January 23, 2010

Husband’s Directed Finding In Post-Dissolution Fraud Case Reviewed By Manifest Weight Standard

Clara George Minch and Ronald George were divorced in 1982. In 2003, Clara learned that Ronald had sold his interest in a company that owned Florida real estate for more than $950,000. She sued George for fraud, asserting that during the divorce proceedings he misrepresented his interest in the stock.

After Clara presented her case, the trial court directed a verdict for George.
The trial court ruled that Clara did not prove fraud and thus failed to meet her burden of proof.

Clara appealed, and the parties disagreed about the proper standard of review. Clara said the appellate court should use a de novo review [trial court gets no deference]. George said the directed verdict should be affirmed unless it was against the manifest weight of the evidence.

The First District Illinois Appellate Court agreed with George. The appellate court explained when each standard is used when a directed verdict is considered on appeal.

If the trial court finds that the plaintiff has failed to present a prima facie case as a matter of law, the appellate standard of review is de novo … If the trial court moves on to consider the weight and quality of the evidence, finding no prima facie case remains, the appellate standard of review is the deferential “manifest weight of the evidence” standard.

In this case, the appellate court found two factors persuasive. (1) The trial court did not state its ruling was “due to the wife’s failure to make a prima facie showing of the husband’s fraud, as a matter of law.” And (2), the appellate court’s review of the record showed it was clear the trial court weighed the evidence.

In the end, George’s directed verdict was affirmed as not against the manifest weight of the evidence. This opinion also sets out the methodology a trial court should follow in ruling on a motion for a directed verdict. Read the whole case, Minch v. George, No. 1-08-1826 (10/30/09), by clicking here.

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January 16, 2010

Jurisdiction Okay Despite Candidate’s Appeal Under Wrong Rule

Mary Ann Aiello passed away with more than 29 months left in her term on the Winnebago, Illinois County Board. Theodore Biondo was appointed to fill the vacancy. By the time Biondo’s appointment went through there was less than 28 months left in Aiello’s term.

Under the Illinois Election Code, a person appointed to fill a vacancy completes the term if less than 28 months remain. If more than 28 months remain in the term, then the person appointed stays in office only until the next election. The next election was in 2008, but the Aiello term did not expire until late 2010. The question was when the clock started ticking – when Aiello passed away or when Biondo was appointed.

The Democratic Party submitted Carolyn Gardner as a candidate to run for the Aiello vacancy in the November 2008 election. Believing Biondo could complete Aiello’s term, and that there should not be an election for the seat until 2010, the Republican Party did not submit a candidate for the office. Nor did Biondo apply to run.

Margie Mullins, the County Clerk, sided with Biondo and refused to place Gardner on the ballot. So Gardner sued for a writ of mandamus to direct Mullins to do so.

The trial court agreed with Gardner and directed Mullins to put Gardner on the ballot. Biondi then entered the lawsuit and asked the trial court to direct that his name be placed on the ballot. But the trial court disagreed with Biondo, who then asked the court to reconsider and for a temporary restraining order to prevent the election for Aiello’s seat. The trial court denied both of Biondo’s requests.

Biondo appealed under Illinois Supreme Court Rule 307 [allowing interlocutory appeals of orders refusing restraining orders as of right]. Gardner asked the appellate court to dismiss the appeal for lack of jurisdiction. One day before the election, the appellate court ruled in favor of Biondo, and stated his name should be on the election ballot. But by then it was too late to change the ballot. The election proceeded with Gardner as the only name of the ballot for the Aiello seat.

Gardner then appealed to the Illinois Supreme Court. Her first argument was that Biondo’s appeal should have been thrown out for lack of jurisdiction. The supreme court agreed that Rule 307 was not the correct rule for Biondo to appeal under. Rule 307 applies only to interlocutory orders. But “Biondo filed a motion for a temporary restraining order after final judgment on the case had been entered [i.e., the order that was entered before Biondo intervened in the case]. Contrary to Biondo's argument, the filing of a motion to reconsider has no effect on the finality of an otherwise final judgment … Because final judgment had been entered, Biondo's appeal under Rule 307 was inappropriate as it was not interlocutory in nature.”

But Biondo’s error was not fatal to the appeal. The judgment Biondo contested, the supreme court stated, was final and appealable, so even though he used the wrong rule, there was appellate jurisdiction. Here’s how the Illinois Supreme Court explained it.

The appellate court has jurisdiction to hear appeals of final judgments … Because this appeal is from a final judgment, Biondo's appeal would have been proper if brought pursuant to Rule 301, as an appeal as of right … Further, instead of filing for a temporary restraining order, Biondo could have properly moved to stay the circuit court's judgment pending appeal pursuant to Rule 305 … Though the appellate court would have been well within its authority to dismiss Biondo's appeal for failing to cite the appropriate rule, his error was not sufficient to divest the appellate court of jurisdiction where the court otherwise had jurisdiction.

So Biondo got his day in court. But to no avail, because the Illinois Supreme Court ruled that the time begins to run when the vacancy occurs, not when it is filled. Read the whole opinion, Gardner v. Mullins, No. 107707 (9/24/09), by clicking here.

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January 6, 2010

Appellate Court Defines Obiter And Judicial Dictum, And Affirms Auto Insurer’s Summary Judgment

Alex Pajic was injured while driving a truck for his employer. Alex contended that another vehicle caused the accident, but left the scene and never was identified. Alex’s lawsuit against his employer’s insurer, Old Republic Insurance, asked for reformation of the underinsured and the uninsured motorist coverages, and for an award of the limits of those coverages. Alex complained that, contrary to the Illinois Insurance Code, Old Republic did not make a “meaningful offer” of the coverages to the employer.

The trial court ruled that Old Republic complied with the Code, so it gave the insurance company summary judgment. Alex appealed.

The case turned on the interplay among two Illinois Supreme Court cases and a 1990 amendment to the Insurance Code. Alex argued that comments by the Illinois Supreme Court about the amended statute were dictum, and were not controlling, because the case it was deciding involved the pre-1990 amended Code.

The First District Illinois Appellate Court rejected Alex’s argument. The court defined the types of dictum, and their precedential value.

“Obiter dictum is a statement of law made by a court for purposes of illustration, argument, or analogy, or it is a remark uttered "by the way" on some collateral point not directly concerning the question before the court … Obiter dictum is a statement that " 'could have been deleted without seriously impairing the analytical foundations of the holding * * * [and] being peripheral, [it] may not have received the full and careful consideration of the court that uttered it.' " … "On the other hand, an expression of opinion upon a point in a case argued by counsel and deliberately passed upon by the court, though not essential to the disposition of the cause, if dictum, is judicial dictum." … Judicial dictum "is entitled to much weight, and should be followed unless found to be erroneous." … The supreme court's statements about the 1990 law were more than passing remarks on a collateral point, they were the analytical foundation for its judgment … The supreme court gave full and careful consideration to the points being raised here … "[E]ven obiter dictum of a court of last resort can be tantamount to a decision and therefore binding in the absence of a contrary decision of that court."

Whether judicial or obiter dictum, the appellate court affirmed Old Republic’s summary judgment. Read the whole opinion, Pajic v. Old Republic Insurance Company, No. 1-08-2782 (9/30/09), by clicking here.

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January 2, 2010

Illinois 4th District Appellate Court Refuses 30-Year “Legitimate Business Interest” Test As Made Of Whole Cloth

Neil Ehlers worked as a salesman for Sunbelt Rentals, a seller and renter of industrial equipment. After about five years, Ehlers left Sunbelt and went to work for Midwest Aerials & Equipment, a company that competed with Sunbelt. Sunbelt sued Ehlers and Midwest to enforce restrictive covenants in Sunbelt’s employment agreement with Ehlers. Sunbelt got a preliminary injunction against Ehlers and Midwest, who then appealed.

One of the issues on appeal was whether the trial court properly followed the “legitimate business interest” test when it analyzed the propriety of the restrictive covenants. That test had been used by Illinois appellate courts for more than 30 years.

But the Fourth District Illinois Appellate Court ruled that it didn’t matter because the “legitimate business interest” test had been “spun out of whole cloth” and never had been adopted by the Illinois Supreme Court. The appellate court ruled it was not constrained to abide a standard set by other state appellate courts despite 30 years of acceptance and use. Here’s the court’s rationale:

[E]ven assuming that Ehlers and Midwest are correct that the trial court was bound by appellate court precedent to apply the "legitimate-business-interest" test and failed to do so, we decline to reach the merits of their argument because, unlike the trial court, this court is not required to follow the decisions of its sister districts or, for that matter, our own prior decisions … ("[T]he opinion of one district, division, or panel of the appellate court is not binding on other districts, divisions, or panels".) Thus, having repudiated the validity of the "legitimate-business-interest" test earlier in this decision--assuming it was ever valid--we need not address the argument of Ehlers and Midwest that the trial court was bound by precedent to apply it in this case. Any error by the trial court in this regard simply no longer matters at this stage of proceedings.

This opinion is important to appellate practitioners as a reminder not to take the “long-established black letter law” for granted. Maybe it’s not so established. In this case, the appellate court referred to the “legitimate business interest” test as “nothing more than a judicial gloss incorrectly applied to this area of law by [other] … appellate courts.”

In the end, the appellate court affirmed the preliminary injunction. Read the whole case, Sunbelt Rentals v. Ehlers, No. 4-09-0290 (9/23/09), by clicking here.

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