MOUNT VERNON – St. Clair County Associate Judge Julie Katz correctly sanctioned attorney Alexander Loftus of Chicago in a case he shared with David Cates of Swansea, Fifth District appellate judges ruled on May 21.
They also affirmed Katz in ordering discovery about possible further sanctions.
Loftus argued on appeal that Katz shouldn’t have awarded sanctions to defendants because his clients dismissed claims against them.
Justices Mark Boie, Randy Moore, and Milton Wharton rejected the argument.
“We agree with the circuit court that parties that have been dismissed from a case maintain their status as parties to the proceedings while timely filed post judgment motions are pending in the case, including motions for sanctions,” Boie wrote.
So far, Katz’s sanctions add up to about $19,000.
Loftus has seen bigger penalties. Last December, U.S. District Judge Virginia Kendall of Northern Illinois imposed a $271,926.92 sanction on his firm and his clients.
In April, U.S. Magistrate Judge Katherine Menendez of Minnesota recommended sanctions of $66,018.93 plus amounts she asked the winners to provide. The winners filed for $114,893.42.
In the St. Clair County case, Loftus, Cates, and Jeffrey Dorman of Chicago represent David Hursey, Robert Liss, Donald Skelton, and Christopher Hursey.
They sued logistics company Mark XVI Transportation Solutions in 2017, claiming direct involvement in its management and operations. They also sued Mark XVI chief executive Michael Head too, but they soon dismissed him as defendant and added him as plaintiff.
They amended the complaint and asserted claims against Mark XVI shareholder Barry Calhoun and his company Bayard Business Capital.
The complaint stated Calhoun stole tens of millions and participated in burning down a warehouse to destroy evidence.
It stated he and his business stripped plaintiffs of ownership and they faced imminent risk of losing 80 percent of their equity. It stated Head and Calhoun agreed that Calhoun would obtain financing and a new line of credit for Mark XVI.
It also stated Head rejected Calhoun’s proposals and Calhoun tried to orchestrate a coup involving Head’s removal and termination of plaintiffs’ employment.
Calhoun moved to dismiss the complaint, claiming capital infusion was impossible due to deficient management and irregular accounting.
He argued the complaint was futile anyway because his agreement with Mark XVI indemnified his business and held its officers harmless.
Rather than dispute that, Loftus and Cates moved to voluntarily dismiss Calhoun and his business.
Katz granted the motion on April 4, 2018, and Calhoun moved for sanctions two weeks later.
He stated he didn’t steal anything, destroy evidence, ask for ownership interest, or hold financing deals hostage.
He stated his lawyers turned over hundreds of documents in hopes that an open approach might convince plaintiffs to reconsider their allegations.
Loftus moved to strike the motion, “rather than litigate these factual questions that would require discovery and a lengthy hearing.”
Calhoun’s counsel replied that a total lack of corroboration “should have spurred a reasonable lawyer to conduct some further investigation.”
Katz denied the motion to strike the sanctions motion, and Loftus filed a response stating Calhoun couldn’t show the averments were false.
He claimed he didn’t aver that Calhoun was responsible for destruction but only that the group who benefited from it was likely responsible.
Mark XVI moved for sanctions in July 2018, claiming the complaint contained numerous contrasting, conflicting statements and outright falsehoods.
In August, Calhoun moved to conduct discovery relevant to sanctions.
Katz granted the motion and dismissed the complaint.
Calhoun issued deposition notices to Loftus and each plaintiff, to no avail.
Calhoun moved for sanctions, and Katz reserved ruling on anything beyond $213.13 in reimbursement for out of pocket costs.
She ordered Loftus and lead plaintiff David Hursey to appear for depositions, but they didn’t appear.
Calhoun moved for discovery sanctions.