Appeal from the Circuit Court of Cook County 03 D 4994 Honorable Kathleen G. Kennedy, Judge Presiding.
The opinion of the court was delivered by: Justice McBRIDE
JUSTICE McBRIDE delivered the judgment of the court, with opinion.
Presiding Justice Epstein and Justice Quinn concurred in the judgment and opinion.
¶ 1 Petitioner Pamela Johnson and respondent Eric Johnson entered into a divorce settlement in December 2004. Petitioner was represented in the divorce proceedings by additional party respondents Arthur M. Berman and Daniel C. Meenan, Jr. In December 2006, petitioner, represented by Berman and Meenan, filed a petition seeking relief from a final judgment pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 2006)), alleging that respondent failed to disclose material facts during the divorce proceedings. Respondent filed a motion for summary judgment, which the trial court granted, and also filed a motion for sanctions against petitioner pursuant to Supreme Court Rule 137 (Ill. S. Ct. R. 137 (eff. Feb. 1, 1994)), seeking his attorney fees and costs incurred in response to the section 2-1401 petition. The trial court granted respondent's motion for sanctions against petitioner and also sua sponte sanctioned Berman and Meenan for filing the section 2-1401 petition. Following an evidentiary hearing as to the amount of respondent's attorney fees and costs, the trial court ordered petitioner to pay $56,000 and Berman and Meenan to pay $56,000 in sanctions.
¶ 2 Berman and Meenan appeal, arguing that the trial court erred in sanctioning them under Rule 137. Petitioner is not a party to this appeal.
¶ 3 On December 22, 2004, the trial court entered its judgment for dissolution of marriage, which included a "Marital Settlement Agreement" (MSA) executed by petitioner and respondent. The MSA resolved all issues related to the divorce. One of the marital assets resolved in the MSA was the parties' stock ownership of Baldwin Richardson Food Company (BRF). Pursuant to the MSA, petitioner was to receive $2,800,000 from BRF as severance pay. Further, any right, title or interest held or claimed by petitioner in BRF was awarded to respondent.
¶ 4 On December 20, 2006, petitioner, represented by Berman and Meenan, filed a section 2-1401 petition for relief from judgment, seeking modification of the judgment for dissolution of marriage. The petition alleged that in October 2006, petitioner learned that prior to the dissolution judgment, respondent had concealed material facts, known and available only to him, which he had a duty to disclose. Respondent did so with the intent to induce petitioner to agree to the resolution of the dissolution case and deprived petitioner of her fair share of the marital assets. Specifically, petitioner claimed that respondent's representations regarding BRF's value were proved to have been "intentionally inaccurate, incomplete and false."
¶ 5 Petitioner stated that BRF was formed in or about 1992 and "manufactured liquid products for the food industry, including but not limited to condiments, dessert toppings, sauces, syrups and fruit fillings." The parties owned a 63% stock interest in the company; they owned 1,550 of 2,266 outstanding shares. Petitioner stated that at times relevant to the underlying judgment, BRF's annual net sales were in the "plus $50 million range." Petitioner further stated that during the underlying proceedings respondent represented to her that BRF was in a precarious financial position with considerable debt. In June 2004, a valuation report of the parties' marital interest in BRF valued the stock at $6 million.
¶ 6 Petitioner alleged that in or about October 2006, she read an article that had been published in the June 2006 edition of Black Enterprise Magazine. The article stated that BRF had acquired the "Industrial Bakery Ingredients division of J.M. Smucker Co." in 2005. "The deal -- valued at $30 million -- allowed [BRF] to expand its bakery capabilities and grow gross sales by 26% in 2005." Petitioner also stated that she spoke with two of her daughters, both of whom are managers for BRF. They indicated to petitioner that BRF had committed to proceed with the acquisition prior to December 2004. Petitioner was also informed that respondent told their daughters that he did not want the deal to become part of the divorce settlement and not to relate any facts of the deal to petitioner. Petitioner attached an affidavit from one of her daughters to the petition that supported these allegations. Based on this information, petitioner alleged that BRF's acquisition would substantially increase BRF's sales volume and have an impact on the company's value.
¶ 7 In her section 2-1401 petition, petitioner asserted that respondent concealed material facts related to BRF and she relied on these misrepresentations when settling her marriage dissolution. Petitioner requested that the judgment be reopened and modified to reflect an increase in the value of BRF.
¶ 8 In June 2008, respondent filed a motion for summary judgment. In his motion, respondent contended that petitioner admitted in a deposition that she and her attorneys knew or should have known about the Smuckers deal no later than December 1, 2004, prior to the dissolution judgment.
¶ 9 Respondent attached excerpts from petitioner's two depositions as exhibits to his motion. The record on appeal does not appear to contain the full transcripts of petitioner's depositions. On March 19, 2008, petitioner testified at her first deposition that the first time she learned of the Smuckers deal was in October 2006 and had no prior knowledge between December 2004 and October 2006. She also stated that she had placed a "Google Alert" on her computer for any articles concerning BRF and said that she did not receive any articles involving the Smuckers deal until 2006.
¶ 10 However, at her April 16, 2008, deposition, petitioner clarified that she heard a "rumor" in December 2004. The excerpt of the deposition transcript is unclear as to petitioner's knowledge of the Smuckers deal and her subsequent action with her attorneys. At the start of the deposition, petitioner stated that the first document she received and gave to her attorneys was an article "from Smucker's saying that they were closing a plant -- you showed it to me last time -- and that they wanted to talk to another company, Orville or something, and maybe discussions with [BRF], so that was the first time [she] actually had something in [her] hand." Respondent's attorney asked petitioner about a fax with pages marked as pages two through five, but there was no page one. Respondent's attorney asked if page one might have been a fax cover sheet, but petitioner said she did not remember. When asked what if anything her attorneys did with this information, petitioner testified that "they talked to [respondent] and they talked to [respondent's attorney]." She stated that she "was sitting on the phone -- [she] was sitting in front of [Meenan] in his office and [she] heard him talk to [respondent's attorney]." Petitioner said she did not "remember exactly" what Meenan told respondent's attorney, but she believed that "he made [respondent's attorney] aware that [she] was questioning about this article, and the response [petitioner] got back was that there was nothing up, nothing to it." Petitioner admitted that she did not hear respondent's attorney give this response. Petitioner also did not know the exact date this conversation took place, but thought it was "pretty close to settlement," which the record indicates occurred in December 2004. Petitioner ...