In re Marriage of Johnson , 2011 IL App (1st) 102826 ( 2011 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
In re Marriage of Johnson, 2011 IL App (1st) 102826Appellate Court In re MARRIAGE OF PAMELA JOHNSON, Petitioner, and ERIC
Caption JOHNSON, Respondent-Appellee (Arthur M. Berman and Daniel C.
Meenan, Jr., Additional Party Respondents-Appellants).
District & No. First District, Fifth Division
Docket Nos. 1-10-2826, 1-10-2827 cons.
Filed December 23, 2011
Held In a marriage dissolution proceeding in which the trial court granted
(Note: This syllabus respondent summary judgment as to petitioner’s petition under section 2-
constitutes no part of 1401 of the Code of Civil Procedure seeking relief from the final
the opinion of the court judgment based on allegations that respondent failed to disclose material
but has been prepared facts during the proceedings, the portion of the trial court’s order granting
by the Reporter of respondent’s motion for sanctions under Supreme Court Rule 137 as to
Decisions for the petitioner’s counsel was vacated on the grounds that the record did not
convenience of the establish what her counsel knew or should have known, there was a
reader.)
difference between what petitioner knew and what her counsel knew,
petitioner was given the opportunity to be represented by counsel and to
defend against the claim for sanctions, her counsel, who had withdrawn
due to the conflict of interest, were not, and the cause was remanded for
an evidentiary hearing on whether sanctions would be appropriate.
Decision Under Appeal from the Circuit Court of Cook County, No. 03-D-4994; the Hon.
Review Kathleen G. Kennedy, Judge, presiding.
Judgment Vacated and remanded.
Counsel on Marvin J. Leavitt and David C. Adams both of Grund & Leavitt, P.C., of
Appeal Chicago, for appellants.
Paul L. Feinstein, of Paul L. Feinstein, Ltd., and Robert H. Hirsch, of
Law Offices of Robert H. Hirsch, both of Chicago, for appellee.
Panel JUSTICE McBRIDE delivered the judgment of the court, with opinion.
Presiding Justice Epstein and Justice Quinn concurred in the judgment
and opinion.
OPINION
¶1 Petitioner Pamela Johnson and respondent Eric Johnson entered into a divorce settlement
in December 2004. Petitioner was represented in the divorce proceedings by additional party
respondents Arthur M. Berman and Daniel C. Meenan, Jr. In December 2006, petitioner,
represented by Berman and Meenan, filed a petition seeking relief from a final judgment
pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 2006)),
alleging that respondent failed to disclose material facts during the divorce proceedings.
Respondent filed a motion for summary judgment, which the trial court granted, and also
filed a motion for sanctions against petitioner pursuant to Supreme Court Rule 137 (Ill. S.
Ct. R. 137 (eff. Feb. 1, 1994)), seeking his attorney fees and costs incurred in response to the
section 2-1401 petition. The trial court granted respondent’s motion for sanctions against
petitioner and also sua sponte sanctioned Berman and Meenan for filing the section 2-1401
petition. Following an evidentiary hearing as to the amount of respondent’s attorney fees and
costs, the trial court ordered petitioner to pay $56,000 and Berman and Meenan to pay
$56,000 in sanctions.
¶2 Berman and Meenan appeal, arguing that the trial court erred in sanctioning them under
Rule 137. Petitioner is not a party to this appeal.
¶3 On December 22, 2004, the trial court entered its judgment for dissolution of marriage,
which included a “Marital Settlement Agreement” (MSA) executed by petitioner and
respondent. The MSA resolved all issues related to the divorce. One of the marital assets
resolved in the MSA was the parties’ stock ownership of Baldwin Richardson Food
Company (BRF). Pursuant to the MSA, petitioner was to receive $2,800,000 from BRF as
severance pay. Further, any right, title or interest held or claimed by petitioner in BRF was
awarded to respondent.
¶4 On December 20, 2006, petitioner, represented by Berman and Meenan, filed a section
2-1401 petition for relief from judgment, seeking modification of the judgment for
dissolution of marriage. The petition alleged that in October 2006, petitioner learned that
prior to the dissolution judgment, respondent had concealed material facts, known and
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available only to him, which he had a duty to disclose. Respondent did so with the intent to
induce petitioner to agree to the resolution of the dissolution case and deprived petitioner of
her fair share of the marital assets. Specifically, petitioner claimed that respondent’s
representations regarding BRF’s value were proved to have been “intentionally inaccurate,
incomplete and false.”
¶5 Petitioner stated that BRF was formed in or about 1992 and “manufactured liquid
products for the food industry, including but not limited to condiments, dessert toppings,
sauces, syrups and fruit fillings.” The parties owned a 63% stock interest in the company;
they owned 1,550 of 2,266 outstanding shares. Petitioner stated that at times relevant to the
underlying judgment, BRF’s annual net sales were in the “plus $50 million range.” Petitioner
further stated that during the underlying proceedings respondent represented to her that BRF
was in a precarious financial position with considerable debt. In June 2004, a valuation report
of the parties’ marital interest in BRF valued the stock at $6 million.
¶6 Petitioner alleged that in or about October 2006, she read an article that had been
published in the June 2006 edition of Black Enterprise Magazine. The article stated that BRF
had acquired the “Industrial Bakery Ingredients division of J.M. Smucker Co.” in 2005. “The
deal–valued at $30 million–allowed [BRF] to expand its bakery capabilities and grow gross
sales by 26% in 2005.” Petitioner also stated that she spoke with two of her daughters, both
of whom are managers for BRF. They indicated to petitioner that BRF had committed to
proceed with the acquisition prior to December 2004. Petitioner was also informed that
respondent told their daughters that he did not want the deal to become part of the divorce
settlement and not to relate any facts of the deal to petitioner. Petitioner attached an affidavit
from one of her daughters to the petition that supported these allegations. Based on this
information, petitioner alleged that BRF’s acquisition would substantially increase BRF’s
sales volume and have an impact on the company’s value.
¶7 In her section 2-1401 petition, petitioner asserted that respondent concealed material facts
related to BRF and she relied on these misrepresentations when settling her marriage
dissolution. Petitioner requested that the judgment be reopened and modified to reflect an
increase in the value of BRF.
¶8 In June 2008, respondent filed a motion for summary judgment. In his motion,
respondent contended that petitioner admitted in a deposition that she and her attorneys knew
or should have known about the Smuckers deal no later than December 1, 2004, prior to the
dissolution judgment.
¶9 Respondent attached excerpts from petitioner’s two depositions as exhibits to his motion.
The record on appeal does not appear to contain the full transcripts of petitioner’s
depositions. On March 19, 2008, petitioner testified at her first deposition that the first time
she learned of the Smuckers deal was in October 2006 and had no prior knowledge between
December 2004 and October 2006. She also stated that she had placed a “Google Alert” on
her computer for any articles concerning BRF and said that she did not receive any articles
involving the Smuckers deal until 2006.
¶ 10 However, at her April 16, 2008, deposition, petitioner clarified that she heard a “rumor”
in December 2004. The excerpt of the deposition transcript is unclear as to petitioner’s
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knowledge of the Smuckers deal and her subsequent action with her attorneys. At the start
of the deposition, petitioner stated that the first document she received and gave to her
attorneys was an article “from Smucker’s saying that they were closing a plant–you showed
it to me last time–and that they wanted to talk to another company, Orville or something, and
maybe discussions with [BRF], so that was the first time [she] actually had something in
[her] hand.” Respondent’s attorney asked petitioner about a fax with pages marked as pages
two through five, but there was no page one. Respondent’s attorney asked if page one might
have been a fax cover sheet, but petitioner said she did not remember. When asked what if
anything her attorneys did with this information, petitioner testified that “they talked to
[respondent] and they talked to [respondent’s attorney].” She stated that she “was sitting on
the phone–[she] was sitting in front of [Meenan] in his office and [she] heard him talk to
[respondent’s attorney].” Petitioner said she did not “remember exactly” what Meenan told
respondent’s attorney, but she believed that “he made [respondent’s attorney] aware that
[she] was questioning about this article, and the response [petitioner] got back was that there
was nothing up, nothing to it.” Petitioner admitted that she did not hear respondent’s attorney
give this response. Petitioner also did not know the exact date this conversation took place,
but thought it was “pretty close to settlement,” which the record indicates occurred in
December 2004. Petitioner did not remember if Meenan called respondent’s attorney or if
respondent’s attorney called Meenan. She did not remember if this occurred in the morning
or the afternoon. Petitioner stated that only she and Meenan were present in his office. She
heard Meenan talking, but could not remember what he said. When asked if she had any
further discussions on this subject, petitioner answered, “no.” She said after this conversation
she “forgot about it.”
¶ 11 However, when asked a second time if she only discussed the matter one time, petitioner
said, “no, that’s not true.” Respondent’s attorney asked again if petitioner spoke with Meenan
about the article after she faxed it to him, she responded that she did, but could not
“remember exactly” if she called him or went to his office. Petitioner stated that “I talked to
him, but I don’t remember if I called him that morning or I don’t remember if I–I thought that
I brought a copy of this and put it where we were working on it. It wasn’t the focus.” She
could not “remember exactly” how many times she discussed the article with her attorneys.
When asked if it was more than once, petitioner answered that she thought it was, but could
not recall.
¶ 12 Respondent’s attorney asked petitioner if she asked either of her attorneys to find out
about this article, and petitioner responded that she did and that she “heard” her attorney ask
respondent’s attorney, though she did not “remember exactly what he asked.” Petitioner then
testified that she did not know if either of her attorneys checked this out further and she did
not ask them if they had. Petitioner said that she “made an assumption” that if respondent
said “there was nothing up and then [she] heard [Meenan] ask [respondent’s attorney] on the
phone and [respondent’s attorney] say nothing to that,” then “everybody was telling the
truth.”
¶ 13 Respondent’s attorney inquired further about what respondent said. Petitioner stated her
“attorneys advised [her] that they had spoken to [respondent] and that he had said something
like ‘Nothing up with it,’ he gets offers every day or requests every day. So [her] attorneys
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advised [her] that that was said.” Petitioner indicated that she was not sure when this
conversation took place and she was not there. Petitioner testified that she did not search any
websites for any articles about BRF’s possible acquisition of a division of Smuckers.
¶ 14 Based on this deposition testimony, respondent argued that petitioner’s prior knowledge
of the Smuckers deal showed that her section 2-1401 petition lacked due diligence, lacked
a meritorious claim and lacked any fraudulent concealment by respondent. Respondent stated
that there was no longer a genuine issue of material fact to sustain petitioner’s section 2-1401
petition and asked for summary judgment.
¶ 15 In her response to the summary judgment motion, petitioner admitted to seeing an article
dated December 1, 2004, from The Cincinnati Post, titled “Smucker to close Calf. Plant.”
The article stated, “Smucker said it wants to sell its Orrville industrial bakery ingredients
business to Baldwin Richardson Foods Co., a privately owned food company in Chicago.
Terms were not disclosed for the deal, which is expected to close by the end of the year.”
Petitioner contended that the article reported only that Smucker “wanted to sell” the division
to BRF, but did not disclose a finalized deal. Petitioner maintained that she did not learn of
a finalized deal until October 2006.
¶ 16 In October 2008, the trial court granted respondent’s summary judgment motion. The
court found that petitioner “cannot establish that she was diligent in presenting her claim in
the original action or that the evidence supporting her claim could not have reasonably been
discovered at the time of judgment.” The court stated that it was “uncontroverted that
[petitioner] learned of the possible acquisition no later than December 1, 2004, through the
online edition of the Cincinnati Post” and shared this information with her attorneys. Despite
learning of the possible acquisition, petitioner voluntarily entered into the MSA on December
22, 2004, based on a December 2003 valuation without an update or any additional
discovery.
¶ 17 In October 2008, respondent filed a motion for sanctions pursuant to Rule 137, requesting
sanctions against petitioner and seeking reasonable attorney fees and costs incurred in
response to the section 2-1401 petition. The sanctions motion did not request sanctions to
be imposed against petitioner’s attorneys. Respondent asserted that petitioner made
knowingly untrue allegations in her section 2-1401 petition, in depositions and other filings
during the section 2-1401 proceedings that she did not learn of the Smuckers acquisition until
October 2006. In a supplemental motion for sanctions, respondent sought attorney fees and
an additional sanction of $75,000 from petitioner.
¶ 18 In December 2008, petitioner filed her response to respondent’s motion for sanctions. In
her response, petitioner admitted that in late 2004, she “heard a rumor about some deal” and
later read that Smuckers wanted to enter into some transaction. But petitioner emphasized
that respondent failed to disclose any information about a deal in discovery and respondent
had told her that BRF was in financial distress. Petitioner maintained that respondent’s acts
or omissions alleged in the petition amounted to fraud. Respondent filed a reply to
petitioner’s response in January 2009 and contended that petitioner and her attorneys knew
at the time they signed the section 2-1401 petition that contrary to the allegations in the
petition, petitioner had prior knowledge of the possible Smuckers acquisition no later than
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December 1, 2004, and that she had notified her attorneys. Despite this information, they
failed to make a reasonable inquiry into the acquisition prior to petitioner signing the MSA
and then filed a false petition to vacate the dissolution judgment.
¶ 19 In February 2009, following a hearing, the trial court entered a written order granting
respondent’s motion for sanctions. In the order, the court found petitioner and her attorneys,
Meenan and Berman, were liable for respondent’s reasonable attorney fees and costs incurred
in litigating the section 2-1401 petition. Specifically, the trial court found as follows.
“Because she must establish her diligence Petitioner’s case for 2-1401 relief turned
on what she knew or should have known at the time she entered into the marital
settlement agreement which was incorporated in the dissolution judgment. Framing the
issue as one of Respondent’s concealment and distinguishing between a possible and an
actual acquisition do not change the fact that she falsely alleged and averred that prior
to the later part of 2006 she had no knowledge or information as to the Smuckers ‘deal.’
Petitioner objectively knew or should have known that the allegations and averments in
her 2-1401 petition and related filings as to the timing of her knowledge about the ‘deal’
were untrue. Because it is undisputed that in 2004 Petitioner conveyed the information
she had to her attorneys they, too, knew or should have known of the falsehoods in
Petitioner’s 2-1401 petition and related filings. Thus, Respondent has shown that
Petitioner’s 2-1401 petition was not well-grounded in fact, Petitioner’s untrue statements
were made without reasonable cause and Rule 137 has been violated. This is not a case
of objectively reasonable arguments for a position that the court found unpersuasive. The
court would certainly have granted Respondent’s Motion to Dismiss Petitioner’s 2-1401
petition if the record at that time reflected the truth: that Petitioner and her attorneys
knew about the Smuckers deal in 2004 before the entry of the dissolution judgment.”
¶ 20 Following the sanction order, Berman and Meenan withdrew their appearances on behalf
of petitioner. Beginning in February 2010, the trial court conducted an evidentiary hearing
on the amount of reasonable attorney fees incurred by respondent. In August 2010, the trial
court awarded respondent $112,000 in attorney fees based on the violation of Rule 137, to
be paid $56,000 by petitioner and $56,000 by Berman and Meenan. Berman and Meenan
each filed a notice of appeal and their appeals were consolidated.
¶ 21 This appeal followed.
¶ 22 On appeal, Berman and Meenan argue that the trial court erred in sanctioning them under
Supreme Court Rule 137 because respondent never sought sanctions against the attorneys
and they were never given notice that they could be liable for sanctions. Specifically, the
attorneys contend that their constitutional procedural due process rights were “abridged”
because the trial court sanctioned them without notice. Alternatively, the attorneys assert that
the trial court abused its discretion in sanctioning them. The attorneys do not raise any issue
on appeal regarding the trial court’s determination of the amount of respondent’s attorney
fees and costs.
¶ 23 Initially, respondent contends that the attorneys have forfeited their claim because it was
not raised in the trial court, we disagree. Respondent cites the decision in Liddle v. Cepeda,
251 Ill. App. 3d 892 (1993), in support of his forfeiture argument. However, the facts present
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in Liddle are distinguishable from the present circumstances. In Liddle, the trial court entered
a sanction order against a law firm for filing a third-party complaint without ever speaking
to their client and having made no reasonable inquiry into the allegations. Liddle, 251 Ill.
App. 3d at 894. On appeal, the law firm complained for the first time that the procedure
under which they were sanctioned was error because the trial court called the hearing on its
own volition and without advance notice. Liddle, 251 Ill. App. 3d at 895. The reviewing
court found this issue forfeited because the attorneys participated in the hearing, never raised
an objection, did not move for a continuance, and declined the trial court’s invitation to have
another attorney from their law firm testify. Liddle, 251 Ill. App. 3d at 895-96.
¶ 24 In contrast, here, the trial court conducted a hearing on respondent’s motion for sanctions
against petitioner, but did not give notice to Berman and Meenan that the court could find
their actions sanctionable. The attorneys did not have the opportunity to raise an objection
or otherwise contest the sanctions because the trial court issued its order and sua sponte
sanctioned the attorneys. This issue concerning the lack of notice given to the attorneys could
not have been raised before the trial court.
¶ 25 Respondent further argues that the attorneys could have raised the issue in the trial court
by filing a posttrial motion before the sanctions amount was determined. However,
respondent has not cited any authority holding that the filing of a motion to reconsider or
other posttrial motion is a prerequisite to filing an appeal. Supreme Court Rule 341(h)(7)
requires an appellant to include in its brief an “[a]rgument, which shall contain the
contentions of the appellant and the reasons therefor, with citation of the authorities and the
pages of the record relied on.” Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2008). Moreover, it is well
settled that a contention that is supported by some argument but does not cite any authority
does not satisfy the requirements of Supreme Court Rule 341(h)(7), and bare contentions that
fail to cite any authority do not merit consideration on appeal. Wasleff v. Dever, 194 Ill. App.
3d 147, 155-56 (1990). Moreover, the reviewing court in In re Michael H., 392 Ill. App. 3d
965, 970 (2009), noted that “there is no requirement that a litigant file a motion to reconsider
before filing an appeal.” See also Cardona v. Del Granado, 377 Ill. App. 3d 379, 385 (2007)
(defendant was not required to file a motion for new trial or a judgment n.o.v. in order to
challenge the court’s order on appeal); Winters v. Kline, 344 Ill. App. 3d 919, 928 (2003)
(finding that the defendants were not required to file a motion for a new trial). Additionally,
section 2-1203(a) of the Code of Civil Procedure states that in all cases tried without a jury,
a party may file a motion for a rehearing, retrial, modification of judgment, to vacate the
judgment, or other relief. 735 ILCS 5/2-1203(a) (West 2008). Berman and Meenan were not
obligated to challenge the trial court’s sanction order before raising the issue on appeal.
Accordingly, the issue has not been forfeited.
¶ 26 Supreme Court Rule 137 provides:
“The signature of an attorney or party constitutes a certificate by him that he has read the
pleading, motion or other paper; that to the best of his knowledge, information, and belief
formed after reasonable inquiry it is well grounded in fact and is warranted by existing
law or a good-faith argument for the extension, modification, or reversal of existing law,
and that it is not interposed for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation. *** If a pleading, motion,
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or other paper is signed in violation of this rule, the court, upon motion or upon its own
initiative, may impose upon the person who signed it, a represented party, or both, an
appropriate sanction, which may include an order to pay to the other party or parties the
amount of reasonable expenses incurred because of the filing of the pleading, motion or
other paper, including a reasonable attorney fee.” Ill. S. Ct. R. 137 (eff. Feb. 1, 1994).
¶ 27 “The purpose of Rule 137 is to prevent parties from abusing the judicial process by
imposing sanctions on litigants who file vexatious and harassing actions based upon
unsupported allegations of fact or law.” Dismuke v. Rand Cook Auto Sales, Inc., 378 Ill. App.
3d 214, 217 (2007). Since Rule 137 is penal in nature, it will be strictly construed. Dowd &
Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 487 (1998). “Courts should use an objective standard
in determining what was reasonable under the circumstances as they existed at the time of
filing.” Sanchez v. City of Chicago, 352 Ill. App. 3d 1015, 1020 (2004). “An appellate court
should base its review of the trial court’s decision on three factors: (1) whether the court’s
ruling was an informed one; (2) whether the ruling was based on valid reasons which fit the
case; and (3) whether the ruling followed logically from the stated reasons to the particular
circumstances of the case.” Sanchez, 352 Ill. App. 3d at 1020.
¶ 28 A trial court’s decision imposing sanctions is entitled to deference and will not be
reversed absent an abuse of discretion. In re Estate of Baker, 242 Ill. App. 3d 684, 687
(1993). “However, the predicate to such deference is that the trial court make an informed
and reasoned decision.” Estate of Baker, 242 Ill. App. 3d at 687 (citing In re Estate of Smith,
201 Ill. App. 3d 1005 (1990)); see also Berg v. Mid-America Industrial, Inc., 293 Ill. App.
3d 731, 736-37 (1997). “[A] trial court’s decision on sanctions must clearly set forth the
factual basis for the result reached in order to be afforded deferential treatment.” Estate of
Baker, 242 Ill. App. 3d at 687-88. The court in Estate of Baker held that “a trial court must
allow for an evidentiary hearing before imposing sanctions.” Estate of Baker, 242 Ill. App.
3d at 688. A hearing would “give the parties involved an opportunity to present any evidence
needed to substantiate or rebut the claim for sanctions, and an opportunity to argue their
positions.” Estate of Baker, 242 Ill. App. 3d at 687.
¶ 29 In Estate of Baker, the executrix of the estate filed the final report which included a
payment of $8,000 in legal fees for the estate’s attorney’s work performed on behalf of the
estate. At a hearing on objections to the final report, the attorney testified about the time
spent on the case and filed a time log which listed a total fee of $9,869.40, based on 109.66
hours of work at $90 per hour. The trial court found this amount to be “ ‘ludicrous’ ” and
“ ‘sanctionable,’ ” stating that he was entitled to an attorney fee of $2,500. Estate of Baker,
242 Ill. App. 3d at 687. The trial court then sua sponte sanctioned the attorney by reducing
his fees to zero and awarding $2,500 to the opposing counsel to be paid by the estate. Estate
of Baker, 242 Ill. App. 3d at 687. On appeal, the reviewing court reversed and remanded for
an evidentiary hearing on the issue of sanctions pursuant to Rule 137, holding that “a trial
court must allow for an evidentiary hearing before imposing sanctions.” Estate of Baker, 242
Ill. App. 3d at 688.
¶ 30 The reviewing court in Berg held that the trial court erred when it entered a dismissal as
a sanction under Rule 137. In that case, the plaintiff filed a complaint on behalf of himself
and a corporation and the defense moved to dismiss the complaint as the plaintiff was not
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an attorney. An attorney filed an appearance for the plaintiffs, but the defense moved to
disqualify him. At a hearing on the disqualification motion, the trial court granted the defense
motion and asked if there was a motion to dismiss, the defendant then moved to dismiss and
the trial court granted the motion. Berg, 293 Ill. App. 3d at 732-33. The reviewing court
noted that a trial court imposing a sanction under Rule 137 must make specific legal and
factual findings and conduct a hearing to allow the parties to present evidence to support or
rebut the claim, but none of this was done by the trial court. Berg, 293 Ill. App. 3d at 736-37.
The appellate court found the trial court’s order to be devoid of sufficient information and
reversed. Berg, 293 Ill. App. 3d at 737.
¶ 31 In Estate of Smith, a claimant received a judgment against the estate following a jury
verdict and sought attorney fees and costs from the estate as a sanction. The trial court denied
the request, finding that the award was not warranted under the circumstances of the case,
but the record indicated that no evidence had been presented at the hearing on the claimant’s
motion for fees and costs. Estate of Smith, 201 Ill. App. 3d at 1007. The reviewing court
remanded for an evidentiary hearing on the claimant’s motion, finding that the trial court
erred in not conducting such a hearing. Estate of Smith, 201 Ill. App. 3d at 1009. The Estate
of Smith court held “in order for the circuit court to fulfill the prerequisites for exercising its
discretion, it must have an evidentiary hearing and it must make specific findings which will
then form the basis for its ultimate decision.” Estate of Smith, 201 Ill. App. 3d at 1010. The
court noted that on remand the claimant was to be given an opportunity to prove the
requirements for sanctions and the estate would be given the opportunity to rebut the
contentions. Estate of Smith, 201 Ill. App. 3d at 1010.
¶ 32 The decision in Riverdale Bank v. Papastratakos, 266 Ill. App. 3d 31, 42 (1994), was
cited by defendant to show that a separate hearing is not necessary when the pleadings and
evidence at trial establish that the allegations were made without reasonable cause and were
untrue. In that case, two of the defendants filed motions for sanctions prior to trial. The bank
filed a declaratory judgment action against multiple defendants raising several allegations
stemming from a forgery, including a fraudulent conspiracy to defraud the bank, and sought
to enjoin all of the defendants from receiving any money. One of the defendants, Sotirios
Georgopoulos, the individual whose signature was forged, was granted summary judgment
on the bank’s complaint and filed a counterclaim for conversion against the bank. Prior to
the trial on the conversion counterclaim, Georgopoulos filed a motion for sanctions. A
second defendant, Nick Papastratakos, filed a motion to dismiss which was granted, and a
motion for fees and costs. Neither the sanction nor the fee motion was ruled on before the
trial. Following a trial on Georgopoulos’ counterclaim, the trial court entered judgment in
Georgopoulos’ favor. Georgopoulos then filed a second motion for sanctions against the
bank. The trial court issued an order imposing sanctions against the bank and awarding fees
and costs to Georgopoulos and Papastratakos. Riverdale Bank, 266 Ill. App. 3d at 33-38.
¶ 33 On appeal, the bank argued that the trial court erred in failing to hold a separate hearing
on the motions for sanctions, as required by Rule 137. The court pointed out that
Papastratakos’ sanction motion was filed prior to the effective date of Rule 137 and therefore
was subject to section 2-611 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110,
¶ 2-611), which governed the imposition of sanctions prior to Rule 137, while Georgopoulos
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sought sanctions under both section 2-611 and Rule 137. The reviewing court noted that a
hearing was not required under section 2-611 when “the pleadings and evidence at trial
demonstrate that the offending allegations were made without reasonable cause and were
untrue.” Riverdale Bank, 266 Ill. App. 3d at 42. There, the court determined that a separate
hearing was unnecessary because “assertions in the pleadings and the evidence at trial
provided a sufficient basis for the court to determine that the statutory requirements for
imposition of sanctions were met.” Riverdale Bank, 266 Ill. App. 3d at 43. The court found
that the bank had made unsupported factual and legal assertions in its complaint and it knew
prior to the filing of the complaint that Georgopoulos’ signature had been forged by another
individual. Riverdale Bank, 266 Ill. App. 3d at 43.
¶ 34 Riverdale Bank is distinguishable from the instant case because in that case, the trial
judge sitting as the finder of fact presided over a lengthy trial in which she heard testimony
from several witnesses and other evidence relating to the forgery allegations before she even
considered the sanctions motions. The trial evidence fully supported the imposition of
sanctions and additional information was therefore not needed. Here, no trial was held and
no evidence presented. We find the circumstances of this case to be similar to those present
in Baker and Berg, where the trial court sanctioned an individual without a hearing and the
opportunity to rebut those allegations. Additionally, the courts in Baker and Berg considered
the more recent Rule 137 in considering the trial court’s actions in imposing sanctions. We
find this line of cases to be the more reasoned view in holding that a trial court may sanction
a party or an attorney “upon its own initiative” but the individual subject to sanction is
entitled to a hearing.
¶ 35 Here, the trial court sua sponte imposed sanctions against Berman and Meenan, or as
Rule 137 states, “upon its own initiative.” “Sua sponte” is defined in Black’s Law Dictionary
as “Without prompting or suggestion; on its own motion.” Black’s Law Dictionary 1437 (7th
ed. 1999). We conclude that this definition and the language of Rule 137 do not mean that
the trial court should act without a hearing. Rather, “sua sponte” or “upon its own initiative”
means that the trial court has the ability to sanction an individual without a motion presented
by a party.
¶ 36 In this case, the trial court conducted a hearing on respondent’s motion for sanctions
against petitioner. However, the trial court never informed Berman and Meenan that it
considered their actions in the filing of the section 2-1401 petition to be sanctionable and the
attorneys represented petitioner at the hearing and presented arguments on behalf of their
client. While Rule 137 does allow for the trial court to impose sanctions “upon its own
initiative,” the opportunity for a person subject to sanctions to be heard is a different matter.
The attorneys were not afforded such an opportunity. The evidence in the record contains
very little information about what petitioner knew about the Smuckers deal and at what time
and what petitioner said she told her attorneys. The record also only offers evidence of what
petitioner said she told her attorneys, but there is nothing in the record to show what
petitioner actually did tell her lawyers. Although the record contains information relating to
what petitioner knew, the record discloses very little information about what the attorneys
knew. The record is devoid of any testimony, deposition or evidence regarding the attorneys’
own knowledge and actions. The attorneys did not have the opportunity to defend their
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actions separate from the actions of their client. We point out that after the trial court issued
its order sanctioning Berman and Meenan, the attorneys withdrew their representation of
petitioner because of a clear conflict of interest.
¶ 37 We also note that the trial court held the attorneys and petitioner to a greater level of
knowledge in its sanction order than in the prior summary judgment order. In the summary
judgment order, the trial court found that it was “uncontroverted that [petitioner] learned of
the possible acquisition no later than December 1, 2004.” Then, in the sanction order, the
trial court definitively stated that “Petitioner and her attorneys knew about the Smuckers deal
in 2004 before the entry of the dissolution judgment.” This difference is significant because
the article petitioner read in Black Enterprise Magazine stated that the sale occurred in 2005,
which was after the MSA was settled and the dissolution judgment was entered. The only
information in the record regarding the Smuckers deal in 2004 concerned the possible
acquisition by BRF. However, as we have found, the record in this case does not establish
what Berman and Meenan knew or should have known. There remains a difference in what
petitioner knew and what her attorneys knew. Petitioner was given the opportunity to be
represented by counsel and to defend against respondent’s claims for sanctions, but Berman
and Meenan were not. Because Rule 137 must be strictly construed and is penal in nature,
Berman and Meenan should have been afforded the opportunity to rebut the allegations at
an evidentiary hearing.
¶ 38 While we make no finding as to whether Berman and Meenan’s conduct was
sanctionable, we hold that the trial court should have allowed the attorneys the opportunity
to defend themselves before being sanctioned. We vacate the trial court’s sanction order
against Berman and Meenan and remand for an evidentiary hearing on whether sanctions are
appropriate here. Since we have found that Berman and Meenan were entitled to a hearing
before being sanctioned, we need not reach the merits of the sanction order or the attorneys’
constitutional challenge to the same. The Illinois Supreme Court has “repeatedly cited the
general principle that courts will address constitutional issues only as a last resort, relying
whenever possible on nonconstitutional grounds to decide cases.” Mulay v. Mulay, 225 Ill.
2d 601, 607 (2007). Finally, respondent’s request for attorney fees and costs for this appeal
is denied.
¶ 39 Based on the foregoing reasons, we vacate the decision of the circuit court of Cook
County and remand for further proceedings consistent with this opinion.
¶ 40 Vacated and remanded.
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