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07/27/87 First National Leasing v. E.T.P. of Chicago

July 27, 1987

FIRST NATIONAL LEASING CORPORATION, PLAINTIFF

v.

E.T.P. OF CHICAGO, INC., ET AL., DEFENDANTS (JAMES RUZICKA, PLAINTIFF AND THIRD-PARTY PLAINTIFF AND COUNTERDEFENDANT-APPELLEE; MICHAEL C. PHILLIPS, THIRD-PARTY DEFENDANT AND COUNTERPLAINTIFF-APPELLANT)



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

511 N.E.2d 889, 158 Ill. App. 3d 882, 110 Ill. Dec. 712 1987.IL.1067

Appeal from the Circuit Court of Du Page County; the Hon. Fredrick Henzi, Judge, presiding.

APPELLATE Judges:

JUSTICE NASH delivered the opinion of the court. LINDBERG, P.J., and INGLIS, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE NASH

Michael C. Phillips, third-party defendant, counterplaintiff, and defendant, in the consolidated actions below appeals from orders which vacated a default judgment entered against James Ruzicka, defendant, third-party plaintiff, and counterdefendant.

On March 2, 1982, First National Leasing Corporation (First National), brought an action against E.T.P. of Chicago, Inc. , and its shareholders Phillips and Ruzicka, for money due under a lease of personal property. Judgment was subsequently entered in First National's favor against all the defendants.

On June 17, 1982, Ruzicka filed a third-party complaint against Phillips for indemnification in which he alleged that Phillips converted the leased property and sought indemnity. On January 6, 1983, Phillips filed an answer to Ruzicka's third-party complaint, denying the conversion and the duty to indemnify, and pleading an affirmative defense. Phillips also filed a three-count counterclaim which sought an accounting between Phillips and Ruzicka and a dissolution of a partnership relationship between them; an exoneration of Phillips for debts incurred by Ruzicka during the partnership; and money damages for breach of contract. Included in Phillips' pleadings was a demand for jury trial.

On May 3, 1984, Ruzicka filed a separate lawsuit against Phillips for money allegedly due on a promissory note. On August 31, 1984, after Phillips filed his answer to the complaint, an order was entered consolidating this action with the action originally brought by First National.

In June and in September 1984, his then retained attorneys were given leave to withdraw as counsel for Ruzicka, and in September 1984, the law firm of Donovan & Roberts, P.C., appeared as his counsel. In February 1985, Ruzicka filed a reply to Phillips' affirmative defense and an answer to his counterclaim.

At a status hearing on June 10, 1985, the trial court ordered that the next status hearing would be held on July 29, 1985. On July 22, 1985, Donovan & Roberts, P.C., was allowed to withdraw as counsel for Ruzicka after giving him notice of its motion to withdraw. A copy of the trial court's order granting the withdrawal of counsel was also sent to Ruzicka.

At a status hearing on July 29, 1985, at which neither Ruzicka nor anyone on his behalf appeared, the trial court dismissed Ruzicka's third-party complaint and other complaint against Phillips, struck Ruzicka's response and answer to the third-party complaint and counterclaim of Phillips, and entered a default judgment in favor of Phillips on his counterclaim. Although there is no transcript of this proceeding in the record on appeal, the trial court's order provided for the dissolution of the business venture of Phillips and Ruzicka known as ETP; a money judgment against Ruzicka in favor of Phillips in the amount of $136,443.72 on Phillips' counterclaim; Ruzicka's satisfaction of certain creditors of business venture debts in accordance with Phillips' counterclaim; and for the payment of court costs by Ruzicka.

Ruzicka was served with a citation to discover assets in July 1986, and in August 1986, Ruzicka's new attorney, who is his counsel for this appeal, filed a motion to vacate the July 29, 1985, judgment.

On October 15, 1986, Ruzicka's counsel filed an amended motion to vacate judgment pursuant to section 2-1401 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-1401) which alleged, inter alia, that Ruzicka did not have notice of the default judgment rendered against him on Phillips' counterclaim until he received notice of the citation to discover assets, and that Ruzicka was not given the necessary time after the withdrawal of Donovan & Roberts, P.C., to file an appearance pursuant to Illinois Supreme Court Rule 13(c)(2) (87 Ill. 2d R. 13(c)(2)) and Rule 6.03 of the Rules of the Circuit Court of the Eighteenth Judicial Circuit. The motion also stated, "Although a Jury Demand was filed in this cause by MICHAEL C. PHILLIPS on January 6, 1983, it appears that this matter was not proved up before a Jury before entry of a Judgment Order in July, ...


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