December 23, 2008

Old Documents Not Preserved For Evidence Not A Basis To Uphold Summary Judgment For American National Bank

More than $1.3 million was embezzled from General Automation, Inc. General’s payroll deposit checks were made payable to its bank, American National Bank and Trust. General’s accountant got the checks before they were deposited with the bank, and deposited them in his personal account.

General Automation settled its claims against the accounting firms with which its embezzler-accountant was associated. General then assigned its claims against American National Bank to Continental Casualty Company, which was the insurer of one of the accounting firms. As assignee, Continental sued American National Bank for breach of contract and violation of the Illinois Fiduciary Obligations Act.

American National asked for and received summary judgment from the trial court. Continental appealed.

Arguing in support of its summary judgment, American claimed the trial court should have granted American’s motion for sanctions against General for failure to preserve evidence – i.e., certain financial records dated around 1993. The First District Illinois Appellate Court disagreed, and ruled that the failure to preserve and produce the documents did not form a basis to affirm the summary judgment. Here is the court’s rationale:

ANB [American] sought discovery of certain financial documents from around the year 1993 that ANB hoped would answer the question of when GAI [General Automation] reasonably should have discovered that Mr. Cohn [accountant] had embezzled the payroll tax deposit checks. The documents sought were approximately 11 or 12 years old. Plaintiff, GAI, and Starr [General’s owner] all searched for the documents, but could not find them. There is no evidence that the documents were purposely destroyed. Further, ANB has access to other documents relevant to the discovery issue, and it has the right to depose Mr. Cohn and Mr. Starr in order to seek facts regarding this issue. We cannot say that the plaintiff's failure to preserve evidence was deliberate, contumacious, or an unwarranted disregard of the court's authority; therefore, plaintiff's failure to preserve evidence cannot serve as a basis to affirm the grant of summary judgment against plaintiff.

In the end, the appellate court ruled that questions of material fact precluded summary judgment. The whole case, Continental Casualty Co. v. American National Bank and Trust Company, No. 1-07-0627 (9/25/08), by clicking here.

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December 21, 2008

Tyco Denied Damages Retrial Because Liability And Damages “Not So Distinct”

Tyco Electronics was unhappy with surge protection equipment it purchased for inclusion in a product it sold to a customer. So Tyco sued Illinois Tool Works, the manufacturer of the equipment. A jury trial ended in a $2 million judgment for Tyco. Tyco still wasn’t pleased, so it asked the trial court for a retrial on damages only. When the trial court denied that motion, Tyco appealed.

The First District Illinois Appellate Court sided with ITW and affirmed the denial of a damages retrial. The appellate court agreed that a damages-only trial would not be fair to Tyco because “liability and damages are not so distinct.”

If the plaintiff seeks a new trial limited to the issue of damages and this court determines that a limited issue trial is not appropriate, in the absence of an alternative motion for a retrial on all issues, the jury’s verdict will be affirmed even if it is found to be inadequate … We conclude that Tyco was not denied a fair trial on the issue of damages, the jury’s verdict was not contrary to the manifest weight of the evidence, and even if the evidence failed to support the jury’s verdict, a new trial which would be limited to the issue of damages would be inappropriate because of the linkage between the liability and damage issues presented.

Read the whole case, Tyco Electronics Corp. v. Illinois Tool Works, No. 1-07-3539 (9/2/08), by clicking here.

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December 17, 2008

Hip Hip . . . . It’s A Number

The entry below is the 250th in this blog. I feel like I should celebrate, but, you know, as my good friend Howie says, “It’s a number.”

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December 17, 2008

“Necessary Step” Exception Overcomes Deficient Notice Of Appeal

Two residents of the Elgin [Illinois] Mental Health Center, both committed to the unit for the criminally insane, challenged certain policies at the Center that limited or prohibited their access to their property and money. The residents asked for summary judgment. But their motion raised events that were not alleged in their complaint, and some that involved a patient who was not a plaintiff in the case. The Center filed its own motion for summary judgment, and also asked the trial court to strike the parts of the residents’ motion that raised the new allegations.

The trial court granted summary judgment to the Center, and granted the Center’s motion to strike the allegations that were raised for the first time in the residents’ motion for summary judgment. The court also denied the residents’ summary judgment request.

The residents appealed. But their notice of appeal did not state they were appealing the order granting the Center’s motion to strike the new allegations in the residents’ summary judgment motion. So the First District Illinois Appellate Court initially considered whether it had jurisdiction to hear an appeal of that order.

The appellate court acknowledged the basic proposition in Illinois Supreme Court Rule 303(b)(2) that states “unequivocally that a proper notice of appeal ‘shall specify the judgment or part thereof or other orders appealed from and the relief sought from the reviewing court.’” An improper notice of appeal would deprive the appellate court of jurisdiction.

But the court ruled there was an “exception for rulings that were necessary steps to the judgment named in the notice.” In this case, the court found that the order striking the new allegations was a “necessary step” in reaching the Center’s summary judgment. So the court accepted jurisdiction over the appeal. Here is the court’s ruling.

The [necessary step] exception applies to this case. In its summary judgment ruling, the trial court held that there was no issue of material fact for trial. Striking some of the issues raised in plaintiffs’ … motion for summary judgment was a necessary step to finding that there was no issue of material fact.

The residents’ victory on jurisdiction was fleeting. The appellate court ultimately ruled that the trial court was correct to strike the new allegations in the residents’ motion. Read the whole opinion, Filiung v. Adams, No. 1-07-2787 (12/1/08), by clicking here.

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December 14, 2008

New Evidence In Reconsideration Motion Saves Appellate Jurisdiction

Jennifer Keener’s daughter was arrested by the City of Herrin Police for underage intoxication. The police allowed the daughter to leave the police station while she still was intoxicated. She was struck by an automobile and killed.

Jennifer sued the City of Herrin for wrongful death. Herrin moved to dismiss Jennifer’s complaint. Several weeks later, the trial court granted the motion to dismiss. But despite directing the order of dismissal to be mailed to the parties’ attorneys, they were not

Discovery in the case continued, including a deposition of the officer who arrested Jennifer’s daughter. The attorneys found out about the dismissal when they appeared in court for a status conference, about 11 months after the dismissal order was entered.

Apparently realizing that the time to appeal the dismissal had long passed, Jennifer’s lawyer filed a motion to reconsider the dismissal under § 2-1401 of the Illinois Code of Civil Procedure (relief from judgments more than 30 days old). The motion included testimony from the arresting officer’s deposition, evidence that was not available when the trial court ruled on Herrin’s the motion to dismiss.

Apparently realizing that the blown deadline to appeal was not Jennifer’s lawyer’s fault, the trial court granted the motion to reconsider, then immediately granted another dismissal of Jennifer’s complaint. Jennifer then filed a timely notice of appeal of the trial court’s second dismissal.

Herrin did not move to dismiss the appeal for lack of jurisdiction, but the Fifth District Illinois Appellate Court reviewed its jurisdiction to hear the appeal on its own motion. The issue was whether Jennifer could circumvent the 30-day rule to file an appeal by getting the trial court to vacate the original dismissal on a motion to reconsider, only to immediately dismiss the complaint again.

Herrin argued that the usual rules applied: (1) It was Jennifer’s responsibility to monitor the case, so the clerk’s failure to notify the parties about the original dismissal did not extend the time for Jennifer to appeal; (2) A party cannot get around the 30-day rule by asking for reconsideration under § 2-1401.

The appellate court sided with Jennifer. The usual rules did not apply to Jennifer’s case because she submitted new evidence that was not before the trial court when it made its original decision to dismiss her complaint. Here’s what the court said:

Jennifer's section 2-1401 petition did not simply request the circuit court to reenter the same dismissal order to restart her appeal clock; instead, she presented the circuit court with new evidence (deposition testimony of Officer Laird) of which the court had no knowledge when it entered its first dismissal order. Jennifer was not seeking the reentry of the same order. She was urging the court to deny the defendant's motion to dismiss. A section 2-1401 petition is the proper mechanism for bringing this additional evidence to the circuit court's attention … Jennifer's section 2-1401 petition was not filed merely as a subterfuge to extend the time requirement of Rule 303 (a) [30 days to file appeal].

Read the whole opinion, Keener v. City of Herrin, No. 5-06-0501 (10/6/08), by clicking here.

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December 10, 2008

Bank’s Petition To Vacate Default Judgment Untimely But Court Hears Appeal Anyway

In this confusing mortgage foreclosure case, a default judgment was entered in favor of Washington Mutual Bank against Archer Bank. About six months later, Archer asked the court to vacate the default. Archer’s motion to vacate relied on two sections of the Illinois Civil Procedure Code − § 2-1301(e) (setting aside default judgments); § 2-1401 (relief from judgments).

The trial court denied Archer’s motion to vacate. Eventually, a final and appealable order distributing the proceeds of the sale of the property was entered. Archer appealed and argued that the default should have been vacated under § 2-1401. In the appellate court, Archer dropped its § 2-1301(e) argument.

Appeals from § 2-1401 petitions are governed by Illinois Supreme Court Rule 304(b). The rule requires an appeal to be filed within 30 days. Although Archer filed an appeal within 30 days of the final distribution order, it came long after the court ruled on the § 2-1401 petition.

We have no doubt that Archer's notice of appeal gives us jurisdiction to review the outcome of the foreclosure case. But Archer's brief complains only of the trial court's dismissal of Archer's request to vacate the default in that request's aspect as a section 2--1401 petition. Under Supreme Court Rule 304(b)(3) … an order resolving a section 2--1401 petition is immediately appealable. When rule 304(b) makes an order immediately appealable, that appeal is not elective--any claim of error is lost if not raised then … Indeed, because a section 2--1401 petition begins a separate action … the resolution of the petition ends the entire action, so no other time to appeal could exist.

But Archer got another bite at the apple anyway. The appellate court ruled that Archer’s § 2-1301 petition became reviewable after the final distribution order was entered, so Archer’s appeal was timely. And although Archer did not brief its § 2-1301 argument, the Second District Illinois Appellate Court took the case on that basis anyway. In the end, the appellate court sent the case back to the trial court to consider Archer’s § 2-1301 petition.

Read the whole opinion, Washington Mutual Bank v. Archer Bank, No. 2-07-0074 (9/15/08), by clicking here.

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December 3, 2008

Trial Court’s Abuse Of Discretion Not Enough To Reverse Medical Malpractice Judgment

Sandra Downey sued her doctor, Gary Dunnington, for medical malpractice when a mastectomy and reconstruction he performed resulted in permanent disfigurement. After a jury trial, judgment was entered for Dunnington.

On appeal, Sandra argued that it was reversible error to admit evidence that Dunnington’s father was a minister and his mother was a stay-at-home-mom. The Fourth District Illinois Court of Appeals agreed that the evidence was “wholly irrelevant to the issues in this trial, and the use of such evidence constitutes an aberrant practice that should not be tolerated.”

Despite the trial court’s abuse of discretion in allowing the evidence, the appellate court ruled it was not bad enough to reverse the defense judgment.

To reverse the verdict, we would have to attribute to the jury a simplemindedness and even a viciousness that are implausible. We would have to infer that the jury considered Dunnington to be a paragon of virtue because, decades ago, he was raised by a father who was a minister and a mother who was a housewife. We also would have to infer that, in its verdict, the jury punished plaintiff because, compared to Dunnington, she had an unfortunate childhood. We choose to believe better of the jury. We conclude that the prejudice was not great enough to have affected the verdict.

The appellate court also took exception to Downey’s argument against a “rigid” application of the “harmless error doctrine.”

It is unclear what plaintiff means by applying the doctrine "rigidly." There is no question of rigidity or flexibility. Either the error is harmless or not. Either the error changed the result, or it did not … Either the error "substantially prejudiced a party and affected the outcome below," or it did not … And the burden is on the party seeking reversal to establish such prejudice … The logic of incentives is undeniable, but the alternative to the plain-error doctrine would be requiring perfect trials. That alternative is impracticable.

Get the whole opinion, Downey v. Dunnington, No. 4-07-0681, modified on 8/21/08, by clicking here.

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