Morse v. Donati

• Decision Date: 08 August 2019
• Docket Number: Nos. 2-18-0328 & 18-0686 cons.,s. 2-18-0328 & 18-0686 cons.
• Citation: 136 N.E.3d 1043,434 Ill.Dec. 518,2019 IL App (2d) 180328
• Parties: Hartwell P. MORSE III and Deborah B. Morse, Plaintiffs-appellants, v. Anthony DONATI and Concetta Donati, Defendants-appellees.
• Court: United States Appellate Court of Illinois

2019 IL App (2d) 180328

136 N.E.3d 1043

434 Ill.Dec. 518

Hartwell P. MORSE III and Deborah B. Morse, Plaintiffs-appellants,

v.Anthony DONATI and Concetta Donati, Defendants-appellees.

Nos. 2-18-0328 & 18-0686 cons.

Appellate Court of Illinois, Second District.

Opinion filed August 8, 2019

Hartwell P. Morse III, of Monroe, Louisiana, for appellants.

Donald J. Angelini Jr., of Angelini & Ori, LLC, of Chicago, for appellees.

JUSTICE ZENOFF delivered the judgment of the court, with opinion.

¶ 1 Plaintiffs, Hartwell P. Morse III and Deborah B. Morse, sued defendants, Anthony Donati and Concetta Donati, for breach of contract arising from a real estate transaction. In appeal No. 2-18-0328, plaintiffs appeal the judgment of the circuit court of Du Page County awarding them only $3608 plus costs. In appeal No. 2-18-0686, plaintiffs appeal the order denying Hartwell's petition for attorney fees. This court consolidated the appeals. We now affirm.

¶ 2 I. BACKGROUND

¶ 3 Plaintiffs owned property commonly known as 282 Stonegate in Clarendon Hills (the property). The property was encumbered by two mortgages. Chase Bank held the first mortgage. PNC Bank (the bank) held the second mortgage. Plaintiffs defaulted on both mortgages.

¶ 4 In August 2015, plaintiffs entered into a contract for the sale of the property to defendants for $410,000. That contract contained a "short sale addendum," meaning that plaintiffs were selling the property for less than they owed. The sale was contingent upon plaintiffs' obtaining the bank's consent.¹ On September 22, 2015, the bank agreed to the short sale, provided that the bank received all of the proceeds and that plaintiffs received $0 at closing. The bank also agreed not to pursue a deficiency judgment against plaintiffs.

¶ 5 On December 21, 2015, defendants refused to close, because of a dispute with their lender. On December 28, 2015, Hartwell, an attorney, filed suit on behalf of himself and Deborah against defendants, for specific performance. On April 12, 2016, plaintiffs sold the property to Susan Kolinger for $375,000, $35,000 less than defendants' contract price. That sale was also a short sale that was approved by the bank on the same terms as outlined above. On July 28, 2016, plaintiffs filed an amended one-count complaint against defendants for breach of contract. Defendants, in their original and amended answers, denied that plaintiffs were damaged.

¶ 6 On July 26, 2017, plaintiffs filed a motion for summary judgment. Before that motion was heard, plaintiffs filed a 43-page motion (omnibus motion) seeking $35,000 in discovery sanctions against defendants and their counsel. On August 11, 2017, defendants filed a cross-motion for partial summary judgment, arguing that plaintiffs suffered no damages as a result of the sale to Kolinger. Plaintiffs then filed a second motion for sanctions against defendants on the ground that the defenses raised in defendants' cross-motion for summary judgment had not been disclosed in response to plaintiffs' interrogatories. Defendants did not file responses to either motion for sanctions. Those motions were continued for hearing to November 29, 2017, along with the cross-motions for summary judgment.

¶ 7 At the beginning of the hearing, Hartwell stated that he was putting the sanctions motions aside and would be arguing the merits of plaintiffs' summary-judgment motion. The court then twice inquired whether Hartwell was arguing the motions for sanctions or the motion for summary judgment. Hartwell replied:

"The motion for sanctions, Your Honor, is not being argued at this moment. I put that aside." He never returned to the motions for sanctions, and the court did not rule on them.

¶ 8 The court found that defendants breached the contract. However, the court ruled that whether plaintiffs sustained damages was an issue of fact, to be resolved at trial. Prior to trial, attorney Gregory Vacala filed his appearance as cocounsel for plaintiffs.

¶ 9 On March 23, 2018, plaintiffs filed a motion to bar defendants' "anticipated defenses" at trial, as a discovery sanction. That motion referenced the omnibus motion, but it did not specifically incorporate it. Vacala argued that defendants had not raised as an affirmative defense plaintiffs' failure to mitigate damages, or the so-called "short-sale defense." The court ruled that damages had earlier been explored and argued "at great length" and that plaintiffs were not taken by surprise.

¶ 10 At the bench trial on April 2, 2018, Hartwell was the only witness. He testified that the sale to defendants was a short sale, for which plaintiffs would not receive any money at closing. Hartwell admitted that the bank would have been entitled to the additional $35,000 if defendants had closed. Hartwell then detailed the expenses that he claimed plaintiffs incurred between the breach on December 21, 2015, and the Kolinger closing on April 12, 2016 (the breach period). In all, plaintiffs claimed damages of $48,881.70. Hartwell admitted that he had no paid receipts or canceled checks for many of the utility bills and other charges for which plaintiffs demanded reimbursement. Hartwell testified that he was required to pay $1658.93 toward Coldwell Banker's brokerage fees at closing. Hartwell also claimed that Chase Bank and the bank charged an additional $10,239 in interest during the breach period. Hartwell admitted that plaintiffs did not pay any of that interest.

¶ 11 Defendants argued that plaintiffs were not damaged, because the bank suffered the $35,000 loss. To counter that argument, plaintiffs contended that the "collateral source rule" should apply to allow plaintiffs to recover damages despite having no out-of-pocket loss. The collateral-source rule, generally applied in tort cases, provides that an injured party who receives benefits from a collateral source, such as an insurance company, may still recover full damages from the tortfeasor. Robert Hernquist, Arthur v. Catour: An Examination of the Collateral Source Rule in Illinois , 38 Loy. U. Chi. L.J. 169, 175 (2006). Defendants argued that the bank bore the loss and was not a collateral source. The court declined to apply the collateral-source rule.

¶ 12 The court found that plaintiffs proved out-of-pocket damages of $3608 plus costs. The court arrived at that figure by adding the amounts of the bills paid during the breach period to the $1658.93 that plaintiffs paid at closing. The court attributed the additional $1658.93 to title charges occasioned by the interest that Chase Bank billed during the breach period. The court entered its written judgment on April 16, 2018. The court also gave the parties 30 days to file petitions for attorney fees. Vacala filed a fee petition for $6428.80, and Hartwell filed a fee petition for $82,500. Defendants filed a fee petition for $10,950. On August 22, 2018, the court granted Vacala's petition plus the costs of filing the complaint and serving summons. The court denied defendants' and Hartwell's petitions.

¶ 13 On May 2, 2018, plaintiffs filed a timely notice of appeal from the court's judgment of April 16, 2018. Plaintiffs also filed a timely notice of appeal from that part of the August 22, 2018, order denying Hartwell's petition for attorney fees. As noted, this court consolidated the appeals.

¶ 14 II. ANALYSIS

¶ 15 Plaintiffs argue that they are entitled to damages of $35,000—the difference between the two contract prices—even though they realized no actual loss. Plaintiffs assert that the collateral-source rule should apply when sellers have no out-of-pocket damages due to a short sale. In failing to apply this rule, plaintiffs argue, the court treated the damages assessment differently than it would in a breach-of-contract case that does not involve a short sale.

¶ 16 Before we consider these arguments, we must address certain deficiencies in plaintiffs' brief and appendix. Illinois Supreme Court Rules 341(h)(6) and (h)(7) (eff. May 25, 2018) require that the statement of facts and argument contain appropriate citations to pages of the record. Plaintiffs, however, cite their appendix, in violation of the rules. See Estate of Prather v. Sherman Hospital Systems , 2015 IL App (2d) 140723, ¶ 31, 393 Ill.Dec. 806, 35 N.E.3d 198 (it is a violation of Rule 341(h) to cite the appendix rather than the record). Plaintiffs also violate Illinois Supreme Court Rule 341(h)(3) (eff. May 25, 2018) in that they do not include a standard of review for their argument that the court should have awarded them the difference in the contract prices. Further, plaintiffs' appendix does not list the pages of the record on which the witness's direct examination, cross-examination, and redirect examination begin, in violation of Illinois Supreme Court Rule 342(3) (eff. July 1, 2017). Most important, the exhibits that were admitted at trial are not in the record, but plaintiffs nonetheless included them in the appendix and refer to them in their brief. If materials are not taken from the record, they may not be placed before us in an appendix and will be disregarded. Oruta v. B.E.W. & Continental , 2016 IL App (1st) 152735, ¶ 32, 410 Ill.Dec. 210, 69 N.E.3d 435. We remind counsel that the Illinois Supreme Court rules are not mere suggestions; they have the force of law, and we may strike portions of a brief or dismiss an appeal when the circumstances warrant such sanctions. Estate of Prather , 2015 IL App (2d) 140723, ¶ 32, 393 Ill.Dec. 806, 35 N.E.3d 198. Here, the record is not voluminous and defendants include appropriate citations to the record, so our review is not hindered. Accordingly, we will consider the merits of the appeal.

¶ 17 We first address whether the court applied an erroneous measure of damages. A reviewing court will not reverse the damages assessed by a trial court in a bench trial unless its judgment is against the manifest weight of the evidence. Royal's Reconditioning Corp., Inc. v. Royal , 293 Ill. App. 3d 1019, 1022, 228 Ill.Dec....