Court Opinion

ID: 2993928
Source: CourtListenerOpinion
Date Created: 2015-09-24 15:05:25.040864+00
Date Added: 2024-06-11T13:36:47.358655
License: Public Domain

2015 IL 118110

                                              IN THE
                                    SUPREME COURT
                                                  OF
                             THE STATE OF ILLINOIS

                                        (Docket No. 118110)

             LAKE ENVIRONMENTAL, INC., Appellee, v. DAMON T. ARNOLD,
                       Director of Public Health, et al., Appellants.

                                Opinion filed September 24, 2015.

         CHIEF JUSTICE GARMAN delivered the judgment of the court, with opinion.

         Justices Freeman, Thomas, Kilbride, Karmeier, Burke, and Theis concurred in
     the judgment and opinion.

                                              OPINION

¶1       After years of protracted litigation, Lake Environmental, Inc. filed a motion for
     sanctions against the Illinois Department of Public Health (Department) and its
     director, Damon Arnold 1, in his official capacity, pursuant to Illinois Supreme
     Court Rule 137 (eff. July 1, 2013). After a hearing, the circuit court of St. Clair
     County denied the motion. The court provided no explanation for its decision. The
     circuit court also denied Lake Environmental’s motion for reconsideration on the

         1
          Damon Arnold is no longer the director of the Department of Public Health. Therefore, the
     current director, LaMar Hasbrouck, has been substituted as a party by operation of law. 735 ILCS
     5/2-1008(d) (West 2014).
     issue. On review, the appellate court concluded that the circuit court erred by
     failing to provide an explanation of its decision to deny the motion for sanctions.
     The appellate court thus remanded the case with instructions that the circuit court
     provide its reasoning for denying the motion. The Department appealed to this
     court, pursuant to Rule 315. Ill. S. Ct. R. 315 (eff. Jan. 1, 2015).

¶2                                   BACKGROUND

¶3       In 2008, the Department of Public Health issued an emergency stop work order
     to Lake Environmental based on alleged violations of the Department’s regulations
     committed during an asbestos cleanup job at Scott Air Force Base. The Department
     also removed Lake Environmental’s name from the list of state-approved asbestos
     abatement contractors. Several months later, the Department dismissed the stop
     work order proceedings voluntarily, after finding that the violations had been
     remedied.

¶4       In 2010, the Department notified Lake Environmental that it intended to revoke
     its asbestos abatement contractor license based on the alleged violations that
     occurred at the Scott Air Force Base job. The director of the Department, upon the
     recommendation of the administrative law judge, granted summary judgment for
     the Department and revoked Lake Environmental’s license.

¶5      In the meantime, the Department filed a civil lawsuit against Lake
     Environmental seeking monetary penalties for the 2008 violations. The circuit
     court found that the Department should have sought such penalties during the 2008
     administrative proceedings and granted summary judgment for Lake
     Environmental based on the doctrine of res judicata.

¶6       Lake Environmental then filed a petition for administrative review challenging
     the Department’s decision to revoke its license. Lake Environmental argued that
     the attempt to revoke its license was barred by res judicata because the Department
     had voluntarily dismissed the emergency stop work order action. Alternatively,
     Lake Environmental argued that the Department lacked authority to seek
     revocation based on alleged violations of federal regulations. The circuit court
     granted summary judgment for Lake Environmental after concluding that the
     Department was barred under the doctrine of res judicata from revoking Lake

                                            -2-
       Environmental’s license based on the 2008 conduct at issue in the original
       emergency stop work order proceeding.

¶7         Lake Environmental then moved for sanctions based on its argument that the
       Department should have known that its claim would be barred by res judicata and
       thus that its continued defense against Lake Environmental’s petition for
       administrative review violated Illinois Supreme Court Rule 137. Rule 137 requires
       that any pleading, motion, or other document filed in court be “well grounded in
       fact and *** warranted by existing law or a good-faith argument for the extension,
       modification, or reversal of existing law,” and not brought for any improper
       purpose. Ill. S. Ct. R. 137(a) (eff. July 1, 2013). The rule allows for a court, on
       motion or on its own initiative, to impose sanctions against a party or its attorney
       for violating these requirements. Id.

¶8         The circuit court held a hearing on the motion and issued an order stating only
       that the motion was denied. Rule 137 expressly requires that the circuit court
       provide an explanation of its decision any time it imposes sanctions under the rule.
       The rule does not address any such requirement when the court denies a motion for
       sanctions. Ill. S. Ct. R. 137(d). The circuit court also denied Lake Environmental’s
       motion for reconsideration on the issue. Lake Environmental appealed. The
       appellate court, relying on Second District precedent, concluded that the circuit
       court must provide an explanation for its decision on a motion for sanctions
       pursuant to Rule 137, regardless of whether the sanctions are imposed or denied. In
       the absence of such an explanation, the appellate court found it could not review
       whether the denial of sanctions was proper and thus remanded the case to the circuit
       court with instructions that it provide an explanation for its decision. We allowed
       the Department’s petition for leave to appeal. Ill. S. Ct. R. 315 (eff. July 1, 2013).

¶9                                         ANALYSIS

¶ 10       Before this court, Lake Environmental argues that the appellate court’s decision
       ought to be understood not as a ruling on the requirements of Rule 137, but as an
       exercise of the appellate court’s authority under Rule 366. Rule 366 provides that
       the appellate court has authority to “enter any judgment and make any order that
       ought to have been given or made, and make any other and further orders and grant
       any relief, including a remandment *** that the case may require.” Ill. S. Ct. R.
       366(a)(5) (eff. Feb. 1, 1994). Lake Environmental asserts that the appellate court
                                               -3-
       lacked a sufficient record upon which to determine whether the circuit court abused
       its discretion and therefore that it was not an abuse of the appellate court’s
       discretion to remand the case to the circuit court.

¶ 11       However, it is clear from the language of the appellate court’s decision that its
       holding was based solely on its interpretation of Rule 137. The court, in its written
       decision, reviewed and adopted the conclusions of several opinions from the
       Second District in which the appellate court has interpreted Rule 137 as requiring
       that circuit courts provide an explanation for their decisions on motions for
       sanctions, regardless of whether they allow or deny the motion. The appellate court
       made no reference to having reviewed the record and found it lacking. The opinion
       concludes: “Because the trial judge in the case at bar provided no explanation for
       his denial of sanctions, his order must be reversed and this cause remanded.” 2014
       IL App (5th) 130109, ¶ 9. Therefore, we find that the appellate court intended to
       interpret Rule 137 and concluded that circuit courts must always provide
       explanations for their decisions on motions for sanctions pursuant to Rule 137,
       regardless of whether they grant or deny such motions. We conclude now that this
       interpretation of Rule 137 is incorrect.

¶ 12        Supreme court rules are interpreted in the same manner as statutes, and this
       court reviews a lower court’s interpretation of either de novo. Vision Point of Sale,
       Inc. v. Haas, 226 Ill. 2d 334, 342 (2007). Both are interpreted by ascertaining and
       giving effect to the intent of the drafter. Roth v. Illinois Farmers Insurance Co., 202
       Ill. 2d 490, 493 (2002). That intent is best understood by giving the language used
       its plain and ordinary meaning. Id. “When the language is clear and unambiguous,
       we will apply the language used without resort to further aids of construction.” Id.
       This court will not insert words into its rules when the rule is otherwise “cogent and
       justifiable.” Waste Management of Illinois, Inc. v. Illinois Pollution Control Board,
       145 Ill. 2d 345, 348 (1991); see People v. Roberts, 214 Ill. 2d 106, 116 (2005)
       (noting that “a court may not inject provisions that are not found in a statute” and
       that the “rules of statutory construction also apply to interpretation of our supreme
       court rules”). Finally, because Rule 137 is penal in nature, it is narrowly construed.
       Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 487 (1998).

¶ 13      Rule 137 provides that:

             “(a) *** Every pleading, motion and other document of a party represented
          by an attorney shall be signed by at least one attorney of record ***. A party

                                                -4-
          who is not represented by an attorney shall sign his pleading, motion, or other
          document and state his address. *** The signature of an attorney or party
          constitutes a certificate by him that he has read the pleading, motion or other
          document; that to the best of his knowledge, information, and belief formed
          after reasonable inquiry it is well grounded in fact and is warranted by existing
          law or a good-faith argument for the extension, modification, or reversal of
          existing law, and that it is 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. July 1, 2013).

       Implicit in this rule is a requirement that “ ‘an attorney promptly dismiss a lawsuit
       once it becomes evident that it is unfounded.’ ” American Service Insurance v.
       Miller, 2014 IL App (5th) 130582, ¶ 13 (quoting Rankin v. Heidlebaugh, 321 Ill.
       App. 3d 255, 267 (2001)). If the rule is violated, the court may, upon motion or its
       own initiative, impose sanctions upon the individual who signed the filing, the
       represented party, or both. Ill. S. Ct. R. 137(a). This rule applies equally to agencies
       of the state, and the court can require one party to pay another party’s costs incurred
       for administrative proceedings when review of an agency decision is at issue. Ill. S.
       Ct. R. 137(c). Subsection (d) requires that, “[w]here a sanction is imposed under
       this rule, the judge shall set forth with specificity the reasons and basis for any
       sanction so imposed either in the judgment order itself or in a separate written
       order.” Ill. S. Ct. R. 137(d).

¶ 14       This language is unambiguous. It requires the circuit court to provide an
       explanation when the court imposes sanctions. Nothing in the language of the rule
       implies that the court must also provide an explanation when it denies sanctions. If
       the drafters of the rule intended to impose such a requirement, they would have
       done so with specific language to that effect.

¶ 15        The requirement that the court provide an explanation only when imposing
       sanctions is in keeping with the purpose of Rule 137. The rule is designed to
       discourage frivolous filings, not to punish parties for making losing arguments.
       In re Estate of Wernick, 127 Ill. 2d 61, 77 (1989) (noting that the purpose of section
       2-611 of the Code of Civil Procedure, the predecessor to Rule 137, was to “penalize
       the litigant who pleads frivolous or false matters, or who brings a suit without any
       basis in the law”); see Fremarek v. John Hancock Mutual Life Insurance Co., 272
       Ill. App. 3d 1067, 1074 (1st Dist. 1995) (“The purpose of [Rule 137] is to prevent
       abuse of the judicial process by penalizing claimants who bring vexatious and
                                                -5-
       harassing actions based upon unsupported allegations of fact or law. It is not
       intended to simply penalize litigants for the lack of success; rather, its aim is to
       restrict litigants who plead frivolous or false matters without any basis in law.”);
       see also Espevik v. Kaye, 277 Ill. App. 3d 689, 697 (2d Dist. 1996) (reaching the
       same conclusion regarding the purpose of Rule 137); Fischer v. Brombolich, 246
       Ill. App. 3d 660, 664 (5th Dist. 1993) (same); In re Marriage of Sykes, 231 Ill. App.
       3d 940, 946 (4th Dist. 1992) (same); Couri v. Korn, 202 Ill. App. 3d 848, 857 (3d
       Dist. 1990) (same). Furthermore, Rule 137 provides that circuit court judges may
       impose sanctions when the rule is violated; they are not required to do so. Ill. S. Ct.
       R. 137(a). Thus, it is logical to require circuit courts to provide an explanation when
       imposing sanctions, to make clear to the sanctioned party and future litigants what
       conduct will not be tolerated. There is no similar need for an explanation when a
       motion is denied.

¶ 16       A circuit court’s decision to deny a motion for sanctions is reviewed for abuse
       of discretion. Dowd & Dowd, Ltd., 181 Ill. 2d at 487. A court has abused its
       discretion when no reasonable person would agree with its decision. In re Marriage
       of O’Brien, 2011 IL 109039, ¶ 52; American Service Insurance, 2014 IL App (5th)
       130582, ¶ 13. By reading into Rule 137 a requirement that the court provide an
       explanation when denying sanctions, the appellate court has inherently concluded
       that no reasonable person could ever find the denial of a motion for sanctions
       justified when the circuit court has not provided an explanation for the denial. This
       logic is flawed. In In re Estate of Smith the appellate court concluded that “[t]he
       appellate court in reviewing a decision on a motion for sanctions should primarily
       be determining whether (1) the circuit court’s decision was an informed one, (2) the
       decision was based on valid reasons that fit the case, and (3) the decision followed
       logically from the application of the reasons stated to the particular circumstances
       of the case.” In re Estate of Smith, 201 Ill. App. 3d 1005, 1009-10 (3d Dist. 1990).
       This language has repeatedly been used to require that the appellate court look at
       the explanation of the circuit court’s decision, rather than the record, to determine if
       the decision was an abuse of discretion. E.g., O’Brien & Associates, P.C. v. Tim
       Thompson, Inc., 274 Ill. App. 3d 472, 483 (2d Dist. 1995); North Shore Sign Co. v.
       Signature Design Group, Inc., 237 Ill. App. 3d 782, 790-91 (2d Dist. 1992); Heiden
       v. Ottinger, 245 Ill. App. 3d 612, 621 (2d Dist. 1993); but see Turner Investors v.
       Pirkl, 338 Ill. App. 3d 676, 683 (3d Dist. 2003) (finding the legal analysis in Smith
       no longer valid due to changes to the relevant statute and rules and rejecting the
       notion that circuit courts “must make findings of fact whether they impose or deny

                                                -6-
       a motion for sanctions” (emphasis in original)). This is contrary to the longstanding
       principle that a reviewing court can “sustain the decision of a lower court on any
       grounds which are called for by the record, regardless of whether the lower court
       relied on those grounds and regardless of whether the lower court’s reasoning was
       correct.” Leonardi v. Loyola University of Chicago, 168 Ill. 2d 83, 97 (1995); see
       Beacham v. Walker, 231 Ill. 2d 51, 61 (2008) (“[T]his court may affirm the circuit
       court’s judgment on any basis contained in the record.”). In light of this authority, it
       is clear that the appellate court ought to focus on whether the record provides an
       adequate basis for upholding the circuit court’s decision to deny sanctions, not on
       the circuit court’s specific reasons for doing so. Turner Investors, 338 Ill. App. 3d
       at 683; see Sullivan v. Eichmann, 213 Ill. 2d 82, 90 (2004) (finding that the record
       was sufficient to allow appellate review for an abuse of discretion, despite the fact
       that the appellant failed to provide the court with a transcript of the relevant
       hearing).

¶ 17       As the appellate court reached its conclusion solely on the lack of an
       explanation from the circuit court, we conclude that the appellate court erred in
       remanding this case. However, there is no pressing need for this court to review the
       record and determine whether the circuit court abused its discretion at this time.
       Therefore, we remand this case to the appellate court with instructions that it
       review the record to determine whether a reasonable person could agree with the
       circuit court’s decision to deny the motion for sanctions.

¶ 18                                      CONCLUSION

¶ 19       The plain language of Illinois Supreme Court Rule 137 imposes no requirement
       on a circuit court to explain its reasons for denying a motion for sanctions. The
       appellate court, when reviewing a circuit court decision to deny sanctions, should
       look to the record to determine whether the circuit court had an adequate basis for
       making its decision. In the event the appellate court finds that the record is
       insufficient for such purposes, then remanding the case may be appropriate.
       However, a record is not inherently insufficient when the circuit court does not
       provide its reasons for denying the motion. Therefore, we remand this case to the
       appellate court with instructions that it review the record on appeal to determine
       whether the circuit court abused its discretion in denying Lake Environmental’s
       motion for sanctions.

                                                -7-
¶ 20   Appellate court judgment reversed.

¶ 21   Cause remanded.

                                            -8-