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Metro. San. Dist. Ex Rel. O'keeffe v. Ingram Corp





APPEAL from the Circuit Court of Cook County; the Hon. JAMES H. FELT, Judge, presiding.


Rehearing denied July 11, 1980.

Aram A. Hartunian (hereinafter referred to as appellant), a nonparty to the record, filed this appeal in the name of Metropolitan Sanitary District in his relation as a taxpayer challenging an award of attorney's fees determined by the circuit court of Cook County after a hearing pursuant to the terms of a settlement agreement reached by the parties of record. The record on appeal in this case is voluminous. Because of our disposition of the case, not all facts need be discussed. However, some background information is necessary for a clear understanding of this matter.

On May 12, 1971, the Metropolitan Sanitary District of Greater Chicago (MSD) entered into a contract with Ingram Corporation for the hauling of sludge (liquid fertilizer) from MSD's treatment plants to a downstate site. This contract was later assigned to Ingram Barge Company, a division of Ingram Corporation (hereinafter Ingram entities will be referred to collectively as Ingram). In 1974, an investigation into the circumstances surrounding MSD's award of the sludge contract to Ingram was commenced by a Federal grand jury. A Federal court criminal trial and several convictions resulted.

In 1975, during the course of the Federal investigation, William F. O'Keeffe (O'Keeffe) filed an action as a taxpayer on behalf of MSD in the circuit court of Cook County to recover funds allegedly wrongfully obtained by Ingram in connection with the contract. (Metropolitan Sanitary District of Greater Chicago ex rel. William F. O'Keeffe v. Ingram Corp., et al., No. 75 L 23747.) Subsequently, MSD commenced civil actions on its own behalf against Ingram in the Federal district court (Metropolitan Sanitary District of Greater Chicago v. Ingram Corp., et al., No. 76 C 1009) and in the circuit court of Cook County (Metropolitan Sanitary District of Greater Chicago v. Ingram Corp., et al., No. 77 L 24930). MSD was also granted leave to intervene in the O'Keeffe action.

The record indicates that appellant acted as special counsel to MSD from January 1976 to March 1977. During that time he filed MSD's civil action in the district court; sought to suppress the production of certain MSD documents; and represented MSD's General Attorney at his deposition.

Prior to a judicial determination in any one of the three cases, a settlement agreement was reached by the parties which encompassed the O'Keeffe action as well as the two civil actions commenced by MSD. In brief, the settlement agreement provided that all claims asserted against Ingram in the three actions would be released upon Ingram's relinquishment of any claims it had against MSD in the approximate amount of $3,500,000 and its payment of $8,250,000 to MSD. Out of this $8,250,000 sum, MSD agreed to pay the fees and expenses of O'Keeffe's attorneys provided MSD's net recovery not be less than $7,250,000. It was agreed that the trial court would determine the amount MSD would pay in attorney's fees upon the submission of a fee petition and a hearing thereon. While MSD reserved the right to contest the fee petition at the hearing, both MSD and O'Keeffe agreed to waive their rights to appeal the fee award. MSD further agreed not to contest O'Keeffe's standing. This agreement was approved by MSD's Board of Trustees and was signed by the parties and their counsel.

On April 4, 1979, the circuit court approved the settlement agreement as fair, reasonable, and adequate. The court's order established a schedule for the filing and a hearing on the fee petition, retained jurisdiction of the cause for the purpose of fixing the amount of attorney's fees, and stated that "subject to said determination, this cause is hereby dismissed with prejudice."

On April 5, 1979, pursuant to an agreement by the parties, MSD's Federal district court case was dismissed with prejudice. On April 6, 1979, the action commenced by MSD in the circuit court was likewise dismissed with prejudice.

On April 9, 1979, Ingram delivered a cashier's check in the amount of $8,250,000 to MSD in satisfaction of its obligation under the settlement agreement. On that same day, MSD acknowledged receipt of the check and forwarded to Ingram a summary of its actions in approving the settlement. Also on April 9, the circuit court entered two orders. One order dismissed O'Keeffe's complaint and cause of action with prejudice as to all defendants. The second order required MSD to file a response to the petition for attorney's fees and set a hearing date on the petition.

By order of April 18, 1979, the trial court after conducting an evidentiary hearing on the fee petition, awarded to O'Keeffe's attorneys $960,000 in fees and $16,842.30 in costs to be paid by MSD in accordance with the settlement agreement as approved on April 4, 1979. On April 19, 1979, MSD's Board of Commissioners approved this fee award and authorized and directed payment.

Before such payment was actually made, appellant by letter dated May 15, 1979, informed the legal department of MSD that he was greatly disturbed by the award of attorney's fees and intended to institute appellate procedures to review the fee award unless MSD did so itself. No action being taken by MSD to appeal the fee award, a notice of appeal stating the appellant to be "Intervenor, Metropolitan Sanitary District of Greater Chicago, ex rel. Aram A. Hartunian" was filed on May 17, 1979, appealing among other orders, the orders of April 4 approving the settlement and April 18 which awarded attorney's fees and expenses. In this notice, appellant prayed that the settlement agreement referred to in the April 4, 1979, order be declared void in its entirety and in particular the provisions about attorney's fees, standing, and the right of appellate review; that the fee petition be stricken and dismissed, and, in the alternative, that the April 18, 1979, order be reversed and cause be remanded for further hearings on whether any award of attorney's fees was appropriate and, if so, the proper amount. On May 18, 1979, this notice of appeal was amended to include the order of April 9, 1979, but did not specify which one of the two orders entered on April 9, 1979.

In view of this appeal and the conflicting positions taken on MSD's behalf by two different taxpayers (O'Keeffe and Hartunian), MSD's Board of Commissioners refused to issue a check in payment of the attorney's fees until this court resolved the matter on appeal.

In July 1979, O'Keeffe initiated supplementary proceedings in the circuit court to enforce the judgment for attorney's fees and expenses. On September 13, 1979, the court ordered MSD to turn over to O'Keeffe checks payable to his attorneys in the amount awarded in the fee order within 15 days. MSD then filed an emergency motion requesting this court to enter an order staying, without bond, supplementary proceedings by way of citation or otherwise, enforcement proceedings, the trial court's order of September 19, 1979, and all other proceedings in the trial court seeking payment of ...

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