August 23, 2009

First District Illinois Appellate Court States Levels Of Appellate Review Of Punitive Damages Verdict

A group of townhome owners sued Carriageway Builders, the company that built the townhouse, and Carriageway’s owner, Wayne Johnson. Unfortunately, the foundation of the townhouse settled up to 10 inches, causing all sorts of damage to the building. A jury awarded the owners more than $1.3 million. A separate, non-jury hearing was held on a statutory consumer fraud action, and the trial court awarded punitive damages to the owners.

The builder appealed. Among other things, the builder claimed the punitive damages verdict should be reversed. The First District Illinois Appellate Court affirmed the punitive damages verdict. The opinion is notable because it identifies the three levels of appellate review the court used to assess the propriety of the punitive damages award under the consumer fraud act. Here is the analysis:

In reviewing a trial court's decision to award punitive damages, we take a three-step approach, considering (1) whether punitive damages are available for the particular cause of action, using a de novo standard, (2) whether, under a manifest weight of the evidence standard, the defendants acted fraudulently, maliciously or in a manner that warrants such damages, and (3) whether the trial court abused its discretion in imposing punitive damages.

The whole case, Linhart v. Bridgeview Creek Development, No. 1-07-2712 (5/20/09), is available b y clicking here.

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August 18, 2009

Pending Review Of Mother’s Finances Deprives Appellate Court Of Jurisdiction In Divorce Battle

Rosemary Mackin was unhappy with the trial court’s division of property and the denial of maintenance in her divorce case, so she appealed. The last order by the trial court disallowed child support, but set it “for review after the expiration of 180 days for examination of the financial circumstances of [mother] and a determination by the Court at that time as to an appropriate amount of child support to be paid from that date forward by [mother] to [father] for the support of the parties' two minor children." Rosemary filed her appeal after this order, but before the 180-day re-examination of her finances.

Rosemary and Thomas, her ex-husband, agreed that the appellate court had jurisdiction. But the Fifth District Illinois Appellate Court reviewed jurisdiction anyway and decided otherwise. Because the issue of child support was still under consideration in the trial court, a final order from which Rosemary could appeal had not been entered. The appellate court explained:

The court decided to wait 180 days to examine the financial circumstances of mother, at which time the court would then make a determination on an appropriate amount of child support to be paid by mother from that date forward for the support of the parties' children. Clearly the court did not resolve the issue of child support and therefore did not resolve the entire dissolution claim. Accordingly, the December 19, 2007, order [denying Rosemary’s post-trial motion disputing maintenance and division of property] was not final, and we lack jurisdiction over mother's appeal.

Rosemary and Thomas argued that “child support can be modified at any time pursuant to section 505(a) of the Illinois Marriage and Dissolution of Marriage Act … and that the effect of the court's order setting the matter of child support for review after 180 days is no different from when a parent motions for a modification of child support at some point after the initial order.” But the appellate court disagreed.

Under section 510 of the [Illinois Marriage and Dissolution of Marriage] Act … a modification of child support is warranted only upon a showing of a substantial change in circumstances … This is not the same situation. The court in this instance will set an amount of child support after the expiration of 180 days, whether or not mother's financial situation has changed. Again, we conclude that the court did not resolve the entire dissolution claim and that we lack jurisdiction to hear mother's appeal.

Get the whole case, IRMO Mackin, No. 5-08-0028 (5/28/09), by clicking here.

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August 16, 2009

Pending Motion To Disqualify Attorney Deprives Appellate Court Of Jurisdiction To Consider Custody Order

Neringa Valkiunas and Jeffrey Olsen were in a protracted custody battle. Neringa first appealed from a custody modification order that made Jeffrey residential custodian. That first appeal was dismissed by the Second District Illinois Appellate Court because, when the appeal was filed, two civil contempt petitions were pending in the trial court. The pending contempt petitions rendered the notice of appeal premature.

Before the dismissal of the appeal, Jeffrey filed a motion in the trial court to disqualify Neringa’s lawyer. After the trial court ruled on the contempt petitions, Neringa moved for rehearing of the dismissal in the appellate court. The request for a rehearing was granted. But unknown to the appellate court at that time, the motion to disqualify still was pending in the trial court.

So the question was: Did Neringa’s notice of appeal give the appellate court jurisdiction, or did the pending motion to disqualify Neringa’s lawyer deprive the appellate court of jurisdiction?

The appellate court ruled that the motion to disqualify was a “pending claim,” so Neringa’s notice of appeal was premature and there was no appellate jurisdiction. Here’s how the court explained it:

"If an order does not resolve every right, liability or matter raised, it must contain an express finding that there is no just reason for delaying an appeal." The June 24, 2008, order disposing of the contempt petitions did not dispose of all the claims, and the February 8, 2008 [making Jeffrey residential custodian], order from which petitioner appealed did not contain Rule 304(a) language; thus, the notice of appeal is still premature and is ineffective to confer jurisdiction on this court.

The dispute was complicated further because Illinois Supreme Court Rule 367 limited a party to one petition for rehearing. As the matter stood, Neringa had used that option and was not entitled to do so again. In apparent deference to the convoluted state of the law in this area, the appellate court vacated “that part of our order of July 28, 2008, granting the petition for rehearing. Thus, the petition for rehearing is still pending. Petitioner [Neringa] now must either obtain a Rule 304(a) finding [allowing an interlocutory appeal] or obtain an order or orders resolving the motion to disqualify and any other pending claims in this matter and then supplement the record with the appropriate order or orders. Upon petitioner's demonstrating to this court that we have jurisdiction, we will rule on the petition for rehearing.”

Read the whole opinion, IRMO Valkiunas, No. 2-08-0279(12/18/08), by clicking here.

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August 15, 2009

Insurer’s Failure To Supplement Deficient Damages Evidence Not Invited Error

Michael Carey and James Fann owned a mixed-use building (residential and dental office) in Chicago, Illinois. The building was substantially damaged in a fire. Carey and Fann made a claim to their insurer, American Family Insurance, but the company denied coverage. Carey and Fann sued American Family. After a bench trial, Carey and Fann were awarded more than $427,000.

American Family appealed. At trial, Carey’s and Fann’s damages expert neglected to put in evidence of depreciation of the building, a required element under Illinois law. Carey and Fann argued that American Family waived the argument that the damages evidence was deficient. Their argument relied on the “invited error” doctrine − American Family’s acceptance of the damages calculation and the company’s failure to put in its own evidence of depreciation.

The First District Illinois Appellate Court rejected Carey’s and Fann’s position. The court ruled there had been no “invited error” or waiver: American Family sufficiently reserved the right to dispute damages and it was not the insurer’s responsibility to assure the building owners’ damages evidence was appropriate. Here is the court’s rationale:

It is true that defendant [American Family] agreed to waive all foundational requirements regarding the admission of Spoerlein's [Carey’s and Fann’s damages expert] testimony and report. However, defendant specifically reserved objection to the testimony and report on all other bases. Further, defendant subjected Spoerlein to cross-examination regarding her estimate and in particular the lack of a calculation considering depreciation. During closing argument, defendant specifically argued that plaintiffs [Carey and Fann] failed to sustain their burden of proving damages to the subject building under the policy because the only evidence submitted concerning damage to the subject building was Spoerlein's testimony of replacement cost rather than actual cash value called for by the policy.

Plaintiffs' [Carey and Fann] argument regarding defendant's American Family] failure to produce evidence of depreciation is similarly unpersuasive. As noted, it is a plaintiff's burden to prove damages to a reasonable degree of certainty … Defendant had no burden of proof and was not required to prove plaintiffs' case.

Even though the damages evidence was inadequate, instead of an outright reversal the appellate court sent the case back to the trial court for a new trial on damages. Read the whole case, Carey v. American Family Brokerage, No. 1-07-3261 (5/11/09), by clicking here.

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August 12, 2009

Summary Judgment On One Of Two Counts Final And Appealable As To Entire Complaint

When George Smith was a police officer in Chicago, he contributed to the Police Pension Fund. When Smith resigned from the police force, the Police Pension Fund refunded his $18,000 contribution. A few years later, Smith became a state court judge in the Circuit Court of Cook County, Illinois. He made salary contributions to the Judicial Pension Fund during the seven years he was on the bench.

After he retired as a judge, Smith returned the $18,000 to the Police Fund and asked for the money to be transferred to the Judicial Pension Fund. He also asked for his police service credits to be applied to his judicial pension. The Police Fund complied, but the Judicial Fund refused the money and to apply the police service credits. The Judicial Fund stated it was prohibited from complying with Smith’s request because he was not an “active member,” as defined in the governing statute.

Smith sued both pension funds. His complaint had two counts: C0unt I against the Police Fund alleged denial of due process; Count II against the Judicial Fund asked for an order requiring the Judicial Pension Fund to accept the money. Smith argued that he was an “active member” because he had not withdrawn his money from the Judicial Fund.

The Judicial Fund asked for and received a summary judgment on Count II because, the trial court ruled, an “active member” can only be a sitting judge. Smith appealed.

The first question was whether the appellate court had jurisdiction to consider the appeal. A judgment is appealable only if it disposes of all claims against all parties. But the summary judgment was granted only to one count in the complaint − so the other count technically had not been resolved.

But the First District Illinois Appellate Court ruled that it had jurisdiction. Although the judgment was only on one count, the appellate court ruled that the disposition of Count II necessarily entailed a judgment on Count I. Here’s how the appellate court explained it:

Once the trial court determined that JRS [Judicial Pension Fund] had no statutory authority to accept the funds being transferred by the [Police] Retirement Board, there was, naturally, no more for the Retirement Board to do except to return the funds to the plaintiff. Therefore, the trial court's August 9, 2007 order was final and appealable because it effectively terminated the litigation between both parties on the merits of the cause and disposed of all pending issues and parties.

Read the whole case, Smith v. Policeman’s Annuity and Benefit Fund, No. 1-07-2421 (5/26/09), by clicking here.

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August 9, 2009

Failure To Cite To Record Ruins Invited Error and Judicial Estoppel Defenses To Appeal

Gloria Sakellariadis had an automobile accident with Steven Campbell. Three months later Gloria was in another accident, that time with Bruce Walters. Gloria injured her neck, shoulders, and back in both accidents. There was one trial against both Campbell and Walters. While the jury was deliberating, Gloria settled with Campbell for $150,000. The jury returned a verdict for Gloria of $518,000, and found Campbell and Walters each liable for 50 percent.

The court awarded Gloria $259,000 from Walters − his 50 percent of the full $518,000 award. Gloria thought Campbell and Walters were jointly and severally liable for the whole verdict, so she appealed and asked for an award of $368,000 from Walters ($518,000 minus the $150,000 settlement).

Certain of the medical providers held liens against Gloria’s judgment. There was a hearing in the trial court to adjudicate those liens. Walters argued that Gloria’s appeal was barred because she “represented to [the] lienholders that she would accept the judgment.” Walters argued that the doctrines of invited error (“a party cannot complain of error which that party induced the court to make or to which that party consented’”), and judicial estoppel (“a party who assumes a particular position in a legal proceeding is estopped from assuming a contrary position in a subsequent legal proceeding”) doomed Gloria’s appeal.

But the First District Illinois Appellate Court disagreed. The appellate court ruled that Walters had not supported his factual assertion about Gloria’s representation to the lienholders with citation to the record on appeal. Here’s what the appellate court stated:

Walters has not provided in his brief specific citations to the record showing plaintiffs affirmative representation in the lien proceedings that she would not challenge the judgment on appeal. To the contrary, the record contains plaintiffs memorandum of law dated more than three months before the adjudication of the liens, arguing that the judgment should have been calculated based on joint and several liability. The trial court was on notice when the liens were adjudicated that plaintiff intended to challenge the judgment. We do not believe the doctrine of invited error, waiver or estoppel bar this appeal. Plaintiff did not affirmatively take a position in the lien proceedings that conflicts with her position on appeal.

In the end, the appellate court affirmed and ruled that joint and several liability did not apply to Gloria’s judgment. Read the whole case, Sakellariadis v. Campbell, No. 1-07-2845 (5/29/09), by clicking here.

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August 4, 2009

Order On Partial Fee Petition Not Appealable. Merits Panel Dismissal Trumps Motion Panel.

Michael Gagliardo died in a racing-car accident. Paulette (sister) and Margaret (wife) administered Michael’s estate. They hired Quinlan & Carroll to investigate whether the estate could sue for wrongful death. Paulette later hired Duane Morris, another law firm, to open an estate in court. Duane Morris was on the job only for a few months, after which Paulette hired Mayer Brown Rowe & Maw.

Paulette asked the trial court to determine how much attorney fees were owed to which law firms. Quinlan, an “interested party” to the estate proceeding, asked for a substitution of judge to determine its right to fees. Quinlan’s request was granted.

Duane Morris filed its fee petition covering the entire time it represented the estate. Mayer Brown filed its fee petition for a part of the time it represented the estate. The trial court granted some of the law firms’ claims for fees.

Unhappy with the ruling, Margaret appealed. But Mayer Brown asked the court to dismiss the appeal because the order from which the Margaret appealed was not final and appealable, and the trial court did not rule that the order could be appealed. The First District Illinois Appellate Court agreed with Mayer Brown. Here is the court’s reasoning:

As noted earlier, it is undisputed that Mayer Brown continued to represent the estate after March 21, 2006, the last date on its fee petition. For this reason, the fee petition was interlocutory in part. Mayer Brown would be filing one or more fee petitions in the future. The 2006 order did not contain the language required by Supreme Court Rule 304(a): "[the trial court must make] an express written finding that there is no just reason for delaying either enforcement or appeal or both." … Nor is the order appealable under Rule 304(b)(1) … as a judgment entered in the administration of an estate that does not require the special language. An order entered in an estate administration without Rule 304(a) language is not appealable where, as here, the judgment entered was for fewer than all of the claims for relief sought by the claimant.

Here, although the order was a final disposition of the fees claimed by Duane Morris, it was an interim order for fees claimed by Mayer Brown. An interim order for attorney fees is not a final or appealable order.

Margaret asked for a rehearing. She argued that the appellate could not dismiss the appeal because a previous panel of appellate judges denied the same request by Mayer Brown to dismiss. But the second appellate panel rejected that argument, saying its opinion trumped the original panel’s:

A motion panel's denial of a motion to dismiss before briefing and argument is not final and may be revised at any time before the disposition of the appeal … The panel that hears the appeal has an independent duty to determine whether it has jurisdiction and to dismiss the appeal if it does not … The motion panel's denial of the earlier motion to dismiss has no bearing on our review.

The lesson is: Don’t give up on a motion to dismiss an appeal, even if it was denied by a motion panel. Appellants have to worry about a motion panel’s dismissal of an appeal, but an appellee gets a second bite at the apple by the merits panel. Read the whole opinion, Estate of Gagliardo, No. 1-06-1714 (6/5/09), by clicking here.

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