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December 11, 1996



Released for Publication January 29, 1997.

The Honorable Justice Gordon delivered the opinion of the court: McNULTY and Hourihane, JJ., concur.

The opinion of the court was delivered by: Gordon

JUSTICE GORDON delivered the opinion of the court:

Plaintiff William Pirman filed a complaint against defendants A & M Cartage, Inc. (hereinafter A & M), Daniel Chiarito and Robert Lee, seeking to recover for injuries he suffered when he was struck at a construction site by a truck allegedly driven by an employee of A & M, either Chiarito or Lee. Defendants failed to appear, answer, or otherwise plead in response to plaintiff's complaint and were therefore defaulted. Judgment was entered against them jointly and severally in the amount of $950,000. Defendants subsequently filed a petition to vacate that judgment pursuant to section 2-1401 of the Illinois Code of Civil Procedure (735 ILCS 5/2-1401 (West 1994)), which the trial court granted, and plaintiff now appeals from that order pursuant to Illinois Supreme Court Rule 304(b)(3) (155 Ill. 2d R. 304(b)(3)).

It is undisputed that this action was originally filed on October 30, 1992. In his complaint, the plaintiff alleged that on October 30, 1990, he was working at a construction site in Tinley Park, Illinois. Plaintiff further alleged that on that day, either defendant Chiarito or Lee was driving a truck for A & M at that construction site and negligently ran into plaintiff. Plaintiff sought to recover damages for his injuries from either Chiarito or Lee under a theory of negligence, and from A & M for its employee's negligence under a theory of respondeat superior. On November 18, 1993, because defendants failed to appear, answer or otherwise plead in response to plaintiff's lawsuit, the trial court entered orders of default against each defendant and scheduled the matter for the prove-up of damages in December 1993. On December 22, 1993, at the conclusion of the prove-up hearing, the trial court entered a default judgment against all three defendants, jointly and severally, in the amount of $950,000, plus costs.

It is also undisputed that on October 13, 1994, nearly ten months after the entry of the December 22, 1993 default judgment against the defendants, plaintiff sought to enforce that judgment by issuing citations to discover assets to the defendants. On November 21, 1994, defendants filed their section 2-1401 petition to vacate the default judgment.

In their section 2-1401 petition to vacate, defendants argued that they had a meritorious defense to plaintiff's lawsuit because neither Chiarito nor Lee were involved in plaintiff's alleged accident; that they had exercised due diligence prior to being defaulted by attempting to defend themselves through their liability insurance carrier; that they had been diligent in presenting their section 2-1401 petition to vacate at their first opportunity to do so; and that the equities weighed in their favor to vacate the $950,000 default judgment. In support, defendants submitted the affidavits of August Badali, president of A & M; Marge Badali, controller of A & M; Steve Badali, vice president and general manager of A & M; defendants Lee and Chiarito; Russ Cawthon, A & M's insurance broker; and Geary McBurrows, an adjuster with A & M's liability insurance carrier.

August Badali, president of A & M, averred by affidavit that neither defendant Chiarito nor Lee were involved in the accident which was the subject of plaintiff's lawsuit. Badali stated that Chiarito had denied any such involvement, and that according to the A & M time sheet and dispatch record attached to his affidavit, defendant Lee was more than five miles away from the scene of the alleged accident when it occurred.

August Badali further averred that A & M was first notified of the plaintiff's alleged accident in an October 1992 telephone conversation between A & M's vice president and general manager, Steve Badali, and an unidentified third party. August Badali further stated that, as president of A & M, he was familiar with the procedures which A & M followed when it has been served with a summons and complaint. It was his responsibility to personally forward all summonses, complaints and court papers to A & M's insurance broker, Russ Cawthon. In early November 1992, Steve Badali gave August Badali the summonses and copies of plaintiff's complaint which had been served upon Chiarito and Lee, and within one week thereafter, August mailed those documents to Cawthon. On March 10, 1993, August's wife, Marge Badali, the controller of A & M, was served with summons and plaintiff's complaint on behalf of A & M, and August forwarded those service documents, too, to Cawthon within one week of that service. August also forwarded all subsequent letters written to A & M by plaintiff's attorney to Cawthon within a week of their receipt, including the motion for default filed by plaintiff and the November 18, 1993 entry of the order of default thereon.

August Badali further averred that on several occasions, he asked Cawthon whether he had forwarded the suit papers and other legal documents which he received pertaining to plaintiff's lawsuit to CNA, and Cawthon assured August that he had and that CNA was taking care of the matter. Prior to October 1994, when plaintiff served Marge Badali with the citation to discover assets, August did not know that a $950,000 default judgment had been entered against A & M or against any other defendant. Until that time, August believed that his insurance carrier was defending A & M and, in particular, was handling the November 18, 1993 default orders against the defendants. According to August (and to Marge Badali in her affidavit), defendant Chiarito never informed him of the $950,000 default judgment, although as noted below, Chiarito averred inconsistently as to whether he notified A & M of that judgment or only of the November 1993 default orders preceding that judgment.

Steve Badali, vice president and general manager of A & M, stated in his affidavit that in September or October of 1992, he received a telephone call from an individual who identified himself as "representing A & M." The caller described plaintiff's 1990 accident to Steve and inquired as to whether Steve knew about it. Steve told the caller that he was not aware of that accident, but added that Chiarito and Lee may have on occasion driven trucks at the construction site in question. However, Steve specified in his affidavit that he did not tell that caller or anyone else that Chiarito and Lee drove trucks at that construction site on the date of plaintiff's injuries.

Defendant Lee averred in his affidavit that he was not involved in or had any knowledge concerning the subject accident. Lee further averred that the aforementioned time sheet and dispatch report, also attached to his affidavit, reflected that on the day and time in question, he was driving his truck more than five miles away from the scene of plaintiff's alleged accident. Lee averred that he received substitute service of summons and plaintiff's complaint at his home on November 10, 1992. A few days later, Lee forwarded the summons and complaint to the A & M dispatcher. According to Lee, the dispatcher advised him that "[he] should not worry about the complaint because [Lee's] truck was not involved in the accident and they would forward the matter on to A & M's insurance carrier." Lee never received any other documents of any nature from any party pertaining to plaintiff's lawsuit.

Defendant Chiarito denied in his affidavit that he had any knowledge of or involvement in plaintiff's accident. Chiarito averred that he was served with the summons and complaint in this lawsuit on November 5, 1992, and he delivered it immediately to Steve Badali, who told him that A & M would handle the defense of the lawsuit on behalf of all defendants through its insurance carrier. Chiarito also stated that Steve Badali informed him that he had spoken with someone from the office of plaintiff's attorney and had informed that person that Chiarito and Lee were driving trucks for A & M in the area where the accident occurred. Chiarito further stated that he received two letters, one on May 14 and the other on June 22, 1993, from plaintiff's attorney, which advised him that no appearance or answer had been filed in the lawsuit and that a judgment would be entered against him if he did not take immediate action. According to Chiarito, August, Marge, and Steve Badali told Chiarito not to worry about those letters because the matter had been turned over to A & M's insurance broker, Cawthon. In October 1993, plaintiff's attorney sent Chiarito a copy of plaintiff's November 18, 1993 motion for default judgment, and in ...

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