Browning, Ektelon Div. v. Williams

• Citation: 256 Ill.App.3d 299,628 N.E.2d 878
• Decision Date: 27 December 1993
• Docket Number: No. 1-92-0260,1-92-0260
• Parties: , 195 Ill.Dec. 414 BROWNING, EKTELON DIVISION, a Utah Corporation, Petitioner-Appellee, v. Don WILLIAMS, Respondent-Appellant.
• Court: United States Appellate Court of Illinois

Page 878

628 N.E.2d 878

256 Ill.App.3d 299, 195 Ill.Dec. 414

BROWNING, EKTELON DIVISION, a Utah Corporation, Petitioner-Appellee, v. Don WILLIAMS, Respondent-Appellant.

No. 1-92-0260.

Appellate Court of Illinois,

First District, First Division.

Dec. 27, 1993.

[195 Ill.Dec. 415] Cassiday, Schade & Gloor, Chicago (Timothy J. Ashe, Lynn D. Dowd, of counsel), for respondent-appellant.

Seyfarth, Shaw, Fairweather & Geraldson, Chicago (Carson P. Veach, Douglas J. Bank, of counsel), for petitioner-appellee.

Justice O'CONNOR delivered the opinion of the court:

On December 17, 1991, the circuit court granted petitioner, Browning Corporation's (Browning) request pursuant to section 2-1401 of the Code of Civil Procedure (Ill.Rev.Stat.1991, ch. 110, par. 2-1401), to vacate a $3.525 million damage award against it in favor of respondent, Don Williams.

The petition for relief stemmed from a petty collection case. Browning, via its collection agency United Mercantile Agencies (UMA), had sued Williams, one of its sales representatives, in 1986 to collect $8,136.88 for materials that it contended Williams owed to it. Williams answered the complaint, denying that he owed Browning money; rather Browning owed him $8,217.52 in commissions. In total, Williams filed ten counterclaims against Browning requesting damages and attorney fees amounting to several hundred thousand dollars.

Browning initially enlisted Chicago attorney, Leonard Abrams, to represent its interest in the collection case. At the time, Abrams practiced with the law firm of Cooper & Cooper, Ltd., in Chicago. Abrams filed the complaint in the case. He also handled discovery matters in the case, at least through July 22, 1988. However, on August 1, 1987, Abrams left Cooper & Cooper. He started his own law practice and took Browning's case with him. He hired former Cooper & Cooper attorney Murray Westler to help him with his workload. Westler shared office space with Abrams and Abrams delegated most of the work and responsibility for this case to Westler; however, Abrams never withdrew his name as lead counsel. In fact, at least until August 3, 1989, the pleadings filed by Westler were submitted on Abrams's stationery, with Abrams named as "counsel" in the case. However, after January 13, 1989, Williams sent notice and other pleadings in the case to Westler, rather than to Abrams.

On August 14, 1989, the trial court granted summary judgment in favor of Williams on count IX of his counter-complaint, which also resulted in judgment against Browning in its collection case. The trial court entered Rule 304(a) (134 Ill.2d R. 304(a)), findings on this judgment. However, Westler never told Browning that it had lost its case. Rather, he reported that the motion for summary judgment was still pending. Westler apparently persisted in this course of dealing for the next year and a half, during which he continued to represent Browning's interest without Browning's knowledge as to precisely what was transpiring. Westler filed a timely notice of appeal from the August 14, 1989 decision; however, this court dismissed the appeal for want of prosecution on March 23, 1990.

Westler moved out of Abrams' office in November, 1989. The trial proceedings on Williams's remaining counterclaims continued. Westler began missing numerous court dates, failed to comply with discovery orders, and generally handled the case very poorly. Apparently, his final court appearance in the case was on September 17, 1990. On this date, the trial court entered a Rule to Show Cause why Browning should not be sanctioned for failing to comply with discovery requests. On October 28, 1990, Westler did not appear to answer the Rule to Show Cause. Accordingly, the trial court entered judgment in favor of Williams on his remaining counterclaims.

On October 28, 1990, the trial court set the case for a trial on damages. The case was thereafter continued numerous times because of Westler's failure to appear in court. The trial judge entered a Rule 304(a) finding as to the October 28 judgment on January 23, 1991. No appeal was filed. Finally, on April 4, 1991, a trial on damages was held. Neither Westler nor anyone else appeared on behalf of Browning, despite the trial judge's and Williams' attorney's attempts to contact Westler. Williams presented expert testimony on damages, and the jury returned a $2.35 million damage award plus $1.175 million in attorney fees. Williams' attorney did not send notice of the judgment to Browning.

On May 13, 1991, more than thirty days after the judgment was entered, Browning "discovered" the judgment against it when Williams began garnishment proceedings. Browning retained new counsel at this time and on July 15, 1991, filed the section 2-1401 petition. On December 17, 1991, the trial court granted the petition "solely to the April 4, 1991 Judgment" and vacated the damage award. The trial court let stand the October 28, 1990 judgment on the counterclaims themselves. Williams appeals the trial court's decision to vacate the damage award.

At oral argument in this case, an issue arose regarding Browning's standing to file the section 2-1401 petition. Both parties filed supplemental argument regarding this issue. The underlying lawsuit was originally filed by "Browning, Ektelon Division," which, apparently, at the time, was "Ektelon Corporation," a California-based, wholly owned subsidiary of Browning. In 1988, according to Browning's appellate counsel, Ektelon was sold to Prince Manufacturing Company of New Jersey; however, after procuring his judgment against Ektelon, Williams sought to satisfy it against Browning at its principal place of business in Utah. Hence, the section 2-1401 petition was filed by Browning.

Initially, Browning urges that Williams has waived the standing issue because, as an affirmative defense, standing must be raised in the trial court. However, the waiver rule is a limitation on parties, not on this court. (In re Marriage of Rodriguez (1989), 131 Ill.2d 273, 279, 137 Ill.Dec. 78, 545 N.E.2d 731). Therefore, because we raised the standing issue, we will address it. For this reason, we deny Williams' motion to strike the supplemental argument filed by Browning.

Requiring that a party have standing to sue "[e]nsures that courts are deciding actual, specific controversies, and not abstract questions or moot issues." (Rodriguez, 131 Ill.2d at 279-80, 137 Ill.Dec. 78, 545 N.E.2d 731). In order for a party to have standing to file a section 2-1401 petition, it must either be privy to the record, injured by the judgment such that it will derive benefit from its reversal, or competent to release the trial court's error. (In re Reilly's Estate (1979), 68 Ill.App.3d 906, 25 Ill.Dec. 191, 386 N.E.2d 462). In this case, Browning owned "Ektelon Division." Furthermore, when Williams sought to satisfy his judgment, he did so by citing the assets of Browning in Utah. Therefore, at the very least, Browning can satisfy the first two of the three criteria.

Williams contends, however, that Browning, as a foreign corporation, lacks standing because it does not have a certificate of authority to transact business in Illinois under the Business Corporation Act (Ill.Rev.Stat.1991, ch. 32, par. 13.70). However, standing to sue cannot be denied to a foreign corporation when the basis of the lawsuit is a transaction involving interstate commerce. (Textile Fabrics Corp. v. Roundtree (1968), 39 Ill.2d 122, 233 N.E.2d 376.) The record on appeal, together with the supplementary pleadings filed by the parties on appeal, reflect that this case involves transactions between a salesman who resided in Illinois and a California-based subsidiary of a Utah corporation. We cannot gainsay that the transactions involved interstate commerce, and, therefore, Browning had standing to file the section 2-1401 petition.

Pursuant to section 2-1401, the Code of Civil Procedure sets forth a simple petition process affording parties, when appropriate, "[r]elief from final orders and judgments, after 30 days from the entry thereof." (Ill.Rev.Stat.1991, ch. 110, par. 2-1401.) A section 2-1401 petition is addressed to the equitable powers of the trial court and allows a party to bring before the court matters unknown to both the parties and the court at the time of the judgment which would have precluded its entry. (Manning v. Meier (1983), 114 Ill.App.3d 835, 70 Ill.Dec. 431, 449 N.E.2d 560.) A section 2-1401 petition is considered a new proceeding separate from the proceeding in which the judgment was rendered (Ill.Rev.Stat.1989, ch. 110, par. 2-1401(b)); therefore, like a complaint, the petitioner must allege and prove a right to the relief sought as in any other civil action. Klein v. La Salle National Bank (1993), 155 Ill.2d 201, 205, 184 Ill.Dec. 420, 613 N.E.2d 737; Smith v. Airoom, Inc. (1986), 114 Ill.2d 209, 221, 102 Ill.Dec. 368, 499 N.E.2d 1381.

A section 2-1401 petitioner is required to allege and prove the existence of a meritorious defense or claim in the original action, (Smith v. Airoom, Inc. (1986), 114 Ill.2d 209, 221, 102 Ill.Dec. 368, 499 N.E.2d 1381), or to the resulting damage award, (see Elfman v. Evanston Bus Co. (1963), 27 Ill.2d 609, 613, 190 N.E.2d 348), as well as due diligence in both the presentation of the claim or defense and the filing of the petition. (Klein v. La Salle National Bank (1993), 155 Ill.2d 201, 205, 184 Ill.Dec. 420, 613 N.E.2d 737; Airoom, 114 Ill.2d at 213, 102 Ill.Dec. 368, 499 N.E.2d 1381). In other words, petitioner bears the burden of showing that, if the ground for relief asserted in the meritorious defense had been known when the complained-of judgment was rendered, the failure to discover and present it at that time was not the result of petitioner's own lack of diligence. (Ostendorf v. International Harvester Co. (1982), 89 Ill.2d 273, 60 Ill.Dec. 456, 433 N.E.2d 253.) In determining diligence, courts look to whether petitioner,...