United States District Court, N.D. Ohio, Western Division
G.G. Marck & Associates, Inc., Plaintiff,
James Peng, et al., Defendants.
MEMORANDUM OPINION AND ORDER
ZOUHARY U.S. DISTRICT JUDGE
before this Court is Plaintiff's Motion for Sanctions for
Defendants' Breach of Settlement Agreement in the 2005
case (Doc. 531), and Defendants' Motion to Dismiss in the
2017 case (Doc. 9). Both Motions are opposed (2005 case, Doc.
533; 2017 case, Doc. 14). The 2005 and 2017 cases have been
consolidated for pretrial purposes. This Order will address
each Motion in turn.
prolonged and tortured history of this case has been
thoroughly explored elsewhere. See, e.g., G.G.
Marck & Assocs., Inc. v. Peng (Marck III),
No. 13-3015 (6th Cir. Sept. 3, 2013); G.G. Marck &
Assocs., Inc. v. N. Am. Inv., Corp. (Marck II),
465 F. App'x 515, 516-17 (6th Cir. 2012); G.G. Marck
& Assocs., Inc. v. Peng (Marck I), 309 F.
App'x 928, 929-31 (6th Cir. 2009). This Court briefly
outlines the relevant facts below.
action began in September 2005, when Marck filed a Complaint
alleging Defendants committed various trademark and unfair
competition violations (2005 case, Doc. 1-1 at 1-14; Doc. 1-2
at 22-23). The following month, the parties reached a
settlement agreement and read its key points into the record
(2005 case, Docs. 10, 16). But the dispute revived when the
parties attempted to memorialize their agreement in writing.
The parties spent the next eight years litigating the terms
and enforceability of their agreement.
January 2013, the district court entered a Settlement
Agreement and Mutual Release of All Claims (2005 case, Doc.
431-1) and Final Order for Permanent Injunction (2005 case,
Doc. 432). Defendants' appeal of that Order concluded in
September 2013. Marck III, No. 13-3015 (6th Cir.
Sept. 3, 2013). The parties agree Defendants complied with
the essential terms of the agreement by December 2, 2013
(2005 case, Doc. 531 at 2). With the completion of the final
Special Master Report in June 2017, this dispute seemed
finally near its end.
August 2017, Marck filed a Motion for Sanctions (2005 case,
Doc. 531). Marck asks this Court to exercise its inherent
powers and order Defendants to pay the entirety of
Marck's attorney fees and costs incurred between December
15, 2005 and December 2, 2013 (id. at 2). During
this period, Marck contends it was “forced” to
incur additional legal expenses because of Defendants'
“bad faith, . . . vexatious and wanton, and . . .
oppressive” failure to timely comply with the essential
terms of the settlement agreement (id.). Defendants
deny materially beaching the agreement, or acting in bad
faith. Further, Defendants argue that many of Marck's
allegations of misconduct “have already been addressed
and rejected by this Court or the Court of Appeals, and
others have already been sanctioned and satisfied”
(2005 case, Doc. 533 at 6). Thus, they cannot be raised again
“under the different legal standard of ‘inherent
powers'” (id. at 7).
the Motion for Sanctions was pending, Marck filed a new
Complaint seeking damages for the alleged breach of the
settlement agreement (2017 case, Doc. 1). Marck filed an
Amended Complaint that same day (2017 case, Doc. 4). The
facts alleged in the Amended Complaint are almost identical
to those in the Motion for Sanctions. Marck also seeks the
same relief: $ 1, 073, 172.97 in attorney fees (id.
at 14). Defendants moved to dismiss the Amended Complaint on
three grounds: (1) Marck's claims are barred by the
six-year statute of limitations for oral contracts; (2) Marck
fails to state a plausible breach of contract claim because
it fails to allege it performed its duties under the
contract; and (3) Marck's claims are barred by res
judicata (2017 case, Doc. 9 at 8-19).
Motion for Sanctions (2005 Case)
the American Rule, parties are ordinarily required to bear
their own attorney fees. Alyeska Pipeline Serv. Co. v.
Wilderness Soc'y, 421 U.S. 240, 247-70 (1975). But
“federal courts recognize several exceptions to this
general rule.” Jones v. Cont'l Corp., 789
F.2d 1225, 1228-29 (6th Cir.1986). Here, Marck requests this
Court order Defendants to pay over a million dollars in
attorney fees under its “inherent powers” to levy
Court may sanction a party under its inherent powers if it
finds that the party “acted in bad faith, vexatiously,
wantonly, or for oppressive reasons, or when the conduct was
tantamount to bad faith.” United States v.
Llanez-Garcia, 735 F.3d 483, 492 (6th Cir. 2013)
(citation omitted). These inherent powers “must be
exercised with restraint and discretion.” Id.
(citation omitted). “Because [a] court's inherent
power to impose sanctions is discretionary, [a] court is not
required to sanction a party or attorney even if it has
determined that some wrongdoing has occurred.”
Murray v. City of Columbus, 534 F. App'x 479,
485 (6th Cir. 2013). And “[w]hile district courts are
required to articulate a basis for awarding sanctions,
nothing requires them to explain their reasons for not
ordering sanctions.” Runfola & Assocs. v.
Spectrum Reporting II, Inc., 88 F.3d 368, 375
(6th Cir. 1996).
certain circumstances, a party's attempt to repudiate or
alter the terms of a settlement agreement may justify an
award of attorney fees to the party who, as a result, must
expend resources to enforce or defend the agreement.
E.g., Jaynes v. Austin, 20 F. App'x
421, 427 (6th Cir. 2001). But “bad faith cannot
underlie every disagreement over the actual terms of a
settlement” or its enforceability. Tocci v. Antioch
Univ., 967 F.Supp.2d 1176, 1202 (S.D. Ohio 2013).
See also McCormick v. Brzezinski, 2010 WL 1463176,
at *6 (E.D. Mich. 2010). To justify an award of attorney fees
under its inherent powers, this Court must find
“something more, ” showing Defendants acted with
an improper purpose. See Jordan v. City of Detroit,
595 F. App'x 486, 488-89 (6th Cir. 2014); Metz v.
Unizan Bank, 655 F.3d 485, 489 (6th Cir. 2011);
Tocci, 967 F.Supp.2d at 1202.
fails to demonstrate that additional sanctions are warranted
in this case.
the record casts doubt on Marck's assertion that
“the Court of Appeals and this Court have already found
. . . through clear and convincing evidence that Peng
repeatedly breached the settlement agreement” (Doc. 531
at 16). In 2009, the district court found Defendants
materially breached the settlement by failing to obtain Anna
Peng's release (Doc. 331 at 12, 14-15). But the Sixth
Circuit questioned this conclusion in both Marck I
and Marck II. In Marck I, 309 F. App'x
at 932 n.1, the Sixth Circuit observed:
[T]he precise reason Marck sought the separate release is far
from comprehensible. According to Marck, Ms. Peng's
refusal to sign that separate mutual release caused the
entire settlement to fail. But Marck does not explain why
this term was so important . . . . Why her signature should
be required on a separate mutual release of claims is thus a