Farley Metals, Inc. v. Barber Colman Co.

• Decision Date: 29 November 1994
• Docket Number: No. 1-93-1047,1-93-1047
• Citation: 645 N.E.2d 964,269 Ill.App.3d 104
• Parties: , 206 Ill.Dec. 712 FARLEY METALS, INC., n/k/a, Farley, Inc., a Delaware corporation, Plaintiff-Appellant, v. BARBER COLMAN COMPANY et al., Defendants-Appellees (Barber Colman Company, Plaintiff; National Cash Register Company et al., Third-Party Defendants-Appellees).
• Court: United States Appellate Court of Illinois

Page 964

645 N.E.2d 964

269 Ill.App.3d 104, 206 Ill.Dec. 712

FARLEY METALS, INC., n/k/a, Farley, Inc., a Delaware corporation, Plaintiff-Appellant, v. BARBER COLMAN COMPANY et al., Defendants-Appellees (Barber Colman Company, Plaintiff; National Cash Register Company et al., Third-Party Defendants-Appellees).

No. 1-93-1047.

Appellate Court of Illinois First District, Second Division.

Nov. 29, 1994.

Rehearing Denied Feb. 16, 1995.

Clausen Miller Gorman Caffrey & Witous, P.C., Chicago (James T. Ferrini, of counsel), for appellant.

Johnson & Bell, Ltd., Chicago (William V. Johnson, Michael B. Gunzburg, Thomas H. Fegan, Mindy Kallus, of counsel), for appellee Barber Colman Co.

Dowd & Dowd, Ltd., Chicago (Michael G. Patrizio, Patrick J. Ruberry, of counsel), for appellee Westronics, Inc.

Kiesler & Berman, Chicago (Clinton J. Feil, Edward L. Cooper, of counsel), for appellee Hyre Elec. Co.

Justice SCARIANO delivered the opinion of the court:

On April 26, 1985, an explosion occurred at Tool & Engineering Company, a metal automobile component manufacturer in the City of Chicago. Tool & Engineering is a wholly owned division of plaintiff Farley Metals, Inc. The explosion resulted in the deaths of three employees, injured others, and caused extensive property damage. During the summer after the explosion, plaintiff's reconstruction manager removed certain artifacts ¹ from the explosion and stored them with Industrial Storage Warehouse (Industrial) in Chicago.

Nearly two years later, on April 24, 1987, plaintiff sued numerous defendants, alleging negligence and strict liability. Plaintiff alleged that an exothermic ² explosion occurred in one of its salt bath furnaces and that the explosion was caused by a mixture of potassium nitrate and sodium nitrate overheating and interacting with aluminum rods. Salt bath furnaces are utilized in the heat treatment of metals; aluminum stock is submerged in the salt bath furnace, heated to temperatures of up to 950 degrees Fahrenheit, and then placed in a "quench tank." Plaintiff alleged that the overheating resulted from defects in the defendants' manufacturing, installation and/or servicing of various products used in the treatment process.

In April 1987, plaintiff's law firm, Clausen, Miller, Gorman, Caffrey & Witous, P.C. (Clausen), entered into a contract with Industrial under which it was obligated to pay Industrial $383.99 per month for storing the artifacts from the explosion. On May 13, 1987, Circuit Court Judge Thomas E. Hoffman entered a protective order in which he ordered that no party could engage in destructive testing, relocation, or alteration of the artifacts from the explosion and that all parties receive timely notice and an opportunity to attend any inspections or testing of the artifacts. He also denied defendant Barber Colman's motion to have the artifacts placed with an independent entity.

By court order, management of the litigation was vested in three committees, the plaintiffs' committee (representing personal injury plaintiffs), the defendants' committee, and the Farley committee. (Farley was both a plaintiff and a defendant.) The court directed these committees to divide the cost of storing the artifacts equally between defendants and plaintiffs, with individual defendants and plaintiffs contributing on a pro rata basis. Although storage costs were shared, Clausen directed the preservation of the artifacts and was the only party with a key to the warehouse gate. Parties wishing to inspect the artifacts would contact Clausen which then informed the other parties and authorized the visit with the warehouse. Clausen remained obligated to pay fees under the contract and advanced payments to Industrial.

In October 1989, one of the attorneys for the personal injury plaintiffs relocated various artifacts from Industrial to Record Copy Services, apparently because of the need for a heated warehouse. According to the affidavits of George Zelcs, a Clausen attorney, and Kevin McQuillan and Tomas Petkus, personal injury plaintiffs' attorneys, Zelcs informed Circuit Court Judge Myron T. Gomberg at a status call that Clausen was having difficulty collecting storage fees from the other parties. Upon questioning by the judge, only Zelcs, McQuillan, and Petkus indicated that they had an interest in further preservation of the artifacts left at Industrial. The judge then ordered that only the interested parties, i.e., plaintiffs, were required to share in the cost of storing those artifacts. However, that ruling was not put in writing and the earlier order that costs be divided among the parties was not amended to reflect it. ³

Defendants later denied stating that they were uninterested in preserving the artifacts remaining at Industrial. Clinton Feil, an attorney for defendant Hyre Electric Company, filed an affidavit dated September 16, 1992, stating that he objected to paying warehouse fees because Clausen had exclusive control over access to the warehouse and that he never "agreed or consented to the violation of the Court Order protecting the artifacts stored in the warehouse or to their destruction." Patrick Ruberry, an attorney for Westronics also filed an affidavit, dated September 28, 1992, asserting that defense attorneys did not state in open court that they were uninterested in preserving the artifacts at Industrial and that he did not consent to the destruction of the artifacts, having discussed with other defense attorneys the possibility that a defect in the salt bath itself caused the explosion. In its reply brief supporting its motion to dismiss, defendant Barber Colman similarly denied ever expressing a lack of interest in preserving the artifacts.

Between 1987 and June 1991, Clausen was in arrears on the Industrial account several times and received six dunning letters and four notices of public auction. In each case, Clausen avoided foreclosure by paying the amount in arrears.

On August 19, 1991, defendant Barber Colman filed a third party action against National Cash Register Company and NCR Corporation (NCR) for contribution. After encountering delays setting up an examination of artifacts at Industrial, NCR, in July 1992, deposed Michael Swade, the president of Industrial, and learned that the artifacts stored at his warehouse had been destroyed. Swade produced past-due invoices on the Clausen account and recalled that on July 2, 1991, Industrial's "lien foreclosure had been perfected" and a public auction was held in an attempt to sell the artifacts. No bids were made and Industrial subsequently sold the goods for scrap. Swade contended that Industrial complied with the Uniform Commercial Code's notice provisions before holding the auction. Plaintiff denied that it received notice of the public auction. The record contains a certificate of publication indicating that Industrial ran an ad regarding the auction in the Lincoln-Belmont Booster on June 12, 1991 and on June 19, 1991. A letter of notice of public sale also appears in the record, but it is unclear whether it was sent to Clausen. ⁴

On December 12, 1991, Industrial sued Clausen for $13,427.60, monies it claimed were past due for storage fees. Clausen eventually paid Industrial $9,000 in settlement of its claim.

Upon learning that the artifacts stored at Industrial were destroyed, defendants filed motions for dismissal pursuant to Supreme Court Rule 219(c). (134 Ill.2d R. 219(c).) Defendant Barber Colman attached to its motion the affidavit of its expert, Q.D. Mehrkam. Mehrkam opined that the explosion may have occurred outside of the salt bath and that "a true understanding of the explosion could only be explained and understood by examining the equipment that was allegedly involved in the occurrence."

Following the hearing, the judge granted defendants' motions to dismiss. ⁵ Plaintiff filed a motion for reconsideration, but the court denied it on March 10, 1993. Plaintiff now appeals.

Plaintiff asserts that the trial court's ruling was an abuse of discretion because, since it had no knowledge of the impending destruction of artifacts, its conduct did not reflect contumacious disregard for the court's authority. Plaintiff also contends that such a drastic sanction was unwarranted because defendants were not prejudiced by the loss of the artifacts.

Modern discovery rules and procedures are designed to effectuate disclosure, for "[t]ruth is the heart of all discovery." (Buehler v. Whalen (1977), 70 Ill.2d 51, 67, 15 Ill.Dec. 852, 859, 374 N.E.2d 460, 467.) They embody a departure from viewing a trial as a "battle of wits," with surprise as a coveted weapon, and a move towards utilizing the trial as a joint endeavor to uncover the truth. (See Krupp v. Chicago Transit Authority (1956), 8 Ill.2d 37, 40-41, 132 N.E.2d 532, 535; Payne v. Coates-Miller, Inc. (1979), 68 Ill.App.3d 601, 606, 25 Ill.Dec. 127, 131, 386 N.E.2d 398, 402.) Extensive disclosure of relevant material before trial facilitates the search for truth and comports with the recognition that "if justice is to be achieved, both sides must have an equal opportunity to prevail in terms of skill of counsel and available resources." Richard A. Michael, Civil Procedure Before Trial § 31.3, at 104 (1989).

Supreme Court Rule 219(c) provides the trial court with discretionary authority to enter a wide range of orders, including dismissal with prejudice, when a party fails to comply with discovery orders. (134 Ill.2d R. 219(c).) The trial court's broad discretion is limited only by the requirement that its order be just. (134 Ill.2d 219(c).) The purpose of Rule 219(c) is to advance the discovery process rather than to punish the offending party. (Kubian v. Labinsky (1988), 178 Ill.App.3d 191, 196, 127 Ill.Dec. 404, 407, 533 N.E.2d 22, 25, appeal denied (1988), 123 Ill.2d 559, 128 Ill.Dec. 891, 535 N.E.2d 402.) Nonetheless, our supreme court has advised that "[d]iscovery for all parties will not be effective...