Appeal from the Circuit Court of Cook County. No. 03 CH 18879 The Honorable Anthony L. Burrell, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Lampkin
PRESIDING JUSTICE LAMPKIN delivered the judgment of the court, with opinion. Justice Hall concurred in the judgment and opinion.
Justice Gordon specially concurred with opinion.
¶ 1 At issue in this case is the continued representation of a deceased man in a contract dispute against defendant, Biljana Cvejin. Prior to his death, Theodore Sarche (Theodore) filed a lawsuit against defendant for damages related to a real estate contract. Theodore died during the ensuing litigation. Plaintiff, Carol Mohica, subsequently was appointed special "administrator" pursuant to section 2-1008(b) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1008(b) (West 2004)) allowing the litigation to proceed in Theodore's absence. Following a bench trial before a new judge, judgment was entered in favor of defendant.
¶ 2 Defendant then filed a petition for attorney fees and an Illinois Supreme Court Rule 137 (eff. Feb. 1, 1994) motion for sanctions, arguing the section 2-1008(b) substitution motion was improperly granted by the initial judge. The second judge agreed and ordered Rule 137 sanctions against plaintiff, as an agent and employee of Krasnow Saunders Cornblath, L.L.P. (Krasnow law firm), in the form of attorney fees.
¶ 3 On appeal, plaintiff contends the circuit court erred in concluding the section 2-1008(b) substitution motion was improper and imposing sanctions based on that conclusion. In the alternative, plaintiff contends the circuit court abused its discretion in awarding Rule 137 sanctions without providing a hearing. On cross-appeal, defendant contends the circuit court erred in dismissing Dr. Michael Sarche (Michael), Theodore's son, from the case for lack of personal jurisdiction and erred in failing to hold the individual attorneys as well as the Krasnow law firm jointly and severally liable for the entire amount of defendant's attorney fees. Based on the following, we reverse the judgment of the circuit court.
¶ 5 In 2003, Theodore and defendant entered into a contract for the purchase of Theodore's condominium. The contract contained a provision providing for attorney fees to the "losing party" in the event of litigation. Defendant gave Theodore a $5,000 security deposit pursuant to the contract. Defendant intended to purchase the condominium as a rental property; therefore, when the condominium board amended its declarations during the pendency of the sale to prohibit renting in the building, defendant refused to close on the contract. On November 10, 2003, Theodore's attorney, Henry Krasnow (Henry) of the Krasnow law firm, filed a lawsuit for breach of contract on Theodore's behalf. Theodore mitigated his damages by selling his condominium for less than the contract price. Theodore amended his complaint to seek damages in the amount of $19,600, which was the difference between the sale price and defendant's contract price, plus the costs associated with owning the property from the scheduled closing date until the date the property actually sold, as well as attorney fees. Defendant filed a motion to dismiss on June 11, 2004. The motion was denied and defendant was ordered to file an answer to Theodore's amended complaint. On November 5, 2004, defendant filed an answer to the amended complaint and affirmative defenses.
¶ 6 On December 15, 2004, Theodore died. Theodore had one living child, Michael, who lived in Denver, Colorado. A probate estate was not opened in Theodore's name.
¶ 7 On December 16, 2004, Henry and Praveen Kosuri, an attorney at the Krasnow law firm, filed a third motion to default defendant for repeatedly failing to comply with the circuit court's orders and failing to appear for a deposition. Theodore was the named plaintiff on the pleading, which requested damages plus attorney fees. On December 28, 2004, the motion was denied, but Theodore and defendant were ordered to appear for depositions. On March 9, 2005, Kosuri filed a fourth amended motion to default defendant, requesting damages plus attorney fees. Again, Theodore remained the named plaintiff on the pleading, which alleged that "[Theodore] noticed the deposition of Defendant for January 20, 2005" and defendant sent a letter refusing to appear without providing alternate dates. The pleading further stated that "[t]o this date, [Theodore] has not received any response from Defendant or her attorneys."
¶ 8 Then, on March 11, 2005, Henry and Kosuri filed a motion pursuant to section 2-1008(b) of the Code to spread Theodore's death of record and to request the appointment of plaintiff as Theodore's special representative. Plaintiff was a paralegal at the Krasnow law firm. The section 2-1008(b) motion provided that Michael and his children were the "individuals who appear entitled to participate in [Theodore's] estate." The motion further provided that plaintiff was Theodore's "special representative and the liaison between his family and his attorneys in Chicago." Plaintiff verified the motion.
¶ 9 A hearing was held on March 21, 2005; however, no court reporter was present. The circuit court denied Theodore's fourth motion for default and granted the section 2-1008(b) motion appointing plaintiff as Theodore's "special administrator."*fn1 The circuit court's March 21, 2005, order additionally instructed that notice be given to Theodore's known heirs. On March 23, 2005, a certified letter was sent by Kosuri to Michael with copies of the section 2-1008(b) substitution motion and the order granting the motion.
¶ 10 The parties subsequently filed cross-motions for summary judgment, which were denied. However, prior to the filing of defendant's cross-motion for summary judgment, on April 7, 2006, plaintiff filed a motion for sanctions and to strike based on defendant's repeated failures to comply with court orders and for "dilatory tactics." The motion was entered and continued on April 20, 2006, with instructions that plaintiff "keep track of any time that is unnecessarily spent due to defendant's acts from this date forward" and that "attorneys fees for any such time shall be considered by the trial judge and are considered warranted by this Court."
¶ 11 A bench trial was ultimately held in September 2007 before a new judge. Prior to trial, defendant's newly retained counsel filed a motion in limine arguing, inter alia, that plaintiff did not have standing to litigate based on the representation of a deceased man. At the hearing on the motion, defendant argued that a positive verdict on her behalf would leave no party against whom to assert a petition for attorney fees. In response, plaintiff's attorney, Margaret Lavanish, from the Krasnow law firm, stated that "whoever is the plaintiff in this case has absolutely nothing to do with the defendant's liability." The court reserved its ruling on the issue of standing. On the next court date, the trial court said, "[w]ell, at this point, I'm going to let the previous judge's ruling as to the appointment stand." A bench trial then commenced. On September 28, 2007, the circuit court found in favor of defendant and ordered the return of her $5,000 earnest money plus interest. In the court's oral ruling, the judge stated that he would "review an affidavit of attorneys' fees." A written order was entered on November 14, 2007, indicating the same.
¶ 12 On October 5, 2007, defendant filed a petition for attorney fees requesting an award of $39,448.50 against the Krasnow law firm, or "the appropriate party."
¶ 13 A letter dated November 28, 2007, from defendant's attorney to Michael references a telephone conversation held that day. In the letter, defendant's attorney provided that, in the telephone conversation, Michael said that he was not represented by the Krasnow law firm in the underlying case; that no estate was ever opened for Theodore; that he did not know plaintiff; that plaintiff did not act as a liaison between his family and Theodore's attorneys; that he did not know plaintiff was appointed as special representative for the lawsuit; that he was surprised to learn more than the $5,000 earnest money was involved in the lawsuit, i.e., attorney fees; and that he had never received a legal bill from the Krasnow law firm.
¶ 14 On December 3, 2007, defendant was granted leave to amend her fee petition, increasing her request to $57,915.75. Defendant's amended fee petition requested that fees be entered against Michael and plaintiff, individually and as an agent and employee of the Krasnow law firm, as well as Henry, Kosuri, and Lavanish. Defendant's motion further moved the court to bar the Krasnow law firm from further litigating the action where there was no party plaintiff as a result of Theodore's death.
¶ 15 Also on December 3, 2007, defendant filed a motion for Rule 137 sanctions, claiming the section 2-1008(b) motion violated Rule 137 where it was not properly verified by Theodore's heir, it did not request the appointment of Michael as special representative, and there was no proof that Theodore's heirs were provided notice of plaintiff's appointment. Defendant requested damages in the form of attorney fees.
¶ 16 On December 13, 2007, plaintiff filed a motion to reconsider the circuit court's order finding in favor of defendant on the breach of contract claim. Defendant filed a response.
¶ 17 Following a hearing on January 28, 2008, a briefing schedule was entered on defendant's motion to bar the Krasnow law firm from further litigating the case and the parties were ordered to file briefs on the issue of "the [section] 2-1008(b) service with respect to Michael Sarche being served with process on the amended fee petition." On February 19, 2008, the Krasnow attorneys filed an amicus brief, arguing that, although the firm did not represent Michael, Michael was not a party to the case and not subject to the court's jurisdiction. On the same date, defendant filed a brief arguing that the Krasnow law firm litigated "substantive and procedural issues on behalf of [Michael] while at the same time challenging the jurisdiction" over him. Defendant averred that the court had jurisdiction over Michael as the only real party in interest where he should have been provided notice of the appointment of plaintiff in 2005.
¶ 18 Also on February 19, 2008, plaintiff responded to defendant's motion to bar the Krasnow law firm from further litigating the case. An affidavit by Michael was attached to the response, in which he attested that he was Theodore's only surviving child; that he did not open an estate for his father because of Theodore's "very limited assets" and there being no requirement in Colorado to open an estate or have letters of office issued; that he authorized the Krasnow law firm to continue the litigation against defendant upon Theodore's death; that he received notice in March 2005 of the order appointing plaintiff as special administrator; that he did not "keep abreast of the progress of [the] case because it was being handled by Henry Krasnow, who had been [his] close and valued friend for over 50 years and in whom [he had] absolute trust; and that he never thought he was a party to the case, where Henry Krasnow represented Theodore's interests.
¶ 19 On May 1, 2008, defendant filed a supplement to her amended petition for attorney fees, increasing her request to $95,190.76.
¶ 20 On May 2, 2008, Michael's attorney filed an appearance on his behalf and moved to dismiss Michael from the case pursuant to section 2-301(a) of the Code (735 ILCS 5/2-301(a) (West 2004)) for lack of jurisdiction.
¶ 21 On June 6, 2008, the circuit court denied plaintiff's motion to reconsider its order finding in favor of defendant on the breach of contract claim.
¶ 22 The case was repeatedly continued for various reasons.
¶ 23 A hearing was held on March 12, 2010, on the petition for attorney fees, the Rule 137 motion for sanctions, and Michael's motion to dismiss. No testimony was presented, but the parties presented extensive arguments.
¶ 24 Ultimately, the circuit court granted Michael's motion to dismiss, finding Michael was never made a "proper party" to the case and, therefore, the court lacked jurisdiction. In addition, the circuit court ruled that the section 2-1008(b) motion violated Rule 137 because it was verified by plaintiff and did not seek to appoint Michael as special representative. In so finding, the court stated that the section 2-1008(b) motion was "improper" and "done for an improper purpose" where:
"the law firm wanted to continue the case rather than going through the procedures necessary to make sure that they had the proper party, *** Dr. Michael Sarche; that they decided they wanted to proceed and that they appointed an employee of the firm as special representative just for the purpose of continuing the case, but they did not follow the correct procedures in doing so. So there was a violation of Rule 137."
The court took the matter of determining the appropriate sanction under advisement, but found defendant was entitled to attorney fees from plaintiff as special representative. In addition, the circuit court denied defendant's motion to bar the Krasnow law firm from further litigation. A briefing schedule was set for defendant's final fee petition and suggested sanctions. A written order was entered on July 30, 2010, memoralizing the court's findings, in which the court additionally provided that plaintiff violated section 2-1008(b) in the "filing" of the motion and that a sanction was appropriate.
¶ 25 On April 5, 2010, defendant filed her third amended petition for fees requesting $123,466.76.
¶ 26 On May 17, 2011, the circuit court granted defendant's Rule 137 motion for sanctions, awarding $114,470 against plaintiff "as agent and employee" of the Krasnow law firm. In so ruling, the circuit court said:
"Here there was a clear Rule 137 violation by the agents and employees of the law firm of Krasnow Saunders Cornblath, L.L.P. ('Krasnow') by the filing of a defective section 2-1008(b) Motion appointing Krasnow employee Carol Mohica, 'Special Representative' for the deceased plaintiff, Dr. Theodore Sarche. This court finds that Ms. Mohica acted at the direction of Krasnow and its attorneys and further, that all of the extensive subsequent litigation and the costs borne by the Defendants is the direct result of this violation. This court finds that if the rules of Civil Procedure had been followed, either the case would have ended with the Plaintiff[']s death (as required by Clay v. Huntley, 338 Ill. App. 3d 68 (*** 1980) and a slew of other cases holding that the attorney's representation of a deceased client terminates with the client's death), or the law firm could have proceeded by getting a bona fide 'Special Representative' (such as Dr. Michael Sarche) to authorize Krasnow to continue the litigation. Krasnow did neither and this ...