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PRO Sapiens LLC v. Indeck Power Equipment Co.

Court of Appeals of Illinois, First District, Third Division

September 30, 2019

PRO SAPIENS LLC and EMMANUEL JACOB, Plaintiffs-Appellants,
v.
INDECK POWER EQUIPMENT CO., Defendant-Appellee.

          Appeal from the Circuit Court of Cook County No. 14 L 5730 Honorable Patrick J. Sherlock, Judge Presiding

          PRESIDING JUSTICE ELLIS delivered the judgment of the court, with opinion. Justices McBride and Cobbs concurred in the judgment and opinion.

          OPINION

          ELLIS, PRESIDING JUSTICE

         ¶ 1 Pro Sapiens LLC sued Indeck Power Equipment Co. (Indeck) for breach of contract, unjust enrichment, and a violation of the Sales Representative Act, alleging that Indeck stiffed Emmanuel Jacob, Pro Sapiens's salesman, out of a commission from the sale of two Indeck boilers to Venezuela's state-owned oil and gas company. During discovery, Indeck learned that Jacob lied in discovery and destroyed evidence-specifically, three years' worth of emails from his personal Yahoo email account. From there the case went off the rails for Pro Sapiens: The court dismissed its case with prejudice pursuant to Illinois Supreme Court Rule 219 (eff. July 1, 2002) and, to boot, imposed monetary sanctions against both Pro Sapiens and Jacob personally.

         ¶ 2 Jacob filed a pro se notice of appeal for himself and Pro Sapiens. But Jacob is not a lawyer, so the notice of appeal was defective as to Pro Sapiens. On Indeck's motion, this court dismissed Pro Sapiens from this appeal for failure to file a notice of appeal. So the only appellant properly before us is Jacob.

         ¶ 3 Jacob raises several challenges to numerous orders the circuit court entered, including an order granting Pro Sapiens's first attorney leave to withdraw, the order dismissing Pro Sapiens's suit as a discovery sanction, and an order denying a motion to reconsider the dismissal. But those claims belong to Pro Sapiens and only Pro Sapiens. In the absence of an appeal by Pro Sapiens, we lack jurisdiction to consider those claims. To that extent, we must dismiss the appeal.

         ¶ 4 The imposition of sanctions against Jacob personally-the one issue Jacob obviously may raise-is another story. Because Jacob was never served with process sufficient for the court to obtain personal jurisdiction over Jacob, the order of sanctions against Jacob individually is void. We vacate that order only as to Jacob personally and remand for further proceedings.

         ¶ 5 BACKGROUND

         ¶ 6 This case has an enormous record and convoluted procedural background. We will make our best attempt at brevity, sticking to only the necessary information to resolve this appeal.

         ¶ 7 I. General Background

         ¶ 8 The nonparty appellant, Emmanuel Jacob, is a resident of Arizona. From 1994 to 2012, Jacob worked at Honeywell selling control systems for oil refineries. From 2012 to 2015, Jacob worked for a company called SPT Group, where he sold software for the oil industry. In March 2015, SPT laid off Jacob. Thereafter, Jacob began working full-time at Pro Sapiens.

         ¶ 9 Plaintiff Pro Sapiens is an Arizona limited liability company which, according to Jacob, "sells equipment solutions" to "various companies" in Latin America. Pro Sapiens was formed by Jacob in 2008 and has two employees, Jacob and his wife.

         ¶ 10 Defendant Indeck is an Illinois corporation based in Wheeling. Indeck sells and rents boilers for industrial applications, including, as relevant to this case, oil refineries.

         ¶ 11 Petroleos de Venezuela, S.A., (PDVSA), is Venezuela's state-owned oil and natural gas company. Carlos Moreno and Ciro Pena are former PDVSA employees.

         ¶ 12 In sum and substance, Jacob claimed that he brokered the sale of two boilers on Indeck's behalf to PDVSA for a PDVSA oil refinery, and that Indeck had agreed to pay Jacob a commission of ten percent on the sale. Indeck denied that it owed Jacob anything.

         ¶ 13 Multiple lawsuits followed, and in the third one-the one before us-Indeck naturally sought to discover any communications Jacob may have had with PDVSA, including former employees Moreno and Pena, whom Jacob claimed were instrumental in the transaction he allegedly brokered.

         ¶ 14 II. Motion for Rule 219 Sanctions

         ¶ 15 Again summarizing an extremely long journey: Indeck ultimately came to the conclusion that Pro Sapiens and Jacob had committed egregious discovery violations, including deleting emails before a court-ordered forensic review of Jacob's emails; lying in discovery about the existence of such emails; and omitting the existence of a second email account.

         ¶ 16 On May 24, 2016, Indeck filed a motion for Rule 219 sanctions. In that motion, Indeck asked the court to dismiss Pro Sapiens's lawsuit and impose monetary sanctions against Pro Sapiens and Jacob, personally.

         ¶ 17 It is undisputed that the notice of this Rule 219 motion was sent to counsel for the sole plaintiff in the case, Pro Sapiens, and only to that attorney. No notice of motion or subpoena was sent to Jacob in his personal capacity.

         ¶ 18 Counsel for Pro Sapiens requested additional time to brief the sanctions issue and to introduce expert testimony on its behalf to rebut the claims in Indeck's motion. But neither Pro Sapiens or Jacob, individually, ever filed a written response. Nor did counsel for Pro Sapiens (or Jacob or any lawyer appearing on Jacob's behalf) appear at the hearing on the motion on July 20, 2016. At the end of the hearing, the court made the following ruling:

"I have had a chance to review the motion long ago as well as in preparation for today's hearing, and I think I conveyed a message to Pro Sapiens' counsel, Mr. Utreras, that the motion or the motions raised serious issues that needed a response; and indeed, I continued the trial date, which I almost never do, because of the seriousness of the issues that are raised in the motion.
*** No response was ever filed. So what I'm left with is a series of unrebutted contentions about the destruction of documents, about the destruction of e-mails, about the failure to produce information that is highly relevant to the case, a series of allegations, all supported by affidavit and other forensic information, that Mr. Jacob took upon himself after there was an order by this Court to not only preserve information but also to produce information so that Indeck could get to the bottom of Pro Sapiens' case but also so that Pro Sapiens could get to the bottom of the defense being set forth by Indeck Power in this case.
It's the Court's view that Mr. Jacob and Pro Sapiens have violated the Court's order in such a gross way in the destruction of documents that are related to this case that the Court has no other recourse than to dismiss this case as a sanction for the various discovery violations that have taken place up through very shortly before the start of the anticipated trial of this case. *** I've reviewed the information that was deleted by Mr. Jacob, or at least that was discovered as deleted by Mr. Jacob. There's just no excuse for the activity that's gone on, and the Court can only assume that the reason Mr. Utreras is not here today is because he really has no response to the very, very serious allegations that are being leveled against Mr. Jacob as it relates to his obligations in this litigation.
So I will dismiss the case with prejudice as a result of the discovery violations that the plaintiff has engaged in. I will order sanctions both against Pro Sapiens, LLC, and Mr. Jacob, including monetary sanctions in the award of attorneys' fees that you will submit a petition for as well as the expert costs that Indeck Power has incurred in connection with this litigation."

         ¶ 19 On August 17, 2016, Indeck filed a petition for fees to be awarded as a result of the Rule 219 monetary sanctions against Pro Sapiens and Jacob, requesting $332, 338.92 in attorney fees, expert fees, and costs.

         ¶ 20 III. Motion for Rule 137 Sanctions

         ¶ 21 Right around this time, also in August 2016, Indeck filed a motion for sanctions under Illinois Supreme Court Rule 137 against Pro Sapiens and its first lawyer on the case, Mr. Landis. Although this Rule 137 motion is not before us on appeal, it plays a small role in this story. The gist of that motion was that this lawsuit was not filed in good faith in the first instance, and thus Pro Sapiens and the attorney who filed it, Mr. Landis, should be sanctioned. But unlike the Rule 219 motion, which sought sanctions for all conduct occurring after the discovery violations began, this motion alleged that all attorney fees and costs should be recoverable, from the outset of the case, because the case was fraudulent from the start. And also unlike the Rule 219 motion, the Rule 137 motion was not directed at Jacob in his individual capacity.

         ¶ 22 IV. Further Proceedings on Rule 219 Motion

         ¶ 23 On August 22, 2016, Pro Sapiens (not Jacob individually) filed a motion to vacate or reconsider the court's July 20 order that dismissed the case with prejudice and imposed sanctions against Pro Sapiens and Jacob individually under Rule 219. The motion to reconsider argued that Pro Sapiens's failure to file a response or attend the July 20 hearing was attributable solely to its attorney, Utreras. Utreras explained that around the time Indeck filed its Rule 219 motion, he was overburdened by other professional obligations, as well as personal family difficulties, that simply overwhelmed him. The motion argued that Pro Sapiens's newly retained expert's conclusion would demonstrate that Pro Sapiens was not guilty of flagrant discovery abuses.

         ¶ 24 On October 26, 2016, the court denied Pro Sapiens's motion to reconsider the Rule 219 sanctions. In its oral pronouncement, the court explained:

"I don't think in my years as a judge I have ever dismissed a case pursuant to 219 because I bend over backwards in an effort to avoid doing that. And I think in this case, I did do that. I struck a trial date. I never strike trial dates.
I granted you relief in the form of having a second bite at the apple, so to speak, when you said that you needed an expert, even though you should have known that you needed an expert in the first instance. Every opportunity was given to you and to your client to come forth with some evidence that the defendant's motion should be denied, and that opportunity was not taken. So on July 20th, the case was dismissed. This motion is no[w] the third bite at the apple. ***
I find no basis to vacate my prior ruling. I'm not going to vacate my prior ruling, and I'm not going to reconsider the order."

         ¶ 25 V. November 9, 2017 Hearing on Rule 137 Motion

         ¶ 26 The parties appeared for another hearing on November 9, 2017. Recall that the court's order imposing Rule 219 sanctions was entered in July 2016, so the parties were now nearly a year and a half removed from that date. By the time of this November 2017 hearing, the trial court had granted the Rule 219 motion, dismissing the case and imposing monetary sanctions, and it had denied a motion to reconsider that ruling. But the court had yet to fix the amount of monetary sanctions-the amount of attorney fees to which Indeck would be entitled. And Indeck's separate Rule 137 motion for sanctions against Pro Sapiens and its first attorney, Mr. Landis, was still pending.

         ¶ 27 At this November 2017 hearing, Jacob himself was present, along with Pro Sapiens's counsel, Mr. Utreras. The trial court told Jacob that it wanted to ensure that he understood that Indeck's Rule 137 motion was seeking over $500, 000 in attorney fees, dating back to the beginning of the case, and Pro Sapiens had yet to file a written ...


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