Kenin L. Edwards, et al. v. The City of Henry

On January 24, 2007, plaintiff Kenin L. Edwards filed a single-count, pro se complaint against defendant City of Henry, requesting damages for alleged violations of the Illinois Antitrust Act (Act) (740 ILCS 10/1 et seq. (West 2006)). The City filed a "Motion to Dismiss and for Sanctions" claiming immunity under the Act (740 ILCS 10/5(15) (West 2006)) and alleging that plaintiff lacked a good-faith basis for his complaint. The motion also asserted that plaintiff, a non-lawyer, improperly sought to represent two corporations.1 The trial court granted the city's motion to dismiss but denied the requested sanctions. Edwards subsequently filed a pro se "Motion to Reconsider,” on behalf of himself and both corporations. The motion to reconsider also requested leave to amend the complaint. The court denied Edwards' motion to reconsider, and he appeals. The city cross-appeals from the denial of the motion for sanctions. We affirm in part and remand for further proceedings.

BACKGROUND

Plaintiff's complaint alleged that he was the sole stockholder of two Illinois corporations, Illinois River Holdings, Inc. (IRH), and Corsaw Log & Lumber, Inc. (Corsaw). According to the complaint, Corsaw was the title holder of record for 505 acres located in section 4 of Henry Township, located in Marshall County (County). The complaint stated that Ozinga Bros, Inc. (Ozinga Bros.), was a mortgagee for portions of the property, IRH was the titleholder of record of the mineral rights to the same 505-acre parcel, and Edwards individually owned the mineral leases for the land.

The complaint stated that in 2003, Corsaw applied for a special use permit from the Marshall County zoning office to surface mine its 505 acres of land for sand and gravel. The City of Henry (City) opposed the application filed with the County. Ultimately, Corsaw withdrew its request for a special use permit from the county zoning office and began mining the land in June 2004 without a special use permit.

According to the complaint, on June 9, 2004, the City instituted litigation against Edwards, Corsaw, and IRH to enjoin the mining operation in the County. The result of that litigation is not stated, and the case (Marshall County circuit court case No. 04–CH–16) apparently remained unresolved when the instant suit was filed in 2007.

The complaint further alleged that, in October 2006, the City and Ozinga Materials, Inc. (the developer), a wholly owned subsidiary of Ozinga Bros., filed joint petitions for reclassification of their acreage located in section 10 of Henry Township within Marshall County, to change the zoning from county agricultural to city heavy industrial I-2, and requested annexation of the property to the City of Henry. The City contemporaneously began proceedings to amend the City's zoning ordinance to allow surface mining and the operation of a City-owned port with access to the Illinois River. The joint petition provided that, in the event the developer acquired additional land in sections 4 and 9 of Henry Township, the developer agreed to enter into an annexation agreement and a covenant and impact fee agreement with the City. On November 8, 2006, the zoning board for the City of Henry heard testimony concerning the proposed amendment to the city zoning ordinance from the city attorney, Richard Joseph. Joseph stated that he drafted the covenant and impact fee agreement appended to the joint annexation petition of the City and the developer. In this document, he included a provision that restricted the developer from allowing the use of the proposed port to transport any mining materials extracted from property located within 1½ miles of the City's corporate limits, unless the property was subject to the terms of an annexation agreement with the City. Joseph explained that the purpose of this clause was to make it uneconomical for persons to mine property within the 1½-mile "collar" that the City did not want mined.

Based on Joseph's statement, plaintiff's complaint alleged the purpose of the annexation petition was to make it uneconomical for Corsaw and IRH to mine the section 4 property and thus diminished the value of the property in the event of a sale. According to Edwards, the City's conduct constituted a violation of the Antitrust Act by allowing Ozinga Bros. to acquire monopoly power over trade and commerce for the purpose of excluding him, Corsaw, and IRH as competitors. In his prayer for relief, Edwards sought damages in excess of $50,000 on behalf of plaintiffs.

On February 22, 2007, attorney Jeffery E. Krumpe of the law firm Miller, Hall & Triggs, entered his appearance for the City and filed a motion to dismiss under section 2–619 of the Code of Civil Procedure (735 ILCS 5/2–619 (West 2006)). The City requested sanctions against plaintiffs under Supreme Court Rule 137 (155 Ill. 2d R. 137). This motion stated that plaintiffs' complaint was defective and alternatively asserted section 5 of the Act provided the City with immunity from antitrust litigation. The City requested sanctions pursuant to Supreme Court Rule 137 (155 Ill. 2d R. 137), because the complaint was not filed in good faith. Additionally, the City's motion alleged that Edwards, a nonlawyer, previously had been admonished by the court for the unauthorized practice of law by attempting to represent the corporations, Corsaw and IRH, in related litigation in violation of the Illinois Attorney Act (705 ILCS 205/1 (West 2006)).

On March 7, 2007, attorney Carl F. Reardon entered his appearance as counsel for plaintiff. Reardon did not amend, refile or redraft the complaint as signed by Edwards. Instead, Reardon moved for a substitution of Judge Scott A. Shore as a matter of right (735 ILCS 5/2–1001(a)(2) (West 2006)), and the cause was reassigned to Judge John A. Barra. Next, Reardon filed a motion for disqualification of attorneys Joseph and Krumpe and the law firm of Miller, Hall & Triggs. On June 15, 2007, the court denied plaintiffs' motion to disqualify defense counsel without prejudice. However, the court noted that plaintiffs' motion might be refiled at a later stage.

Attorney Krumpe argued the City's section 2–619 motion to dismiss and request for Rule 137 sanctions. Krumpe emphasized that the Act unambiguously stated that units of local government were immune from liability and that the City was a unit of local government as defined by article VII, section 1, of the Illinois Constitution (Ill. Const. 1970, art. VII, §1). Krumpe contended Reardon should not have filed a motion to disqualify or argued the motion because plaintiffs proceeded against the City in light of this immunity. Instead, Krumpe argued that Reardon had a duty to advise plaintiffs that statutory immunity barred the lawsuit.

In response, attorney Reardon argued that the City could only act within the authority granted by the legislature. He contended that, since plaintiffs' section 4 property was located outside the city limits, the City could not claim immunity for unauthorized actions when the City joined with the developer to eliminate competition within a 1½-mile corridor outside the City's boundaries. In reply to Reardon's argument, attorney Joseph argued the Illinois Supreme Court ruled that a municipality's zoning code applied outside municipal boundaries, subject to an annexation agreement (Village of Chatham v. County of Sangamon, 216 Ill. 2d 402, 429 (2005), citing 65 ILCS 5/11–15.1–2.1(a) (West 2002)). Finally, Reardon reiterated his position that the City was not authorized by the Illinois Municipal Code (65 ILCS 5/1-1-1 et seq. (West 2002)) to enter into an annexation agreement in violation of the state's antitrust law.

Following the parties' arguments, Judge Barra took a brief recess to review case law. When the hearing resumed, he asked the parties whether they were conversant with Du Page Aviation Corp. v. Du Page Airport Authority, 229 Ill. App. 3d 793 (1992). Judge Barra reviewed the appellate court's analysis of the immunity provision at issue in that case (Ill. Rev. Stat 1989, ch. 38, par. 60–5(14)) and observed that the immunity provision under the current Act (740 ILCS 10/5(15) (West 2006)) mirrored the provision considered in Du Page Aviation. The Du Page Aviation court ruled that the defendant airport authority was a "unit of local government" as defined by the Illinois Constitution of 1970 and was, therefore, immune from liability under the Illinois Antitrust Act.

Based on DuPage Aviation, Judge Barra granted the City's motion to dismiss with prejudice and denied sanctions. In so ruling, the court commented as follows: "[W]hether the Illinois Legislature made a right decision or not, it's really not for me *** to decide what they are doing is legal or illegal.

The question becomes, are they immune from the Illinois Antitrust Act?

And it seems about as plain of language as I can get, that it says it is. *** [T]here is an Illinois Appellate Court case on point *** and there is [sic] no other cases that say anything differently.

It's not saying what they did was even legal. The only thing before me is whether it violates the Illinois Antitrust Act. And I believe and the cases say that it is immune. * * * And it's not a question of repleading, because even though you plead more facts, one thing you can't plead is that it is not a unit of local government.*** And therefore *** the motion is granted. The motion for sanctions is denied."

On July 13, 2007, Edwards filed a pro se "Motion to Reconsider” on behalf of all plaintiffs. Citing Lathrop v. Juneau & Associates, Inc., 220 F.R.D. 330 (S. D. Ill. 2004), the motion asserted that plaintiffs should be granted leave to amend the complaint to assert the antitrust claim against the city officials and its attorney on the ground that these individuals acted outside the scope of their authority. Edwards did not attach a proposed amended complaint to the motion.

On August 30, 2007, immediately before Edwards presented arguments in support of his written motion, attorney Reardon orally moved for leave to withdraw as plaintiffs' attorney.

Reardon noted that Edwards was bringing the motion for reconsideration on his own behalf. Edwards then addressed the court and argued that, pursuant to Lathrop, he should be allowed 28 days to file an amended complaint to add City officials as parties and to allege that the City attorney's conduct in drafting the annexation agreement exceeded the scope of his official authority. In response, attorney Krumpe argued the immunity provision of the Act extended to "the activities of the employees, agents and officers of a unit of local government" (740 ILCS 10/5(15) (West 2006)).

After hearing the parties' arguments, the court denied plaintiff's motion. Addressing plaintiff's assertion that the City attorney acted outside his authority, the court observed, "[T]he only thing you've alleged now is that the lawyer may have given them bad advice. That doesn't make it outside the scope of authority." The court then denied plaintiffs' request for leave to amend, and Edwards brought this appeal.

The City cross-appeals, contending that both plaintiff and attorney Reardon should be sanctioned for violating Supreme Court Rules 137 and 375 (155 Ill. 2d Rs. 137, 375).

ISSUES AND ANALYSIS

I. Plaintiff's Appeal

Plaintiff, proceeding pro se on appeal, argues the trial court abused its discretion in denying his request to file an amended complaint. In response, the City contends plaintiffs waived this issue by failing to tender a proposed amended complaint to the trial court. The City also argues that, waiver aside, nothing contained in the pro se "Motion to Reconsider” gives rise to a cause of action under the Act.

As a general rule, a motion to amend a complaint is a matter that lies within the trial court's sound discretion, and the court's decision will not be disturbed on review in the absence of an abuse of discretion. Compton v. Country Mutual Insurance Co., 382 Ill. App. 3d 323, 331-32 (2008). An abuse of discretion is demonstrated if no reasonable person would take the view adopted by the trial court. In re Marriage of Schneider, 214 Ill. 2d 152, 173 (2005). A primary consideration in determining whether the court abused its discretion by denying leave to amend is whether the proposed amendment would cure the defective pleading. Compton, 382 Ill. App. 3d at 332, citing Loyola Academy v. S & S Roof Maintenance, Inc., 146 Ill. 2d 263, 273 (1992). Section 5 of the Act contains 15 enumerated exceptions to its application. 740 ILCS 10/5 (West 2006). This section provides in relevant part as follows:

"No provisions of this Act shall be construed to make illegal:

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(15) the activities of a unit of local government or school district and the activities of the employees, agents and officers of a unit of local government or school district.” (Emphasis added) 740 ILCS 10/5(15) (West 2006).

In this case, Edwards' complaint asserted the City's contractual relationship with Ozinga Bros. diminished the value of plaintiffs' property and made it uneconomical for plaintiffs to mine or market the real estate. Plaintiffs' original complaint did not allege that the City's actions were unauthorized, only that the effect of the City's arrangements with Ozinga Bros. caused plaintiffs to suffer damages. Therefore, plaintiffs' proposal to add the City attorney and/or other City officials on grounds that their conduct exceeded their authority in advancing the City's contractual relationship with Ozinga Bros. and violated the antitrust law would not cure the complaint.

As observed by the federal district court in Lathrop, the above-cited provision means that both municipalities and their employees, agents and officers are immune from liability under the Act. The court dismissed the charges relating to the officials' acts in their official capacities, but allowed Lathrop time to amend his complaint to show the municipal officials acted illegally in their individual capacities and outside the scope of their authority as municipal officers. In Lathrop, however, the plaintiff pleaded facts claiming municipal officers engaged in a civil conspiracy to commit unlawful acts, both individually and in their official capacities. If Lathrop made such a showing, the court ruled, plaintiff was not precluded from proceeding on his claim for damages under the Act. Lathrop, 220 F.R.D. at 338.

In this case, unlike Lathrop, plaintiff has not alleged facts indicating that any city official acted illegally, as an individual, outside the scope of his official authority. The antitrust violation allegedly committed by the City consisted of contracting with Ozinga Bros. and its wholly owned subsidiary, Ozinga Materials, Inc., to annex Ozinga Bros.' property and eliminate plaintiff as a competitor in the sand and gravel mining business. It is well settled that contracting with parties seeking to annex property is not an illegal municipal activity (65 ILCS 5/11–15.1–1 (West 2006)), and a municipality is not precluded from zoning property outside city limits when the property is subject to an annexation agreement. Village of Chatham, 216 Ill. 2d at 432-33. Having failed to tender a proposed amended complaint in the trial court demonstrating an amendment would cure the defective pleading, and having failed to argue or present facts claiming that city officials acted outside the scope of their official authority or acted unlawfully independent of their official capacities, Edwards' request to amend his complaint was inadequate.

In sum, Edwards cannot overcome the bar of immunity in subsection 5(15) of the Antitrust Act. Accordingly, we conclude the trial court did not abuse its discretion by denying plaintiff's request for leave to amend his complaint, and we affirm the court's ruling.

II. The City's Cross-Appeal

Next, we consider the City's argument on cross-appeal that the trial court should have granted its motion for Rule 137 sanctions against Edwards and attorney Reardon.

The City claims the court abused its discretion by denying Rule 137 sanctions against plaintiff and Reardon. Supreme Court Rule 137 provides that the court may impose sanctions upon a party or his attorney, including the reasonable cost of defending an action, that is not warranted by existing law or an action that is interposed for an improper purpose, such as to harass, to cause unnecessary delay or to increase the expense of litigation. 155 Ill. 2d R. 137. The trial court's ruling on a motion for Rule 137 sanctions should not be reversed on review unless the trial court abused its discretion. Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 487 (1998).

The purpose of the rule is to prevent parties from abusing the judicial process with vexatious actions unsupported by fact or law, not to punish litigants and their attorneys merely because they were unsuccessful in the litigation. Dismuke v. Rand Cook Auto Sales, Inc., 378 Ill. App. 3d 214, 217 (2007); Burrows v. Pick, 306 Ill. App. 3d 1048, 1050 (1999). Since the rule is penal in nature, it is strictly construed. Dowd & Dowd, 181 Ill. 2d at 487. Here, the City claims the trial court's denial of sanctions is not entitled to deference because the court "refused to take any evidence or even hear any arguments with respect to the City's motion.” Our review of the report of proceedings does not support this assertion. The record shows that on June 15, 2007, the court heard several pending motions, including attorney Reardon's motion to disqualify counsel for the defense and the City's combined "Motion to Dismiss and for Sanctions.” After denying Reardon's motion to disqualify, the court allowed attorney Krumpe to present the City's motion to dismiss and the request for sanctions. In support of the motion to dismiss, Krumpe asserted the case was "so simple [that the] court should dismiss the case with prejudice and award sanctions.”

Krumpe noted that, even though Edwards filed the complaint pro se, Reardon subsequently entered his appearance and prepared and presented other motions when he "should have told his client at that point that he had no claim.” Krumpe argued that the statutory immunity set forth in subsection 5(15) of the Act applied to the City as a "unit of local government,” and plaintiff was not entitled to rely on cases interpreting the federal Sherman Act (15 U.S.C. §1 et seq. (2006)), which held that a "person” liable under the federal antitrust laws included a municipality (see, e.g., City of Lafayette, Louisiana v. Louisiana Power & Light Co., 435 U.S. 389, 400, 55 L. Ed. 2d 364, 374-75, 98 S. Ct. 1130, 1123, 1130 (1978)) because plaintiffs relied on the Illinois statute as a basis for their complaint. Concluding, Krumpe stated:

"We shouldn't be here. We shouldn't have to brief any of these motions or argue the motion to disqualify or any other motion because it is clear on the statute that there is no cause of action.”

In response, Reardon argued, when the City acted to affect land use situated beyond the geographical city limits, the City could not rely on the statutory immunity for those actions.

Reardon suggested that it was incumbent on the City to show that it had specific authority to take the challenged action before it could claim immunity under subsection 5(15) of the Act.

The trial judge, after briefly recessing, invited the City's attorneys to reply to Reardon's argument. Attorney Joseph responded that the supreme court ruled, in Village of Chatham, that cities had authority to apply their own zoning codes and enter into contracts for purposes of annexing property situated outside of city limits. Concluding, Reardon pointed out that section 11 of the Act (740 ILCS 10/11 (West 2006)) provided that decisions of the federal courts should be used as a guide when construing language common to federal antitrust statutes and the Act, but that the Act should not be construed to restrict powers granted to units of local government by state statutes and the Illinois Constitution.

In response to the court's inquiry, Reardon acknowledged that the federal antitrust statutes did not contain an immunity provision similar to subsection 5(15) of the Illinois Antitrust Act. Continuing, Reardon posited that subsection 5(15) of the Illinois Antitrust Act should not be construed as a grant of blanket immunity, but immunity for actions taken by the City that were authorized by the Illinois Municipal Code. The court observed that Reardon's point was not baseless, in that the City may be liable for actions taken outside the authority granted by the legislature, but the question remained whether a cause of action could be maintained against the City under the Antitrust Act.

The judge took another brief recess to read a case, and, when the hearing resumed, he resolved the City's combined motion to dismiss and for sanctions. Relying on Du Page Aviation, which attorney Krumpe admitted he had not cited in his pleading, the court concluded that the City was immune from liability under the Act, even if the City's actions as alleged by plaintiff were beyond the jurisdictional limits of the City's authority. The court then granted the City's motion to dismiss with prejudice and denied its request for Rule 137 sanctions. Based on this record, it is apparent to this court that the City was afforded an ample opportunity to fully present its motion for sanctions. The court patiently permitted both parties to argue their positions and did not refuse a request to take evidence or hear arguments on the request for Rule 137 sanctions. The record shows the court gave serious consideration to the positions of both parties and conducted independent research before ruling on the City's combined motion. Although the court ultimately agreed that plaintiff's complaint could not withstand the City's legal challenge, the court did not indicate that the plaintiff's pleadings were frivolous or brought for an improper purpose. Based on the arguments specifically raised by the City in support of the motion for sanctions, we cannot conclude the trial court's ruling was erroneous.

Nevertheless, we cannot leave this issue without observing that it is well established that a corporation may not initiate actions in courts of this state unless the corporation is represented by an attorney. Siakpere v. City of Chicago, 374 Ill. App. 3d 1079, 1081 (2007). A complaint drafted by a nonattorney on behalf of a corporation constitutes the unauthorized practice of law rendering the pleading a nullity and any judgment entered on it void. Housing Authority of the County of Cook v. Tonsul, 115 Ill. App. 3d 739, 740 (1983). An attorney's subsequent appearance and adoption of a complaint improperly drafted by a nonattorney does not absolve the drafter of the unauthorized practice of law. Tonsul, 115 Ill. App. 3d at 740; Francorp, Inc. v. Siebert, 211 F. Supp. 2d 1051 (N.D. Ill. 2002).

In this case, Edwards drafted the complaint on behalf of himself and two corporations. It is undisputed that the damages sought would inure to the benefit of not only Edwards, individually, but also to both corporate entities. Attorney Reardon later entered his appearance apparently without reviewing or amending Edwards' complaint. Reardon simply pursued the pleading and opposed the motion to dismiss presumably aware that the complaint was drafted by a nonlawyer on behalf of himself and two corporations. However, Reardon ended his involvement as counsel with an oral motion to withdraw after Edwards filed his own motion for reconsideration and request to amend the complaint that Edwards previously prepared.

The City argues that attorney Reardon's oral motion to withdraw was ineffective. We disagree. In this case, the record shows that attorney Reardon did not file a written motion to withdraw as counsel for plaintiff as required. 134 Ill. 2d R. 13(c)(2)(3). However, neither Edwards nor opposing counsel objected to the oral nature of the motion. The record also shows that Edwards was allowed to argue the motion to reconsider and amend the complaint before the court. Since the judge did not require attorney Reardon to argue the motion to reconsider and amend that had been prepared by Edwards, we conclude the trial court allowed the oral motion to withdraw without objection.

The City's written request for sanctions under Rule 137 exposed Edwards' unauthorized practice of law but failed to directly challenge the complaint as void. Nonetheless, even after the court denied the City's first request for sanctions on June 15, 2007, Edwards once again chose to represent the interests of corporate individuals and filed his motion to reconsider the motion to dismiss and requested to amend the complaint. Here, the City requests this court to consider sanctions.

To deny sanctions, we must excuse the unauthorized practice of law by ignoring the fact that Edwards was a nonattorney when he filed the motion to reconsider and amend the complaint in the trial court on behalf of himself and the corporate entities. This is a position we are not willing to adopt as a court of review. Under analogous circumstances, this court sua sponte granted a remand for determination of Rule 137 sanctions where the underlying claim was grounded on false allegations of fact. First of America Trust Co. v. First Illini Bancorp, Inc., 289 Ill. App. 3d 276, 291 (1997). We deem the unauthorized practice of law in the drafting of a complaint and a written motion to reconsider and request to amend that complaint so drafted to constitute a defect at least as serious, if not more so, than the defects presented to this court in First of America Trust Co. v. First Illini Bancorp, Inc., 289 Ill. App. 3d 276 (1997).

Here, the record discloses that the trial court duly admonished Edwards in earlier proceedings that his pursuit of the cause on behalf of Corsaw and IRH constituted an unauthorized practice of law in violation of the Illinois Attorney Act and warned him regarding his contemptuous behavior. Accordingly, we remand this cause to the trial court with directions to address whether sanctions should be imposed against Edwards pursuant to Rule 137 for the filing of his motion to reconsider and amend a complaint that should have been treated as a nullity.

III. Rule 375 Sanctions

Finally, the City requests an award of attorney fees incurred in defending this appeal pursuant to Rule 375. An award of attorney fees may be granted as a sanction if a party wilfully refuses to comply with appellate rules, or where an appeal is taken in bad faith or for an improper purpose. 155 Ill. 2d R. 375. An appeal is deemed frivolous if a reasonable, prudent attorney acting in good faith would not have brought it. Penn v. Gerig, 334 Ill. App. 3d 345, 357 (2002). We have previously noted that the original motion to reconsider and request to amend the complaint was drafted by Edwards, a nonlawyer, on behalf of all three plaintiffs. In spite of having an attorney of record at the time, Edwards prepared and filed the motion to reconsider and amend the complaint on behalf of all plaintiffs. Based on the status of this record, a prudent attorney acting in good faith would not have brought this appeal to contest the court's ruling on a motion to reconsider, prepared by a nonlawyer representing himself and other corporate interests, asking to amend an initial complaint drafted by the nonlawyer on behalf of himself and other corporate interests. The motion to reconsider and amend should not have been filed by a nonlawyer and to attorney Reardon's credit, we recognize he attempted to distance himself from that action by making an oral motion to withdraw. The denial of the motion to reconsider and amend the complaint, which was drafted, signed, and filed by Edwards, gives rise to this appeal. We deem the appeal from the denial of this improper motion to be sanctionable under Rule 375. We are mindful that after the trial court denied plaintiffs' request to reconsider and amend the complaint, Edwards filed a pro se notice of appeal without naming the corporations as party plaintiffs. Even though Edwards pursues this appeal solely as an individual, the underlying motion to reconsider and amend the complaint was filed in violation of the Attorney Act and was void. Accordingly, we allow the City's request for Rule 375 sanctions and we remand this case to the trial court to properly consider any and all sanctions against Edwards, including the cost of this appeal.

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http://www.state.il.us/court/Opinions/AppellateCourt/2008/3rdDistrict/August/3070652.pdf

For the reasons stated, we affirm the judgment of the circuit court of Marshall County in part and reverse in part. We remand the cause for further proceedings to determine the amount of the appropriate sanctions and to enter an order for sanctions in favor of the City pursuant to Rule 137 and Rule 375 consistent with this opinion. Affirmed in part and remanded with directions.