Court Opinion

ID: 9941781
Source: CourtListenerOpinion
Date Created: 2024-02-16 21:04:46.569435+00
Date Added: 2024-06-11T13:47:01.981963
License: Public Domain

2024 IL App (1st) 220535-U
                                            No. 1-22-0535
                                    Order filed February 16, 2024

                                                                                      Sixth Division
 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
 ______________________________________________________________________________
 HANNAH PUCKORIUS CARTA,                                       )    Appeal from the Circuit Court
                                                               )    of Cook County, Illinois.
           Plaintiff-Appellant,                                )
                                                               )    No. 19 L 001795
     v.                                                        )
                                                               )    The Honorable
 MATTHEW KELLY,                                                )    Ronald F. Bartkowicz,
                                                               )    Judge, Presiding.
           Defendant-Appellee.                                 )

           JUSTICE C.A. WALKER delivered the judgment of the court.
           Presiding Justice Oden Johnson and Justice Hyman concurred in the judgment.

                                             ORDER

¶1        Held: we vacate the circuit court’s judgment and remand the case for an evidentiary
          hearing where unresolved factual issues preclude this court from conducting a meaningful
          review on appeal.

¶2        This case involves the validity of a confidentiality and non-disparagement clause

(“confidentiality clause or clause”) in a settlement and release of claims agreement (“settlement

agreement or agreement”) involving claims of sexual misconduct. Plaintiff-Appellant Hannah
No. 1-22-0535

Carta filed a motion to vacate the circuit court’s dismissal order and rescind a settlement agreement

(“motion to rescind”) resulting from an inappropriate sexual relationship between her and

Defendant-Appellee Matthew Kelly. The circuit court denied Carta’s request to rescind the

agreement and vacate the dismissal order but reformed the agreement’s confidentiality clause to

allow Carta to speak about the facts surrounding the alleged sexual misconduct within “well

recognized, confidential, and privileged relationships, such as clergy-parishioner, doctor-patient,

psychotherapist-patient, and spousal relationship.” Carta appealed, arguing the circuit court (1)

abused its discretion when it denied rescission of the settlement agreement and (2) erred in finding

the agreement was enforceable because (a) the confidentiality clause violated Illinois public policy

and (b) the confidentiality clause was substantively unconscionable. For the following reasons, we

vacate the circuit court’s judgment and remand for an evidentiary hearing on the merits of the

motion to rescind.

¶3                                      I. BACKGROUND

¶4      Carta is a graduate of St. Giles School, an elementary and middle school overseen by the

Archdiocese of Chicago, an ecclesiastical entity of the Roman Catholic Church. Kelly was the St.

Giles School’s basketball coach and coached Carta when she was in the fourth, fifth, seventh, and

eighth grades. In the summer of 2009, Kelly hired Carta, then 14 years old, to serve as an assistant

coach for the St. Giles girls’ basketball, volleyball, and co-ed soccer teams. Carta also served as

the assistant coach of the boys’ basketball teams and worked for Kelly as a maintenance crew

member at the River Forest Tennis Club during the summer of her sophomore and junior year of

high school.

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No. 1-22-0535

¶5         On February 19, 2019, Carta filed a complaint against the Archdiocese of Chicago for

negligence and against Kelly for battery. The complaint alleged Kelly engaged in an inappropriate

sexual relationship with Carta, a minor, while employed at St. Giles School from 2009 to 2012.

On June 28, 2021, the parties conducted a settlement mediation and reached an agreement. The

parties drafted two agreements entitled “settlement agreement and general release of claims,” one

pertaining to Carta’s settlement with the Archdiocese of Chicago 1 and one pertaining to Carta’s

settlement with Kelly. The settlement agreement between Kelly and Carta provided that Kelly

would pay Carta $25,000 upon the dismissal of the action.

¶6         Relevant here, the confidentiality and non-disparagement provision in the settlement

agreement between Carta and Kelly states the following:

                    “As a part of the consideration for entering into this settlement and release, Plaintiff

           and Defendant promise, covenant, and agree as follows:

                    a. To keep the terms of this settlement, negotiations and/or considerations leading

           to this Settlement Agreement, all claims underlying the Settlement Agreement and any and

           all allegations, facts, circumstances or instances underlying said claims strictly confidential

           and not to communicate any of the foregoing orally or in writing to any third party, other

           than: any required disclosure made to financial institutions, state or federal tax authorities,

           tax preparers, in addition to immediate family and the parties’ financial advisors. In the

           event disclosures regarding the terms of this Settlement Agreement are required to be made

           by any Party, based on the foregoing, the Party or its representative making the disclosure

           shall attach to said disclosure Notice that the disclosure is confidential, subject to a

1
    The settlement agreement between Carta and the Archdiocese of Chicago is not at issue on appeal.

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No. 1-22-0535

       confidentiality agreement, and that the disclosure cannot be further disseminated. Under

       no circumstances shall any disclosure of the terms of and the negotiations and/or

       considerations leading to this Settlement Agreement be made by the Plaintiff, Defendant

       or their attorney(s), agent(s), and representative(s) to any press media, professional

       organizations, or any other third parties. If inquiry is made by the press or any third party

       regarding the facts of, terms of, or negotiations and/or considerations leading to this

       Settlement Agreement, or regarding the merits of the above-referenced lawsuit, Plaintiff,

       Defendant and their attorney(s), agent(s), and/or representative(s) shall only reply: ‘NO

       COMMENT’. There shall be no additional comment made and, specifically, the fact of

       settlement shall be kept confidential.”

¶7     The indemnification provision in the settlement agreement between Carta and Kelly states

the following:

                 “Except for the payment specified in Section 5 of this Agreement [pertaining to

       Kelly’s payment to Carta], the releasing party agrees to indemnify and hold harmless the

       released party from liability for any and all claims related to the incident made by any

       person, firm, corporation, or governmental or non-governmental entity of any kind against

       any of the released parties, as a result of claims made by the Plaintiff arising out of this

       incident or this action, including but not limited to, any liability for claims of negligence,

       breach of contract, misrepresentation, fraud, subrogation of claims or liens arising out of

       the payment of Medicare payments however described or categorized, or actionable

       conduct of any kind, subrogation of claims or liens, and any liability for costs and/or

       reasonable attorney fees incurred by the releasing parties or her counsel in connection with

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No. 1-22-0535

       any claims covered by the indemnification provisions of this paragraph or in connection

       with any liens asserted against the payment specified in Section 5 of this Agreement.”

¶8     Carta signed the settlement agreement on August 24, 2021, and the circuit court dismissed

the case on August 27, 2021. On September 22, 2021, Carta filed a motion to vacate the court’s

dismissal order pursuant to section 2-1301(e) of the Code of Civil Procedure (735 ILCS 5/2-

1301(e) (West 2020)) and to rescind the settlement agreement with Kelly. In the motion, Carta

argued (1) the settlement agreement should be rescinded because she believed that the

confidentiality provision would not restrict her from sharing the details of her abuse, and therefore,

was unilaterally mistaken about the confidentiality clause; (2) the confidentiality clause was

unconscionable because it precluded her from sharing facts about her abuse to a therapist, medical

professional, clergy, or friend and “vulnerable youth to protect against further abuse”; and (3) the

confidentiality clause violated Illinois public policy of protecting children from sex offenders. In

her reply motion, Carta asserted she was never advised about the indemnification provision in the

settlement agreement that required her to indemnify Kelly from liability for actionable conduct of

any kind related to any claims covered under the provision.

¶9     On March 22, 2022, the circuit court denied Carta’s request to rescind the agreement and

vacate the dismissal order but reformed the agreement’s confidentiality clause. The court

recognized that Illinois law “ensure[s] that individuals receive ‘needed medical care and

emergency counseling’ ” and found reformation, rather than recission, was the appropriate remedy

to “retain the need for confidentiality for Defendant and the need for spiritual and health care for

Plaintiff.” As such, the circuit court reformed the confidentiality clause to “indicate that Plaintiff

is not prohibited from seeking care from well recognized, confidential, and privileged

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No. 1-22-0535

relationships, such as clergy-parishioner, doctor-patient, psychotherapist-patient, and spousal

relationship.” The court also found Carta failed to adequately raise a claim about the

indemnification provision and denied any equitable relief on that provision. This appeal follows.

¶ 10                                    II. JURISDICTION

¶ 11   On September 22, 2021, Carta filed a motion to vacate the court’s dismissal order and

rescind the settlement agreement. The circuit court entered its judgment on March 22, 2022. Carta

filed a notice of appeal on April 19, 2022. We have jurisdiction over this appeal, pursuant to article

VI, section 6 of the Illinois Constitution (Ill. Const. 1970, art. VI, § 6) and Illinois Supreme Court

Rule 301 (eff. Feb. 1, 1994) and Rule 303 (eff. July 1, 2017).

¶ 12                                      III. ANALYSIS

¶ 13   On appeal from the motion to rescind, Carta argues the circuit court (1) abused its discretion

when it ordered reformation, rather than rescission, of the confidentiality clause in the settlement

agreement and (2) erred in finding the agreement was enforceable where (a) the confidentiality

clause violated Illinois public policy and (b) the confidentiality clause was substantively

unconscionable.

¶ 14   Section 2-1301(e) provides, “The court may in its discretion, before final order or

judgment, set aside any default, and may on motion filed within 30 days after entry thereof set

aside any final order or judgment upon any terms and conditions that shall be reasonable.” 735

ILCS 5/2-1301(e) (West 2022). “When ruling on a motion to vacate, the predominant concern is

whether substantial justice is being done between the parties and whether it is reasonable under

the circumstances to proceed to trial on the merits.” Larson v. Pedersen, 349 Ill. App. 3d 203, 207-

08 (2004). The court should consider all the events leading up to the judgment and should decide

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No. 1-22-0535

what is just and proper based on the facts of the case. Id. “The guiding principle is to prevent

dismissal when it would be unfair, unjust, and inequitable.” Mann v. Upjohn Co., 324 Ill. App. 3d

367, 377 (2001). A circuit court’s decision on a motion to vacate under section 2-1301 is reviewed

for an abuse of discretion. Id. at 207-08.

¶ 15      We begin with Carta’s argument that the circuit court abused its discretion when it ordered

reformation, rather than rescission, of the settlement agreement. Carta claims recission is the

appropriate remedy because, despite exercising due care, she mistakenly believed the

confidentiality clause only referred to the settlement terms when the parties entered into the

agreement but later discovered the provision pertained to any facts related to the underlying claims

of sexual misconduct. Kelly asserts the circuit court properly denied rescission of the settlement

agreement because Carta was not mistaken, but rather she agreed to confidentiality during the

mediation and signed the agreement confirming that she understood the terms of the confidentiality

clause.

¶ 16      Under certain circumstances, rescission is appropriate when a party to an agreement asserts

a unilateral mistake. In re Marriage of Agustsson, 223 Ill. App. 3d 510, 519 (1992). A unilateral

mistake occurs when “there is apparently a valid contract in writing, but by reason of a mistake of

fact by one of the parties, not due to his negligence, the contract is different with respect to the

subject matter or terms from what was intended.” (Internal quotation marks omitted.) Brzozowski

v. Northern Trust Co., 248 Ill. App. 3d 95, 100 (1993). A party seeking rescission based on a

unilateral mistake must show by clear and convincing evidence that (1) the mistake was material;

(2) the mistake is so significant as to make enforcement unconscionable; (3) the mistake occurred

despite the exercise of due care by the party seeking rescission; and (4) rescission will place the

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No. 1-22-0535

other party in the status quo. Siegel v. Levy Organization Development Co. Inc., 153 Ill. 2d 534,

545 (1992).

¶ 17   In an action for reformation, a party to an agreement must prove the existence of a mutual

mistake or fraud. Schaffner v. 514 West Grant Place Condominium Association, Inc., 324 Ill. App.

3d 1033, 1045 (2001); Cameron v. Bogusz, 305 Ill. App. 3d 267, 272 (1999). A written contract

may be reformed to reflect the intention of the parties and the agreement between them. Suburban

Bank of Hoffman-Schaumburg v. Bousis, 144 Ill. 2d 51, 58 (1991). The purpose of reformation is

to “change the written instrument by inserting the omitted provision so that the instrument

conforms to the original agreement between the parties.” Id. at 1044. “What is sought to be

reformed is not the understanding between the parties, but rather the written instrument which

inaccurately reflects it.” (Emphasis in original.) Briarcliffe Lakeside Townhouse Owners

Association v. City of Wheaton, 170 Ill. App. 3d 244, 251 (1988). The underlying basis for a

reformation action is the existence of a mutual understanding between the parties which the parties

agreed to reduce to writing, but in doing so, either through mutual mistake or mistake on one side

coupled with fraud on the other, omitted some material provision. Id. A mutual mistake is “one

where both parties understand that the real agreement is what one party alleges it to be, then,

unintentionally, a drafted and signed contract does not express the true agreement.” Cameron, 305

Ill. App. 3d at 272. To establish a claim for reformation based on mutual mistake, the complaining

party must prove by clear and convincing evidence that (1) there was an agreement between the

parties; (2) that the parties agreed to reduce their agreement to writing; and (3) that a variance

exists between the parties’ original agreement and the writing. Briarcliffe Lakeside Townhouse

Owners Association, 170 Ill. App. 3d at 251.

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No. 1-22-0535

¶ 18   While similarities exist between the equitable doctrines of reformation and rescission, the

two doctrines have evolved separately and are distinguishable. Estate of Blakely v. Federal Kemper

Life Assurance Company, 267 Ill. App. 3d 100, 106 (1994). “[E]quity cannot make a new

agreement for the parties under the guise of reforming one made by them.” Friedman v.

Development Management Group, Inc., 82 Ill. App. 3d 949, 954 (1980). There must be mutuality

of mistake or fraud by the other party to the contract before a written contract can be reformed.

Jonas v. Meyers, 410 Ill. 213, 224 (1951); Black v. Illinois Fair Plan Association, 87 Ill. App. 3d

1106, 1109 (1980). Where the mistake is unilateral and not mutual the contract should be rescinded

or cancelled, not reformed. Id.

¶ 19   Without conducting an evidentiary hearing, the circuit court denied rescission and granted

the motion to rescind in part to reform the confidentiality clause. The court iterated the parties’

arguments about Carta’s unilateral mistake but found reformation, rather than recission, of the

agreement was the appropriate remedy to “retain the need for confidentiality for Defendant and

the need for spiritual and health care for Plaintiff.” The court reformed the agreement to “indicate

that Plaintiff is not prohibited from seeking care from well recognized, confidential, and privileged

relationships, such as clergy-parishioner, doctor-patient, psychotherapist-patient, and spousal

relationship.”

¶ 20   After examining the record on appeal, we cannot determine whether the circuit court’s

decision was proper. To start, we do not have an adequate record to ascertain the basis of the circuit

court’s finding of reformation. In this case, reform necessitates that the parties be mistaken, either

by a mutual mistake or a mistake of one party and fraud by the other party, about the terms of the

agreement. See Briarcliffe Lakeside Townhouse Owners Association v. City of Wheaton, 170 Ill.

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No. 1-22-0535

App. 3d at 251. The record does not contain any information as to whether the parties were

mutually mistaken about the confidentiality clause as it pertains to Carta’s ability to discuss the

facts surrounding the alleged sexual misconduct in well-recognized, confidential relationships

when they entered into the agreement. The record is also scant regarding Kelly or his attorneys’

knowledge of Carta’s mistaken belief as an indication of fraud. In fact, Kelly’s allegations point

to the opposite conclusion. In his response to the motion to rescind, Kelly alleged that he “was

most certainly not aware of the communications between Plaintiff and her counsel, Plaintiff’s

documented concern with respect to business interference, or Plaintiff’s alleged concern about

disclosing the allegations to others.” We cannot defer to a finding not based on the evidence. See

Hanaman v. Davis, 20 Ill. App. 2d 111, 115 (1959) (“judgment of the court in action tried without

a jury must be based upon evidence admitted in the case and it is essential to sufficiency of findings

of court that they be sustained by evidence”).

¶ 21   Additionally, the parties raise factual disputes on the issue of rescission based on a

unilateral mistake that cannot be determined on the pleadings and supporting documents alone.

Carta alleged the following allegations in her motion to rescind and accompanying affidavit.

Before signing the settlement agreement, Carta expressed her confusion about the terms of the

settlement agreement and asked her attorneys to clarify its terms. After she consulted with her

attorneys and received information regarding the agreement’s terms at the mediation, she believed

she was allowed to share the details of the abuse and was “gravely misled” into signing the

settlement agreement. The confidentiality clause unduly prevents Carta from sharing details of her

abuse with a therapist, medical professional, clergy, friend or “other vulnerable youth to protect

against further abuse” while Kelly is “free to utilize all emotional support services available to

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No. 1-22-0535

him.” This one-sided disparity renders the confidentiality clause unconscionable. If the agreement

was rescinded, Kelly would return to the status quo because he would still be able to seek discovery

and proceed with litigation.

¶ 22   Contrarily, Kelly alleged Carta was not mistaken about the terms of the settlement

agreement because she did not express a lack of understanding during the mediation, the mediation

judge “apprised all the parties’ counsel and [Carta] of the settlement and the Clause,” and while

represented by counsel, Carta signed the agreement, which stated she “completely understands and

voluntarily accepts all the terms, conditions, and consequences of the Agreement.” Kelly

contended the confidentiality clause was not material to the agreement because the agreement

expressly states that the provision was only material to Kelly, not Carta. Kelly also asserted

rescission would not return him to the status quo. Rather, rescission would frustrate any future

negotiations as any changes would affect the Archdiocese of Chicago, Kelly’s co-defendant, and

Kelly “would not be able to reach the same or substantially similar outcome *** where [Carta]

would agree to the Clause.”

¶ 23   Case law sets forth the elements we must consider when determining whether rescission or

reformation is a proper remedy in this case. The record before us hinders our assessment of these

elements because there remain factual issues that cannot be resolved on the pleadings alone and

the record does not sufficiently demonstrate whether the essential elements of reformation were

met. While Carta did attach documentary evidence supporting her argument of recission, this

evidence does not entirely resolve the issue. For instance, both Carta and Kelly allege varying facts

about whether Kelly would be returned to the status quo if the agreement was rescinded. Carta

argues that Kelly still would be able to proceed to litigation and seek discovery while Kelly

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No. 1-22-0535

contends rescission would frustrate any future negotiations. To ascertain the full extent of the

implications, an evidentiary hearing is necessary.

¶ 24   Given this, we find the interest of justice requires we remand the case for an evidentiary

hearing on the motion to rescind and related pleadings. See Steiner v. Eckert, 2013 IL App (2d)

121290, ¶ 21 (“[a]n evidentiary hearing regarding the formation and terms of a settlement

agreement is appropriate when there are disputed factual issues in that regard and additional

evidence is necessary to satisfactorily resolve the issues”). This court has vacated and remanded

cases for an evidentiary hearing in situations, like here, where there remain issues of fact that

preclude us from conducting a meaningful review of the circuit court’s decision. See Kennedy v.

MKF I & II, Inc., 2022 IL App (1st) 192158-U, ¶ 36 (citing Door Properties, LLC v. Nahlawi,

2020 IL App (1st) 173163, ¶ 55 (“rather than reverse the judgment outright, the better course is to

vacate the judgment and remand for an evidentiary hearing”), and Dinerstein v. Evanston Athletic

Clubs, Inc., 2016 IL App (1st) 153388, ¶ 54). Therefore, we vacate the circuit court’s judgment

and remand the case for an evidentiary hearing on the merits of Carta’s motion to vacate the

dismissal order and rescind the settlement agreement with instructions for the circuit court to make

factual findings on the elements of rescission and reformation.

¶ 25                                   IV. CONCLUSION

¶ 26    We find that there remain factual issues that preclude this court from conducting a

meaningful review of this case on appeal. Therefore, we vacate the judgment of the circuit court

and remand the case for an evidentiary hearing on the issue of mistake as is required for

determining whether recission or reformation are appropriate actions of the court.

¶ 27   Vacated and remanded with instructions.

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