Brandt v. Schal Associates, Inc.

131 F.R.D. 512, 1990 U.S. Dist. LEXIS 8908, 1990 WL 99950
District Court, N.D. Illinois·Decided July 17, 1990·No. No. 85 C 357·Published·Cited by 9 cases

Opinion

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

This Court’s detailed May 2, 1990 Findings of Fact (“Findings”) and Conclusions of Law (“Conclusions”), collectively referred to as “Opinion II” 131 F.R.D. 485:1

(a) held that Schal Defendants are entitled to receive the sum of $351,664.96 (that figure was held to be the total amount of reasonable attorneys’ fees and expenses incurred by Schal Defendants as a direct result of Campbell’s violations of Rule 11) — subject to appropriate further adjustments — from Campbell as sanctions under Rule 11; and
(b) directed the parties to address, by further submissions, the remaining question of “what additional amount should be added to that figure as a sanction to give effect to the delay factor sustained by Schal Defendants in obtaining the recovery of substantial amounts incurred by reason of Campbell’s Rule 11 violations.”

Opinion II led to a flurry of activity, both in response to that direction and beyond the single issue thus identified:

1. Schal Defendants moved that this Court reconsider its disallowance in Conclusion 34, of the portion of Schal Defendants’ attorneys’ fees incurred in conjunction with Campbell’s appeal to our Court of Appeals, 854 F.2d 948 (7th Cir. 1988). That led to a full briefing of that issue.
2. Both parties did respond (though on an extended schedule) on the delay factor identified at the conclusion of Opinion II. Schal Defendants suggested a calculation based on the cost of money in prime-interest-rate terms, while Campbell opposed any award at all for delay (or suggested that at most a short-term government securities rate would be proper).
3. At a brief status hearing held just after both matters just referred to had become fully briefed, this Court directed the litigants to address two issues:
(a) what the delay factor calculations through May 31, 1990 (the date dealt with in Schal Defendants’ original submission)2 would become if Schal Defendants’ motion for reconsideration were granted; and
(b) what the delay factor calculations should be for the period beginning June 1 (on each alternative— whether this Court granted or denied Schal Defendants’ motion for reconsideration).
4. When the parties responded to the latter directive, Campbell’s counsel disclosed that Campbell had filed for bankruptcy in the United States Bankruptcy Court for the Eastern District of Missouri, Eastern Division (Case No. 90-02458-BKC-BSS), and his counsel there[514] fore sought a stay of further proceedings here by reason of the automatic bankruptcy stay provisions of 11 U.S.C. § 362 (“Section 362”). Schal Defendants responded to that latter suggestion by citing a decision (O’Brien v. Fischel, 74 B.R. 546 (D.Hawaii 1987)) that rejected such a stay of Rule 11 proceedings by calling upon the exception provided by Section 362(b)(4).

During the course of the status hearing when O’Brien was sought to be invoked by Schal Defendants, this Court reviewed that opinion and found the reasoning there unpersuasive. Accordingly this Court suggested that Schal Defendants seek a lifting of the automatic Section 362 stay from the Bankruptcy Court. That relief was in fact obtained on June 20.3

At the next status hearing on June 22, this Court asked the parties to brief the potential impact on Schal Defendants’ pending motion for reconsideration of the recently-issued Supreme Court decision in Cooter & Gell v. Hartmarx Corp., — U.S. —, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). That has been done,4 and the current motions are now ripe for decision.

Modification of Conclusion 34

Campbell’s lawyers in this proceeding (apparently counsel selected by his malpractice insurance carrier5) have regrettably carried on in the same disturbing spirit that Campbell manifested throughout this litigation, as dealt with so extensively in Opinion II. There is not much point in expanding the discussion by going back to review and itemize the various distressing aspects of the lawyers’ representation,6 but the relevant one here is that Conclusion 34 — the one at issue — had been the direct [515] product of an affirmative misrepresentation on the part of Campbell’s lawyers: their false statement that Jeff Harris, Esq. (the counsel for Schal Defendants) was the only one who had participated as the lawyer for all defendants in the appeal, so that Schal Defendants’ fee request for services on appeal had not properly separated out the Rule-11-allowable amount allocable to themselves alone.

Schal Defendants have now exposed that flat misrepresentation by pointing out that the other appellee, Northwestern University, was separately represented on the appeal as it had been before this Court — so that there was no occasion for any allocation of the services rendered on appeal by Schal Defendants’ lawyers.7 But that exposure has then been met with this response by Campbell’s lawyers (in their May 30 Mem. 4):

Motions to reconsider are ordinarily granted only to correct clear errors of law or fact, or to present newly discovered evidence which could not have been adduced during the pendency of the motion. Publisher’s [sic] Resource[ Inc.] v. Walker-Davis Publication[s, Inc.], 762 F.2d 557, 561 (7th Cir.1985). The evidence presented on defendant’s motion to amend findings cannot be considered newly discovered evidence since the evidence of who represented whom on appeal was available at the time the fee request was made and should have been presented to this Court by Schal’s attorneys to assist the Court in determining the reasonableness of the fee request. Certainly, it would have been of benefit for Schal’s attorneys to explain that all of their work was performed for one client and that there was no overlap in billing. If claiming newly discovered evidence, the moving party must demonstrate that the evidence was in existence at the time of the trial, but that the moving party was excusably ignorant.

That presentation really compounds the egregiousness of the conduct by Campbell’s counsel, because it too is really misleading. As Schal Defendants’ June 1 R. Mem. 2 accurately points out:

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Brandt v. Schal Associates, Inc., 131 F.R.D. 512, 1990 U.S. Dist. LEXIS 8908, 1990 WL 99950 (N.D. Ill. 1990).

131 F.R.D. 512 (Brandt v. Schal Associates, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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