Airy's Inc. v. Hill ( 2021 )

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Appellate Court Date: 2022.08.01
13:22:13 -05'00'
Airy’s Inc. v. Hill, 2021 IL App (3d) 200193Appellate Court AIRY’S INC., an Illinois Corporation, Plaintiff-Appellant, v.
Caption MARVIN HILL; CATAWBA LEASING, INC., an Illinois
Corporation; and HILL COMPANY, an Illinois General Partnership,
Defendants-Appellees.–MARVIN HILL and AIRY’S INC., an Illinois
Corporation, Through Marvin Hill, a Minority Shareholder, Plaintiffs-
Appellees, v. RYAN HILL; AIRY’S INFRASTRUCTURE, INC.; and
AIRY’S PROPERTY, LLC, Defendants-Appellants.
District & No. Third District
No. 3-20-0193
Filed September 22, 2021
Decision Under Appeal from the Circuit Court of Will County, Nos. 19-MR-707, 19-
Review CH-865; the Hon. John C. Anderson, Judge, presiding.
Judgment Certified questions answered; discovery order vacated; cause
remanded with directions.
Counsel on D. Cass Wennlund and Michael A. Pascarella, of Wennlund &
Appeal Associates, of New Lenox, for appellants.
Jeff Tomczak, of Tomczak Law Group, and John E. Partelow, both of
Joliet, and Michael D. Ettinger, Craig N. Ettinger, and Alexander A.
Michael, of Michael D. Ettinger & Associates, P.C., of Palos Heights,
for appellees.
Panel JUSTICE HOLDRIDGE delivered the judgment of the court, with
opinion.
Presiding Justice McDade and Justice O’Brien concurred in the
judgment and opinion.
OPINION
¶1 This cause comes before the court as an interlocutory appeal pursuant to Illinois Supreme
Court Rule 308 (eff. Oct. 1, 2019). The circuit court of Will County certified two questions
after it granted the motion to take limited discovery filed by Marvin Hill and denied the motion
for an order of friendly contempt filed by counsel for Ryan Hill. The questions are as follows:
“1. When a motion to disqualify is filed, may the trial court authorize and compel
discovery on issues limited to the disqualification motion?
2. If the first question is answered affirmatively, may the discovery be directed
toward the attorney and/or firm that is the subject of the disqualification motion, so
long as the information sought is not privileged?”
¶2 I. BACKGROUND
¶3 In March 2019, through its majority shareholder Ryan Hill, Airy’s Inc. filed a complaint
against Catawba Leasing, Inc. (Catawba); Hill Company; and Marvin Hill. Marvin was a
minority shareholder of Airy’s Inc., the sole shareholder of Catawba, the general partner of
Hill Company, and Ryan’s father. The complaint alleged that Marvin improperly withdrew
$243,325.75 from Airy’s Inc. and transferred the money to accounts owned by Catawba and
Hill Company. Marvin then filed a suit (both individually and as a minority shareholder of
Airy’s Inc.) against Ryan; Airy’s Infrastructure, Inc. (Airy’s Infrastructure); and Airy’s
Property, LLC (Airy’s Property). This complaint alleged that Ryan fraudulently convinced
Marvin to sign over some of his shares of Airy’s Inc. so that Ryan could be the majority
shareholder when Marvin’s health began to deteriorate. Ryan told Marvin that Airy’s Inc.
would receive preferential treatment from the Illinois American Water Company if Ryan was
the majority shareholder because of Ryan’s military service. The complaint also alleged that
Ryan created Airy’s Infrastructure and Airy’s Property, had been diverting Airy’s Inc.
customers and funds to these two corporations, and sought to “undermin[e] and destroy[ ]”
Airy’s Inc. The two cases were consolidated.
¶4 On July 11, 2019, Marvin filed a motion to disqualify attorney D. Cass Wennlund and the
firm of Wennlund and Associates from representing Ryan and Airy’s Inc., as Wennlund had
previously represented Marvin in a real estate matter in 2005. Marvin also sought to enjoin
Ryan’s use of Airy’s Inc. funds to pay for the litigation. The court denied Marvin’s motion to
disqualify on September 23, 2019. It also denied the motion to enjoin the use of corporate
funds, noting that “Airy’s should not be paying Ryan’s personal legal bills, and to the extent
these cases largely involve a struggle for control of Airy’s between Marvin and Ryan, the
dispute is predominately personal in nature.” However, the court stated that, if Ryan
improperly used Airy’s Inc. assets to pay his legal bills, there would be other remedies,
including, inter alia, potential claims for breach of fiduciary duty, fraud, and/or conversion,
such that an injunction was not necessary.
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¶5 On September 27, 2019, Marvin filed a motion for leave to conduct limited discovery
relating to “(a) the scope of the representation of counsel for Ryan Hill, and (b) the source of
funds paid to counsel for Ryan Hill.” Specifically, Marvin sought to issue written discovery
requests and take the depositions of Ryan and Ryan’s counsel. On January 24, 2020, the court
granted the motion for limited discovery relating to the disqualification, stating,
“Parties may take limited-scope discovery relating only to (a) the scope of the alleged
prior representation by Cass Wennlund and his firm; and (b) the amount and source of
funds used to pay Mr. Wennlund and his firm. Discovery may be issued to Mr.
Wennlund, members of his firm, litigants, and any other relevant person/entity with
knowledge.”
Wennlund filed a motion for an order of friendly contempt to appeal the order permitting the
discovery. The court denied the motion for an order of friendly contempt on April 27, 2020,
but certified the above-mentioned questions. This court allowed the interlocutory appeal.
¶6 II. ANALYSIS
¶7 Rule 308 allows for the permissive interlocutory appeal of an order involving “a question
of law as to which there is substantial ground for difference of opinion” where “an immediate
appeal from the order may materially advance the ultimate termination of the litigation.” Ill. S.
Ct. R. 308(a) (eff. Oct. 1, 2019). We review these certified questions de novo. Bowman v.
Ottney, 2015 IL 119000, ¶ 8. Our examination on appeal is generally limited to considering
the certified questions, rather than analyzing the propriety of the underlying order. De Bouse
v. Bayer AG, 235 Ill. 2d 544, 550 (2009). However, once we have answered the certified
questions, we may consider the propriety of the order where the interest of judicial economy
and the need to reach an equitable result so requires. Id.¶8 The first question before us is, “When a motion to disqualify is filed, may the trial court
authorize and compel discovery on issues limited to the disqualification motion?” Discovery
in civil actions is governed by Illinois Supreme Court Rules 201 through 224. Rule 201(b) sets
forth the scope of discovery. Ill. S. Ct. R. 201(b) (eff. July 1, 2014). “[A] party may obtain by
discovery full disclosure regarding any matter relevant to the subject matter involved in the
pending action, whether it relates to the claim or defense of the party seeking disclosure or of
any other party ***.” Ill. S. Ct. R. 201(b)(1) (eff. July 1, 2014). While a circuit court has great
latitude in ruling on discovery matters (Chicago’s Pizza, Inc. v. Chicago’s Pizza Franchise
Ltd. USA, 384 Ill. App. 3d 849, 869 (2008)), “ ‘Rule 201(b)(1) is founded on the basic premise
that the objective of discovery is the “expeditious and final determination of controversies in
accordance with the substantive rights of the parties.” [Citation.] Thus, discovery should only
be utilized to “illuminate the actual issues in the case.” [Citation.]’ (Emphasis added.)” Allen
v. Peoria Park District, 2012 IL App (3d) 110197, ¶ 10 (quoting Owen v. Mann, 105 Ill. 2d
525, 530 (1985)).
¶9 Based on the above, we answer the first certified question in the affirmative, with
qualification. We find that a court may only authorize and compel discovery as it relates to a
disqualification motion if such discovery is relevant to and necessary for resolution of the
actual issues in the case. We note that, in allowing the limited discovery motion, the court cited
Milazzo v. Wolin & Rosen, Ltd., 2018 IL App (1st) 172300-U, ¶ 23, and stated that courts
routinely allow these motions. While not precedential, as it is an unpublished order under
Illinois Supreme Court Rule 23, Milazzo does not support the proposition that courts routinely
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allow these motions but merely provides an example of an instance where limited discovery
for a disqualification motion was related to the actual issues of the case. In Milazzo, the
plaintiffs had multiple lawsuits pending against clients of the law firm of Wolin & Rosen, Ltd.,
as well as against Wolin & Rosen, Ltd., itself. Id. ¶ 2. The potential relationship between the
plaintiffs and the law firm formed the basis of many of the claims in the complaint, as they
related to fiduciary duty and the existence of an attorney-client relationship.
¶ 10 Having determined that, in some instances, a court may authorize and compel discovery as
it relates to a disqualification motion, we turn to the second question of whether such discovery
may “be directed toward the attorney and/or firm that is the subject of the disqualification
motion, so long as the information sought is not privileged.”
¶ 11 We find In re Marriage of Baumgartner, 384 Ill. App. 3d 39 (2008), particularly
applicable. In Baumgartner, the former wife, Susan, issued subpoenas for deposition and
document production to the counsel of her former husband, Craig. Id. at 43. Craig moved to
quash the subpoenas and for sanctions, which the court granted. Id. at 43-44. Susan appealed,
arguing, inter alia, that the court abused its discretion when it sanctioned her for subpoenaing
Craig’s counsel. Id. at 64. The First District of our appellate court adopted a rule set forth in
Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986), which allowed depositions
of opposing counsel only “ ‘where the party seeking to take the deposition has shown that
(1) no other means exist to obtain the information than to depose opposing counsel [citation];
(2) the information sought is relevant and nonprivileged; and (3) the information is crucial to
the preparation of the case.’ ” Baumgartner, 384 Ill. App. 3d at 65 (quoting Shelton, 805 F.2d
at 1327). In doing so the Baumgartner court quoted the following from Shelton:
“Taking the deposition of opposing counsel not only disrupts the adversarial system
and lowers the standards of the profession, but it also adds to the already burdensome
time and costs of litigation. *** Finally, the practice of deposing opposing counsel
detracts from the quality of client representation. Counsel should be free to devote his
or her time and efforts to preparing the client’s case without fear of being interrogated
by his or her opponent. Moreover, the ‘chilling effect’ that such practice will have on
the truthful communications from the client to the attorney is obvious.
***
*** The harassing practice of deposing opposing counsel (unless that counsel’s
testimony is crucial and unique) appears to be an adversary trial tactic that does nothing
for the administration of justice but rather prolongs and increases the cost of litigation,
demeans the profession, and constitutes an abuse of the discovery process.” (Internal
quotation marks omitted.) Id.See also Kilpatrick v. First Church of the Nazarene, 182 Ill. App. 3d 461, 470 (1989).
¶ 12 We adopt the three-part test as set forth in Shelton and adopted by Baumgartner. Therefore,
we answer the second certified question in the affirmative, with qualifications. A party may
only issue the above-mentioned discovery request upon a party’s counsel, if (1) the only way
to obtain such information is through opposing counsel, (2) the information sought is not
privileged and is relevant to the case, and (3) the information is crucial to the preparation of
the case.
¶ 13 Though we may consider the propriety of the underlying order where the interests of justice
require and for judicial economy, we will not do so here. As Marvin points out in his brief, the
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case has continued in the circuit court after the court entered its order for additional discovery
and facts may have come to light that would have informed the court’s discovery order.
Therefore, we vacate the court’s discovery order and remand for the court to reconsider the
order consistent with this opinion. In doing so, the court should only authorize and compel
discovery as it relates to a disqualification motion if such discovery is relevant to and necessary
for resolution of the actual issues in the case. If the court so finds, then such an order may only
be provided to Ryan’s counsel if (1) the sole way of obtaining such information is through
Ryan’s counsel, (2) the information sought is not privileged and is relevant, and (3) the
information is crucial to the preparation of the case.
¶ 14 III. CONCLUSION
¶ 15 We answer both questions in the affirmative, with qualification. Therefore, we vacate the
court’s limited discovery order and remand for the circuit court to reconsider the motion as set
forth in this opinion.
¶ 16 Certified questions answered; discovery order vacated; cause remanded with directions.
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