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Ford Motor Credit Company v. Sperry

November 03, 2003

FORD MOTOR CREDIT COMPANY, PLAINTIFF AND COUNTERDEFENDANT-APPELLANT,
v.
THOMAS B. SPERRY, D/B/A THOMAS B. SPERRY, INC., DEFENDANT AND COUNTERPLAINTIFF-APPELLEE (SYCAMORE AUTO CENTER, INC., THIRD-PARTY DEFENDANT).



Appeal from the Circuit Court of Kane County. No. 94-LA-999 Honorable Donald J. Fabian, Judge, Presiding.

The opinion of the court was delivered by: Justice McLAREN

UNPUBLISHED

Plaintiff, Ford Motor Credit Company, appeals from an order declaring void the court's prior award of attorney fees to plaintiff. The court voided the fees award because the law firm representing plaintiff, Schulz and Associates, P.C. (the firm), had not registered with the Illinois Supreme Court, as required by Supreme Court Rule 721(c) (166 Ill. 2d R. 721(c)), and, therefore, was prohibited from practicing law when the firm obtained the fees award against defendant, Thomas B. Sperry, d/b/a Thomas B. Sperry, Inc. We affirm.

In 1993, defendant leased an automobile from third-party defendant, Sycamore Auto Center, Inc., which later assigned the lease to plaintiff. In 1995, plaintiff filed suit seeking the return of the vehicle and damages. Defendant filed a counterclaim against plaintiff and a third-party claim against third-party defendant, alleging, among other things, consumer fraud. After a 1999 trial, plaintiff and third-party defendant were granted a directed verdict on the consumer fraud claim. Plaintiff then petitioned for its attorney fees as the prevailing party on the consumer fraud claim (see 815 ILCS 505/10a (West 2000)), and the court granted the petition, awarding plaintiff $31,717.75. In May 2001, plaintiff began collection proceedings on the fees award.

On February 5, 2002, defendant moved the court to vacate its order awarding plaintiff attorney fees and declare the order void ab initio. He contended that the fees award was null because, when the firm initiated the lawsuit and when it petitioned for attorney fees, the firm lacked a Rule 721(c) certificate of registration with the supreme court and was not permitted to practice law. He argued that the firm should not be entitled to attorney fees for its unauthorized act. After a hearing, the trial court granted defendant's motion, and this appeal followed.

The Professional Service Corporation Act (805 ILCS 10/1 et seq. (West 2000)) authorizes the incorporation of groups of individuals providing professional services, such as legal practice. Attorneys employed by a professional corporation must be licensed to practice law. 805 ILCS 10/3.4 (West 2000); 166 Ill. 2d R. 721(a). Before a professional service corporation may engage in the practice of law or open or maintain a law office, it must obtain a certificate of registration from the supreme court. 166 Ill. 2d R. 721(c). It is undisputed that, when it petitioned the court for attorney fees, the firm, a professional service corporation, did not have a Rule 721(c) certificate of registration.

The question presented for our review is whether an order awarding statutory attorney fees is void if the law firm lacked a Rule 721(c) certificate of registration with the supreme court when it obtained the order. This issue is a question of law that we review de novo. Pratt-Holdampf v. Trinity Medical Center, 338 Ill. App. 3d 1079, 1083 (2003).

"In Illinois, it is well established that only persons duly admitted to practice law in this state may appear on behalf of other persons. [Citations.] The normal effect of a person's unauthorized practice on behalf of a party is to require the dismissal of the cause or to treat the particular actions taken by the representative as a nullity." Pratt-Holdampf, 338 Ill. App. 3d at 1083.
The nullity rule was applied in Remole Soil Service, Inc. v. Benson, 68 Ill. App. 2d 234 (1966). In that case, the corporation plaintiff obtained a small claims judgment against the defendant. Throughout the proceedings, the plaintiff was represented by its office manager. Remole, 68 Ill. App. 2d at 236. The court determined that a corporation was not statutorily permitted to appear in court on its own behalf and could appear only by an attorney. Remole, 68 Ill. App. 2d at 238 (discussing Ill. Rev. Stat. 1965, ch. 32, pars. 411, 414, 415). Accordingly, it resolved that the proceedings were prosecuted by an unauthorized person and were null. It further held that the resulting judgment was void. Remole, 68 Ill. App. 2d at 239.

Recently, the consequences of a law firm's failure to obtain a Rule 721(c) certificate of registration were addressed in Joseph P. Storto, P.C. v. Becker, 341 Ill. App. 3d 337 (2003). In Storto, this court considered "whether a law firm's failure to register as a corporation with the Illinois Supreme Court pursuant to Rule 721 provides a remedy to a former client of the law firm to void an otherwise valid contract with the law firm because of that Rule 721 violation." Storto, 341 Ill. App. 3d at 340.

In that case, the plaintiff law firm filed a complaint, seeking to recover its fees for services it had rendered pursuant to a contract with its former client, the defendant. Storto, 341 Ill. App. 3d at 338. The defendant moved for summary judgment. Storto, 341 Ill. App. 3d at 339. In support of its motion, the defendant contended that, when she contracted with the plaintiff for legal services, the plaintiff was not registered to practice law in the state as was required by Rule 721(c). She also asserted that her contract with the plaintiff was void and that she was not obligated to pay the plaintiff the unpaid legal fees. The trial court granted the defendant's summary judgment motion.

On appeal, this court reversed. The Storto court concluded that the defendant was not excused from paying her contractual obligations to the law firm even though the law firm had violated the supreme court rule. Storto, 341 Ill. App. 3d at 343. Under such circumstances, clients would be entitled to relief only if they demonstrated that they were harmed by the law firm's rule violation. Storto, 341 Ill. App. 3d at 343.

In our view, the circumstances in the present case are more similar to those involving the general nullity rule, like in Remole, than those discussed in Storto. The Storto court resolved whether a contractual obligation between the parties was enforceable despite the law firm's violation of the supreme court rule. In that situation, the client had an opportunity to investigate whether the law firm was licensed and negotiate with the law firm before entering into the contract. According to Storto, a client will not be excused from a contractual obligation without demonstrating how he or she was harmed by the law firm's failure to register with the supreme court. For example, a client might be harmed because he or she relied on the existence of the corporate entity in choosing that particular law firm. Storto, 341 Ill. App. 3d at 343. Additionally, a client might be harmed if the law firm representing it committed malpractice. Storto, 341 Ill. App. 3d at 343.

In this case, the firm is seeking statutory attorney fees from the opposing party. Unlike in Storto, it is not seeking attorney fees for services rendered to its client pursuant to a contract. The client in Storto received the benefit of legal services from the plaintiff and then attempted to use its violation of Rule 721 to excuse herself from compensating it for those services. Here, defendant received no benefit from the firm's legal representation of plaintiff. Therefore, we conclude that the holding in Storto does not govern the present facts.

In sum, the firm was not properly registered with the supreme court when it obtained the attorney fees award. Like the plaintiff in Remole, it performed legal services without authorization and in violation of the law. The general rule of dismissal applies under such circumstances. Accordingly, we ...


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