Borcherding v. Anderson Remodeling Co., Inc.

• Decision Date: 09 December 1993
• Docket Number: Nos. 2-92-1041,2-92-1084,s. 2-92-1041
• Citation: 253 Ill.App.3d 655,624 N.E.2d 887
• Parties: , 191 Ill.Dec. 699 Sandra BORCHERDING et al., Plaintiffs-Appellees, v. ANDERSON REMODELING COMPANY, INC., Defendant (Ron Kafka, Defendant-Appellant). Lester WATSON et al., Plaintiffs-Appellees, v. KAFKA, INC., Defendant (Ron Kafka, Defendant-Appellant).
• Court: United States Appellate Court of Illinois

Page 887

624 N.E.2d 887

253 Ill.App.3d 655, 191 Ill.Dec. 699

Sandra BORCHERDING et al., Plaintiffs-Appellees, v. ANDERSON REMODELING COMPANY, INC., Defendant (Ron Kafka,

Defendant-Appellant).

Lester WATSON et al., Plaintiffs-Appellees, v. KAFKA, INC., Defendant (Ron Kafka, Defendant-Appellant).

Nos. 2-92-1041, 2-92-1084.

Appellate Court of Illinois Second District.

Dec. 9, 1993.

Douglas Drenk, Douglas Drenk & Associates, P.C., Wheaton, for Ron Kakfa.

Maureen Flaherty, Lehrer, Flaherty & Canavan, P.C., Wheaton, for Sandra Borcherding, and Charlotte Evans.

Justice WOODWARD delivered the opinion of the court:

This is a consolidated appeal. In two separate actions the trial court entered default judgments against defendant Ron Kafka. In cause No. 2-92-1041, the trial court entered a judgment in favor of plaintiffs Sandra Borcherding and Charlotte Evans (Borcherding plaintiffs) against defendants Ron Kafka (Kafka) and Anderson Remodeling Co. (Anderson), jointly and severally. In cause No. 2-92-1084, the trial court entered a judgment in favor of plaintiffs Lester and Carol Watson (Watson plaintiffs) against Kafka, Inc., and Ron Kafka, individually. Kafka, individually, appeals in both actions from the trial court's denials of his petitions for relief from the judgments under section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 1992)). Anderson is not a party in the Borcherding appeal. Kafka claims in both appeals that the trial court erred in denying his section 2-1401 petitions because the underlying default judgments were void. He claims that the Borcherding judgment was void both because the Borcherding plaintiffs' complaint failed to state a cause of action and because the arbitration award by Anderson against the Borcherding plaintiffs renders their claims res judicata. Kafka further claims that the Watson judgment was void because the Watson plaintiffs' complaint failed to state a cause of action.

On February 6, 1991, the Borcherding plaintiffs filed a two-count complaint against defendant Anderson and Kafka. They sued Kafka in both his "representative [sic]" and individual capacities. Their complaint alleged the following. Kafka was the employee and/or agent of Anderson. They informed Kafka that they would not enter into a contract with any company connected to a company called "Father and Sons." Kafka represented to them that Anderson was a reputable and reliable company which would provide suitable remodeling services and that Anderson was not connected with Father and Sons. In reliance on these representations, they entered into a remodeling contract with Anderson and made a down payment. Kafka's statements were willfully and intentionally false. When they learned that Anderson was the successor company to Father and Sons, they attempted to revoke the contract. Kafka and Anderson refused to honor their revocation. Kafka and Anderson obtained an arbitration award against them in the amount of $13,200.23 based on the contract.

Count I of the Borcherding plaintiffs' complaint alleged a violation of the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 1992)), and count II alleged common-law fraud. They sought $25,000 in compensatory damages and $250,000 in punitive damages.

The Borcherding plaintiffs attempted to serve Anderson and Kafka this complaint on several occasions but were unsuccessful. After the trial court appointed a special process server, the Borcherding plaintiffs finally served Kafka on May 29, 1991. On August 9, 1991, the Borcherding plaintiffs moved for a default judgment against Kafka and Anderson on the ground that neither of them had made an appearance or filed an answer.

On August 12, 1991, the trial court found Anderson and Kafka in default. The trial court scheduled a hearing for the Borcherding plaintiffs to prove up their damages. On August 14, 1991, Anderson moved to dismiss the Borcherding plaintiffs' complaint. Anderson asserted that on January 13, 1991, Anderson had obtained an arbitration award against the Borcherding plaintiffs which precluded their present cause of action. On August 20, 1991, rather than rule on Anderson's motion to dismiss, the trial court entered a default judgment in favor of the Borcherding plaintiffs. The trial court awarded to the Borcherding plaintiffs $5,600 in compensatory damages and $18,000 in punitive damages. In addition, the trial court revoked the contract between the parties and extinguished the Borcherding plaintiffs' liability on the contract. The trial court further awarded the Borcherding plaintiffs $571.10 in costs and $2,000 in attorney fees.

On July 15, 1992, Kafka, individually, petitioned under section 2-1401 for relief from the default judgment against him and moved to dismiss the Borcherding plaintiffs' complaint. Kafka denied that he had represented to the Borcherding plaintiffs that Anderson had no connection to Father and Sons. Kafka asserted, therefore, that the Borcherding plaintiffs failed to state a claim against him. On July 30, 1992, the trial court denied Kafka's section 2-1401 petition.

Kafka, individually, appealed the denial of his section 2-1401 petition pursuant to Supreme Court Rule 304(b)(3) (134 Ill.2d 304(b)(3)). As noted above, Anderson is not a party in this appeal. Kafka claims that the Borcherding plaintiffs failed to state a claim against Kafka under either the Act or under common-law fraud. Therefore, according to Kafka, the default judgment against him was void, and he was entitled to relief from that judgment under section 2-1401 regardless of whether he acted with due diligence. He also argues that the damage award was void because the Borcherding plaintiffs did not state sufficient facts to support an award of punitive damages. Kafka further argues that the Borcherding judgment was void because the arbitration award that Anderson obtained against the Borcherding plaintiffs rendered the Borcherding plaintiffs' claims res judicata.

On May 20, 1991, the Watson plaintiffs filed a three-count complaint against Kafka, individually, and defendant Kafka, Inc. They sued Kafka in his representative and individual capacities. The Watson plaintiffs' complaint alleged the following. Kafka was the owner, employee, and/or agent of Kafka, Inc. He falsely represented to them that Kafka, Inc., was a reputable and competent company which would provide suitable remodeling services. In reliance on these statements, they entered into a remodeling contract with Kafka, Inc., on September 13, 1990, paid a sum of money to Kafka, Inc., and made certain purchases in preparation for the remodeling. Kafka, Inc., failed to begin work on their property as promised.

Count I of the Watson plaintiffs' complaint alleged breach of contract. Count II alleged that defendants violated the Act. Count III alleged common-law fraud. The Watson plaintiffs sought $25,000 in compensatory damages and $250,000 in punitive damages.

On August 13, 1991, the trial court entered default judgments against both Kafka and Kafka, Inc., on the ground that they failed to appear or answer the Watson plaintiffs' complaint. On August 21, 1991, after a default prove-up hearing, the trial court awarded $7,700 in compensatory damages and $18,000 in punitive damages to the Watson plaintiffs. The trial court rescinded the contract between the Watson plaintiffs and Kafka, Inc. The trial court further awarded $446 in costs and $2,000 in attorney fees to the Watson plaintiffs.

On August 30, 1991, Kafka, Inc., moved to vacate the default judgment and dismiss the Watson plaintiffs' complaint. On October 7, 1991, the trial court vacated the default judgment as to Kafka, Inc., only; denied Kafka, Inc.'s motion to dismiss the Watson plaintiffs' complaint; and allowed Kafka, Inc., 21 days to answer counts II and III of the Watson plaintiffs' complaint. The trial court subsequently awarded the Watson plaintiffs $1,765.25 in attorney fees as a condition of its vacation of the default judgment. The Watson plaintiffs voluntarily withdrew count I of their complaint.

On November 4, 1991, Kafka moved to vacate the default judgment against him. The trial court denied this motion as untimely. On March 19, 1992, the trial court reinstated the default judgment against Kafka, Inc., because Kafka, Inc., failed to pay the $1,765.25 in attorney fees.

On July 15, 1992, Kafka petitioned under section 2-1401 for relief from the default judgment against him. Kafka asserted that he was not a proper party to the lawsuit. According to Kafka, he sold Kafka, Inc., on January 25, 1989, and was not the owner, employee, or agent of Kafka, Inc., when the Watson plaintiffs entered into the contract with Kafka, Inc. Therefore, according to Kafka, the Watson plaintiffs did not state in their complaint any facts which would impose liability on him. Kafka attached an affidavit to this petition in which he stated that he had never met, seen, or spoken to the Watson plaintiffs.

In an order of August 5, 1992, the trial court denied Kafka's section 2-1401 petition. The trial court specifically found that counts II and III of the Watson plaintiffs' complaint clearly stated causes of action against Kafka. The trial court found, therefore, that Kafka was not entitled to relief under section 2-1401 because he did not allege that he acted with due diligence and because the record demonstrated that he did not act with due diligence either in the underlying suit or in bringing the section 2-1401 petition.

Kafka appealed the denial of his section 2-1401 petition pursuant to Supreme Court Rule 304(b)(3) (134 Ill.2d 304(b)(3)). Kafka, Inc., is not a party to this appeal. Kafka argues once again that the Watson plaintiffs' complaint was void because it failed to state a claim against him for a violation of the Act or for common-law fraud. He also argues that the Watson plaintiffs' complaint was insufficient to support an award for...