Court of Appeals of Illinois, First District, Second Division
KNM HOLDINGS, INC., as Assignee of Building Maintenance Systems, Inc., Plaintiff-Appellee,
DAVID A. JAMES; PAMELA S. STANISH; JAMES SOLUTIONS, INC.; ALL ABOUT SNOW AND MULCH, INC.; and 1817 EPPING PLACE, SCHAUMBURG, ILLINOIS, Defendants-Appellants.
from the Circuit Court of Cook County. No. 08 CH 37329 &
08 L 51015 The Honorable Kathleen M. Pantle, Judge,
JUSTICE HYMAN delivered the judgment of the court, with
opinion. Presiding Justice Pierce and Justice Neville
concurred in the judgment and opinion.
1 Intentionally ignoring or flouting numerous discovery
orders can lead to the entry of severe sanctions, including a
default judgment. Here, repeated failures to comply with
discovery ultimately led the trial court to enter an order of
default judgment against defendants in the amount of about
$1.2 million. Not until nearly two years later did defendants
seek to vacate the default judgment under section 2-1401 of
the Code of Civil Procedure (Code) (735 ILCS 5/2-1401 (West
2014)). That petition, however, was dismissed on the grounds
defendants did not exercise due diligence in the underlying
proceeding or in filing the section 2-1401 petition.
2 Defendants appeal, arguing (i) the default judgment was not
an appropriate sanction for their failure to comply with the
court's discovery orders; (ii) their failure to exercise
due diligence was their attorney's fault; and, (iii) at
minimum, they should be allowed to challenge the award of
3 According to an ancient maxim, the law helps those who are
watchful and not those that are sleepy, negligent, or (we
add) derelict in regard to discovery. For over two years,
defendants repeatedly failed to comply with discovery
requests. Then, after learning of the default judgment, they
waited nearly another two years before filing a motion to
vacate. Defendants were responsible for following their
case's progress, and any alleged misconduct by their
attorney was not a reasonable excuse for a lack of due
diligence in the original action or in filing the section
2-1401 petition. We affirm.
5 In September 2008, David James sued his former employer,
Building Maintenance Systems, Inc. (BMS), alleging wage
violations and conversion of property. A few weeks later, BMS
sued James, alleging he breached his fiduciary duties by
forming competing companies that diverted business away from
BMS and used BMS property and employees for his personal use.
The complaint also named James's wife, two of his
companies, and his residence as defendants. (BMS employee, Ed
Jurczak, also named as a defendant, is not a party to this
appeal.) The cases were consolidated, and the parties began
6 On November 18, 2009, the circuit court ordered that
written discovery be completed by February 22, 2010.
Defendants did not comply. On February 25, the circuit court
entered an agreed order extending the cut-off date for
written discovery until May 24. Discovery was again
continued. On June 22, 2010, the circuit court ordered
defendants to respond to outstanding discovery by July 20.
Nearly a month later, on August 17, 2010, defendants filed a
"joint response" to the document requests. The
circuit court deemed this response inadequate because it (i)
was a group response rather than individual responses for
each defendant, (ii) was not properly labeled, (iii) did not
identify which requests the documents corresponded to, and
(iv) failed to provide substantive information. On September
9, 2010, the circuit court ordered defendants to individually
answer the interrogatories and document production requests
by September 30 and to hold a conference under Illinois
Supreme Court Rule 201(k) (eff. July 1, 2014) if outstanding
discovery issues remained.
7 On October 5, 2010, after the court-ordered deadline, BMS
received revised responses to its document requests. The
responses, identical to those provided in the August 17
"joint response, " consisted of multiple copies
with different titles to account for each defendant. On
October 25, the court again ordered the parties to have a
Rule 201(k) conference. The Rule 201(k) conference was never
8 In November, BMS filed a motion for sanctions under
Illinois Supreme Court Rule 219(c) (eff. July 1, 2002)
against defendants for failing to comply with the circuit
court's September 9, 2010, order regarding their
discovery requests and its order to hold a Rule 201(k)
conference. BMS asked the circuit court to sanction
defendants by striking James's claims and defendants'
affirmative defenses, entering a default judgment, and
awarding attorney fees and costs. On the same day,
defendants' attorney withdrew, and defendants were given
three weeks to retain new counsel. Meanwhile, the motion for
sanctions was continued.
9 Defendants' new attorney appeared, and, at the next
status hearing, on January 14, 2011, the circuit court
ordered defendants to correct the deficiencies in the
document production and submit the additional responsive
documents by February 11. The court also gave defendants
until February 11, to respond to BMS's motion for
sanctions and set the matter for a hearing.
10 On March 25, 2011, after a hearing of BMS's motion for
sanctions, the circuit court awarded BMS attorney fees but
denied its request for default judgment. The court stated
that "[d]ismissal of a cause of action or sanction which
result in a default should only be employed when it appears
that all other enforcement efforts of the court have failed
to advance the litigation. *** Furthermore, dismissal of a
cause of action for failure to comply with court orders is
only justified when the dilatory party has shown a deliberate
and contumacious disregard for the court's
authority." The court concluded that "[d]efendants
have not shown a deliberate and contumacious disregard for
the court's authority thus far." The court ordered
defendants to comply with all outstanding discovery requests
within 14 days and warned that their failure to do so
"will warrant additional sanctions."
11 Despite the admonition, defendants again failed to comply
with BMS's discovery requests, and, on May 17, 2011, BMS
filed another motion for sanctions. The motion stated that
despite the circuit court's March 25 order requiring
defendants to produce outstanding discovery by April 12,
defendants had not produced the documents or communicated
with BMS. The motion sought dismissal of James's
counterclaims with prejudice, dismissal of defendants'
affirmative defenses, and the entry of a default ...