Ford Motor Credit Co. v. Sperry

• Decision Date: 24 March 2005
• Docket Number: No. 98075.,98075.
• Citation: 292 Ill.Dec. 893,827 N.E.2d 422,214 Ill.2d 371
• Parties: FORD MOTOR CREDIT COMPANY, Appellant, v. Thomas B. SPERRY, d/b/a Thomas B. Sperry, Inc., Appellee.
• Court: Illinois Supreme Court

827 N.E.2d 422

214 Ill.2d 371

292 Ill.Dec. 893

FORD MOTOR CREDIT COMPANY, Appellant, v. Thomas B. SPERRY, d/b/a Thomas B. Sperry, Inc., Appellee.

No. 98075.

Supreme Court of Illinois.

March 24, 2005.

Mary K. Schulz, Chicago, for appellant.

Dewey G. Hollingsworth, of Truemper, Hollingsworth & Titiner, Aurora (Larry Wechter, Geneva, of counsel), for appellee.

Chief Justice McMORROW delivered the opinion of the court:

The circuit court of Kane County entered an order declaring void a previous order of that court awarding attorney fees to plaintiff, Ford Motor Credit Company (Ford Credit). The circuit court held that because the law firm representing Ford Credit had failed to register with this court, pursuant to our Rule 721(c) (166 Ill.2d R. 721(c)), the firm's practice of law was unauthorized, and, accordingly, there was no valid basis upon which the court could award legal fees. A majority of the appellate court affirmed the judgment of the circuit court. 344 Ill.App.3d 1068, 280 Ill.Dec. 9, 801 N.E.2d 954. For the reasons that follow, we reverse the judgment of the appellate court and vacate the order of the circuit court.

BACKGROUND

In June 1993, defendant, Thomas B. Sperry, leased an automobile from Sycamore Auto Center, Inc. (Sycamore). Thereafter, Sycamore assigned the lease to Ford Credit. In December 1994, Ford Credit filed suit against defendant, alleging that defendant had breached the terms of the motor vehicle lease. As a remedy for defendant's breach, Ford Credit sought the return of the vehicle and monetary damages.

In response to the lawsuit lodged against him by Ford Credit, defendant filed a counterclaim against Ford Credit and a third-party action against Sycamore. Defendant alleged that Ford Credit and Sycamore had engaged in various fraudulent activities with respect to the vehicle lease. Only defendant's counterclaim against Ford Credit is at issue in this appeal. In August 1999, Ford Credit's lawsuit against defendant, as well as defendant's counterclaim against Ford Credit, went to trial. Following defendant's presentation of his case, Ford Credit moved for a directed verdict on several counts of defendant's counterclaim, including count V. In count V, defendant alleged that Ford Credit had violated provisions of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)). After hearing the evidence, the circuit court granted Ford Credit a directed verdict against defendant on this consumer fraud count.

Thereafter, on November 15, 1999, Ford Credit petitioned the circuit court for statutory attorney fees available to it as the prevailing party in the consumer fraud action (see 815 ILCS 505/10a(c) (West 2000)). The evidence adduced with respect to this claim showed that, during the entire course of these proceedings, Ford Credit was represented by attorney Mary K. Schulz. At the time Ford Credit's complaint was filed, Schulz practiced with the professional service corporation law firm of Vigil, Berkley, Schulz and Gordon, P.C. After that firm dissolved, Schulz continued to represent Ford Credit in these proceedings as the principal in her own newly created professional service corporation law firm, Schulz & Associates, P.C.

On May 8, 2000, the circuit court awarded Ford Credit—as the prevailing party in the consumer fraud action—statutory attorney fees in the amount of $31,717.25. Defendant neither filed a motion with the circuit court to reconsider this award, nor filed an appeal of this judgment with the appellate court. In May 2001—one year after the judgment for attorney fees was entered—Ford Credit commenced collection proceedings against defendant on the attorney fees award.

On February 5, 2002-21 months after the circuit court entered the original judgment against defendant for attorney fees— defendant, pro se, filed in the circuit court a pleading entitled "First Amended Motion to Vacate the Void Orders of This Court." In this pleading, brought pursuant to section 2-1401(f) of the Code of Civil Procedure (735 ILCS 5/2-1401(f) (West 2000)), defendant requested that the circuit court vacate the May 8, 2000, order awarding statutory attorney fees to Ford Credit. Defendant asserted that when the professional service corporation of Vigil, Berkley, Schulz and Gordon, P.C., initiated the lawsuit against him in 1994, that firm lacked a certificate of registration with this court, as required pursuant to our Rule 721(c) (166 Ill.2d R. 721(c)). Defendant also alleged that when that same law firm petitioned the circuit court for attorney fees in 1999, it remained unregistered under Rule 721(c). Based upon the firm's lack of registration with this court, defendant asserted that Ford Credit was "not represented by any entities authorized by the Illinois Supreme Court to practice law in the State of Illinois," and that the law firm was thereby "prohibited from opening or maintaining an office for that purpose." Accordingly, defendant argued, the filing of the lawsuit against him "did not confer jurisdiction" upon the circuit court. Thus, defendant concluded, because the law firm was "prohibited * * * from practicing law in the State of Illinois" as a result of its failure to register pursuant to Rule 721(c), the attorney fees award was null and void ab initio.

A hearing on defendant's motion was held on March 7, 2002. At that time, defendant had retained counsel and was no longer appearing pro se. Counsel for defendant argued that pursuant to the Corporation Practice of Law Prohibition Act (705 ILCS 220/0.01 et seq. (West 2000)), a corporation is prohibited from practicing law, unless that entity falls within the ambit of the Professional Service Corporation Act (805 ILCS 10/1 et seq. (West 2000)). In turn, counsel argued, the Professional Service Corporation Act specifies that it is this court which shall determine how professional corporations shall be organized to practice law, and it is through the provisions of Rule 721 that this court allows professional corporations to practice law.

Counsel further argued that because the professional service corporation law firms representing Ford Credit were not registered with this court pursuant to Rule 721(c), those firms were engaged in the unauthorized practice of law. Accordingly, counsel stated, the order granting those law firms attorney fees was therefore void. In addition, counsel further asserted that because the motion to vacate the judgment granting Ford Credit attorney fees was brought pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401(f) (West 2000)), the motion was not untimely, as section 2-1401 provides that a void order can be set aside at any time.

At the hearing on defendant's motion, Ford Credit was again represented by attorney Mary K. Schulz. In response to defendant's arguments, Ford Credit's counsel first noted that there was no dispute that, during these proceedings, she was a duly licensed attorney in good standing with this court. Counsel then stressed that the licensing requirements imposed by this court upon attorneys is distinguishable from the registration requirements for professional service corporation law firms contained within Rule 721(c). Counsel argued that Rule 721 is an administrative rule which allows this court to identify the individuals who are involved in a professional service corporation and to assure that these persons are licensed to practice law in this state. The administrative provisions of Rule 721, counsel asserted, are in contrast to the licensing and regulation provisions in our rules. Counsel emphasized that licenses to practice law are not given to law firms; rather, they are awarded to individuals. Further, counsel stated, the law firms for which licensed attorneys practice are not, themselves, licensed to practice law.

During the course of the hearing, counsel also advised the court that the firm with which she practiced at the time Ford Credit's complaint was filed, Vigil, Berkley, Schulz and Gordon, P.C., had since dissolved in May 2000, and she believed that firm had not been registered with this court pursuant to Rule 721. Counsel further stated that she then set up her own professional service corporation law firm, Schulz & Associates, P.C., which was, at the time of the hearing, in the process of Rule 721 registration with this court. Counsel concluded her argument by reiterating her position that registration under Rule 721 is purely administrative and is not analogous to the grant of a license to practice law.

On April 9, 2002, the circuit court granted defendant's motion to vacate the judgment order of May 8, 2000, which had awarded Ford Credit statutory attorney fees. As an initial matter, the court found that it was uncontroverted that Ford Credit's attorney throughout these proceedings, Mary K. Schulz, was duly licensed to practice law in this state. In addition, the circuit court acknowledged that, at the time of its ruling, the law firm of Schulz & Associates, P.C., had registered with this court pursuant to Rule 721(c).

However, the circuit court also found that it was uncontroverted that the law firms with which Schulz practiced during this litigation had not registered under Rule 721(c). The circuit court held that the "most pertinent" case was Kaplan v. Tabb Associates, Inc., 276 Ill.App.3d 320, 212 Ill.Dec. 720, 657 N.E.2d 1065 (1995), because it presented "striking similarities" to the cause before it. The circuit court explained that in Kaplan, the plaintiff and the defendant architectural firm signed a contract for architectural services. When a monetary dispute arose between the plaintiff and the defendant firm, that firm sought to invoke the contract's arbitration provision. The plaintiff sought to have the contract declared void due to the failure of the defendant firm to be licensed under the Illinois Architecture Practice Act of 1989 (225 ILCS 305/21 (West 1992)). The circuit court in...