Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-02184/USCOURTS-ca7-15-02184-0/pdf.json

Parties Involved:
Veerasikku Bommiasamy
Appellant
Rakesh Parikh
Appellee
V. Bommiasamy, M.D., S.C.
Appellant

Document Text:

United States Court of Appeals 

For the Seventh Circuit 

Chicago, Illinois 60604 

Argued January 26, 2016 

Decided March 21, 2016 

Before 

DIANE P. WOOD, Chief Judge 

WILLIAM J. BAUER, Circuit Judge 

RICHARD A. POSNER, Circuit Judge

No. 15-2184 

VEERASIKKU BOMMIASAMY and 

V. BOMMIASAMY, M.D., S.C., 

 Plaintiffs-Appellants, 

v. 

RAKESH PARIKH, 

 Defendant-Appellee.

 Appeal from the United States District 

Court for the Northern District of 

Illinois, Eastern Division. 

No. 12 C 7314 

Rebecca R. Pallmeyer 

Judge.

O R D E R 

This appeal concerns a district court’s decision to deny sanctions under 28 U.S.C. 

§ 1927, the statute that authorizes fees to be imposed on lawyers who “unreasonably and 

vexatiously” multiply proceedings. The underlying dispute arises out of the efforts of 

Dr. Veerasikku Bommiasamy (and his medical practice V. Bommiasamy, M.D., S.C.) to 

enforce a promissory note and stock sale allegedly executed by Dr. Rakesh Parikh. More 

than a year after Bommiasamy filed suit, the district court discovered a jurisdictional 

problem: Parikh had permanently relocated from Indiana to Illinois, the state of 

Bommiasamy’s citizenship, before the suit was filed, and thus diversity of citizenship 

was lacking. The district court accordingly dismissed the action for lack of subject-matter 

jurisdiction. At that point Bommiasamy sought sanctions based on the failure of Parikh’s 

NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with Fed. R. App. P. 32.1 

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No. 15-2184 Page 2 

counsel to notify the court promptly of his client’s non-diverse citizenship. The court 

concluded that defense counsel’s oversight was disappointing, but not sanctionable. We 

conclude that it did not abuse its discretion in so ruling. 

A look at the lawsuit between the parties provides useful context for the district 

court’s decision. In 2004, Bommiasamy, along with two other men, agreed to sell the 

stock of a medical laboratory corporation (since dissolved) they owned, HealthCare 

Labs, Inc., to Parikh in exchange for a yearly percentage of the company’s collections 

over the next three years, a lump sum, and debt payment. Four days after signing the 

stock-purchase agreement, Parikh executed and delivered the promissory note, in which 

he promised to pay Bommiasamy $180,000 in sixty monthly installments of $3,000. 

Parikh never paid, Bommiasamy says, and from 2005 to 2011 the parties pursued the 

breach-of-contract action in state court. 

In 2011 Bommisasamy’s lawyer moved to withdraw on the grounds that his 

relationship with Bommiasamy had broken down and Bommiasamy had retained other 

counsel, William Kohn. (Kohn continues to represent Bommiasamy in this appeal.) 

Because the trial date was looming, the court denied the motion. Counsel soon had the 

case voluntarily dismissed, over Kohn’s objection; Kohn purported to be participating as 

Bommiasamy’s “non-record counsel.” Bommiasamy then retained Kohn as counsel and 

sought unsuccessfully to vacate the voluntary dismissal. When that request was denied, 

Bommiasamy appealed. 

Bommiasamy meanwhile filed this suit in federal court, reasserting his 

breach-of-contract claims and invoking diversity jurisdiction, see 28 U.S.C. § 1332. He 

asserted that the amount in controversy exceeded $75,000, that he and his corporation 

were Illinois citizens, and that Parikh “is upon information and belief a citizen and 

resident of Ft. Wayne, Indiana.” Parikh moved to dismiss the case as barred by res 

judicata; he took the position that the prior state-court litigation had resolved the matter. 

The district court denied the motion as premature and ordered Parikh to answer the 

complaint. In answering the complaint, Parikh admitted the jurisdictional allegation. 

Three weeks later, Parikh moved to dismiss the complaint for lack of 

subject-matter jurisdiction, asserting for the first time that he was in fact a citizen of 

Illinois, not Indiana as alleged in the complaint. Parikh attached to his motion to dismiss 

an affidavit swearing that in August 2007 he had moved with his family from Illinois to 

Indiana, where he practiced medicine until October 2010. For most of the next two years, 

he practiced medicine in Texas but frequently returned to Indiana, where his family 

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No. 15-2184 Page 3 

remained while his son finished high school. But in June 2012 his family moved back to 

their home in Illinois, where he was domiciled when Bommiasamy filed this suit three 

months later. 

Bommiasamy ultimately conceded that he could not establish diversity 

jurisdiction and moved under 28 U.S.C. § 1927 for sanctions based on Parikh’s 

“unreasonabl[e] fail[ure] to timely raise his diversity jurisdiction defense.” He peppered 

his motion with charges of both “gamesmanship”—arguing that Parikh’s attorneys 

previously knew about Parikh’s Illinois citizenship but intentionally delayed disclosing 

it—and deception, in that Parikh answered the complaint “in a way that appeared 

calculated to fudge the jurisdictional issue.” And even if Parikh’s counsel did not know 

about Parikh’s move, Bommiasamy continued, sanctions were warranted because it was 

“not ... objectively reasonable” for counsel to fail to ascertain Parikh’s citizenship before 

“initiating a year’s worth of non-meritorious, non-jurisdictional motion practice.” 

 Parikh’s attorneys opposed the § 1927 motion. They denied that they were aware 

that Parikh had returned to Illinois, let alone that they had any incentive to prolong 

vexatiously and unreasonably any proceedings for which jurisdiction was lacking. They 

maintained that they discussed the jurisdictional allegations with Parikh upon receiving 

the complaint and speculated that Parikh may not have understood the legal 

consequences of his move—“likely the result of language barriers.” One of Parikh’s 

attorneys swore that he first noticed the issue when reviewing the draft answer and that 

he instructed Parikh’s other attorney not to admit diversity jurisdiction and to keep 

investigating. Parikh’s other attorney swore that he changed the answer so that Indiana 

citizenship was not admitted, but that he inadvertently left unchanged the admission of 

diversity jurisdiction. At no time did they act unreasonably or in bad faith, both lawyers 

insisted, and even if their conduct “at worst” was negligent, negligence is not a proper 

basis on which to award sanctions under § 1927. 

The district court denied the motion for sanctions. It expressed disappointment 

with counsel’s failure to discover Parikh’s citizenship sooner, but concluded that counsel 

did not act unreasonably or seriously disregard the judicial process: 

Defense counsel’s failure to ascertain these details earlier is disappointing 

for obvious reasons. This court devoted substantial attention to a confusing 

record to resolve the res judicata dispute—a matter of state law. 

... 

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An award of sanctions under 28 U.S.C. § 1927 is “proper if the attorney ‘has 

acted in an objectively unreasonable manner by engaging in a serious and 

studied disregard for the orderly process of justice[,] or where a claim is 

without a plausible legal or factual basis and lacking in justification.’” 

Lightspeed Media Corp. v. Smith, 761 F.3d 699, 708 (7th Cir. 2014) (quoting 

Walter v. Florenzo, 840 F.2d 427, 433 (7th Cir. 1988)) (alterations removed). 

The court sees no “serious and studied disregard” in this record. Dr. 

Parikh’s attorneys represented him for years in the state court litigation; it 

is undisputed that he was domiciled in Indiana at that time. In this era of 

electronic communication, it is not surprising that counsel’s attention was 

not drawn to Dr. Parikh’s return to Illinois. Plaintiff’s counsel suspects his 

opponents of knowing all along that Dr. Parikh had moved back to Illinois 

in June 2012, but there is no evidence that establishes this, nor any obvious 

incentive for counsel to conceal an argument for dismissal of the 

complaint. 

... While the court’s time could have been better spent on cases properly 

before it, it appears that the parties themselves would have engaged in 

motion practice on this issue regardless where the complaint was filed. In 

short, defense counsel’s failure to blow the whistle on this litigation earlier 

may well not be genuinely costly to Plaintiff. 

On appeal Bommiasamy argues that the district court made a legal error in this 

ruling by using the wrong standard to evaluate his claim. He contends that it applied a 

more stringent “serious and studied disregard” standard, rather than one based on 

“recklessness or extreme negligence” or “pursuing a path that a reasonably careful 

attorney would avoid.” 

We reject this argument. The district court may not have used the exact words 

Bommiasamy would prefer, but it correctly looked for objectively unreasonable actions 

and bad faith. See Micrometl Corp. v. Tranzact Techs., Inc., 656 F.3d 467, 472 (7th Cir. 2011); 

Jolly Grp., Ltd. v. Medline Indus., Inc., 435 F.3d 717, 720 (7th Cir. 2006); Dal Pozzo v. Basic 

Mach. Co., 463 F.3d 609, 614 (7th Cir. 2006); see also Star Mark Mgmt., Inc. v. Koon Chun 

Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 178 (2d Cir. 2012); Peer v. Lewis, 606 F.3d 

1306, 1314 (11th Cir. 2010). 

Bommiasamy argues in the alternative that the court unreasonably evaluated the 

facts. It downplayed Parikh’s counsel’s year-long delay after the complaint’s filing to 

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No. 15-2184 Page 5 

confirm the court’s subject-matter jurisdiction, he complains. But the district court was 

well aware of both the duration of the delay and defense counsel’s explanation, and it 

found nothing “objectively unreasonable” in counsel’s conduct. As the court explained, 

counsel had represented Parikh “for years” in state-court litigation while he was 

domiciled in Indiana, and no evidence established that counsel knew that Parikh had 

moved back to Illinois or that counsel had any incentive to conceal such knowledge.We 

note as well that § 1927 is a permissive statute, and so the district court was not required 

to impose sanctions even if it had found evidence of objective or subjective bad faith. 

See Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 1014 (7th Cir. 2004). 

Accordingly, we AFFIRM the denial of sanctions. 

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