2022 IL App (1st) 210940-U

FIFTH DIVISION

June 30, 2022

No. 1-21-0940 

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the 

limited circumstances allowed under Rule 23(e)(1).

______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

FIRST DISTRICT

______________________________________________________________________________ 

JOHN NERSESIAN, individually and derivatively on 

behalf of NM ACQUISITIONS, LLC, an Illinois limited 

liability company, 

Plaintiff-Appellee, 

 v. 

MICHAEL MURDOCK, an individual 

 (former) Defendant,

and CHARLES MURDOCK, an individual, 

 Defendant-Appellant. 

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Appeal from the Circuit Court

of Cook County.

No. 17 CH 12353

Honorable 

Allen P. Walker, 

Judge, presiding.

PRESIDING JUSTICE DELORT delivered the judgment of the court.

Justices Hoffman and Cunningham concurred in the judgment. 

ORDER 

Held: We affirm the circuit’s court denial of the appellant’s motion for sanctions, because

the appellee made reasonable pre-complaint inquiries, and his claims were not so 

plainly meritless that he had a duty to voluntarily dismiss them upon learning 

particular information during the course of the litigation. 
No. 1-21-0940 

2 

¶ 1 This case arises from a dispute between plaintiff-appellee John Nersesian, defendantappellant Charles Murdock, and Charles’s son and former defendant Michael Murdock, regarding 

a property transaction conducted by NM Acquisitions, LLC (NMA).

1 After Nersesian filed an 

initial complaint and two amended complaints, the circuit court granted partial summary judgment 

for Charles on one claim, and Nersesian then voluntarily dismissed his remaining claims. Charles

filed a motion for sanctions against Nersesian pursuant to Illinois Supreme Court Rule 137 (eff. 

Jan. 1, 2018), which the court denied. Charles now appeals that order, arguing that sanctions were 

required because Nersesian failed to conduct proper pre-complaint inquiries, and also failed to 

timely dismiss his claims after discovery demonstrated their invalidity. We affirm. 

¶ 2 BACKGROUND

¶ 3 On September 12, 2017, Nersesian filed his verified complaint against Michael, Charles, 

and Pacacory Properties, LLC, a/k/a Pacacory Properties LLC BC.

2 In relevant part, Nersesian 

alleged that in December 2014 and January 2015, Michael and Nersesian agreed to form NMA to 

purchase, renovate, and sell properties, including a property on the 4300 block of North Keeler 

Avenue in Chicago (Keeler Property). The two agreed that Michael would run the day-to-day 

business of NMA, including “filing tax returns, filing annual reports, and keeping NMA in good 

standing with the Illinois Secretary of State.” Nersesian alleged that when NMA officially formed, 

its members were Nersesian and Pacacory Properties, LLC, but later Michael and Charles were

listed as “members and/or managers.” Nersesian attributed this to information from the Illinois

Secretary of State, which he alleged conflicted with the “organizational documents of NMA.”

1 Because Michael Murdock and Charles Murdock share a last name, we will refer to them by their 

first names. 

2

 Pacacory Properties LLC and Pacacory Properties LLC BC are separate entities, but Nersesian’s 

Verified Complaint conflated them. 
No. 1-21-0940 

3 

Nersesian initially contributed $240,000 to NMA. He and Michael agreed that when the entity 

earned money, Nersesian would first recoup his contribution, then Michael would recoup his, and 

the two would evenly split any remaining net proceeds. 

¶ 4 On January 7, 2015, Michael purchased the Keeler Property in his name for $204,000. He

oversaw renovations, and later conveyed the property to NMA by a quit claim deed dated April 

14, 2016. When the property was sold months later, Charles “assisted” with the closing, and also 

“assisted in the recording of releases and satisfactions of judgment for the personal benefit of” 

Michael in connection with the closing. Due to these releases, NMA, and by extension Nersesian, 

received less profit than expected from the sale. Nersesian repeatedly asked Michael for an 

accounting, which Michael did not provide.

¶ 5 In March 2015, Michael proposed that NMA purchase property on the 4500 block of North 

Krueger Road in Long Grove, Illinois (Krueger Property). Nersesian agreed, and contributed 

$900,000 through the NMA bank account, which Michael controlled. NMA purchased the Krueger 

property in April 2015 for $725,000, but as of the date of the verified complaint, Michael had not 

completed renovations. Nersesian alleged that Michael abandoned the Krueger Property and

refused to account for Nersesian’s contribution. 

¶ 6 Nersesian’s claims against Charles alleged in pertinent part that Charles violated his 

fiduciary duties by representing NMA at the Keeler Property closing, during which seven “releases 

and satisfactions of judgment were recorded for the benefit of [Michael] personally,” against 

NMA’s and Nersesian’s interests. Nersesian alleged that Charles prepared one of these releases 

himself, and further breached his fiduciary duties by “(1) failing to properly manage the legal 

affairs of NMA, (2) engaging in a representation where a conflict of interest existed without 
No. 1-21-0940 

4 

obtaining a waiver of such conflict, and (3) putting his personal interest before and above those of 

NMA and Nersesian.”

¶ 7 Nersesian attached documents to the verified complaint, including a document titled 

“corporate resolution,” which bore Charles’s signature as a “member” of NMA and provided that 

Charles could sign documents to execute the Keeler Property closing, and had an empty signature 

line for Nersesian; a copy of the warranty deed for NMA’s sale of the Keeler Property, dated June 

9, 2016, which also bore Charles’s signature in his capacity as a “member” of NMA; and forms 

related to Michael’s debts to various parties, including a release from Byline Bank, dated June 14, 

2016, that contains a note stating, “prepared by [Charles].” 

¶ 8 On November 27, 2017, Charles moved to dismiss the claims against him, arguing in 

relevant part that Nersesian failed to plead that Charles owed a fiduciary duty to Nersesian or 

NMA, or acted as NMA’s attorney. 

¶ 9 On January 4, 2018, before the circuit court ruled on the motion, Nersesian filed an

amended verified complaint, wherein he alleged in relevant part that Charles was a “former” 

member of NMA, but acted as a member of NMA during the Keeler Property transaction, and 

breached his fiduciary duty while doing so. The amended verified complaint also referred to an 

annual report filed with the Secretary of State on April 13, 2016, which listed Charles and 

Nersesian as the NMA members, and articles of amendment, dated June 13, 2016, which added

Michael as a member and again listed Charles as a member. Charles’s signature appeared on both 

documents, which Nersesian attached to the filing. Additionally, Nersesian alleged that at the 

Keeler Property closing, Michael provided NMA’s “closing attorney” with a “copy of a purported 

signed operating agreement for NMA,” which listed Nersesian, Michael, and Charles as members. 

The signature on that document purporting to be Nersesian’s was not his, and he did not authorize 
No. 1-21-0940 

5 

anyone to sign on his behalf. At the Keeler Property closing, Charles “executed documents or, 

without proper authority, instructed NMA’s closing attorney to execute documents providing for 

the payment of [Michael’s] personal loans from the closing escrow and the escrowing of funds for 

title indemnities for personal liens and judgments of Michael.” Nersesian further alleged that 

Charles was a signatory on NMA’s bank account.

¶ 10 Nersesian attached to the amended verified complaint a document entitled “operating 

agreement,” that listed Charles as an NMA member and purported to bear his signature, as well as 

an NMA annual report, filed September 11, 2017, which no longer listed Charles as a member or 

bore his signature.

¶ 11 On February 1, 2018, Charles moved to dismiss the amended verified complaint, arguing 

that it did not sufficiently allege facts showing Charles owed NMA a fiduciary duty, a breach of 

any alleged duty, or damages. On June 18, 2018, the circuit court granted Charles’s motion without 

prejudice. 

¶ 12 On July 16, 2018, Nersesian filed his second amended verified complaint, in which he 

alleged in relevant part that Charles acted as NMA’s agent at all relevant times, and held himself 

out to be a member of NMA between January 8, 2015 and September 11, 2017. Nersesian alleged 

that Charles did so “for the purpose of improperly asserting control of NMA, to assist [Michael] 

in his tortious conduct, and to divert funds from the sale of the Keeler Property without” 

Nersesian’s consent. Nersesian included new claims against Charles: Count V for breach of 

fiduciary duty by an agent, and Count VI for aiding and abetting breach of fiduciary duty.

¶ 13 Charles moved to dismiss Nersesian’s second amended verified complaint, arguing that 

Nersesian failed to allege sufficient facts to support his new claims. Nersesian responded to 

Charles’s motion, arguing his allegations established “the existence of an agency relationship” 
No. 1-21-0940 

6 

between Charles and NMA. On January 24, 2019, the circuit court granted Charles’s motion as to 

Count V only. 

¶ 14 On December 17, 2018, Nersesian responded to Charles’s request for admissions, and 

admitted that he never communicated with Charles, never received legal advice from Charles, and 

Charles was never an NMA member.

¶ 15 On February 21, 2019, Charles filed an answer in which he denied that he used the NMA 

bank account, signed the April 13, 2016 annual report or the articles of amendment, or assisted

Michael in any allegedly tortious conduct. Charles also denied that he provided the operating 

agreement to Coleman. He admitted that at Coleman’s direction, he “executed certain documents 

with the understanding that the immediate execution of those documents was required for the 

closing of a real estate transaction that would benefit both Nersesian and Michael.” 

¶ 16 On May 6, 2019, Coleman was deposed. She testified that she did not believe she ever 

spoke to Nersesian. She admitted that if NMA purchased the Keeler Property initially, instead of 

Michael, his personal liens would not have attached. By virtue of Michael’s individual purchase, 

NMA could not sell the Keeler Property before clearing Michael’s liens because they were clouds 

on the title. She confirmed that NMA’s profits would have increased from the Keeler Property sale

if not for the need to pay Michael’s liens.

¶ 17 She further testified that she or someone at her office instructed Charles to sign the 

corporate resolution, a version of which, that also bore Nersesian’s signature, is attached to her 

deposition. This version of the corporate resolution lists Nersesian and Charles as NMA members, 

authorizes Charles to enter into the contract for sale of the Keeler Property and to “execute any 

and all documents necessary to close the sale,” and indicates it was prepared by Michael and 

Coleman. She directed closing documents to Charles for signature because to her “knowledge he 
No. 1-21-0940 

7 

was the managing member (of NMA).” At no point between June 9, 2016 and the Keeler Property

closing did Michael or Charles tell Coleman that Charles was not an NMA member.

¶ 18 On May 31, 2019, Michael responded to Nersesian’s interrogatories, and explained that 

Pacacory Properties LLC BC, Michael’s LLC under which he joined NMA, was a “Designated 

Series” of Pacacory Properties LLC, of which Charles was the sole member. When Michael 

attempted to file the articles of organization and annual report for NMA, the Illinois Secretary of 

State office erroneously refused to accept them, insisting Charles’s LLC was the member LLC of 

NMA. In response, Michael “listed [Charles] as the [NMA] member.” Michael admitted that 

Charles was a “back-up signatory” to the NMA bank account, but did not receive bank statements 

or ever access the account. Michael also acknowledged he signed Charles’s and Nersesian’s names 

to the operating agreement, and indicated he signed Charles’s name to other documents due to the 

situation with the Secretary of State’s office. 

¶ 19 On July 17, 2019, Nersesian was deposed. He testified he believed Charles acted as an 

attorney for NMA when it purchased the Keeler Property based on documents he reviewed, but he 

could not recall which documents specifically. Michael also informed Nersesian verbally that 

Charles would be involved with the Keeler Property transaction. He did not request the Keeler 

Property closing documents from Michael before filing the lawsuit. Nersesian did not recall when 

he signed the corporate resolution, and whether it was before or after the Keeler Property sale. He 

acknowledged the resolution authorized Charles to enter into a contract for the sale of the Keeler 

Property. Nersesian could not recall what, if any, documents reflected Charles’s involvement in 

the Krueger Property.

¶ 20 Nersesian confirmed his allegations against Charles were based on documents produced in 

discovery, and claimed “numerous documents” showed Charles’s involvement, but could not 
No. 1-21-0940 

8 

reference any document specifically. Before filing the lawsuit, Nersesian visited the Krueger 

Property and reviewed its tax records, and also unsuccessfully requested an accounting of the 

Keeler Property sale from Michael. Nersesian did not “directly” request any documents from the

Illinois Secretary of State’s office before filing the verified complaint. Nersesian could not recall 

if he ever approved Charles to become an NMA member. He based his allegation that Charles 

instructed Coleman to pay Michael’s personal loans from the Keeler Property closing proceedings 

on “Charles’s role in the partnership and the closing transaction that took place,” and the closing 

documents “that indicate the payment of existing liens prior to the release of funds” to NMA, with

which he believed Charles would be “very familiar.”

¶ 21 On October 18, 2019, Charles moved for summary judgment, arguing that Nersesian 

presented no evidence that Charles knew of a violation by Michael. Respecting the Keeler

Property, Charles argued the evidence showed any knowledge he had came directly from Coleman. 

Additionally, the corporate resolution showed Nersesian had authorized Charles’s actions 

regarding the Keeler Property. Respecting the Krueger Property, Charles emphasized Nersesian 

testified at his deposition that he had no recollection of any involvement by Charles. He attached 

Nersesian’s and Coleman’s deposition transcripts, Nersesian’s request for admissions response, 

and Michael’s interrogatory responses to the motion, and other documents, to the motion. 

¶ 22 On December 13, 2019, Nersesian moved for leave to file an amended Count V of the 

second amended verified complaint. The circuit court granted the motion over Charles’s objection.

¶ 23 In Nersesian’s response to the motion for summary judgment, he represented he only 

sought relief from Charles based on the Keeler Property transaction, and abandoned any claims 

against Charles regarding the Krueger Property. Nersesian contended that a genuine issue of 

material fact existed regarding “Charles’ knowing assistance of Michael’s breach of his fiduciary 
No. 1-21-0940 

9 

duties to Nersesian” relating to the Keeler Property transaction. In his undisputed material facts 

sections, Nersesian admitted he signed the corporate resolution that permitted Charles to sign 

certain documents on NMA’s behalf at the Keeler Property closing. 

¶ 24 Michael and Nersesian settled their dispute on February 27, 2020.

¶ 25 On January 21, 2021, the circuit court granted summary judgment on count VI, finding 

“there is no genuine issue of material fact or evidence to make a showing that [Charles] knowingly 

and substantially assisted [Michael] in the diversion of the proceeds from the sale of the subject 

property or that [Charles] was regularly aware of [Michael’s] alleged conduct.” Nersesian then 

moved to dismiss his remaining claims, which the court granted on March 3, 2021. 

¶ 26 On April 1, 2021, Charles moved for sanctions against Nersesian pursuant to Rule 137. In 

relevant part, he alleged that Nersesian did not make a reasonable pre-complaint inquiry into his 

claims. Specifically, Charles complained that Nersesian never contacted him or Coleman before

filing the verified complaint. Charles further cited Nersesian’s request for admission response that 

Charles was never a member of, or attorney for, NMA, and Nersesian’s testimony that he was 

unclear of Charles’s role at NMA, and could not identify the specific documents that formed the 

bases of his claims. Additionally, Charles argued that Nersesian never had a basis for the Krueger 

Property allegations, and improperly included those claims in each successive complaint.

¶ 27 Charles attached to the motion for sanctions an email from his attorney to Nersesian’s 

attorney dated October 30, 2017 (between the verified complaint and amended verified complaint),

wherein Charles’s attorney represented that the Keeler Property closing documents showed 

Coleman, not Charles, was NMA’s attorney at the closing. Charles’s attorney requested that 

Nersesian dismiss Charles from the case because he “provided no legal services for your client or 
No. 1-21-0940 

10 

[NMA], never has had managerial authority with respect to [NMA] or Pacacory Properties LLC 

BC, and has in no way facilitated the wrongs” alleged against Michael.

¶ 28 In Nersesian’s response to the motion for sanctions, he emphasized that Charles’s signature 

appeared on a number of “organizational documents, a corporate resolution, and closing 

documents for the Keeler Property,” and that Michael’s forgeries were not revealed until later in 

the discovery process. Nersesian continued that the circumstances of the Keeler Property closing 

suggested his claims against Charles could have validity, as Charles agreed to assist Michael by 

signing the Keeler Property closing documents even though Nersesian could sign on behalf of 

NMA and Charles knew he was not a member of the LLC, permitting the inference “that Charles 

must have been aware of an intent to conceal the details of the closing.” Specific addressing his 

allegations in the verified complaint that Charles acted as NMA’s attorney, Nersesian argued he 

relied on Michael’s statements of Charles’s likely involvement in NMA, the corporate resolution, 

and the fact Charles signed release of judgment documents for Michael’s liens. Nersesian also 

argued he did attempt to contact Charles before filing suit, but Charles refused to attend a 

September 2017 meeting. Regarding the Krueger Property, Nersesian argued the NMA bank 

account records, with Charles as a signer on the account, justified the initial allegations. 

¶ 29 At a hearing on the sanctions motion, Charles’s attorney argued in pertinent part that

Nersesian signed the authorization for Charles to “sign any documents necessary” to close the 

Keeler Property sale. He further argued that Charles’s name only appeared on the documents 

submitted to the Secretary of State because of the Secretary of State office’s error, and Michael’s 

response thereto, a fact Charles could have told Nersesian before the any litigation had Nersesian 

simply contacted him. The attorney contended that Nersesian only brought claims against Charles

“to assert pressure on Michael by having his father, an esteemed law professor, dragged into 
No. 1-21-0940 

11 

litigation and have his name smeared” across three verified pleadings “despite the lack of evidence 

to substantiate” the claims. Charles’s attorney maintained that Nersesian’s conduct remained

sanctionable despite his ultimate dismissal of the case because Nersesian put Charles “through the 

expense of proving that [the] aiding and abetting theory also held no water, even after all the 

discovery that had been done and even after [Nersesian] had absolutely no evidence that [Charles]

knowingly participated in any type of a scheme or fraud.”

¶ 30 Nersesian’s attorney argued that the documents they received from the state listed Charles

as a member and manager of NMA, and Charles was added without Nersesian’s knowledge. 

Additionally, Charles’s “fingerprints were all over the file. They existed on releases that were 

prepared. He signed powers of attorney.” The attorney continued that on the date he filed the 

verified complaint, Nersesian knew he was out “a million two,” Charles’s signature appeared on 

multiple documents, including indications he was an NMA member, and Michael informed 

Nersesian that Charles would assist with the LLC. These facts provided a “reasonable basis to 

determine that Charles had involvement.”

¶ 31 The circuit court denied the motion for sanctions on July 7, 2021, stating in relevant part

that, “there was information provided to the Secretary of State which *** the Court believes 

[Nersesian] reasonably relied on.” The court continued, “There is a difference *** between the – 

the discovery between the investigation that is required prior to filing and the investigation that is 

done as a consequence of discovery and the information that’s gathered therefrom.”

¶ 32 This appeal followed. 

¶ 33 ANALYSIS

¶ 34 On appeal, Charles first claims that the circuit court erred by not sanctioning Nersesian

under Rule 137 for not making reasonable inquiries before signing and filing his three complaints. 
No. 1-21-0940 

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¶ 35 Under Rule 137, a party signing a filing must certify in relevant part that “to the best of his 

knowledge, information, and belief formed after reasonable inquiry” that the allegations made in 

the complaint are “well grounded in fact and warranted by existing law,” and are “not interposed 

for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in 

the cost of litigation.” Ill. S. Ct. R. 137(a) (eff. Jan. 1, 2018). Rule 137 is penal in nature, and we

must construe it strictly. Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 487 (1998). The rule is 

not intended to punish litigants who are simply unsuccessful. Burrows v. Pick, 306 Ill. App. 3d 

1048, 1050 (1999). Whether a complaining party made a sufficient inquiry before filing a 

complaint is judged by an objective standard. Whitmer v. Munson, 335 Ill. App. 3d 501, 514 

(2002). The issue turns on what the party knew at the time of filing. Watkins v. Ingalls Memorial 

Hospital, 2018 IL App (1st) 163275, ¶ 82. 

¶ 36 We review a circuit court’s decision on a motion for sanctions pursuant to Rule 137 for 

abuse of discretion. Id. ¶ 78.3 “A court has abused its discretion when no reasonable person would 

agree with its decision.” Lake Environmental, Inc. v. Arnold, 2015 IL 118110, ¶ 16. “When 

reviewing a decision on a motion for sanctions, the primary consideration is whether the trial 

court's decision was informed, based on valid reasoning, and follows logically from the facts.” 

Technology Innovation Center, Inc. v. Advanced Multiuser Technologies Corporation, 315 Ill.

App. 3d 238, 244 (2000). 

3 We note that the court here did not hold an evidentiary hearing on the motions for sanctions. Some 

courts in this circumstance have suggested that de novo review is more appropriate. See Heckinger v. Welsh, 

339 Ill. App. 3d 189, 191 (2003). In Heckinger, however, the court utilized de novo review because the 

circuit court ruled on the sanctions issue as a matter of law, which the court here did not do. Id. The majority 

of reviewing courts have reviewed sanctions orders for abuse of discretion even absent an evidentiary 

hearing, often citing Shea, Rogal & Associates, Ltd. v. Leslie Volkswagen, Inc., 250 Ill. App. 3d 149, 153-

55 (1993). We agree with Shea and will review the circuit court’s decision here for abuse of discretion. 
No. 1-21-0940 

13 

¶ 37 We find that the circuit court did not abuse its discretion by not sanctioning Nersesian 

based on unreasonable pre-complaint inquiry. The record shows that Nersesian expected he and 

Michael would be the NMA members, but Charles, an attorney, would assist, and Michael and 

Nersesian would evenly split the Keeler Property profit. After the closing, from which Nersesian 

believed the profits were too low, he procured documents and found Charles listed as an NMA

member, and that proceeds from the sale were first used to pay Michael’s personal debt obligations. 

Michael refused to provide additional documents or information about the transaction. A 

reasonable person in this circumstance could believe Charles assisted Michael in rerouting the 

Keeler Property sale proceeds away from NMA to first pay Michael’s personal debts, and that 

filing suit and obtaining discovery would provide evidence of this. Additionally, regarding any 

conduct pre-dating the second amended verified complaint, we must consider that Nersesian did 

not have the benefit of any deposition testimony or Michael’s interrogatory answers. It was not 

until these were a part of the record that the parties learned Michael forged Charles’s name on 

some of the documents that listed Charles as an NMA member. On this record, we cannot say the 

court’s decision not to sanction Nersesian for his pre-complaint inquiry constituted an abuse of 

discretion. See Burrows, 306 Ill. App. 3d 1048, 1054-55 (no sanctions where “facts and 

circumstances known to [the claimant] were such that one could reasonably assume that further 

investigation would uncover supporting proof”). 

¶ 38 Charles argues that Nersesian’s deposition testimony reveals his pre-complaint inquiry was 

inadequate because he testified he took only three actions—he visited the Krueger Property, 

investigated its taxes, and requested an accounting of the Keeler Property sale from Michael. This 

argument is negated by the record; Nersesian attached to the verified complaint multiple 
No. 1-21-0940 

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documents with Charles’s signature indicating he was NMA member, and also the Byline Bank 

document suggesting Charles’s involvement in Michael’s debt payments.

¶ 39 Charles also contends that Nersesian’s failure to contact either Charles or Coleman before 

filing the verified complaint constituted unreasonable inquiry. We disagree. If Nersesian had called 

Charles before filing and Charles denied any involvement, this would not have changed any of the 

facts known to Nersesian before filing suit regarding Charles’s purported signatures on the 

documents attached to the Verified Complaint. Respecting Coleman, even if she had fully 

informed Nersesian before he filed of her role with NMA and her understanding of Charles’s role 

at the Keeler Property closing, this too would not have absolved Charles. Coleman testified she 

believed Charles was a member of NMA and acted accordingly, and offered no insight into 

Charles’s knowledge or intent respecting Michael’s allegedly improper conduct. 

¶ 40 Charles next argues that Nersesian’s allegation in the verified complaint that Charles acted 

as NMA’s attorney was knowingly false, and thus sanctionable. We reject this contention, because 

the record shows that Nersesian did not know the nature and extent of Charles’s NMA involvement 

until after he filed the verified complaint. Nersesian’s deposition shows that, before he filed the 

verified complaint, he only knew of Charles what Michael told him—that Charles was an attorney, 

and would assist with NMA. Nersesian then was asked to sign a form authorizing Charles to take 

actions on behalf of NMA at the Keeler Property closing. This was sufficient information for 

Nersesian to file a complaint and trigger discovery to learn more regarding Charles’s specific role 

in NMA. Burrows, 306 Ill. App. 3d at 1055. After he filed the verified complaint and received the 

October 30, 2017 email from Charles’s attorney, Nersesian removed the claim that Charles acted 

as NMA’s attorney, an act consistent with his Rule 137 duties. See Stiffle v. Baker Esptein Marz, 
No. 1-21-0940 

15 

2016 IL App (1st) 150180, ¶ 37 (explaining that a litigant has a duty to promptly dismiss invalid 

claims). 

¶ 41 Similarly, Charles argues that Nersesian had no basis to allege Charles was involved in the 

Krueger Property transaction. Again, the record suggests otherwise, as Michael informed 

Nersesian at NMA’s outset that Charles would be generally involved, and Nersesian also had

evidence that Charles was a signatory to a bank account into which Nersesian deposited the funds 

for the Krueger Property. 

¶ 42 Charles also argues that Nersesian had no basis to allege Charles was a member of NMA 

because for Charles to become a member, Nersesian himself had to approve the addition. In so 

arguing, Charles points to Nersesian’s request for admission response that Charles was never a 

member of NMA. We reject this argument, because a reasonable court could have found that it 

was unclear from the record whether Nersesian knew Charles was not a member of NMA such 

that the allegation was sanctionable, in light of: (1) the documents Nersesian reviewed pre-suit, (2) 

Nersesian’s testimony that he was not an attorney and did not have a sophisticated understanding 

of Charles’s role, and (3) Nersesian’s deposition testimony that he was unsure if he ever authorized 

Charles to become a member. Additionally, Nersesian changed the allegation to Charles holding 

himself out as a member, and acting as NMA’s agent, as discovery proceeded. This distinguishes 

this matter from Pritzker v. Drake Tower Apartments, Inc., 283 Ill. App. 3d 587 (1996), cited by 

Charles. There, the court found sanctions were appropriate because the claimant maintained a 

factual claim the record showed she knew to be false; here, the record does not show that Nersesian 

persisted with the allegation that Charles was an NMA member after the discovery process 

suggested otherwise. See Pritzker, 283 Ill. App. 3d at 592-93.
No. 1-21-0940 

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¶ 43 Finally, Charles argues that Keeler Property closing documents demonstrate that Nersesian 

had no basis to claim Charles could be liable for issues with the transaction, specifically arguing 

that (1) Nersesian signed the corporate resolution authorizing Charles to sign the closing 

documents, (2) Coleman testified she prepared the documents for Charles to sign, and (3) the

documents themselves show Charles was not involved beyond responding to Coleman’s request 

to sign. This argument fails because neither the corporate resolution nor the closing documents 

were conclusive of Charles’s knowledge of Michael’s lien situation or if Charles owed a fiduciary

duty to Nersesian and/or NMA. While Nersesian authorized Charles to sign closing documents, 

the record is not clear that Nersesian did so knowing this would involve Charles signing off on 

paying Michael’s debts first from the Keeler Property proceeds, or that Charles was participating 

in the closing while not owing any fiduciary duty to NMA. A reasonable court could find that 

given this record, a reasonable person could have believed that discovery would uncover evidence 

allowing for Charles to be liable for his conduct surrounding the Keeler Property closing, and thus 

Rule 137 sanctions were not warranted. See Dowd, 181 Ill. 2d at 487 (finding sanctions were 

inappropriate where “evidence exists supporting the plaintiff’s claims”). We therefore have no 

basis to find that the circuit court abused its discretion on this point. 

¶ 44 Charles’s second claim is that the circuit court erred because it did not consider Nersesian’s 

failure to dismiss meritless claims as a basis for sanctions. Charles also makes arguments regarding 

the merits of this theory. Nersesian responds that Charles waived any claim based on Nersesian’s 

alleged failure to dismiss meritless claims because Charles did not argue this theory below, and 

even if Charles had properly preserved the argument, it was meritless. 

¶ 45 First, we find Charles sufficiently argued Nersesian’s alleged failure to dismiss meritless 

claimsto the circuit court as a ground for sanctions, and thus did not forfeit the argument on appeal. 
No. 1-21-0940 

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For a party to preserve an argument for appeal, they must first raise it before the circuit court. See 

Huang v. Brenson, 2014 IL App (1st) 123231, ¶ 22. In his motion for sanctions, Charles argued 

that Nersesian “continued to morph his allegations with each amended pleading *** without any 

evidence to support his new claims.” Then, at the oral argument, Charles’s attorney contended that 

Nersesian’s conduct was still sanctionable even though he ultimately dismissed the case because 

he forced Charles to defend against clearly meritless claims. Based on this record, we find that 

Charles sufficiently argued Nersesian’s failure to timely dismiss as a ground for sanctions before 

the circuit court. See id. (no forfeiture where issues on appeal are commensurate with those raised 

before the circuit court). 

¶ 46 We next address Charles’s argument that the circuit court failed to consider his failure to 

dismiss theory. A circuit court “is presumed to know the law and apply it properly, absent an 

affirmative showing to the contrary in the record.” In re N.B., 191 Ill. 2d 338, 345 (2000). Under 

Rule 137, a party who learns his claims are meritless during discovery has a duty to dismiss the 

claims in a timely fashion, and the failure to do so may constitute grounds for sanctions. See Stiffle, 

2016 IL App (1st) 150180, ¶ 37. 

¶ 47 We find that Charles has failed to rebut the presumption that the circuit court knew and 

correctly applied the law of Rule 137 in its decision to deny his motion for sanctions. Charles’s 

attorney specifically referenced the facts learned post-discovery, and characterized them as 

demonstrating Nersesian’s claims against Charles were invalid, during proceedings on the motion. 

We must presume the court considered this argument in light of the law holding that sanctions can 

be based on a failure to timely dismiss meritless claims. In re N.B., 191 Ill. 2d at 345. We further 

note that in this context, the law is clear that the circuit court was under no obligation whatsoever 

to explain its ruling. See Arnold, 2015 IL 118110, ¶ 15. The fact the court did not specifically 
No. 1-21-0940 

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reference Nersesian’s duty to dismiss in explaining its decision is thus of no moment, because the 

law did not require it do so; instead, it is incumbent upon the challenger, here Charles, to 

affirmatively demonstrate the court’s error. Charles makes no affirmative showing from the record

that the court did not know and apply this aspect of the law, and thus his argument fails. Id.

¶ 48 Next, to the extent Charles argues that the circuit court considered failure to dismiss as a 

potential ground to sanction Nersesian, but abused its discretion by not sanctioning Nersesian on 

this basis, we find that this argument fails as well. At the time Charles moved for summary 

judgment, Nersesian’s claims hinged on Charles’s state of mind when he facilitated the Keeler 

Property closing. Nersesian contended that the fact that Charles actively participated in the Keeler 

Property closing by signing the documents that made Michael’s lien clearances possible permitted 

the inference that Charles knew of Michael’s situation and intended to further it. The circuit court 

ultimately ruled the evidence did not support this inference, but the argument was not so 

unreasonable that it is clear Nersesian knew it was false during the litigation, or pursued it for a 

vexatious or improper purpose. See Ill. S. Ct. R. 137(a) (eff. Jan. 1, 2018); Burrows, 306 Ill. App. 

3d at 1050. 

¶ 49 Charles argues that Nersesian’s failure to dismiss the Krueger claims before summary 

judgment entry is sanctionable. We disagree. Before the discovery process, Nersesian could 

reasonably believe, based on Charles’s behavior regarding the Keeler Property, that Charles was 

generally involved in NMA’s business, which here Nersesian alleged involved misuse of funds 

intended for the Krueger renovations. Nersesian also knew Charles’s name was on the bank 

account from which the allegedly misused funds were withdrawn. When discovery revealed that 

Charles never used the account, and there was no additional evidence suggesting his active

involvement in the Krueger Property project, Nersesian abandoned the claims. This conduct 
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followed the requirements of Rule 137. See Stiffle, 2016 IL App (1st) 150180, ¶ 37 (attorney has 

duty to promptly dismiss claims when discovery reveals they are invalid). 

¶ 50 Charles next argues that Nersesian should be sanctioned because he did not abandon the 

allegation that Charles instructed Coleman regarding the Keeler Property closing, despite 

Coleman’s testimony that she provided Charles the documents he signed. We acknowledge 

Coleman’s testimony here was somewhat inconsistent with Nersesian’s allegation, but the 

underlying theory remained valid despite this testimony—while Charles may not have instructed 

Coleman to prepare the documents, he still executed them, and Coleman confirmed she provided 

the documents to Charles believing he was an NMA member. Thus, the theory underlying these 

allegations, that Charles’s active role at the Keeler Property closing demonstrated knowledge and 

intent regarding Michael’s conduct, is not impacted by the deposition testimony Charles 

highlights. Again, that the circuit court ultimately ruled against Nersesian on this point did not 

render the theory objectively unreasonable to pursue, and thus sanctionable, even in light of 

Coleman’s testimony. See Id. ¶ 32 (“party seeking sanctions *** must show that the opposing 

party made untrue and false allegations without reasonable cause”).

¶ 51 Charles also argues that Nersesian’s testimony at his deposition demonstrated he 

knowingly perpetuated invalid claims because he could not reference the specific documents from 

which he formed the basis of his claims. We disagree because this testimony was irrelevant; no 

matter whether Nersesian could reference the documents at the time of his deposition, such 

documents existed, as described extensively above. 

¶ 52 Finally, Charles contends that Nersesian’s lawyer’s argument during the sanctions hearing

betrayed the ill intent behind Nersesian’s claims. Specifically, the attorney overstated Nersesian’s 

losses and attempted to sensationalize the matter, which Charles argues was emblematic of 
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Nersesian’s overarching strategy of improperly leveraging Charles’s reputation to procure a larger 

return on the lawsuit than Michael alone could provide. As explained above, however, we believe 

Nersesian had valid bases for pursuing his claims, and that Charles may have suffered a loss of 

reputation due to the lawsuit does not constitute grounds for sanctions in of itself. See Dowd, 181 

Ill. 2d at 487. Because Nersesian had a basis for his claims, and Charles points to nothing in the 

record that demonstrates actual animus or ill intent towards him on Nersesian’s part, this argument 

fails as well. See Ill. S. Ct. R. 137 (eff. Jan 1. 2018) (claim can be sanctionable if brought for 

“improper purpose, such as to harass or to cause unnecessary delay or needless increase” in costs). 

¶ 53 CONCLUSION

¶ 54 Nersesian’s pre-complaint inquiry was reasonable and provided sufficient grounds to 

pursue claims against Charles, and the information learned in the discovery process did not so 

clearly invalidate his claims that Nersesian had a duty to dismiss them. Accordingly, the circuit 

court did not abuse its discretion by denying Charles’s motion for sanctions under Rule 137. 

¶ 55 Affirmed.