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In re Marriage of Kane

Court of Appeals of Illinois, Second District

December 29, 2016

In re MARRIAGE OF GREGORY PHILLIP KANE, Petitioner-Appellee, and HEATHER ANN KANE, Respondent-Appellee (Michael D. Canulli, Appellant).

         Appeal from the Circuit Court of Du Page County No. 14-D-1199, Honorable Linda E. Davenport, Judge, Presiding

          JUSTICE SPENCE delivered the judgment of the court, with opinion. Justices McLaren and Schostok concurred in the judgment and opinion.



         ¶ 1 This dispute concerns fees sought by attorney Michael D. Canulli, who represented petitioner, Gregory Phillip Kane, during a portion of his dissolution-of-marriage proceeding. Upon withdrawing as counsel, Canulli filed against Gregory a petition for setting final fees and costs pursuant to section 508(c) of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/508(c) (West 2014)), and against respondent, Heather Ann Kane, a petition for contribution pursuant to section 503(j) of the Act (750 ILCS 5/503(j) (West 2014)). In both petitions, Canulli sought an award of approximately $48, 000, which was in addition to the $37, 500 that he had already been paid. Following a full evidentiary hearing, the trial court denied Canulli's request for contribution from Heather, but it awarded Canulli $12, 500 on his petition against Gregory. Because the trial court's rulings on the petitions were not an abuse of discretion, we affirm.

         ¶ 2 I. BACKGROUND

         ¶ 3 Gregory and Heather were married in 1995 and have two minor children. In June 2014, Gregory filed a pro se petition for dissolution of marriage. He thereafter retained Canulli on July 1, 2014. Canulli and Gregory's written engagement agreement provided that, if Gregory had an objection regarding any of Canulli's billing statements, he would notify Canulli in writing within seven days of receiving the statement; otherwise the objection would be considered waived. Canulli filed his appearance on behalf of Gregory on July 23, 2014. On September 23, 2014, the trial court entered an order awarding Canulli $37, 500 in interim attorney fees, by way of a Qualified Domestic Relations Order that partially liquidated Heather's retirement account. Canulli's billing records indicated that from July 1, 2014, through September 23, 2014, he billed Gregory approximately $35, 000 in attorney fees. On January 15, 2015, Canulli filed a second petition for interim fees, seeking an additional $72, 000. According to the petition, said sum would satisfy his then-unpaid fees of $37, 000 and provide an additional retainer of $35, 000. ¶ 4 On February 4, 2015, Canulli sent Gregory an email stating that his balance due was nearly $43, 000, and that he would be willing to stay on the case if Gregory and Heather entered an agreed order to each receive $200, 000 from Heather's retirement account, and that Gregory would have to further agree to use $90, 000 to pay Canulli's fees, with the surplus funds constituting an additional retainer.

         ¶ 5 Gregory did not agree, and on February 10, 2015, Canulli filed an emergency motion to withdraw as counsel, alleging an inability to communicate with Gregory and unpaid attorney fees. On February 13, 2015, the trial court granted Canulli's request to withdraw his appearance and also granted him leave to file fee petitions. Gregory represented himself pro se for several weeks and then retained new counsel, who entered an appearance on April 23, 2015. Said counsel continues to represent Gregory in this appeal.

         ¶ 6 Within the dissolution action, on April 15, 2015, Canulli filed against Gregory a petition for setting final fees and costs pursuant to section 508(c) of the Act. Canulli also filed against Heather a petition for contribution pursuant to section 503(j) of the Act. The engagement agreement and 28 pages of itemized billing statements were among the exhibits attached to the fee petitions. In both petitions, Canulli acknowledged that he had already been paid $37, 500 in fees, but he alleged that he was owed an additional $48, 000.

         ¶ 7 On May 1, 2015, the trial court entered a judgment for dissolution of marriage, which incorporated a marital settlement agreement and a joint parenting agreement. Said judgment awarded Gregory and Heather joint legal custody of the children, awarded Heather primary residential custody of the children, established a visitation schedule, and awarded Gregory $27, 000 in maintenance in gross.

         ¶ 8 The trial court held a day-long evidentiary hearing on Canulli's fee petitions on July 2, 2015. The court took judicial notice of the court file and admitted into evidence Canulli's 28 pages of itemized billing statements, which reflected that he had billed Gregory for 268.7 hours from July 2014 until he withdrew in February 2015. At the hearing, Canulli testified, in relevant part, as follows. He had practiced family law for 38 years. Gregory filed a number of pleadings pro se, which Canulli agreed was not normal or customary. The total fees incurred in Canulli's representation of Gregory were $85, 529.86, of which he had been paid $37, 500. Canulli thus sought the remaining balance of more than $48, 000. Gregory and Heather had no ability to communicate or resolve any matters in the case, and "the case was litigious on both ends." Gregory was "unusually extraordinarily emotional" about the divorce. Gregory and Canulli exchanged emails almost every day, and sometimes more than once a day. Canulli also testified as to his billing practices that he recorded services contemporaneously when rendered and that he reviewed each bill for accuracy before mailing it to Gregory.

         ¶ 9 On cross-examination, Canulli was questioned regarding billing entries that opposing counsel asserted were unreasonable and unnecessary. Much of the hearing was spent going line-by-line through these entries. Canulli was questioned regarding time that he billed to review pleadings that, according to his billing statements, were filed by Heather when in fact no such pleadings had been filed. Canulli also billed for drafting motions that were not noticed or presented to the court and in some cases never filed. Canulli acknowledged that he did not prepare for trial, nor did he prepare a trial notebook, parenting agreement, or marital settlement agreement. On several days he billed more than 10 hours on Gregory's case.

          ¶ 10 Gregory testified as follows. He was employed by the Illinois River Winery, a corporation of which he was the sole shareholder and director and from which he drew an annual salary of $18, 000. Gregory was awarded the business by way of the parties' marital settlement agreement. The corporation had recently emerged from Chapter 11 bankruptcy, and Gregory operated it judgment-free. The gross receipts for the winery in 2014 were approximately $500, 000, and its checking account contained approximately $3000. The winery owned the real property it was situated on, but the property was encumbered by several loans, totaling approximately $200, 000. By way of the marital settlement agreement, Gregory was receiving maintenance from Heather, and he also received approximately $225, 000 from Heather's retirement account. In April 2015, Gregory received $20, 000 from the settlement of a personal-injury claim.

         ¶ 11 Heather then testified as follows. She earned approximately $134, 000 per year working at the Nielsen Company, and she had received a bonus in excess of $40, 000 in each of the prior three years. By way of the marital settlement agreement, Heather received the marital residence, which was valued at $355, 000 but encumbered by a mortgage of $208, 000 and a home-equity line of credit that exceeded $200, 000, both of which were solely Heather's responsibility. The marital residence was "under water." After the payment of her legal fees and a distribution to Gregory pursuant to the marital settlement agreement, her retirement account was worth approximately $200, 000. Also pursuant to the marital settlement agreement, Heather was responsible for $43, 000 of credit card debt incurred by the parties during the marriage. Heather paid tuition for the younger child to go to private school. She was paying maintenance to Gregory, and she was not receiving child support from him.

         ¶ 12 At the conclusion of the hearing, the court first observed that the parties stipulated to the reasonableness of Canulli's $304 hourly rate, which included a $9 administrative fee. In ruling on the reasonableness of Canulli's fees, the court found that "the majority of the work that was done was not necessary nor [sic] reasonable." The court agreed that Gregory was a "difficult" client who "contacted [Canulli] a lot, " but it stated that Canulli encouraged Gregory's "rogue behavior" by fostering, tolerating, and aiding him in filing pro se petitions, "which did nothing to control the litigation" and allowed Gregory to take "unreasonable positions." The court noted that only two hearings were held while Canulli was on the case and that no depositions were taken. The court stated that Canulli's billing statements, though very detailed, were "absolutely form over content at some point because [there were] no substantive things being done in the case." The court denied Canulli's request for contribution from Heather, but it found that he was entitled to a total of $50, 000 from Gregory for his work on the case. As Canulli had already been paid $37, 500, the court awarded Canulli $12, 500, to be paid by Gregory.

         ¶ 13 II. ANALYSIS

         ¶ 14 Before addressing the merits of the appeal, we must first address our own jurisdiction. We previously dismissed this appeal pursuant to In re Marriage of Knoerr, 377 Ill.App.3d 1042 (2007). Though no party had raised the issue, we discovered that a contempt petition filed by Gregory remained pending in the trial court when Canulli filed his notice of appeal on July 31, 2015. As the appealed order lacked a finding, pursuant to Illinois Supreme Court Rule 304(a) (eff. Jan. 1, 2015), that there was no just reason for delaying either enforcement or appeal or both, we dismissed the appeal as premature. In the dismissal order, we commented that Illinois Supreme Court Rule 303(a)(2) (eff. Jan 1, 2015) could potentially allow Canulli to establish the effectiveness of his July 31, 2015, notice of appeal. Reiterating the procedure set forth in Knoerr, we stated that, "if the trial court has already ...

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