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03/22/96 THEODORE WATERS v. ARNOLD REINGOLD

March 22, 1996

THEODORE WATERS, INDIVIDUALLY AND D/B/A ELECTRO CON, INC., A CORPORATION, PLAINTIFF-APPELLANT,
v.
ARNOLD REINGOLD, DEFENDANT-APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE RONALD C. RILEY, JUDGE PRESIDING.

The Honorable Justice Gordon Delivered The Opinion OF The Court: McNULTY, P.j., and Hourihane*, J., concur.

The opinion of the court was delivered by: Gordon

JUSTICE GORDON DELIVERED THE OPINION OF THE COURT:

Plaintiffs, Theodore Waters and Electro Con, Inc., appeal from the trial court's grant of summary judgment to the defendant relative to plaintiffs' sixth amended complaint alleging accountant malpractice and negligence and from the trial court's dismissal with prejudice of plaintiffs' seventh amended complaint alleging breach of contract. On appeal, the plaintiffs argue that the summary judgment and the involuntary dismissal were erroneous. Before we can reach the merits of plaintiffs' appeal, however, we must first address the issue of jurisdiction, raised by defendant in a motion taken with the case, to review the summary judgment order.

Plaintiffs' sixth amended complaint contained two counts. *fn1 The first count alleged accountant malpractice by defendant Reingold based upon defendant's negligent handling of certain tax matters for the plaintiffs. The second count presented a separate cause of action for attorney negligence by the law firm hired by plaintiffs to prepare certain trust documents relative to a stock transfer. That latter count was dismissed pursuant to settlement on January 21, 1993 and is not involved in the instant appeal.

Plaintiffs' sixth amended complaint was the subject of two summary judgment motions. *fn2 The first motion, filed by the defendant attorneys and subsequently joined by defendant Reingold, included an attack based on the statute of limitations. The judge at the time, Judge Martin Ashman, specifically rejected the statute of limitations argument and denied the motion in its entirety in two orders dated December 2 and 10, 1992. On December 21, 1992, defendant Reingold filed a second motion for summary judgment arguing that plaintiffs' accountant malpractice action was barred by the Moorman doctrine which prohibits recovery of economic damages in tort. (See Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 435 N.E.2d 443, 61 Ill. Dec. 746.) That motion was granted on January 25, 1993. At that time, the court denied plaintiffs' request to include in the summary judgment order leave to file a seventh amended complaint to add a breach of contract action but told the plaintiffs to file a written motion for leave to file an amended complaint, with the complaint attached, during the next 30 days. The court included in the summary judgment order a finding that there was no just reason to delay enforcement or appeal.

On February 19, 1993, the plaintiffs filed a motion to reconsider the January 23, 1993 order and a motion for leave to file instanter his seventh amended complaint. This complaint alleged breach of contract by defendant Reingold based on the same conduct alleged in the sixth amended complaint sounding in tort. On May 10, 1993, at the hearing on these motions, the plaintiffs also orally moved for Supreme Court Rule 308 certification (134 Ill. 2d R. 308) of the question of whether the Moorman doctrine should be applied to accountant malpractice. At the conclusion of that hearing, the court denied plaintiffs' motion to reconsider, granted leave to file the seventh amended complaint, and ordered plaintiffs to submit a written motion for Rule 308 certification. There was no appealability language in the May 10, 1993 order. On May 17, 1993, the plaintiffs filed their Rule 308 motion.

The defendant subsequently moved to dismiss plaintiffs' seventh amended complaint with prejudice because that complaint failed to state a contract cause of action (735 ILCS 5/2-615 (West 1992)) and because the complaint was barred by the statute of limitations. *fn3 On September 24, 1993, the court dismissed plaintiffs' seventh amended complaint with prejudice finding insufficient factual allegations of late discovery and fraudulent concealment to defeat the operation of the statute of limitations as well as insufficient allegations of the elements for breach of contract. On that date, the court also denied plaintiffs' Rule 308 certification as being moot; and found that there was no just reason to delay enforcement or appeal. The plaintiffs did not seek leave to file any further amended pleadings and on October 8, 1993 filed their notice of appeal seeking review of the trial court order entered on September 24, 1993 dismissing plaintiffs' seventh amended complaint; the order on January 25, 1993 granting summary judgment to the defendant; and the order denying plaintiffs' motion to reconsider the January 25, 1993 order.

The filing of a timely notice of appeal is both jurisdictional and mandatory. ( Reyes v. Compass Health Care Plans (1993), 252 Ill. App. 3d 1072, 625 N.E.2d 246, 192 Ill. Dec. 286.) Supreme Court Rule 303(a)(1) provides that the notice must be filed within 30 days after final judgment has been entered or, if a timely post-trial motion directed at the judgment is filed, within 30 days after entry of the order disposing of the last pending post-trial motion. (134 Ill. 2d R. 303(a)(1).) For purposes of Supreme Court Rule 303, an order or judgment is final if it terminates the litigation between the parties on the merits of the cause or disposes of the rights of the parties either upon the entire controversy or upon some definite part thereof. (E.g., F.H. Prince & Co. v. Towers Financial Corp. (1994), 266 Ill. App. 3d 977, 640 N.E.2d 1313, 203 Ill. Dec. 940; Mars v. Priester (1990), 205 Ill. App. 3d 1060, 563 N.E.2d 977, 150 Ill. Dec. 850.) If the judgment or order does not dispose of all matters, an appeal may not be taken unless the trial court has made an express written finding that there is no just reason for delaying enforcement or appeal. ( Marsh v. Evangelical Covenant Church (1990), 138 Ill. 2d 458, 563 N.E.2d 459, 150 Ill. Dec. 572.) Absent such language, the order is not final and is subject to revision at any time before entry of the judgment adjudicating all claims, rights and liabilities of all the parties. 134 Ill. 2d R. 304(a).

Here, the summary judgment order of January 25, 1993 included Rule 304(a) language that there was no just reason to delay enforcement or appeal. The plaintiffs' post-trial motion directed at that judgment was denied on May 10, 1993. The plaintiffs' notice of appeal from that judgment was not filed until October 8, 1993, after plaintiffs' seventh amended complaint was dismissed. The defendant argues that plaintiffs' notice of appeal was untimely as to the summary judgment order because it was not filed within 30 days of May 10, 1993, the date the court denied plaintiffs' post-trial motion directed at the summary judgment order.

Initially we note that the Rule 304(a) finding included in the summary judgment order of January 25, 1993 was unnecessary because there was only one claim pending, plaintiffs' count I alleging accountant malpractice. Count II, which alleged legal malpractice against other defendants, had been dismissed previously pursuant to a negotiated settlement. The summary judgment order, which terminated count I, was final in and of itself because it terminated the litigation on the merits of the cause and disposed of the rights of the remaining parties upon the entire controversy. (See F.H. Prince & Co. v. Towers Financial Corp; Mars v. Priester.) Thus, that order was appealable as a final order pursuant to Supreme Court Rule 301. (134 Ill. 2d R. 301.) However, that order became nonfinal on February 19, 1993 when the plaintiffs filed a written motion for leave to file their seventh amended complaint instanter, which was granted on May 10, 1993, thereby creating an additional claim sounding in contract *fn4 (see Marsh v. Evangelical Covenant Church, 138 Ill. 2d at 465, 563 N.E.2d at 463 (a claim for purposes of Rule 304(a) is defined as "any right, liability or matter raised in an action")). See F.H. Prince & Co. v. Towers Financial Corp. (the filing of a claim while the trial court has jurisdiction makes any judgment final when entered nonfinal); see also In re Marriage of Tomei (1993), 253 Ill. App. 3d 663, 624 N.E.2d 884, 191 Ill. Dec. 696 (notice of appeal directed at dissolution judgment premature where petition for fees claim subsequently filed).

The issue thus becomes whether a Rule 304(a) finding, superfluous when made, can be activated at a later point in time to create appealability upon the subsequent filing of an additional claim. *fn5 There appears to be some tacit support for an affirmative response to this query in the context of motions for sanctions filed after entry of judgment in the underlying action. In Marsh v. Evangelical Covenant Church, the plaintiff filed a notice of appeal on August 25, 1988, 28 days after the trial court denied plaintiff's request for injunctive relief. Also on August 25, 1988, the defendant filed a motion for sanctions. The court held that the notice of appeal was premature because it was filed before the court disposed of the motion for sanctions. Notwithstanding its holding, the court suggested that a different result would have been reached had there been a Rule 304(a) finding when the order denying the injunctive relief was entered. See Marsh, 138 Ill. 2d at 468, 563 N.E.2d at 464-65 ("no appeal may be taken from an otherwise final judgment entered on a claim when a [motion for sanctions] claim remains to be resolved, absent a finding pursuant to Rule 304(a) that there is no just reason to delay enforcement or appeal"). See also second district appellate decisions of Gaynor v. Walsh (1991), 219 Ill. App. 3d 996, 579 N.E.2d 1223, 162 Ill. Dec. 409 and Cashmore v. Builders Square, Inc. (1990), 207 Ill. App. 3d 267, 565 N.E.2d 703, 152 Ill. Dec. 170 (appeal number 2-90-0660).

In American National Bank & Trust Co. v. Bus (1991), 212 Ill. App. 3d 133, 569 N.E.2d 1377, 155 Ill. Dec. 766, a second district appellate court decision, a Rule 304(a) finding was included in a summary judgment order that was final and appealable when entered without the Rule 304(a) finding but that became nonfinal later when the defendant filed a motion for sanctions. The issue in that case was whether the trial court retained jurisdiction to hear the motion for sanctions once the notice of appeal was filed in the underlying action. The court found that, while the appellate court had jurisdiction to hear the plaintiff's appeal from the summary judgment order, the trial court retained jurisdiction to hear the motion for sanctions as that motion presented a claim entirely distinct from the summary judgment order. Although not discussed in the opinion, the court's recognition of appellate jurisdiction in the earlier appeal from the summary judgment order suggests that Rule 304(a) language, unnecessary when made, can become effective and create appealability at a later time.

The effect of an unnecessary Rule 304(a) finding in an otherwise final judgment was expressly reached by the first district appellate court in Pines v. Pines (1994), 262 Ill. App. 3d 923, 635 N.E.2d 986, 200 Ill. Dec. 647. In Pines, the plaintiff filed a notice of appeal on March 19, 1993 from the trial court's order dated February 26, 1993 that dismissed plaintiff's action with prejudice and denied plaintiff's motion for voluntary dismissal. The dismissal order included a Rule 304(a) finding. On March 29, 1993, the defendants filed a motion for sanctions. The trial court dismissed defendants' motion for sanctions finding it lacked jurisdiction; and the defendants filed a separate appeal from that dismissal. On a ...


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