Novoselsky v. Zvunca et al
Filing
42
ORDER signed by Judge J.P. Stadtmueller on 12/29/2017: GRANTING 40 Plaintiff's Motion for Leave to File Declaration Instanter and GRANTING in part 35 Defendants F. John Cushing, III and Jeanine L. Stevens' Motion for Sanctions. With in 14 days, Movants to FILE a separate motion itemizing and supporting their fees and expenses incurred in this matter, excluding those incurred in connection with the sanctions motion itself. Plaintiff to RESPOND to the fee petition within 14 days from filing; Movants may reply within 5 days thereafter. Movants' motion and Plaintiff's response not to exceed 15 pages, and Movants' reply not to exceed 10 pages. See Order for further details. (cc: all counsel) (jm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
DAVID ALAN NOVOSELSKY,
Plaintiff,
v.
CRISTINA ZVUNCA, as Supervised
Administrator of the Estate of Claudia
Zvunca, JEANINE L. STEVENS, and F.
JOHN CUSHING, III,
Case No. 17-CV-427-JPS
ORDER
Defendants.
On July 17, 2017, the Court issued an order dismissing this action for
lack of subject-matter jurisdiction. Novoselsky v. Zvunca, Case No. 17-CV427-JPS, 2017 WL 3025870, at *1 (E.D. Wis. July 17, 2017). A month later,
Defendants Jeanine L. Stevens (“Stevens”) and F. John Cushing, III
(“Cushing”) (collectively, “Movants”) filed a motion for sanctions against
Plaintiff David Alan Novoselsky (“Novoselsky”). (Docket #35). Movants
argue that Novoselsky’s complaint was frivolous and is sanctionable under
Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927, and the Court’s
inherent authority. The motion is fully briefed and, for the reasons stated
below, the Court will grant Movants their reasonable attorney’s fees and
expenses under Rule 11.
1.
BACKGROUND
The history between these parties is long and troubled. For brevity’s
sake, the Court will confine itself to the facts necessary to the disposition of
the present motion. The interested reader may consult the prior decisions
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of this and other courts for further background information. See generally
Novoselsky, 2017 WL 3025870; Zvunca ex rel. Klein v. Greyhound Lines, Inc.,
530 F. App’x 672 (10th Cir. 2013); Cushing v. Greyhound Lines, Inc., 991
N.E.2d 28 (Ill. Ct. App. 2013).
Novoselsky filed the complaint in this case on March 22, 2017.
(Docket #1). The complaint concerned primarily a sanctions award entered
against him by Judge Propes of the Circuit Court of Cook County, Illinois
in favor of Movants—specifically, $75,000 to Stevens and $25,000 to
Cushing. Id. He alleged that did not owe the sanctions either to Movants or
the estate of Claudia Zvunca (the “Estate”), his former client. Id.1
Movants filed a motion to dismiss May 22, 2017. (Docket #16). The
motion raised the following grounds for dismissal:
a.
the Declaratory Judgment Act does not confer
jurisdiction, as Novoselsky had claimed;
b.
there was no subject matter jurisdiction because the
amount in controversy was not satisfied as to any
defendant for purposes of diversity jurisdiction;
c.
there was no subject-matter jurisdiction in the district
court under the Rooker–Feldman doctrine;
d.
personal jurisdiction did not exist over Cushing and
Stevens; and
f.
venue was improper in this District.
(Docket #17 at 8–19). After filing the motion, Movants’ counsel sent
Novoselsky a safe harbor letter on May 25, 2017 under Federal Rule of Civil
He also asserted a separate breach of contract claim against Cristina
Zvunca, in her capacity as supervised administrator of her deceased mother’s
estate. The Court dismissed that claim as well. Novoselsky, 2017 WL 3025870, at *5.
The Estate did not join in the sanctions motion.
1
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Procedure 11(c)(2), outlining the alleged legal deficiencies in the complaint
and asking him to withdraw the filing. (Docket #35-1).
Novoselsky did not withdraw his complaint. Instead, he filed a brief
in opposition to the motion to dismiss on June 12, 2017. (Docket #23). He
variously argued that:
a.
the Declaratory Judgment Act is a stand-alone basis for
subject-matter jurisdiction;
b.
the Complaint satisfied the amount in controversy
requirement because the two sanctions awards could
be aggregated;
c.
the Rooker–Feldman doctrine did not deprive the
district court of subject-matter jurisdiction because the
relief sought was not a reversal of the state-court
sanctions order;
d.
personal jurisdiction existed over Cushing and Stevens
because they filed adversary proceedings in this Court
against Novoselsky in connection with his bankruptcy
proceeding; and
e.
venue is proper in this District because sufficient
relevant events occurred here.
Id. at 4–11. Movants take issue with the merit of these arguments, but that
will be addressed later on.
While Movants’ motion to dismiss was pending, Novoselsky filed
two motions of his own. On June 29, 2017, he moved for leave to file a surreply. (Docket #31). The Court denied the motion in its dismissal order,
describing the proposed sur-reply as “cit[ing] no law whatsoever; it consists
of eight pages of Novoselsky’s stream-of-consciousness musings. . .which
adds nothing to the record and has no effect on the disposition of the case.”
Novoselsky, 2017 WL 3025870, at *4 n.2. Next, on July 13, 2017, Novoselsky
filed a motion asking the Court to stay consideration of the motion to
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dismiss because he planned to seek relief from another state-court order in
the bankruptcy court. (Docket #32). The Court dismissed the case four days
later, and Movants did not respond to the July 13 motion before the
dismissal was entered.2
The Court’s dismissal order focused on the lack of subject-matter
jurisdiction over Novoselsky’s claims under the Rooker–Feldman doctrine.
Novoselsky, 2017 WL 3025870, at *3–5. The Court did not opine on Movants’
contentions that the amount-in-controversy requirement was not satisfied,
that personal jurisdiction was lacking as to them, or that venue was
improper in this District. Id. at 2 (“The Court will address only subjectmatter jurisdiction, as it must be the first item of business for a federal court
and review of the pertinent authorities demonstrates that subject-matter
jurisdiction is lacking in this case.”).
2.
DISCUSSION
Federal Rule of Civil Procedure 11 imposes a set of duties on those
who file papers with the court. It also provides for an appropriate sanction
to be imposed if those duties are violated. Rule 11(b) states, in pertinent
part, that
[b]y presenting to the court a pleading, written motion, or
other paper--whether by signing, filing, submitting, or later
advocating it--an attorney or unrepresented party certifies
that to the best of the person’s knowledge, information, and
belief, formed after an inquiry reasonable under the
circumstances:
(1) it is not being presented for any improper purpose, such
as to harass, cause unnecessary delay, or needlessly increase
the cost of litigation;
Novoselsky also filed two other expedited motions for emergency
injunctive relief, but those were quickly withdrawn. See (Docket #25, #26, #28).
2
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(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[.]
Fed. R. Civ. P. 11(b)(1)–(2). The Rule grants a court discretion to impose an
appropriate sanction for violations of these obligations, which may include
“nonmonetary directives; an order to pay a penalty into court; or, if
imposed on motion and warranted for effective deterrence, an order
directing payment to the movant of part or all of the reasonable attorney’s
fees and other expenses directly resulting from the violation.” Id. 11(c)(4).
The duties imposed in Rule 11—coupled with the available
sanctions—ensure that the “powerful, intimidating, and often expensive”
machinery of the federal judiciary “[is] engaged only to address claims and
defenses that have a reasonable basis in fact and law and that are asserted
only for a proper purpose.” N. Ill. Telecom, Inc. v. PNC Bank, N.A., 850 F.3d
880, 883 (7th Cir. 2017). Toward that end, the Rule imposes an objective
standard of reasonableness on a party’s or lawyer’s action. Id. at 885. As the
Seventh Circuit has explained, the Rule “[leaves] no room for an ‘empty
head, pure heart’ defense.” Id. Additionally, in this context, a bad claim
spoils the bunch; one cannot avoid sanctions for frivolous claims simply
because they were included with one or more non-frivolous claims. Reed v.
v. Great Lakes Cos., Inc., 330 F.3d 931, 936 (7th Cir. 2003).
In this case, Movants seek sanctions for purported violations of Rule
11(b)(1) and (2). That is, Movants assert that several of Novoselsky’s legal
contentions on jurisdictional issues were frivolous, and they say that the
entire case was brought for the improper purpose of avoiding or delaying
payment of Judge Propes’ sanctions award. Sanctions are proper only on
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the former ground. To arrive at this conclusion, the Court will first analyze
the safe-harbor letter Movants sent to Novoselsky on May 25, 2017, then
turn to the sanctions motion itself, and finally consider the arguments about
Novoselsky’s frivolous contentions.3
2.1
The Safe Harbor Letter
The bulk of Novoselsky’s opposition to the instant motion is that
Movants’ May 25 letter falls short of the requirements of Rule 11(c)(2). That
Subpart sets out the protocols for obtaining sanctions should a party violate
one of the duties imposed by Subpart (b):
(2) Motion for Sanctions. A motion for sanctions must be
made separately from any other motion and must describe the
specific conduct that allegedly violates Rule 11(b). The motion
must be served under Rule 5, but it must not be filed or be
presented to the court if the challenged paper, claim, defense,
contention, or denial is withdrawn or appropriately corrected
within 21 days after service or within another time the court
sets. If warranted, the court may award to the prevailing party
the reasonable expenses, including attorney’s fees, incurred
for the motion.
Fed. R. Civ. P. 11(c)(2). This provision is designed to give an offending party
a chance to withdraw a filing that allegedly violates Subpart (b). N. Ill.
One initial matter to consider is which filings are properly the subject of
Movants’ request for Rule 11 sanctions. Surely the complaint is, as Movants served
their May 25 letter on Novoselsky warning him about the defects therein. What
about Novoselsky’s briefs on the motion to dismiss? Movants sent similar warning
letters relating to these documents, but because the 21-day safe harbor period did
not elapse before the Court dismissed the case, they do not seek sanctions for
assertions made in those particular documents. (Docket #35 at 7 n.2). Of course,
this distinction makes little practical difference here. Rule 11(b) permits sanctions
when a party “later advocat[es]” a position taken in an earlier filing, see Fabriko
Acquisition Corp. v. Prokos, 536 F.3d 605, 610 (7th Cir. 2008), and so the Court can
and will consider Novoselsky’s later briefs as evidence of whether and to what
extent the allegations of his complaint were frivolous.
3
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Telecom, 850 F.3d at 887.
Most Circuit courts require strict compliance with this provision. In
this Circuit, however, a party seeking sanctions may obtain them after
achieving only “substantial compliance” with Rule 11(c)(2). Id.; Nisenbaum
v. Milwaukee Cty., 333 F.3d 804, 808 (7th Cir. 2003). A case-by-case approach
has developed here whereby certain “warning shots” to the offending party
will suffice even if they do not take the form of a prospective Rule 11
motion. N. Ill. Telecom, 850 F.3d at 887. The key inquiry is whether the party
seeking sanctions has given notice to the offending party that his filing is
being challenged as violative of Rule 11(b), and why. See id.; Nisenbaum, 333
F.3d at 808; Methode Elecs., Inc. v. Adam Techs., Inc., 371 F.3d 923, 927 (7th
Cir. 2004); Matrix IV, Inc. v. Am. Nat’l Bank & Trust Co. of Chicago, 649 F.3d
539, 552–53 (7th Cir. 2011). This substantial compliance theory is unpopular,
even among judges of this Circuit, but it remains the law. See N. Ill. Telecom,
850 F.3d at 887.
Novoselsky does not challenge the substantial compliance doctrine
itself. Instead, he claims that Movants’ letter simply does not provide
sufficient notice of the alleged deficiencies in his complaint. The May 25
letter provides, in pertinent part:
I write this pursuant to Fed. R. Civ. P. 11(c)(2), on behalf of
defendants F. John Cushing III and Jeanine L. Stevens.
As detailed in our motion to dismiss and accompanying
memorandum of law, which are incorporated herein, under
long-established law the court lacks both subject matter
jurisdiction and personal jurisdiction over the captioned
matter, and venue is improper in the Eastern District of
Wisconsin. There is no subject matter jurisdiction both
because the amount in controversy is not satisfied as to
Cushing or Stevens (and their respective amounts cannot be
aggregated to achieve the amount in controversy), and
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because of the Rooker–Feldman doctrine. There is no personal
jurisdiction under either the Wisconsin long-arm statute or
due process because your claims do not arise out of any
actions in the Eastern District of Wisconsin. The exhibits and
factual allegations of your complaint establish these matters.
A reasonable investigation of the law would have revealed
the lack of jurisdiction in federal court and the lack of venue
in the Eastern District of Wisconsin; there is no “nonfrivolous
argument for extending, modifying, or reversing existing law
or for establishing new law.” Therefore, the complaint
violates Fed. R. Civ. P. 11(b).
Pursuant to Fed. R. Civ. P. 11(c)(2), you have twenty-one (21)
days to withdraw your complaint. If you fail to do so, I intend
to move for sanctions if and when the complaint is dismissed.
(Docket #35-1 at 1).
Novoselsky argues that while safe-harbor letters are allowed in this
Circuit, they “must nonetheless satisfy the same criteria as applied to the
draft motion required in other Circuits.” (Docket #39 at 2). In his view, the
May 25 letter does not pass muster because it is not “materially identical”
to the sanctions motion. Id. at 2–3. Further, says Novoselsky, a one-page
letter full of “bare conclusions” can hardly be expected to give a fulsome
warning of potential Rule 11(b) problems. Id. at 4.
Novoselsky is right insofar as a safe-harbor letter only authorizes a
party to seek sanctions based on the grounds set forth in the letter. See Fed.
R. Civ. P. 11(c)(2); Knapp v. Evgeros, Inc., 15 C 754, 2017 WL 3668165, at *2
(N.D. Ill. Aug. 24, 2017). He is also correct that one court of the Northern
District of Illinois has held that the safe-harbor letter must be “materially
identical” to the later-filed motion for sanctions in order to satisfy Rule
11(c)(2). Knapp, 2017 WL 3668165, at *2. However, this Court cannot go so
far.
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While the grounds raised must match from letter to motion, the
Court will not require that the letter set forth the entirety of the sanctions
argument for each such ground. Doing so would impose needless
technicality on the sanctions process. The Seventh Circuit has, at least for
the time being, embraced a substantial compliance approach to Rule
11(c)(2), and thus it would be inconsistent to say that one can comply with
that Subpart by sending a letter, but the letter must look exactly like the
later-filed motion. Surely the purpose of the substantial compliance
doctrine is not simply to authorize the use of attorney letterhead. Rather,
the doctrine is practical, allowing a party to obtain sanctions if he has
reasonably put the offending party on notice that his filing is being
challenged as violative of Rule 11(b), including the general reasons therefor.
See N. Ill. Telecom, 850 F.3d at 887; Matrix IV, 649 F.3d at 552 n.5.
On this view of the substantial compliance doctrine, the Court finds
that Movants’ May 25 letter was sufficient in notifying Novoselsky that his
complaint contained legally frivolous contentions as prohibited by Rule
11(b)(2). With respect to that issue, Movants outlined the matters raised in
the complaint that allegedly violated Rule 11(b)(2), and they briefly
explained their reasons for reaching those conclusions. Thus, the letter was
substantially compliant with Rule 11(c)(2).
The letter says nothing, however, about Novoselsky’s alleged
improper purpose in bringing suit, as proscribed by Rule 11(b)(1). It
therefore did not put him on sufficient notice that this would be a potential
ground for later Rule 11 sanctions. This is true even if the Court condoned
Movants’ attempt to incorporate into their letter by reference their entire
brief in support of their motion to dismiss. That attempt at incorporation
directs Novoselsky to consider Movants’ arguments as to why his
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jurisdictional contentions were frivolous. True, the motion brief also
contained charged words about Novoselsky’s alleged forum shopping and
nefarious motives, see (Docket #17 at 7–8), but Movants did not try to direct
Novoselsky’s attention to those matters in their letter.
Substantial compliance forgives much about the technicalities of
Rule 11(c)(2), but at a minimum the movant must identify to his opponent
the kind of Rule 11(b) violation for which he will seek sanctions. The
proscriptions of Rule 11(b)(1) and (2) are fundamentally distinct, and
neither depends on the other. See Senese v. Chicago Area I.B. of T. Pension
Fund, 237 F.3d 819, 825 (7th Cir. 2001). As such, a warning about frivolous
arguments is no warning at all about improper purpose. Thus, the Court
finds that the May 25, 2017 letter served as a proper safe-harbor letter only
as to the alleged Rule 11(b)(2) violations.4
2.2
The Sanctions Motion
Novoselsky next claims that the sanctions motion was untimely
because the Court has already dismissed this case. (Docket #39 at 4–5). This
contention itself borders on the frivolous. First, it is well settled in this
Circuit that a district court retains jurisdiction to hear a Rule 11 motion even
after a case is dismissed. Wojan v. Gen. Motors Corp., 851 F.2d 969, 973 (7th
Cir. 1988). Further, Rule 11 contains no deadline for filing a motion for
sanctions. Divane v. Krull Elec. Co., Inc., 200 F.3d 1020, 1025 (7th Cir. 1999).
The Seventh Circuit generally enforces a post-judgment sanctions motion
In finding that Movants’ letter failed to warn Novoselsky about the
prospect of sanctions for a Rule 11(b)(1) violation, the Court expresses no opinion
about the propriety of sanctions for the pertinent conduct, including Novoselsky’s
relentless forum-shopping in the face of adverse rulings and his apparent disdain
for the numerous sanctions awards entered against him in prior state and federal
cases. See (Docket #35 at 8–11).
4
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deadline of ninety days, Matrix IV, 649 F.3d at 552, but Movants’ motion
was well within that time frame.
Novoselsky clearly misreads the district court opinion upon which
he relies, Noonan v. CACH, LLC, No. 4:15-CV-1305 CAS, 2016 WL 1641405,
at *3 (E.D. Mo. Apr. 26, 2016). There, the defendants did not serve their
motion for sanctions on the plaintiff prior to dismissal of the case. Id. Thus,
the plaintiff had no opportunity to cure his alleged violations of Rule 11(b).
Id. Noonan says nothing about a time limit for filing the sanctions motion
with the court after proper notice to the offending party. Besides,
Novoselsky had ample time to withdraw his complaint before this case was
dismissed, making Noonan even less applicable.
2.3
Novoselsky’s Contentions Were Frivolous
Now that the safe harbor letter and sanctions motion have been
found procedurally proper with respect to claimed violations of Rule
11(b)(2), the Court will consider Movants’ arguments regarding which of
Novoselsky’s allegations are sanctionable. Movants point to three such
contentions: (1) that jurisdiction could be premised on the Declaratory
Judgment Act; (2) that the amount in controversy was satisfied either
because of interest accrual or aggregating Stevens’ and Cushing’s sanctions
awards; and (3) that personal jurisdiction existed over Movants. (Docket
#35 at 5–7).5
The Court agrees that these arguments were frivolous. It will address
each in turn. First, and easiest, is Novoselsky’s claim that subject-matter
“Because Novoselsky did make an actual argument on the Rooker–Feldman
doctrine, albeit incorrect and unsuccessful, and cited some minimal authority,”
Movants do not seek sanctions for Novoselsky’s opposition to that argument.
(Docket #35 at 6 n.1). Movants do not mention improper venue in the sanctions
motion, so the Court will not consider that as a basis for sanctions, either.
5
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jurisdiction could be premised on the Declaratory Judgment Act. It cannot.
Rueth v. U.S. E.P.A., 13 F.3d 227, 231 (7th Cir. 1993). There is no ambiguity
in the case law on this point; in any event, Novoselsky has apprised the
Court of none. He should have known that this was an untenable argument.
Second, Novoselsky contended that the amount in controversy was
satisfied as to Stevens because Judge Propes’s sanctions order “requires not
only the payment of the face amount of $75,000 but interest accruing” on
that sum. (Docket #23 at 5). However, the diversity statute, 28 U.S.C. § 1332,
excludes interest. That statute requires that “the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs.” 28
U.S.C. § 1332(a). In her order, Judge Propes awarded Cushing the sum of
$25,000 and Stevens $75,000. Neither meets the amount-in-controversy
requirement standing alone. Anthony v. Sec. Pac. Finan. Servs., Inc., 75 F.3d
311, 315 n.1 (7th Cir. 1996). Judge Propes’ order that interest accrue on the
amounts does not change things, since that interest is incidental, arising
only by virtue of delay in payment, and is not itself a basis for the present
suit. See Principal Mut. Life. Ins. Co v. Juntunen, 838 F.2d 942, 943 (7th Cir.
1988); 14AA Charles Alan Wright et al., Fed. Prac. & Proc. § 3712 (2011).
Whatever post-judgment interest has accrued on these awards cannot be
considered.
Moreover, the two amounts cannot be aggregated in order to cross
the jurisdictional threshold; that is permitted “only if the defendants are
jointly liable; however, if the defendants are severally liable, plaintiff must
satisfy the amount in controversy requirement against each individual
defendant.” LM Ins. Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 548 (7th Cir.
2008). Novoselsky did not credibly contend that payment to Stevens would
affect his obligation to Cushing, or vice versa, other than to baldly state that
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Judge Propes awarded them as a “unitary sum.” (Docket #23 at 6); Batson v.
Live Nation Entm’t, Inc., 746 F.3d 827, 833 (7th Cir. 2014) (finding an
argument “forfeited because it was perfunctory and underdeveloped”). A
plain reading of her order reveals that the two awards are distinct despite
being issued at the same time. Thus, this argument too was wholly
meritless.6
Third, and finally, is Novoselsky’s allegation that personal
jurisdiction existed over Movants. The Fourteenth Amendment’s Due
Process Clause protects a defendant from being haled into court in a state
where it has no meaningful connections. Burger King Corp. v. Rudzewicz, 471
U.S. 462, 464 (1985). Due process requires that for personal jurisdiction to
exist over a nonconsenting, out-of-state defendant, the defendant must
have “certain minimum contacts with it such that the maintenance of the
suit does not offend ‘traditional notions of fair play and substantial
justice.’” Int’l Shoe Co. v. State of Wash., Office of Unemployment Comp. &
Placement, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457,
463 (1940)).
However, for specific personal jurisdiction—the only type arguably
relevant in this case—mere minimum contacts are not enough. uBID, Inc. v.
GoDaddy Grp., Inc., 623 F.3d 421, 429 (7th Cir. 2010). It is also important that
the plaintiff’s claims arise from or relate to the defendant’s contacts with
the forum State. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 (1984); Int’l Shoe, 326 U.S. at 317–18. Specific personal jurisdiction exists
Part of Novoselsky’s theory in the case was that he owed the entire
$100,000 (plus interest) to the Estate, but he did not raise this in his opposition brief
as a reason that the sum should be considered “unitary.” See (Docket #23 at 5–6).
6
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only where the defendant’s contacts with the forum state “directly relate to
the challenged conduct or transaction.” Tamburo v. Dworkin, 601 F.3d 693,
702 (7th Cir. 2010).
The sole allegation connecting Movants with the State of Wisconsin
was their decision to preserve Judge Propes’ sanctions award by filing
proofs of claim and an adversary complaint for nondischargeability in
Novoselsky’s ongoing bankruptcy proceedings in this district. See (Docket
#1 ¶ 7) (“[T]he dispute over the sum in controversy in this complaint arises
from claims brought against Plaintiff by Defendants seeking relief against
Plaintiff in the Courts of the Eastern District of Wisconsin.”). Those actions
have nothing at all to do with Novoselsky’s claims in this case.
As the allegations of the complaint itself make clear, this case rests
entirely on the parties’ interactions in Illinois. Novoselsky engaged in
sanctionable conduct there, Judge Propes’ sanctions award was issued
there, and the parties disputed the legality and interpretation of the
sanctions award there. Id. ¶¶ 8–11. Indeed, even the several other cases that
Novoselsky thought had some bearing on the sanctions award were all
either Illinois state or federal cases. See id. ¶¶ 12–28. Although not relevant
to the propriety of personal jurisdiction over Movants, it is worth noting as
well that the breach-of-contract claim against the Estate was likewise based
solely in agreements and conduct that occurred in Illinois. See id. ¶¶ 29–33.
Thus, while it is true that Movants sought to reap their sanctions award
from Novoselsky’s bankruptcy estate, his claims regarding the sanctions
award have no connection whatsoever to this State. Personal jurisdiction
over Movants was not plausible in this case. See Burger King, 471 U.S. at 474–
75 (a defendant must have sufficient contacts with the forum, related to the
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suit at bar, that it “should reasonably anticipate being haled into court [in
the forum State]” on that suit).
Novoselsky’s opposition to Movants’ motion to dismiss did not help
matters. It was scattered, incoherent, and quite clearly the product of no
meaningful legal research. For instance, without any citation to authority,
Novoselsky maintained that the Declaratory Judgment Act “on its face does
provide for jurisdiction.” (Docket #23 at 5). This is simply not true.
The brief also fell well short on the matter of personal jurisdiction.
Novoselsky stressed that Movants tried to obtain sanctions despite—for
reasons he did not cogently explain—the need for those sanctions to be paid
to the Estate. Id. at 8–9. This, he reasoned, represented Movants’ affirmative
choice to enter Wisconsin and fight Novoselsky here over the sanctions
award. See id. But here again, his brief is devoid of appeal to any authority
other than, apparently, his own intellect.
Likewise, as to the amount-in-controversy argument, Novoselsky
again cited no law at all but simply noted that the sanctions award would
be paid with interest. Id. at 5–6. A modicum of research on the point would
have revealed the error in his view, as shown above. Similarly, his vague
musings about the sanctions awards forming “unitary sum” were not
backed up by even one citation to legal authority. In short, the Court reads
Novoselsky’s brief, like his complaint, as having been fired off his keyboard
with precious little thought, revision, or research.
As Movants point out, “Novoselsky’s proposed sur-reply cured
nothing and added nothing.” (Docket #35 at 6) (citation omitted). First, it
raised no arguments about these three matters, instead focusing on the
Rooker–Feldman issue. Further, as the Court noted in the context of the
dismissal order itself, “[t]he brief cites no law whatsoever; it consists of
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eight pages of Novoselsky's stream-of-consciousness musings.” Novoselsky,
2017 WL 3025870, at *4 n.2. The Court concluded that the sur-reply should
not be allowed, as it “add[ed] nothing to the record and ha[d] no effect on
the disposition of the case.” Id.
Litigants of all kinds—and perhaps especially lawyer-litigants—
should be expected to conduct reasonably careful research in finding that
jurisdictional premises for suit are satisfied. Novoselsky did not do so, and
that failure is worthy of sanctions. Movants’ cited cases support this view.
First, in International Shipping Co., S.A. v. Hydra Offshore, Inc., 875 F.2d 388,
393 (2d Cir. 1989), plaintiff’s counsel was sanctioned for filing a complaint
that on its face ran afoul of the complete diversity requirement of 28 U.S.C.
§ 1332. In particular, he had named aliens on both sides of the dispute,
thereby clearly and unequivocally destroying diversity. Id. at 391. The
jurisdictional defect was unmistakable to a reasonably prudent lawyer. Id.
Even more apt is a comparison to a prior instance in which a federal
court meted out sanctions against Novoselsky. In MB Financial, N.A. v.
Stevens, 678 F.3d 497, 498 (7th Cir. 2012), the Seventh Circuit affirmed a
sanctions award against Novoselsky for frivolously removing an Illinois
state case to federal court. The problems with removal were manifold—
Novoselsky was not a party in the state case, much less a defendant; he did
not secure any of the defendants’ consent to remove; removal was not
proper because the defendants were all Illinois citizens; and the time for
removal had long since expired. Id. at 498–99.
Here, as in numerous prior cases, Novoselsky offered outlandish
jurisdictional claims backed up by uninformed, spurious arguments. The
problems in this case would be plain to any lawyer of reasonable ability
after consultation with pertinent authorities. Novoselsky apparently
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eschewed those authorities in favor of his own beliefs about what the law
is. Consequently, the Court finds that Novoselsky’s jurisdictional
contentions in this case were frivolous, violated Rule 11(b)(2), and are
deserving of an appropriate sanction.7
2.4
Novoselsky’s Unclean Hands Defense
Astoundingly, Novoselsky offers no opposition whatsoever to
Movants’ arguments about his specific frivolous contentions. Rather, he
says that sanctions should not be allowed because he had no improper
purpose and because Movants come to the Court with unclean hands.
(Docket #39 at 9). His allegations are wide-ranging, but the gist of them is
that Movants—and especially Stevens—are to blame for not informing him
about developments in the state cases and for not settling the underlying
death case. The Court need not consider the matter of Novoselsky’s
improper purpose, for as explained above, his complaint is separately
sanctionable for its frivolousness. See supra Part 2.1. The unclean hands
defense, however, deserves some mention.
The decisions Novoselsky cites do not support his belief that
Movants’ allegedly unclean hands are relevant to the Court’s sanctions
While Movants’ focus is on Rule 11 as a basis for sanctions, they propose
that sanctions would, in the alternative, be permissible under 28 U.S.C. § 1927 or
the Court’s inherent authority. Section 1927 empowers courts to punish any
lawyer or litigant who “multiplies the proceedings in any case unreasonably and
vexatiously.” 28 U.S.C. § 1927. Similarly, a court has the inherent authority “to
manage judicial proceedings and to regulate the conduct of those appearing before
it, and pursuant to that authority may impose appropriate sanctions to penalize
and discourage misconduct.” Ramirez, T&H Lemont, Inc., 845 F.3d 772, 776 (7th Cir.
2016); Chambers v. Nasco, Inc., 501 U.S. 32, 47 (1991). Because Movants request only
an award of attorney’s fees and expenses, and because such an award is
appropriate under Rule 11, the Court does not decide whether a sanction would
be appropriate under Section 1927 or the Court’s inherent authority.
7
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determination. The first, Thomas v. Schwab, Civil Action No. 09–CV–13632,
2012 W.L. 6553773, at *1 (E.D. Mich., Dec. 14, 2012), dealt with a situation in
which the defendant, having failed to comply with Rule 11(c)(2), sought to
work around that failure by asking for sanctions under the court’s inherent
authority. Id. The court declined, noting that defendant blatantly
disregarded the requirements of Rule 11 and should not be rewarded for
doing so. Id.
In this case, unlike Thomas, Movants have complied with the
requirements of Rule 11. That Rule imposes an objective standard of
conduct. See Chambers v. Nasco, Inc., 501 U.S. 32, 47 (1991). Its focus is on the
representations a party or his advocate makes to the Court. Whether the
movant has its own faults is of little consequence. SFM Corp. v. Sundstrand
Corp., 102 F.R.D. 555, 560 (N.D. Ill. 1984) (an unclean hands defense has no
relevance to Rule 11 relief because it “is not equitable in nature” and does
not turn on the movant’s behavior). A court’s inherent authority, by
contrast, is equitable in nature, and therefore its exercise can be colored by
equitable doctrines such as unclean hands. See S. Shore Ranches, LLC v.
Lakelands Co., LLC, No. 1:09–cv–105 AWI DLB, 2010 WL 2543112, at *6 (E.D.
Cal. June 18, 2010). Thus, to the extent Thomas supports the application of
an unclean-hands defense to sanctions awarded under a court’s inherent
power, it does not translate to the Rule 11 context.
Novoselsky’s only other citation, Lam v. City of Cleveland, Case No.
1:16CV1563, 2017 W.L. 3318315, at *2 (N.D. Ohio Aug. 3, 2017), is similarly
inapposite. There, the court declined to issue Rule 11 sanctions, finding that
the offending party’s conduct was not objectively unreasonable. Id. The
court then noted that while the movant alleged procedural violations, he
had committed a few of his own. Id. Yet, not only was this dictum,
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Novoselsky offers no contention that Movants violated a rule of procedure
in this case. Thus, Lam too is unpersuasive. The Court finds no support for
the notion that it can refuse Rule 11 sanctions in their entirety based on a
claim of unclean hands in the movant. This finding renders much of the
remainder of Novoselsky’s brief—a five-page diatribe about how
Novoselsky is the real victim here—irrelevant.
2.5
The Proper Sanction
The Court, having considered the parties’ arguments and the record
as a whole, finds that an award of attorney’s fees against Novoselsky is
required under Rule 11 “to deter repetition of the conduct or comparable
conduct by others similarly situated.” Fed. R. Civ. P. 11(c)(4).8 As explained
above, that Subpart of the Rule gives the Court wide discretion to fashion
an appropriate penalty, which may include “nonmonetary directives; an
order to pay a penalty into court; or, if imposed on motion and warranted
for effective deterrence, an order directing payment to the movant of part
or all of the reasonable attorney’s fees and other expenses directly resulting
from the violation.” Id.
A district court enjoys broad discretion in arriving at a sanctions
award that it believes will serve the deterrent purpose of Rule 11. See Divane
v. Krull Elec. Co., 319 F.3d 307, 314 (7th Cir. 2003); Fries v. Helsper, 146 F.3d
452, 459 (7th Cir. 1998) (noting that district courts have “significant
discretion in determining what sanctions, if any, should be imposed for a
Movants request that sanctions be entered jointly against Novoselsky and
his law firm. (Docket #35 at 12). A law firm is generally responsible for the Rule 11
violations of one of its members who represents a party to a case. See Fed. R. Civ.
P. 11(c)(1). Here, however, Novoselsky proceeded pro se, despite his repeated and
misguided references to representing himself through his firm. Thus, the law firm
was never actually involved in this matter.
8
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violation, subject to the principle that the sanctions should not be more
severe than reasonably necessary to deter repetition of the conduct by the
offending person(s).” (citation omitted)). The primary goal of sanctions
under this Rule is not to reimburse the movant dollar-for-dollar, but instead
to punish the violator and deter future misconduct. See Brandt v. Schal
Assoc., Inc., 960 F.2d 640, 645 (7th Cir. 1992). That said, paying the
reasonable attorney’s fees and expenses of one’s opponent can ensure that
abusive litigants think twice. Id.
In this case, Novoselsky proffered baseless claims, Movants
challenged them, and Novoselsky’s responses were flaccid, rambling, and,
most importantly, revealed that his claims were unsupported in law or fact.
As a consequence, the Court will award Movants their reasonable
attorney’s fees and expenses incurred in this case, with the exclusion of any
fees or expenses incurred in connection with the sanctions request itself.
While the bulk of Novoselsky’s contentions in his opposition to Movants’
sanctions request was unpersuasive, the Court did find some of his points
to have merit, particularly on the important issue of whether the Court
could consider allegations of improper purpose under Rule 11(b)(1).
Moreover, given the substantial body of filings in this case so far, the Court
is confident that a reasonable attorney’s fee for the non-sanctions-related
work will be more than sufficient to deter future misconduct.
Novoselsky asks the Court to deny Movants’ request for sanctions
outright because they did not attach copies of counsel’s timesheets or other
documents substantiating a claim for monetary relief. (Docket #39 at 5–8).
Yet in the same breath, Novoselsky acknowledges that the Court has the
discretion to order a second round of briefing on the question of the amount
of an appropriate sanction. Id. That is the course the Court will take in this
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instance. See Fed. R. Civ. P. 11. The Court will, therefore, set forth a separate
round of briefing for Movants to state the amount of the monetary sanction
they seek.
Novoselsky’s request is based on a suggestion that Movants’ counsel
will inflate his fee request in this case, as he was found to do in a prior
appeal to the Seventh Circuit. (Docket #39 at 5–8); (Docket #39-2 at 2). To be
sure, the Court will police any such padding in its review of the fee petition.
The Court warns both parties that their submissions should be brief,
focused on the narrow issues at hand, and should not devolve into the
“grudge match” that played out before the Court of Appeals. (Docket #392 at 2). Further, Movants must offer adequate evidentiary and legal support
as to each claimed amount.
3.
CONCLUSION
Sanctioning litigants is a serious matter, not to be undertaken unless
the facts clearly call for it. The Court finds that sanctions are undoubtedly
appropriate in this case. For David Novoselsky, a bankrupt lawyer who has
spent the last decade of his life trying one failed ploy after another to get a
share of the tragic Zvunca case, all the while alienating his former clients
and colleagues alike, perhaps one more sanction will mean little. Yet in this
Court’s view, it is the proper course to at least try to dissuade him and
others like him from future misconduct.
Accordingly,
IT IS ORDERED that Plaintiff’s expedited motion for leave to file
declaration instanter (Docket #40) be and the same is hereby GRANTED;
IT IS FURTHER ORDERED that Defendants F. John Cushing, III
and Jeanine L. Stevens’ motion for sanctions (Docket #35) be and the same
is hereby GRANTED in part as stated herein; and
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IT IS FURTHER ORDERED that Movants shall, within fourteen
(14) days of the date of this Order, file a separate motion itemizing and
supporting, with appropriate evidence and citation to authority, their fees
and expenses incurred in this matter, with the exclusion of their fees and
expenses incurred in connection with the sanctions motion itself. Plaintiff
shall respond to the fee petition no later than fourteen (14) days from the
date it is filed, and Movants may reply within five (5) days thereafter.
Movants’ motion and Plaintiff’s response shall not exceed fifteen (15) pages
in length, and Movants’ reply shall not exceed ten (10) pages.
Dated at Milwaukee, Wisconsin, this 29th day of December, 2017.
BY THE COURT:
J.P. Stadtmueller
U.S. District Judge
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