UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

NORTHERN ILLINOIS TELECOM, )

INC., )

)

Plaintiff, ) Case No. 12 C 2372

)

v. )

) Judge John Robert Blakey

PNC BANK, NA, )

)

Defendant. )

)

MEMORANDUM OPINION AND ORDER

Northern Illinois Telecom, Inc. (“NITEL”) sued PNC Bank NA (“PNC”) for 

breach of contract [46-2]. On PNC’s motion [44], the Court entered summary 

judgment in favor of PNC, finding that NITEL had failed to demonstrate the 

existence of a valid contract between the parties [63]. PNC then moved for 

sanctions under Federal Rule of Civil Procedure 11, arguing that NITEL knew or 

should have known that its claim was frivolous from the outset and that NITEL 

sued PNC for an improper purpose – namely, to harass and exploit a settlement 

[65]. For the reasons set forth below, PNC’s motion is granted. 

Background & Procedural History

NITEL filed a breach of contract suit against PNC in Cook County Circuit 

Court, alleging that PNC failed to pay for cabling work NITEL had done at four 

bank branches. See Verified Complaint [46-2]. NITEL alleged that:
[i]n August of 2007, NITEL entered into agreements with National 

City Bank and Mid-America Bank to install data and telephone cabling 

at four separate bank locations:

A. 90 Burr Ridge Parkway, Burr Ridge, Illinois;

B. 2600 E. Main Street, St. Charles, Illinois;

C. 8990 N. Milwaukee Avenue, Niles, Illinois; and 

D. 1955 N. Damen Avenue, Chicago, Illinois.

Verified Complaint [46-2], ¶4. NITEL alleged that it performed the work required 

under “Work Orders” signed by bank representatives at each location; that it issued

invoices on those work orders; and that National City Bank and Mid-America Bank 

defaulted on their obligations under the agreement1 by failing to pay NITEL for the 

work it completed at those four locations. Id., ¶¶6, 8-9. NITEL alleged that PNC, 

as “the successor in interest to both National City Bank and Mid-America Bank . . . 

is solely responsible for the obligations of those entities” – including damages of 

$81,300 “based on the fact that the banks never paid for any of the work performed 

under those invoices.” Id., ¶¶10-11. 

PNC removed the action to the Northern District of Illinois [1] and answered

the complaint, denying the existence of any agreement between NITEL and PNC or 

its predecessor banks and denying any obligation to pay. PNC’s Answer and 

Affirmative Defenses [7], ¶¶4, 9, 13. PNC asserted that NITEL was a subcontractor 

to Nexxtworks Inc., and that any monies due and owing to NITEL were owed by 

Nexxtworks. Id., ¶14. 

Before engaging in substantial discovery, PNC sent NITEL a letter detailing 

the defects in the claim against PNC. On July 31, 2012, Jim Crowley, counsel for 

1 The complaint refers to “agreements” in ¶4, “agreement” in ¶9, and seems to use these 

words, as well as “work orders” and “invoices” interchangeably.

2

 
PNC, wrote to Robert Riffner, counsel for NITEL, advising that PNC was taking the 

position that neither it, nor its predecessors, ever entered into an agreement with 

NITEL relating to the matters referenced in NITEL’s complaint. See 7/31/12 Letter 

from Crowley to Riffner [65-1] (attached as Exhibit A to PNC’s motion for 

sanctions). PNC asserted that NITEL performed the subject work as a 

subcontractor to Nexxtworks and that if it believed it was owed money, it should 

look to Nexxtworks. Id., p. 1. According to Crowley, NITEL knew its claim was 

with Nexxtworks, not PNC, and NITEL’s awareness of the real party in interest 

was obvious as of at least February 16, 2010, when NITEL filed a proof of claim in 

Nexxtworks’ bankruptcy case. Id. Crowley attached the proof of claim and, based 

upon the information and evidence, demanded that NITEL dismiss the complaint or 

risk sanctions under Rule 11. Id. Crowley advised that if NITEL did not dismiss 

the complaint, “PNC will be seeking sanctions under Federal Rule 11 against 

NITEL and your firm in connection with the matters which are set forth in the 

referenced Complaint.” Id., p. 2. PNC offered to settle the matter in exchange for a 

dismissal order and a check to cover PNC’s attorney’s fees and costs in defending 

against the lawsuit to date (which, at that time, amounted to about $9,000). NITEL 

did not respond (through counsel or otherwise), and PNC was forced to proceed with 

discovery.

During discovery, PNC reiterated that it could not be liable to NITEL 

because NITEL never had an agreement with PNC or its predecessor banks. In 

fact, when NITEL objected to PNC’s discovery requests as irrelevant, PNC moved to 

3
compel. See, e.g., PNC’s Motion to Compel [24], ¶¶1-3. At the hearing on the 

motion, the subject of proof came up, and the Magistrate Judge expressly discussed 

the fact that, absent a contract, PNC could not be found liable on NITEL’s breach of 

contract claim, even if NITEL had done the work. See Transcript of Proceedings 

from 2/28/13) [93], pp. 15-16, 19-20 (attached as Exhibit H to PNC’s Reply in 

Support of its Motion for Sanctions). The Magistrate Judge specifically disabused 

counsel of any notion that an email from Nexxtworks telling NITEL to deal directly 

with the banks could somehow form the basis of a breach of contract claim against 

PNC and that the work orders signed by bank managers likewise would not 

establish a contract between PNC and NITEL either. Id., pp. 15-16, 19-20. The 

Magistrate Judge further noted that NITEL’s filing of a proof of claim in 

Nexxtworks’ bankruptcy case, however, “does indicate that [NITEL] believed that 

they were the people who owed him money” and that in terms of establishing a legal 

obligation to pay on the part of PNC, NITEL had “real proof problems”; she 

observed that the mere fact that he did not get paid “doesn’t mean that he can be 

made whole by [PNC].” Id., pp. 26, 30, 40. 

These points were reiterated in the order entered following the hearing: 

“NITEL asserts that ‘PNC needs to provide evidence they have either previously 

paid NITEL . . ., or . . . that they have paid Nexxtworks for the cabling services 

performed. Dkt. 27-7. This assertion turns the burden of proof on its head. NITEL 

has the burden of proving the monies it seeks to collect are due and owing from 

PNC.” Order dated 3/6/13 [39], p. 3, n.1. 

4
Shortly after this hearing, PNC sent NITEL a second Rule 11 letter. On 

April 2, 2013, Crowley wrote to Riffner, reiterating PNC’s earlier position and 

refuting NITEL’s allegations concerning the existence of a contract. See April 2, 

2013 Letter from Crowley to Riffner [65-5] (attached as Exhibit E to PNC’s motion 

for sanctions). Crowley attached documents, including affidavits from the bank 

representatives who allegedly signed the work orders NITEL claimed formed the 

basis of a contractual relationship between NITEL and PNC. According to the 

affidavits, which came from the managers of the four branches where work was 

done, the individuals represented were not authorized to sign such orders, the

individuals denied signing the orders and further represented that the signatures 

appeared to be forged. Id. Crowley’s second letter advised NITEL that PNC 

planned to file a motion for summary judgment based upon the lack of any 

contractual obligation on PNC’s part. Crowley advised that PNC would also file “a 

motion for sanctions against your client, as well as your office with respect to this 

frivolous lawsuit and you, as attorney for NITEL, should have either refused to file 

this lawsuit, or sought settlement once you became aware of the matters which I 

describe above.” Id., p. 3. PNC again offered to settle the matter in exchange for a 

dismissal order and a check to cover fees and costs (which, by this point, exceeded 

$24,000 after a discount). NITEL did not respond to the letter (through counsel or 

otherwise). 

Subsequently, PNC deposed Paul Coy, NITEL’s President, on May 9, 2013. 

Coy’s deposition testimony shows that NITEL’s breach of contract claim was based 

5
on work orders and a general desire to make someone pay for the services NITEL 

provided. In fact, Paul Coy admitted at his deposition that he did not know (or 

particular care) whether NITEL had a contract with PNC. When asked why he was 

suing PNC, Coy testified that 

[i]t depends on who paid who for the job. If the banks never – if the 

banks paid Nexxtworks for the job and Nexxtworks didn’t pay us, then 

we would have to go after Nexxtworks for the job. But if the banks

never paid Nexxtworks for the job and were supposed to pay us, then 

we are owed the money from the banks. We’re just trying to find the 

money.

Coy Deposition [83], p. 67, lines 16-23. When pressed, he testified: 

I don’t know the legalities of it. I’m speculating. My opinion of the 

matter is that if National City – even if National City paid Nexxtworks 

for the job, we still then did not get paid for the services. Therefore, 

National City reaped the benefits of our services and should be paying

us for our services.

Q: Even if they paid Nexxtworks?

A: Yes.

Coy Deposition [83], p. 68, lines 15-23. When asked why he was seeking payment 

from Nexxtworks, he testified: “[b]ecause we didn’t know who the bank had paid. 

So we were trying to go after anybody that had money. We just didn’t want to [lose] 

any opportunities.” Id., p. 111, lines 19-21. Riffner represented Coy at his 

deposition.

On September 9, 2013, PNC moved for summary judgment [44]. Judge St. 

Eve, to whom the case was previously assigned, found that NITEL could not 

establish the existence of a valid contract between it and PNC or its predecessors 

and that PNC was therefore entitled to judgment as a matter of law. Memorandum 

6
Opinion and Order [63], pp. 12-14. The Court granted PNC’s motion for summary 

judgment on August 27, 2014, and judgment was entered that same day [64]. 

About two months later, on October 21, 2014, PNC filed a motion seeking 

sanctions under Federal Rule of Civil Procedure 11 [65]. In its motion, PNC argues 

that NITEL’s claim against it has been baseless from the start and that sanctions 

are therefore appropriate. PNC asks this Court to require NITEL to pay the

attorney’s fees and costs PNC incurred in defending against this frivolous claim (a 

total of about $84,000). See Motion for Rule 11 Sanctions [65]; Supplemental 

Affidavit in Support of Attorneys’ Fees and Costs [87]; Second Supplemental 

Affidavit in Support of Attorneys’ Fees and Costs [94]. 

In response, NITEL continued to litigate against PNC by opposing the 

sanctions motion on timeliness grounds, and moving to dismiss it. Motion to 

Dismiss [71]. PNC moved to strike the motion to dismiss. Motion to Strike [76]. 

The Court denied both motions, set PNC’s sanctions motion for a hearing on 

January 29, 2105, and directed NITEL to file a substantive response to the 

sanctions motion by January 23, 2015. See Order entered 1/9/15 [80]. When NITEL 

failed to file a response as directed, the Court ordered the parties to appear on 

January 29 and to address the merits of the motion. Order entered 1/26/15 [81]. 

Counsel for NITEL failed to appear on January 29, 2015 as directed, and the 

attorney who stepped up on his behalf had not filed an appearance in the case and 

was not prepared to argue the merits of the sanctions motion. The Court reset the 

matter for hearing on March 3, 2015, and directed NITEL to file a substantive 

7
response to PNC’s sanctions motion by February 26, 2015. See Order entered 

1/29/15 [82]. NITEL filed its response on February 27 [91]. PNC filed a timely 

reply [93], along with a supplemental affidavit in support of its claimed attorneys’ 

fees and costs [94].

Discussion

Federal Rule of Civil Procedure 11 provides that a court may “impose an 

appropriate sanction upon the attorneys, law firms, or parties that have violated 

subdivision (b) or are responsible for the violation.” Fed. R. Civ. P. 11(c). 

Subdivision (b) of Rule 11 provides 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;

(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 further investigation or discovery; and 

(4) the denial of factual contentions are warranted on the 

evidence or, if specifically so identified, are reasonably based on belief

or a lack of information.

Fed. R. Civ. P. 11(b). PNC argues that NITEL and its attorneys have violated 

subsections (1), (2) and (3). 

8
A. PNC’s Motion is Procedurally Appropriate.

Initially, PNC’s motion is timely. “It is well established in this Circuit that 

90 days from the date of entry of final judgment represents ‘the outer parameters of 

the timeliness for sanctions claims.’” Sullivan v. Hunt, 350 F.3d 664, 666 (7th Cir. 

2003) (quoting Kaplan v. Zenner, 956 F.2d 149, 151 (7th Cir.1992). “Moreover, 90 

days from the entry of final judgment is not guaranteed to the parties; we have held 

that this limit ‘will not necessarily protect a sanctions claim if the party bringing it 

has failed to do so within a reasonable amount of time.’” Sullivan, 350 F.3d at 666 

(quoting Kaplan, 956 F.2d at 152). “Where appropriate, sanctions motions ‘should 

be filed at an earlier time-as soon as practicable after discovery of a Rule 11 

violation.’” Sullivan, 350 F.3d at 666 (quoting Kaplan, 956 F.2d at 151).

PNC advised NITEL via letters dated July 31, 2012 and April 2, 2013 that 

NITEL’s claims against PNC were frivolous. When NITEL refused to stand down, 

PNC was forced to defend itself against the lawsuit and to pursue and participate in 

discovery to build its case for summary judgment. Once summary judgment was 

entered, PNC moved with reasonable speed to prepare and file its motion. NITEL 

can hardly argue that it had no notice that a Rule 11 motion would be forthcoming.

In Olson v. Reynolds, No. 11-2273, 2012 WL 2403519 (7th Cir. June 27, 

2012), the Seventh Circuit found untimely a Rule 11 motion that was not served on 

the opposing party until after trial was over and after the defendant had spent a lot 

of time and money defending against the frivolous allegations. In Olson, however, 

the Court also noted that the time and expense could have been avoided if the 

9
defendant had served the Rule 11 motion earlier and given the plaintiff a chance to 

retract the filings. Here, PNC gave NITEL that chance – in fact, PNC gave NITEL 

two explicit chances. Nevertheless, NITEL chose to pursue its claim in bad faith. It 

cannot now claim surprise that PNC is following through on its threat to pursue 

Rule 11 sanctions. 

Additionally, the Seventh Circuit has noted that, in some cases, technical 

compliance with the safe harbor provision may not be possible and substantial 

compliance may be enough. E.g., Methode Electronics, Inc. v. Adam Technologies, 

Inc., 371 F.3d 923, 927 (7th Cir. 2004). Here, PNC fired two warning shots – which 

is what the Advisory Committee Notes suggest. NITEL chose not to respond and 

failed to abandon its baseless claim. And once judgment was entered, there was 

nothing left for NITEL to retract and no need for NITEL to be given another 

opportunity to take advantage of any safe harbor provision. See also Matriz IV, Inc. 

v. American National Bank and Trust Co. of Chicago, 649 F.3d 539, 552-553 (7th 

Cir. 2011) (“Postjudgment motions for sanctions are permissible so long as the 

moving party substantially complies with Rule 11’s safe harbor requirement” and “a 

letter informing the opposing party of the intent to seek sanctions and the basis for 

the imposition of sanctions” – as long as it is sent at least 21 days before the motion 

for sanctions is filed – “is sufficient for Rule 11 purposes.”). PNC’s motion is timely 

and procedurally proper. 

10
B. Sanctions Under Rule 11 are Warranted.

PNC argues that NITEL and its attorney, Robert Riffner, violated Rule 11 by 

filing a complaint and pursuing a claim they knew was frivolous. PNC also argues 

that NITEL and Riffner pursued the claim for an improper purpose – namely, to 

harass PNC for the purpose of extorting a settlement. 

The decision to award sanctions under Rule 11 is within the Court’s 

discretion. E.g., de Silva v. Cinquegrani, No. 11 C 4259, 2014 WL 3954990, at *2 

(N.D. Ill. Aug. 13, 2014) (citing Cooney v. Casady, 735 F.3d 514, 523 (7th Cir. 2013)). 

Sanctions should be “granted sparingly . . . and should not be imposed lightly.’” de 

Silva, 2014 WL 3954990, at *2 (quoting Lefkovitz v. Wagner, 219 F.R.D. 592, 593 

(N.D. Ill. 2004)). Nevertheless, such sanctions “may be imposed on a party for 

‘making arguments or filing claims that are frivolous, legally unreasonable, without 

factual foundation, or asserted for an improper purpose.’” Ochs v. Hindman, 984 

F.Supp.2d 903, 912 (N.D. Ill. 2013)(quoting Fries v. Helsper, 146 F.3d 452, 458 (7th 

Cir. 1998)). “A frivolous argument or claim is one that is ‘baseless and made 

without a reasonable and competent inquiry.’” Id. (quoting Fries, 146 F.3d at 458).

The mere fact that NITEL lost on summary judgment does not, by itself,

mean that its claim was frivolous or that it should automatically be sanctioned. 

E.g., Cartwright v. Cooney, 788 F.Supp.2d 744, 755 (N.D. Ill. 2011) (“even when a 

court has ruled that a party has been “wrong on the law,” sanctions against that 

party do not flow inevitably”) (citing Harlyn Sales Corp. Profit Sharing Plan v. 

Kemper Financial Servs., Inc., 9 F.3d 1263, 1270 (7th Cir. 1993)). “The test is 

11
whether ‘competent attorneys performing a reasonable investigation could not have 

believed in the merit of the position taken in the complaint . . . .’” Cartwright, 788 

F.Supp.2d at 756 (quoting Harlyn Sales, 9 F.3d at 1269).

Based upon the record (and confirmed by Judge St. Eve’s findings in ruling 

on the motion for summary judgment), NITEL’s claims were baseless from the start. 

NITEL sued PNC for breach of contract, seeking to impose liability under the

theory that PNC was the successor-in-interest to National City Bank, which in turn 

was the successor-in-interest to MidAmerica Bank, FSB. NITEL alleged in its 

complaint that it entered into contracts with National City and MidAmerica to do 

cabling work at four Chicago-area branches; that it completed the work required 

under the contacts; that a representative of either National City or MidAmerica 

signed off on the work at each branch; yet neither bank paid the invoices when 

NITEL presented them for payment. 

In fact, however, NITEL never had contracts with National City, MidAmerica 

or PNC. Rather, the work referenced in the complaint was performed pursuant to 

contracts between the banks (National City and MidAmerica) and Nexxtworks, Inc.; 

Nexxtworks then entered into a written subcontract with NITEL to perform some of 

the work, including the work done at the four branches referenced in the complaint. 

NITEL invoiced Nexxtworks for the work and Nexxtworks paid the invoices (though 

it withheld certain amounts because of issues with the quality of the work that are 

not relevant to the current discussion). Nexxtworks then invoiced National City 

and National City paid Nexxtworks’ invoices in full. 

12
In light of the above, the allegations in the Verified Complaint lack any basis 

in law or fact. Although the Verified Complaint was not filed in federal court (it 

was removed), the false allegations have been improperly pursued and persistently 

presented to the Court on multiple occasion, despite the absence of support. NITEL 

knew – or with reasonable inquiry should have known – that it never had a contract 

with PNC’s predecessors and could not sustain a breach of contract claim against 

PNC. From a purely evidentiary perspective, NITEL and its attorneys certainly 

knew they could not prove the existence of a valid contract. Throughout the 

protracted proceedings, NITEL consistently argued that it was “alleging a contract 

with PNC,” yet it never offered any evidence to support the existence of a contract 

and, when pressed, could not even describe the alleged contract. As the record on 

summary judgment confirms, no contract ever existed that could give rise to a 

breach of contract claim against PNC, National City or Mid-America. This 

insurmountable proof problem was emphasized to NITEL and its attorneys on 

multiple occasions, to no effect. 

PNC advised NITEL by July 31, 2012 that PNC owed it no contractual 

obligation. On that day, Jim Crowley, counsel for PNC, wrote to Robert Riffner, 

counsel for NITEL, and explicitly advised him of this fact [65-1]. Crowley explained 

that any contractual obligation to pay NITEL came from Nexxtworks. Id., p. 1. 

Crowley also discussed the evidence that he had uncovered proving that NITEL 

knew its contractual relationship was with Nexxtworks and not the banks (i.e, the 

proof of claim). Crowley’s letter attached the proof of claim. Despite this – and 

13
despite the threat of a sanctions motion – NITEL did not abandon its baseless 

litigation. NITEL did not respond to the letter and took no steps to withdraw its 

claim or dismiss the case. 

Moreover, NITEL was again confronted with the lack of proof at least two 

more times: once at the February 28, 2013 hearing on PNC’s motion to compel 

before the Magistrate Judge, and again on April 2, 2013 when Crowley sent the 

second Rule 11 letter. To the extent Riffner had any doubt about whether his client 

could pursue a breach of contract claim against PNC based on work orders and an 

email from Nexxtworks, Magistrate Judge Rowland confirmed that it could not. 

Despite the admonition from the Magistrate Judge, NITEL did not dismiss its 

complaint but continued to press its false breach of contract claim. 

Crowley’s April 2, 2013 letter further bolstered the Magistrate Judge’s 

determination that NITEL’s work orders could not form the good faith basis of any 

contractual obligation on the part of the banks. Crowley explained to Riffner that, 

to the extent he was relying on the work orders to support his contract claim, that 

claim would fail. Specifically, he gave Riffner notice of the affidavits PNC obtained 

from the bank representatives who allegedly signed the work orders where NITEL 

worked. Those affidavits undermined NITEL’s argument that the branch managers 

somehow authorized the work or obligated PNC to pay NITEL. In the affidavits, 

the branch managers disavowed any authority to sign such orders and denied ever 

signing the orders; in fact, the branch managers represented that the signatures on 

the orders were not theirs, indicating forgery. See April 2, 2013 Letter from Crowley 

14
to Riffner [65-5]; Affidavit of Kathleen Petzold [46-29]; Affidavit of Beata MikitaGlenn [46-31]. Crowley’s second letter advised NITEL and Riffner that PNC 

planned to file a motion for summary judgment. Crowley advised that PNC would 

also file “a motion for sanctions against your client, as well as your office with 

respect to this frivolous lawsuit and you, as attorney for NITEL should have either 

refused to file this lawsuit, or sought settlement once you became aware of the 

matters which I describe above.” [65-5], p.3. Despite the threat of a sanctions 

motion, and despite being confronted with evidence that undermined any shred of 

support for a breach of contract claim, NITEL failed to comply with Rule 11. Once 

again, NITEL did not respond to the letter and took no steps to withdraw its claim 

or dismiss the case.

To the contrary, despite Crowley’s letters and despite the Magistrate Judge’s 

rulings, NITEL persisted in its baseless position before this Court that the work 

orders and the email from Nexxtworks established a breach of contract claim 

against PNC. At his deposition, Paul Coy himself claimed under oath that the work 

orders were “contracts” that PNC breached. Coy Deposition [83], p. 19. Neither 

Coy, nor NITEL, nor Riffner (who was present at Coy’s deposition) ever corrected 

that false assertion.

The proof of claim constitutes clear evidence that, in fact, NITEL knew 

Nexxtworks (and not PNC) was contractually obligated to pay for the work NITEL 

did at the branches, and even a cursory investigation would have shown that the 

Nexxtworks email and the work orders could not support a breach of contract claim. 

15
At a minimum, Crowley’s July 31 letter alerted Riffner to the fatal weaknesses in 

his client’s case. And his continued assertion of the claim thereafter is sanctionable. 

Discovery proceedings and Crowley’s second letter eliminated any possibility 

that the work orders could support a breach of contract claim, yet NITEL

improperly persisted in its breach of contract claim, forcing PNC to conduct the 

discovery necessary to support its summary judgment motion. Even on summary 

judgment, NITEL maintained its claim but offered no evidence to support its 

arguments on summary judgment, in violation of the Court’s Local Rules. Perhaps 

most damaging to NITEL, PNC submitted the bank managers’ affidavits in its 

summary judgment motion, which indicated that NITEL relied upon fabricated 

evidence (fake work orders, supposedly signed by branch managers at the banks) in 

an attempt to bolster its claim – a claim it knew could not survive legally or 

factually. NITEL did not attempt to explain or refute this evidence in response to 

the summary judgment motion. 

In its response to PNC’s motion for sanctions, NITEL fails to justify its

behavior under Rule 11. NITEL notes that there is no dispute that it performed 

work in PNC branches, and thus the work must have been authorized. But no one 

is suggesting otherwise. The question is not whether NITEL was authorized to 

perform work at the branches; it clearly was. The question is whether NITEL had 

any legal right to pursue a breach of contract claim against PNC. The answer to 

that question is equally clear: it did not. In its Verified Complaint, NITEL alleged 

that in “August of 2007, NITEL entered into agreements with National City Bank 

16
and Mid-America Bank to install data and telephone cabling at four separate bank 

locations . . . .” Verified Complaint [46-2], ¶4 (attached as Exhibit B to PNC’s State 

of Facts in Support of Summary Judgment). It further alleged that “National City 

Bank and Mid-America Bank defaulted on their obligations under the agreement by 

failing to pay NITEL for the work that it completed at those four locations” and that 

“PNC is now the successor in interest to both National City Bank and Mid-America 

Bank and, as such, is solely responsible for the obligations of those entities.” Id., 

¶¶9-10. Nothing in NITEL’s response would allow this Court to conclude that the 

breach of contract claim filed against PNC, the allegations of which were reiterated 

throughout these proceedings, was warranted under existing law. Nor has NITEL 

provided any basis for the Court to conclude that the factual contentions in that 

claim had evidentiary support. 

In fact, as explained above, Paul Coy admitted at his deposition that he did 

not know (or particular care) whether NITEL had a contract with PNC. When 

asked why he was seeking payment from Nexxtworks, he testified “[b]ecause we 

didn’t know who the bank had paid. So we were trying to after anybody that had 

money. We just didn’t want to [lose] any opportunities.” Id., p. 111, lines 19-21. 

Coy testified that he really did not know who owed him money – whether it was the 

banks or Nexxtworks. Coy had no factual basis for his breach of contract claim 

against PNC, and he knew it. And if his attorney had probed just a little, he would 

have quickly determined that there was no contract – and therefore no feasible 

theory of liability – with respect to PNC. Because NITEL and Riffner maintained 

17
the breach of contract claim in the absence of any evidence and in light of Coy’s 

testimony, the Court finds that NITEL (through Coy) and Riffner pursued this 

claim for an improper purpose: to harass PNC for the purpose of forcing the bank to 

pay. 

For his part, Attorney Riffner argues that he and his firm were essentially 

hired to be NITEL’s debt collector, and that all of the clients responded to his 

collection efforts by paying on the invoices . . . except PNC. Riffner argues that his 

client’s explanation of the PNC “debt” “seemed imminently reasonable.” Response, 

p.2. Nevertheless, the fact that other clients may have legitimately owed debts to 

NITEL would not, and did not, obviate the need to conduct due diligence on the 

PNC debt to ensure it was legitimate. And of course Riffner’s statement says 

nothing about whether the explanation supported a claim against PNC, as opposed 

to Nexxtworks.

Riffner also notes that, after PNC provided evidence that the branch work 

orders had been forged, it “did not use the work orders as evidence against PNC’s 

Motion for Summary Judgment.” Response, p. 7. This statement is likewise 

unavailing. The work orders were what NITEL used (without success) to justify its 

claim against PNC in the first place; acknowledging that those work orders were 

forged would completely undermine NITEL’s claim. Thus, if Riffner is admitting 

that he recognized at that point that the work orders were fake and that his claim 

was meritless, he should have taken affirmative steps to correct the matter and 

dismissed the case. See, e.g., Fowler v. Freighliner Corp., No. 99 C 0988, 1999 WL 

18
1000558, at *3 (N.D. Ill. Nov. 1, 1999) (“Rule 11 imposes a duty to withdraw claims 

filed without evidentiary support.”). Neither he nor NITEL did that; instead, he 

and NITEL continued to assert in bad faith under Rule 11 the existence of a 

contractual obligation on the part of PNC to pay NITEL for the cabling work. Far 

from curing the Rule 11 violation, NITEL and Riffner compounded it.

NITEL’s and attorney Riffner’s failure to investigate the legal and factual 

bases for the breach of contract claim against PNC is sanctionable, as is the 

continued assertion of those claims through summary judgment proceedings here. 

The representations and statements in the complaint, pursued in this Court and 

repled in response to PNC’s motion for summary judgment, were made for an 

improper purpose – namely to harass PNC and to extort a settlement from PNC 

when no legal entitlement to damages could be established – and lacked any 

evidentiary support in the record. As such, they violate Rule 11. 

In sum, the Court finds that NITEL’s breach of contract claim, initially pled 

in state court but maintained in this Court after removal, was frivolous, lacking any 

basis in existing law. Additionally, the factual allegation concerning the existence

of a valid contract between PNC or its predecessors and NITEL lacked any support 

in fact or law, as there never was a contract between NITEL and the banks. Yet 

NITEL asserted the allegation in its verified complaint, throughout discovery, see 

e.g., NITEL’s response to PNC’s motion to compel [27], pp. 1-2, and on summary 

judgment, see NITEL’s memorandum in support of its response to PNC’s motion for 

summary judgment [56], pp. 1-3. These pleadings all run afoul of Rule 11(b)(2) and 

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(3). NITEL and counsel’s insistence on the existence of a contract despite the lack 

of evidentiary support, taken together with Coy’s deposition testimony, indicate 

that this case was filed and pursued for an improper purpose – namely, to force 

PNC to pay up – in violation of Rule 11(b)(1). 

Under Rule 11, the Court may impose sanctions on lawyers or parties or both 

for submissions that are filed for an improper purpose or without a reasonable 

investigation of the facts and law necessary to support their claims. See

Fed.R.Civ.P. 11(b). Additionally, where an attorney and client are both responsible 

for the conduct that violates Rule 11, the Court may impose joint and several 

liability. E.g. Jimenez v. Madison Area Technical College, 321 F.3d 652, 656 (7th

Cir. 2003) (citing In re Alberto, 119 B.R. 985, 993 (Bankr. N.D. Ill. 1990) (“[w]hen an 

attorney and client share responsibility for litigation strategy and such strategy 

violates Rule 11, courts can impose joint and several liability...”). NITEL (via Paul 

Coy) initially determined that it would go after PNC to recoup the money it deemed 

it was owed; Coy signed the verified complaint on behalf of NITEL and represented 

in the complaint and in his deposition that NITEL had a valid contract with the 

banks when he knew it did not. Coy also developed the litigation theory that the 

work orders could constitute a contract – a frivolous theory that had no basis in law

or fact, and he pursued that theory on NITEL’s behalf and as NITEL’s president. 

Riffner advanced Coy’s theory and NITEL’s claim (both in signed pleadings and in 

arguments before the Court) without reasonable investigation of the surrounding 

facts and law. Riffner never withdrew the claim; rather, he continued to oppose 

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summary judgment even after he realized that the work orders could not support a 

breach of contract claim. Accordingly, the Court finds that NITEL and Robert G. 

Riffner2 are jointly liable for the Rule 11 sanctions.

C. Reimbursement of Fees and Costs is the Appropriate Sanction.

Having determined that some sanction is appropriate, the Court next 

considers the type and amount of the sanction. PNC seeks all of the fees and costs 

it incurred in this case. Specifically, it claims costs in the amount of $1,702.35 and 

fees in the amount of $82,622.35 (through March 9, 2015). While Rule 11 “is not a 

fee shifting measure,” an appropriate sanction may include “payment to the movant 

of part or all of the reasonable attorney’s fees and other expenses directly resulting 

from the violation.” Fed. R. Civ. P. 11(c)(4); Cooney v. Casady, 735 F.3d at 523. 

Under Rule 11, however, the sanction imposed “must be limited to what suffices to 

deter repetition of the conduct or comparable conduct by others similarly situated.” 

Id.

Given that NITEL’s claim against PNC lacked any good faith basis from the 

start, all of the fees and costs incurred by PNC can be viewed as stemming from the 

Rule 11 violation. Additionally, NITEL and Riffner persisted in refusing to see (or 

2 Robert G. Riffner was potentially affiliated with two firms during the relevant time 

period. Riffner represents in his response to PNC’s sanctions motion that he formed the 

Riffner Firm, P.C. (where he is the only attorney) in August of 2012. Riffner filed his 

appearance in this case on May 23, 2012 and, at that time, identified his firm as Riffner 

Barber LLC. It is this firm -- and not the Riffner Firm -- that appears on all of the relevant 

pleadings, including the response to PNC’s motion to compel filed January 29, 2013 and the 

summary judgment response brief filed December 11, 2013 – both long after Riffner 

allegedly switched from Riffner Barber to the Riffner Firm. The Court finds that the murky 

water surrounding this issue constitutes “exceptional circumstances” under Rule 11(c)(1) 

and, accordingly, declines to hold Riffner Barber (which consists of just one additional 

lawyer) or the Riffner Firm liable for Riffner’s personal and professional failings. 

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declining to act upon) what was in front of them the entire time, that is, there was 

no contract between NITEL and PNC. At various points in this litigation, NITEL 

and its counsel were directly confronted with the frivolous nature of this lawsuit. 

Yet at no point did NITEL withdraw its claim or back off in any way on its pursuit 

of its claim. Even on summary judgment, NITEL pressed the breach of contract 

claim, despite a complete lack of evidence to support it. Neither NITEL nor Riffner 

has ever taken any affirmative step to correct or withdraw the false statements, 

allegations and pleadings presented here. Such conduct suggests that a significant 

sanction is necessary to achieve the desired deterrent effect. Additionally, although 

the Court is not specifically sanctioning Riffner for his most recent failures to 

comply with the Orders issued in connection with the sanctions motion (e.g. his 

failure to appear and file briefs as directed), this conduct confirms that a 

substantial sanction is required to convey the message that compliance with federal 

rules and orders is not optional. Accordingly, the Court finds that the sanction 

urged by PNC is necessary for effective deterrence, and the Court will impose a 

sanction in the amount requested. 

CONCLUSION

For the reasons explained above, the Court finds that Rule 11 sanctions are 

warranted against NITEL and its attorney, Robert G. Riffner. The Court further 

finds that the appropriate sanction is $84,324.70, the amount of attorneys’ fees and 

costs PNC incurred in having to defend against NITEL’s claim, which was baseless 

from the start. 

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The sanction is imposed against NITEL and Robert G. Riffner jointly and 

severally, and should be paid directly to PNC, via its counsel, James M. Crowley of 

Crowley & Lamb, P.C. 

Dated: April 29, 2015

Entered:

____________________________

John Robert Blakey

United States District Judge

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