Dalan/Jupiter, Inc. v. Draper & Kramer, Inc.

Citations: 865 N.E.2d 442; 372 Ill. App. 3d 362; 310 Ill. Dec. 118; 2007 Ill. App. LEXIS 316Docket: 1—06—1274, 1—06—2637 cons.

Court: Appellate Court of Illinois; March 30, 2007; Illinois; State Appellate Court

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The Appellate Court of Illinois ruled on a dispute involving Dalan/Jupiter, Inc. (plaintiff-appellant) and Draper and Kramer, Inc. (defendant-appellee) regarding attorney fees and costs following a breach of contract. The court determined that Dalan's failure to raise its entitlement to attorney fees during the original proceedings barred it from claiming such fees under the doctrine of res judicata. The case stemmed from a 1994 lawsuit where Draper alleged Dalan and Trammell Crow Company failed to pay a commission. After a bench trial, the court ruled in Draper's favor, awarding significant damages and attorney fees. Dalan did not request attorney fees during that case or in its subsequent appeal, which was dismissed. Later, Dalan sought fees based on a prevailing party clause in a contract, but the trial court ruled that Dalan's petition was untimely and lacked jurisdiction. Dalan did not challenge this ruling through a motion for reconsideration or seek an immediate appeal, leading to the dismissal of its appeal by the court. The court also upheld the trial court's award of attorney fees to Draper for a discovery sanction but modified the amount awarded.

On July 13, 2005, the trial court dismissed the underlying litigation with prejudice. The case originated from a lawsuit Dalan filed against Draper on May 20, 2003, which included a First Amended Complaint on April 8, 2004, asserting claims for breach of contract, subrogation, and unjust enrichment, all related to a prevailing party clause in a 1991 Engagement Agreement with Trammell Crow Company. Dalan acknowledged that its claims mirrored those in a prior fee petition, adding an unjust enrichment claim. Dalan argued that Draper would be unjustly enriched if not required to cover Dalan's attorney fees and costs, totaling $318,020.89. Draper moved for summary judgment on November 23, 2004, asserting that Dalan had admitted no contract existed between them and claiming no benefit was conferred. The court granted Draper's motion for the unjust enrichment count but denied it for the breach of contract and subrogation counts on February 3, 2005. 

Draper later filed a motion for summary judgment based on res judicata, while Dalan sought summary judgment on its breach of contract and subrogation claims. On April 6, 2006, the court granted Draper's res judicata motion and denied Dalan's. Dalan appealed, seeking reversal of the summary judgment for Draper and a finding of liability on its counts. 

Regarding discovery violations, Draper filed a motion to bar witnesses due to Dalan's failure to disclose them despite court orders. The court allowed Dalan to designate witnesses but sanctioned it by ordering payment for Draper's fees incurred in bringing the motion. Dalan did not contest Draper's evidence at the hearing, leading to an award of $15,928.35 in fees and costs to Draper. Dalan appealed this award and the summary judgment on the unjust enrichment count, with both appeals consolidated for review. The appellate court's review of the summary judgment is de novo, allowing affirmation on any supporting ground in the record.

The doctrine of res judicata establishes that a final judgment issued by a court with proper jurisdiction is binding on the parties involved and prevents relitigation of the same claim or cause of action. For res judicata to be applicable, three criteria must be satisfied: 1) a final judgment on the merits from a court of competent jurisdiction; 2) an identity of causes of action; and 3) an identity of parties or their privies. A judgment cannot be considered res judicata if it is based solely on a lack of subject matter jurisdiction. 

In the case at hand, the parties agree on the identity of both parties and causes of action concerning breach of contract and subrogation, but dispute whether there was a final judgment on the merits. Dalan argues that since the trial court lacked jurisdiction to adjudicate the fee petition, the February 23, 2003 order lacks res judicata effect on a subsequent lawsuit for the same fees. The court clarifies that the February order does not govern the current case and notes that after reversing the trial court's judgment in 2001, there was no remand, thus the trial court retained no jurisdiction over Dalan's fee petition.

Supreme Court Rule 369(b) allows for further proceedings upon filing a mandate following an appeal's dismissal or affirmance, but does not apply to reversals lacking remand. Conversely, Rule 369(c) allows reinstatement after remand for a new trial or hearing. Citing the case of Watkins v. Dunbar, the court emphasizes that a judgment reversed without remanding does not restore the trial court's jurisdiction. The court expresses disagreement with a prior decision (Coldwell Banker Havens, Inc. v. Renfro), which permitted a fee petition to proceed under similar circumstances, asserting that it misinterpreted Rule 369(b). Ultimately, the court concludes that the present case falls under res judicata for reasons distinct from those cited by the trial court.

The February 21, 2003, order from the trial court was not a final judgment because the court had lost subject matter jurisdiction. In contrast, the July 25, 2001, decision was final. Dalan had the option to request a remand for attorney fees after the initial appeal but did not mention fees in its briefs and argued that neither party was a prevailing party. Dalan's subsequent petition for rehearing was filed three months after the appellate mandate, exceeding the allowable 21 days. The appellate court, following precedent, stated that it lacked jurisdiction to act after the rehearing period. When the trial court dismissed Dalan's petition for fees, Dalan attempted to file a collateral complaint, which was disallowed. The doctrine of res judicata was cited to prevent repetitive litigation and protect against unjust burdens of relitigating the same issues. The court emphasized that Dalan's failure to raise the fees issue in the first appeal barred it from doing so now, affirming summary judgment against Dalan's claims for unjust enrichment and Counts I and II of the First Amended Complaint. The court applied a transactional test to determine identity of causes of action, concluding that Dalan's claims arose from the same set of operative facts, thus reinforcing the application of res judicata.

Dalan's unjust enrichment claim in its complaint mirrors the relief sought in its breach of contract and subrogation claims, and it could have included this claim in its first appeal. The issue of whether a discovery violation occurred is a legal question reviewed de novo, while a trial court's sanction for such a violation is reviewed for abuse of discretion. Dalan asserts it did not violate discovery rules, but the trial court sanctioned it under Supreme Court Rule 219(c) for failing to comply with Rule 213(f), which mandates the disclosure of trial witness identities. Dalan's challenge to the validity of Rule 213(f) against section 2-1003(c) of the Code of Civil Procedure was rejected, as Illinois law holds that supreme court rules take precedence over conflicting statutes. Dalan also contends that any violation did not prejudice Draper, arguing the sanctions were excessive. However, the court found that Dalan did not properly identify trial witnesses, thereby justifying the sanctions. Although the trial court’s fee award was largely upheld, it was found to have abused its discretion by awarding $4,000 for a deposition deemed excessive, which was reduced to $1,000. The total fees awarded to Draper were thus modified to $12,928.35. The trial court's summary judgment favoring Draper was affirmed, but the ruling on Dalan's liability claim was not addressed.