Default “Orders”, Default “Judgments” And “DWPs” – Illinois Quick Hits

Jackson v. Hooker, 397 Ill.App.3d 614 (1st Dist. 2010) is dated but relevant for its interesting procedural history and nuanced discussion of appellate procedure, the difference between default orders and default (money) judgments and the appropriate time to vacate a dismissal for want of prosecution (“DWP”).

After obtaining an order of default against the defendant, the plaintiff didn’t show up for the prove-up hearing and the case was dismissed for want of prosecution (“DWP’d”). Four months later, the plaintiff moved to vacate the DWP.  The trial court denied the motion and granted the plaintiff leave to file a Section 2-1401 petition to vacate the DWP. Plaintiff did so and the court granted the motion and reinstated the default.

Plaintiff later obtained a $700,000 money judgment after a prove-up hearing. This time, the defendant moved to vacate the judgment. The trial court denied the motion for failure to comply with Section 2-1401. Defendant appealed.

Reversing the default judgment, the trial court first focused on the nature of DWPs and when and how to vacate them.  The guideposts:

– When a case is DWPd, a plaintiff has one year (or within the remaining limitations period) to file a new action under Code Section 13-217 (735 ILCS 5/13-217);

– A DWP order only becomes final and appealable when the one-year refiling period lapses.  Until that one-year time period expires, the DWP isn’t a final order and can’t be appealed;

– In addition, the one-year period doesn’t start running until after a court rules on a motion to vacate a DWP.  (For example: if a case is DWP’d on January 1, 2015, the plaintiff has through January 1, 2016 to refile the case.  If the DWP is vacated on June 1, 2015, the plaintiff has one year – through June 1, 2016 – to refile.);

– Code Section 2-1301 (735 ILCS 5/2-1301) allows a court to set aside any (non-final) default order at any time or to set aside a final judgment within 30 days of the judgment’s entry;

– After 30 days from the judgment date, the more stringent Section 2-1401 standards apply (735 ILCS 5/2-1401).  Section 2-1401 applies to judgments more than 30 days but less than 2 years old;

– A default order (an “order of default”) is simply a non-final order that prevents the defaulting party from making additional defenses but doesn’t determine any rights or remedies;

– A default judgment is the specific act that ends the litigation and finally decides the dispute;

– A default judgment has two elements: (1) a finding of the issues for the plaintiff; and (2) an assessment of damages.

(¶¶ 4-9)

Here, Since the one-year refiling period hadn’t expired when the plaintiff sought to vacate the DWP, the motion was timely.  As a result, Section 2-1401 didn’t apply and the plaintiff didn’t have to show due diligence or a meritorious defense.

The court also held that Section 2-1401 also didn’t apply to the defendant’s motion to vacate the default judgment in favor of the plaintiff. A default order entered in October 2007 but the default judgment didn’t enter until June 2008.  Since the defendant filed his motion to vacate the default judgment within 30 days of June 2008, the more relaxed standards of Section 2-1301 applied.  ¶ 9; also see (here)

Take-aways:

The case contains some good procedural reminders.  Specifically, an order of default differs qualitatively from a default judgment.  The latter assigns a dollar value to the plaintiff while a default order doesn’t award any monetary relief.

The case also stresses that a dismissal for want of prosecution isn’t a final (and therefore appealable) order until one-year elapses from (a) the date of the dismissal or (b) from the date a motion to vacate the DWP is denied.

Lastly, this case reaffirms the key differences between motions to vacate judgments before (Section 2-1301 motions) and after (Section 2-1401 motions) 30 days.

 

 

Mechanics’ Lien Doesn’t Secure Attorneys’ Fees and Costs – Utah Supreme Court

Q: Does a mechanics lien secure payment of attorneys’ fees and costs (in addition to the amount of improvements) incurred by a lien claimant under the Utah mechanic’s lien statute?

A: No.

In an earlier article (http://paulporvaznik.com/contractors-attorneys-under-illinois-mechanics-lien-law/502) I tried to harmonize some Illinois cases that discuss whether attorneys’ fees can be added to a mechanics lien amount.  It’s an important question since mechanics’ lien attorneys’ fees often end up astronomical; especially where there’s multiple litigants and the case drags on for several years.  

In Illinois, attorneys’ fees can only be assessed against a property “owner” but only after a finding that its failure to pay was “without just cause or right.” 770 ILCS 60/17.  Today’s post features a case from Utah, a place I’ve never practiced.  I deemed the case post-worthy because it highlights a lien issue likely to recur in mechanics’ lien cases.

2 Ton Plumbing, Inc. v. Thorgaard, 2015 WL 404592 (Utah 2015), involves the reversal of a contractor’s lien award of nearly $50K that included fees incurred over the course of a circuitous lien case involving multiple property owners and lenders.  In reversing the lien judgment, the Court expands on Utah’s lien statute (Utah Code Section 38-1a101-804 (the “Lien Act”)), as well as the philosophy underpinning mechanics lien law.

Under Utah’s Lien Act, a lien attaches to the value of services, labor, materials or equipment furnished or rented on an improvement or structure. It also allows a “successful party” to recover a “reasonable attorneys’ fee” which the court taxes as “costs” on the losing party. The Lien Act also allows the successful claimant to recover “costs” of preparing and recording the lien including reasonable attorneys’ fees incurred in preparing and recording the lien notice.

In gutting much of the lien amount, the Utah appeals court held that attorneys’ fees are normally only allowed by statute or contract.  If a lien claimant could always augment his lien amount with his attorneys’ fees, the amount claimed would be a “moving target” (the amount would keep going up indefinitely) and so frustrate the Lien Act’s purposes. ¶¶ 25, 35, 42.

The court also noted that since a party has no obligation to pay an opposite side’s attorneys’ fees in a lien case unless that party has lost the case, fees, by definition, can’t be included in a lien amount. Otherwise, it would be tantamount to putting the proverbial “cart before the horse” by allowing a lien claimant to tack on (future) fees before he was deemed a successful party. ¶¶ 38-42.

Afterword:

A decision worth noting for its universal applicability.  Since lien case fees are often substantial, it’s important to know what amounts can and can’t be included in a lien claim.  As 2 Ton shows, a failure to lien for the proper amount can have unfortunate fiscal ramifications.

 

 

Motions to Dismiss Where The Same Parties Are (Already) Litigating In Another Forum

In Hergan v. Pawlan Law, LLC (2013 IL App 1st) 113812-U, the First District applies the “same parties, same cause” motion to dismiss rule.

The plaintiff sued defendant and her lawyer based on fraudulent statements made in connection with various loan transactions stemming from a realty investment contract. There were some four (4) other lawsuits pending at the time plaintiff sued.  The Court granted the defendants’ 2-619(a)(3) motion based on the multiple pending cases involving the litigants.

Illinois Code Section 2-619(a)(3) governs dismissal of a complaint where there is “another action pending between the same parties for the same cause.” 735 ILCS 5/2-619(a)(3).  This section is a procedural device aimed at avoiding duplicative litigation. It applies where there is a pending case involving the same parties for the same cause.

The “same parties” requirement doesn’t require that the parties be identical; all that’s required is that the litigants’ interests be sufficiently similar. The 2-619(a)(3) movant demonstrate by clear and convincing evidence that the two (or more) actions stem from the same underlying transaction and involve parties whose interests are substantially aligned. ¶¶ 26-27.

The test is whether the different actions stem from the same underlying transaction; not whether the specific legal theories or causes of action are the same. So, if in the prior case, the complaint sounds in breach of contract and in the later filed case, the complaint seeks rescission, the second case can still be dismissed if it derives from the same underlying facts.

Once the movant establishes that the same parties and same cause are involved in two (or more) separate suits, the Court examines four factors: (1) comity (giving respect to another forum’s decisions); (2) preventing multiplicity, vexation and harassment; (3) the likelihood of obtaining complete relief in another forum; and (4) the res judicata effect of a foreign judgment on the local forum.

The Court doesn’t have to weigh all four factors; just the one(s) applicable to a given case.  Here, the only factor that applied was the “multiplicity” one. Clearly, the five pending suits involved the same parties and the same transaction: the loans and investment contract. As a result, there was clear multiplicity among the various actions involving the parties. The other factors didn’t apply because all five suits were pending in the same forum – the Cook County Circuit Court. ¶¶ 29, 33-36.

Afterwords:

Hergan provides a cogent summary of the elements that a 2-619(a)(3) movant must establish when trying to dismiss an action based on a pending suit involving the same parties and same cause;

The case demonstrates that where multiple suits are filed involving common litigants, principles of judicial economy and efficiency will weigh in favor of dismissing repetitive actions and instead consolidating them into already pending cases.

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