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September 26, 1994


Appeal from the Circuit Court of Du Page County. No. 91-L-0627. Honorable Robert K. Kilander, Judge, Presiding.

Rehearing Denied October 24, 1994. Petition for Leave to Appeal Denied February 1, 1995.

Inglis, McLAREN, Geiger

The opinion of the court was delivered by: Inglis

PRESIDING JUSTICE INGLIS delivered the opinion of the court:

The circuit court of Du Page County sanctioned respondents, attorney T. Patrick Rice (Rice) and Illinois Farmers Insurance Company (Farmers), for violating Supreme Court Rule 137 (Official Reports Advance Sheet No. 26 (December 22, 1993), R. 137, eff. February 1, 1994) by alleging negligent entrustment in a civil complaint without any factual basis and without adequate investigation. Petitioner, James H. Scott (the father), appeals the order, contending that the court erred in awarding only $10,000 for his attorney fees, where undisputed evidence indicated that his fees totaled $36,082.72. Rice and Farmers cross-appeal the order, contending that no violation of Rule 137 occurred and that the sanction constituted an abuse of discretion. We affirm the award of sanctions and remand for a new hearing on the amount of the award.

A two-car accident occurred on April 29, 1990. Plaintiff, Christina Ashley, a passenger in one of the cars, was injured. This car was driven by her fiance, defendant James M. Scott (the son), and was owned by the father. Plaintiff was insured against bodily injury by Farmers. Farmers paid plaintiff $250,000 in underinsurance benefits and pursued its subrogation claim against the son. Farmers retained Rice to pursue this claim.

Rice filed a complaint against the son alleging negligence. He then amended the complaint to add the father as a defendant and to add a count of negligent entrustment against the father. This was the basis for the allegation:

"The defendant JAMES H. SCOTT, knew, or should have known, that he was entrusting his vehicle to an unfit driver, JAMES M. SCOTT, and that JAMES M. SCOTT had been convicted of no less than four (4) traffic violations in Du Page County within a period of two years, prior to the date of the subject occurrence; further, by entrusting said vehicle to JAMES M. SCOTT, JAMES H. SCOTT was negligent."

The record indicates that Rice retained an investigator to determine what claims might be brought. The investigator explored the son's driving record and the father's financial position, and, on this basis, Rice levied the allegation of negligent entrustment. Mostnotably, Rice never inquired of plaintiff, the passenger in the car driven by the son, as to whether she observed any indication that he was an unfit driver. The record also indicates that the son was a licensed driver and a member of Alcoholics Anonymous, returning from an AA celebration of his first full year of sobriety. The son's driving record had been clear for 14 months.

The father moved for summary judgment on the entrustment issue, and plaintiff was deposed on that issue only. Plaintiff stated that she did not agree with the entrustment allegation. Rice then instructed her not to answer any other questions regarding facts which might support the allegation that the son was an unfit driver. The court granted a motion to compel answers to deposition questions, and Rice disclosed that plaintiff knew of no facts to support the allegation that the son was an unfit driver. He also disclosed that plaintiff had not been consulted prior to filing the complaint for negligent entrustment.

The court granted the father's motion for summary judgment, including in the order language indicative of finality and appealability in accordance with Supreme Court Rule 304 (Official Reports Advance Sheet No. 26 (December 22, 1993), R. 303, eff. February 1, 1994). No appeal was taken. The father moved for sanctions in March 1992. Rice answered that he had materials in his files that supported the claim, but that the materials were privileged and work product in nature. Rice sought a continuance of the sanction matter until after settlement or judgment or, alternatively, an in camera inspection of his documents and recusal of the Judge after the in camera inspection. The father moved for an in camera inspection and for the compulsion of disclosure.

The court ruled in March 1993 that the father had established a prima facie case for the imposition of sanctions; that the claim of privilege was irrelevant to the issue raised in the motion for sanctions; and that no just reason existed to delay the sanction proceeding. In a response to the motion for sanctions, Rice and Farmers alleged collusion between plaintiff and the father's attorney. The father and his attorney filed a surreply to the response, answering this and other allegations therein. The parties also argued about a demand letter allegedly sent by Rice to plaintiff and about an emergency motion to reopen proofs which was granted and then denied.

When the matter was finally heard, the court found that the investigation of the father's financial position offered no credible information supporting the negligent entrustment claim. The court also found that the traffic offenses "clearly did not establish a reasonablebasis to bring the complaint for negligent entrustment." The court found that the failure to discuss the matter with plaintiff constituted a failure to make a reasonable factual investigation in violation of Supreme Court Rule 137.

Rice and Farmers moved for reconsideration and for continuances. The court denied the motion for reconsideration and scheduled a hearing on the amount of sanctions for October 1993. The father then supplemented his motion for sanctions, ...

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