ECIMOS, LLC et al v. Nordyne, LLC et al
ORDER granting 244 motion for leave to supplement; granting in part and denying in part 238 motion to enforce settlement agreement; granting 224 motion for reconsideration; granting in part and denying in part 247 renewed motion to dismiss; and denying as moot 231 motion for stay and denying as moot 249 countermotion for stay. Signed by Judge Samuel H. Mays, Jr on 08/11/2017. (Mays, Samuel)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
ECIMOS, LLC; and ELECTRICAL
NORTEK GLOBAL HVAC LLC; LOGICAL )
SYSTEMS, INC.; LOGICAL SYSTEMS, )
LLC; GAIL WAYNE ROANE; and MI)
Before the Court are six motions.
First, on September 13,
2016, Charles M. Weirich, Jr. (“Weirich”) filed a motion asking
the Court to reconsider a June 2016 award of sanctions against
Weirich and Daniel Frederick Peel (“Peel”) based on their conduct as counsel for Plaintiffs ECIMOS, LLC (“ECIMOS”) and Electrical Controls, Inc. (“EC”).
(Mot. of Pls.’ Attorney to Revise
Order to Remove Award of Sanctions Against Pls.’ Attorneys and
Supporting Mem. of Law, ECF No. 224 (“Reconsideration Mot.”).)
Systems, Inc. (“LSI”); Logical Systems, LLC (“LSL”); Gail Wayne
Roane (“Roane”); and Michael Gray (“Gray”) (collectively, “De-
fendants”) 1 filed a response to the Reconsideration Motion on
September 20, 2016.
(Defs.’ Resp. to Mot. of Pls.’ Attorney to
Revise Order to Remove Award of Sanctions Against Pls.’ Attorneys, ECF No. 229 (“Reconsideration Resp.”).)
On September 26,
2016, Magistrate Judge Diane Vescovo filed her report and recommendation addressing the Reconsideration Motion.
(R. & R. on
Pl.’s Mot. to Reconsider Order on Mot. to Dismiss, ECF No. 230
No parties objected to the Recon-
sideration Report, and the time to do so has passed.
(Id. at 6
(setting deadline for objections).)
Peel filed a motion asking the Court to stay an order compelling
payment of the June 2016 sanctions award.
(Motion to Stay Order
Compelling Payment of Sanctions and Supporting Mem., ECF No. 231
The same day, Defendants and former Defendant
Tesluk filed a response to the Stay Motion.
(Resp. of Pls.’
[sic] to Mot. to Stay Order Compelling Payment of Sanctions, ECF
No. 233 (“Stay Resp.”).)
Plaintiffs’ claims against Defendant David Tesluk (“Tesluk”)
were dismissed in this Court’s order dated June 15, 2016. (Order 12, ECF No. 195 (“June 2016 Order”).) He is no longer a defendant, but has a pending counterclaim and an unpaid award of
sanctions. (See Answer of David Tesluk to Third Am. Compl., and
Counter-Compl. of David Tesluk Against ECIMOS, LLC, and Electrical Controls, Inc. 20–22, ECF No. 55; Order Awarding Attorney
Fees and Expenses to the Defs. 20, ECF No. 208 (“Fee Order”).)
The third and fourth motions before the Court are interrelated.
On October 4, 2016, Defendants and Tesluk filed a motion
asking the Court to enforce a settlement agreement purportedly
Agreement, ECF No. 238 (“Settlement-Enforcement Mot.”); see also
Defs.’ Mem. in Supp. of Mot. to Enforce Settlement Agreement,
ECF No. 238-1 (“Settlement-Enforcement Mem.”).)
On October 26,
2016, Stephen Olita, the principal of both Plaintiffs, emailed
to the Court a pro se response (the “Olita Response”) to the
On February 7, 2017, Plaintiffs,
represented by new counsel, submitted a motion asking for leave
to supplement the Olita Response.
(Mot. and Supporting Mem. for
Leave to Suppl. Resp. to Stephen G. Olita’s Resp. to Def.’s Mot.
to Enforce Settlement Agreement, ECF No. 244 (“Leave-to-Suppl.
Attached to the Leave-to-Supplement Motion is a pro-
(Suppl. Resp. to Stephen G. Olita’s Resp. to Defs.’ Mot
that responded to the Leave-to-Supplement Motion and the Settlement-Enforcement Response.
(Defs. Opp’n to Pls.’ Mot. for Leave
to Suppl. Resp. to Stephen G. Olita’s Resp. to Defs.’ Mot. to
The fifth and sixth motions before the Court are also interrelated.
On March 31, 2017, Defendants and Tesluk filed a
motion asking the Court to (1) enforce the purported settlement
(2) dismiss this action with prejudice.
(Defs.’ Second Renewed
On April 14, 2017, Plaintiffs filed a response to the
(Pls.’ Resp. to Defs.’ Second Renewed Mot. to
Dismiss and for Sanctions and Counter-Mot. to Stay Proceedings
Pending the Court’s Ruling on Defs.’ Mot. to Enforce Settlement
Agreement, ECF No. 249 (“Dismissal Resp.”).)
The Dismissal Re-
sponse included a “countermotion” asking the Court to stay these
proceedings until the Court rules on the Settlement-Enforcement
Motion (“Stay Countermotion”).
(Id. at 3.)
On April 24, 2017,
Defendants and Tesluk filed a document serving as a reply in
support of the Dismissal Motion and as a response to the Stay
(Defs.’ Reply in Supp. of Second Renewed Motion
to Dismiss and for Sanctions, ECF No. 252 (“Dismissal Reply”).)
Defendants and Tesluk filed identical documents at ECF Nos. 247
and 248. The document at ECF No. 248 is stricken.
GRANTED in part and DENIED in part.
The Reconsideration Motion
is GRANTED, and the sanctions levied against Weirich and Peel in
GRANTED in part and DENIED in part.
This action is DISMISSED
The Stay Countermotion and the Stay Motion are
DENIED as moot.
The history of this matter has been recounted in, inter
alia, (1) Section I of Magistrate Judge Vescovo’s report and
recommendation addressing a motion to dismiss filed by Defendants and Tesluk in September 2015, and (2) Section I of the June
(R. & R. on Defs.’ Mot. to Dismiss and Order Grant-
ing Defs.’ Mot. to Strike the Pls.’ Suppl. Resp. and Order Denying Pls.’ Mot. for Leave to File DVDs and Order Denying Defs.’
Mot. for Leave to File Notice of Additional Deficiencies 3–25,
ECF No. 183 (“March 2016 Report”); June 2016 Order 3–5.)
following background section addresses subsequent proceedings.
On July 15, 2016, Defendants filed a “renewed” motion to
dismiss based on “continued discovery deficiencies” by Plaintiffs.
(Defs.’ Renewed Mot. to Dismiss Based on Pls.’ Continued
Discovery Deficiencies or, Alternatively, Mot. for Extension of
Time 1, ECF No. 197 (“July 2016 Mot. to Dismiss”).)
complained of discovery deficiencies after the March 2016 Report,
Plaintiffs had done nothing to address their outstanding discovery deficiencies.
(See, e.g., id. at 2–6.)
dismissal as a discovery sanction.
(See, e.g., id. at 6–7.)
The Court referred the July 2016 Motion to Dismiss to Magistrate
(Order of Reference, ECF No. 207.)
On July 22, 2016, Magistrate Judge Vescovo issued an order
awarding Defendants and Tesluk certain attorney fees and expenses pursuant to the June 2016 Order.
(See generally Fee Order.)
The June 2016 Order had ordered Plaintiffs, Weirich, and Peel to
pay attorney fees to Defendants and Tesluk as a sanction.
2016 Order 12–16.)
After entering the June 2016 Order, the
Court referred to Magistrate Judge Vescovo various objections
Plaintiffs had made to the requested amount of attorney fees.
(See Objs. of Pls. and Pls.’ Counsel to Amount of Attorneys’
Fees Requested in Affidavits of Defense Counsel, ECF No. 181;
Order of Reference, ECF No. 196.)
The Fee Order addressed those
(See generally Fee Order.)
The Fee Order required
Plaintiffs to pay Defendants and Tesluk $53,902.98, and required
Weirich and Peel to pay Defendants and Tesluk $51,223.38.
The payments were due “within twenty-eight days” ––
i.e., by August 19, 2016.
(Id. at 20.)
On July 29, 2016, Plaintiffs filed a response to the July
2016 Motion to Dismiss.
(Pls.’ Resp. to Defs.’ Renewed Mot. to
Dismiss or Alternatively, Mot. for Extension of Time, ECF No.
On August 24, 2016, Plaintiffs, Weirich, and Peel filed a
document expressing various objections to the Fee Order.
of Pls. and Pls.’ Counsel to Order Awarding Attorney Fees and
Expenses to the Defs., ECF No. 215 (“Fee-Order Objs.”).)
gust 29, 2016, Defendants filed a reply in support of the July
2016 Motion to Dismiss.
(Defs.’ Reply in Supp. of their Renewed
Mot. to Dismiss Based on Pls.’ Continued Discovery Deficiencies
or, Alternatively, Mot. for Extension of Time, ECF No. 216.)
On August 30, 2016, Defendants filed a motion asking the
Court to compel Plaintiffs and Plaintiffs’ Counsel to comply
with the Fee Order.
(Defs.’ Notice and Mot. to Compel Compli-
ance with the Court’s Order, ECF No. 217 (“Mot. to Compel Compliance”).)
The Motion to Compel Compliance represented that
“Plaintiffs and their counsel have failed to comply with [the
Fee Order],” and asked the Court to compel the ordered payments.
(Id. at 1.)
The Court referred the Motion to Compel Compliance
to Magistrate Judge Vescovo.
(Order of Reference, ECF No. 220.)
On September 13, 2016, Weirich filed the Reconsideration
The Court referred the Reconsideration Motion to Magis-
trate Judge Vescovo on September 15, 2016.
ECF No. 225.)
(Order of Reference,
The same day, Plaintiffs filed a response to the
Motion to Compel Compliance.
(Pls.’ Resp. to Defs.’ Notice and
Mot. to Compel Compliance with the Court’s Order, ECF No. 226
(“Mot. to Compel Compliance Resp.”).)
On September 19, 2016, Magistrate Judge Vescovo granted the
Motion to Compel Compliance.
(Order Granting Defs.’ Mot. to
Compel Pls.’ Compliance with the Ct.’s Order, ECF No. 227 (“Order Granting Mot. to Compel Compliance”).)
and Peel had argued that the Fee Order was not a final order and
that, until it was final, paying the sanctions award was unnecessary.
(See Mot. to Compel Compliance Resp. 2–3.)
Weirich, and Peel to pay the sanctions award within seven days,
by September 26, 2016.
(Order Granting Mot. to Compel. 4–5.)
On September 26, 2016, Magistrate Judge Vescovo filed the
It recommends that the Court deny the
Reconsideration Motion “to the extent [it] seeks revision of the
[March 2016 Report] but that the Court reconsider [the June 2016
Order] if [the Court had] failed to consider” Plaintiffs’ objections to the March 2016 Report.
(Id. at 2.)
Weirich and Peel filed the Stay Motion on September 27,
The Stay Motion represents that the parties have “reached
an agreement for the resolution of all claims, counterclaims,
and sanctions awards.”
(Stay Mot. ¶ 1.)
The gravamen of the
motion is that, because the settlement agreement has resolved
the sanctions award, enforcing the award is unnecessary.
same day, the parties filed a Notice of Settlement.
Plaintiffs also filed the Stay Response.
On October 4, 2016, Defendants and Tesluk filed the Settlement-Enforcement Motion.
That motion recounts the history of
Enforcement Mot. ¶¶ 1–7; see also Settlement-Enforcement Mem. 2–
According to Defendants and Tesluk, the parties reached a
binding settlement agreement verbally on Friday, September 23,
2016, “with the understanding that the settlement would be further
(Settlement-Enforcement Mot. ¶ 1.)
Following negotiations over
the weekend and on the following Monday, “[a]t 3:00 pm on Monday, September 26, 2016, [Weirich] sent counsel for Defendants
an email communicating Plaintiffs’ acceptance of the final draft
of the settlement agreement.”
(Id. ¶ 3.)
On September 27 and
28, however, Weirich and Peel “advised Defendants that [Stephen
Olita] had not signed the agreed upon [Written Settlement Agreement
calls or text messages.”
(Id. ¶ 4.)
Late in the afternoon on
Defendants . . .
that [Olita] was no longer willing to sign the [WSA].”
The Settlement-Enforcement Motion asks the Court to “find
that the [WSA] is binding upon all Parties”; “[d]ismiss this
case, with prejudice”; and “[a]ward Defendants their attorney
fees and costs incurred since Monday, September 26, 2016, including
Enforcement Motion, “as a sanction for Plaintiffs’ and Mr. Olita’s conduct.”
(Id. ¶ 9(a)–(c).)
The same day that Defendants and Tesluk filed the Settlement-Enforcement Motion, Weirich and Peel filed motions to withdraw as Plaintiffs’ counsel.
(Charles M. Weirich, Jr.’s Am.
Mot. to Withdraw as Counsel for Pls. and Supp. Mem. of Law, ECF
No. 236 (“Weirich Withdrawal Mot.”); Daniel F.B. Peel’s Motion
to Withdraw as Counsel for Pls. and Supp. Mem. of Law, ECF No.
237 (“Peel Withdrawal Mot.”).)
On October 12, 2016, the Court
entered an order that, inter alia, granted the withdrawal motions.
(Order 8–11, ECF No. 239 (“October 2016 Order”).)
order also instructed Plaintiffs to respond to the SettlementEnforcement Motion within fourteen days.
(Id. at 1, 11–12.)
On October 26, 2016, Olita sent the Court an email with numerous attachments, including the Olita Response.
Stephen Olita, ECIMOS, LLC, to Hon. Samuel H. Mays, Jr. (Oct.
On November 9, 2016, Defendants and Tesluk filed a
Notice Regarding Motion to Enforce Settlement Agreement.
The notice states that Defendants and Tesluk received
the Olita Response and argues that the Court should grant the
(See generally id.)
On December 27, 2016, three attorneys with Bateman Gibson,
LLC, filed notices of appearance seeking to represent Plain10
(Notice of Appearance, ECF No. 241 (appearance of J.
O’Neal Perryman); Notice of Appearance, ECF No. 242 (appearance
of Ralph T. Gibson); Notice of Appearance, ECF No. 243 (appearance of Everett B. Gibson).)
On February 7, 2017, Plaintiffs,
through their new counsel, filed the Leave-to-Supplement Motion
and the accompanying Settlement-Enforcement Response.
vamen of the Settlement-Enforcement Response is that Weirich and
Peel pursued their own interests, not Plaintiffs’, when negotiating
On February 17, 2017, Defendants and Tesluk
filed the Leave-to-Supplement Opposition.
On February 28, 2017, the Court entered an order addressing
the July 2016 Motion to Dismiss.
(Order, ECF No. 246.)
Court noted that, if it granted the Settlement-Enforcement Motion, the July 2016 Motion to Dismiss would be moot.
The Court denied the July 2016 Motion to Dismiss to the ex-
tent it requested dismissal of the action.
(Id. at 3.)
Defendants had faced a deadline when they filed the July 2016
Motion to Dismiss, that motion had requested, in the alternative, an extension of time to file a motion for sanctions based
on any “additional or new discovery deficiencies.”
Court granted the July 2016 Motion to Dismiss insofar as it requested an extension of time.
The Court gave Defendants
until March 31, 2017, “to file a motion for sanctions based on
additional or new discovery deficiencies.”
On March 31,
2017, Defendants filed the Dismissal Motion.
On April 14, 2017, Plaintiffs filed the Dismissal Response,
which included the Stay Countermotion.
On April 24, 2017, De-
fendants filed the Dismissal Reply.
The operative complaint in this action is the Third Amended
Complaint filed by Plaintiffs on January 14, 2015.
Compl. for Breach of Contract, Theft of Trade Secrets, Conversion, Civil Conspiracy, Procurement of Breach of Contract, and
Interference with Business Relations, ECF No. 47 (“Third Am.
Under 28 U.S.C. § 1331, U.S. district courts have
original jurisdiction “of all civil actions arising under the
Third Amended Complaint asserts, inter alia, that Defendants and
Tesluk violated the U.S. Copyright Act of 1976 by infringing on
copyrighted material in Plaintiffs’ Integrated Process Control
(See, e.g., Third Am. Compl. ¶¶ 14, 69–77.)
It also asserts, inter alia, that Defendants’ and Tesluk’s conduct related to the IPCS violated the Digital Millennium Copyright Act of 1998.
(Id. ¶¶ 78–85.)
Those claims arise under
the Constitution or laws of the United States.
The Court has
state-law claims under 28 U.S.C. § 1367(a).
Those claims derive
from a “common nucleus of operative fact” with the federal-law
United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725
(1966); Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576, 588–89
(6th Cir. 2016).
Plaintiffs to “supplement” the Olita Response with the Settlement-Enforcement Response.
(Leave-to-Suppl. Mot. 1.)
tiffs represent that, when Olita submitted the Olita Response,
Plaintiffs had been unable to find substitute counsel following
the withdrawals of Weirich and Peel.
(Id. at 1–2.)
represent that they found replacement counsel on December 27,
would cause “minimal” prejudice to Defendants.
(Id. at 2.)
The Leave-to-Supplement Opposition argues that the Settlement-Enforcement Response is “procedurally improper,” “untimely,”
Suppl. Opp’n 3; see generally id. at 3–4.)
Neither Plaintiffs nor Defendants and Tesluk provide any
citations to rules or caselaw addressing the Court’s ability to
grant Plaintiffs leave to file the Settlement-Enforcement Response.
The Court will not rely on the Olita Response.
court, corporations and limited-liability companies must be represented by counsel.
See, e.g., Sharpe v. Sierra Leone Ministry
of Surveys, Lands & Env’t, No. 2:13-CV-00187, 2015 WL 247949, at
*2 (S.D. Ohio Jan. 20, 2015) (citing cases) (corporations), report and recommendation adopted sub nom. Sharpe v. Sierra Leone
Ministry of Surveys, No. 2:13-CV-187, 2015 WL 5190951 (S.D. Ohio
Sept. 4, 2015); Wilson v. Acacia Dermatology PLLC, No. 1:11-CV00069, 2011 WL 3651779, at *1 (M.D. Tenn. Aug. 18, 2011) (citing
cases) (limited-liability companies).
Olita is not an attorney.
He cannot represent ECIMOS or EC.
The Court construes the Leave-to-Supplement Motion as a request to permit a late filing.
The October 2016 Order gave
Plaintiffs until October 24, 2016, to respond to the SettlementEnforcement Motion.
(October 2016 Order 12.)
Supplement Motion asks the Court to consider a filing made on
February 7, 2017, well beyond the Court’s deadline.
“Matters of docket control . . . are within the sound discretion of the district court.”
Eng’g & Mfg. Servs., LLC v.
Ashton, 387 F. App’x 575, 582 (6th Cir. 2010) (citing Sixth Cir-
Under Rule 6(b)(1)(B), 3 “[w]hen an act may or must
be done within a specified time, the court may, for good cause,
extend the time . . . on motion made after the time has expired
Courts should determine whether there is excusable neglect considering “five principal factors”: “(1) the danger of prejudice
to the nonmoving party, (2) the length of the delay and its potential impact on judicial proceedings, (3) the reason for the
delay, (4) whether the delay was within the reasonable control
of the moving party, and (5) whether the late-filing party acted
in good faith.”
Ashton, 387 F. App’x at 582 (quoting Nafziger
v. McDermott Int’l, Inc., 467 F.3d 514, 522 (6th Cir. 2006)).
Plaintiffs failed to act because of excusable neglect.
danger of prejudice to Defendants or Tesluk is minimal.
months after the relevant deadline, but given this matter’s convoluted history, considering the Settlement-Enforcement Response
will not deleteriously impact the proceedings.
Much of the de-
lay in filing the Leave-to-Supplement Motion occurred because
Plaintiffs were searching for new counsel.
It took Plaintiffs’
new counsel six weeks to file the Leave-to-Supplement Motion,
but there is no indication that the Leave-to-Supplement Motion
References to “Rule __” are to the Federal Rules of Civil Procedure.
GRANTED, and the Court will consider the Settlement-Enforcement
The Settlement-Enforcement Motion asks the Court to enforce
(Settlement-Enforcement Mot. ¶ 3.)
Enforcement Motion asks the court to “[f]ind the [WSA] is binding upon all [p]arties”; to “[d]ismiss this case, with prejudice”; and to “[a]ward Defendants their attorney fees and costs
incurred since . . . September 26, 2016 . . . as a sanction for
Plaintiffs’ and Mr. Olita’s conduct and pursuant to the terms
and provisions of the [WSA].”
(Id. ¶ 9.)
If the Court finds
that the WSA is not binding, the Settlement-Enforcement Motion
asks the Court, in the alternative, to dismiss the case with
prejudice, to order Plaintiffs’ to pay all attorneys’ fees and
expenses incurred “in connection with the negotiation and preparation of the [WSA],” and to order Plaintiffs to pay all previously awarded amounts.
(Id. ¶ 10.)
In support of the Settlement-Enforcement Motion, Defendants
and Tesluk argue that the Court has the “inherent power” to enforce settlement agreements agreed to by the parties.
ment-Enforcement Mem. 7 (quoting Brock v. Scheuner Corp., 841
F.2d 151, 154 (6th Cir. 1998).)
Defendants and Tesluk argue
that the WSA is valid and binding under Tennessee contract law.
(Id. at 7–10.)
The Settlement-Enforcement Response argues that the WSA is
not an enforceable agreement binding Plaintiffs.
Plaintiffs argue that, throughout
the WSA’s negotiation and preparation, Weirich and Peel had an
ethical conflict with Plaintiffs.
(Id. at 1–3.)
Plaintiffs claim that Weirich’s and Peel’s goal in settlement
negotiations was to resolve the Court’s sanctions award against
Weirich and Peel, and that Weirich and Peel sacrificed Plaintiffs’ interests to advance that goal.
(Id. at 2–3.)
tiffs also represent that, on September 26, 2016, Plaintiffs
expressed disagreement with the proposed settlement and refused
to sign the WSA.
(Id. at 4.)
Tesluk state that “Plaintiffs admit they sought and authorized
Defendants and Tesluk also state that under Plain-
agreement –– Plaintiffs are in violation of the Order Granting
Motion to Compel Compliance.
(Id. at 2, 4–6.)
The key issue is Weirich’s and Peel’s authority.
ants and Tesluk argue that the agreement between Weirich and
Peel and Defendants meets all the requirements of a contract.
Even if that be true, the agreement binds Plaintiffs only if
Weirich and Peel had the authority to enter into the agreement
on Plaintiffs’ behalf.
The Court need not address Plaintiffs’
arguments about an alleged ethical conflict if Weirich and Peel
lacked the authority to enter into the WSA on Plaintiffs’ behalf.
A preliminary question is what law governs the authority to
The WSA contains a choice-of-law provision stating that
the “Agreement shall be construed in accordance with and governed
Agreement § 16, ECF No. 238–14 (“WSA”).)
contend they did not agree to enter into the WSA.
is a dispute about contract formation, the choice-of-law provision in the relevant alleged contract does not dictate the law
that applies to contract formation.
See, e.g., Wynn v. Five
Star Quality Care Tr., No. 3:13-CV-01338, 2014 WL 2560603, at *6
(M.D. Tenn. June 5, 2014).
Defendants, Tesluk, and Plaintiffs rely on Tennessee authority
Mem. 7–10 (citing Tennessee law on contract formation); Settlement-Enforcement
When parties do not dispute that a given state’s
substantive law applies, the Court need not conduct a choice-oflaw analysis sua sponte.
Stein v. Regions Morgan Keenan Select
High Income Fund (In re Regions Morgan Keegan Sec., Derivative &
ERISA Litig.), 166 F. Supp. 3d 948, 957 (W.D. Tenn. 2014) (citing GBJ Corp. v. Eastern Ohio Paving Co., 139 F.3d 1080, 1085
(6th Cir. 1998)).
Tennessee law governs whether Weirich and
Peel had authority to bind Plaintiffs to the WSA.
“The general rule in Tennessee is that an attorney cannot
surrender substantial rights of a client, including agreeing to
dismissal of litigation which permanently bars a client from
pursuing his claim, without the express authority of the client.”
Absar v. Jones, 833 S.W.2d 86, 89 (Tenn. Ct. App. 1992)
(citing Tennessee cases); see also Harris v. City of Chattanooga,
Schauffert v. Certain Underwriters at Lloyd’s, London, No. 3-090510, 2011 WL 1156608, at *8 (M.D. Tenn. Mar. 28, 2011) (same),
1671638 (M.D. Tenn. May 3, 2011).
The WSA would “surrender sub-
stantial rights” of Plaintiffs because it would lead to the dismissal of Plaintiffs’ claims with prejudice.
(See WSA §§ 2.1,
To enter into the WSA on Plaintiffs’ behalf, Weirich and
Peel needed “express authority” to do so.
“In Tennessee, an agent’s express authority is that which
the principal gives to him in direct terms, either orally or
Rubio v. Precision Aerodynamics, Inc., 232 S.W.3d
738, 742–43 (Tenn. Ct. App. 2006) (citing Hollingshead Co. v.
Baker, 4 Tenn. App. 362, 368 (1927)).
There is no record evi-
dence that Plaintiffs gave Weirich and Peel express authority to
statement that, “on September 22, 2016, Plaintiffs authorized
[Weirich and Peel] to engage in settlement negotiations.”
tlement-Enforcement Resp. 3, cited at Leave-to-Suppl. Opp’n 2.)
That admission demonstrates, at most, that Weirich and Peel had
express authority to negotiate toward a settlement.
It does not
establish that Weirich and Peel had express authority to enter
into the WSA on Plaintiffs’ behalf.
Because Weirich and Peel did not have express authority to
enter into the WSA, the WSA does not bind Plaintiffs.
tlement-Enforcement Motion is DENIED.
The Settlement-Enforcement Motion seeks three forms of relief if this Court does not enforce the WSA: dismissal of the
case with prejudice, an order granting Defendants and Tesluk the
attorney fees expended in the negotiation and preparation of the
WSA, and an order demanding payment of “all amounts previously
awarded to the respective Defendants pursuant to the Court’s Orders.”
(Settlement-Enforcement Mot. ¶ 10.)
The request for
dismissal in the Settlement-Enforcement Motion is DENIED as moot
because the Court is granting the Dismissal Motion.
tion III.D infra.)
The request in the Settlement-Enforcement Motion for an order demanding payment of previously awarded amounts is GRANTED.
That relief is a natural result of the unenforceability of the
Plaintiffs are ORDERED to pay Defendants and Tesluk the
previously awarded amounts that Plaintiffs owe Defendants and
$3,347.50 to Tesluk; $1,326.00 to Roane and Gray collectively;
$11,733.48 to LSI and LSL collectively; and $37,496.00 to Nortek
(Fee Order 20.)
The request in the Settlement-Enforcement Motion for attorney fees incurred in the negotiation and preparation of the WSA
The Court is dismissing this action with prejudice.
A further sanctions award based on Defendants’ and Tesluk’s fees
associated with the WSA is not warranted.
The Reconsideration Motion asks the Court to revise the
June 2016 Order “to remove that portion which affirms the Magistrate’s
March 2016 Report.
(Reconsideration Mot. 1.)
It argues that
the objections of Plaintiffs’ counsel to the March 2016 Report
were timely and that the Court failed to give de novo consideration to them.
(Id. at 2–7.)
mends that the Court find that Weirich’s and Peel’s objections
to the March 2016 Report were timely.
It recommends that the Court deny the Reconsideration Mo-
tion “to the extent [it] seeks revision of the [March 2016 Report],” but recommends that the Court “reconsider [its June 2016
Order] if it failed to consider the objections filed by the
(Id. at 2.)
Congress enacted 28 U.S.C. § 636 to relieve the burden on
the federal judiciary by permitting the assignment of districtcourt duties to magistrate judges.
See United States v. Curtis,
States, 490 U.S. 858, 869–70 (1989)); see also Baker v. Peterson, 67 F. App’x 308, 310 (6th Cir. 2003).
“The district judge
must determine de novo any part of the magistrate judge’s disposition that has been properly objected to.”
72(b)(3); see also 28 U.S.C. § 636(b)(1).
Fed. R. Civ. P.
After reviewing the
evidence, the court is free to accept, reject, or modify the
U.S.C. § 636(b)(1).
The district court is not required to re-
view –– under a de novo or any other standard –– those aspects
of the report and recommendation to which no objection is made.
Thomas v. Arn, 474 U.S. 140, 150 (1985).
which no specific objection is filed.
The district court
Id. at 151–52.
whether it gave proper consideration to Plaintiffs’ objections
to the March 2016 Report.
(Reconsideration Report 5.)
Court reviewed those objections de novo, the proper level of review.
(See June 2016 Order 9–15.)
It gave the objections that
that Plaintiffs’ objections to the March 2016 Report were untimely.
(See, e.g., id. at 8 (“Even if Plaintiffs’ [objections
are] considered on [their] merits, [they] must fail.”).)
adopting the Reconsideration Report would lead to denial of the
The Court has further considered the award of sanctions
against Weirich and Peel.
Those sanctions are not appropriate
in the context of this case.
That conclusion is not based on
changed facts underlying the sanctions award, but on reconsideration of how the relevant legal standards apply to the facts.
The March 2016 Report bases the sanctions award against
Weirich and Peel on five separate sources: Rule 37(b)(2)(A),
Rule 37(c)(1), Rule 26(g)(3), 28 U.S.C. § 1927, and the court’s
(March 2016 Report 3, 32–33.)
None of those
sources mandates a sanctions award following problematic discovery conduct.
Under Rule 37(b)(2)(C), if a party “fails to obey an order
to provide or permit discovery,” the court “must order the diso23
bedient party, the attorney advising that party, or both to pay
the reasonable expenses, including attorney’s fees, caused by
The court need not issue such an order, however,
if “the failure was substantially justified or other circumstances make an award of expenses unjust.”
Fed. R. Civ. P.
Under Rule 37(c)(1)(A), “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or
(e),” the court “may order payment of the reasonable expenses,
including attorney’s fees, caused by the failure.”
As the use of “may” indicates, courts have wide discre-
tion in imposing sanctions under Rule 37(c)(1)(A).
Adkins v. Shelter Mut. Ins. Co., No. 5:12-CV-173-KKC-REW, 2014
WL 12648463, at *2 (E.D. Ky. Dec. 15, 2014); Marais v. Chase
Home Fin., LLC, 24 F. Supp. 3d 712, 730 (S.D. Ohio 2014).
26(a)(1) or (a)(3) and every discovery request, response, or objection
ord . . . .”
Rule 26(g)(3) states, “If a certification violates
court . . .
must impose an appropriate sanction on the signer, the party on
whose behalf the signer was acting, or both.
The sanction may
include an order to pay the reasonable expenses, including attorney’s fees, caused by the violation.”
use of “may” again indicates that courts have wide discretion
when deciding whether to impose a fee award under Rule 26(g)(3).
See, e.g., Beard v. City of Southfield, No. 14-13465, 2016 WL
6518490, at *4 (E.D. Mich. Nov. 3, 2016); Shapiro v. Plante &
Moran, LLP (In re Connolly N. Am., LLC), 376 B.R. 161, 193
(Bankr. E.D. Mich. 2007).
Pursuant to 28 U.S.C. § 1927, “[a]ny attorney . . . who so
multiplies the proceedings in any 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.”
“Courts have ‘broad discretion’ when
deciding whether to award sanctions under [§] 1927.”
v. Spirit Airlines, Inc., No. 16-CV-12114, 2017 WL 2438790, at
*7 (E.D. Mich. June 6, 2017) (quoting N. Ky. Right to Life
Comm., Inc. v. Ky. Registry of Election Fin., Nos. 95-6334, 965395, 1998 WL 13405, at *8 (6th Cir. Jan. 7, 1998)); see also
Miller v. Food Concepts Int’l, LP, No. 2:13-CV-00124, 2016 WL
5122541, at *2 (S.D. Ohio Sept. 21, 2016).
A court has the “inherent power” to assess attorney fees as
a sanction “when a party has acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.”
Chambers v. NASCO, Inc.,
501 U.S. 32, 45–46 (1991); see also United States ex rel. Tingley
3098178, at *2 (6th Cir. July 21, 2017).
The Supreme Court has
explicitly stated, however, that this power “must be exercised
with restraint and discretion.”
Chambers, 501 U.S. at 44; see
also Tingley, 2017 WL 3098178, at *2.
All of these sources provide that a court’s power to impose
attorney-fee sanctions is discretionary.
The source that comes
closest to creating a mandatory sanction –– Rule 37(b)(2)(A) ––
permits a court to refrain from imposing a fee award if circumstances would make that unjust.
There are such circumstances
37(b)(2)(A) is not justified, an award of fees under the other
sources of sanctioning authority would be unjustified.
A significant factor here is Weirich’s and Peel’s limited
time as counsel when the sanction-triggering conduct occurred.
When ECIMOS filed its original complaint in this action
in state court in May 2013, Weirich and Peel were its counsel.
(Compl. for Breach of Contract, Theft of Trade Secrets, Conversion, Civil Conspiracy, Procurement of Breach of Contract, and
Interference with Business Relations 12, ECF No. 1-3 at PageID
On March 17, 2014, Weirich and Peel moved to withdraw as
(Mot. to Withdraw as Counsel of Record for Pl. 1, ECF
No. 1-11 at PageID 647–48.)
Weirich and Peel were replaced by
(See, e.g., Notice of Appearance, ECF No. 1-11 at PageID 649;
Order Granting Mot. to Withdraw as Counsel of Record for Pl.,
ECF No. 1-11 at PageID 651.)
Culpepper and Field began as ECIMOS’s counsel of record in
EC was added in August 2014, in an amended com-
plaint filed by Culpepper, Field, and Michael Marshall, another
Evans Petree attorney.
(See, e.g., Mot. for Leave to Amend the
Compl., ECF No. 1-12 at PageID 666–67.)
The Evans Petree attor-
neys were Plaintiffs’ counsel when the case was removed to this
(See, e.g., Notice of Removal 7, ECF No. 1 (certificate
of service naming Evans Petree attorneys).)
On January 29, 2015, Plaintiffs filed a motion asking the
Court for permission to substitute counsel.
(Pls.’ Mot. for
Substitution of Counsel and Cert. of Consultation, ECF No. 53.)
On February 6, 2015, the motion was granted.
Pls.’ Mot. for Substitution of Counsel, ECF No. 56.)
(Id. at 1.)
On September 23, 2015, Bonderud filed a motion asking the
Court to permit him to withdraw from representing Plaintiffs.
(Mot. to Withdraw as Counsel of Record Without Substitution, ECF
Bonderud represented that “[m]ultiple grounds for
withdrawal exist” under Rule 1.16 of the Tennessee Rules of Professional Conduct and that “[t]hese matters constitute irreconcilable differences and good cause for withdrawal.”
(Id. ¶¶ 1,
Bonderud also represented that Plaintiffs had been unable
to secure substitute counsel.
(Id. ¶ 4.)
During a telephone status conference on December 16, 2015,
Bonderud represented that Plaintiffs had been able to find substitute counsel: Weirich and Peel.
(Minutes, ECF No. 150.)
same day, the Court entered an order granting Bonderud’s motion
(Order Granting Mot. to Withdraw, ECF No. 152.)
On January 4, 2016, Weirich and Peel filed their appearances in
(Notice of Appearance, ECF No. 153 (Peel); Notice
of Appearance, ECF No. 154 (Weirich).)
As discussed above (see Section I supra), Weirich and Peel
filed motions to withdraw as Plaintiffs’ counsel on October 4,
Both Weirich and Peel asserted that “[f]urther represen-
tation of Plaintiffs will result in a violation” of the Tennessee
Mot. ¶¶ 1, 2; Peel Withdrawal Mot. ¶¶ 1, 2.)
The Court granted
those motions on October 12, 2016, and Plaintiffs’ current counsel filed appearances in late December 2016.
(See Section I su-
Plaintiffs have changed counsel four times in less than
In two instances, counsel have asked to
withdraw because of ethical concerns about continued representation.
award against Weirich and Peel.
In their second time as coundisputes
During 2015, when Plaintiffs were represented by prior counsel,
Defendants and Tesluk collectively brought at least four discovery disputes to the Court.
(See, e.g., Defs. Nortek Global HVAC
LLC and Nortek, Inc.’s Mot. to Compel Discovery from Pls. ECIMOS, LLC, and Electrical Controls, Inc., ECF No. 79 (“First Mot.
to Compel”); Defs. Logical Sys. Inc., Logical Sys., LLC, and
Nortek Global HVAC LLC’s Mot. to Compel Discovery from Pls. ECIMOS, LLC, and Electrical Controls, Inc., ECF No. 82 (“Second
Mot. to Compel”); David Tesluk’s Mot. to Compel Discovery from
(“Third Mot. to Compel”); Defs. Logical Systems, Inc. and Logical Systems, LLC’s Mot. to Compel Discovery from Pls. ECIMOS,
LLC and Electrical Controls, Inc., ECF No. 99 (“Fourth Mot. to
These disputes resulted in orders compelling Plain-
tiffs (not Plaintiffs’ counsel) to pay $63,338.04 in attorney
(See, e.g., Pls.’ Objs. to Magistrate Judge’s Orders ¶ 1,
ECF No. 141 (stating amount of award); Order, ECF No. 149 (ordering
Plaintiffs’ discovery conduct throughout 2015
was not consistent with their obligations.
When they re-entered the case, Weirich and Peel became involved in these ongoing controversies.
Within a month of filing
their notices of appearance in January 2016, Weirich and Peel
attended a hearing on discovery issues before Magistrate Judge
(See, e.g., Minute Entry, ECF No. 160.)
preparation for and conduct at that hearing motivated the sanctions award in the March 2016 Report.
The Court agrees with the
March 2016 Report that Weirich’s and Peel’s handling of discovery matters in January 2016 was not optimal.
however, the Court no longer believes that Weirich’s and Peel’s
faults in January and February 2016 merit a sanctions award.
The circumstances here are sui generis.
The two most critical
are (1) the short time between Weirich’s and Peel’s re-entering
the case and the February 3, 2016 hearing, and (2) the clear
record that Plaintiffs are contumacious clients who are unwilling to comply with the rules and orders of the Court.
unique circumstances, the sanctions award against Weirich and
Peel will be stricken. 4
The March 2016 Order states that, “[s]hould the district court
not adopt this portion of the Report and Recommendation recommending the imposition of sanctions on the Plaintiffs’ attorneys, it is recommended that these expenses and attorney’s
fee[s] be imposed on the Plaintiffs.”
(March 2016 Report 55
The Court is reversing the sanctions award against
Weirich and Peel, but imposing those sanctions on Plaintiffs, as
recommended by the Magistrate Judge, would not be appropriate
given the result in this case. Plaintiffs are at fault for the
The Reconsideration Motion is GRANTED.
The sanctions award
against Weirich and Peel in the June 2016 Order is stricken.
Dismissal Motion and Stay Countermotion
Defendants argue in the Dismissal Motion that the Court
should enforce the WSA.
(Dismissal Mot. 2, 3, 6.)
ly, Defendants ask the Court to sanction Plaintiffs by, inter
alia, dismissing this action with prejudice.
(Id. at 4–6.)
challenge to the Settlement-Enforcement Motion, Plaintiffs have
(i) comply with the Court’s Order to pay the Court-awarded sanctions by September 26, 2016 . . . ; (ii) cure, much less attempt
to cure, their numerous discovery deficiencies that Defendants
identified over one year ago and which the Court ordered Plaintiffs to address; and (iii) take any action to prosecute this
(Id. at 1–2 (emphasis in original); see also id. at 2–
The Dismissal Response represents that Plaintiffs had difficulty finding replacement counsel after the Court permitted
status of discovery in January 2016. Because the Court is sanctioning Plaintiffs by dismissing this action, however, the further sanction of imposing additional expenses and fees on
Plaintiffs is unnecessary.
Peel’s conduct in negotiating the WSA was unethical.
Plaintiffs represent that they have “worked tirehave
thousands of dollars to engage in the discovery process in good
faith and get back into the lawsuit,” pointing to a purportedly
similar case in this District, ECIMOS, LLC v. Carrier Corp.,
Case No. 15-2726 (W.D. Tenn.).
(Id. at 2–3.)
that they have been waiting for the Court to resolve the Settlement-Enforcement Motion, arguing that “[i]t is illogical to expect
additional expenses, notwithstanding the considerable sanctions
award that would have to be paid, to address and engage in the
discovery process in good faith in this matter only to have the
illegal settlement agreement enforced against them.”
In the Stay Countermotion, Plaintiffs ask the Court to stay
discovery in this matter and stay “any continued efforts by Defendants to have the case dismissed through sanctions.”
In the alternative, Plaintiffs ask the Court for “ninety (90)
days to address the discovery issues in this matter and be given
an opportunity to get back into the lawsuit with the assistance
of their present representation.”
The Dismissal Reply reiterates Defendants’ view that the
WSA binds Plaintiffs.
(See, e.g., Dismissal Reply 1–2.)
fendants also reiterate that, if the Court does not enforce the
WSA, the Court should dismiss this matter with prejudice.
Defendants repeat their claim that Plaintiffs have done
nothing in the case since September 2016, and argue that Plaintiffs’ discovery conduct in a separate matter is irrelevant to
their conduct in this case.
(Id. at 2.)
Defendants argue that
the Stay Countermotion is “procedurally defective” and merely an
“attempt to avoid the inevitable consequences of Plaintiffs’ total lack of action on these issues for over a year.”
The WSA is not enforceable.
The remaining issue in the
Dismissal Motion is whether to dismiss this case with prejudice
based on Plaintiffs’ discovery misconduct.
The Dismissal Motion
invokes Rule 37(b)(2)(A), which provides for dismissal for a
41(b), which provides for dismissal where a plaintiff fails to
prosecute its case or fails to comply with a court order.
missal Mot. 5.)
Under either Rule 37(b)(2)(A) or Rule 41(b), courts consider four factors when deciding whether to impose dismissal as a
sanction for litigant conduct: “‘(1) whether the party’s failure
is due to willfulness, bad faith, or fault; (2) whether the adversary
(3) whether the dismissed party was warned that failure to cooperate
sanctions were imposed or considered before dismissal was ordered.”
Barron v. Univ. of Mich., 613 F. App’x 480, 484 (6th
Cir. 2015) (quoting United States v. Reyes, 307 F.3d 451, 458
(6th Cir. 2002)) (Rule 37(b)(2)(A) context); United States v.
$506,069.09 Seized from First Merit Bank, 664 F. App’x 422, 427
(6th Cir. 2016) (quoting Carpenter v. City of Flint, 723 F.3d
700, 703–04 (6th Cir. 2013)) (Rule 41(b) context).
All of these
factors favor dismissal of this action with prejudice.
Plaintiffs have repeatedly failed to comply with the rules
of discovery and the orders of this Court.
That failure is not
limited to the last year, but has continued for many years.
Plaintiffs’ conduct in the last year, however, is consistent
with their prior failures.
with the Court’s Order to pay the Court-awarded sanctions by
September 26, 2016.”
(Dismissal Mot. 1.)
Plaintiffs do not
dispute that they have not complied with that order.
erally Dismissal Resp.)
Plaintiffs argue that, because the WSA,
if approved, would have resolved the sanctions award, it would
make little sense for Plaintiffs to pay the award before the
Settlement-Enforcement Motion was resolved.
argument is not well-taken.
September 27, 2016.
(Id. at 3.)
Plaintiffs filed the Stay Motion on
The Stay Motion sought to stay Magistrate
Judge Vescovo’s Order Granting Motion to Compel Compliance.
Stay Motion has not been granted.
The deadline in the Order
Granting Motion to Compel Compliance has remained in effect.
failing to pay the sanctions award, Plaintiffs are in violation
of the Court’s order.
Defendants state that Plaintiffs have not cured, or attempted to cure, “their numerous discovery deficiencies that Defendants identified over a year ago and which the Court ordered
Plaintiffs to address.”
(Dismissal Mot. 1 (emphasis in origi-
Plaintiffs do not seriously dispute this claim.
generally Dismissal Resp.)
Instead, Plaintiffs argue that their
lack of progress should be excused because of the dispute over
the Settlement-Enforcement Motion.
is not well-taken.
(Id. at 3.)
As Defendants point out, Plaintiffs’ use of
the Settlement-Enforcement Motion is self-serving.
tiffs’ contention that the WSA was not enforceable and that the
should have paid the outstanding sanctions award and proceeded
By choosing not to do so, Plaintiffs ran the
risk of being where they are now: the Court has agreed that the
WSA is not enforceable, but Plaintiffs have done nothing to resolve the underlying discovery problems that derailed this case
in the first place.
Plaintiffs have repeatedly failed to comply
with the discovery ordered by the Court.
Defendants state that Plaintiffs have failed to “take any
action to prosecute this case” since September 2016.
Rule 41(b) permits a court to dismiss a case based on
a plaintiff’s failure to prosecute.
Plaintiffs’ only response
is that the Settlement-Enforcement Motion made it reasonable for
Plaintiffs to refrain from proceeding on their case.
reasons discussed above, that argument is not well taken.
The first dismissal factor provides that, “[f]or a plaintiff’s actions to be motivated by bad faith, willfulness, or
fault, his conduct ‘must display either an intent to thwart judicial proceedings or a reckless disregard for the effect of
[his] conduct on those proceedings.’”
Wu v. T.W. Wang, Inc.,
420 F.3d 641, 643 (6th Cir. 2005) (quoting Mulbah v. Detroit Bd.
of Educ., 261 F.3d 586, 591 (6th Cir. 2001)) (second alteration
There must be a “clear record of delay or contu-
Freeland v. Amigo, 103 F.3d 1271, 1277 (6th
Plaintiffs’ conduct meets this standard.
tiffs have been sanctioned five times in this case for discovery
violations, do not seriously dispute that they have yet to correct previous discovery deficiencies, and have twice let the
case languish for months for no good reason.
That pattern has
failure to follow court orders (including discovery orders) and
failure to prosecute their case are entirely Plaintiffs’ respon36
There is a clear record of delay and contumacious
conduct, and Plaintiffs have demonstrated a reckless disregard
for the effect of that conduct on this proceeding.
The second dismissal factor provides that, “‘[a] defendant
is prejudiced by the plaintiff’s conduct where the defendant
waste[d] time, money, and effort in pursuit of cooperation which
[the plaintiff] was legally obligated to provide.’”
Bergh, 516 F. App’x 568, 570 (6th Cir. 2013) (quoting Schafer v.
City of Defiance Police Dep’t, 529 F.3d 731, 736 (6th Cir. 2008)
(second and third alterations in Shavers)).
This factor is met.
The docket shows that Defendants have been prejudiced by Plaintiffs’ conduct: Defendants have had to prepare and file repeated
motions that would have been unnecessary if Plaintiffs had complied with their discovery obligations.
The cost to Defendants
in time, money, and effort is demonstrated, in part, by the
sanctions that have been imposed.
The third dismissal factor provides that a party must have
Plaintiffs have been warned no fewer than six
times since September 2015 that failure to cooperate with discovery
(See, e.g., Order Granting Nortek Global HVAC LLC’s Mot. to Compel Discovery from Pls. ECIMOS, LLC and Electrical Controls,
Inc. 4, ECF No. 106 (“Order on First Mot. to Compel”); Order
Granting Defs. Logical Systems, Inc., Logical Systems, LLC, and
Nortek Global HVAC LLC’s Mot. to Compel Discovery from Pls. ECIMOS, LLC and Electrical Controls, Inc. 4, ECF No. 105 (“Order on
Second Mot. to Compel”); Order Granting Def. David Tesluk’s Mot.
to Compel Discovery from Pls. ECIMOS, LLC, and Electrical Controls, Inc. 5, ECF No. 108 (“Order on Third Mot. to Compel”);
Order on Defs. Logical Systems, Inc. and Logical Systems, LLC’s
Mot. to Compel Discovery from Pls.’ ECIMOS, LLC, and Electrical
Controls, Inc. 3, ECF No. 104 (“Order on Fourth Mot. to Compel”); March 2016 Report 28; Fee Order 19 n.3.)
Indeed, in her
March 2016 Report, Magistrate Judge Vescovo stated, “In hindsight, the court should have recommended dismissal with prejudice
2015 . . . .
Plaintiffs’ claims against one former defendant, Tesluk, have
been dismissed as a sanction for Plaintiffs’ discovery misconduct.
(March 2016 Report 29–31; June 2016 Order 10–12.)
almost two years, Plaintiffs have been well aware that this case
was subject to dismissal.
This factor is met.
Sanctions less drastic than dismissal have been considered and
Plaintiffs have been sanctioned monetarily
at least five times, but Plaintiffs have continued their contumacious conduct.
On July 15, 2015, Nortek Global, inter alia, filed a motion
to compel against Plaintiffs.
(First Mot. to Compel.)
tion was granted on September 2, 2015.
(Order on First Mot. to
On July 21, 2015, LSI, LSL, and Nortek Global filed a
second motion to compel against Plaintiffs.
(Second Mot. to
That motion was granted on September 2, 2015.
on Second Mot. to Compel.)
(Third Mot. to Com-
That motion was granted on September 3, 2015.
Third Mot. to Compel.)
On August 13, 2015, LSI and LSL filed a
fourth motion to compel against Plaintiffs.
On August 7, 2015, Tesluk filed a
third motion to compel against Plaintiffs.
(Fourth Mot. to
That motion was granted in part and denied in part on
September 1, 2015.
(Order on Fourth Mot. to Compel.)
the four orders addressing the motions to compel awarded attorney fees to the movants.
The total amount of fees and costs
Plaintiffs owed as a result of the four orders was $63,338.04:
$42,142.83 to Nortek Global, $13,669.00 to LSI and LSL collectively, and $7,526.21 to Tesluk.
(See Order Awarding Attorney
Fees and Expenses to Def. Nortek Global HVAC LLC for Amounts Incurred in Preparing and Filing Mot. to Compel 2, ECF No. 127;
Order Awarding Attorney Fees and Expenses to Defs. Logical Systems, Inc., and Logical Sys., LLC, for Amounts Incurred in Preparing and Filing Mot. to Compel 2, ECF No. 128; Order Awarding
Attorney Fees and Expenses to Def. David Tesluk for Amounts Incurred in Preparing and Filing Mot. to Compel 2, ECF No. 129.)
Plaintiffs were monetarily sanctioned a fifth time pursuant
to the March 2016 Report and the June 2016 Order.
As noted in
Section I infra, that sanction award was $53,902.98.
This factor is met.
All four of the factors to be considered before dismissal
under Rule 37(b)(2)(A) and Rule 41(b) are met.
Motion is GRANTED insofar as it requests that this action be
This action is DISMISSED WITH PREJUDICE. 5
Countermotion is DENIED as moot.
The Dismissal Motion also asks the Court to “award Defendants their fees and costs in connection” with the July 2016
Motion to Dismiss as well as the Dismissal Motion.
Mot. 6; see also Dismissal Reply 5.)
is a sufficient sanction.
Dismissal of this action
Imposing an additional fee award is
unnecessary and would not be equitable.
Cf. Fed. R. Civ. P.
37(b)(2)(C) (fee award not required where “circumstances make an
Defendants specifically request dismissal of “this action with
(Dismissal Mot. 6 (emphasis added); see also Dismissal Reply 5 (same language); Settlement-Enforcement Mot. 4
(motion by Defendants and Tesluk seeking dismissal “of the case
with prejudice” if the WSA is determined to be unenforceable).)
The Court construes these requests to mean that Defendants and
Tesluk seek dismissal not only of Plaintiffs’ claims, but of the
entire action, including any remaining counterclaims.
award of expenses unjust”).
The Dismissal Motion is DENIED in-
sofar as it requests an award of fees and costs.
Given the resolution of the other motions in this matter,
that Stay Motion is DENIED as moot.
The Leave-to-Supplement Motion is GRANTED and the Settle-
ment-Enforcement Motion is GRANTED in part and DENIED in part.
Plaintiffs are ORDERED to pay unpaid sanctions awards as follows: $3,347.50 to David Tesluk; $1,326.00 to Gail Wayne Roane
and Michael Gray collectively; $11,733.48 to Logical Systems,
Inc., and Logical Systems, LLC, collectively; and $37,496.00 to
Nortek Global HVAC LLC.
The Reconsideration Motion is GRANTED,
and the sanctions levied against Weirich and Peel in the June
2016 Order are stricken.
The Dismissal Motion is GRANTED in
part and DENIED in part.
This action is DISMISSED WITH PREJU-
The Stay Countermotion and the Stay Motion are DENIED as
So ordered this 11th day of August, 2017.
/s/ Samuel H. Mays, Jr.
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE
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