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03/25/94 REHABILITATION CONSULTANTS FOR INDUSTRY v.

March 25, 1994

REHABILITATION CONSULTANTS FOR INDUSTRY, INC., PLAINTIFF-APPELLANT,
v.
PHILOMENA BRIDGET NOWAK, DEFENDANT-APPELLEE (KENNETH B. DROST, APPELLANT).



Appeal from the Circuit Court of Du Page County. No. 88-CH-0451. Honorable John W. Darrah, Judge, Presiding.

Geiger, Inglis, McLAREN

The opinion of the court was delivered by: Geiger

JUSTICE GEIGER delivered the opinion of the court:

The plaintiff, Rehabilitation Consultants for Industry, Inc. (the Company), brought this action for an injunction and damages against the defendant, Philomena Bridget Nowak. Following the company's voluntary dismissal of its complaint, the trial court entered sanctions against it and its attorney, the appellant, Kenneth B. Drost. The company and its attorney appeal from the sanctions order. We reverse.

The basic facts are as follows. The defendant was employed by the company as a rehabilitation counselor from May 13, 1986, to June 7, 1988; she signed no written employment contract. Thereafter, she began a competing rehabilitation consulting business, and on June 22, 1988, the company brought this suit. It alleged, among otherthings: (1) that she breached her fiduciary] duty to the company by soliciting the company's customers while she was still in its employ; and (2) that she was currently soliciting customers based on confidential customer information to which she had access during her employment.

Based on the company's claim that it would suffer irrevocable harm unless the court issued a restraining order, on June 27, 1988, the court granted the company's motion for a temporary restraining order. Thereafter, the defendant answered and counterclaimed, alleging the company's malicious interference with her business interest. On July 19, and 20, the court held hearings on the company's request for a preliminary injunction. At the close of proofs, the court denied the preliminary injunction and dissolved the temporary restraining order.

In September 1990, the defendant voluntarily dismissed her counterclaim and, thereafter, the company voluntarily dismissed its complaint. On September 25, the trial court entered an "Agreed Order" that voluntarily dismissed the cause. The order concluded with the following sentence: "The issue of sanctions pursuant to [Supreme Court] Rule 137 [134 Ill. 2d R. 137], is expressly reserved by defendant to be brought and determined, if at all, in accordance with the applicable practice rules."

On October 26, 1990, 31 days after entry of the preceding order, the defendant filed a motion for sanctions under Supreme Court Rule 137. She sought attorney fees from the company and its lawyer, alleging that they failed to conduct a reasonable inquiry into the facts alleged. After a full hearing on whether the trial court had jurisdiction to hear the Rule 137 claim, the court found it had jurisdiction and ordered that the company and its lawyer were jointly and severally liable for the defendant's $43,291.35 in legal fees. The company and attorney brought this appeal.

In this court, the company and the attorney have filed separate appellate briefs. The company argues that the trial court lost jurisdiction over the case 30 days after the September 25, final order. It also argues, alternatively, that the court's imposition of sanctions was an abuse of discretion. In a second alternative argument, the company argues that the amount of fees awarded and the imposition of joint and several liability were erroneous.

The attorney's initial argument is, like the company's, that the trial court lacked jurisdiction to hear the defendant's Rule 137 motion. Additionally, he argues in the alternative that the court's award should be reversed because the defendant did not sufficiently allege and establish which of the company's pleadings were falsely made or specify what fees resulted from those false statements.

We first examine the question of the trial court's jurisdiction to consider sanctions. The parties do not dispute that the defendant's motion for sanctions was filed 31 days after the court's voluntary dismissal order of September 25. The core dispute between them is whether the trial court retained jurisdiction to hear the sanctions motion because of the concluding sentence of its September 25 order.

The defendant asserts that as the trial court found in its hearing on the company's and the attorney's motion to dismiss the sanctions motion, in drafting the September 25 order, the parties agreed that the defendant reserved a right to bring a sanctions petition, including more than 30 days following entry of the order. She also argues that the September 25 order was not "final," since through it, the trial court retained jurisdiction for resolution of the sanctions issue.

The company and the attorney argue that absent any timely post-trial motion, the September 25 order provided no basis for jurisdiction in the trial court to continue beyond the standard 30-day period. (See 735 ILCS 5/2-1203 (West 1992).) They also argue that the trial court's jurisdiction was not extended by the parties' agreement, since the parties may not agree to convey jurisdiction upon the court.

Supreme Court Rule 137, like its predecessor, section 2-611 of the Code of Civil Procedure (Ill. Rev. Stat. 1989, ch. 110, par. 2-611), provides for sanctions, including reasonable attorney fees, against a party or his attorney who signs a pleading that is not "well grounded in fact, * * * [not] warranted by existing law, * * * [or] interposed for any improper purpose." (134 Ill. 2d R. 137.) The rule further provides that all proceedings under it shall be part of the civil action from which they arose, and shall not give rise to a separate cause of action. (134 Ill. 2d R. 137.) Accordingly, like predecessor actions under section 2-611, they "must be brought within 30 days of the underlying judgment or within such further time as the underlying claim remains under the jurisdiction of the ...


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