[vr Crncurt Counr oF Coox Cour, kuno1s Covery Demat, Cuanceny Devson Dru Bars, rat, Plaintifts, No. 220806190 consolidated with LP Manaces, ELC, erat, Defendants, Calendar 4 and Maps & Asn Manacennr, LLC, ert, ) } ) ) ) ) ) ) No. 23.cH 04047 ) ) ) ) ) ) Nominal Defendants. Before the Court are (I) Plaintiff’ Verified Petition for a Rule to Show Cause or, Alternatively, to Enforce this Court's Prior Order: Against Defendants Foregiveness, Inc. (Foregiveness IL") and Foregiveness AZ, LLC ("Foregiveness Az") (collectively "Foregiveness Entities") and (i) Plaintiffs’ Verified Petition for a Rule to Show Cause or, Alternatively to Enforce this Court's Prior Order Against Defendant LP Ventures, LLC ("LP Ventures"). Bach Petition is fully briefed, and the Court heard argument on February 20, 2028, For the following reasons, each Petition is granted in part and denied in part. Bacnznoino For purposes of this Order, the Court assumes familiarity with the record related to written discovery. In pertinent part; Plantifls served written discovery requests on the Foregiveness Entities and LP Ventures in February 2023. On July 21, 2023, this Court granted in its entirety Plaintiff" First Motion to Cormpel against LP Ventures.® The Court concluded; inter alla, that LP Ventures failed to use Rule 213(e) properly. It invoked the Rule in a “document-dump-type approach’ a practice which the appellate court rejected in * The reasons forthe ruling ae set forth inthe Hearing Transeript of july 21,2023 at 16-17Simpkins v. HSHS Med. Grp., 2017 1L App (Sth) 160478, par. 41? The Court ordered LP Ventures to supplement its responses. Plaintiffs found the supplement deficient, prompting a Second Motion to Compel against LP Ventures. On December 12, 2023, the Court granted the mation in its entirety ‘The Court concluded, inter alla that LP Ventures failed to rectify and continued its misuse cf Rule 213(6) Plaintiffs also moved to compel sufficient responses from the Foregiveness Entities. (On December 12, 2023, the Court granted thie motion to compel in ite entirety" One of the grounds for the ruling was that the Foregiveness Entities failed t use Rule 213(e) roperly and in accordance with Simpkins. Another ground was that the Foregiveness Entities failed to identify Albany Bank in their answer to Interrogatory 10, which counsel eventually acknowiedged. 12/12/23 Tr at 106-9. The Court admonished the Foregiveness Entities and their counsel about the importance of making tue and ‘complete answers under oath, 12/12/23 Tr at 108-9. LP Ventures and the Foregiveness Entities again supplemented their responses on. January 14, 2024, Plaintiffs find the responses stil deficient. In the instant Petitions, Plalnbifs ask this Court to issue a rule to show cause against LP Ventures and the Foregiveness Entities, or alternatively, sanction them for noncompliance with court orders and discovery rules * In Simpkins, the appellate court stated, “We do riot approve of this practice of simply referting a gant to thousands of pages of documents without a reference to where the Itigant might find the answer being sought. Its not an acceptable substtuta forthe answers required by Rules 201(b), 213, and 214... Dumping documents on the plaintiffs and asking them to ‘igure Ie ot runs ‘ostrary tothe goal of open discovery” 3 The reasons for the ruling aro set forth in the Hearing Transcript of December 12, 2023, (12/i223 Te) at 104-8, ‘+ ‘The reasons for the ruling ate set forth in the Hearing Transcript of December 12, 2023 cuepizjaa te ae1i2-13 2scat Stanoano When a party falls to comply with a court's discovery order, sanctions or contempt may be appropriate. Sup. Ct. R. 219(¢) ("In lieu of or in addition to the foregoing, the court, upon motion or upon its own initiative, may impose upon the offending party or his or her attorney, or both, an appropriate sanction.... When appropriate, the court may, by contempt proceedings, compel obedience by any party .. to any .. order entered under these rules"). On the present record, this Court finds it unnecessary to invoke the contempt power, because the powers afforded under Supreme Court Rule 219(c) are sufficient See, eg, Door Props, LLC ». Nahlawl, 2023 IL App (ist) 730012, par. 26 (describing the court's inherent contempt authority asa “necessity to ensure [courts] can enforce their other powers") “Sanctions have a dual purpose: to combat abuses of the discovery process and rmaintaln the Integrity of the court system” Locasto v, City of Chicago, 2014 IL App (1st) 113576, pan 27, Sanctions may be imposed only when a party's noncompliance is unreasonable, S.Ct. 219(c). A sanction ordered must be just. Ajust order is one which, to the degree possible, ensures both discovery and trial on the merits. Webusch v. Taylor, 97 MM. App. 3d 210, 214 (Ist Dist. 1983). Just sanctions may include an order to pay reasonable attorneys’ fees, to debar the offending party from maintaining a claim, or to bar a witness from testifying about a particular issue. S. CLR. 219. Aus Here, Plaintiffs contend that LP Ventures and the Foregiveness Entities ‘unreasonably failed to provide true and complete answers to certain interrogatories and requests to produce. As 2 sanction, they ask for a judicial finding that the person who verified these answers under oath, James Lasky, was not truthful. They zlso ask for thelr attorneys’ fees in connection with their multiple motions to compel. ‘The Initial question is whether these Defendants unreasonably fled to comply with court orders or discovery rules. The Court concludes that they have, for the following reasons. 1. The Foregiveness Entities and LP Ventures Answered Interrogatories Untruthfully and Incorrectly Under Oath through their Principal James Lasky A. Foregiveness Entities 1 Imterrogatory 10 In Interrogatory 10, Plaintiffs asked Foregiveness IL to “[i]denify any insurer, accounting firm, bank, oF other financial institution with which You have done business.” On November 14, 2023, Foregiveness Il, answered: “This Defendant has an account with Chase bankJames Lasky verified under oath that this answer was true and correct. Im thelr Motion to Compel and at the December 12, 2023 hearing, Plaintiffs asserted that the answer omits another bank account held by Foregiveness IL at Albany Bank Plainbiffs supported their assertion with a bank statement showing Foregiveness IL as the holder of an Albany Bank account. Foregiveness IL’s counsel promised to rectify the mistake in a supplement. 12/12/23 Tr at 112. Foregiveness IL, supplemented its answer on January 13, 2024, The supplemental answer still omits Albany Bank, as Plaintiffs point out inthe instant Petition. At the February 20, 2024 hearing, Foregiveness IL's counsel offered a ttany of misplaced excuses why the verified answer continued © omit Albany Banc The excuses Include: 2. "We're not done with discovery” (2/20/24 Tr at 48); b. "We've not done a certificate of affidavit of completeness” (Ti at 48, 62); > "We're not atissue in the case” (Tr at 48); 4. Plaintiffs already had the documents (tr. at 5-57, 61, 62}; € Foregiveness will supplement again to fix i (Tr at 52, 56); £ Its only “two words” (Ir at $2, 55, 56): Plaintiffs “didn't ike the answers" (Tr. at 56); h. The issue fs one of equity (Wr-at 59); and §, Plaintiffs’ counsel should have brought the error to counsel's attention before filing a motion (Tr at 60, 115). None of those excuses justifies Foregiveness IL rade by James Lasky under oath, is untrue and incorrect deficient answer. The answer, 2. Interrogatory 1 Plaintiffs’ Interrogatory 1 asked Foregiveness IL to “{iidentify all payments (by date and amount) since January 1, 2022 by You to or on behalf of Jamas Lasky or Jerry Lasky or any company owned in whole or in part, directly or Indirectly, by either” On November 14, 2023, Foregiveness IL answered See the bank statements previously provided to the Plaintiffs and Defendants 214 response to see the specific payments made 0 operate ‘Maple & Ash in Arizona, No payments were made to fames Lasly or Jerry Lasky.In January, Foregiveness IL supplemented the answer as follows: SUPPLEMENTAL RESPONSE 2: None to date James Lasky verified both answers under oath In the Instant Petiton and at the February 20, 2024 hearing, Plaintifs produced a June 9, 2023 email from James Lasky instructing hls CFO to send $305,000 from ForegWeness IL to Jerry Lasky. Plaintiffs also point to bank documents confirming the transfer on june 12, 2023. In response, Foregveness IL's counsel raised many of the same misplaced excuses listed above. 2/20/24 Tr.at 93-94 (offering to supplement, stating that documents were produced, and asserting that Plaintiffs “don't like" the answers). Counsel added that the payment was made postdissolution and therefore not relevant. 2/20/24 Tr. at 90, 92. But, as counsel admitted, Foregiveness IL did not assert a specific objection to this effect, nor any objection at all. 2/20/24 Tr, at 91. And Foregiveness IL did not indicate that its answer was based on a time period more limited than what Plaintiffs identified. Instead, Foregiveness IL answered “none” notwithstanding the bank records and email showing that a yayment of $305,000 was made from an account held by Forogiveness IL to Jerry Lasky: When the Court asked Foregiveness IL's counsel if the answer was true, counsel responded: Your Honor, t's literally true but it’s nat true as itrelates to this case 2/20/24 Tr at 91. ‘The Court is not persuaded. The records show that a payment was made to Jerry Lasky that should have been disclosed in the interrogatory answer but was not. Thus, the Interrogatory answer, mace by James Lasky under oath, is untrue and incorrect. 3. Foregiveness Il’s Answer to Interrogatory 2 Interrogatory 2 asks Foregiveness IL to state the reason for any payment idenitfied in Imterrogatory 1. Becuuse the answer to lnterrogatory 1 does not truthfully and correctly identify responsive payments, the answer to Interrogatory 2 ("[njone to date"), ‘made by james Lasky under oat, is also untrue and incorrect. B, LP Ventures’ Answer to Interrogatory 1 Im Interrogatory 1, Plaintiffs ask LP Ventures to identity, inter alia, all payments to James Lasky. As a supplement, LP Ventures stated that “[e]very payment made by LP Ventures to Jim Lasky (or any company owned in whole or in part by him) is Iisted in [attached] spreadsheets." The attached spreadsheets show payments to James Lasky until June 14, 2021.In the Petition, Plaintifs include LP Ventures’ bank records showing 45 additional payments to jim Lasky totaling $1.6 milion, None of those payments appears on the spreadsheet referenced in the interrogatory answer In response, LP Ventures’ counsel initially tried to defend the veracity of the spreadsheet, 2/20/24 Tt. at 137. But after examining the bank records during a recess and calling LP Ventures’ consulting expert, counsel conceded that the 45 entries are notin the chart. 2/20/24 Tr. at 142, He blamed the expert and disavowed any personal nowledge because “ths is not my area of expertise, accounting principles” 2/20/24 Tat 144, This statement is not persuasive. Nelther accounting principles nor math were necessary to ensure that all ledger entries were Included and a proper time frame was sed, LP Ventures stated In its sworn answer that the spreadsheet showed “every” payment to fim Lasky. The spreadsheet omitted 45 payments to Lasky totaling $1.6 nillion, The answer, made by james Lasky under oath is untrue and incorrect. I Other Examples of Unreasonable Noncompliance with Court Orders or Discovery Rules In addition to the foregoing, there are other examples of unreasonable failures to comply with court orders or discovery rules. AL Foregiveness Entities 1, Foregiveness I's Answer to [nterrogatory 1 Included in the scope of Interrogatory 1 are payments to (a) Jim Lasky and (b) any Lasty-owned entities. Foregiveness identified “[n]one to date” However, Foregiveness IL ‘bank statements show payments of (a) $365,000 to Jim Lasky's accounts, and (b) more than $1 milion to LP Ventures, which is a Lasky-controlled entity. Petition at 6-7, 2 Foregiveness Entities’ Answers to Interrogatory 8 Interrogatory 8 asks each Foregiveness entty to “[i]dentify any person or entity ‘whom You expect to pay a judgment rendered against You and state the basis for Your expectation (whether by indemnity, insurance, or otherwise)" In November 2023, each of ‘the Foregiveness entities answered that “MA restaurant [sic} have a contractual obligation to indemnify" Foregiveness. In December 2023, this Court ordered both Foregiveness ‘enities to use more precise terms in its answer; "MA restaurant" was not specific enough to identity any ofthe various entities at issue here. 12/12/23 Tr at 105, [Neither entity complied with the Court’sorder, In their January 2024 supplements, ‘both entities continued to use the imprecise term. Foregiveness IL stated: SUPPLEMENTAL RESPONSE 2: MA Restaurants had an indemnification obligation. 6Foregiveness AZ stated: SUPPLEMENTAL RESPONSE 2: This Defendant will be indemnified by the restaurant This answer does not provide any meaningtul information on which person or entity, IF ‘any,has or had an indemnification obligation. Itis therefore deficient under Rule 213, 3, Foregiveness AZ's Answer to Interrogatory 1 Included in the scope of Interrogatory 1 are payments to any Lasiy-owned entities. Foregiveness identified "[nJone to date” However, Foregiveness IL bank statements show payments of more than $340,000 to LP Ventures, which is a Lasky-controlled entity Petition at 14, 4, Foregiveness AZ's Answer to Interrogatory 2 Interrogatory 2 asks Foregiveness AZ to state the reason for any payment ‘identified in Interrogatory 1. Because the answer to Interrogatory 1 does not truthfully and correctly identify responsive payments, the answer to interrogatory 2 ("{njone to date") is deficient. 5. Foregiveness AZ's Answer to Interrogatory 12 Interrogatory 12 asks Foregiveness AZ to Kentfy the recipient of and reason for certain payments on an attached chart, In its supplemental response, Foregiveness AZ refers to a Sharefile document. The Sharefile document does not identify any recipients of or reasons for the payments. It is therefore not responsive to the interrogatory and not compliant with Rule 213, B. LP Ventures 1. Answer to Interrogatory 5 LP Ventures references an accompanying spreadsheet in its January 11, 2024 supplement. The spreadsheet is difficult to decipher and does not adequately identify payments by date and amount received from any MA Restaurant, The colloquy on pages 153-158 of the February 20, 2024 transcript illustrate some of the difficulties. 2 Answer to Interrogatory 7 LP Ventures’ answer to Interrogatory 7 does not properly identify all debts Incurred between it and elther MA Restaurant. At the February 20, 2024 hearing, LP Ventures’ counsel conceded that the answer does not adequately respond to the question. 2/20/24 Te. at 161.3. Answer to Interrogatory 9 ‘The answer to Interrogatory 9 Is also inadequate for the reasons set forth in the transcript and acknowledged by LP Ventures’ counsel. 2/20/24 Tr. at 163-64. 4. Answer to Interrogatories 11-14. Interrogatories 11 through 14 seek information about, and policies and guidelines related to, any transfers, uses and disbursements of PPP loans. The answers are vague and non-responsive: 5. Answer to Interrogatory 17 Interrogatory 17 asks, inter alia, who is paying LP Ventures’ attorneys’ fees. In its January 11, 2024 answer, LP Ventures ignored the Court’s December 2023 order and continued to use the vague term "MA restaurant” Accordingly, the answer is deficient Sancrions ano Oren Reus Based on the record before it, the Petitions are granted to the extent they seek sanctions agalnst the Foregiveness Entities, LP Ventures, and thelr counsel. The Court deems itjust to enter an order finding that: ‘© James Lasky testified under oath in his verification that Foregiveness IL's answer to Interrogatory 10 was true and correct when in fact that answer is not true and correct. ‘© James Lasky testified under oath in his verification that Foregiveness IL's answer to Interrogatory 1 was true and correct when in fact that answer is not true and correct. ‘+ James Lasky testified under oath in his verification that Foregiveness Il’s answer to Interrogatory 2 was true and correct when in fact that answer is not true and correct. * James Lasty testified under oath in his verification that LP Ventures’ answer tw Interrogatory 1 was true and correct when in fact that answer Is not rue and correct. In addition, the Foregiveness Entities and LP Ventures are ordered to supplement. heir discovery responses to comply with today’s order, all prior orders related to the requests, and all applicable discovery rules. Failure to do so may result in additional, escalated sanctions, including without limitation barring witnesses, evidence or defenses or shifting the burden. The supplements are due within 21 days of the date of this order. Plaintiffs shall also be awarded their reasonable fees and costs for the ume expended in seeking to compel compliance from the Foregiveness Entities and LP Ventures with discovery rules and court orders. Plaintifs are given leave to fle a fee petition as soon as practicable. Because (a) James Lasky executed thé verifications and (0) the Foregiveness Entities’ and LP Ventures’ counsel claimed some responsibility forsome of the incorrect answers, James Lasky and counsel for the Foregiveress Entities’ and LP Ventures’ shall be jointly and severally lable for the reasonable attorneys’ fees and costs awarded In connection with this order pursuant to Rule 219(c). ‘SO ORDERED. Dareo: March 20, 2024 Bere -sadgodlieon C. Conlon 29 70m Circuit Court— 2140 CirchitJudge