Heritage Pullman Bank & Trust Co. v. Carr

1-95-2776

HERITAGE PULLMAN BANK & TRUST           )    Appeal from the
COMPANY, an Illinois corporation,       )    Circuit Court of
not individually but as T/U/T/N         )    Cook County.
5096, dated October 3, 1957,            )
                                        )
          Plaintiff-Appellee,           )
                                        )
          v.                            )    
                                        )
EVELYN RAFACZ CARR; and MELANIE DENDOR, )
as Executor of the Estate of Walter     )
Rafacz, Deceased,                       )
                                        )
          Defendants-Appellants,        )
                                        )
          v.                            )
                                        )
NORMAN J. BARRY, as Executor under      )
Last Will & Testament of Edward A.      )
Rafacz; and NORMAN J. BARRY, as         )
Executor under Last Will & Testament    )
of Henry Rafacz,                        )    
                                        )    Honorable
          Defendants /                  )    Thomas P. Durkin,
          Cross-Plaintiffs-Appellees.   )    Judge Presiding.


     PRESIDING JUSTICE HARTMAN delivered the opinion of the court:
     This is the second appeal involving these parties.  See
Heritage Pullman Bank & Trust Co. v. Carr, 254 Ill. App. 3d 676,
627 N.E.2d 160 (1993) (Carr).  Relevant to the present appeal, in
Carr, we affirmed the circuit court's (1) award of fees and costs
to Heritage Pullman Bank & Trust Co. (Trustee) in accordance with
a trust agreement, (2) determination that defendant Evelyn Carr
(Carr) took a groundless position in asserting that unanimous
consent was required under the terms of the trust and should be
charged with the Trustee's fees and costs, and (3) finding that
Norman J. Barry, as executor of the Estates of Edward and Henry
Rafacz (collectively the Estates), did not take a groundless
position and, therefore, should prevail on their cross-claims
against Carr.  We remanded Carr "to the circuit court for a
petition and evidentiary hearing on the Trustee's request for fees
accruing since January 2, 1990."  254 Ill. App. 3d at 685.
     Following our remand, the circuit court granted the Estates'
section 2-611 petition for sanctions, which alleged that Carr had
needlessly prolonged the litigation by pursuing her groundless
claim, and awarded fees and costs in the amount of $98,755.50. 
Ill. Rev. Stat. 1987, ch. 110, par. 2-611.  Carr again appeals,
contending the circuit court erred in (1) denying her motion to
strike and dismiss the Estates' section 2-611 petition for
sanctions, (2) not holding an evidentiary hearing as to whether
Carr violated section 2-611, (3) granting the Estates' section 2-
611 petition for sanctions, (4) refusing Carr a hearing as to the
reasonableness of the Estates' fees, (5) denying her motion for
leave to file a third-party complaint, and (6) applying section 2-
611 instead of Supreme Court Rule 137 (Rule 137).  134 Ill. 2d R.
137.
     Prior to the initial appeal, the parties entered into a
settlement resolving their underlying dispute.  The Trustee
thereafter petitioned the court for its expenses.  The Estates
cross-claimed against Carr, asserting "she should pay the Trustee's
expenses because she took a groundless position causing the
litigation."  254 Ill. App. 3d at 678.  The Estates neither
admitted nor denied the Trustee was entitled to fees but asserted
Carr was liable.  At the time, the Trustee's fees were $9,969.60. 
The court granted the Trustee's petition for fees on October 21,
1987, but did not rule on the Estates' cross-claim.  The Trustee
subsequently filed a supplement to its petition for fees.
     On March 14, 1988, Carr responded to the Trustee's petition
for fees, contending the Trustee was not entitled to fees because
a control sheet generated by the Trustee "confused" her in that it
indicated that unanimous consent of the beneficiaries was required. 
Based on this claim, the circuit court vacated its October 21,
1987, order granting the Trustee fees and set the matter for trial. 
Following trial, the court determined the Trustee properly filed
suit and Carr failed to demonstrate that unanimity was required
under the terms of the trust.  The court also found in favor of the
Trustee as against all beneficiaries, and in favor of the Estates
as against Carr.  These findings were affirmed on direct appeal. 
Carr, 254 Ill. App. 3d at 678.
     Prior to the initial appeal, the Estates filed a section 2-611
petition for sanctions against Carr because she had asserted a
groundless claim of "confusion."  On October 16, 1991, the circuit
court continued all petitions for fees and sanctions until this
court had ruled on Carr's direct appeal.
     Following the disposition in Carr, the Estates filed a second
amended section 2-611 petition for sanctions (petition for
sanctions), asserting Carr had failed to make a reasonable inquiry
into the facts to support her claim of "confusion" and requesting
fees from March 14, 1988, to December 31, 1993.  Attached to the
petition for sanctions were the affidavits and billing records of
the Estates' attorneys.  Carr moved to strike and dismiss the
Estates' petition for sanctions, which was denied by the circuit
court.  Carr thereafter filed a response to the petition for
sanctions, contesting a violation of section 2-611, and moved for
leave to file a third-party complaint, which was denied by the
court as dilatory, barred by laches, "in violation of the time
limits provided by Supreme Court Rules and an abuse of process."
     At the hearing on the Estates' petition for sanctions, the
circuit court initially permitted Carr to argue "in support of the
position that this is a hearing for something other than the
reasonableness of fees."  Carr's counsel unsuccessfully asserted
the court should hold an evidentiary hearing to determine whether
or not Carr assumed a groundless position in the underlying
litigation.  The court noted that the matter had been decided by
the appellate court and there was "no question that there is a 2-
611 violation."  The court then entered judgment for the Estates in
the amount of $98,755.50, the amount claimed in the Estates'
petition for sanctions and unrebutted by Carr.  Carr appeals.


                                     I
     Carr initially contends the circuit court erred in denying her
section 2-615 motion to strike and dismiss the Estates' petition
for sanctions because the Estates failed (1) to specify which fees
were incurred by reason of Carr's groundless claim, and (2) to
plead an essential element of section 2-611.
     No action should be dismissed on a motion pursuant to section
2-615 for failure to state a cause of action unless it clearly
appears that no set of facts can be proved under the pleadings
which will entitle plaintiff to relief.  Fulton-Carroll Center,
Inc. v. Industrial Council of Northwest Chicago, Inc., 256 Ill.
App. 3d 821, 824, 628 N.E.2d 1121 (1993).  When deciding a motion
to dismiss, all well-pleaded facts in the complaint will be
regarded as true and all reasonable inferences will be considered
correct.  Krasinski v. United Parcel Service, Inc., 124 Ill. 2d 483, 485-86, 530 N.E.2d 468 (1988).  The complaint is deficient
when it fails to allege the facts necessary for plaintiff to
recover.  People ex rel. Fahner v. Carriage Way West, Inc., 88 Ill. 2d 300, 308, 430 N.E.2d 1005 (1981).  The grant or denial of a
section 2-615 motion is within the sound discretion of the circuit
court.  Evers v. Edward Hospital Ass'n, 247 Ill. App. 3d 717, 724,
617 N.E.2d 1211 (1993).
     A section 2-611 motion for attorneys' fees must meet minimum
requirements of specificity so that a responding party has an
opportunity to challenge and defend against the allegations made
and so that fees and costs may be apportioned fairly.  Brandel
Realty Co. v. Olson, 159 Ill. App. 3d 230, 235, 512 N.E.2d 85
(1987).  A 2-611 petition must state specifically which statements
were falsely made and what fees were incurred as a result of such
statements.  Laurence v. Flashner Medical Partnership, 206 Ill.
App. 3d 777, 787, 565 N.E.2d 146 (1990).  The movant bears the
burden of proving entitlement to fees and costs.  Johnson v. La
Grange State Bank, 73 Ill. 2d 342, 366-67, 383 N.E.2d 185 (1978). 
A circuit court's decision to grant or deny a motion for sanctions
will not be overturned unless it can be shown that the court abused
its discretion.  Pole Realty Co. v. Sorrells, 84 Ill. 2d 178,
184-85, 417 N.E.2d 1297 (1981).
     Carr maintains the Estates' petition for sanctions fails to
specify the attorneys' fees incurred as a result of her false
statements because the Estates merely included every hour of work
since March 14, 1988, without demonstrating how the fees were
related to Carr's improper pleadings.
     At the time Carr filed her pleading contending she was
confused by the Trustee's control sheet, the only issues remaining
before the circuit court were the amount of the Trustee's fees and
the Estates' cross-claim against Carr, which asserted that Carr was
solely liable for the Trustee's fees.  As a result of Carr's claim,
the court vacated its earlier order granting attorneys' fees to the
Trustee.  Although Carr contends the Estates' petition for
sanctions failed to account for the fact that the Estates initiated
a cross-claim against Carr and also agreed with her position that
the Trustee was not entitled to fees in the initial appeal, Carr
asserted her confusion defense in response to the Trustee's
petition for fees.  See Carr, 254 Ill. App. 3d at 678.  As a result
of this groundless claim, Carr single-handedly extended this
litigation over an eight-year period.  The Estates' filing of a
cross-claim against Carr, asserting the Trustee was not entitled to
fees, does not alter the equation because if the Estates had not
filed a cross-claim against Carr, they would have been precluded,
by principles of res judicata, from asserting that Carr was
responsible for the Trustee's fees.  Had Carr not raised her
groundless claim, the only issue remaining was the amount of the
Trustee's fees and who was responsible for them; the court had
previously determined, by its order of October 21, 1987, the
Trustee was entitled to fees.  Not only did Carr's claim of
confusion expose the Estates to the possibility of being liable for
the Trustee's mushrooming attorneys' fees but, also, if Carr's
confusion defense was valid, the Estates would have been solely
liable for the Trustee's fees.  Consequently, the Estates were
required to contest the Trustee's fees.  Carr also failed to
present any evidence contesting the affidavits of the Estates'
attorneys and the circuit court could properly accept the
unrebutted affidavits of the Estates' attorneys.  See Aroonsakul v.
Flanagan, 155 Ill. App. 3d 223, 229, 507 N.E.2d 1 (1987).
     Carr contends the Estates failed to allege her pleading was
filed for an "improper purpose."  A party seeking to recover
attorneys' fees under section 2-611, however, has the burden of
proving that his opponent made untrue allegations without
reasonable cause.  In re Estate of Wernick, 127 Ill. 2d 61, 76, 535 N.E.2d 876 (1989); see also In re Estate of Hoover, 155 Ill. 2d 402, 615 N.E.2d 736 (1993) (construing Rule 137).  Carr's
contention must be rejected.  The circuit court did not abuse its
discretion in denying Carr's motion to strike and dismiss the
Estates' petition for sanctions.
                                    II
     Carr next argues the circuit court erred in denying her an
evidentiary hearing as to whether she had violated section 2-611.
     In order to determine whether sanctions are proper under
section 2-611, the circuit court generally must conduct a hearing
to determine whether an untrue statement was made without
reasonable cause.  Fried v. Barad, 187 Ill. App. 3d 1024, 1029, 543 N.E.2d 1018 (1989).  If proof can be made, however, on the basis of
pleadings or trial evidence, an additional hearing is not required.
Barad, 187 Ill. App. 3d at 1029.
     Carr contends there is a distinction between a finding that
her claim was groundless and a finding that she violated section 2-
611, relying upon Webbe v. First National Bank & Trust Co., 139
Ill. App. 3d 806, 487 N.E.2d 711 (1985) (Webbe).  As in the present
case, Webbe involved a trust agreement and a determination that the
trustee was entitled to reimbursement for attorneys' fees and costs
due to the assertion of a groundless defense.  In Webbe,
plaintiff's claim was groundless, but the court reversed the
circuit court's finding that plaintiff was personally responsible
for fees pursuant to section 2-611, because the circuit court's
"finding that the complaint and amended complaint were untrue" was
not "technically correct."  139 Ill. App. 3d at 812.  Specifically,
the pleadings the circuit court had found false were "simply
averments of fact describing the parties and their circumstances
and were admitted by defendants."  (Emphasis added.)  139 Ill. App.
3d at 812.
     Webbe is readily distinguishable from the present case.  The
Estates never admitted or stipulated that Carr's claim of confusion
was valid nor that Carr's claim was a mere misstatement of fact. 
Carr's claim was her personal defense against the Trustee's
petition for fees.  A finding that a claim is groundless is not
tantamount to a finding of a section 2-611 violation; yet the
circuit court in the present case specifically found that Carr's
"allegation that [Trustee] *** confused her" was groundless. 
(Emphasis added.)  The court observed that Carr's position was
unsupported "in fact or law."  These findings were affirmed on
direct appeal and have become the law of the case.  Kennedy v.
First National Bank, 259 Ill. App. 3d 560, 563, 631 N.E.2d 813
(1994).  The circuit court's findings prior to the initial appeal
establish that Carr had filed a pleading which was not based in law
or fact and, therefore, was groundless.  Carr asserts the issue is
whether she filed her pleadings after making a reasonable inquiry
that was well grounded in fact and law.  The court's initial
finding observed, however, that Carr "has failed to present the
evidence of fault on [Trustee's] *** part which would warrant
denial of its petition for fees."  Carr, 254 Ill. App. 3d at 685. 
Carr's testimony revealed that "she wanted unanimous consent to be
required," but "she had never paid attention to what was required
under the trust agreement."  Carr, 254 Ill. App. 3d at 684.  In
Carr, we affirmed the circuit court's determination that nothing in
Carr's "testimony even purports to support Carr's assertion that
she was confused by [Trustee's] *** documents."  Carr, 254 Ill.
App. 3d at 684.  The circuit court could determine on the basis of
pleadings and trial evidence that an additional hearing was not
required and that Carr had filed a pleading in violation of section
2-611.  See Barad, 187 Ill. App. 3d at 1029.
                                    III
     Carr next argues the circuit court erred in granting the
Estates' section 2-611 petition for sanctions.
                                     A
     The imposition of attorneys' fees is proper where movant
demonstrates his opponent has pled statements which he knew, or
should have known, to be untrue.  Webbe v. First National Bank &
Trust Co., 139 Ill. App. 3d 806, 812, 487 N.E.2d 711 (1985). 
Section 2-611 seeks to prevent vexatious actions based upon false
statements, without legal foundation, thus causing an undue burden
on the opponent to disprove such allegations.  Webbe, 139 Ill. App.
3d at 812.  Section 2-611 is penal in nature and should be invoked
only in those cases falling strictly within its terms.  Webbe, 139
Ill. App. 3d at 812.  The grant or denial of a section 2-611 motion
is within the sound discretion of the circuit court.  Chicago City
Bank & Trust Co. v. Pick, 235 Ill. App. 3d 252, 257, 602 N.E.2d 484
(1992).
     Carr contends although she was unsuccessful in asserting
confusion initially, the Estates have failed to prove that she did
not make a reasonable inquiry.  Carr asserts the Trustee's control
sheet indicated unanimous consent was required and, therefore, she
asserted unanimity was required and later, she was confused by the
control sheet.  The circuit court's findings, however, indicate
Carr was unable to "show that she was confused by the control
sheet," and nothing in Carr's testimony "even purports to support
[her] *** assertion that she was confused by [Trustee's] ***
documents."  Carr, 254 Ill. App. 3d at 684-85.  The evidence at
trial demonstrated that Carr:
          "'failed to provide any legal authority to
          support her position.  Carr herself testified
          that she told [her attorney] *** she wanted
          unanimous consent to be required; she had no
          opinion prior to that time whether unanimous
          consent was required; she had never paid
          attention to what was required under the trust
          agreement and had not received an opinion by
          [her attorney] ***; she never spoke to a
          Trustee representative about this issue and no
          one ever told her unanimity was required; and
          she believed unanimous consent was required
          because previous directions had been
          unanimous.'"  Carr, 254 Ill. App. 3d at 676.
          This evidence demonstrates Carr pled statements that she knew, or
should have known, to be untrue and contradicts Carr's contention
that she did not know the control sheet was not a trust document. 
Notwithstanding Carr's knowledge about the control sheet, she did
not allege the control sheet confused her until two years after
locating it.  She also failed to discuss with the Trustee whether
unanimous consent was required.  Carr, 254 Ill. App. 3d at 684. 
Carr asserts the scope of the first trial was whether the Trustee
was at fault for filing the declaratory action.  The record belies
this claim because the circuit court held "Carr had taken a
groundless position" and the Trustee was entitled to reasonable
fees.  Carr, 254 Ill. App. 3d at 681.
     The circuit court's order in the present case found that (1)
Carr's March 14, 1988, pleading "contained groundless claims of
'confusion'"; (2) Carr "failed to make a reasonable inquiry into
the facts"; (3) the "pleadings were interposed for an improper
purpose, that is, to cause unnecessary delay and needless increase
in the costs of litigation"; and (4) the fees charged by the
Estates' attorneys were reasonable and "incurred as a direct result
of" Carr's groundless pleadings.
     Carr's assertions must be rejected.  The circuit court did not
err in granting the Estates' section 2-611 petition for sanctions.
                                     B
     Carr next argues the circuit court's award of sanctions was
improper because the Estates did not present evidence to show the
fees and costs that they incurred resulted from the section 2-611
violation.  Carr's contentions here mirror those arguments advanced
in Part I of this opinion; for the reasons aforementioned, the
circuit court's award of sanctions was proper.
                                    IV
     Carr next asserts the circuit court erred in denying her a
hearing as to the reasonableness of the Estates' fees. 
     In assessing the reasonableness of fees, the circuit court
should consider a variety of factors; the court is permitted to use
its own knowledge and experience to assess the time required to
complete particular activities; and a reviewing court may not
reverse an award of attorneys' fees merely because it may have
reached a different conclusion.  Olsen v. Staniak, 260 Ill. App. 3d
856, 865-66, 632 N.E.2d 168 (1994).  The determination of
attorneys' fees is within the discretion of the court.  See
Aroonsakul v. Flanagan, 155 Ill. App. 3d 223, 229, 507 N.E.2d 1
(1987).
     Carr maintains she was denied the opportunity to cross-examine
the affiants regarding their fees, relying upon Olsen v. Staniak,
260 Ill. App. 3d 856, 865-66, 632 N.E.2d 168 (1994) and Fried v.
Barad, 187 Ill. App. 3d 1024, 1029, 543 N.E.2d 1018 (1989). 
Although Barad holds that an evidentiary hearing on the
reasonableness of fees is required because the issue of
reasonableness is a matter of proof which should be subject to
cross-examination (187 Ill. App. 3d at 1030), the circuit court's
acceptance of unrebutted affidavits of counsel as to fees, in the
absence of an evidentiary hearing, is within its discretion (see
Aroonsakul v. Flanagan, 155 Ill. App. 3d 223, 229, 507 N.E.2d 1
(1987)).  In Staniak, the circuit court reduced an attorney's fees
pursuant to section 2-611 after holding an hearing and matching
"those expenses related to defending the frivolous pleadings."  260
Ill. App. 3d at 866.  In Staniak, the circuit court did not abuse
its discretion in independently matching fees to frivolous
pleadings notwithstanding the nonmovant's failure to provide any
rebuttal evidence to the attorney's affidavit.  Unlike Staniak, the
circuit court in the present case did not independently have to
match fees to frivolous pleadings because the Estates asserted that
Carr was liable for all fees incurred since the filing of her
groundless claim.  Carr did not present any evidence or
counteraffidavits to contradict the evidence submitted by the
Estates and the circuit court was justified in relying upon the
unrebutted affidavits of the Estates' attorneys.  See Aroonsakul,
155 Ill. App. 3d at 229.
     Carr submits the affidavits of the Estates' attorneys violate
Supreme Court Rule 191.  145 Ill. 2d R. 191.  Carr failed to raise
this issue in the circuit court.  See Liddle v. Cepeda, 251 Ill.
App. 3d 892, 896, 623 N.E.2d 849 (1993).  The circuit court did not
err in denying Carr a hearing as to the reasonableness of the
Estates' attorneys' fees.
                                     V
     Carr next asserts the circuit court erred in denying her
motion to file a third-party complaint.  Carr submits Supreme Court
Rule 183 and section 2-406(b) of the Code of Civil Procedure
(section 2-406(b)) (735 ILCS 5/2-406(b) (West 1994)), govern this
issue although her motion to file a third-party complaint was not
made pursuant to any specific section of the Code of Civil
Procedure.
     Section 2-406(b) provides that a defendant may file a third-
party complaint "[w]ithin the time for filing his or her answer or
thereafter by leave of court" against a party "who is or may be
liable to him or her for all or part of the plaintiff's claim
against him or her."  735 ILCS 5/2-406(b) (West 1994).  A necessary
party is an individual or entity having a present, substantial
interest in the matter being litigated, and in whose absence
complete resolution of the subject matter in controversy cannot be
achieved without affecting that interest.  Brumley v. Touche, Ross
& Co., 123 Ill. App. 3d 636, 463 N.E.2d 195 (1984).  The denial of
a motion to file a third-party complaint will not be regarded as
error absent a manifest abuse of discretion.  Winter v. Henry
Service Co., 143 Ill. 2d 289, 573 N.E.2d 822 (1991).
     Supreme Court Rule 183 provides that a court "may extend the
time for filing any pleading."  134 Ill. 2d R. 183.  The movant
must demonstrate that there is "good cause" for allowing the
extension.  Waterford Executive Group, Ltd. v. Clark/Bardes, Inc.,
261 Ill. App. 3d 338, 347, 633 N.E.2d 1003 (1994).  The grant or
denial of a motion for an extension is within the sound discretion
of the circuit court.  Clark/Bardes, Inc., 261 Ill. App. 3d at 347. 
Inadvertence, mistake, or absence of prejudice to the opposing
party or inconvenience to the circuit court does not constitute
"good cause."  Clark/Bardes, Inc., 261 Ill. App. 3d at 347.
     The Estates filed their initial petition for sanctions on
January 17, 1991.  The Estates' second amended petition for
sanctions was filed on January 21, 1994.  More than one year later,
Carr moved for leave to file a third-party complaint on May 9,
1995.  At the time, the Estates' petition for sanctions was set for
hearing on July 17, 1995.  The circuit court precluded argument and
denied the motion as being untimely. 
     Carr contends the circuit court abused its discretion because
the third party, Henry Synek, was Carr's counsel who signed the two
pleadings setting forth her confusion claim.  Carr knew of the
Estates' original petition for sanctions on January 17, 1991, but
she did not move the court for leave to file a third-party
complaint until May of 1995.  Neither Carr's motion nor her third-
party complaint set forth any bases to permit the filing of the
third-party complaint four years after the initial pleading.
     Carr submits Synek is a necessary party but has not cited any
case law to support this proposition, in violation of Supreme Court
Rule 341(e)(7).  134 Ill. 2d R. 341(e)(7).  Notwithstanding this
omission, section 2-611 sanctions were imposed against Carr for
failing "to make a reasonable inquiry into the facts before filing
the *** pleadings."  (Emphasis added.)  Carr was not sanctioned for
taking a position unsupported by existing law.  Further, Synek was
not the attorney who allegedly advised Carr regarding unanimity
prior to the initial appeal.  See Carr, 254 Ill. App. 3d at 680. 
The circuit court did not err in denying Carr's motion for leave to
file a third-party complaint.
                                    VI
     Carr next contends the circuit court improperly applied
section 2-611, instead of Rule 137 and, further, it is
unconstitutional to apply section 2-611 because it was repealed in
1989.
     Notwithstanding Carr's failure to raise this argument in the
circuit court (see Liddle v. Cepeda, 251 Ill. App. 3d 892, 896, 623 N.E.2d 849 (1993)), and her lack of case law and argument in her
appellate brief (see 134 Ill. 2d R. 341(e)(7); Wilson v.
Continental Body Corp., 93 Ill. App. 3d 966, 418 N.E.2d 56 (1981)),
Carr's contention must be rejected because a motion for sanctions
relating to a pleading filed prior to August 1, 1989, is properly
analyzed under section 2-611 of the Code of Civil Procedure; Rule
137 applies to offensive pleadings filed on or after its effective
date, August 1, 1989.  Chicago City Bank & Trust Co. v. Pick, 235
Ill. App. 3d 252, 256, 602 N.E.2d 484 (1992).
     For the foregoing reasons, the order of the circuit court is
affirmed.
     Affirmed.
     DiVITO and BURKE, JJ., concur.