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Henderson-Smith & Associates, Inc. v. Nahamani Family Service Center

May 28, 2001

HENDERSON-SMITH & ASSOCIATES, INC, A CORPORATION, PLAINTIFF-APPELLEE
v.
NAHAMANI FAMILY SERVICE CENTER, INC., A NOT-FOR-PROFIT CORPORATION, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County No. 99 M 1113255 The Honorable Clarence S. Lipnick, Judge Presiding.

The opinion of the court was delivered by: Justice Cohen

Not Released For Publication

HENDERSON-SMITH & ASSOCIATES, INC, A CORPORATION, PLAINTIFF-APPELLEE
v.
NAHAMANI FAMILY SERVICE CENTER, INC., A NOT-FOR-PROFIT CORPORATION, DEFENDANT-APPELLANT.

Appeal from the Circuit Court of Cook County No. 99 M 1113255 The Honorable Clarence S. Lipnick, Judge Presiding.

The opinion of the court was delivered by: Justice Cohen

The parties entered into a contract for the plaintiff corporation to provide accounting services for the defendant corporation. Subsequently, the Illinois Secretary of State administratively dissolved the plaintiff for failure to pay state franchise taxes. The plaintiff alleges that after it was dissolved it provided services for the defendant pursuant to the contract, however, the defendant never rendered payment for those services.

 The plaintiff filed suit in municipal court, but failed to attach a copy of the contract to its complaint as required by the Code of Civil Procedure. 735 ILCS 5/2-606 (West 1998). On the day of trial, the trial court, over the defendant's objection, allowed the plaintiff to amend its complaint by attaching the contract. The defendant moved to dismiss based on the plaintiff's administrative dissolution. The trial court denied the motion and, after a bench trial, entered judgment for the plaintiff.

The plaintiff attempted to execute the judgment by issuing a citation to discover assets. A second judge, on the motion of defendant, quashed the citation to discover assets and, on the court's own motion, sanctioned the plaintiff for issuing it. The plaintiff then paid its franchise taxes and was reinstated.

The defendant filed a motion for a new trial before the original judge. In this motion, the defendant argued that it was improper to grant judgment for an administratively dissolved corporation and further argued that the plaintiff should not have been permitted to amend its complaint on the day of trial. The plaintiff filed a reply accompanied by a copy of its reinstatement notice. The judge denied the motion for a new trial. The defendant then appealed to this court.

We affirm.

BACKGROUND

The plaintiff, Henderson-Smith & Associates, Inc. (Henderson -Smith) is an Illinois corporation that provides bookkeeping and accounting services. The defendant, Nahamani Family Service Center, Inc. (Nahamani) is an Illinois nonprofit corporation that operates a group home for children who are wards of the State.

On January 3, 1997, the parties entered into a contract. According to the contract, Henderson-Smith was to perform accounting services for Nahamani for a fee of $1,500 per month. The parties agreed that at the end of each fiscal year, Henderson-Smith would "close the books" and assist with Nahamani's year-end audit for an additional fee of $5,000. The contract was terminable by either party on thirty days' notice.

Subsequently, Henderson-Smith failed to pay its franchise taxes. As a result, the Secretary of State administratively dissolved Henderson-Smith effective June 1, 1998, as directed by section 12.40 of the Business Corporation Act (the Act). 805 ILCS 5/12.40 (West 1998). Henderson-Smith continued to keep Nahamani's books.

In October 1998, Henderson-Smith performed Nahamani's audit for the fiscal year ending June 30, 1998. Henderson-Smith alleges that it never received its $5,000 fee for the year-end audit. On March 16, 1999, Henderson-Smith filed suit in the Circuit Court seeking $5,000 in damages. It attached a copy of Nahamani's invoice to the complaint instead of attaching a copy of the contract as required by the Code of Civil Procedure. 735 ILCS 5/2-606 (West 1998).

The matter was set for a bench trial on November 9, 1999. Prior to trial, Nahamani moved to dismiss based on the administrative dissolution of Henderson-Smith. Nahamani attached a copy of the certificate of dissolution to its motion. The trial judge denied the motion. Nahamani also moved for dismissal predicated on the failure of Henderson-Smith to attach a copy of the contract to its complaint. Nahamani argued that without the copy of the contract, the complaint only stated a claim for quantum meruit. Nahamani further argued, as a quantum meruit claim will not lie where there is a written contract governing the matter in question (Industrial Lift Truck Service Corp. v. Mitsubishi International Corp., 104 Ill. App. 3d 360-61, 432 N.E.2d 999, 1002 (1982)), the complaint was legally insufficient. In response, Henderson-Smith moved to amend its complaint to attach a copy of the contract. The court granted the motion over Nahamani's objection. Nahamani then moved for a continuance, arguing that it needed time to adjust its defense based on (according to Nahamani) the new theory of the complaint. The judge denied the motion and the trial went forward. The court found for Henderson-Smith and entered an order for $5,000 plus costs. Nahamani filed a motion for a new trial.

Henderson-Smith then attempted to collect the judgment. On November 24, 1999, counsel for Henderson-Smith appeared before the supplementary proceeding judge and caused a citation to discover assets to be issued upon Nahamani's bank, resulting in Nahamani's bank account being frozen. Nahamani filed an emergency motion to quash. On December 14, 1999, the supplementary proceeding judge granted the motion to quash. On his own motion, the judge also ordered that a hearing be held to determine whether Henderson-Smith should be assessed Rule 137 sanctions for availing itself of the court's supplementary proceedings when it did not have legal authority to do so having previously been administratively dissolved.

Henderson-Smith then paid its franchise taxes, with its corporate status being reinstated on January 6, 2000. Henderson-Smith attached a copy of the certificate of reinstatement to its response to Nahamani's motion for a new trial.

On February 14, 2000, the hearing on the motion for sanctions proceeded before the supplementary proceeding judge. Counsel for Henderson-Smith did not appear and a default order was entered.

On March 29, 2000, the trial judge entered a memorandum order denying Nahamani's motion for a new trial.

Nahamani now appeals, arguing that the trial judge erred in: (1) allowing Henderson-Smith to proceed to trial and obtain a judgment despite its administrative dissolution; and (2) allowing Henderson-Smith to amend its complaint on the day of trial and ...


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