Illinois Appellate Court Upholds Sanctions Over ‘Vexatious and Harassing’ Lawsuit

October 10, 2017 – Press Releases

Fox Rothschild attorney Marc C. Smith won a decisive victory in the Appellate Court of Illinois that upheld the dismissal of a $20 million lawsuit against Chicago financier Peter Goldman and levied more than $33,000 in sanctions on the plaintiff companies for pursuing “vexatious and harassing” litigation.

The sanctions may increase substantially because the unanimous three-judge panel also found that there was no valid legal basis for pursuing the appeal and that the plaintiffs’ theory of the case was “delusional.”

The lawsuit centered on a financially troubled health club and the circumstances that led to its foreclosure and sale. The plaintiffs – Lake Shore Athletic Club Illinois Center, LLC and Two Eleven North Stetson LLC – are the former operators of the club and the property owner. Together they alleged that Goldman breached a confidentiality agreement and interfered with their lender, leading to the sale of the club to Strategic Hotels & Resorts, Inc. (A group led by Goldman ultimately purchased the property.)

A lower court dismissed all claims in the suit several times. The plaintiffs were repeatedly permitted to refile their claims, but the court found that they were never able to properly plead their accusations. Ultimately, the trial court declared that the plaintiffs had violated Illinois Supreme Court Rule 137 because the suit was premised entirely on unsupported allegations of fact and meritless legal theories.

Now the appellate court has upheld those findings and ruled that the suit should never have been filed.

“Quite simply, at the time the lawsuit was filed, plaintiffs possessed no facts that supported the existence of any business expectancy or Goldman's knowledge of or interference with that expectancy,” Justice Mary Anne Mason wrote in a 22-page opinion in Lake Shore Athletic Club Illinois Center, LLC et al. v. Goldman et al.

“And plaintiffs' delusional theory of causation should have prompted them and their attorneys to (i) refrain from filing those claims or, at a minimum, (ii) dismiss them once their obvious lack of merit was pointed out by the circuit court,” Justice Mason wrote.