Patel v. Medical Society
Annotate this Case
THIRD DIVISION
July 22, 1998
No. 1-96-3465
IN THE APPELLATE COURT
OF ILLINOIS
FIRST JUDICIAL DISTRICT
DR. ASHWIN PATEL, DR. SATYA AHUJA, DR.
ANTHONY STAGNOS, DR. JOSH TUNCA, and DR.
HENRY TABE,
Plaintiffs-Appellants,
v.
ILLINOIS STATE MEDICAL SOCIETY,
Defendant-Appellee,
MEDICAL STAFF OF ALEXIAN BROTHERS
MEDICAL CENTER, INC.,
Defendant. )
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) Appeal from the
Circuit Court of
Cook County
No. 96CH4712
Honorable
John K. Madden,
Judge Presiding.
JUSTICE GORDON DELIVERED THE OPINION OF THE COURT:
Plaintiffs are physicians who are members of the Chicago
Medical Society ("CMS"). Each is also a member of the Illinois
State Medical Society ("ISMS") and/or on the staff at Alexian
Brothers Medical Center, Inc. ("Alexian Brothers"), the
organizations named as defendants. Plaintiffs brought suit to
obtain access to the records of ISMS and Alexian Brothers under
section 107.75 of the Illinois Not for Profit Corporation Act
("the Act") (805 ILCS 105/107.75 (West 1994)), in order to
ascertain whether a Dr. Dennis M. Brown (not a party to this
action) had been reimbursed by both defendant organizations for
the same expenses he had incurred while attending medical
conventions. At a pre-trial conference the circuit court
dismissed plaintiff's action with prejudice because plaintiffs
had "abused the settlement process." Plaintiffs appeal from that
order. For the reasons set forth below, we reverse and remand.
FACTS
In May 1996, plaintiffs filed a mandamus action in the
Circuit Court of Cook County, requesting that ISMS and Alexian
Brothers be directed to grant plaintiffs access to "all receipts
for airline tickets, hotels and cancelled checks reflecting
payment for these expenses" for which defendants reimbursed
Brown. Plaintiffs stated that they wished to examine these
records to determine "whether there have been any expense
improprieties and possible double payments heretofore."
The circuit court initially attempted to resolve the
petition on an expedited basis because plaintiffs' counsel
represented that Brown was scheduled to assume the office of
President of CMS on June 8, 1996, and they wished to have the
matter resolved before that date. However, because of a delay in
discovery occasioned by the plaintiffs' failure to produce
witnesses or inform the defendants who their witnesses would be,
the court determined that there could be no resolution before
that date and decided to handle the case in its normal course.
Alexian Brothers represented that it was taking the position
of a mere "stakeholder" with respect to the records in its
possession. Counsel for Alexian Brothers stated that his client
would turn over the records if the court so ordered, and did not
have an independent position on the matter. In July, the court
entered an order directing Alexian Brothers to turn over to
plaintiffs all documents relating to reimbursement of Brown for
expenses for any American Medical Association (AMA) meetings he
attended on behalf of Alexian Brothers in 1993, 1994 and 1995.
The court provided that after turning over those records, the
suit would be dismissed with prejudice with respect to Alexian
Brothers. At a status hearing on July 29, plaintiffs' counsel
stated that he had received the records ordered to be turned
over. In August, nunc pro tunc to July, the court dismissed
Alexian Brothers with prejudice and without any award of
attorneys' fees or costs.
It appears from statements of the court and counsel at the
July 29 status call that in July plaintiffs also received some
documents from Dr. Arvin Goyal, a trustee of ISMS. There does
not appear in the record before us any order of the court
requiring ISMS to provide plaintiffs with any such records,
although on July 10 the court ordered an in camera inspection of
the contents of a file Goyal had brought to his deposition but
had refused to allow counsel for ISMS[fn1] to examine. The
document Goyal provided is not contained in the record on appeal.
Counsel for ISMS represented that Goyal had stated in his
deposition that a particular portion of the document, apparently
a computer printout, referred to reimbursements made to Brown for
expenses incurred in attending the 1994 AMA interim meeting in
Hawaii.[fn2] Counsel for plaintiffs agreed that the documents
"obviously" showed at least one double billing, but that
plaintiffs wished to see "whether it was double-billed on
others."
At a status call in August, counsel for ISMS stated that
plaintiffs had "arguably" shown a "proper purpose," as required
by the Act (see 805 ILCS 105/107.75 (West 1994)) ("[a]ll books
and records of a corporation may be inspected by any member ***
for any proper purpose at any reasonable time") for inquiry into
certain expenses for which Brown was reimbursed in connection
with the 1994 meeting, and he was prepared to submit to
plaintiffs an affidavit regarding those reimbursements. Counsel
for plaintiffs did not accept this offer, reiterating that
plaintiffs wished to see the actual records. The court ordered
ISMS to bring in for an in camera inspection records relating to
payments made to Brown for expenses he had incurred in 1994. At
the next hearing, on August 15, after the court reviewed the
records in camera, ISMS stated that it was willing to allow
plaintiffs to make "extracts" from the records, which included
copies of Brown's expense report and hotel bill, the expense
check ISMS had issued to Brown, and a check Brown had written
ISMS as a refund for the airfare. ISMS stated that it did not
concede that plaintiffs had shown a proper purpose, nor that the
court had so ruled, but that it had made the records available
"in an effort to resolve this matter" and in the expectation that
it would "bring this matter to a close." The circuit court's
order of August 15 required ISMS to allow plaintiffs' counsel to
examine and make abstracts of the records submitted by Brown
regarding the 1994 interim meeting of the AMA in Hawaii, but did
not grant plaintiffs access to records regarding any 1993 or 1995
meetings nor the 1994 AMA annual meeting. The court also ordered
ISMS to produce to plaintiffs the affidavit regarding Brown's
1994 expenses.
Plaintiffs' counsel thereafter disseminated a letter to his
clients (hereinafter "the client letter"), purporting to relate
what had occurred in the litigation. Among other statements, the
client letter reported that ISMS had used dilatory tactics in
resisting inspection and that the court had ruled that plaintiffs
had established a proper purpose and counsel was entitled to
review the records. It also characterized the petition as having
come to a "very successful conclusion" and stated that the
records plaintiffs had received had established that Brown had
received double reimbursements. It appears that ISMS became
aware of this letter when a copy of it was attached to a letter
from plaintiffs to ISMS demanding that ISMS request Brown to
resign from all positions he held with the organization.
In reaction to the client letter, ISMS filed an "Emergency
Motion for Injunction" in late August, which was heard on
September 3. ISMS appended to its motion the client letter, the
letter from plaintiffs to ISMS, and a letter from plaintiffs to
CMS demanding that it also request Brown to resign from any
positions he held with that organization. ISMS requested that
the court enjoin plaintiffs and counsel from any further
dissemination or publication of the client letter and that the
court "enter sanctions against plaintiffs for the willful
dissemination of false statements concerning this litigation
including dismissal of the action and reasonable attorneys fees."
At the hearing on the motion, plaintiffs' counsel stated that he
had not yet received a copy of the motion, although eight or nine
pages of it had been faxed to him. (The record reflects that the
motion itself was only seven pages long, although including
attachments it ran to more than twenty pages.) Plaintiffs'
counsel stated that he had not read the motion and he requested
28 days in which to respond. Counsel for ISMS responded that the
fax department of his law firm had told him that they had
received a telephone call in which plaintiffs' counsel had told
them that he had received five pages of the motion and did not
need any more. The court stated that "[w]e got [sic] to give him
time to respond," but allowed ISMS to convert its motion to a
motion for a temporary restraining order ("TRO"). The court
stated that it would pass the case, allow plaintiffs' counsel to
read the motion, and would then entertain argument on the TRO.
When the case was recalled, on the same date, ISMS argued
first (for approximately 5 pages of transcript) in favor of the
TRO. Afterwards, plaintiffs' counsel responded:
"MR. SMITH (Plaintiffs' counsel): Basically, Judge, I
don't think he has set forth in his petition the
necessary elements for this restraining order.
Secondly, all of the items in here [the client
letter] to my client are basically based on facts that
have occurred in this courtroom as well as throughout
the litigation. At no time would you have ever entered
an order ordering Alexian Brothers Medical Center to
turn over records unless we had established proper
purpose.
THE COURT: Wrong, go ahead.
MR. SMITH: You would never have ordered ISMS to turn
over the records for examination if we had not
established a proper purpose.
THE COURT: Wrong, wrong.
MR. SMITH: I have a copy of the August 15th hearing
before you.
THE COURT: To save some time, the remedy at law is
sufficient so we don't have a proceeding, [sic] but we
can go by way of a temporary restraining order because
this is by way of defamation.
However, the settlement process has been so abused
by the Plaintiffs in this particular case that this
case is going to be dismissed with prejudice, that's
going to be the sanction that the Court is going to
impose in this particular case.
This case came before the Court under a
questionable situation, the complaint that was brought
was never tested by way of a motion to dismiss.
Instead, Counsel for the Medical Association did
everything he could do to facilitate this matter in a
way that would avoid litigation. We attempted to
settle this particular matter and the Plaintiffs, your
clients, have done nothing but abuse the entire
settlement process that was undertaken by the
Defendants in this matter and by this Court and
although this is an extraordinary sanction being
imposed by the Court, this Court does not want to
invite that type of conduct by attorneys when they
enter into settlement negotiations. For that reason,
the case is dismissed with prejudice. You have an
appealable order, okay."
The written order of September 3 also reflects that the case
was dismissed because plaintiffs "have abused the settlement
process." It provided that there was "no just reason to delay
the appeal or enforcement" of the order. At some point[fn3]
plaintiffs filed a motion for costs and sanctions under section
14-104 of the Illinois Code of Civil Procedure (Code) (735 ILCS
5/14-104 (West 1994)) and Supreme Court Rule 137 (155 Ill. 2d R.
137), which it does not appear the circuit court ruled on, at
least with respect to ISMS. On September 30 plaintiffs filed a
notice of appeal from the circuit court's September 3 order
dismissing the case. We reverse and remand.
ANALYSIS
First, although neither party has discussed the issue, we
briefly note that the outstanding motion for costs and sanctions
does not deprive us of jurisdiction to entertain this appeal. A
case is not finally disposed of and appealable under Supreme
Court Rule 301 until the circuit court has ruled on all pending
motions for sanctions. Marsh v. Evangelical Covenant Church, 138 Ill. 2d 458, 467-68, 563 N.E.2d 459, 464-65 (1990) (appellate
court lacks jurisdiction in the face of an outstanding motion for
sanctions under section 2-611 of the Code (735 ILCS 5/2-611 (West
1994))); Cashmore v. Builders Square, Inc., 207 Ill. App. 3d 267,
273-74, 565 N.E.2d 703, 707 (1990) (appellate court lacks
jurisdiction in the face of an outstanding motion for sanctions
under section 2-611 of the Code (735 ILCS 5/2-611 (West 1994)) or
Supreme Court Rule 137 (155 Ill. 2d R. 137)). However, in this
case the circuit court made a finding that there was no just
reason to delay enforcement or appeal of its order dismissing the
case. That finding conferred jurisdiction on this court to
consider the appeal under Supreme Court Rule 304(a) despite the
outstanding motion for sanctions. See Marsh, 138 Ill. 2d at 468,
563 N.E.2d at 465; Cashmore, 207 Ill. App. 3d at 274, 565 N.E.2d
at 708; Roser v. Anderson, 222 Ill. App. 3d 1071, 1073-74, 584 N.E.2d 865, 867-68 (1991).
ISMS asserts that the appeal should be dismissed as moot,
however, in light of the facts that (1) Brown took office in June
1996 and his term has thus already concluded, and (2) in the
client letter counsel (a) stated that the records plaintiffs had
received had established that Brown had received double
reimbursements and (b) characterized the lawsuit as having come
to a "very successful conclusion."
An appeal should generally be dismissed as moot where there
remains no live present controversy between the parties. In re
E.G., 133 Ill. 2d 98, 105, 549 N.E.2d 322, 325 (1989). "The
existence of a real controversy is an essential prerequisite to
appellate jurisdiction." In re Estate of Wellman, 174 Ill. 2d 335, 353, 673 N.E.2d 272, 280 (1996); accord, Central States
Import & Export Corp. v. Illinois Liquor Control Commission, 405 Ill. 58, 59, 89 N.E.2d 903, 904 (1950); Chaitlen v. Kaspar
American State Bank, 372 Ill. 83, 87, 22 N.E.2d 673, 675 (1939).
However, we find that there remains a controversy between the
parties, and accordingly decline to dismiss the appeal in this
case. Although plaintiffs have received records which tended to
establish one instance of double billing, they have not received
all the records they sought. They were entitled to all of the
records they sought for which they showed a proper purpose.[fn4]
805 ILCS 105/107.75 (West 1994) ("[a]ll books and records of a
corporation may be inspected by any member *** for any proper
purpose at any reasonable time"). The circuit court never made a
determination that plaintiffs had not shown a proper purpose for
the other records they had requested. Since there remained an
unadjudicated controversy as to whether plaintiffs were entitled
to the remaining documents which they sought, the matter cannot
be considered moot. See Weigel v. O'Connor, 57 Ill. App. 3d
1017, 1027, 373 N.E.2d 421, 428 (1978) (where plaintiffs "plainly
rejected" defendants' offer to produce less than all of the
documents plaintiffs had demanded pursuant to the Illinois
Business Corporation Act, a "real and substantial controversy
continued to exist between the parties").
We reject the arguments of ISMS that we should find mootness
based on the client letter[fn5] or the fact that Brown is no
longer president of CMS. With respect to the latter argument,
assuming that ISMS properly established that Brown's term has
expired through its representation to that effect in its brief to
this court,[fn6] plaintiffs never averred in their complaint nor
at any time on the record that their sole motivation for
requesting the records was to prevent Brown from taking office or
expel him therefrom (although they did raise the fact that he was
about to take office as a reason for their request that the case
be handled on an expedited basis). Rather, plaintiffs' stated
purpose for examining the records was to determine "whether there
have been any expense improprieties and possible double payments
heretofore." If this purpose was a proper one, which the circuit
court never resolved, plaintiffs would be entitled to determine
the extent of any impropriety, rather than being barred from any
further investigation once it had been established that there was
any impropriety at all. See Weigel, 57 Ill. App. 3d at 1027, 373 N.E.2d at 428. Accordingly, the expiration of Brown's term does
not moot the appeal.
The statement in the client letter regarding a "successful
conclusion" does not necessarily connote that plaintiffs received
all the relief they were seeking. The context of the statement
shows that counsel was referring to the successful resolution of
the underlying legal issues in the suit (i.e. establishment of a
proper purpose), not to having obtained all of the relief
requested. Moreover, these assertions would constitute at most
an admission by plaintiffs, but since the statement was not made
in court it would not be a judicial admission. Accordingly, the
statements would not in any event be preclusive of the issue, but
would rather be considered among the totality of all pertinent
facts.[fn7] And it is clear that there does remain a
controversy, as plaintiffs did not receive all of the records
they sought. As noted above, if plaintiffs' purpose of
determining whether there had been "any expense improprieties"
was a proper one, they would have the right to determine the
extent of any impropriety. Accordingly, we consider the
contentions plaintiffs raise on appeal, that the dismissal
constituted an abuse of discretion and violated their rights to
procedural due process.[fn8]
As courts avoid constitutional questions where the case may
be decided on other grounds (In re S.G., 175 Ill. 2d 471, 479,
677 N.E.2d 920, 924 (1997)), we turn first to examine whether the
sanction imposed constituted an abuse of discretion. We find the
court did abuse its discretion in dismissing this case, as
plaintiffs did not engage in any conduct warranting that sanction
on the record before us. It is clear that a court is vested with
authority both under Supreme Court Rule 219 (155 Ill. 2d R. 219),
and pursuant to its inherent authority to control its docket, to
sanction a party for violations of its orders. See Sander v. Dow
Chemical Co., 166 Ill. 2d 48, 61-63, 65-67, 651 N.E.2d 1071,
1078, 1080 (1995). The sanctions may be as severe as dismissal.
See 155 Ill. 2d R. 219(c)(v); Sander, 166 Ill. 2d at 67, 651 N.E.2d at 1080. A party may be sanctioned under Rule 219 even
without having violated a specific court order, if it fails to
comply with the Supreme Court Rules regarding discovery, requests
for admissions, and pretrial procedure (Rules 201-230). 155 Ill.
2d R. 219(c). But there must be sanctionable conduct. It is
clear that neither the letters plaintiffs wrote to ISMS and to
CMS, nor the client letter, violated any specific order nor any
Supreme Court Rule (which would allow a sanction without a
violation of an order). The only conduct of plaintiffs which
could be construed as a violation is their failure in June to
produce their witnesses for depositions. However, this conduct
clearly had nothing to do with the "settlement process" or the
court's dismissal of the case.
In this case there were a number of conferences held off the
record involving the court, plaintiffs' counsel, and counsel for
ISMS (occasionally also counsel for Alexian Brothers). From
comments made on the record it appears that at least some of
these conferences may have concerned settlement of the case. But
the court entered no orders nor did it make any statements on the
record as to any tentative agreements which the parties may have
reached. The court might well justifiably have been frustrated
if plaintiffs' counsel had, e.g., represented that his clients
would be satisfied if ISMS turned over certain documents, then
reneged on that promise. However, there is no indication in the
record that this occurred, and even if it had, "we cannot allow
personal frustration alone to be the cause for dismissal."
Walton v. Throgmorton, 273 Ill. App. 3d 353, 360, 652 N.E.2d 803,
807 (1995). The sanction of plaintiffs was not based on their
failure to comply with an order of the circuit court or a Supreme
Court Rule, and thus it was not warranted.
Moreover, even if it were appropriate to impose some degree
of sanction on plaintiffs, dismissal was unwarranted. When
lawfully imposed, a court's decision to impose a particular
sanction will be reversed only if the record establishes a clear
abuse of discretion. Sander, 166 Ill. 2d at 67, 651 N.E.2d at
1081. However, "[t]he purpose of imposing sanctions is to coerce
compliance with court rules and orders, not to punish the
dilatory party." Sander, 166 Ill. 2d at 68, 651 N.E.2d at 1081.
Sanctions under Supreme Court Rule 219(c) should be imposed "'to
obtain compliance with discovery rules, rather than to dispose of
litigation as a form of punishment.'" Walton, 273 Ill. App. 3d
at 360, 652 N.E.2d at 807, quoting United Excavating & Wrecking,
Inc. v. J. L. Wroan & Sons, Inc., 43 Ill. App. 3d 101, 105, 356 N.E.2d 1160, 1163 (1976). Dismissal is a "drastic sanction"
which "should only be employed when it appears that all other
enforcement efforts of the court have failed to advance the
litigation." Sander, 166 Ill. 2d at 67-68, 651 N.E.2d at 1081;
accord, Besco v. Henslee, Monek & Henslee, No. 4--97--0950, slip
op. at 7 (June 12, 1998). We are reluctant to find that
dismissal was employed as a "last resort" when the record reveals
that the party had no warning that dismissal was imminent.
Walton, 273 Ill. App. 3d at 359, 652 N.E.2d at 807 ("[t]he facts
in this record show a disregard for the court's authority, but
without some notice to Walton that a dismissal was imminent, we
cannot find that the dismissal was used only as a last resort").
Dismissal appears to have been a first, not last, resort in
this case. At the July 29 hearing the court did disagree with
oral statements of plaintiffs' counsel criticizing ISMS.
However, there is no indication on the record that plaintiffs'
counsel was rebuked or warned that such statements would not be
tolerated. There is no indication that, apart from the case not
being handled on an expedited basis, plaintiffs were ever
censured or admonished before the case was dismissed. Dismissal
cannot be the first step a court takes, which, so far as is
revealed by the record before us, was what occurred in this case.
ISMS argues that dismissal may be warranted when a party
shows disregard or disrespect for the authority of a court even
if the party has not violated any order of the court. However,
the authority it cites does not support the proposition that a
party may be sanctioned without having violated an explicit rule
of court or disobeyed a specific order of the court. Shelbyville
Mutual Insurance Co. v. Sunbeam Leisure Products Co., 262 Ill.
App. 3d 636, 641, 634 N.E.2d 1319, 1323 (1994), the first case
cited by ISMS, only stands for the proposition that a party may
be sanctioned for destruction of evidence without an order
prohibiting destruction. The authority on which Shelbyville
Mutual relied held that destruction of evidence may constitute
"unreasonable noncompliance" with a Supreme Court Rule regarding
discovery (specifically Rule 214, which allows a party to request
production of tangible things for inspection and testing (155
Ill.2d R. 214)), for which Rule 219(c) allows a court to impose
sanctions. See Shelbyville Mutual, 262 Ill. App. 3d at 641, 634 N.E.2d at 1323, citing American Family Insurance Co. v. Village
Pontiac-GMC, Inc., 223 Ill. App. 3d 624, 627, 585 N.E.2d 1115,
1118 (1992). No "unreasonable noncompliance" has been shown in
this case, however.
Further, contrary to the representation of ISMS, the court
in Chabowski v. Vacation Village Ass'n, 291 Ill. App. 3d 525, 690 N.E.2d 115, 118 (1997), affirmed a dismissal of a case not solely
because of plaintiff's lack of respect for the court's authority,
but also because plaintiff had violated at least one explicit
order of the circuit court. Any implication in dictum that no
explicit order need be violated was based on the language in
Sander that "'[w]here it becomes apparent that a party has
willfully disregarded the authority of the court, and such
disregard is likely to continue, the interests of that party in
the lawsuit must bow to the interests of the opposing party.'"
See Chabowski, 291 Ill. App. 3d 525, 690 N.E.2d at 118, quoting
Sander, 166 Ill. 2d at 69, 651 N.E.2d at 1081. However, Sander
made this statement in reviewing the severity of the sanction
imposed, having already determined that the trial court had the
power to sanction. See Sander, 166 Ill. 2d at 69, 651 N.E.2d at
1081. In discussing the latter issue, Sander only endorsed the
power of a court to dismiss for the violation of or failure to
comply with court orders:
"We also conclude that apart from Rule 219(c), a
trial court, pursuant to its inherent authority, is
empowered to dismiss a cause of action with prejudice
for violations of court orders.
***
*** [T]he court in Bejda[ v. SGL Industries,
Inc., 82 Ill. 2d 322, 328, 412 N.E.2d 464 (1980)]
recognized the inherent authority of a trial court to
dismiss a cause of action with prejudice because of a
litigant's disregard of court orders.
Other jurisdictions have recognized a trial
court's authority to dismiss a cause of action with
prejudice based on a refusal to obey court orders to
amend pleadings. [Citations.] This court has
described judicial authority to dismiss a cause action
[sic] with prejudice as 'the most effective sanction'
against the disregard of court orders. [Citation.]
Thus, we acknowledge the inherent authority of a
circuit court to dismiss a cause of action with
prejudice for failure to comply with court orders where
the record shows deliberate and continuing disregard
for the court's authority." (Emphasis added.) Sander,
166 Ill. 2d at 65-67, 651 N.E.2d at 1080.
Sander makes clear that it is the violation of an order for which
a court may impose a sanction, whereas "deliberate and continuing
disregard for the court's authority" is but a circumstance to be
considered in determining the severity of the sanction.
Moreover, the record does not reflect that plaintiffs or
their counsel showed a lack of respect for the authority of the
court in this case. The client letter exemplifies at worst a
trivialization of a court process by an attorney for purposes of
"grandstanding" to a client by exaggerating a result. This
exaggeration may well have jeopardized a delicate settlement
structure. However, as previously noted, as frustrating as this
may have been, it would not justify an abrupt sanction of
dismissal. See Sander, 166 Ill. 2d at 67-68, 651 N.E.2d at 1081;
Walton, 273 Ill. App. 3d at 360, 652 N.E.2d at 807.
Finally, we note that even if the court had been justified
in imposing the sanction of dismissal in this case, there would
appear to be some force to plaintiffs' contention that they were
deprived of due process in the procedure the circuit court
followed.[fn9] The standard of review for determining whether
constitutional rights have been violated is de novo. In re
Barbara H., 288 Ill. App. 3d 360, 365, 680 N.E.2d 471, 475
(1997). First, although technically dismissal was one of the
remedies ISMS requested in its injunction motion, it is clear
that both parties' focus was on whether plaintiffs should be
prohibited from further dissemination of the client letter, and
the court's decision to dismiss the case was essentially sua
sponte. Further, plaintiffs' counsel was not given an adequate
opportunity to respond to the motion. He had no chance to
respond in writing, and his opportunity to respond orally was
scant at best. As noted above, the court twice interrupted
counsel, then cut him off entirely and dismissed the case with
prejudice, after having explicitly stated that plaintiffs would
receive an opportunity to respond in writing to the injunction
motion and stating it would hear argument only on the TRO to
which it allowed ISMS to convert its petition. Although due
process is a flexible concept, it is well established that at its
heart is the "fundamental requirement" of an "opportunity to be
heard at a meaningful time and in a meaningful manner." East St.
Louis Federation of Teachers, 178 Ill. 2d at 419, 687 N.E.2d at
1061-62, citing Mathews v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 902, 47 L. Ed. 2d 18, 32 (1976). Plaintiffs would not appear
to have received such an opportunity.
CONCLUSION
For the reasons above stated, we reverse and remand to the
Circuit Court of Cook County for further proceedings consistent
with this decision.
Reversed and remanded.
LEAVITT, P.J. and CAHILL, J., concur.
[fn1] Although Goyal was a trustee of ISMS, he appears to
have been sympathetic to the plaintiffs' position. Plaintiffs'
counsel represented to the court that it was through Goyal that
plaintiffs would establish that they had a "proper purpose" (see
805 ILCS 105/107.75 (West 1994)) for seeking the records
(although the proceedings were terminated before a hearing on
proper purpose was held). However, despite the possibly
antagonistic relationship between Goyal and ISMS, it does not
appear from the record that Goyal provided plaintiffs the
document over the objection of ISMS.
[fn2] That portion of Dr. Goyal's deposition which is
contained in the supplemental record provided to this Court
appears to bear out that assertion, although since the documents
themselves are not part of the record before us we cannot be
certain that the document to which Goyal refers in his deposition
is the same as the document later provided to the plaintiffs.
[fn3] The only copy of the motion for sanctions contained
in the record on appeal is file-stamped September 24. However,
it would appear that it was in fact filed earlier than that date,
as counsel for ISMS referred to a motion for sanctions in his
argument on September 3 in support of the TRO, and in the circuit
court's order of August 28 dismissing Alexian Brothers the court
specifically stated that "plaintiffs' motion for costs or fees
against Alexian Brothers Medical Staff is denied." At any rate,
the question of when the motion was filed is irrelevant to our
resolution of this appeal; the only potentially relevant fact is
that it does not appear the motion was ever ruled on with respect
to ISMS.
[fn4] The right to examine records may even extend to
records for which a proper purpose has not been directly shown,
so long as one has been shown for some records:
"[t]he shareholder is not required to establish a
proper purpose for each record he requests.
[Citation.] 'Once that purpose has been established,
the shareholder's right [to inspect] extends to all
books and records necessary to make an intelligent and
searching investigation * * * [and] "from which he can
derive any information that will enable him to better
protect his interests."'" (Emphasis added.) Meyer v.
Board of Managers of Harbor House Condominium Ass'n,
221 Ill. App. 3d 742, 748, 583 N.E.2d 14, 18 (1991),
quoting Weigel v. O'Connor, 57 Ill. App. 3d 1017, 1027,
373 N.E.2d 421, 428 (1978), quoting 5 W. Fletcher,
Private Corporations 2239 at 779 (rev. vol. 1976).
However, we need not decide the scope of plaintiffs' right at
this juncture; it suffices to observe that they would at least be
entitled to inspect those records for which they had shown a
proper purpose.
[fn5] We note that this argument could have been raised
before the circuit court. Normally a party will not be allowed
to present on appeal arguments which could have been, but were
not, raised in front of the circuit court. See Hulman v.
Evanston Hosp. Corp., 259 Ill. App. 3d 133, 145, 631 N.E.2d 322,
330 (1994) (a reviewing court is limited to consideration of the
grounds presented to the trial court). However, an appellate
court is obligated to examine its jurisdiction even if the
parties never raise the issue. Shanklin v. Hutzler, 277 Ill.
App. 3d 94, 99, 660 N.E.2d 103, 106 (1995). And, as noted in the
text, the existence of a present controversy is a jurisdictional
requirement. Estate of Wellman, 174 Ill. 2d at 353, 673 N.E.2d
at 280; Central States Import & Export, 405 Ill. at 59, 89 N.E.2d
at 904; Chaitlen, 372 Ill. at 87, 22 N.E.2d at 675. Accordingly,
it is not appropriate to apply waiver to a mootness argument,
because mootness is at its core a lack of jurisdiction.
[fn6] The length of Brown's term is not established in the
record, which will ordinarily prevent us from considering a fact
on appeal. See O'Brien v. City of Chicago, 285 Ill. App. 3d 864,
874, 674 N.E.2d 927, 936 (1996) (reviewing court may not consider
matter not contained in the record). However, there is an
exception to this rule when facts dehors the record establish
mootness. As our supreme court stated in La Salle National Bank
v. City of Chicago, 3 Ill. 2d 375, 379, 121 N.E.2d 486, 488
(1954):
"Since the existence of a real controversy is an
essential requisite to appellate jurisdiction, the
general rule is that where a reviewing court has notice
of facts which show that only moot questions or mere
abstract propositions are involved, it will dismiss the
appeal or writ of error even though such facts do not
appear in the record. [Citations.] From the necessity
of the situation courts allow facts which affect their
right and duty to proceed in the exercise of their
appellate jurisdiction, but which do not appear in the
record before it, to be proved by extrinsic evidence.
[Citations.] Such a fact may be presented, as here, by
motion supported by affidavit."
Accord, Central States Import & Export, 405 Ill. at 60, 89 N.E.2d
at 904, quoting Chaitlen, 372 Ill. at 87, 22 N.E.2d at 675 ("'a
reviewing court will dismiss an appeal where facts are disclosed
which show that such a controversy does not exist, even though
such facts do not appear in the record'"); People ex rel.
Bernardi v. City of Highland Park, 121 Ill. 2d 1, 6, 520 N.E.2d 316, 318 (1988) ("this court will dismiss an appeal as moot upon
notice of facts not of record"); Johnson v. Quern, 90 Ill. App.
3d 151, 155, 412 N.E.2d 1082, 1085 (1980) ("[w]here there are
strange circumstances which render the issue on appeal moot, the
appeal will be dismissed even though such facts do not appear in
the record"). It appears that a court may take notice of facts
establishing mootness no matter how those facts are brought to
the attention of the court. See People v. Lynn, 102 Ill. 2d 267,
272, 464 N.E.2d 1031, 1034 (1984) (taking notice of fact brought
to the court's attention during oral argument).
[fn7] The admission would not be the client letter, but
rather the attachment of the client letter to the letter from
plaintiffs to ISMS, which could constitute an admission by
adoption.
[fn8] We note that plaintiffs argue in the alternative that
even if the appeal were moot, this court should retain
jurisdiction under the "collateral legal consequences" doctrine.
That doctrine allows a court to review a mooted case if
collateral effects of the order under review survive its
expiration. Brown v. Murphy, 278 Ill. App. 3d 981, 988, 664 N.E.2d 186, 192 (1996), quoting In re Sciara, 21 Ill. App. 3d
889, 893-894, 316 N.E.2d 153 (1974); accord, In re Phillips, 62
Ill. App. 3d 408, 410-11, 379 N.E.2d 97, 99 (1978). We would
reject this argument were we to reach it. The only collateral
consequence of which plaintiffs complain is that ISMS would be
entitled under section 5-118 of the Illinois Code of Civil
Procedure to recover "full costs" from them because the action
was dismissed. See 735 ILCS 5/5-118 (West 1994). However, it is
a well-established rule that an appellate court will not review a
cause merely to resolve the issue of costs. E.g. Estate of
Wellman, 174 Ill. 2d at 353, 673 N.E.2d at 280; La Salle National
Bank, 3 Ill. 2d at 379, 121 N.E.2d at 488 ; Central States Import
& Export, 405 Ill. at 59, 89 N.E.2d at 904; Chaitlen, 372 Ill. at
87, 22 N.E.2d at 675.
[fn9] The procedures followed had to comport with due
process considerations because plaintiffs had a liberty or
property interest which has been interfered with by the State.
East St. Louis Federation of Teachers, Local 1220, v. East St.
Louis School Dist. No. 189 Financial Oversight Panel, 178 Ill. 2d 399, 415-16, 687 N.E.2d 1050, 1060 (1997). An interest is
subject to due process protections if it is "secured by rules or
mutually explicit understandings that support the claim of
entitlement." East St. Louis Federation of Teachers, 178 Ill. 2d
at 416, 687 N.E.2d at 1060, citing Perry v. Sindermann, 408 U.S. 593, 601, 92 S. Ct. 2694, 2699, 33 L. Ed. 2d 570, 579 (1972) and
Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709, 33 L. Ed. 2d 548, 561 (1972). Section 107.75 of
the Act provides that "[a]ll books and records of a corporation
may be inspected by any member entitled to vote, or that member's
agent or attorney, for any proper purpose at any reasonable
time." 805 ILCS 105/107.75 (West 1994). This statute "secures"
plaintiffs' interest in the books and records, and accordingly
due process considerations are relevant to proceedings
thereunder.
July 22, 1998
No. 1-96-3465
IN THE APPELLATE COURT
OF ILLINOIS
FIRST JUDICIAL DISTRICT
DR. ASHWIN PATEL, DR. SATYA AHUJA, DR.
ANTHONY STAGNOS, DR. JOSH TUNCA, and DR.
HENRY TABE,
Plaintiffs-Appellants,
v.
ILLINOIS STATE MEDICAL SOCIETY,
Defendant-Appellee,
MEDICAL STAFF OF ALEXIAN BROTHERS
MEDICAL CENTER, INC.,
Defendant. )
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) Appeal from the
Circuit Court of
Cook County
No. 96CH4712
Honorable
John K. Madden,
Judge Presiding.
JUSTICE GORDON DELIVERED THE OPINION OF THE COURT:
Plaintiffs are physicians who are members of the Chicago
Medical Society ("CMS"). Each is also a member of the Illinois
State Medical Society ("ISMS") and/or on the staff at Alexian
Brothers Medical Center, Inc. ("Alexian Brothers"), the
organizations named as defendants. Plaintiffs brought suit to
obtain access to the records of ISMS and Alexian Brothers under
section 107.75 of the Illinois Not for Profit Corporation Act
("the Act") (805 ILCS 105/107.75 (West 1994)), in order to
ascertain whether a Dr. Dennis M. Brown (not a party to this
action) had been reimbursed by both defendant organizations for
the same expenses he had incurred while attending medical
conventions. At a pre-trial conference the circuit court
dismissed plaintiff's action with prejudice because plaintiffs
had "abused the settlement process." Plaintiffs appeal from that
order. For the reasons set forth below, we reverse and remand.
FACTS
In May 1996, plaintiffs filed a mandamus action in the
Circuit Court of Cook County, requesting that ISMS and Alexian
Brothers be directed to grant plaintiffs access to "all receipts
for airline tickets, hotels and cancelled checks reflecting
payment for these expenses" for which defendants reimbursed
Brown. Plaintiffs stated that they wished to examine these
records to determine "whether there have been any expense
improprieties and possible double payments heretofore."
The circuit court initially attempted to resolve the
petition on an expedited basis because plaintiffs' counsel
represented that Brown was scheduled to assume the office of
President of CMS on June 8, 1996, and they wished to have the
matter resolved before that date. However, because of a delay in
discovery occasioned by the plaintiffs' failure to produce
witnesses or inform the defendants who their witnesses would be,
the court determined that there could be no resolution before
that date and decided to handle the case in its normal course.
Alexian Brothers represented that it was taking the position
of a mere "stakeholder" with respect to the records in its
possession. Counsel for Alexian Brothers stated that his client
would turn over the records if the court so ordered, and did not
have an independent position on the matter. In July, the court
entered an order directing Alexian Brothers to turn over to
plaintiffs all documents relating to reimbursement of Brown for
expenses for any American Medical Association (AMA) meetings he
attended on behalf of Alexian Brothers in 1993, 1994 and 1995.
The court provided that after turning over those records, the
suit would be dismissed with prejudice with respect to Alexian
Brothers. At a status hearing on July 29, plaintiffs' counsel
stated that he had received the records ordered to be turned
over. In August, nunc pro tunc to July, the court dismissed
Alexian Brothers with prejudice and without any award of
attorneys' fees or costs.
It appears from statements of the court and counsel at the
July 29 status call that in July plaintiffs also received some
documents from Dr. Arvin Goyal, a trustee of ISMS. There does
not appear in the record before us any order of the court
requiring ISMS to provide plaintiffs with any such records,
although on July 10 the court ordered an in camera inspection of
the contents of a file Goyal had brought to his deposition but
had refused to allow counsel for ISMS[fn1] to examine. The
document Goyal provided is not contained in the record on appeal.
Counsel for ISMS represented that Goyal had stated in his
deposition that a particular portion of the document, apparently
a computer printout, referred to reimbursements made to Brown for
expenses incurred in attending the 1994 AMA interim meeting in
Hawaii.[fn2] Counsel for plaintiffs agreed that the documents
"obviously" showed at least one double billing, but that
plaintiffs wished to see "whether it was double-billed on
others."
At a status call in August, counsel for ISMS stated that
plaintiffs had "arguably" shown a "proper purpose," as required
by the Act (see 805 ILCS 105/107.75 (West 1994)) ("[a]ll books
and records of a corporation may be inspected by any member ***
for any proper purpose at any reasonable time") for inquiry into
certain expenses for which Brown was reimbursed in connection
with the 1994 meeting, and he was prepared to submit to
plaintiffs an affidavit regarding those reimbursements. Counsel
for plaintiffs did not accept this offer, reiterating that
plaintiffs wished to see the actual records. The court ordered
ISMS to bring in for an in camera inspection records relating to
payments made to Brown for expenses he had incurred in 1994. At
the next hearing, on August 15, after the court reviewed the
records in camera, ISMS stated that it was willing to allow
plaintiffs to make "extracts" from the records, which included
copies of Brown's expense report and hotel bill, the expense
check ISMS had issued to Brown, and a check Brown had written
ISMS as a refund for the airfare. ISMS stated that it did not
concede that plaintiffs had shown a proper purpose, nor that the
court had so ruled, but that it had made the records available
"in an effort to resolve this matter" and in the expectation that
it would "bring this matter to a close." The circuit court's
order of August 15 required ISMS to allow plaintiffs' counsel to
examine and make abstracts of the records submitted by Brown
regarding the 1994 interim meeting of the AMA in Hawaii, but did
not grant plaintiffs access to records regarding any 1993 or 1995
meetings nor the 1994 AMA annual meeting. The court also ordered
ISMS to produce to plaintiffs the affidavit regarding Brown's
1994 expenses.
Plaintiffs' counsel thereafter disseminated a letter to his
clients (hereinafter "the client letter"), purporting to relate
what had occurred in the litigation. Among other statements, the
client letter reported that ISMS had used dilatory tactics in
resisting inspection and that the court had ruled that plaintiffs
had established a proper purpose and counsel was entitled to
review the records. It also characterized the petition as having
come to a "very successful conclusion" and stated that the
records plaintiffs had received had established that Brown had
received double reimbursements. It appears that ISMS became
aware of this letter when a copy of it was attached to a letter
from plaintiffs to ISMS demanding that ISMS request Brown to
resign from all positions he held with the organization.
In reaction to the client letter, ISMS filed an "Emergency
Motion for Injunction" in late August, which was heard on
September 3. ISMS appended to its motion the client letter, the
letter from plaintiffs to ISMS, and a letter from plaintiffs to
CMS demanding that it also request Brown to resign from any
positions he held with that organization. ISMS requested that
the court enjoin plaintiffs and counsel from any further
dissemination or publication of the client letter and that the
court "enter sanctions against plaintiffs for the willful
dissemination of false statements concerning this litigation
including dismissal of the action and reasonable attorneys fees."
At the hearing on the motion, plaintiffs' counsel stated that he
had not yet received a copy of the motion, although eight or nine
pages of it had been faxed to him. (The record reflects that the
motion itself was only seven pages long, although including
attachments it ran to more than twenty pages.) Plaintiffs'
counsel stated that he had not read the motion and he requested
28 days in which to respond. Counsel for ISMS responded that the
fax department of his law firm had told him that they had
received a telephone call in which plaintiffs' counsel had told
them that he had received five pages of the motion and did not
need any more. The court stated that "[w]e got [sic] to give him
time to respond," but allowed ISMS to convert its motion to a
motion for a temporary restraining order ("TRO"). The court
stated that it would pass the case, allow plaintiffs' counsel to
read the motion, and would then entertain argument on the TRO.
When the case was recalled, on the same date, ISMS argued
first (for approximately 5 pages of transcript) in favor of the
TRO. Afterwards, plaintiffs' counsel responded:
"MR. SMITH (Plaintiffs' counsel): Basically, Judge, I
don't think he has set forth in his petition the
necessary elements for this restraining order.
Secondly, all of the items in here [the client
letter] to my client are basically based on facts that
have occurred in this courtroom as well as throughout
the litigation. At no time would you have ever entered
an order ordering Alexian Brothers Medical Center to
turn over records unless we had established proper
purpose.
THE COURT: Wrong, go ahead.
MR. SMITH: You would never have ordered ISMS to turn
over the records for examination if we had not
established a proper purpose.
THE COURT: Wrong, wrong.
MR. SMITH: I have a copy of the August 15th hearing
before you.
THE COURT: To save some time, the remedy at law is
sufficient so we don't have a proceeding, [sic] but we
can go by way of a temporary restraining order because
this is by way of defamation.
However, the settlement process has been so abused
by the Plaintiffs in this particular case that this
case is going to be dismissed with prejudice, that's
going to be the sanction that the Court is going to
impose in this particular case.
This case came before the Court under a
questionable situation, the complaint that was brought
was never tested by way of a motion to dismiss.
Instead, Counsel for the Medical Association did
everything he could do to facilitate this matter in a
way that would avoid litigation. We attempted to
settle this particular matter and the Plaintiffs, your
clients, have done nothing but abuse the entire
settlement process that was undertaken by the
Defendants in this matter and by this Court and
although this is an extraordinary sanction being
imposed by the Court, this Court does not want to
invite that type of conduct by attorneys when they
enter into settlement negotiations. For that reason,
the case is dismissed with prejudice. You have an
appealable order, okay."
The written order of September 3 also reflects that the case
was dismissed because plaintiffs "have abused the settlement
process." It provided that there was "no just reason to delay
the appeal or enforcement" of the order. At some point[fn3]
plaintiffs filed a motion for costs and sanctions under section
14-104 of the Illinois Code of Civil Procedure (Code) (735 ILCS
5/14-104 (West 1994)) and Supreme Court Rule 137 (155 Ill. 2d R.
137), which it does not appear the circuit court ruled on, at
least with respect to ISMS. On September 30 plaintiffs filed a
notice of appeal from the circuit court's September 3 order
dismissing the case. We reverse and remand.
ANALYSIS
First, although neither party has discussed the issue, we
briefly note that the outstanding motion for costs and sanctions
does not deprive us of jurisdiction to entertain this appeal. A
case is not finally disposed of and appealable under Supreme
Court Rule 301 until the circuit court has ruled on all pending
motions for sanctions. Marsh v. Evangelical Covenant Church, 138 Ill. 2d 458, 467-68, 563 N.E.2d 459, 464-65 (1990) (appellate
court lacks jurisdiction in the face of an outstanding motion for
sanctions under section 2-611 of the Code (735 ILCS 5/2-611 (West
1994))); Cashmore v. Builders Square, Inc., 207 Ill. App. 3d 267,
273-74, 565 N.E.2d 703, 707 (1990) (appellate court lacks
jurisdiction in the face of an outstanding motion for sanctions
under section 2-611 of the Code (735 ILCS 5/2-611 (West 1994)) or
Supreme Court Rule 137 (155 Ill. 2d R. 137)). However, in this
case the circuit court made a finding that there was no just
reason to delay enforcement or appeal of its order dismissing the
case. That finding conferred jurisdiction on this court to
consider the appeal under Supreme Court Rule 304(a) despite the
outstanding motion for sanctions. See Marsh, 138 Ill. 2d at 468,
563 N.E.2d at 465; Cashmore, 207 Ill. App. 3d at 274, 565 N.E.2d
at 708; Roser v. Anderson, 222 Ill. App. 3d 1071, 1073-74, 584 N.E.2d 865, 867-68 (1991).
ISMS asserts that the appeal should be dismissed as moot,
however, in light of the facts that (1) Brown took office in June
1996 and his term has thus already concluded, and (2) in the
client letter counsel (a) stated that the records plaintiffs had
received had established that Brown had received double
reimbursements and (b) characterized the lawsuit as having come
to a "very successful conclusion."
An appeal should generally be dismissed as moot where there
remains no live present controversy between the parties. In re
E.G., 133 Ill. 2d 98, 105, 549 N.E.2d 322, 325 (1989). "The
existence of a real controversy is an essential prerequisite to
appellate jurisdiction." In re Estate of Wellman, 174 Ill. 2d 335, 353, 673 N.E.2d 272, 280 (1996); accord, Central States
Import & Export Corp. v. Illinois Liquor Control Commission, 405 Ill. 58, 59, 89 N.E.2d 903, 904 (1950); Chaitlen v. Kaspar
American State Bank, 372 Ill. 83, 87, 22 N.E.2d 673, 675 (1939).
However, we find that there remains a controversy between the
parties, and accordingly decline to dismiss the appeal in this
case. Although plaintiffs have received records which tended to
establish one instance of double billing, they have not received
all the records they sought. They were entitled to all of the
records they sought for which they showed a proper purpose.[fn4]
805 ILCS 105/107.75 (West 1994) ("[a]ll books and records of a
corporation may be inspected by any member *** for any proper
purpose at any reasonable time"). The circuit court never made a
determination that plaintiffs had not shown a proper purpose for
the other records they had requested. Since there remained an
unadjudicated controversy as to whether plaintiffs were entitled
to the remaining documents which they sought, the matter cannot
be considered moot. See Weigel v. O'Connor, 57 Ill. App. 3d
1017, 1027, 373 N.E.2d 421, 428 (1978) (where plaintiffs "plainly
rejected" defendants' offer to produce less than all of the
documents plaintiffs had demanded pursuant to the Illinois
Business Corporation Act, a "real and substantial controversy
continued to exist between the parties").
We reject the arguments of ISMS that we should find mootness
based on the client letter[fn5] or the fact that Brown is no
longer president of CMS. With respect to the latter argument,
assuming that ISMS properly established that Brown's term has
expired through its representation to that effect in its brief to
this court,[fn6] plaintiffs never averred in their complaint nor
at any time on the record that their sole motivation for
requesting the records was to prevent Brown from taking office or
expel him therefrom (although they did raise the fact that he was
about to take office as a reason for their request that the case
be handled on an expedited basis). Rather, plaintiffs' stated
purpose for examining the records was to determine "whether there
have been any expense improprieties and possible double payments
heretofore." If this purpose was a proper one, which the circuit
court never resolved, plaintiffs would be entitled to determine
the extent of any impropriety, rather than being barred from any
further investigation once it had been established that there was
any impropriety at all. See Weigel, 57 Ill. App. 3d at 1027, 373 N.E.2d at 428. Accordingly, the expiration of Brown's term does
not moot the appeal.
The statement in the client letter regarding a "successful
conclusion" does not necessarily connote that plaintiffs received
all the relief they were seeking. The context of the statement
shows that counsel was referring to the successful resolution of
the underlying legal issues in the suit (i.e. establishment of a
proper purpose), not to having obtained all of the relief
requested. Moreover, these assertions would constitute at most
an admission by plaintiffs, but since the statement was not made
in court it would not be a judicial admission. Accordingly, the
statements would not in any event be preclusive of the issue, but
would rather be considered among the totality of all pertinent
facts.[fn7] And it is clear that there does remain a
controversy, as plaintiffs did not receive all of the records
they sought. As noted above, if plaintiffs' purpose of
determining whether there had been "any expense improprieties"
was a proper one, they would have the right to determine the
extent of any impropriety. Accordingly, we consider the
contentions plaintiffs raise on appeal, that the dismissal
constituted an abuse of discretion and violated their rights to
procedural due process.[fn8]
As courts avoid constitutional questions where the case may
be decided on other grounds (In re S.G., 175 Ill. 2d 471, 479,
677 N.E.2d 920, 924 (1997)), we turn first to examine whether the
sanction imposed constituted an abuse of discretion. We find the
court did abuse its discretion in dismissing this case, as
plaintiffs did not engage in any conduct warranting that sanction
on the record before us. It is clear that a court is vested with
authority both under Supreme Court Rule 219 (155 Ill. 2d R. 219),
and pursuant to its inherent authority to control its docket, to
sanction a party for violations of its orders. See Sander v. Dow
Chemical Co., 166 Ill. 2d 48, 61-63, 65-67, 651 N.E.2d 1071,
1078, 1080 (1995). The sanctions may be as severe as dismissal.
See 155 Ill. 2d R. 219(c)(v); Sander, 166 Ill. 2d at 67, 651 N.E.2d at 1080. A party may be sanctioned under Rule 219 even
without having violated a specific court order, if it fails to
comply with the Supreme Court Rules regarding discovery, requests
for admissions, and pretrial procedure (Rules 201-230). 155 Ill.
2d R. 219(c). But there must be sanctionable conduct. It is
clear that neither the letters plaintiffs wrote to ISMS and to
CMS, nor the client letter, violated any specific order nor any
Supreme Court Rule (which would allow a sanction without a
violation of an order). The only conduct of plaintiffs which
could be construed as a violation is their failure in June to
produce their witnesses for depositions. However, this conduct
clearly had nothing to do with the "settlement process" or the
court's dismissal of the case.
In this case there were a number of conferences held off the
record involving the court, plaintiffs' counsel, and counsel for
ISMS (occasionally also counsel for Alexian Brothers). From
comments made on the record it appears that at least some of
these conferences may have concerned settlement of the case. But
the court entered no orders nor did it make any statements on the
record as to any tentative agreements which the parties may have
reached. The court might well justifiably have been frustrated
if plaintiffs' counsel had, e.g., represented that his clients
would be satisfied if ISMS turned over certain documents, then
reneged on that promise. However, there is no indication in the
record that this occurred, and even if it had, "we cannot allow
personal frustration alone to be the cause for dismissal."
Walton v. Throgmorton, 273 Ill. App. 3d 353, 360, 652 N.E.2d 803,
807 (1995). The sanction of plaintiffs was not based on their
failure to comply with an order of the circuit court or a Supreme
Court Rule, and thus it was not warranted.
Moreover, even if it were appropriate to impose some degree
of sanction on plaintiffs, dismissal was unwarranted. When
lawfully imposed, a court's decision to impose a particular
sanction will be reversed only if the record establishes a clear
abuse of discretion. Sander, 166 Ill. 2d at 67, 651 N.E.2d at
1081. However, "[t]he purpose of imposing sanctions is to coerce
compliance with court rules and orders, not to punish the
dilatory party." Sander, 166 Ill. 2d at 68, 651 N.E.2d at 1081.
Sanctions under Supreme Court Rule 219(c) should be imposed "'to
obtain compliance with discovery rules, rather than to dispose of
litigation as a form of punishment.'" Walton, 273 Ill. App. 3d
at 360, 652 N.E.2d at 807, quoting United Excavating & Wrecking,
Inc. v. J. L. Wroan & Sons, Inc., 43 Ill. App. 3d 101, 105, 356 N.E.2d 1160, 1163 (1976). Dismissal is a "drastic sanction"
which "should only be employed when it appears that all other
enforcement efforts of the court have failed to advance the
litigation." Sander, 166 Ill. 2d at 67-68, 651 N.E.2d at 1081;
accord, Besco v. Henslee, Monek & Henslee, No. 4--97--0950, slip
op. at 7 (June 12, 1998). We are reluctant to find that
dismissal was employed as a "last resort" when the record reveals
that the party had no warning that dismissal was imminent.
Walton, 273 Ill. App. 3d at 359, 652 N.E.2d at 807 ("[t]he facts
in this record show a disregard for the court's authority, but
without some notice to Walton that a dismissal was imminent, we
cannot find that the dismissal was used only as a last resort").
Dismissal appears to have been a first, not last, resort in
this case. At the July 29 hearing the court did disagree with
oral statements of plaintiffs' counsel criticizing ISMS.
However, there is no indication on the record that plaintiffs'
counsel was rebuked or warned that such statements would not be
tolerated. There is no indication that, apart from the case not
being handled on an expedited basis, plaintiffs were ever
censured or admonished before the case was dismissed. Dismissal
cannot be the first step a court takes, which, so far as is
revealed by the record before us, was what occurred in this case.
ISMS argues that dismissal may be warranted when a party
shows disregard or disrespect for the authority of a court even
if the party has not violated any order of the court. However,
the authority it cites does not support the proposition that a
party may be sanctioned without having violated an explicit rule
of court or disobeyed a specific order of the court. Shelbyville
Mutual Insurance Co. v. Sunbeam Leisure Products Co., 262 Ill.
App. 3d 636, 641, 634 N.E.2d 1319, 1323 (1994), the first case
cited by ISMS, only stands for the proposition that a party may
be sanctioned for destruction of evidence without an order
prohibiting destruction. The authority on which Shelbyville
Mutual relied held that destruction of evidence may constitute
"unreasonable noncompliance" with a Supreme Court Rule regarding
discovery (specifically Rule 214, which allows a party to request
production of tangible things for inspection and testing (155
Ill.2d R. 214)), for which Rule 219(c) allows a court to impose
sanctions. See Shelbyville Mutual, 262 Ill. App. 3d at 641, 634 N.E.2d at 1323, citing American Family Insurance Co. v. Village
Pontiac-GMC, Inc., 223 Ill. App. 3d 624, 627, 585 N.E.2d 1115,
1118 (1992). No "unreasonable noncompliance" has been shown in
this case, however.
Further, contrary to the representation of ISMS, the court
in Chabowski v. Vacation Village Ass'n, 291 Ill. App. 3d 525, 690 N.E.2d 115, 118 (1997), affirmed a dismissal of a case not solely
because of plaintiff's lack of respect for the court's authority,
but also because plaintiff had violated at least one explicit
order of the circuit court. Any implication in dictum that no
explicit order need be violated was based on the language in
Sander that "'[w]here it becomes apparent that a party has
willfully disregarded the authority of the court, and such
disregard is likely to continue, the interests of that party in
the lawsuit must bow to the interests of the opposing party.'"
See Chabowski, 291 Ill. App. 3d 525, 690 N.E.2d at 118, quoting
Sander, 166 Ill. 2d at 69, 651 N.E.2d at 1081. However, Sander
made this statement in reviewing the severity of the sanction
imposed, having already determined that the trial court had the
power to sanction. See Sander, 166 Ill. 2d at 69, 651 N.E.2d at
1081. In discussing the latter issue, Sander only endorsed the
power of a court to dismiss for the violation of or failure to
comply with court orders:
"We also conclude that apart from Rule 219(c), a
trial court, pursuant to its inherent authority, is
empowered to dismiss a cause of action with prejudice
for violations of court orders.
***
*** [T]he court in Bejda[ v. SGL Industries,
Inc., 82 Ill. 2d 322, 328, 412 N.E.2d 464 (1980)]
recognized the inherent authority of a trial court to
dismiss a cause of action with prejudice because of a
litigant's disregard of court orders.
Other jurisdictions have recognized a trial
court's authority to dismiss a cause of action with
prejudice based on a refusal to obey court orders to
amend pleadings. [Citations.] This court has
described judicial authority to dismiss a cause action
[sic] with prejudice as 'the most effective sanction'
against the disregard of court orders. [Citation.]
Thus, we acknowledge the inherent authority of a
circuit court to dismiss a cause of action with
prejudice for failure to comply with court orders where
the record shows deliberate and continuing disregard
for the court's authority." (Emphasis added.) Sander,
166 Ill. 2d at 65-67, 651 N.E.2d at 1080.
Sander makes clear that it is the violation of an order for which
a court may impose a sanction, whereas "deliberate and continuing
disregard for the court's authority" is but a circumstance to be
considered in determining the severity of the sanction.
Moreover, the record does not reflect that plaintiffs or
their counsel showed a lack of respect for the authority of the
court in this case. The client letter exemplifies at worst a
trivialization of a court process by an attorney for purposes of
"grandstanding" to a client by exaggerating a result. This
exaggeration may well have jeopardized a delicate settlement
structure. However, as previously noted, as frustrating as this
may have been, it would not justify an abrupt sanction of
dismissal. See Sander, 166 Ill. 2d at 67-68, 651 N.E.2d at 1081;
Walton, 273 Ill. App. 3d at 360, 652 N.E.2d at 807.
Finally, we note that even if the court had been justified
in imposing the sanction of dismissal in this case, there would
appear to be some force to plaintiffs' contention that they were
deprived of due process in the procedure the circuit court
followed.[fn9] The standard of review for determining whether
constitutional rights have been violated is de novo. In re
Barbara H., 288 Ill. App. 3d 360, 365, 680 N.E.2d 471, 475
(1997). First, although technically dismissal was one of the
remedies ISMS requested in its injunction motion, it is clear
that both parties' focus was on whether plaintiffs should be
prohibited from further dissemination of the client letter, and
the court's decision to dismiss the case was essentially sua
sponte. Further, plaintiffs' counsel was not given an adequate
opportunity to respond to the motion. He had no chance to
respond in writing, and his opportunity to respond orally was
scant at best. As noted above, the court twice interrupted
counsel, then cut him off entirely and dismissed the case with
prejudice, after having explicitly stated that plaintiffs would
receive an opportunity to respond in writing to the injunction
motion and stating it would hear argument only on the TRO to
which it allowed ISMS to convert its petition. Although due
process is a flexible concept, it is well established that at its
heart is the "fundamental requirement" of an "opportunity to be
heard at a meaningful time and in a meaningful manner." East St.
Louis Federation of Teachers, 178 Ill. 2d at 419, 687 N.E.2d at
1061-62, citing Mathews v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 902, 47 L. Ed. 2d 18, 32 (1976). Plaintiffs would not appear
to have received such an opportunity.
CONCLUSION
For the reasons above stated, we reverse and remand to the
Circuit Court of Cook County for further proceedings consistent
with this decision.
Reversed and remanded.
LEAVITT, P.J. and CAHILL, J., concur.
[fn1] Although Goyal was a trustee of ISMS, he appears to
have been sympathetic to the plaintiffs' position. Plaintiffs'
counsel represented to the court that it was through Goyal that
plaintiffs would establish that they had a "proper purpose" (see
805 ILCS 105/107.75 (West 1994)) for seeking the records
(although the proceedings were terminated before a hearing on
proper purpose was held). However, despite the possibly
antagonistic relationship between Goyal and ISMS, it does not
appear from the record that Goyal provided plaintiffs the
document over the objection of ISMS.
[fn2] That portion of Dr. Goyal's deposition which is
contained in the supplemental record provided to this Court
appears to bear out that assertion, although since the documents
themselves are not part of the record before us we cannot be
certain that the document to which Goyal refers in his deposition
is the same as the document later provided to the plaintiffs.
[fn3] The only copy of the motion for sanctions contained
in the record on appeal is file-stamped September 24. However,
it would appear that it was in fact filed earlier than that date,
as counsel for ISMS referred to a motion for sanctions in his
argument on September 3 in support of the TRO, and in the circuit
court's order of August 28 dismissing Alexian Brothers the court
specifically stated that "plaintiffs' motion for costs or fees
against Alexian Brothers Medical Staff is denied." At any rate,
the question of when the motion was filed is irrelevant to our
resolution of this appeal; the only potentially relevant fact is
that it does not appear the motion was ever ruled on with respect
to ISMS.
[fn4] The right to examine records may even extend to
records for which a proper purpose has not been directly shown,
so long as one has been shown for some records:
"[t]he shareholder is not required to establish a
proper purpose for each record he requests.
[Citation.] 'Once that purpose has been established,
the shareholder's right [to inspect] extends to all
books and records necessary to make an intelligent and
searching investigation * * * [and] "from which he can
derive any information that will enable him to better
protect his interests."'" (Emphasis added.) Meyer v.
Board of Managers of Harbor House Condominium Ass'n,
221 Ill. App. 3d 742, 748, 583 N.E.2d 14, 18 (1991),
quoting Weigel v. O'Connor, 57 Ill. App. 3d 1017, 1027,
373 N.E.2d 421, 428 (1978), quoting 5 W. Fletcher,
Private Corporations 2239 at 779 (rev. vol. 1976).
However, we need not decide the scope of plaintiffs' right at
this juncture; it suffices to observe that they would at least be
entitled to inspect those records for which they had shown a
proper purpose.
[fn5] We note that this argument could have been raised
before the circuit court. Normally a party will not be allowed
to present on appeal arguments which could have been, but were
not, raised in front of the circuit court. See Hulman v.
Evanston Hosp. Corp., 259 Ill. App. 3d 133, 145, 631 N.E.2d 322,
330 (1994) (a reviewing court is limited to consideration of the
grounds presented to the trial court). However, an appellate
court is obligated to examine its jurisdiction even if the
parties never raise the issue. Shanklin v. Hutzler, 277 Ill.
App. 3d 94, 99, 660 N.E.2d 103, 106 (1995). And, as noted in the
text, the existence of a present controversy is a jurisdictional
requirement. Estate of Wellman, 174 Ill. 2d at 353, 673 N.E.2d
at 280; Central States Import & Export, 405 Ill. at 59, 89 N.E.2d
at 904; Chaitlen, 372 Ill. at 87, 22 N.E.2d at 675. Accordingly,
it is not appropriate to apply waiver to a mootness argument,
because mootness is at its core a lack of jurisdiction.
[fn6] The length of Brown's term is not established in the
record, which will ordinarily prevent us from considering a fact
on appeal. See O'Brien v. City of Chicago, 285 Ill. App. 3d 864,
874, 674 N.E.2d 927, 936 (1996) (reviewing court may not consider
matter not contained in the record). However, there is an
exception to this rule when facts dehors the record establish
mootness. As our supreme court stated in La Salle National Bank
v. City of Chicago, 3 Ill. 2d 375, 379, 121 N.E.2d 486, 488
(1954):
"Since the existence of a real controversy is an
essential requisite to appellate jurisdiction, the
general rule is that where a reviewing court has notice
of facts which show that only moot questions or mere
abstract propositions are involved, it will dismiss the
appeal or writ of error even though such facts do not
appear in the record. [Citations.] From the necessity
of the situation courts allow facts which affect their
right and duty to proceed in the exercise of their
appellate jurisdiction, but which do not appear in the
record before it, to be proved by extrinsic evidence.
[Citations.] Such a fact may be presented, as here, by
motion supported by affidavit."
Accord, Central States Import & Export, 405 Ill. at 60, 89 N.E.2d
at 904, quoting Chaitlen, 372 Ill. at 87, 22 N.E.2d at 675 ("'a
reviewing court will dismiss an appeal where facts are disclosed
which show that such a controversy does not exist, even though
such facts do not appear in the record'"); People ex rel.
Bernardi v. City of Highland Park, 121 Ill. 2d 1, 6, 520 N.E.2d 316, 318 (1988) ("this court will dismiss an appeal as moot upon
notice of facts not of record"); Johnson v. Quern, 90 Ill. App.
3d 151, 155, 412 N.E.2d 1082, 1085 (1980) ("[w]here there are
strange circumstances which render the issue on appeal moot, the
appeal will be dismissed even though such facts do not appear in
the record"). It appears that a court may take notice of facts
establishing mootness no matter how those facts are brought to
the attention of the court. See People v. Lynn, 102 Ill. 2d 267,
272, 464 N.E.2d 1031, 1034 (1984) (taking notice of fact brought
to the court's attention during oral argument).
[fn7] The admission would not be the client letter, but
rather the attachment of the client letter to the letter from
plaintiffs to ISMS, which could constitute an admission by
adoption.
[fn8] We note that plaintiffs argue in the alternative that
even if the appeal were moot, this court should retain
jurisdiction under the "collateral legal consequences" doctrine.
That doctrine allows a court to review a mooted case if
collateral effects of the order under review survive its
expiration. Brown v. Murphy, 278 Ill. App. 3d 981, 988, 664 N.E.2d 186, 192 (1996), quoting In re Sciara, 21 Ill. App. 3d
889, 893-894, 316 N.E.2d 153 (1974); accord, In re Phillips, 62
Ill. App. 3d 408, 410-11, 379 N.E.2d 97, 99 (1978). We would
reject this argument were we to reach it. The only collateral
consequence of which plaintiffs complain is that ISMS would be
entitled under section 5-118 of the Illinois Code of Civil
Procedure to recover "full costs" from them because the action
was dismissed. See 735 ILCS 5/5-118 (West 1994). However, it is
a well-established rule that an appellate court will not review a
cause merely to resolve the issue of costs. E.g. Estate of
Wellman, 174 Ill. 2d at 353, 673 N.E.2d at 280; La Salle National
Bank, 3 Ill. 2d at 379, 121 N.E.2d at 488 ; Central States Import
& Export, 405 Ill. at 59, 89 N.E.2d at 904; Chaitlen, 372 Ill. at
87, 22 N.E.2d at 675.
[fn9] The procedures followed had to comport with due
process considerations because plaintiffs had a liberty or
property interest which has been interfered with by the State.
East St. Louis Federation of Teachers, Local 1220, v. East St.
Louis School Dist. No. 189 Financial Oversight Panel, 178 Ill. 2d 399, 415-16, 687 N.E.2d 1050, 1060 (1997). An interest is
subject to due process protections if it is "secured by rules or
mutually explicit understandings that support the claim of
entitlement." East St. Louis Federation of Teachers, 178 Ill. 2d
at 416, 687 N.E.2d at 1060, citing Perry v. Sindermann, 408 U.S. 593, 601, 92 S. Ct. 2694, 2699, 33 L. Ed. 2d 570, 579 (1972) and
Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709, 33 L. Ed. 2d 548, 561 (1972). Section 107.75 of
the Act provides that "[a]ll books and records of a corporation
may be inspected by any member entitled to vote, or that member's
agent or attorney, for any proper purpose at any reasonable
time." 805 ILCS 105/107.75 (West 1994). This statute "secures"
plaintiffs' interest in the books and records, and accordingly
due process considerations are relevant to proceedings
thereunder.
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