Davis v. Haas & Haas Inc.

No. 2--97--0735
_________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 1998

VaDONNA DAVIS, ) Appeal from the Circuit Court
Plaintiff-Appellant, ) for the 14th Judicial Circuit,
) Whiteside County, Illinois
v. )
)
HAAS & HAAS INCORPORATED, ) No. 96--L--62
FRED HAAS, SR.; and )
DIVERSIFIED COMPOSITE ) Honorable
CORPORATION, ) Daniel A. Dunagan
Defendants-Appellees. ) Judge, Presiding
________________________________________________________________

JUSTICE BRESLIN delivered the opinion of the court:
_________________________________________________________________

This case arises out of an action to enforce a Human Rights
Commission (Commission) order. The central question on appeal is
whether a trial court has jurisdiction to determine the validity of
a Commission decision when the order was entered on a charge of
marital status discrimination based on the identity of one's
spouse. Plaintiff VaDonna Davis (Davis) contends that the trial
court erroneously reviewed the validity of the underlying order.
For the following reasons, we disagree and affirm.
BACKGROUND
Roy Davis and VaDonna Davis were husband and wife. In 1983
both became employed by Haas and Haas, Inc., a manufacturer of
fiberglass products. In October of 1989 Haas & Haas terminated Roy
Davis. Within a year, it dismissed VaDonna also. She filed a
charge of marital discrimination with the Illinois Department of
Human Rights.
In January 1995, Fred Haas, acting on behalf of Haas & Haas,
sold all the corporate assets and liabilities of the company to
Diversified Composite Corporation (Diversified). Six months later,
the Commission entered an order against Haas & Haas, finding that
it committed a civil rights violation against VaDonna Davis because
it terminated her solely based on the identity of her spouse, Roy.
The Commission awarded Davis damages, injunctive relief by way of
reinstatement, and fees and costs.
Within a year, Davis filed a complaint in the circuit court
for the enforcement of the Commission's order against Haas & Haas,
and Fred Haas and Diversified as its officers, servants, agents,
successors and assigns. Diversified settled the claim with Davis.
Fred Haas and Haas & Haas declined to settle and instead filed
motions to dismiss the complaint. Fred Haas argued that he was not
a named party to the Commission case and thus was not ordered to
compensate Davis. The court agreed and granted his motion in an
individual capacity. But the order was entered without prejudice
to any right Davis had to seek deliverance of corporate assets.
The court denied Haas & Haas's motion. Thereafter, Haas & Haas
filed a motion for summary judgment, claiming that the Commission's
order was an invalid order and could not be enforced based on
Boaden v. Department of Law Enforcement, 171 Ill. 2d 230, 664 N.E.2d 61 (1996). Relying on Boaden, the court entered summary
judgment on behalf of Haas & Haas and Davis appeals.
DISCUSSION
First we are asked to determine whether the trial court erred
in granting Fred Haas's motion to dismiss because he was not a
party to the underlying case.
The relevant portion of the Human Rights Act (Act) provides:
"When the Commission, at the instance of the Department
or an aggrieved party, concludes that any person has
violated a valid order of the Commission issued pursuant
to this Act, *** the Commission *** shall order the
Department to commence an action in the name of the
People of the State of Illinois by complaint, alleging
the violation *** and praying for the issuance of an
order directing such person, his or her or its officers,
agents, servants, successors and assigns to comply with
the order of the Commission." (emphasis added) 775 ILCS
5/8-111(B)(1)(West 1996).
A corporation is a legal entity which exists separate and
distinct from its shareholders, directors and officers. Fentress v.
Triple Mining, Inc., 261 Ill. App. 3d 930, 635 N.E.2d 102 (1994).
Accordingly, shareholders, directors and officers are generally not
liable for a corporation's obligations. Jacobson v. Buffalo Rock
Shooters Supply Inc., 278 Ill. App. 3d 1084, 664 N.E.2d 328 (1996).
On appeal from an order dismissing a complaint, this court applies
the de novo standard of review. Benbenek v. Chicago Park District,
279 Ill. App. 3d 930, 665 N.E.2d 500 (1996).
Neither party disputes that Fred Haas was an officer and agent
of Haas & Haas. Under the Act, he could be ordered to fulfill the
Commission order. But Fred Haas cannot be held personally liable
for the judgment entered against Haas & Haas. See Jacobson, 278
Ill. App. 3d at __, 664 N.E.2d at __ (1996)(absent evidence of
fraud or wrongdoing, an officer of a corporation is not personally
liable for its obligations). Accordingly, the trial court properly
dismissed him in an individual capacity.
Turning to the primary issue, did the court err in awarding
Haas & Haas summary judgment based on its conclusion that the
Commission order was invalid?
Summary judgment should be awarded when the pleadings,
depositions, admissions and affidavits on file show that there is
no genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law. 735 ILCS 5/2-1105(c)(West
1996); Johnson v. Owens-Corning Fiberglass Corp., 284 Ill. App. 3d
669, 672 N.E.2d 885 (1996). An order granting summary judgment is
reviewed de novo. Armstrong v. Washington, 289 Ill. App. 3d 306,
682 N.E.2d 761 (1997).
An erroneous decree is one in which the court entered an order
as a result of a mistake in judgment or an incorrect decision based
upon the facts or law. Ward v. Sampson, 395 Ill. 353, 70 N.E.2d 324
(1946). An erroneous order is immune from collateral attack once
the time for judicial review has lapsed. Ward, 395 Ill. at 363, 70
N.E.2d at __.
By contrast, a void decree is one entered by a court which
lacked subject matter jurisdiction and may be collaterally attacked
at any time after judgment is entered. Estate of Wallen, 262 Ill.
App. 3d 61, 633 N.E.2d 1350 (1994). Subject matter jurisdiction is
the power a court possesses to adjudicate a case and grant the
relief requested. Estate of Steinfeld, 158 Ill. 2d 1, 630 N.E.2d 801 (1994). A court without such jurisdiction has no authority to
act, and any action taken beyond this power is void. In re M.M.,
156 Ill. 2d 53, 619 N.E.2d 702 (1993). This fundamental principle
is equally applicable to administrative agencies. Robinson v.
Illinois Human Rights Comm'n, 201 Ill. Ap. 3d 722, 559 N.E.2d 229
(1990). An agency obtains its power to act from the legislation
creating it and has no power to act beyond the confines of its
legislative authority. Abatron, Inc. v. Department of Labor, 162
Ill. App. 3d 697, 515 N.E.2d 1336 (1987). Absent express statutory
authority, it has no common law powers to preside over a case.
County of Whiteside v. Property Tax Appeal Bd., 276 Ill. App. 3d
182, 188, 658 N.E.2d 481, 486 (1995).
Davis insists that Haas & Haas's motion for summary judgment
was based upon a mistake or error in judgment by the Commission,
and can only be raised within the statutory period for review. But
Haas & Haas contends that because Boaden v. Department of Law
Enforcement, 171 Ill. 2d 230, 664 N.E.2d 61 (1996) abolishes a
claim of marital status discrimination based on the identity of the
employee's spouse, the Commission did not have jurisdiction over
Davis's cause of action and the order is void.
In Boaden, 171 Ill. 2d at 238, 664 N.E.2d at 65, the court
held that the Act does not extend to marital status discrimination
actions based on the identity of an employee's spouse. In reaching
this holding the court analyzed the definition of marital
discrimination under the Act and interpreted it to include only
those charges of marital discrimination based on an individual's
legal status, i.e. married, single, divorced. Boaden, 171 Ill. 2d
at 238, 664 N.E.2d at 65.
Here, the Commission expressly determined that Davis was
discharged because of the identity of her spouse. Applying the
holding in Boaden, it lacked subject matter jurisdiction to render
a decision based on such a charge. Accordingly, the Commission's
order exceeded the scope of its statutory authority and the order
was void as a matter of law. Therefore, the order is subject to
collateral attack and summary judgment was appropriate.
The Supreme Court recently reiterated the legal distinction
between a void versus a voidable order in In re Marriage of
Mitchell, No. 81791, slip op. (February 20, 1998). In that case,
the court acknowledged that a judgment may be attacked collaterally
as void when there exists a total want of jurisdiction by the
court. However, it emphasized that a voidable judgment is a
judgment entered erroneously by a court that did have jurisdiction
and is subject only to direct attack. Mitchell, No. 81791, slip op.
at 4. Because the trial court had jurisdiction over the parties'
dissolution proceeding, the court held that the child support
determination in a percentage amount was merely erroneous and thus
voidable, not void. Mitchell, No. 81791, slip op. at 5.
By contrast, the Commission in this case never possessed
jurisdiction over the subject matter of the charge in question.
Consequently, the Commission's order is void.
But Davis argues that even if Boaden abolishes the
Commission's authority to determine charges involving marital
discrimination due to the identity of a spouse, it does not apply
retroactively to the case at hand. We disagree.
A decision in a civil case will be applied prospectively only
if: (1) the decision establishes a new rule of law by either
overruling past precedent or deciding an issue of first impression;
(2) retroactive operation will hamper its operation; (3) there is
injustice or hardship in holding the decision retroactive.
The decision reached in Boaden did not create new law, it
merely considered the intent of the legislature when it created the
Act and interpreted the Act as it previously existed. Boaden
pronounced that the jurisdiction of the Commission does not
encompass charges involving marital status discrimination based on
the identity of one's spouse. It reached this conclusion by
analyzing the plain language of the Act and its definition of
marital discrimination. Thus, Boaden defined and declared existing
law. Therefore, the trial court correctly applied the case to the
Commission order and declared it void as a matter of law.
Even so, Davis contends that the trial court exceeded its
authority when it reviewed the underlying Commission order and
declared it invalid and unenforceable. In support of her position,
she relies on In re Schaefer, 173 Ill. App. 3d 862, 527 N.E.2d 961
(1988). Schaefer holds that a petitioner cannot seek
administrative review of a Commission order in the circuit court.
Schaefer, 173 Ill. App. 3d at 863, 527 N.E.2d at 963-64. In our
case, the court was asked to enforce a Commission order. In so
doing, it had express statutory authority to refuse to enforce an
invalid order. See 775 ILCS 5/8-111 (B)(2) & (B)(3)(West 1996)(a
party may seek enforcement of only a valid Commission order and the
circuit court shall have the power to grant or refuse the relief
sought or impose such other remedy as it deems proper).
Accordingly, the court appropriately considered the validity of the
underlying order.
For the foregoing reasons, the judgment of the circuit court
of Rock Island County is affirmed.
Affirmed.
SLATER, J., concur.
JUSTICE HOMER, specially concurring in part and dissenting in
part:
I agree that the complaint against Fred Haas, Sr., was
properly dismissed by the trial court. However, I disagree with
the majority holding that the Human Rights Commission exceeded the
scope of its statutory authority rendering its order void as a
matter of law and making it subject to collateral attack.
Therefore, I respectfully dissent to that part of the majority's
opinion.
Subject matter jurisdiction refers to a tribunal's authority
to hear and determine causes of action of the general class to
which the proceedings in question belong. See Ward, 395 Ill. at
360, 70 N.E.2d at 328. Pursuant to the Illinois Human Rights Act
(775 ILCS 5/1-101, et seq. (West 1996)), the Commission is
authorized to hear and determine cases regarding alleged civil
rights violations. It is a civil rights violation for an employer
to discharge an employee on the basis of unlawful discrimination,
which includes discrimination against an employee because of her
marital status. 775 ILCS 5/2--102(A), 5/1--103(J),(Q) (West 1996).
Davis' claim of employment discrimination based on marital status
falls squarely within the general class of cases within the subject
matter jurisdiction of the Commission. Applying the majority's
reasoning, subject matter jurisdiction would never be determinable
at the outset of a case. Only after the Commission (or even the
appellate court) hears the matter and concludes that the alleged
civil rights violation falls within the purview of the Act, would
subject matter jurisdiction attach. Clearly, this result is not
tenable.
The majority is incorrect when it states that Boaden
"pronounced that the jurisdiction of the Commission does not
encompass charges involving marital status discrimination based on
the identity of one's spouse." The Supreme Court, in Boaden, did
not hold that the Commission lacked subject matter jurisdiction and
therefore rendered a void order. Rather, it found that the
Commission interpreted the law erroneously and declined, on direct
review, to defer to the Commission's interpretation that the
statutory definition of marital status encompasses policies based
on the identity of one's spouse. Boaden, 171 Ill. 2d at 239, 664 N.E.2d at 65.
The Supreme Court recently applied a similar line of reasoning
to child support orders which express support payments as a
percentage of income. The court held such orders to be voidable
rather than void and that such orders cannot be challenged by
collateral attack. In re Marriage of Mitchell, No. 81791, slip op.
at 5 (February 20, 1998). Although the court found that the
judgment entered by the trial court was contrary to the plain
language of the statute, it determined that the trial court
possessed jurisdiction over the parties and the subject matter. A
court may not lose jurisdiction merely because it makes a mistake
in determining either the facts, the law or both. Mitchell, No.
81791, slip op. at 4. The same is true of the Commission. The
Supreme Court, in Mitchell, noted the parties had the opportunity
to fully litigate the issues when the original order was entered.
Mitchell, No. 81791, slip op. at 6. Because Haas & Haas chose not
to appeal the Commission's order within the statutorily prescribed
time period, it should not now be allowed to collaterally attack
the Commission's order at this late date.
Additionally, I believe the trial court exceeded its authority
in considering the merit of the underlying claim. As noted by the
majority, a petitioner cannot seek administrative review of a
Commission order in the circuit court. See In re Schaefer, 173
Ill. App. 3d 862, 863, 527 N.E.2d 961, 963-4 (1988). The
legislature specifically gave the power of judicial review of the
Commission's final orders to the appellate court (775 ILCS 5/8--
111(A) (West 1996)) and merely vested the trial court with
enforcement authority (775 ILCS 5/8--111(B) (West 1996)). In
awarding summary judgment to Haas & Haas, the trial court
improperly performed the function of judicial review.
For the foregoing reasons, I would find that the Commission's
order was not void. As such, the order should not be subject to
collateral attack. I would also find that the trial court exceeded
its statutory authority by improperly performing the function of
judicial review in this case. Accordingly, I would reverse the
circuit court's entry of summary judgment.