Ryan v. Kontrick

• Decision Date: 20 September 2002
• Docket Number: No. 1-01-2528.,1-01-2528.
• Citation: 335 Ill. App.3d 225,779 N.E.2d 287,268 Ill.Dec. 673
• Parties: Robert A. RYAN, Plaintiff-Appellee, v. Andrew J. KONTRICK, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

779 N.E.2d 287

335 Ill. App.3d 225

268 Ill.Dec. 673

Robert A. RYAN, Plaintiff-Appellee, v. Andrew J. KONTRICK, Defendant-Appellant.

No. 1-01-2528.

Appellate Court of Illinois, First District, Fifth Division.

September 20, 2002.

Rehearing Denied November 4, 2002.

As Modified Upon Rehearing November 8, 2002.

Winston and Strawn, Chicago (Kimball R. Anderson and E. King Poor, of counsel), for Appellant.

Abramson and Fox, Chicago (Donald P. Colleton, of counsel), for Appellee.

MODIFIED UPON REHEARING

Justice QUINN delivered the opinion of the court:

Defendant Andrew J. Kontrick appeals the order of the trial court granting plaintiff Robert A. Ryan's motion to reinstate in connection to this court's opinion in Ryan v. Kontrick, 304 Ill.App.3d 852, 237 Ill.Dec. 588, 710 N.E.2d 11 (1999) (Ryan I).

Ryan's motion was filed 290 days after a stay was lifted in a bankruptcy proceeding initiated by Kontrick. On appeal, Kontrick contends that the trial court erred in granting plaintiff's motion to reinstate because Ryan failed to exercise due diligence in filing the motion, as required by Supreme Court Rule 369(c). 134 Ill.2d R. 369(c).

BACKGROUND

In Ryan I, Kontrick appealed the trial court's confirmation of a December 1996 arbitration award of $519,324.42 against him in favor of Ryan, which had resulted from a contract dispute between the two men, both of whom are medical doctors. This amount consisted of compensatory and punitive damages and attorney fees and costs. The trial court also awarded prejudgement interest on that sum. In our March 26, 1999, opinion in Ryan I, we affirmed the arbitrator's awards of compensatory damages and attorney fees, but vacated the punitive damages award. The case was remanded for entry of an order requiring Kontrick to pay interest at the required statutory rate. This court's mandate in Ryan I was issued on November 17,1999.

In April 1997, during the pendency of the appeal in Ryan I, Kontrick filed with the bankruptcy court a petition for relief under chapter 7 of the United States Bankruptcy Code (11 U.S.C. § 701 et seq. (1994)). In response, Ryan filed a complaint seeking to deny Kontrick a discharge of the amount owed on the arbitration award. As a result of Kontrick's bankruptcy proceeding, an automatic stay was imposed prohibiting any further proceedings against Kontrick. In addition to the Ryan I appeal, this stay affected two other suits, one in Lake County and one in Cook County, that Ryan had pending against Kontrick. The stay was later modified to allow Kontrick to proceed with his appeal in Ryan I.

On June 13, 2000, the bankruptcy court entered its order denying Kontrick a discharge, which was the subject of a motion to amend. On July 10, 2000, the bankruptcy court entered its amended order, which also denied Kontrick a discharge. Kontrick then appealed the bankruptcy court's order denying discharge, and the Court of Appeals for the Seventh Circuit affirmed the bankruptcy court's order while the instant case was under advisement. In re Kontrick, 295 F.3d 724 (7th Cir.2002).

On February 7, 2001, Ryan, through his attorney, filed a wage garnishment and citation to discover assets to enforce the December 1996 arbitration award, which had been reversed in part in Ryan I. Kontrick moved to quash on the ground that the trial court lacked jurisdiction to enforce the reversed judgment and that Ryan had failed to reinstate the case as required by Supreme Court Rule 369(c). The trial court granted Kontrick's motion to quash, and Ryan's attorney, who had filed the garnishment and citation, was sanctioned.

On March 30, 2001, Ryan filed his motion to reinstate under Supreme Court Rule 369(c). In the memorandum in support of his motion, Ryan argued that he did not have a duty to reinstate because Kontrick was the prevailing party for purposes of Rule 369(c). In the alternative, Ryan noted that since June 13, 2000, the date the automatic stay was dissolved, he and Kontrick had been involved in other proceedings relating to Ryan's collection of the arbitration award. Based upon Kontrick's acquiescence to repeated deferrals in a case involving the allegedly fraudulent transfer of funds from Kontrick to his wife, Ryan argued that Kontrick had acquiesced to the delay in filing for reinstatement. Ryan also argued that the parties had been "actively preoccupied" with proceedings relating to sanctions brought against Ryan and his attorney in bankruptcy court.

Ryan further argued that to grant reinstatement would undermine neither the orderly disposition of the case nor the policy considerations behind Rule 369(c) and asserted that he had delayed seeking reinstatement because if Kontrick were to win his appeal of the bankruptcy court's denial of discharge, Ryan would be required to return the funds he had collected. Ryan asserted that he would be "inequitably and grievously harmed" and that Kontrick would receive an undeserved windfall if reinstatement were denied.

At the hearing on Ryan's motion to reinstate, the trial court had a discussion with Kontrick's attorney, who explained that the automatic stay was lifted by operation of law in June 13, 2000, the date the bankruptcy court originally denied Kontrick a discharge. Kontrick's attorney further explained that the denial of discharge did not become final until 10 days after the bankruptcy court entered its July 10, 2000, amended order. Based upon counsel's statements, the trial court concluded that Ryan could have sought reinstatement as early as July 21, 2000. After hearing arguments, the trial court granted Ryan's motion to reinstate, noting that the litigation between Ryan and Kontrick, which included both the State court proceedings involving the arbitration award and the federal bankruptcy proceedings, had been "vigorously fought." Reinstatement aside, the trial court questioned whether collection of the arbitration award could occur prior to a conclusion of the appeal relating to Kontrick's discharge proceedings. The trial court distinguished the cases involving Rule 369(c) from the instant case by stating that only the "ministerial task of computation" was necessary in the instant case, which was different from other cases, where there was "a lot to be done" after remand. After the parties filed competing memoranda regarding the manner in which post-judgment interest should be calculated, the trial court entered its amended judgment in favor of Ryan for $422,414.53. This appeal followed.

ANALYSIS

Kontrick contends that the trial court erred in granting Ryan's motion to reinstate. He argues that as the prevailing party in Ryan I, Ryan has failed to establish due diligence under Supreme Court Rule 369(c) where he filed his motion to reinstate 290 days after June 13, 2000, the date the automatic stay in the bankruptcy proceedings was lifted.

Supreme Court Rule 369(c) provides that, "When the reviewing court remands the case for a new trial or hearing and the mandate is filed in the circuit court, the case shall be reinstated therein upon 10 days' notice to the adverse party." 134 Ill.2d R. 369(c). When determining whether a party has reinstated a case within a reasonable period of time, it is proper for a court to consider the totality of the circumstances, particularly any reasons offered for an undue delay. People v. NL Industries, Inc., 297 Ill.App.3d 297, 300-01, 231 Ill.Dec. 433, 696 N.E.2d 729 (1998). The reasonableness requirement is considered in terms of whether a petitioner has exercised due diligence in filing the petition. National Underground Construction, Co. v. E.A. Cox Co., 273 Ill. App.3d 830, 837, 210 Ill.Dec. 132, 652 N.E.2d 1108 (1995). When considering cases under Rule 369(c), this court may consider cases brought under section 2-1401 of the Illinois Code of Civil Procedure (735 ILCS 5/2-1401 (West 2000)), addressing the issue of due diligence. See National Underground, 273 Ill.App.3d at 836-37, 210 Ill.Dec. 132, 652 N.E.2d 1108. Thus, due diligence in filing a reinstatement petition requires the petitioner to have a "reasonable excuse" for failing to timely file the petition. See Smith v. Airoom, Inc., 114 Ill.2d 209, 222, 102 Ill.Dec. 368, 499 N.E.2d 1381 (1986). Finally, absent an abuse of discretion, the trial court's ruling upon a motion for reinstatement will stand. People v. NL Industries, Inc., 297 Ill.App.3d at 301, 231 Ill.Dec. 433, 696 N.E.2d 729.

Kontrick argues that each of Ryan's proffered reasons for failing to file for reinstatement establishes a lack of due diligence on Ryan's part. As for Ryan's claim that he was under no obligation to reinstate the case, Kontrick cites Renth v. Krausz, 219 Ill.App.3d 120, 121, 161 Ill. Dec. 754, 579 N.E.2d 11 (1991), which stated in reference to application of the equitable doctrine of laches, that "ignorance of the law or legal rights will not excuse delay in bringing suit." Kontrick further argues that Ryan's explanation that he did not seek reinstatement because he was waiting to see the results of the bankruptcy appeal in order to avoid having to return any money in the event Kontrick was successful is without merit. He asserts that this justification is illogical because reinstatement is a matter wholly separate from the bankruptcy proceeding. Kontrick also asserts that this justification is contradicted by Ryan's own conduct because during the pendency of Kontrick's bankruptcy proceeding, Ryan initiated garnishment proceedings.

Kontrick further asserts that Ryan's justification for failing to reinstate is without merit because the diligence requirement is not relaxed by a litigant's desire to wait and see how events unfold elsewhere. In support, Kontrick relies upon Smith v. Airoom, where our supreme court stated:

"`Relief under section [2-1401] is available only to those who diligently pursue their legal defenses and remedies in court, not to those who disregard these procedures on the gamble that better results can be obtained through

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