ 61.) After further investigation, Malanis
told police that he was authorized by a person named “George” at an address near the final
location of Plaintiff’s vehicle. (Id. at ¶ 62.) The address, however, did not correspond to a
building, and no one named “George” was located at the nearby building. (Id.)
Plaintiff filed two pro se Complaints, 12-cv-5831 and 15-cv-5833, against Dean Malanis
and Great Lakes Service II, Inc. and Darwin Asset Management, Thomas Drive Partnership, and
the owner of record of 705-715 Thomas Drive, Bensenville, Illinois, on July 24, 2012. On
February 6, 2013, the court consolidated the two cases and dismissed both Complaints without

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prejudice. The court dismissed Plaintiff’s Amended Complaints without prejudice on June 26,
2014. Plaintiff filed Second Amended Complaints on July 17, 2014, which the court dismissed
without prejudice on February 4, 2015. Plaintiff filed two Third Amended Complaints on
February 25, 2015. Plaintiff’s Third Amended Complaint against Darwin Asset Management,
Thomas Drive Partnership, and the owner of record of 705-715 Thomas Drive, Bensenville,
Illinois, (12-cv-5833, R. 88), was dismissed for lack of subject-matter jurisdiction. The court
referred Plaintiff’s Third Amended Complaint against Dean Malanis and Great Lakes Service II,
Inc., (12-cv-5831, R. 158), to the magistrate judge for a final jurisdictional hearing.
Magistrate Judge Weisman issued his Report and Recommendations on September 14,
2016, and found that Plaintiff properly alleged only $49,571.52 in damages. Plaintiff objected to
Magistrate Judge Weisman’s findings. On January 25, 2017, Plaintiff’s objections were denied,
the Report and Recommendations were adopted, and the case was dismissed for lack of subjectmatter jurisdiction.1 On February 10, 2017, Defendants filed the present petition.
LEGAL STANDARD
In the Seventh Circuit, “an attorney violates Rule 11 in maintaining a claim that is
unwarranted by existing law or has no reasonable basis in fact.” Fabriko Acquisition Corp. v.
Prokos, 536 F.3d 605, 610 (7th Cir. 2008) (quoting Fed. R. Civ. P. 11(b)). Specifically, a court
“may impose Rule 11 sanctions for arguments ‘that are frivolous, legally unreasonable, without
factual foundation, or asserted for an improper purpose.’” Indep. Lift Truck Builders Union v.
NACCO Materials Handling Grp., Inc., 202 F.3d 965, 968-69 (7th Cir. 2000) (quoting Fries v.
Helsper, 146 F.3d 452, 458 (7th Cir. 1998)); see also Jimenez v. Madison Area Tech. College,
321 F.3d 652, 656 (7th Cir. 2003) (“Rule 11 requires that an attorney or party, certify to the best

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The Executive Committee transferred this case from Judge John W. Darrah to the Court on March 28, 2017.

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of his knowledge, information, and belief, formed after an inquiry reasonable under the
circumstances that any pleading presented to the court is not presented for an improper purpose,
that the claims therein have a legally sufficient basis, and that the allegations and other factual
contentions have evidentiary support.”); Brunt v. Serv. Emp. Int’l Union, 284 F.3d 715, 721 (7th
Cir. 2002) (“Sanctions will be imposed if counsel files a complaint with improper motives or
without adequate investigation.”). Under Rule 11(c)(4), sanctions may include “part or all of the
reasonable attorney’s fees and other expenses directly resulting from the violation.” Fed. R. Civ.
P. 11(c)(4).
“The burden of proof is on the Rule 11 fee opponent to establish objective reasonableness
and adequate pre-filing investigation once a prima facie showing of sanctionable conduct has
occurred.” Lord v. High Voltage Software, Inc., No. 09 CV 04469, 2017 WL 1178147, at *5
(N.D. Ill. Mar. 30, 2017) (citing Smart Options, LLC v. Jump Rope, Inc., No. 12 CV 2498, 2013
WL 500861, at *3 (N.D. Ill. Feb. 11, 2013)). Specifically, “[o]nce a litigant moves based upon
non-frivolous allegations for a Rule 11 sanction, the burden of proof shifts to the non-movant to
show it made a reasonable pre-suit inquiry into its claim.” Digeo, Inc. v. Audible, Inc., 505 F.3d
1362, 1368 (Fed. Cir. 2007); see also Bannon v. Joyce Beverages, Inc., 113 F.R.D. 669, 674
(N.D. Ill. 1987) (“Once the movant puts forth a prima facie showing that the facts as known to
the plaintiff before he filed the complaint were not consistent with allegations in the complaint,
certainly the burden shifts to the non-movant to explain that either the facts are not as they have
been presented or that in spite of the facts the circumstances at the time the pleading was filed,
reasonable inquiry having been made, justified making the allegations.”).
The Supreme Court has instructed that Rule 11 “requires a court to consider issues rooted
in factual determinations” and has explained, as an example, that “to determine whether an

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attorney’s prefiling inquiry was reasonable, a court must consider all the circumstances of a
case.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 401 (1990). “The court must undertake
an objective inquiry into whether the party or his counsel should have known that his position is
groundless.” Cuna Mut. Ins. Soc. v. Office and Prof. Emps. Int’l Union, Local 39, 443 F.3d 556,
560 (7th Cir. 2006) (citing Nat’l Wrecking Co. v. Int’l Bhd. of Teamsters, Local 731, 990 F.2d
957, 963 (7th Cir. 1993). A court may impose sanctions on pro se litigants, though the court can
consider pro se status when determining if sanctions are appropriate. Ochs v. Hindman, 984 F.
Supp. 2d 903, 912 (N.D. Ill. 2013) (citing Vukadinovich v. McCarthy, 901 F.2d 1439, 1445 (7th
Cir. 1990)). Furthermore, the Seventh Circuit requires that “district judges reflect seriously, and
consider fully, before imposing (or denying) sanctions.” Malec Holdings II Ltd. v. Eng., 217 F.
App’x 527, 529 (7th Cir. 2007) (citing Mars Steel Corp. v. Cont’l Bank N.A., 880 F.2d 928, 936
(7th Cir. 1989)).
ANALYSIS
By signing and presenting a paper to the court, a party is certifying that “(1) it is not
being presented for any improper purpose, such as to harass, cause unnecessary delay, or
needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are
warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing
existing law or for establishing new law; [and] (3) the factual contentions have evidentiary
support or, if specifically so identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery. . . .” Fed. R. Civ. P. 11(b)(1)-(3). “Rule 11 of
the Federal Rules of Civil Procedure imposes on any party who signs a pleading, motion, or
other paper ̶ whether the party’s signature is required by the Rule or is provided voluntarily ̶ an
affirmative duty to conduct a reasonable inquiry into the facts and the law before filing, and that

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the applicable standard is one of reasonableness under the circumstances.” Bus. Guides Inc. v.
Chromatic Comm., Ent. Inc., 498 U.S. 533, 550 (1991).2 Defendants argue that Plaintiff violated
Rule 11 because (1) “Plaintiff’s repeated filings . . . were filed solely for the purpose of harassing
these Defendants and increasing the costs of this litigation”, (2) “Plaintiff’s pleadings were not
warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing
existing law or for establishing new law, as she was repeatedly advised by the Court that she
could not assert various claims she presented and/or could not recover various damages under the
claims she was presenting”, and (3) “Plaintiff’s factual contentions utterly lacked evidentiary
support.” (R. 213, Petition for Attorneys’ Fees and Costs, at 4, 5.)
Defendants have not made a prima facie showing that Plaintiff’s filings were filed for the
sole purpose of harassing Defendants and increasing litigation costs. The Court asking Plaintiff
to “evaluate whether her resource would be better utilized by taking her claims to state court”
does not show that any future filing was made solely for the purpose of harassment or increasing
the costs of litigation. While Defendants claim that Plaintiff ignored “directives from the Court
to pursue her claim in state court,” (R. 220, Defendant’s Reply, at 3), the record does not reflect
any such directive. Plaintiff represents that she gave “careful consideration” as to whether
federal jurisdiction was warranted and concluded that her interests were best served in federal
court due to allegedly persistent auto theft at the state and county level. (R. 217, Plaintiff’s

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Plaintiff argues that her filings must meet the “objectively reasonable basis” test for whether fees should be
assessed in an improperly removed case. See Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). By
statute “[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.” 28 U.S.C. § 1447(c). This statute is inapplicable because it governs feeshifting when a case has been improperly removed from state court. Here, Plaintiff filed the suit in federal court at
the outset and the court dismissed her complaints for lack of subject matter jurisdiction. Whether there was an
“objectively reasonable basis” for removal is inapplicable to this case.

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Response, at 20.) Plaintiff was not solely intending to harass Defendants or increase litigation
costs.
Nor have Defendants made a prima facie showing that Plaintiff’s factual allegations
lacked evidentiary support. The standard certification for factual allegations under Rule 11(b)(3)
is “that there is (or likely will be) ‘evidentiary support’ for the allegation, not that the party will
prevail with respect to its contention.” Iosello v. Orange Lake Country Club Inc., No. 14 C
3051, 2015 WL 2330180, at *3 (N.D. Ill. May 14, 2015) (citing Fed. R. Civ. P. 11(b)(3)
Advisory Committee Notes (1993 Amendments)). Given Plaintiff’s status as a pro se litigant
from out of state, she appears to have conducted a reasonable inquiry into the factual basis of her
claims. Defendants failed to make a showing that Plaintiff’s allegations lacked any evidentiary
support or that any evidentiary support would not be found.
Defendants have made a prima facie showing that some of Plaintiff’s claims were not
warranted “by existing law or by a nonfrivolous argument for extending, modifying, or reversing
existing law or for establishing new law.” Fed. R. Civ. P. 11(b)(2). Plaintiff persisted in making
some claims that the court clearly ruled did not have a basis in law. Plaintiff argues the claims
involving the alleged theft of her Sensitive Security Information and her status as a covered
person under 49 C.F.R. § 1520 et seq., were issues of first impression and that the Court never
said that there was no private right of action created by the regulations. The latter argument is
plainly false. In ruling on the first Complaints, Judge Nordberg stated: “The defendants argue
that Section 1520 does not create an implied private right of action giving plaintiff the right to
sue third parties who may be in possession of SSI. We agree. Plaintiff has cited to no cases, nor
pointed to any textual basis, which would even remotely support such a right.” (R. 59, p. 3)
(emphasis added). Further, as noted in the memorandum opinion and order dismissing the

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Amended Complaints, the regulations only require that any covered person, whether they are an
employee of an air carrier or an owner and operator of a private aircraft or airport, who “becomes
aware that SSI has been released to unauthorized persons” must “promptly inform TSA or the
applicable DOT or DHS component or agency.” 49 C.F.R. § 1520.9(c) (2009). Plaintiff was
repeatedly told that claims related to the alleged theft of her SSI were not supported by the
regulations or any case law. Those claims were frivolous.
Plaintiff argues that Defendants made frivolous arguments and ran up litigation costs.
First, Plaintiff notes Defendants refused to engage in settlement talks, but there is no requirement
to do so. Plaintiff also claims Defendants erroneously argued that Plaintiff misallocated damages
for truck repairs and that Plaintiff’s truck was totaled. However, those are non-frivolous legal
arguments about the proper allocation and amount of damages which affected diversity
jurisdiction. Plaintiff further argues attorneys’ fees should be denied because of Defendants’
repeated assertions that Plaintiff did not reside in Wisconsin. For these assertions, Defendants
relied on a LinkedIn profile for Plaintiff which stated that she was in the “Greater Chicago Area”
and an unnamed “Pilots and Airmen” registry site listing an address in Summit, Illinois. (R. 102,
at 4; R. 133, at 5-6.) Defendants have at least some basis for their claims that Plaintiff was not a
citizen of Wisconsin. Plaintiff is correct, however, that Defendants should have known that
Illinois law did not support their repeated arguments Plaintiff could not recover damages
reimbursed by insurance.
Defendants request reimbursement for all of their litigation costs. Where a “defendant
would have incurred [an] expense in any event[,] he has suffered no incremental harm from the
frivolous claim,” and “the court lacks a basis for shifting the expense.” Goodyear Tire & Rubber
Co. v. Haeger, 137 S. Ct. 1178, 1187 (2017) (citing Fox v. Vice, 563 U.S. 826, 836 (2011)).

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Plaintiff pled non-frivolous claims in her Complaints but was unable to meet the threshold for
federal diversity jurisdiction. Defendants would have incurred the costs of defending against
most of her claims and those costs cannot be shifted. Further, Defendants did not substantively
address Plaintiff’s frivolous allegations regarding SSI in subsequent briefs, except noting that
costs associated with them were unavailable in their brief to the Magistrate Judge when the Third
Amended Complaint was sent for a jurisdictional hearing and in their response to Plaintiff’s
Objections to the Magistrate Judge’s Report and Recommendation. As such, it is unclear what
costs arose from those frivolous claims.
Plaintiff’s filings were not made solely for the purpose of harassing these Defendants and
increasing the costs of this litigation and her factual contentions did not utterly lack evidentiary
support. While some of Plaintiff’s claims were not warranted by existing law or by a
nonfrivolous argument for extending, modifying, or reversing existing law or for establishing
new law, the costs to Defendants based on those claims are unclear, and seemingly negligible.
Therefore, Defendants’ request for attorneys’ fees and costs is denied.
CONCLUSION
For the foregoing reasons, the Court denies Defendant’s Petition for Attorneys’ Fees and
Costs.
DATED: March 15, 2017

ENTERED

______________________________
AMY J. ST. EVE
United States District Court Judge

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