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Scattered Corp. v. Midwest Clearing Corp.

September 18, 1998

SCATTERED CORPORATION, PLAINTIFF-APPELLANT,
v.
MIDWEST CLEARING CORPORATION, DEFENDANT-APPELLEE.



The opinion of the court was delivered by: Justice Theis

Appeal from the Circuit Court of Cook County.

No. 93-L-10216

Honorable Sheldon Gardner, Judge Presiding.

Appellant, Scattered Corporation (Scattered), appeals from the circuit court's order entered pursuant to Supreme Court Rule 219(e) (166 Ill. 2d R. 219(e)), awarding the Midwest Clearing Corporation $135,756.11 as reimbursement for the reasonable expenses incurred in defending a lawsuit brought by Scattered after Scattered chose to voluntarily dismiss the suit, without prejudice, pursuant to section 2-1009(a) of the Illinois Code of Civil Procedure. 735 ILCS 5/2-1009(a) (West 1996). Scattered also appeals from the circuit court's denial of its oral motions to stay the judgment, to withdraw its voluntary dismissal, and to file a third-amended complaint. For the reasons that follow, we reverse.

On August 23, 1993, Scattered filed suit against the Midwest Clearing Corporation (the MCC) alleging conversion and breach of contract. Trial was first scheduled for April 16, 1996. On April 4, 1996, the MCC filed a motion to disqualify Scattered's counsel. The court granted the motion and rescheduled the trial date to July 8, 1996. On June 20, 1996, the court entered an order granting Scattered's motion to vacate the July 8, 1996, trial date and entering and continuing the date for amended pretrial materials.

Status of the case was continued until December 17, 1996, at which time the court entered two orders, one setting the final pretrial conference and one setting the trial date. The court order setting the pretrial conference indicated: (1) all discovery was closed except for two pending expert depositions; (2) the parties were to identify to each other all anticipated witnesses, documents, exhibits, and motions in limine by February 14, 1997; (3) the parties were to exchange objections and stipulations to pretrial materials and provide copies to the court by February 28, 1997; and (4) the final pretrial conference was scheduled for March 20, 1997. The court's second order set the trial date for March 31, 1997, with trial to be concluded no later than April 18, 1997.

On January 10, 1997, Scattered filed a motion to voluntarily dismiss the case, without prejudice. 735 ILCS 5/2-1009(a) (West 1996). The MCC responded by filing a petition for reimbursement of its reasonable expenses pursuant to Supreme Court Rule 219(e). 166 Ill. 2d R. 219(e) (amended June 1, 1995, eff. January 1, 1996). On January 30, 1997, the circuit court set a briefing schedule on the applicability of Supreme Court Rule 219(e) and struck the substantive pretrial and trial dates.

The MCC's petition in support of its Rule 219(e) request documented $145,756.11 in expenses, comprised of discovery expenses, opinion witness expenses, reproduction costs, computer research, court fees, travel expenses, telephone and facsimile charges, and delivery and postage charges incurred by the MCC's two law firms. Scattered filed a memorandum in opposition to the MCC's Rule 219(e) petition arguing that, as a matter of law, Rule 219(e) only concerned voluntary dismissals seeking to avoid discovery obligations.

On April 23, 1997, the circuit court began a hearing on Scattered's motion to voluntarily dismiss and the MCC's petition for Rule 219(e) expenses. Before the court, Scattered claimed it owed nothing more than the appearance costs due under section 2-1009 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-1009 (West 1996). The circuit court entered an order continuing Scattered's motion for voluntary dismissal, granting the MCC's petition for Rule 219(e) expenses subject to a finding of reasonableness, and entitling Scattered to review the MCC's supporting records to the requested expenses. The court reserved ruling on the necessity for further discovery and continued the hearing until May 16, 1997.

On May 16, 1997, the court reconvened the hearing. After framing the issues and conducting an evidentiary hearing considering each category of expenses, the supporting documentation, and the objections thereto, the court awarded the MCC $135,756.11 as reasonable expenses. Scattered then made an oral motion for a continuance to decide whether to withdraw its voluntary dismissal, which the court refused. Scattered next asked for a continuance to amend its complaint, which the court also denied. The circuit court then entered a written final judgment and order requiring Scattered to pay to the MCC $135,756.11 as reasonable expenses incurred by the MCC in defending the action as a condition of the court granting Scattered's motion to voluntarily dismiss without prejudice. The written order also denied Scattered's oral motions to stay the judgment, to withdraw its dismissal, and to amend its complaint.

On appeal, the parties contend that interpretation of Supreme Court Rule 219(e) in this case presents two issues. First, may a "set trial date" constitute a "discovery deadline, order, or applicable rule" for purposes of assessing expenses pursuant to Rule 219(e) when a suit is voluntarily dismissed? And, second, does Rule 219(e) require the circuit court to make a preliminary finding that the plaintiff's voluntary dismissal was sought to "avoid compliance" with a "discovery deadline, order, or applicable rule"? Because interpretation of Supreme Court Rule 219(e) involves a question of law, our review of the circuit court's interpretation is de novo. Advincula v. United Blood Services, 176 Ill. 2d 1, 12, 678 N.E.2d 1009, 1015 (1996).

Supreme Court Rule 219 is entitled "Consequences of Refusal to Comply with Rules or Order Relating to Discovery or Pretrial Conferences." 134 Ill. 2d R. 219. Paragraph (e) of Rule 219, entitled "Voluntary Dismissals and Prior Litigation," provides:

"A party shall not be permitted to avoid compliance with discovery deadlines, orders or applicable rules by voluntarily dismissing a lawsuit. In establishing discovery deadlines and ruling on permissible discovery and testimony, the court shall consider discovery undertaken (or the absence of same), any misconduct, and orders entered in prior litigation involving a party. The court may, in addition to the assessment of costs, require the party voluntarily dismissing a claim to pay an opposing party or parties reasonable expenses incurred in defending the action including but not limited to discovery expenses, opinion witness fees, reproduction costs, travel expenses, postage, and phone charges." 166 Ill. 2d R. 219(e) (amended June 1, 1995, eff. January 1, 1996).

On appeal, Scattered contends that Rule 219(e) is confined to discovery deadlines, discovery orders, and discovery rules and requires an initial finding of misconduct by the trial court before expenses may be imposed. In contrast, the MCC argues that Rule 219(e) does not confine the imposition of expenses solely to orders and rules relating to discovery and, further, the circuit court need not enter a threshold finding of misconduct before imposing such expenses. Because this appeal may be resolved by addressing the issue of whether the circuit court must make a preliminary finding of misconduct before imposing expenses pursuant to Rule 219(e), we need not decide whether, in any given case, a ...


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