September 23, 2011

Insured’s Second Appeal Dismissed For Lack Of Jurisdiction

This case involved John Crane, Inc.’s claim for insurance coverage, and the insurers’ counterclaim against Crane. The insurers persuaded the trial court to dismiss Crane’s complaint. Two days later, Crane appealed the dismissal.

Then CNA, one of the insurers, asked the trial court to vacate or modify the dismissal order and for leave to amend its counterclaim against Crane. The trial court ruled (1) against CNA and would not allow the judgment to be vacated or modified, (2) for CNA and allowed amendment of the counterclaim against Crane.

Two weeks later, the trial court entered a final judgment on all of the remaining claims except CNA’s counterclaim.

About two weeks after that, the appellate court dismissed Crane’s appeal for want of prosecution because the company did not file the record on appeal within the time allowed by the rules. Rather than file a petition for rehearing of the dismissal of the appeal, Crane filed a whole new appeal. Crane’s second appeal asked for the same relief as the first one.

Allianz Underwriters, another of Crane’s insurers, asked the appellate court to dismiss the second appeal. Allianz argued the appellate court had jurisdiction when it dismissed the first appeal; because Crane did not ask for a rehearing, that dismissal ended the proceeding. Crane argued the second appeal was proper because CNA’s motion to modify the judgment meant the “first appeal never became effective,” and there never was appellate jurisdiction over that appeal.

The First District Illinois Appellate Court agreed with Allianz. Crane’s first appeal became effective, the appellate court said, after the trial court ruled against CNA’s request to modify the judgment. Then the dismissal of the first appeal rendered the appellate court without jurisdiction to consider Crane’s second appeal. Here is how the appellate court explained the ruling:

John Crane’s first appeal was the effective appeal from both the November 13, 2009 [final judgment], and the March 10, 2009 [dismissal of Crane’s complaint] … and this court had jurisdiction when we dismissed its [Crane’s] first appeal … for want of prosecution … John Crane did not file a petition for rehearing within 21 days. When an appeal of a final order is dismissed for want to prosecution and no petition for rehearing is filed within 21 days, the dismissal becomes final and the appellate court loses jurisdiction to consider additional arguments stemming from the initial order.

The whole opinion, John Crane, Inc. v. Admiral Insurance, 2011 IL App (1st) 093240 (August 30, 2011), is available by clicking here.

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September 15, 2011

Naming Wrong Party In Notice Of Appeal Does Not Defeat Appeal By Estate’s Executor And Lawyer

David Hammer was executor of Ronald Weeks’s estate. Hammer hired Thomas Brucker as an attorney to assist in the administration of the estate. Hammer ($120,000) and Brucker ($170,000) paid themselves based on a percentage of the estate’s value.

Weeks left one-fourth of his estate to a New York-based charity. The charity disputed whether Hammer and Brucker could properly take a percentage of the estate for their fees. The Illinois Attorney General intervened in the case, and disputed Hammer’s and Brucker’s fees. The trial court agreed with the Attorney General, drastically lowered the fees, and ordered Hammer and Brucker to return the excess to the estate.

Hammer and Brucker appealed. But their notice of appeal stated that the Estate of Weeks was the party appealing, not Hammer and not Brucker. The Attorney General argued that the appellate court did not have jurisdiction to consider the appeal because the wrong party was identified as the appellant. The Fourth District Illinois Appellate Court ruled that the mistake on the notice of appeal was technical, and did not defeat appellate jurisdiction. Here’s how the appellate court explained the ruling.

Jurisdiction in this court is conferred by a notice of appeal … Illinois Supreme Court Rule 303 … sets forth specific formatting and filing requirements of the notice of appeal. Among other things, a notice of appeal must name the parties and designate them "in the same manner as in the circuit court and add[ ] the further designation 'appellant' or 'appellee' " … and must "contain the signature and address of each appellant or appellant's attorney" … However, "Illinois courts have repeatedly refused to dismiss an appeal because of a technical deficiency in the notice of appeal so long as the notice fulfills its basic purpose of informing the victorious party that the loser desires a review of the matter by a higher court." Petitioners' failure to name themselves as appellants in the notice of appeal, while technically deficient, did not deprive intervenor of the notice to which she was entitled. Intervenor [Attorney General] does not allege she was prejudiced in any way by petitioners' naming the estate rather than themselves as appellants.

Hammer and Brucker won the jurisdiction battle, but lost the war. The appellate court affirmed the ruling requiring Hammer and Brucker to give back the excessive part of their fees. Read the whole opinion, In re Estate of Weeks, No. 4-10-0338 (5/20/11), by clicking here.

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September 6, 2011

De Novo Standard For Judge-Candidate’s Appeal Of Successful Ballot Challenge

Chris Ward wanted to be a judge in the state trial court in Will County, Illinois. Circuit court judges are elected by popular vote in Illinois, so Ward filed a candidacy petition to run in the primary. But when he filed, he did not live in the subcircuit he filed in.

Daniel Goodman, husband of one of Ward’s primary opponents, filed an objection to Ward’s candidacy petition. Goodman argued Ward was ineligible to run for judge in a subcircuit he did not live in when the petition was filed.

The Will County electoral board agreed with Ward and ruled that Ward could appear on the election ballot. Goodman appealed the board’s decision to the circuit (trial level) court, which agreed with him, and precluded Ward from the ballot. Ward then took the case to the Illinois Appellate Court, which also agreed with Goodman.

The Illinois Supreme Court took Ward’s appeal. The standard of review was among the preliminary issues. Did the case present a question of law, a question of fact, or a mixed question of law and fact? Each has a different standard of review. The question in this case, the supreme court ruled, was whether the governing law had been interpreted properly given the undisputed facts. Here’s how the Illinois Supreme Court explained it:

As in other administrative review cases, the standard of review we apply to an election board's decision depends on what is in dispute, the facts, the law, or a mixed question of fact and law … In this case there is no argument about the facts. The issue is whether, given those facts, the Will County officers electoral board correctly concluded that Ward's nominating petitions were sufficient under the controlling law to permit his name to appear on the ballot for the February 2, 2010, primary election as a candidate for the Democratic nomination to fill a subcircuit vacancy.

Our court has held that where the historical facts are admitted or established, the controlling rule of law is undisputed and the issue is whether the facts satisfy the statutory standard, the case presents a mixed question of fact and law for which the standard of review is “clearly erroneous.” … We have also held, however, that where the historical facts are admitted or established, but there is a dispute as to whether the governing legal provisions were interpreted correctly by the administrative body, the case presents a purely legal question for which our review is de novo … The matter before us here falls within the latter category. Our review is therefore de novo, a standard we have characterized as “independent and not deferential.”

In the end, the supreme court ruled that Ward did not belong on the election ballot. Read the whole case, Ward v. Goodman, No. 109796 (3/24/11), by clicking here.

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September 3, 2011

Developer’s Financial Finagling Supports Punitive Damages Award

Old Town Development sued a slew of companies for fraud and breach of fiduciary duties in operating Old Town Development. After a bench trial, the trial court awarded Old Town over $1 million compensatory damages and three times that for punitive damages.

The defendant companies appealed. The appellate court’s opinion is instructive on the standards of review for the various aspects of a punitive damages award.

The first part of the punitive damages test was whether “punitive damages were available as a matter of law [under] plaintiff’s cause of action.” The appellate court ruled that its standard of review was de novo (no discretion to the trial court). In this case, the First District Illinois Court of Appeals ruled, a breach of fiduciary duty action could support a claim for punitive damages.

The second part of the test was whether the defendant companies acted with willful and wanton disregard for Old Town’s rights. The appellate court reviewed the “factual determination that defendants acted willfully and that aggravating factors exist under the manifest-weight standard … In applying this standard, we give deference to the trial court as the finder of fact because it is in the best position to observe the conduct and demeanor of the parties and the witnesses … For that reason, we may not substitute our judgment for that of the trial court regarding the credibility of witnesses, the weight to be given to the evidence, or the inferences to be drawn.”

In this case, the appellate court affirmed the finding of willful disregard of Old Town’s rights because the trial court “‘was shocked by the nonchalance with which both McLean [defendant] and his accountant * * * described their misconduct in their testimony’ and how any device they could use to deceive Tully was deemed justified because Tully was considered a pest and an impediment to McLean's business interests.”

Next was the whether it was proper to award punitive damages in view of its legal purpose ― punishment and deterrence. The appellate court gave the trial court lots of latitude on this question, and ruled the standard of review was abuse-of-discretion.

The company defendants argued that the court was biased, and thus the punitive damages award was not made to punish or deter. But the appellate court again referred to McLean’s nonchalance, “which was well within the scope of the [trial] court’s consideration. There is nothing to show the court’s decision to award punitive damages was the result of the court’s bias against defendants …”

The appellate court also considered whether the amount of the punitive damage award was appropriate. The appellate court did not state a standard of review on this question, but it did “review the [trial] court’s computation of the amount of punitive damages award to determine whether the amount was excessive or the result of passion, partiality, or corruption.” The defendant companies argued that a three-to-one punitive-to-compensatory ratio was too harsh because there was no intention to hurt Old Town.

But the appellate court ruled that didn’t matter. “The fact that defendants may not have intended to harm plaintiffs does not take away from the fact that they were fully aware of and ignored the impact their ‘on demand loans’ [taken out of Old Town] would have on Old Town … OTD [Old Town] was harmed by the transfers in that it couldn’t meet its financial obligations and was charged late fees and penalties as a result. It was also unable to use its own funds or earn interest thereon during the period the interest-free loans were outstanding.”

The defendant companies also challenged the punitive damages award as violating their due process rights under the U.S. Constitution. Reviewing the constitutional argument under a de novo standard of review, the appellate court ruled there was no due process violation.

Read this most interesting opinion, Tully v. McLean, No. 1-09-2976 (4/26/11), by clicking here.

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