Hager-Freeman v. Spircoff, HAGER-FREEMAN and W

• Decision Date: 07 May 1992
• Docket Number: No. 1-90-1987,HAGER-FREEMAN and W,1-90-1987
• Citation: 593 N.E.2d 821,171 Ill.Dec. 1,229 Ill.App.3d 262
• Parties: , 171 Ill.Dec. 1 Christelalter O. Freeman, Plaintiffs-Appellants, v. Carl SPIRCOFF, William O'Keefe, Show-Biz Home Video, Inc., and Plaza Bank of Norridge, Illinois, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 821

593 N.E.2d 821

229 Ill.App.3d 262, 171 Ill.Dec. 1

Christel HAGER-FREEMAN and Walter O. Freeman, Plaintiffs-Appellants, v. Carl SPIRCOFF, William O'Keefe, Show-Biz Home Video, Inc., and Plaza Bank of Norridge, Illinois, Defendants-Appellees.

No. 1-90-1987.

Appellate Court of Illinois,

First District, Fourth Division.

May 7, 1992.

Rehearing Denied June 3, 1992.

[229 Ill.App.3d 263] [171 Ill.Dec. 2] Wiczer & Associates, Chtd., Northbrook (Fred L. Berkovits, of counsel), for plaintiffs-appellants.

John O. Tuohy, Chicago, for defendants-appellees.

Justice LINN delivered the opinion of the court:

Plaintiffs, Christel Hager-Freeman and Walter O. Freeman, filed a multiple count action against Carl Spircoff, William O'Keefe, and Show-Biz Home Video, Inc., an Illinois corporation (Show-Biz). christel and Carl, along with Charles DiCaro, were the three shareholders of the corporation formed to operate a video rental store. O'Keefe was the lawyer for Show-Biz. The controversy pending before the court arose from a transaction in which Charles sold his shares to Carl alone, instead of jointly to Carl and Christel as allegedly intended. According to Christel, she and Carl had agreed to jointly purchase Charles' shares, and to that end both deposited $5,000 with O'Keefe, as partial payment for the shares. O'Keefe allegedly assured her that he could handle the transaction for both parties and that she need not consult her own counsel. Without Christel's knowledge, and with the help of O'Keefe, Carl purchased Charles' shares in his own name and took over control of the business, locking out Christel and denying her access to the books and records. Christel's employment with Show-Biz was terminated. She filed suit against Carl and O'Keefe, seeking various forms of equitable relief.

All but two counts of the second amended complaint have been dismissed, with prejudice, for failure to state causes of action. Plaintiffs' appeal is limited to the dismissal of counts 3 and 7, which may be described, respectively, as a claim against attorney O'Keefe for breach of a duty sounding in agency and a shareholder action against defendants Carl and Show-Biz for oppression. Counts 4 and 6 survived the motion to dismiss, but plaintiffs withdrew them, for purposes of the appeal, with leave to reinstate. Before we can consider the legal sufficiency of counts 3 and 7, however, we must unravel and resolve the jurisdictional matters.

The record in this case is daunting, filled with innumerable motions and briefing schedules. The complaint was amended twice, answered, and subjected to repeated motions to dismiss. Both sides sought summary judgment as to some counts. The trial court denied summary judgment but then dismissed certain counts with prejudice and let other counts stand. The procedural history leading up to the two orders is convoluted and confusing. The appellate briefs do not, unfortunately, dispel the confusion that has been generated by the years of pleading battles.

Jurisdictional Background

Plaintiffs filed their notice of appeal on July 10, 1990, seeking review of an order entered on June 12, 1990. The June 12 order denied plaintiffs' motion to reconsider an earlier order (March 13, 1990) that dismissed with prejudice counts 3 and 7 of the second amended complaint. The June 12 order also granted defendants' motion to strike plaintiffs' motion to reconsider the dismissal of those counts. Counts 4 and 6 were stricken with leave to reinstate. The June 12 order contains a finding under Supreme Court Rule 304(a) (134 Ill.2d R. 304(a)) that the decision to deny plaintiffs' motion to reconsider and to grant defendants' motion to strike the motion to reconsider was a final and appealable order.

In the earlier order of March 13, 1990, the trial court had dismissed count 3 (against attorney O'Keefe) with prejudice and entered a finding pursuant to Supreme Court Rule 304(a) that there was no just reason to delay enforcement of or appeal from that ruling. The March 13 order also dismissed count 7 with prejudice but at the same time granted plaintiffs leave to file their brief in support of count 7, in the form of a motion to reconsider. Count 7 may be referred to as the "shareholder oppression" claim. The court in the March 13 order denied defendants' motion to dismiss counts 4 and 6. Count 4 challenges Carl's wrongful refusal to allow Christel her shareholder's right to inspect the books and records of Show-Biz. Count 6 sounds in constructive trust and seeks to impose an equitable lien on one-half of the shares of the business, based on Carl's alleged fraudulent misrepresentations.

In one other development that occurred after entry of the June 12 order appealed from, Carl moved for attorney fees pursuant to section 2-611 of the Code of Civil Procedure. (Ill.Rev.Stat.1989, ch. 110, par. 2-611.) This motion was filed on July 11, 1990, one day after plaintiffs filed their timely notice of appeal. According to defendants, Carl's motion for attorney fees divested the appellate court of jurisdiction under the original notice of appeal. Carl contends that because plaintiffs failed to refile their notice of appeal after the disposition of the fee motion, pursuant to Supreme Court Rule 303(a)(2), this court lacks jurisdiction over this appeal.

OPINION

I.

In their initial brief, filed in December 1990, plaintiffs asserted that the June 12 order was final and appealable under Supreme Court Rules 301 and 303. Thereafter, the appeal was dismissed on defendants' motion. Plaintiffs moved to reinstate the appeal and filed an additional or amended statement of jurisdiction, premised on Supreme Court Rule 304(a). This court then reinstated the appeal. Subsequently, defendants filed their appellee briefs. (Carl Spircoff and Show-Biz Home Video, Inc. filed one brief, and attorney William O'Keefe filed a separate brief.) Defendants' briefs both challenge this court's jurisdiction.

Carl's brief asserts that the plaintiffs failed to properly perfect this appeal because after the notice of appeal was filed the trial court ruled on what Carl terms a "post-trial" motion, his motion for attorney fees under Section 2-611 of the Code of Civil Procedure. Under Supreme Court Rule 303(a)(2), when post-trial motions are filed, either before or after a notice of appeal is filed, the notice of appeal has no effect and must be withdrawn by the appellant by moving for dismissal of the notice of appeal pursuant to Supreme Court Rule 309. After the post-trial motion is ruled upon, the appellant must then re-file the notice of appeal. Plaintiffs did not re-file their notice of appeal after the fee motion was determined, and Carl maintains that this divests the court of appellate jurisdiction.

O'Keefe joins in this argument, but makes additional challenges. He contends that plaintiffs have waived jurisdictional arguments under Supreme Court Rule 304(a) because the statement of jurisdiction in plaintiff's opening brief relies on Supreme Court Rules 301 and 303. Those rules involve appeals from judgments that are final and appealable as to all matters, without a special finding. Notwithstanding the waiver argument, O'Keefe claims that the June 12 order did finally dispose of all matters on that date, (despite the express finding under Supreme Court Rule 304(a)) because the plaintiffs had voluntarily dismissed the two remaining counts of their complaint, and there was nothing left to be determined at that point. O'Keefe thereby maintains that jurisdiction would have been proper under Rules 301 and 303 but that plaintiffs have abandoned this base of jurisdiction by relying on Rule 304(a) (which he claims they have waived in any event).

This court admits to lingering confusion over the exact jurisdictional arguments being joined in this appeal, as the above attempt to summarize defendants' positions indicates. We can state with certainty, however, that the only possible basis for this court's jurisdiction is Supreme Court Rule 304(a) because the March 13 and June 12 orders clearly show that not all counts of the second amended complaint were finally put to rest. In the June 12 order, counts 4 and 6 were dismissed without prejudice and with leave to reinstate. Those two counts survived the motion to dismiss, but the transcript of the hearing indicates that plaintiffs were allowed to put them "in abeyance" by withdrawing them without prejudice and with leave to reinstate. The apparent purpose of this procedure was to facilitate appellate review by fashioning a final disposition of the lawsuit. (We note the fallacy in such an approach, however, as the June 12 order could not be made final as to all claims by the simple device of dismissing viable counts with leave to reinstate.) In any event, both the March 13 and June 12 orders determine "fewer than all rights and liabilities in issue or fewer than all the matters involved in the case." (Getzelman v. Koehler (1958), 14 Ill.2d 396, 400, 152 N.E.2d 833, 835.) Accordingly, our jurisdiction over this appeal can only be premised on Supreme Court Rule 304(a). (E.g., Marsh v. Evangelical Covenant Church (1990), 138 Ill.2d 458, 150 Ill.Dec. 572, 563 N.E.2d 459.) To come within this provision, the order appealed from must contain the trial court's express finding that there is no just reason to delay enforcement of or appeal from the ruling. In the pending case the orders appealed from do contain such a finding, but that is only the beginning of the inquiry into this court's authority to hear this appeal. ¹

Procedural History

To straighten the strands of the jurisdictional tangle, we believe it may be useful to first examine the nature of the controversy, to better understand which counts were dismissed at what point and for what reasons. Massive motion practice occurred in the years after the initial filing, and that has contributed to the current confusion over the appealability of the orders on appeal.

A...