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Kral v. Fredhill Press Co.

March 31, 1999

MICHAEL J. KRAL, PLAINTIFF-APPELLEE,
v.
FREDHILL PRESS COMPANY, INC., DEFENDANT-APPELLANT ELECTRICAL SERVICES, INC., DEFENDANT



No. 92-L-2958

The opinion of the court was delivered by: Justice Theis

Appeal from the Circuit Court of Cook County

Honorable Judith Cohen, Jacqueline Cox, Judges Presiding.

Defendant-appellant, Fredhill Press Co., Inc. (Fredhill Press), appeals the circuit court's order of March 19, 1998, denying its motion to vacate the default judgment entered against it on August 30, 1995. The circuit court denied the motion, which was brought pursuant to section 2-1301(e) of the Illinois Code of Civil Procedure (735 ILCS 5/2-1301(e) (West 1996)), finding it was not timely brought. Fredhill Press appeals, claiming the motion was timely brought, as it was filed within 30 days of the judgment that adjudicated all the claims, rights, and liabilities of all the parties. We reverse and remand.

On March 9, 1992, Michael J. Kral (Kral) filed suit against Fredhill Press, a Kentucky corporation, and Electrical Services, Inc. (ESI), an Illinois corporation, alleging negligence and strict product

liability. Kral's suit was precipitated by an injury he sustained while using a carbon-coater machine manufactured by Fredhill Press and repaired and inspected by ESI. While Kral's action was pending, Fredhill Press sold its assets and dissolved. Thereafter, on May 26, 1995, Fredhill Press' Illinois counsel was allowed to withdraw as counsel of record. Fredhill Press then ended its participation in Kral's suit.

Kral moved for an order of default against Fredhill Press. On August 2, 1995, Kral's motion was granted, and the matter was set for prove up of damages. On August 30, 1995, the circuit court entered judgment against Fredhill Press in the amount of $858,000. The order did not include a finding pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)) that the judgment was immediately enforceable and appealable.

Kral registered the Illinois judgment he received against Fredhill Press in the circuit court of Boone County, Kentucky, on September 30, 1996. In addition, on August 15, 1997, Kral brought an action in Kentucky against the estate and heirs of Fred Hill Sr., seeking satisfaction of his Illinois judgment, a temporary injunction against the distribution or transfer of assets, and punitive damages resulting from the allegedly fraudulent conveyance of the $685,000 in proceeds realized from the sale of Fredhill Press to the estate and heirs of Fred Hill Sr. The Kentucky court granted Kral's request for temporary injunctive relief on September 18, 1997.

While Kral's Illinois suit was pending against Fredhill Press and ESI, ESI was undergoing bankruptcy proceedings. At the Conclusion of its bankruptcy action, ESI was no longer a viable corporation. On November 25, 1997, the circuit court entered an order granting Kral's motion to dismiss ESI as a defendant.

On December 19, 1997, Fredhill Press filed a motion, pursuant to section 2-1301(e), to vacate the default judgment entered against it on August 30, 1995. On March 10, 1998, Kral moved for sanctions, claiming Fredhill Press' motion was frivolous, as it was not well grounded in law or fact, and was filed for the purpose of harassment. Kral's motion for sanctions was later withdrawn. By order entered March 19, 1998, the circuit court denied Fredhill Press' motion to vacate. The circuit court explained that because the motion to vacate the default was not filed within 30 days of entry of that final order, as section 2-1301(e) requires, the motion was untimely. The circuit court stated that the absence of a Rule 304(a) finding (155 Ill. 2d R. 304(a)) in its order of default did not affect that order's finality or preclude denial of the motion on grounds that it was untimely filed. Fredhill Press now appeals from the circuit court's order of March 19, 1998, on grounds that its motion to vacate was timely filed.

We begin by noting that the order at issue did not dispose of Kral's claim against ESI nor did it contain a finding pursuant to Supreme Court Rule 304(a) (155 Ill. 2d 304(a)) that the judgment was enforceable and appealable. We also note that we are asked only a threshold question: whether Fredhill Press timely filed its post-trial motion to vacate the default judgment entered against it on August 30, 1995, when it filed that motion, not within 30 days after the trial court's entry of that judgment, but within 30 days after the trial court's dismissal on November 25, 1997, of Kral's case against ESI. The question before us is not whether the motion to vacate the default should have been granted, but whether the motion should have been entertained as timely filed.

Fredhill Press maintains the motion should have been entertained as timely filed because, for purposes of section 2-1301(e), an order or judgment is final if it is final and appealable or includes language pursuant to Supreme Court Rule 304(a). Kral contends, to the contrary, that section 2-1301(e) is dispositive in this instance and that Supreme Court Rule 304(a) is inapplicable. Kral is incorrect.

The resolution of this dispute turns on the relationship between Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)) and section 2-1301(e) of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2-1301(e) (West 1996)). Accordingly, Rule 304(a) and the Code sections that govern the filing of motions to set aside a default judgment must be examined in turn. Section 2-1301(e) of the Code sets forth the terms under which the court may exercise its discretion to set aside any default, and the terms under which it may entertain a motion requesting that it do so:

"The court may in its discretion, before final order or judgment, set aside any default, and may on motion filed within 30 days after entry thereof set aside any final order or judgment upon any terms and conditions ...


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