Court Opinion

ID: 4662182
Source: CourtListenerOpinion
Date Created: 2021-02-23 18:05:37.003544+00
Date Added: 2024-06-11T08:02:19.379403
License: Public Domain

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                                   Appellate Court                            Date: 2021.02.19
                                                                              09:56:54 -06'00'

           Shamrock Chicago Corp. v. Wroblewski, 2019 IL App (1st) 182354

Appellate Court        SHAMROCK CHICAGO CORPORATION, an Illinois Corporation,
Caption                Plaintiff-Appellee, v. STEVEN M. WROBLEWSKI, DAVID J.
                       WELLS, CHRISTOPHER ENGLAND, DONALD NOWAK,
                       SKYLINE INDUSTRIAL CORPORATION, an Illinois Corporation,
                       and Unknown Investors and Co-conspirators, Defendants (Skyline
                       Industrial Corporation, Defendant-Appellant).

District & No.         First District, First Division
                       No. 1-18-2354

Filed                  December 31, 2019

Decision Under         Appeal from the Circuit Court of Cook County, No. 17-M-36275; the
Review                 Hon. David D. Roti, Judge, presiding.

Judgment               Affirmed in part and vacated in part.
                       Cause remanded.

Counsel on             William J. Didier, of Didier Law Office, LLC, of Chicago, for
Appeal                 appellant.

                       Matthew M. Saffar and John S. Saletta, both of Palatine, for appellee.
     Panel                    JUSTICE HYMAN delivered the judgment of the court, with opinion.
                              Presiding Justice Griffin and Justice Pierce concurred in the judgment
                              and opinion.

                                              OPINION

¶1        Shamrock Chicago Corporation (Shamrock) sells antifreeze, motor oil, and heat transfer
      fluids. After a failed negotiation to sell Shamrock to a small group of its employees, those
      employees, according to Shamrock’s complaint, misappropriated and then destroyed large
      swaths of financial and client data from Shamrock’s computers. Using that information, the
      then-former employees formed their own company, Skyline Industrial Corporation (Skyline).
¶2        Shamrock sought ongoing disclosure of Skyline’s bank statements and QuickBooks files.
      The trial court ordered Skyline to comply with Shamrock’s request and appointed a facilitator
      in discovery to help enforce its order. Skyline, fearing interference with its new business if
      Shamrock became privy to its finances, refused to comply. The trial court found Skyline in
      “friendly contempt” and imposed a monetary penalty, vesting us with interlocutory
      jurisdiction. See Ill. S. Ct. R. 304(b)(5) (eff. Mar. 8, 2016).
¶3        Skyline argues that the ongoing production of its bank statements and QuickBooks files is
      overbroad and includes information irrelevant to Shamrock’s claims. Skyline also disputes the
      propriety of appointing a facilitator in discovery to assist the trial court in the oversight of
      Skyline’s discovery compliance. We find the information Shamrock requested both relevant
      and integral to proving its claims. We also find no impediment to the trial court’s appointment
      of a facilitator in discovery under either the discovery rules or case law interpreting them. We
      affirm the discovery order, but since Skyline appealed in good faith, vacate the contempt order.

¶4                                             Background
¶5        Shamrock has sold antifreeze, motor oil, and heat transfer fluids since 1974. John Dreamer,
      Sr. eventually became the sole shareholder. When John died, his wife, Annie Dreamer, became
      the sole shareholder. Annie, now incapacitated due to medical issues, is the sole beneficiary of
      a trust that holds all of Shamrock’s stock.
¶6        At the time of the events giving rise to this litigation, Shamrock had five employees: John
      Dreamer, Jr., Les Kreifels, Steven Wroblewski (John Jr.’s nephew), David Wells, and Chris
      England. Wroblewski started working for Shamrock in 2006 and served as the vice president
      and secretary. Wells, a certified public accountant, started working for Shamrock in 2011, and
      served as Shamrock’s chief financial officer. England also was an employee, though the record
      leaves his role vague.
¶7        The Dreamer family decided to sell Shamrock and offered Wroblewski and Wells the
      opportunity to make the first offer. Wroblewski and Wells submitted an offer that was
      financially acceptable but included “collateral terms” that the Dreamers would not accept. In
      “mid-August” 2017, Shamrock made a counteroffer, having revised some terms unrelated to
      the purchase price.
¶8        On September 1, 2017, Wroblewski and Wells “abruptly resigned.” England resigned four
      days later. According to Shamrock’s first amended complaint, the day before Wroblewski and

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       Wells resigned, they “had Beaver Shredding, Inc., deliberately destroy three double file boxes
       and perform one cabinet destruction service at Shamrock’s headquarters” without anyone
       else’s knowledge. The complaint also alleged that Wroblewski and Wells “had deliberately
       altered the network of computers” and “deleted large amounts of data from Shamrock’s
       computer system.” Wells also had “copied Shamrock’s QuickBooks files” and other data from
       Shamrock’s computers. Wroblewski, for his part, uploaded data from Shamrock’s computers
       to the digital storage site Dropbox in the days leading up to his resignation.
¶9         After the resignations, Skyline “went live” with its own website. Shamrock alleges that
       Skyline’s business is “exactly the same” as its own, and Skyline has been representing itself
       as Shamrock’s successor business to customers and vendors. The complaint attaches a series
       of e-mails initiated by Wroblewski to Shell Corporation, one of Shamrock’s vendors, in which
       Wroblewski requests an application for credit. In the e-mail chain, one of the Shell employees
       says, “Shamrock was just bought out by 2 of their employees and investors. Their new name
       is Skyline Industrial Corp.” Later that month, a logistics company that Shamrock used “insisted
       numerous times” that it was waiting on a shipment of 5000 gallons of propylene glycol for one
       of Shamrock’s customers. Shamrock did not know about the shipment. Later Shamrock learned
       Skyline had made the order.
¶ 10       Shamrock’s complaint sets out 11 counts against various combinations of Wroblewski,
       Wells, England, Skyline, yet-unknown investors, and David Nowak, an accountant Shamrock
       employed for tax purposes. Many counts allege that the defendants “destroy[ed] electronic
       data, including but not limited to: Emails; Quickbook[s] files; Accounts Receivable; Accounts
       Payable; Client lists; Supplier invoices and pricing; Formula lists, and client histories.” Before
       allegedly destroying those files, Shamrock alleges that defendants uploaded them to Dropbox.
¶ 11       Shortly after filing its complaint, Shamrock moved for a temporary restraining order
       (TRO). The motion for a TRO asked, among other things, that the court appoint “a receiver to
       monitor any substantial transactions engaged in by the defendants and in particular Skyline,
       Wroblewski, Wells, and England pursuant to 740 ILCS 160/8(3)(B).” The trial court granted
       Shamrock’s motion and entered a TRO “[a]ppointing a receiver at Plaintiff’s expense to
       monitor any substantial (i.e., $20,000 or more) transactions engaged in by the defendants
       Skyline, Wroblewski, and England.” The defendants petitioned this court’s review of the TRO
       (see Ill. S. Ct. R. 307(d) (eff. Nov. 1, 2017)). We denied the petition.
¶ 12       Thereafter, the trial court entered an order appointing James Venetos, a certified public
       accountant, “to monitor Skyline’s transactions.” The court ordered Skyline to keep its “books
       and records current *** in the ordinary course of business” and to make its monthly bank
       statements available to Venetos within three days of their availability. The court’s order also
       required Skyline to keep its QuickBooks current and provide Venetos a copy of its QuickBooks
       files every other week. The order permitted Skyline to password protect or encrypt its files and
       documents, as long as Venetos had access. The information turned over to Venetos remains
       subject to a protective order, which limits viewing to “attorney’s eyes only.”
¶ 13       Skyline filed a motion to vacate or modify the order appointing Venetos. The trial court
       denied the order and set a date by which Skyline had to turn over its QuickBooks files. After
       that date passed, Shamrock filed a petition for rule to show cause, alleging that Skyline
       “refus[ed] to provide the Quickbook[s] files and bank records to [the] monitor.” In response,
       Skyline argued that the court’s order was too broad and harmed Skyline by revealing its
       financial information to Shamrock. Alternatively, Skyline asked to be held in “friendly

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       contempt” to test the order’s validity. The trial court granted Shamrock’s petition for rule to
       show cause, found Skyline in indirect civil contempt, and imposed a $10 per day fine for
       continued noncompliance.

¶ 14                                             Analysis
¶ 15       Skyline breaks its arguments into several discrete sections, but its contentions essentially
       challenge (i) the trial court’s order for discovery of all of Skyline’s financial and business
       records as overbroad and (ii) the trial court’s appointment of Venetos to facilitate Skyline’s
       production of bank transactions and QuickBooks files. Skyline also argues that we should
       vacate the contempt order, regardless of our conclusions.

¶ 16                                            Scope of Review
¶ 17       Shamrock argues that we cannot review the underlying discovery order, partly because the
       order holding Skyline in contempt constitutes the only order subject to review. Shamrock
       believes the orders are not discovery orders. Skyline asks us to review all the trial court’s
       underlying orders back to the TRO entered in 2017. We disagree with both parties on the scope
       of the issues.
¶ 18       We reject Shamrock’s argument. The law is well settled that when a contempt order based
       on a discovery violation is appealed, the underlying discovery order is also subject to review.
       Norskog v. Pfiel, 197 Ill. 2d 60, 69 (2001). We need to look at the contempt order to define the
       parameters of our analysis: “Defendant Skyline is found to be in indirect civil contempt and
       ordered to comply with the order dated May 22, 2018.” The May 22 order required Skyline to
       comply with the April 18, 2018, discovery order. That order described Skyline’s discovery
       obligations and Venetos’s duties. Our review concerns only the contempt order and the trial
       court’s April 18 order.
¶ 19       For much of the same reason, we reject the arguments Skyline makes attacking the TRO.
       Skyline’s appeal, according to its briefs, relies on Rule 304(b)(5), which allows an
       interlocutory appeal of an order finding a person or entity in contempt and imposing a monetary
       penalty. Ill. S. Ct. R. 304(b)(5) (eff. Mar. 8, 2016). Rule 304(b)(5) provides limited jurisdiction
       that, as we said, involves just the contempt order and the underlying order on which it is based.
       See Norskog, 197 Ill. 2d at 69.
¶ 20       In addition, Shamrock argues that we should reject Skyline’s appeal because the April 18
       order is something other than a discovery order. According to Shamrock, the trial court did no
       more than exercise its equitable powers to appoint a “receiver,” and Skyline’s arguments do
       not address that harm. To the contrary, we find the April 18 order set out a process for
       discovery.
¶ 21       We acknowledge that both the parties and the trial court, through much of the litigation,
       referred to the position that Venetos would eventually occupy as a “receiver.” But the order
       ultimately appointing Venetos and setting out his duties reveals a much narrower role.
¶ 22       Receivers have functions based on the relevant statutory schemes allowing for their
       appointment, but, generally, a receiver takes possession of and holds disputed assets pending
       resolution of the parties’ claims. See In re Marriage of Pick, 167 Ill. App. 3d 294, 299 (1988)
       (collecting cases). Most critically, the trial court’s order appointing Venetos left Wells and
       Wroblewski in complete control of Skyline and its finances. They were to continue to operate

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       “in the ordinary course of business” and were placed in charge of keeping the records current.
       Skyline had no obligation to transfer assets to Venetos for his control. Indeed, Venetos’s duty
       related solely to collecting information—records of Skyline’s banking and QuickBooks—and
       not assets.
¶ 23        The trial court appointed Venetos, at Shamrock’s expense, to supervise Skyline’s
       compliance. The parties have not cited an Illinois case. But see Will v. Northwestern
       University, 378 Ill. App. 3d 280, 287 n.6 (2007) (mentioning someone serving in similar
       capacity). Other courts, however, have made a succinct distinction between a “receiver,” on
       the one hand, and a “monitor” or “facilitator in discovery,” on the other. See Vorachek v.
       Citizens State Bank of Lankin, 461 N.W.2d 580, 584 (N.D. 1990) (describing difference
       between receiver and discovery monitor). There, the court described what it termed “a
       monitor” as a “watchdog” appointed to ensure the availability of the disputed information to
       all the parties. Id. That is the same role the trial court envisioned for Venetos, a role commonly
       referred to by judges in Illinois as “facilitator in discovery.”
¶ 24        Mindful of these limitations, the question before us narrows considerably: Did the trial
       court err in appointing someone to facilitate the production of Skyline’s bank records and
       QuickBooks files? We find that the court acted properly and within its discretion.

¶ 25                                         Standard of Review
¶ 26       Skyline and Shamrock dispute the applicable standard of review. Skyline argues that for
       contempt orders, an abuse of discretion should apply, and for the underlying discovery orders,
       which involve construction of the constitution and Illinois Supreme Court Rules, de novo
       review should apply. Shamrock contends that the underlying discovery orders are
       nonreviewable, and we can only review the indirect civil contempt order, which we should do
       using the manifest weight of the evidence standard.
¶ 27       We find that an abuse of discretion standard applies to both the contempt order and the
       underlying discovery order that led to Skyline’s contempt.
¶ 28       We do not fault the parties for relying on disparate standards of review—both parties cite
       cases that apply their proposed standard. See Brown v. Advocate Health & Hospitals Corp.,
       2017 IL App (1st) 161918, ¶ 10 (“The standard of review for a contempt order is abuse of
       discretion.”). But see Busey Bank v. Salyards, 304 Ill. App. 3d 214, 217 (1999) (“the trial
       court’s determination [that a party has committed indirect civil contempt] will not be
       overturned on appeal unless it is against the manifest weight of the evidence”). Our supreme
       court, in In re Marriage of Logston, 103 Ill. 2d 266, 286-87 (1984), purported to resolve the
       question of whether contempt orders should be reviewed under abuse of discretion or manifest
       weight of the evidence. The court apparently applied both standards, concluding “that the trial
       court neither abused its discretion nor reached a decision contrary to the manifest weight of
       the evidence.” Id. at 287. As the Second District has noted, our supreme court “has never
       expressly abandoned the Logston standard.” In re Marriage of Barile, 385 Ill. App. 3d 752,
       759 n.3 (2008).
¶ 29       We see no tension in the Logston rule. Instead, it makes explicit a system of double
       deference to the trial court in contempt proceedings. If the trial court’s factual findings are in
       dispute, we review the record and only reverse those findings that are against the manifest
       weight of the evidence. If the trial court’s factual findings are not in dispute or if those findings

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       are consistent with the manifest weight of the evidence, we review the contempt order for an
       abuse of discretion, considering the relevant facts.
¶ 30        This appellate deference two-step is consistent with the role typical to each standard of
       review. The abuse of discretion standard provides deference to the trial court’s ultimate
       conclusions and allows reversal of rulings that are “arbitrary, unreasonable, fanciful, or where
       no reasonable person would take the view adopted by the circuit court.” Brown, 2017 IL App
       (1st) 161918, ¶ 10. The manifest weight of the evidence standard provides deference to the
       trial court’s fact-finding where “divergent inferences could have been drawn from the
       undisputed facts.” Busey Bank, 304 Ill. App. 3d at 217. So, where the factual findings are
       correct or if we determine they are not against the manifest weight of the evidence, we
       determine whether it was reasonable for the trial court to reach its ultimate ruling based on its
       factual findings.
¶ 31        Neither Skyline nor Shamrock takes issue with any of the trial court’s underlying factual
       findings. Thus, we need not review the factual findings, but decide whether the trial court’s
       contempt order constitutes an abuse of discretion.
¶ 32        As to the underlying discovery orders, Skyline argues that our standard of review should
       be de novo because our review requires interpretation of constitutional provisions and
       construction of Illinois Supreme Court Rules. We disagree. Theoretically, discovery disputes
       between private parties involve a constitutional component. See Kaull v. Kaull, 2014 IL App
       (2d) 130175, ¶ 37 (noting “number of Illinois cases where reviewing courts have applied the
       fourth amendment to discovery orders in civil cases between private parties”). But where the
       pertinent discovery rule provides “requirements of relevance and reasonableness” and the
       parties have the benefit of judicial oversight, the rule also complies, by definition, with the
       fourth amendment and to the privacy clause of the Illinois Constitution. Id. ¶¶ 45, 47.
¶ 33        Our task, then, is not to interpret the discovery rules for their compliance with the
       constitution; instead, we review the trial court’s application of those rules. Thus, we review
       the trial court’s discovery orders for an abuse of discretion. Klaine v. Southern Illinois Hospital
       Services, 2016 IL 118217, ¶ 13.

¶ 34                                         Scope of Discovery
¶ 35       Illinois Supreme Court rules allow for broad discovery “regarding any matter relevant to
       the subject matter involved in the pending action.” Ill. S. Ct. R. 201(b)(1) (eff. July 1, 2014).
       Relevant evidence means evidence having any tendency to make the existence of a fact in issue
       more or less probable. Jacobs v. Yellow Cab Affiliation, Inc., 2017 IL App (1st) 151107, ¶ 34.
       Skyline claims that Shamrock’s requests sweep in irrelevant information. Shamrock seeks
       “customer, vendor and supplier identities, pricing information, purchase and sales orders,
       invoices and transactional history, and general accounts payable, accounts receivable, and
       other business financials.” These materials bear on several counts in Shamrock’s first amended
       complaint that allege Skyline (including in its formation) destroyed or misappropriated
       “Emails; Quickbook files; Accounts Receivable; Accounts Payable; Client lists; Supplier
       invoices and pricing; Formula lists, and client histories.” Shamrock cannot prove that Skyline
       took its financial and client records without access to the current state of those records. That is
       discernibly relevant.
¶ 36       The cases Skyline cites are not to the contrary. The Illinois Supreme Court has said that
       “no right is given to compel the submission of records to a general inspection and examination,

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       for fishing purposes or with the view of finding evidence to be used in other suits or
       prosecutions.” Firebaugh v. Traff, 353 Ill. 82, 85 (1933). There, however, the parties against
       whom a subpoena had been issued “were not necessary or proper parties” to the litigation. Id.
       Of course, Skyline is the party alleged to have stolen Shamrock’s business and financial
       records.
¶ 37       Skyline’s citation to Antonacci v. Seyfarth Shaw, LLP, 2015 IL App (1st) 142372, is
       unavailing as well. In pursuit of a motion to substitute judge, the plaintiff served a subpoena
       on the court reporting company that included a forensic examination of the court reporter’s
       audio recorder and laptop. Id. ¶ 16. The trial court allowed the parties to listen to the audio
       from the disputed proceeding and quashed the subpoena in all other respects. Id. ¶ 17. We
       affirmed, finding the request for forensic examination to be nothing more than a fishing
       expedition. Id. ¶ 40. Our analysis, however, focused on the transcript of the disputed hearing
       matching the audio recording; no other evidence supported a claim that the recording or
       transcript had been altered. Id. Accordingly, the discovery allowed by the trial court—the
       playing of the audio—refuted the plaintiff’s claim of fraudulent alteration of the transcript. In
       contrast, nothing in the record refutes Shamrock’s claims of misappropriation of business and
       financial records.
¶ 38       Moreover, we reject Skyline’s “fishing expedition” characterization. We borrow an
       analogy from another case cited by Skyline: “A party may not dredge an ocean of ***
       electronically stored information and records in an effort to capture a few elusive, perhaps non-
       existent, fish.” (Internal quotation marks omitted.) Carlson v. Jerousek, 2016 IL App (2d)
151248, ¶ 65. Shamrock, however, does not allege that Skyline merely hooked a few yet-
       unknown fish; Shamrock alleges that Skyline drained the ocean. The production of bank
       records and QuickBooks files directly relates to records Shamrock claims stolen by Skyline.

¶ 39                                       Appointment of Venetos
¶ 40       Skyline argues there was “no basis in law” for the trial court to appoint someone to
       supervise discovery. But the discovery rules provide the trial court with broad authority to
       control discovery. The purpose of the discovery rules is “to be flexible and adaptable to the
       infinite variety of cases and circumstances appearing before the trial court.” Doe 1 v. Board of
       Education of the City of Chicago, 2017 IL App (1st) 150109, ¶ 16. As our supreme court has
       said of our discovery rules, “[p]rovisions permitting greater flexibility or conferring wider
       discretion would be difficult to formulate.” Monier v. Chamberlain, 35 Ill. 2d 351, 355 (1966).
       Rule 201 tells the trial court that “on its own initiative without notice, the court may supervise
       all or any part of any discovery procedure.” Ill. S. Ct. R. 201(c)(2) (eff. July 1, 2014). This is
       expansive language.
¶ 41       Skyline does not suggest that the trial court could not have ordered Skyline to produce the
       disputed records say for in camera examination. See Youle v. Ryan, 349 Ill. App. 3d 377, 381
       (2004) (supervision of discovery “includes the authority to review discovery materials in
       camera to determine any possible relevance”). We see no impediment to the trial court
       assigning the specialized task to a neutral third party with the necessary expertise and
       competency. This course of action makes sense because the trial court ordered periodic updates
       of Skylines bank records and QuickBooks file, which Skyline had thus far refused to turnover.
       Appointing the facilitator helped ensure that the parties would not have to return to court every
       time Skyline made a new production.

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¶ 42       The trial court also tailored its order appointing Venetos. The order limits discovery to
       Skyline’s bank records and QuickBooks file. While stored electronically (see Ill. S. Ct. R.
       201(b)(4) (eff. July 1, 2014)), this information is not of the type the drafters of our rules
       believed to be overly burdensome for parties to produce. Ill. S. Ct. R. 201(c)(3), Committee
       Comments (rev. May 29, 2014) (listing presumptively nondiscoverable types of electronically
       stored information). The limits placed on the material available to Shamrock set its request far
       apart from the discovery in Carlson, where the plaintiff attempted to use the discovery process
       to forensically image an entire computer—a procedure that was, under the facts there, overly
       broad and intrusive. See Carlson, 2016 IL App (2d) 151248, ¶¶ 63-66.
¶ 43       Moreover, Skyline may password protect and encrypt its files so that only Venetos has
       regular access. The order also incorporates the previously entered protective order and limits
       disclosure to “attorney’s eyes only.” The trial court properly made every effort to balance
       Shamrock’s need for information with Skyline’s concerns about privacy and competition.
¶ 44       Skyline has not cited a case as much as hinting that the trial court lacks authority to appoint
       a third party to assist in the supervision of complex and ongoing discovery. We read the broad
       language in our discovery rules, and the Illinois cases interpreting them, to find that the trial
       court did not abuse its discretion.
¶ 45       We also find assurance of the soundness of our conclusion in the Cook County circuit court
       rules. For example, Rule 20 allows the trial court to appoint a mediator “to assist in identifying
       the issues, reducing misunderstandings, exploring and clarifying the parties’ respective
       interests and priorities, and identifying and exploring possible solutions that will satisfy the
       interests of all parties and thereby resolve some or all of the issues in dispute.” Cook County
       Cir. Ct. R. 20.01 (Apr. 5, 2004). While the trial court did not invoke Rule 20, we point to this
       rule as an example of the extensive authority the trial court has to assistance overseeing its
       docket.
¶ 46       Examples of a facilitator in discovery appear in cases from other jurisdictions. See
       Vorachek, 461 N.W.2d at 584-85; see also, e.g., Wachtel v. Health Net, Inc., 239 F.R.D. 81,
       111-13 (D.N.J. 2006) (nature of litigation put too great a strain on docket and supervised party
       had repeatedly abused discovery process); Pullen v. Walker, 228 P.3d 158, 160 (Colo. App.
       2008) (collecting cases).
¶ 47       The trial court only abuses its discretion when its decision is “arbitrary, fanciful, or
       unreasonable.” Doe 1, 2017 IL App (1st) 150109, ¶ 15. Enlisting the assistance of a facilitator
       in discovery to help ensure the flow of voluminous, complex financial information between
       the parties, particularly where Skyline had been resisting discovery from the beginning, is not
       “arbitrary, fanciful, or unreasonable.” See id.

¶ 48                                    Vacatur of the Contempt Order
¶ 49        Skyline argues that regardless of our conclusions about the trial court’s underlying
       discovery orders, we should vacate the contempt citation. When a contemnor acts in good faith
       to test the validity of an order, generally, we will vacate the contempt citation even if we affirm
       the underlying order. Klaine v. Southern Illinois Hospital Services, 2014 IL App (5th) 130356,
       ¶ 41. In keeping with this line of precedent, we vacate the contempt order entered against
       Skyline.

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¶ 50   Affirmed in part and vacated in part.
¶ 51   Cause remanded.

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