Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LLC v. GQ Sand, LLC

United States District Court, W.D. Wisconsin

November 1, 2017

K3 PROP, LLC, Plaintiff,
v.
GQ SAND, LLC, Defendant.

          OPINION & ORDER

          JAMES D. PETERSON District Judge

         On July 6, 2017, the court dismissed this case for lack of subject matter jurisdiction after plaintiff K3 Prop, LLC, failed to adduce evidence sufficient to establish its citizenship. Dkt. 65. It awarded defendant GQ Sand, LLC, its reasonable actual attorney fees and costs. Both parties have submitted numerous filings concerning the amount of fees and who should pay them-K3 or its counsel. See Dkt. 61; Dkt. 64; Dkt. 69; Dkt. 71; Dkt. 72; Dkts. 77-81. GQ contends that K3's counsel should be held jointly and severally liable for fees under Federal Rule of Civil Procedure 11. The court agrees. But it will reduce the amount of fees requested.

         BACKGROUND

         Plaintiff K3 Prop, LLC, procures frac sand for its customers in the petroleum industry. In March 2017, it filed this lawsuit against defendant GQ Sand, LLC, alleging that GQ breached the parties' frac sand purchase agreement and converted K3's funds for its own use. K3 invoked this court's subject matter jurisdiction under 28 U.S.C. § 1332. But the allegations in K3's initial complaint were insufficient to determine whether the parties were completely diverse because K3 failed to allege the names or citizenships of any of its or GQ's members. See Dkt. 1. The court allowed K3 to file an amended complaint establishing subject matter jurisdiction. Dkt. 14. K3 did so, alleging that K3's sole member is Charles Cody Lyon, a citizen of Texas, and that GQ's members are Joe Gargano and Joshua Quisling, both citizens of Wisconsin. Dkt. 16. Those allegations were sufficient to establish subject matter jurisdiction at the pleading stage. Dkt. 18.

         Other than amending its complaint, K3 didn't do much in the case. It failed to participate in the court's preliminary pretrial conference. See Dkt. 15, at 1. It failed to answer GQ's counterclaims, prompting the court to enter default. Dkt. 25. (The court set aside the entry of default and allowed K3 to file a supplemental answer based on its counsel's representation that he forgot to record the answer deadline. Dkt. 38.) After GQ moved for summary judgment, K3 filed a response that put the veracity of its earlier allegations regarding its citizenship in doubt. It adduced a document titled “Membership Interests Purchase and Sale Agreement, ” dated July 29, 2015, which purports to transfer membership of K3 from Kenneth C. White, III, and Kenneth C. White, Jr., to Managed Owners Group, LLC. Jim R. Pierce signed the document on behalf of Managed Owners Group as its manager. Dkt. 48-5. The agreement does not mention Charles Cody Lyon.

         Faced with evidence calling into question K3's allegation that Lyon was its sole member, the court ordered K3 to adduce evidence sufficient to determine the members of K3 and the citizenship of each member. Dkt. 63. It warned K3 that failure to timely submit evidence would result in prompt dismissal of the matter for lack of subject matter jurisdiction with an award of fees and costs to GQ. The court also addressed a side issue: in opposition to GQ's summary judgment motion, K3 adduced Lyon's declaration and several exhibits attached to the declaration. Dkt. 48. GQ claimed that Lyons was recently sentenced to 30 years in prison and was therefore unable to testify at trial. The court ordered K3 to show that the content of Lyon's declaration-the sole evidence it adduced in opposition to GQ's summary judgment motion, other than the frac sand purchase agreement-would be admissible at trial and warned K3 that failure to make this showing would result in the court striking Lyon's declaration and its attachments.

         Despite the warning, K3 failed to respond to the court's order. So the court dismissed the case and invited GQ to file documentation supporting the attorney fees that it incurred in defending the action. Dkt. 65.

         ANALYSIS

         The court has already awarded attorney costs and fees to GQ. There is no question that K3 is liable for the award. But the parties seek the court's decision on two remaining issues: K3's attorneys' joint liability for the award under Rule 11 and the amount of the award.

         First, GQ asks that K3's counsel be held jointly and severally liable with K3 as a sanction under Rule 11. Rule 11(b) provides:

By 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;
(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;
(3) The factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.