In re the Marriage of David Newton

• Decision Date: 30 June 2011
• Docket Number: 1–09–0685.,1–09–0684,Nos. 1–09–0683,s. 1–09–0683
• Citation: 2011 IL App (1st) 090683,353 Ill.Dec. 105,955 N.E.2d 572
• Court: United States Appellate Court of Illinois
• Parties: In re The MARRIAGE OF David NEWTON, Petitioner–Appellee,andHadley Newton, Respondent (David J. Grund, Marvin J. Leavitt, and Grund & Leavitt, P.C., Contemnors–Appellants).

2011 IL App (1st) 090683
955 N.E.2d 572
353 Ill.Dec. 105

In re The MARRIAGE OF David NEWTON, Petitioner–Appellee,andHadley Newton, Respondent (David J. Grund, Marvin J. Leavitt, and Grund & Leavitt, P.C., Contemnors–Appellants).

Nos. 1–09–0683

1–09–0684

1–09–0685.

Appellate Court of Illinois, First District, Fourth Division.

June 30, 2011.

[955 N.E.2d 577]

Grund & Leavitt, P.C., Chicago, IL (Marvin J. Leavitt, David C. Adams), for Appellants.Berger Schatz, Chicago, IL (Michael J. Berger, Leon I. Finkel, Rebecca S. Berlin), for Appellee.[353 Ill.Dec. 110] OPINION Justice PUCINSKI delivered the judgment of the court, with opinion.

¶ 1 Contemnors-appellants, David Grund, Marvin Leavitt, and Grund & Leavitt, P.C. (collectively Grund and Leavitt), appeal the court's entry of a contempt order against them based on their refusal to comply with the court's order to step aside following an earlier court order that disqualified Grund and Leavitt due to a conflict of interest and denied their petition for attorney fees seeking $250,000 in interim and prospective fees in the divorce of David Newton (David) and Hadley Newton (Hadley).

¶ 2 After a full hearing on David's motion to disqualify, the circuit court determined that there was a conflict of interest in violation of Rule 1.9 of the Illinois Rules of Professional Conduct (Ill. Rs. of Prof'l Conduct, R. 1.9 (eff. Aug. 1, 1990)), and that Grund and the firm of Grund & Leavitt were disqualified from representing Hadley. At a hearing on the petition for fees, the court determined Grund and Leavitt were not entitled to any fees based on their disqualification due to the conflict of interest. Grund and Leavitt refused to comply with the court's order denying them fees and ordering them to step away from the bench, and the court found them in contempt and ordered Grund to pay $100 to purge the contempt. Grund and Leavitt appeal only the contempt order.

¶ 3 The issue before us is discrete and limited: did the court err in entering the contempt order? We clarify from the outset that Grund and Leavitt appeal only the contempt order and seek corollary review of the underlying denial of their fee petition because of the disqualification order, not their disqualification. A contempt order is final and appealable and generally also brings the propriety of the underlying disqualification order and subsequent denial of attorney fees before us. See SK Handtool Corp. v. Dresser Industries, Inc., 246 Ill.App.3d 979, 986, 189 Ill.Dec. 233, 619 N.E.2d 1282 (1993).

¶ 4 We find that the circuit court did not err in finding Grund and Leavitt in contempt based on their unwillingness to step aside, thus continuing their unwillingness to comply with Grund's disqualification due to a conflict of interest and the resulting denial of attorney fees. Grund and Leavitt violated Rule 1.9, and under section 508(c)(3) of the Illinois Marriage and Dissolution of Marriage Act (the Act), the retainer agreement with Hadley was not enforceable because it was in violation of a court rule. 750 ILCS 5/508(c)(3) (West 2008). Further, as the court correctly noted, even without section 508, ordinary contract law requires fees only for valid contracts and here the contract with Hadley was void ab initio because Grund was not allowed by Rule 1.9 to enter into it.

¶ 5 JURISDICTION

¶ 6 At the time of the instant appeal, March 18, 2009, the underlying divorce proceedings were still pending and [353 Ill.Dec. 111]

[955 N.E.2d 578]

judgment was not entered until nearly a year later, on March 8, 2010. Disqualification orders are not immediately appealable ( In re Estate of French, 166 Ill.2d 95, 100, 209 Ill.Dec. 677, 651 N.E.2d 1125 (1995)), but Grund and Leavitt here are not appealing the disqualification order. Following the disqualification order the court denied attorney fees going back in time to the first meeting with Hadley. Grund and Leavitt are not directly appealing the denial of attorney fees. Grund and Leavitt argue that they are entitled to fees up to the time of their disqualification. The court disagreed and denied all fees. Grund and Leavitt are appealing the contempt order and fine of $100 imposed by the court for not stepping aside, thereby disregarding the disqualification order and challenging the court's denial of all fees from either David or Hadley.

¶ 7 Contempt judgments that impose a penalty are final, appealable orders. In re Marriage of Gutman, 232 Ill.2d 145, 153, 327 Ill.Dec. 510, 902 N.E.2d 631 (2008). See also Ill. S.Ct. R. 304(b)(5) (eff. Jan. 1, 2006).

¶ 8 “ ‘ “Where an unappealable interlocutory order results in a judgment of contempt including a fine or imprisonment, such a judgment is a final and appealable judgment and presents to the court for review the propriety of the order of the court claimed to have been violated.” ’ ” Index Futures Group, Inc. v. Street, 163 Ill.App.3d 654, 657, 114 Ill.Dec. 735, 516 N.E.2d 890 (1987) (quoting People v. Verdone, 107 Ill.2d 25, 30, 88 Ill.Dec. 905, 479 N.E.2d 925 (1985), quoting People ex rel. Scott v. Silverstein, 87 Ill.2d 167, 174, 57 Ill.Dec. 585, 429 N.E.2d 483 (1981)). Here, the court imposed a fine of $100, and therefore the contempt was a final judgment which was immediately appealable.

¶ 9 STANDARD OF REVIEW

¶ 10 The parties dispute the standard of review. Grund and Leavitt assert the issue must be reviewed de novo, as it presents a question of law, while David maintains that the proper standard of review is abuse of discretion. When the facts of a contempt finding are not in dispute, their legal effect may be a question of law, which we review de novo. Busey Bank v. Salyards, 304 Ill.App.3d 214, 217, 238 Ill.Dec. 197, 711 N.E.2d 10 (1999). See also Skokie Gold Standard Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 116 Ill.App.3d 1043, 1054, 72 Ill.Dec. 551, 452 N.E.2d 804 (1983) (this court conducts an independent review of questions of law presented by the disqualification order). “As a general rule, a trial court's decision to award fees is a matter of discretion and will not be disturbed on appeal absent an abuse of discretion.” In re Marriage of Nesbitt, 377 Ill.App.3d 649, 656, 316 Ill.Dec. 378, 879 N.E.2d 445 (2007) (citing In re Marriage of Schneider, 214 Ill.2d 152, 174, 291 Ill.Dec. 601, 824 N.E.2d 177 (2005)). Here, however, the circuit court indicated its belief that it could not award attorney fees once Grund and Leavitt were disqualified. Meanwhile, Grund and Leavitt argue that, although they were disqualified, they are still entitled to their fees accrued for work performed for Hadley under section 508 of the Act before the disqualification and assert that nothing in the ethical rules explicitly states that no fees are allowed if an attorney is disqualified. The legal question is thus whether the circuit court properly denied attorney fees from the beginning of Grund's representation of Hadley. Whether a court or administrative agency has the authority to award attorney fees is a question of law that we review de novo. Grate v. Grzetich, 373 Ill.App.3d 228, 231, 310 Ill.Dec. 886, 867 N.E.2d 577 (2007) (citing [353 Ill.Dec. 112]

[955 N.E.2d 579]

Alvarado v. Industrial Comm'n, 216 Ill.2d 547, 297 Ill.Dec. 458, 837 N.E.2d 909 (2005)). “Furthermore, whether a party may recover attorney fees and costs pursuant to any specific act is a question of law.” Grate, 373 Ill.App.3d at 231, 310 Ill.Dec. 886, 867 N.E.2d 577 (citing Johnson v. Thomas, 342 Ill.App.3d 382, 276 Ill.Dec. 669, 794 N.E.2d 919 (2003)). Thus, since the facts of the contempt are not in dispute and since Grund and Leavitt are not appealing the disqualification, we are presented with a question of law and we review this issue de novo.¶ 11 BACKGROUND

¶ 12 Petitioner, David Newton, and respondent, Hadley Newton, were divorced pursuant to a judgment for dissolution of marriage entered on March 8, 2010. In the underlying divorce proceedings, David filed an emergency motion to disqualify Hadley's attorney, Grund, and the law firm of Grund & Leavitt, pursuant to Rule 1.9 (Ill. S.Ct. Rs. of Prof. Conduct, R. 1.9 (eff. Aug. 1, 1990)), due to Grund's former representation of David in the same proceeding. On August 9, 2007, the circuit court entered a preliminary injunction order prohibiting Grund and Leavitt from representing Hadley while the motion to disqualify was pending. Hadley filed her response to the motion to disqualify on July 27, 2007. A hearing was held on September 4, 2007. The court heard testimony by David, Grund, and Hadley. However, upon questioning of Grund regarding his conversation with David, David's counsel objected based on attorney-client privilege. Although there was an offer of proof, the circuit court barred Grund's testimony on the basis of the attorney-client privilege. David testified that he met alone with Grund in Grund's office for between 1 1/2 and 2 hours. They discussed information and issues related to his marriage and impending divorce from Hadley, including issues regarding the children and his financial situation, and Grund took notes.

¶ 13 Hadley testified, upon questioning by Grund, that she learned that there was a conflict with Grund representing her because Grund himself told her there was a conflict when she came in to see him. However, he entered into a retainer agreement with her and represented her. The court found that Grund and Leavitt were disqualified from representing Hadley.

¶ 14 On September 18, 2007, Hadley sought interlocutory review of the court's order and filed a petition for leave to appeal (first appeal) under Supreme Court Rule 306 (Ill. S.Ct. R. 306 (eff. Sept. 1, 2006)). On October 17, 2007, we granted leave to appeal, thus staying proceedings below. On June 13, 2008, we rendered our decision pursuant to Illinois Supreme Court Rule 23 (Ill. S.Ct. R. 23 (eff. May 30, 2008)), in which we held that the circuit court erred in barring Grund's testimony at the hearing on the motion to disqualify. In re...