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02/04/94 ROGER BERMAN AND ESTHER BERMAN v. RAYMOND

February 4, 1994

ROGER BERMAN AND ESTHER BERMAN, PLAINTIFFS-APPELLEES,
v.
RAYMOND J. DEMPSEY, SR., RAYMOND J. DEMPSEY, JR., AND FULTON MANAGEMENT CORP., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County. The Honorable John V. Virgilio, Judge Presiding.

Released for Publication March 18, 1994.

Rakowski, Egan, Mcnamara

The opinion of the court was delivered by: Rakowski

JUSTICE RAKOWSKI delivered the opinion of the court:

The appellees, Roger and Esther Berman (plaintiffs), filed an action for fraud and breach of contract against the appellants Raymond J. Dempsey, Sr. (Dempsey, Sr.), Raymond J. Dempsey, Jr. (Dempsey, Jr.), and Fulton Management Corp. (defendants).

When defendants failed to appear for a status call, the Judge entered an order of default. Following a hearing, judgment was entered against the defendants for compensatory and punitive damages. On appeal, the defendants contend that it was error for the court to enter a default and also that the evidence does not support an award of punitive damages.

The facts follow. On November 23, 1988, the plaintiffs purchased from the defendants certain real estate in Chicago for $4,000,000. Subsequently, upon learning that representations made by defendants concerning the real estate were untrue, plaintiffs filed a verified complaint in the Chancery Division alleging fraud and breach of contract and requested both compensatory and punitive damages. The gist of the complaint, filed on February 13, 1990, is that the defendants made material misrepresentations regarding cash flow, leases and expenses. Specifically, the complaint alleges that the defendants stated the cash flow to be $588,754.78, when it was $211,327. The complaint describes, in detail, each misrepresentation that contributed to the shortfall.

On March 21, 1990, an attorney filed an appearance for the defendants and then filed an unverified answer with affirmative defenses on April 20, 1990. On September 23, 1991, upon motion, Judge Hofert allowed counsel for the defendants to withdraw, gave the defendants 21 days to file a supplemental appearance, and set the matter for status on October 24, 1991. When no one appeared at the status call, Judge Hofert entered the following order:

"This matter coming on to be heard for status, the court being advised in the premises, it is hereby ordered:

1. Defendants Raymond J. Dempsey, Sr., Raymond J. Dempsey, Jr., Fulton Management Corporation and Chicago Title and Trust u/t/a 1085004 are found to be in default.

2. A copy of this order shall be mailed by registered mail to each defendant within five days of the date of this order.

3. A hearing on damages is set for November 8, 1991 at 10:30 a.m. without further notice."

Judge Hofert then transferred this case to the law division forprove-up. On October 25, 1991, Dempsey, Jr. filed a supplemental appearance. He did not, however, move to vacate the order of default. After several continuances, Judge Virgilio held a prove-up hearing on February 21, 1992. Dempsey, Sr. and Dempsey, Jr. were present. After hearing evidence from the plaintiffs, the Judge found the three defendants jointly and severally liable for $2,600,000 in compensatory damages and $100,000 in punitive damages.

The defendants present two issues on appeal: (1) whether the default was properly entered; and (2) whether an award of ...


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