Lake Environmental, Inc. v. Arnold

2015 IL 118110IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 118110)
LAKE ENVIRONMENTAL, INC., Appellee, v. DAMON T. ARNOLD,
Director of Public Health, et al., Appellants.
Opinion filed September 24, 2015.
CHIEF JUSTICE GARMAN delivered the judgment of the court, with opinion.
Justices Freeman, Thomas, Kilbride, Karmeier, Burke, and Theis concurred in
the judgment and opinion.
OPINION
¶1 After years of protracted litigation, Lake Environmental, Inc. filed a motion for
sanctions against the Illinois Department of Public Health (Department) and its
director, Damon Arnold 1, in his official capacity, pursuant to Illinois Supreme
Court Rule 137 (eff. July 1, 2013). After a hearing, the circuit court of St. Clair
County denied the motion. The court provided no explanation for its decision. The
circuit court also denied Lake Environmental’s motion for reconsideration on the
1
Damon Arnold is no longer the director of the Department of Public Health. Therefore, the
current director, LaMar Hasbrouck, has been substituted as a party by operation of law. 735 ILCS
5/2-1008(d) (West 2014).
issue. On review, the appellate court concluded that the circuit court erred by
failing to provide an explanation of its decision to deny the motion for sanctions.
The appellate court thus remanded the case with instructions that the circuit court
provide its reasoning for denying the motion. The Department appealed to this
court, pursuant to Rule 315. Ill. S. Ct. R. 315 (eff. Jan. 1, 2015).
¶2 BACKGROUND
¶3 In 2008, the Department of Public Health issued an emergency stop work order
to Lake Environmental based on alleged violations of the Department’s regulations
committed during an asbestos cleanup job at Scott Air Force Base. The Department
also removed Lake Environmental’s name from the list of state-approved asbestos
abatement contractors. Several months later, the Department dismissed the stop
work order proceedings voluntarily, after finding that the violations had been
remedied.
¶4 In 2010, the Department notified Lake Environmental that it intended to revoke
its asbestos abatement contractor license based on the alleged violations that
occurred at the Scott Air Force Base job. The director of the Department, upon the
recommendation of the administrative law judge, granted summary judgment for
the Department and revoked Lake Environmental’s license.
¶5 In the meantime, the Department filed a civil lawsuit against Lake
Environmental seeking monetary penalties for the 2008 violations. The circuit
court found that the Department should have sought such penalties during the 2008
administrative proceedings and granted summary judgment for Lake
Environmental based on the doctrine of res judicata.
¶6 Lake Environmental then filed a petition for administrative review challenging
the Department’s decision to revoke its license. Lake Environmental argued that
the attempt to revoke its license was barred by res judicata because the Department
had voluntarily dismissed the emergency stop work order action. Alternatively,
Lake Environmental argued that the Department lacked authority to seek
revocation based on alleged violations of federal regulations. The circuit court
granted summary judgment for Lake Environmental after concluding that the
Department was barred under the doctrine of res judicata from revoking Lake
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Environmental’s license based on the 2008 conduct at issue in the original
emergency stop work order proceeding.
¶7 Lake Environmental then moved for sanctions based on its argument that the
Department should have known that its claim would be barred by res judicata and
thus that its continued defense against Lake Environmental’s petition for
administrative review violated Illinois Supreme Court Rule 137. Rule 137 requires
that any pleading, motion, or other document filed in court be “well grounded in
fact and *** warranted by existing law or a good-faith argument for the extension,
modification, or reversal of existing law,” and not brought for any improper
purpose. Ill. S. Ct. R. 137(a) (eff. July 1, 2013). The rule allows for a court, on
motion or on its own initiative, to impose sanctions against a party or its attorney
for violating these requirements. Id.¶8 The circuit court held a hearing on the motion and issued an order stating only
that the motion was denied. Rule 137 expressly requires that the circuit court
provide an explanation of its decision any time it imposes sanctions under the rule.
The rule does not address any such requirement when the court denies a motion for
sanctions. Ill. S. Ct. R. 137(d). The circuit court also denied Lake Environmental’s
motion for reconsideration on the issue. Lake Environmental appealed. The
appellate court, relying on Second District precedent, concluded that the circuit
court must provide an explanation for its decision on a motion for sanctions
pursuant to Rule 137, regardless of whether the sanctions are imposed or denied. In
the absence of such an explanation, the appellate court found it could not review
whether the denial of sanctions was proper and thus remanded the case to the circuit
court with instructions that it provide an explanation for its decision. We allowed
the Department’s petition for leave to appeal. Ill. S. Ct. R. 315 (eff. July 1, 2013).
¶9 ANALYSIS
¶ 10 Before this court, Lake Environmental argues that the appellate court’s decision
ought to be understood not as a ruling on the requirements of Rule 137, but as an
exercise of the appellate court’s authority under Rule 366. Rule 366 provides that
the appellate court has authority to “enter any judgment and make any order that
ought to have been given or made, and make any other and further orders and grant
any relief, including a remandment *** that the case may require.” Ill. S. Ct. R.
366(a)(5) (eff. Feb. 1, 1994). Lake Environmental asserts that the appellate court
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lacked a sufficient record upon which to determine whether the circuit court abused
its discretion and therefore that it was not an abuse of the appellate court’s
discretion to remand the case to the circuit court.
¶ 11 However, it is clear from the language of the appellate court’s decision that its
holding was based solely on its interpretation of Rule 137. The court, in its written
decision, reviewed and adopted the conclusions of several opinions from the
Second District in which the appellate court has interpreted Rule 137 as requiring
that circuit courts provide an explanation for their decisions on motions for
sanctions, regardless of whether they allow or deny the motion. The appellate court
made no reference to having reviewed the record and found it lacking. The opinion
concludes: “Because the trial judge in the case at bar provided no explanation for
his denial of sanctions, his order must be reversed and this cause remanded.” 2014
IL App (5th) 130109, ¶ 9. Therefore, we find that the appellate court intended to
interpret Rule 137 and concluded that circuit courts must always provide
explanations for their decisions on motions for sanctions pursuant to Rule 137,
regardless of whether they grant or deny such motions. We conclude now that this
interpretation of Rule 137 is incorrect.
¶ 12 Supreme court rules are interpreted in the same manner as statutes, and this
court reviews a lower court’s interpretation of either de novo. Vision Point of Sale,
Inc. v. Haas, 226 Ill. 2d 334, 342 (2007). Both are interpreted by ascertaining and
giving effect to the intent of the drafter. Roth v. Illinois Farmers Insurance Co., 202
Ill. 2d 490, 493 (2002). That intent is best understood by giving the language used
its plain and ordinary meaning. Id. “When the language is clear and unambiguous,
we will apply the language used without resort to further aids of construction.” Id.This court will not insert words into its rules when the rule is otherwise “cogent and
justifiable.” Waste Management of Illinois, Inc. v. Illinois Pollution Control Board,
145 Ill. 2d 345, 348 (1991); see People v. Roberts, 214 Ill. 2d 106, 116 (2005)
(noting that “a court may not inject provisions that are not found in a statute” and
that the “rules of statutory construction also apply to interpretation of our supreme
court rules”). Finally, because Rule 137 is penal in nature, it is narrowly construed.
Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 487 (1998).
¶ 13 Rule 137 provides that:
“(a) *** Every pleading, motion and other document of a party represented
by an attorney shall be signed by at least one attorney of record ***. A party
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who is not represented by an attorney shall sign his pleading, motion, or other
document and state his address. *** The signature of an attorney or party
constitutes a certificate by him that he has read the pleading, motion or other
document; 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.” Ill. S. Ct. R. 137(a) (eff. July 1, 2013).
Implicit in this rule is a requirement that “ ‘an attorney promptly dismiss a lawsuit
once it becomes evident that it is unfounded.’ ” American Service Insurance v.
Miller, 2014 IL App (5th) 130582, ¶ 13 (quoting Rankin v. Heidlebaugh, 321 Ill.
App. 3d 255, 267 (2001)). If the rule is violated, the court may, upon motion or its
own initiative, impose sanctions upon the individual who signed the filing, the
represented party, or both. Ill. S. Ct. R. 137(a). This rule applies equally to agencies
of the state, and the court can require one party to pay another party’s costs incurred
for administrative proceedings when review of an agency decision is at issue. Ill. S.
Ct. R. 137(c). Subsection (d) requires that, “[w]here a sanction is imposed under
this rule, the judge shall set forth with specificity the reasons and basis for any
sanction so imposed either in the judgment order itself or in a separate written
order.” Ill. S. Ct. R. 137(d).
¶ 14 This language is unambiguous. It requires the circuit court to provide an
explanation when the court imposes sanctions. Nothing in the language of the rule
implies that the court must also provide an explanation when it denies sanctions. If
the drafters of the rule intended to impose such a requirement, they would have
done so with specific language to that effect.
¶ 15 The requirement that the court provide an explanation only when imposing
sanctions is in keeping with the purpose of Rule 137. The rule is designed to
discourage frivolous filings, not to punish parties for making losing arguments.
In re Estate of Wernick, 127 Ill. 2d 61, 77 (1989) (noting that the purpose of section
2-611 of the Code of Civil Procedure, the predecessor to Rule 137, was to “penalize
the litigant who pleads frivolous or false matters, or who brings a suit without any
basis in the law”); see Fremarek v. John Hancock Mutual Life Insurance Co., 272
Ill. App. 3d 1067, 1074 (1st Dist. 1995) (“The purpose of [Rule 137] is to prevent
abuse of the judicial process by penalizing claimants who bring vexatious and
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harassing actions based upon unsupported allegations of fact or law. It is not
intended to simply penalize litigants for the lack of success; rather, its aim is to
restrict litigants who plead frivolous or false matters without any basis in law.”);
see also Espevik v. Kaye, 277 Ill. App. 3d 689, 697 (2d Dist. 1996) (reaching the
same conclusion regarding the purpose of Rule 137); Fischer v. Brombolich, 246
Ill. App. 3d 660, 664 (5th Dist. 1993) (same); In re Marriage of Sykes, 231 Ill. App.
3d 940, 946 (4th Dist. 1992) (same); Couri v. Korn, 202 Ill. App. 3d 848, 857 (3d
Dist. 1990) (same). Furthermore, Rule 137 provides that circuit court judges may
impose sanctions when the rule is violated; they are not required to do so. Ill. S. Ct.
R. 137(a). Thus, it is logical to require circuit courts to provide an explanation when
imposing sanctions, to make clear to the sanctioned party and future litigants what
conduct will not be tolerated. There is no similar need for an explanation when a
motion is denied.
¶ 16 A circuit court’s decision to deny a motion for sanctions is reviewed for abuse
of discretion. Dowd & Dowd, Ltd., 181 Ill. 2d at 487. A court has abused its
discretion when no reasonable person would agree with its decision. In re Marriage
of O’Brien, 2011 IL 109039, ¶ 52; American Service Insurance, 2014 IL App (5th)
130582, ¶ 13. By reading into Rule 137 a requirement that the court provide an
explanation when denying sanctions, the appellate court has inherently concluded
that no reasonable person could ever find the denial of a motion for sanctions
justified when the circuit court has not provided an explanation for the denial. This
logic is flawed. In In re Estate of Smith the appellate court concluded that “[t]he
appellate court in reviewing a decision on a motion for sanctions should primarily
be determining whether (1) the circuit court’s decision was an informed one, (2) the
decision was based on valid reasons that fit the case, and (3) the decision followed
logically from the application of the reasons stated to the particular circumstances
of the case.” In re Estate of Smith, 201 Ill. App. 3d 1005, 1009-10 (3d Dist. 1990).
This language has repeatedly been used to require that the appellate court look at
the explanation of the circuit court’s decision, rather than the record, to determine if
the decision was an abuse of discretion. E.g., O’Brien & Associates, P.C. v. Tim
Thompson, Inc., 274 Ill. App. 3d 472, 483 (2d Dist. 1995); North Shore Sign Co. v.
Signature Design Group, Inc., 237 Ill. App. 3d 782, 790-91 (2d Dist. 1992); Heiden
v. Ottinger, 245 Ill. App. 3d 612, 621 (2d Dist. 1993); but see Turner Investors v.
Pirkl, 338 Ill. App. 3d 676, 683 (3d Dist. 2003) (finding the legal analysis in Smith
no longer valid due to changes to the relevant statute and rules and rejecting the
notion that circuit courts “must make findings of fact whether they impose or deny
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a motion for sanctions” (emphasis in original)). This is contrary to the longstanding
principle that a reviewing court can “sustain the decision of a lower court on any
grounds which are called for by the record, regardless of whether the lower court
relied on those grounds and regardless of whether the lower court’s reasoning was
correct.” Leonardi v. Loyola University of Chicago, 168 Ill. 2d 83, 97 (1995); see
Beacham v. Walker, 231 Ill. 2d 51, 61 (2008) (“[T]his court may affirm the circuit
court’s judgment on any basis contained in the record.”). In light of this authority, it
is clear that the appellate court ought to focus on whether the record provides an
adequate basis for upholding the circuit court’s decision to deny sanctions, not on
the circuit court’s specific reasons for doing so. Turner Investors, 338 Ill. App. 3d
at 683; see Sullivan v. Eichmann, 213 Ill. 2d 82, 90 (2004) (finding that the record
was sufficient to allow appellate review for an abuse of discretion, despite the fact
that the appellant failed to provide the court with a transcript of the relevant
hearing).
¶ 17 As the appellate court reached its conclusion solely on the lack of an
explanation from the circuit court, we conclude that the appellate court erred in
remanding this case. However, there is no pressing need for this court to review the
record and determine whether the circuit court abused its discretion at this time.
Therefore, we remand this case to the appellate court with instructions that it
review the record to determine whether a reasonable person could agree with the
circuit court’s decision to deny the motion for sanctions.
¶ 18 CONCLUSION
¶ 19 The plain language of Illinois Supreme Court Rule 137 imposes no requirement
on a circuit court to explain its reasons for denying a motion for sanctions. The
appellate court, when reviewing a circuit court decision to deny sanctions, should
look to the record to determine whether the circuit court had an adequate basis for
making its decision. In the event the appellate court finds that the record is
insufficient for such purposes, then remanding the case may be appropriate.
However, a record is not inherently insufficient when the circuit court does not
provide its reasons for denying the motion. Therefore, we remand this case to the
appellate court with instructions that it review the record on appeal to determine
whether the circuit court abused its discretion in denying Lake Environmental’s
motion for sanctions.
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¶ 20 Appellate court judgment reversed.
¶ 21 Cause remanded.
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