HARTWELL P. MORSE III and DEBORAH B. MORSE, Plaintiffs-Appellants,
ANTHONY DONATI and CONCETTA DONATI, Defendants-Appellees.
from the Circuit Court of Du Page County. No. 15-CH-2123
Honorable Bonnie M. Wheaton, Judge, Presiding.
JUSTICE ZENOFF delivered the judgment of the court, with
opinion. Justices Hutchinson and Hudson concurred in the
judgment and opinion.
1 Plaintiffs, Hartwell P. Morse III and Deborah B. Morse,
sued defendants, Anthony Donati and Concetta Donati, for
breach of contract arising from a real estate transaction. In
appeal No. 2-18-0328, plaintiffs appeal the judgment of the
circuit court of Du Page County awarding them only $3608 plus
costs. In appeal No. 2-18-0686, plaintiffs appeal the order
denying Hartwell's petition for attorney fees. This court
consolidated the appeals. We now affirm.
2 I. BACKGROUND
3 Plaintiffs owned property commonly known as 282 Stonegate
in Clarendon Hills (the property). The property was
encumbered by two mortgages. Chase Bank held the first
mortgage. PNC Bank (the bank) held the second mortgage.
Plaintiffs defaulted on both mortgages.
4 In August 2015, plaintiffs entered into a contract for the
sale of the property to defendants for $410, 000. That
contract contained a "short sale addendum," meaning
that plaintiffs were selling the property for less than they
owed. The sale was contingent upon plaintiffs' obtaining
the bank's consent. On September 22, 2015, the bank agreed
to the short sale, provided that the bank received all of the
proceeds and that plaintiffs received $0 at closing. The bank
also agreed not to pursue a deficiency judgment against
5 On December 21, 2015, defendants refused to close, because
of a dispute with their lender. On December 28, 2015,
Hartwell, an attorney, filed suit on behalf of himself and
Deborah against defendants, for specific performance. On
April 12, 2016, plaintiffs sold the property to Susan
Kolinger for $375, 000, $35, 000 less than defendants'
contract price. That sale was also a short sale that was
approved by the bank on the same terms as outlined above. On
July 28, 2016, plaintiffs filed an amended one-count
complaint against defendants for breach of contract.
Defendants, in their original and amended answers, denied
that plaintiffs were damaged.
6 On July 26, 2017, plaintiffs filed a motion for summary
judgment. Before that motion was heard, plaintiffs filed a
43-page motion (omnibus motion) seeking $35, 000 in discovery
sanctions against defendants and their counsel. On August 11,
2017, defendants filed a cross-motion for partial summary
judgment, arguing that plaintiffs suffered no damages as a
result of the sale to Kolinger. Plaintiffs then filed a
second motion for sanctions against defendants on the ground
that the defenses raised in defendants' cross-motion for
summary judgment had not been disclosed in response to
plaintiffs' interrogatories. Defendants did not file
responses to either motion for sanctions. Those motions were
continued for hearing to November 29, 2017, along with the
cross-motions for summary judgment.
7 At the beginning of the hearing, Hartwell stated that he
was putting the sanctions motions aside and would be arguing
the merits of plaintiffs' summary-judgment motion. The
court then twice inquired whether Hartwell was arguing the
motions for sanctions or the motion for summary judgment.
Hartwell replied: "The motion for sanctions, Your Honor,
is not being argued at this moment. I put that aside."
He never returned to the motions for sanctions, and the court
did not rule on them.
8 The court found that defendants breached the contract.
However, the court ruled that whether plaintiffs sustained
damages was an issue of fact, to be resolved at trial. Prior
to trial, attorney Gregory Vacala filed his appearance as
cocounsel for plaintiffs.
9 On March 23, 2018, plaintiffs filed a motion to bar
defendants' "anticipated defenses" at trial, as
a discovery sanction. That motion referenced the omnibus
motion, but it did not specifically incorporate it. Vacala
argued that defendants had not raised as an affirmative
defense plaintiffs' failure to mitigate damages, or the
so-called "short-sale defense." The court ruled
that damages had earlier been explored and argued "at
great length" and that plaintiffs were not taken by
10 At the bench trial on April 2, 2018, Hartwell was the only
witness. He testified that the sale to defendants was a short
sale, for which plaintiffs would not receive any money at
closing. Hartwell admitted that the bank would have been
entitled to the additional $35, 000 if defendants had closed.
Hartwell then detailed the expenses that he claimed
plaintiffs incurred between the breach on December 21, 2015,
and the Kolinger closing on April 12, 2016 (the breach
period). In all, plaintiffs claimed damages of $48, 881.70.
Hartwell admitted that he had no paid receipts or canceled
checks for many of the utility bills and other charges for
which plaintiffs demanded reimbursement. Hartwell testified
that he was required to pay $1658.93 toward Col dwell
Banker's brokerage fees at closing. Hartwell also claimed
that Chase Bank and the bank charged an additional $10, 239
in interest during the breach period. Hartwell admitted that
plaintiffs did not pay any of that interest.
11 Defendants argued that plaintiffs were not damaged,
because the bank suffered the $35, 000 loss. To counter that
argument, plaintiffs contended that the "collateral
source rule" should apply to allow plaintiffs to recover
damages despite having no out-of-pocket loss. The
collateral-source rule, generally applied in tort cases,
provides that an injured party who receives benefits from a
collateral source, such as an insurance company, may still
recover full damages from the tortfeasor. Robert Hernquist,
Arthur v. Catour: An Examination of the Collateral Source
Rule in Illinois, 38 Loy. U. Chi. L.J. 169, 175 (2006).
Defendants argued that the bank bore the loss and was not a
collateral source. The court declined to apply the
12 The court found that plaintiffs proved out-of-pocket
damages of $3608 plus costs. The court arrived at that figure
by adding the amounts of the bills paid during the breach
period to the $1658.93 that plaintiffs paid at closing. The
court attributed the additional $1658.93 to title charges
occasioned by the interest that Chase Bank billed during the
breach period. The court entered its written judgment on
April 16, 2018. The court also gave the parties 30 days to
file petitions for attorney fees. Vacala filed a fee petition
for $6428.80, and Hartwell filed a fee petition for $82, 500.
Defendants filed a fee petition for $10, 950. On August ...