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03/28/94 CONNIE OLSEN v. WITOLD STANIAK

March 28, 1994

CONNIE OLSEN, PLAINTIFF-APPELLEE, AND JON FLORIA, THIRD-PARTY DEFENDANT-APPELLEE.
v.
WITOLD STANIAK, DEFENDANT, AND ASHLEY S. ROSE, RESPONDENT-APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Edwin L. Berman, Presiding Judge.

Released for Publication May 5, 1994.

Manning, Buckley, O'Connor

The opinion of the court was delivered by: Manning

JUSTICE MANNING delivered the opinion of the court:

This is an appeal by defendant Ashley S. Rose and a cross-appeal by Jon Floria from a judgment of the trial court. The trial court entered an order imposing sanctions against Rose based upon the court's determination that the complaint and affirmative defenses filed by Rose violated Rule 137. (137 Ill. 2d R. 137). In Floria's cross-appeal he asserts that the sanction amount awarded by the trial court against Rose was inadequate. For the following reasons we affirm.

The record reveals that on April 15, 1986, Witold and Daniella Staniak retained attorney Jon Floria to represent them in thepurchase of property located in Barrington, Illinois owned by Connie Olsen. Helen Edwards, a real estate broker for ReMax, referred the Staniaks to attorney Floria. Attorney David Lynam initially represented Connie Olsen in the sale of the property. The Staniaks agreed to purchase the Olsen's home for $170,000 and deposited $17,000 as earnest money which was held by ReMax. The closing was initially set for June 15, 1986, contingent upon the Staniaks securing a mortgage commitment within 40 days. The Staniaks were codefendants in the original action seeking to recover the earnest money, but are not parties to this appeal.

On April 21, 1986, attorney Floria sent a letter to attorney Lynam requesting that the contract between the Staniaks and Olsen be modified to provide that the purchase be contingent upon the Staniaks first selling their home. Nothing in the record suggests that the sellers objected to this amendment. However, on April 30, 1986, Lynam sent a letter to Floria requesting modification of the contract regarding various warranties, including the exclusion of express warranties for the property. Floria indicated his acceptance of the modifications by signing the letter and returning it to Lynam.

The closing did not occur by the June 15 date, and Floria withdrew from representation of the Staniaks on July 30, 1986. On July 31, 1986, Lynam sent a letter to attorney Phillip Solzan, the Staniaks' new counsel, advising him that the Staniaks were in default of the contract for failing to close by June 15, 1986. On August 4, 1986, Solzan sent a letter to Lynam explaining that the Staniaks were not aware of the letter of April 30, 1986, from Lynam requesting modifications to the contract, that he did not feel the Staniaks should be bound by the modifications, and that he desired to reach an agreement to avoid a lawsuit. It was the Staniaks' position that Floria had accepted these modifications without their knowledge or consent. On August 13, 1986, Lynam sent a letter to Solzan demanding that a closing take place on August 21, 1986. The letter also explained that Olsen would assert her right to declare a forfeiture by the Staniaks of their earnest money deposit if they did not close by that date. After the date for closing had expired, both Solzan and Lynam made a demand on ReMax for the earnest money.

On October 7, 1986, Olsen retained attorney Scott Colky to represent her in an action to recover the earnest money. Colky filed a complaint for declaratory judgment against the Staniaks and Re Max. Attorney Ashley Rose was retained by the Staniaks to represent them in that action. On May 12, 1987, Rose filed a 37 page answer and affirmative defenses to Olsen's complaint. Rose also filed acounter-claim against Olsen, a cross-claim against ReMax, and a third-party complaint against Floria. In Rose's affirmative defenses he alleged, in pertinent part, that:

(1) Olsen scheduled and rescheduled closing dates knowing that the Staniaks had not received a firm commitment for mortgage financing, and knowing that there was outstanding work to be completed on the property;

(2) That Olsen failed to disclose to the Staniaks that a foreclosure action was pending at the time of the contract;

3) That upon information and belief the relationship between Floria and ReMax was an established one, rendering Floria's allegiance as legal counsel to the Staniaks a legal sham.

On December 6, 1988, Olsen filed a motion for summary judgment and for attorney's fees against Rose, pursuant to section 2-611 of the Code of Civil Procedure. On June 15, 1989, the Staniaks also filed a motion for sanctions pursuant to section 2-611 against Rose, who had withdrawn as their counsel at that time. On August 8, 1989, the court determined that Olsen had established a prima facie case under section 2-611 against Rose and ordered Rose to present his defense on October 3, 1989. The court, however, denied the Staniaks' 2-611 motion against Rose, and granted Floria and ReMax 21 days to file their 2-611 motions. On August 29, 1989, Floria filed his motion for attorney's fees against Rose consistent with the court's order of August 8, 1989. Floria pleaded in his motion that Rose violated Rule 137 by signing his signature on the pleadings; specifically alleging that count II of the third party complaint against him for malpractice and negligence was done to harass or intimidate. Floria also asserted that Rose violated Rule 137 with respect to his prayer for punitive damages and allegations unsupported by personal knowledge.

Eventually, on September 6, 1989, attorneys for the parties entered into a stipulation and agreed order dismissing all complaints, claims, cross-claims, third-party complaints and counterclaims. The order, however, did not dismiss any pending section 2-611 or Rule 137 motions against Rose, consistent with the parties' agreement.

On November 20, 1990, after a hearing, the court determined that as to Connie Olsen three of the affirmative defenses raised by Rose violated Rule 137, and one violated section 2-611. As to Jon Floria, the court determined that one of the affirmative defenses raised by Rose violated both Rule 137 and section ...


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