Appeal from the TONI S. DUNCAN, Circuit Court of Cook County Honorable GREENWOOD, Vice President, Judge Presiding. No. 08 CH 35079
The opinion of the court was delivered by: Presiding Justice Cunningham
PRESIDING JUSTICE CUNNINGHAM delivered the judgment of the court, with opinion.
Justices Karnezis and Connors concurred in the judgment and opinion.
This consolidated appeal arises from the January 22, 2009 order entered by the circuit court of Cook County dismissing with prejudice the instant taxpayers' lawsuit filed by the plaintiffs, Chris Nelson, Mike Luckenbach and Toni Duncan, and from the subsequent order of the circuit court, which imposed a $49,447.50 sanction, pursuant to Illinois Supreme Court Rule 137 (eff. Feb. 1, 1994), against the instant plaintiffs' attorneys. On appeal, the plaintiffs argue that: (1) res judicata did not bar their claims in the instant lawsuit; (2) the circuit court wrongly held that the terms of a settlement agreement in a separate, prior lawsuit, in which the plaintiffs were not involved, barred the instant lawsuit; and (3) the circuit court abused its discretion in imposing Rule 137 sanctions against the plaintiffs' attorneys, and erred in denying the plaintiffs' motion to strike the sanctions; and the amount awarded was excessive. For the following reasons, we affirm the judgment of the circuit court of Cook County.
This case involves a complex procedural history and only the facts pertinent to our resolution of this matter are set forth below. For purposes of clarity, we characterize the litigation that underpins the issues before us as Latin I and Latin II. On April 16, 2008, Protect Our Parks, Inc. (POP), a community organization, along with three individual Chicago taxpayers, filed a lawsuit against the Latin School of Chicago (Latin School), the Chicago Park District (CPD), the City of Chicago, and various individuals affiliated with CPD and the City of Chicago. See Protect Our Parks, Inc. v. Latin School of Chicago, No. 08--CH--14027 (Cir. Ct. Cook Co.) (Latin I). The plaintiffs' complaint in Latin I sought a declaratory judgment regarding an agreement (South Field Agreement) between CPD and Latin School, which granted Latin School permission to fund and construct a soccer field in the "North Meadow of South Field" area of Lincoln Park in Chicago, in exchange for Latin School's priority usage of that soccer field. The Latin I complaint also sought to enjoin construction of the soccer field, alleging that the South Field Agreement violated the Lake Michigan and Chicago Lakefront Protection Ordinance (Chicago Municipal Code §16-4 (passed Oct. 24, 1973), the Illinois Constitution and the public trust doctrine. Attorney Herbert Caplan (Attorney Caplan), as a board member of POP, verified the Latin I complaint and served as co-counsel for the plaintiffs in Latin I.
On April 25, 2008, the trial court in Latin I entered a temporary restraining order (TRO) Cons. against CPD and Latin School, ordering them to halt construction of the soccer field. On May 15, 2008, the Latin I parties entered into a settlement agreement, the terms of which stated that CPD would make a $40,000 payment to the plaintiffs and that the parties would release each other from liability. Specifically, the pertinent part of the settlement agreement stated:
"A. [The parties] absolutely, unconditionally and irrevocably release and discharge the other from any and all claims, demands, causes of action, proceedings, suits, liabilities, obligations, promises, covenants, conditions, agreements, undertakings, duties, debts and damages, known or unknown, direct or indirect, suspected or unsuspected, disclosed or undisclosed, arising under statute, regulation, ordinance, the United States and Illinois Constitutions, common law, or otherwise, which either [p]laintiffs or [d]efendants has previously had, now has or hereafter may have against the other arising out of or in connection with the [CPD's] December 1, 2006 agreement with the [Latin School] and the Latin Facility, as defined in the [p]laintiffs' [c]omplaint, and as alleged, or which should or could have been alleged in the lawsuit Protect Our Parks, Inc., et al. v. The Latin School of Chicago, et al., Case No. 08 CH 14027, filed in the Circuit Court of Cook County, Illinois. ***
B. Notwithstanding anything to the contrary herein this general
release shall not be applicable and shall not release any
demands, causes of action, proceedings,
suits, liabilities, obligations, promises, covenants, conditions,
agreements, undertakings, duties, debts and damages, known or unknown,
direct or indirect, suspected or unsuspected, disclosed or
undisclosed, arising under statute, regulation, ordinance, the United
States and Illinois Constitutions, common law, or otherwise:
1. not arising out of or in connection with or related to the Litigation or the [CPD's] December 1, 2006 agreement with the [Latin School] and the Latin Facility, or;
2. between or among the [CPD] or its Commissioners, the [Latin School] and the City of Chicago."
The settlement agreement further stated that Latin I would be dismissed without prejudice upon execution of the agreement by the parties, and that it would be dismissed with prejudice "upon the execution by the Latin School and [CPD] of [a] termination agreement," which would terminate the South Field Agreement. (Emphasis added.)
On that same day, May 15, 2008, the trial court approved the settlement agreement, and entered an agreed order dismissing Latin I without prejudice and stating that the case would be dismissed with prejudice contingent upon the execution of the termination agreement between CPD and Latin School.
On June 19, 2008, CPD and Latin School entered into a termination agreement as required by the terms of the May 15, 2008 settlement agreement and the trial court's order. The termination agreement terminated the South Field Agreement between CPD and Latin School and provided that CPD would assume all of Latin School's remaining contracts relating to the construction of the soccer field and that CPD would reimburse Latin School for the construction work done under the terms of the South Field Agreement.
On June 24, 2008, the trial court in Latin I, noting that CPD and Latin School had entered into a termination agreement and that CPD had tendered $40,000 to the Latin I plaintiffs as required by the terms of the settlement agreement, entered an order dismissing Latin I with prejudice. The June 24, 2008 order also allowed the trial court to "retain jurisdiction for the sole purpose of enforcing this settlement agreement; provided, however, that the [c]court's jurisdiction shall cease upon the later of the [CPD's] determination of this matter after its receipt of the Chicago Plan Commission's recommendation, if any, *** or October 1, 2008."
In an e-mail dated July 8, 2008 from Attorney Caplan to Latin School and to the general superintendent of CPD, Timothy Mitchell (Mitchell), Attorney Caplan raised several objections to the language of the termination agreement. In particular, he objected to CPD's assumption of Latin School's remaining construction contracts and CPD's obligation to reimburse Latin School with "public moneys for the illegal soccer field construction." Attorney Caplan's e-mail further stated that he intended to raise these objections in "subsequent proceedings."
On August 29, 2008, Attorney Caplan, as co-counsel for the Latin I plaintiffs, filed an emergency motion to enforce the settlement agreement before the trial court (emergency motion to enforce), arguing that CPD violated the terms of the settlement agreement because it improperly removed a scoreboard from the construction site of the soccer field and arguing that a notice provided by CPD regarding a September 3, 2008 public hearing about the soccer field at issue was inadequate. The emergency motion to enforce did not raise any of Attorney Caplan's objections to the terms of the termination agreement, which were expressed in his July 8, 2008 e-mail. Subsequently, the trial court denied the emergency motion to enforce.
On September 22, 2008, while the trial court in Latin I still retained jurisdiction over the enforcement of the settlement agreement, plaintiffs Chris Nelson, Mike Luckenbach and Toni Duncan filed the instant taxpayer lawsuit against CPD, Latin School, and various individuals affiliated with these two entities (Latin II). The complaint in Latin II alleged that the June 19, 2008 termination agreement, which brought Latin I to an end, was "void or voidable" because its terms provided that CPD agreed to use public funds "to reimburse Latin [School] $900,000 to $1.3 million" for the illegal construction of the soccer field. Further, the Latin II complaint alleged that CPD's assumption of Latin School's remaining construction contracts violated CPD and Illinois bidding requirements. Attorney Caplan also served as co-counsel for the Latin II plaintiffs.
On October 23, 2008, CPD and Latin School filed a joint motion to dismiss in Latin II (motion to dismiss) pursuant to section 2-619.1 of the Illinois Code of Civil Procedure (Code), arguing, inter alia, that the Latin II lawsuit was barred by res judicata and by the release terms in the settlement agreement of Latin I. 735 ILCS 5/2-619.1 (West 2008).
On January 22, 2009, a hearing on CPD and Latin School's motion to dismiss was held. After hearing arguments by the parties, the trial court in Latin II granted the motion to dismiss under section 2-619 of the Code, holding that the matter was barred by res judicata. The trial court said in pertinent part:
"All the requisites of res judicata are present here. First, the taxpayers are in privity with one another. It's clearly stated in the complaint that was filed before [the trial court in Latin I] that the plaintiffs there were taxpayers as well as the group [POP], but they were individual taxpayers as well who were plaintiffs. And clearly, the case before me, [Latin II] case, the plaintiffs set themselves out as taxpayers. So the requirement of privity is established.
The second requirement is whether there is a final disposition of the merits. There certainly was a final disposition of the merits. It's in the June 24th, 2008 order of [the trial court in Latin I] in which [it] dismissed the case with prejudice. That's a final disposition on the merits.
And the third requisite is that the issues were or could have been raised in the same -- in the case, in the earlier case, and that the case involves the same set of operative facts. That's also met clearly. The final disposition on the merits that occurred in [Latin I] was predicated expressly on the execution of the termination agreement, the very agreement that the plaintiffs in this suit now seek to declare as invalid."
In granting the motion to dismiss, the trial court further held that the instant lawsuit was barred by the release terms of the May 15, 2008 settlement agreement. The trial court also stated that it had "no real reason to take up [CPD and Latin School's arguments] under 2-615." Nonetheless, the trial court noted that "two of the bases on which the plaintiffs purport to proceed here, two statutory bases, neither one of them apply. The municipal code [has] no application, which the plaintiffs concede; and the Illinois Park District Code, by its terms, does not seek to restrict the powers of [CPD] or any other park district which was previously formed under a special charter." The trial court then dismissed the entirety of the instant lawsuit--Latin II--with prejudice.
On that same day, January 22, 2009, the Latin II plaintiffs filed a notice of appeal before this court. On February 9, 2009, CPD filed a Rule 137 motion for sanctions (motion for sanctions) against the Latin II plaintiffs, arguing that the Latin II complaint was not well-founded in fact or law.
On February 17, 2009, the Latin II plaintiffs filed a motion to strike and dismiss (motion to strike), arguing that the Illinois Citizen Participation Act (735 ILCS 110/5 et seq. (West 2008)) barred CPD's Rule 137 motion for sanctions. On June 25, 2009, the trial court in Latin II denied the plaintiffs' motion to strike, finding ...