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10/05/88 Linda Washington Et Al., v. Allstate Insurance Company

October 5, 1988

LINDA WASHINGTON ET AL., PLAINTIFFS-APPELLANTS

v.

ALLSTATE INSURANCE COMPANY, DEFENDANT-APPELLEE

AN AWARD UNDER SECTION 2 -- 611 IS SUBJECT TO AN ABUSE OF DISCRETION STANDARD. PERLMAN

v.

TIME, INC. (1985), 133 ILL. APP. 3D 348, 355, 478 N.E.2D 1132.



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

529 N.E.2d 1086, 175 Ill. App. 3d 574, 125 Ill. Dec. 10 1988.IL.1505

Appeal from the Circuit Court of Cook County; the Hon. Paul F. Elward, Judge, presiding.

APPELLATE Judges:

JUSTICE FREEMAN delivered the opinion of the court. WHITE, P.J., and McNAMARA, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

Plaintiffs, Linda and John Washington, brought a breach of contract action against defendant, Allstate Insurance Company, in the circuit court of Cook County for denying their claim on a policy of automobile insurance for the theft of the insured vehicle, a 1982 Mercedes Benz 380 SL. On June 29, 1987, after the plaintiffs presented their case in chief, the trial court granted defendant a directed verdict. On July 14, 1987, defendant presented its motion for attorney fees and costs under section 2-611 of the Civil Practice Law (Ill. Rev. Stat. 1987, ch. 110, par. 2-611). The trial court continued the motion for hearing to August 31, 1987, on which date it awarded defendant attorney fees and costs of $27,182.24. Plaintiffs appeal that award.

Preliminarily, we must address defendant's motion to dismiss the appeal on the grounds of plaintiffs' failure to file an adequate record to decide the issue presented. (See Davis v. Allstate Insurance Co. (1986), 147 Ill. App. 3d 581, 498 N.E.2d 246.) Defendant relies on plaintiffs' failure to file a transcript of the trial proceedings and transcripts of the hearings of July 14, 1987, and August 31, 1987. Contrary to defendant's assertion, with respect to the latter hearing, plaintiffs did file that transcript pursuant to a stipulation under Supreme Court Rule 327 (107 Ill. 2d R. 327). Plaintiffs assert that the transcript provides a sufficient record on which to decide their appeal. We agree.

Section 2 -- 611 requires that every pleading, motion or other paper be signed either by an attorney representing a party or the party himself when proceeding pro se. It then provides:

"The signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. . . . If a pleading, motion, or other paper is signed in violation of this Section, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include . . . the amount of the reasonable expenses incurred." (Ill. Rev. Stat. 1987, ch. 110, par. 2-611.)

Defendant's section 2-611 motion for attorney fees and costs asserted that allegations in plaintiffs' complaint and the amendment thereto were made without reasonable cause and were found to be untrue by the trial court on June 29, 1987. It further asserted that the finding of falsity was the basis for the trial court's entry of directed verdict in defendant's favor. Those allegations were: (1) plaintiffs were the owners of the Mercedes Benz automobile; (2) plaintiffs acquired the automobile on or about October 4, 1982; (3) plaintiffs performed all the conditions under the terms of the insurance policy issued by defendant; (4) on or about October 24, 1982, the automobile was stolen; (5) plaintiffs performed all tasks required of them under the insurance policy, specifically, they submitted a sworn proof of loss and submitted to examination under the oath by defendant's attorneys; (6) the reasonable value of the automobile was $39,000; (7) defendant's course of conduct in denying plaintiffs' claim constituted a pattern of vexatious and unreasonable delay; and (8) plaintiffs held and maintained an insurable interest in the automobile. This last allegation was an amendment to the allegation in the original complaint that plaintiffs owned the vehicle.

Defendant asserted that the foregoing allegations were proved false during plaintiffs' case in chief. Specifically, defendant asserted that plaintiffs failed to establish: (a) the financial means to purchase the car; (b) whether the car was a convertible or hardtop; and (c) whether the purchase price of the car was $39,000, as they testified, or $44,000, as reflected in the receipt from the purported seller. Defendant asserted that these failures of proof resulted in plaintiffs' failure to establish their ownership of the 1982 Mercedes Benz 380 SL. That failure, in turn, defendant asserted, resulted in plaintiffs' failure to prove that they had an insurable interest in such automobile, its theft from them on October 24, 1982, or that defendant had improperly denied their claim therefor. Finally, defendant asserted that plaintiffs' allegations of cooperation with defendant by submitting a truthful proof of loss and by testifying truthfully under oath were impeached at trial by the inconsistencies between their prior sworn statements and their trial testimony.

While the court agreed that plaintiffs' prior sworn statements had been "impeached" by their testimony, it concluded that such impeachment was not a grounds for relief under section 2 -- 611. It found defendant's motion otherwise "in order." After hearing evidence from one of defendant's attorneys as to its costs and fees in defending the suit, the trial court entered the judgment appealed from.

The gist of plaintiffs' appeal is that the trial court abused its discretion in granting defendant's section 2 -- 611 motion after ruling that only plaintiffs and an agent of defendant, John Saletta, would be allowed to testify at trial that they had seen the Mercedes Benz. That order was entered pursuant to defendant's motion to exclude witnesses at trial and defendant's motion in limine. The former sought to exclude any plaintiffs' witnesses who might testify that they saw or rode in the insured vehicle. The latter motion sought to bar plaintiffs and their attorney, as well as any other witnesses, from testifying to having seen or ridden in the vehicle. The motions were based on the failure of plaintiffs' counsel to respond to a supplemental interrogatory requesting the names of all persons who had seen or had been passengers in the Mercedes Benz. Plaintiffs assert that it was unfair for the trial court to conclude from the evidence they were permitted to present that they had made false allegations of fact where it had previously ...


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