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Armis Const. Co. v. Cosmopolitan Nat'l Bk





Appeal from the Circuit Court of Cook County; the Hon. Edwin M. Berman, Judge, presiding.


Defendants-counterplaintiff's second amended counterclaim was dismissed for want of prosecution on December 20, 1983. On March 30, 1984, defendants-counterplaintiffs filed a petition to vacate the dismissal under section 2-1401 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-1401). Plaintiffs-counterdefendants filed a special and limited appearance to contest the trial court's jurisdiction based upon improper service, and filed a motion to quash defendants-counterplaintiff's petition to vacate and notice thereof.

The trial court granted defendants-counterplaintiff's petition to vacate and denied plaintiffs-counterdefendants' motions to quash. Plaintiffs-counterdefendants appeal from this order under Supreme Court Rule 304(b)(3) (87 Ill.2d R. 304(b)(3)).

This suit was originally filed in 1980 by plaintiffs-counterdefendants-appellants Armis Construction Co., and Bill Martzaklis (plaintiffs). The sole attorney of record for plaintiffs throughout this litigation has been William T. Regas.

In April 1981, plaintiffs filed a five-count amended complaint, the first two counts of which sought foreclosure of a mechanic's lien against, inter alia, the Des Plaines Bank, and the fifth count of which sought damages against the bank on behalf of Martzaklis individually. On June 9, 1981, following the appointment of a receiver for the bank, defendant-counterplaintiff-appellee the Federal Deposit Insurance Corporation (FDIC) was granted leave to be substituted as the real party in interest in place of the Des Plaines Bank.

On August 21, 1981, the FDIC filed verified counterclaims against plaintiffs, seeking damages for various unpaid loans to and guarantees made by plaintiffs. On August 2, 1983, the FDIC moved for summary judgment against plaintiffs with respect to those counts of their amended complaint seeking foreclosure of a mechanic's lien. On September 21, 1983, the FDIC's motion for summary judgment was heard and granted, and the remaining portions of the cause were transferred to the law division of the circuit court of Cook County.

In December of 1983, the cause was placed on the law division assignment call. Neither plaintiffs nor the FDIC appeared for said call, and on December 20, 1983, the entire action was dismissed.

In March of 1983, the FDIC filed a petition to vacate the dismissal order under section 2-1401 of the Code of Civil Procedure. Notice of this petition was served upon plaintiffs' attorney of record in the original action, William T. Regas. On April 6, 1984, the petition was heard in the circuit court, and plaintiffs' attorney filed a special and limited appearance together with a motion to quash service.

Argument at the hearing centered on whether, under the particular circumstances of the case, the service upon plaintiffs' attorney was sufficient to confer jurisdiction upon the trial court. The court eventually directed the FDIC to attempt to serve notice of its petition directly upon plaintiffs and continued all motions. The FDIC then filed a notice of its section 2-1401 petition directed to Martzaklis personally at his last known address and to Armis in care of its registered agent.

On May 24, 1984, another hearing was held on the FDIC's section 2-1401 petition and on plaintiffs' motion to quash. The court heard evidence of the FDIC's efforts to locate and personally serve plaintiffs and of plaintiffs' apparent attempts to avoid such service. Among the FDIC's efforts had been attempts at personal service, service by restricted delivery mail and the hiring of a private investigator to find Martzaklis. After the hearing, the trial court, in reliance on its equitable powers, held that the FDIC's service upon plaintiffs' attorney had been adequate under the circumstances and denied plaintiffs' motion to quash while granting the FDIC's section 2-1401 petition. Plaintiffs appeal.

• 1 It is clear that a party seeking relief from a judgment under section 2-1401 of the Code of Civil Procedure must give notice to the opposing parties by one of the methods specified in Supreme Court Rule 105(b). (87 Ill.2d R. 105(b); see Schiffman v. Bowman (1980), 88 Ill. App.3d 766, 769, 411 N.E.2d 71; Andonoplas v. Jaremko (1972), 9 Ill. App.3d 298, 300, 292 N.E.2d 225.) Plaintiffs contend that, because notice of the FDIC's petition was not properly served upon them, the trial court lacked jurisdiction to vacate its earlier dismissal order. Plaintiffs argue that service upon their attorney, William T. Regas, rather than upon plaintiffs themselves, is improper under the supreme court rules, and that such service should not have been accepted by the trial court on equitable grounds because there was no evidence that Regas was still plaintiffs' attorney at the time the section 2-1401 petition was filed.

The law regarding service of notice of section 2-1401 petitions is clear:

"Although filed in the same case under the same number and title, a section 72 petition is regarded as an independent action and the respondent named in the petition must be notified anew. [Citation.] If the notice is invalid, jurisdiction is lacking and subsequent orders are likewise invalid. [Citation.] Supreme Court Rules 105 and 106 indicate that notice of a section 72 petition shall be served in one of the following three ways: (1) by the method provided by law for service of summons; (2) by prepaid registered mail; (3) by publication." Silny v. Lorens (1979), 73 Ill. App.3d 638, 641, 392 N.E.2d 267.

The FDIC admits that its section 2-1401 petition was not served in the manner provided by the supreme court rules, but argues that the instant case is one in which an exception should be made to the strict adherence to the service requirements provided by the rules. In support of this argument, the FDIC cites Public Taxi Service, Inc. v. Ayrton (1973), 15 Ill. App.3d 706, 304 N.E.2d 733, in which this court held that, while notice to an opposing party, rather than to his attorney, is required in section 72 proceedings, where the attorney's subsequent actions ...

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