European Tanspa, Inc. v. Shrader

610 N.E.2d 172, 242 Ill. App. 3d 103, 182 Ill. Dec. 748, 1993 Ill. App. LEXIS 310
CourtAppellate Court of Illinois
DecidedMarch 12, 1993
Docket2-92-0428
StatusPublished
Cited by18 cases

This text of 610 N.E.2d 172 (European Tanspa, Inc. v. Shrader) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
European Tanspa, Inc. v. Shrader, 610 N.E.2d 172, 242 Ill. App. 3d 103, 182 Ill. Dec. 748, 1993 Ill. App. LEXIS 310 (Ill. Ct. App. 1993).

Opinion

JUSTICE McLAREN

delivered the opinion of the court:

Plaintiff, European Tanspa, Inc., appeals the order of the circuit court which granted the motion of defendants, Winfred and Ethel Shrader, under section 2 — 1401 of the Code of Civil Procedure (111. Rev. Stat. 1991, ch. 110, par. 2 — 1401) to vacate a default judgment. On appeal, plaintiff contends (1) that the petition is legally deficient in that it is unsupported by affidavit as required by statute; (2) the court erred in finding that defendants pleaded a meritorious defense; and (3) the court abused its discretion in holding that substantial justice required granting the petition. We reverse.

Defendants operated a tanning salon under a franchise agreement with plaintiff. On December 4, 1990, plaintiff filed a complaint for breach of contract in the circuit court of Du Page County. The complaint alleged that defendants had failed to pay certain licensing royalties. The parties settled that suit, No. 90 — LM—7622, on May 20, 1991, with the execution of a settlement agreement.

The settlement provided in part that defendants would pay plaintiff $9,000 in complete satisfaction of all outstanding debts, defendants agreed to release all claims and defenses against plaintiff, and both parties would continue to abide by the franchise agreement as modified. Based on this agreement, the court entered an order dismissing the action.

Defendants failed to make the first payment due under the settlement agreement. Plaintiffs attorney, Edward Welch, telephoned defendants’ attorney to notify him of the breach. After consulting with his clients, defendants’ attorney called Welch back to inform him that defendants would not comply with the settlement agreement.

Welch then sent defendants a certified letter informing them of the default. Ethel Shrader responded with a letter stating that she and her husband were experiencing extreme financial difficulties in operating the business and would probably have to sell their home to keep the business going. The letter also stated defendants’ belief that plaintiff had failed to train them properly to run the business. The letter concluded by stating, “Do what you think best.”

On September 26, 1991, plaintiff filed the instant action. The complaint contained four counts. Count I sought to enjoin defendants from doing business at their present location or any site within a 10-mile radius; from being affiliated with any competitor of plaintiff for one year and within a 10-mile radius of their current location; and to assign their business telephone number to plaintiff. Count II sought an accounting for all royalty payments allegedly due. Count III sought specific performance of the licensing agreement as well as a preliminary injunction to prohibit defendants from transferring the equipment used in the business. Count IV sought damages of $1,800 for licensing fees allegedly due as of September 1, 1991.

Attached to the complaint and incorporated by reference was a copy of the settlement agreement in 90 — LM—7622, but the complaint apparently did not seek a judgment for breach of this agreement.

The record shows that both defendants were served personally with the complaint and summons on October 6, 1991. On November 12, the court entered a default judgment for all the requested relief. Although defendants had not filed an appearance, Welch sent them a notice of the motion for default judgment.

On November 12, the court passed the case to the end of the call at approximately 10:30 a.m. and, when defendants failed to appear, entered judgment by default for all the relief requested. The judgment does not mention the settlement agreement in No. 90 — LM— 7622.

Apparently sometime later that day, defendants appeared in courtroom 2011, where the clerk informed them that a default judgment had been entered against them. Defendants were informed that they must move to vacate the default judgment within 30 days.

Joyce Cocogliato, plaintiff’s president, and a female companion, attempted to deliver a certified copy of the judgment to defendants’ place of business on December 30, 1991. According to Cocogliato’s affidavit, Winfred Shrader threatened to kill her, shouted obscenities at her, and attempted to push her and her assistant through a plate-glass window.

Plaintiff filed a motion for a rule to show cause why defendants should not be held in contempt of court for failure to abide by the November 12 judgment. A hearing on the motion was set for January 21, 1992. Defendants appeared at the hearing pro se. Ethel Shrader stated that she was in court on November 12. She further stated:

“It seemed like everybody [sic] had been entered against us, so we were waiting for — to see what came about that ***.”

The court advised defendants to get a lawyer. Mrs. Shrader protested repeatedly that defendants had no money and could not afford a lawyer. The court responded, “You can’t afford not to get a lawyer.” The court continued the matter to February 5.

On that date, attorney Richard Lucas represented to the court that he would be filing an appearance for defendants. The court granted defendants 21 days to file a section 2 — 1401 petition to vacate the default judgment.

Defendants filed their petition on March 5. The petition alleges that defendants attempted to appear on November 12, but “inadvertently failed to arrive in the appropriate courtroom” prior to the case being called. Defendants “diligently sought” counsel but lacked the financial resources to secure counsel at an earlier date. The petition further alleges as follows:

“5. The Defendants have a meritorious defense to the claims presented in the Complaint, including but not limited to the following:
a. Plaintiffs failed to comply with the licensing agreement, as pled in the complaint, including but not limited to failure to provide training to the Defendants in the operation of the materials, supplies and equipment comprising the European Tan-Spa franchise;
b. Defendants [sic] failed to comply with the terms of the settlement agreement, as to inspections, by demanding inspection without reasonable notice, by demanding inspections be carried out by persons specifically identified as not being an authorized agent of Plaintiff for the purpose of inspections;
c. Defendants [sic] have failed to comply with the terms of the licensing agreement, and have specifically failed to provide the disclosures required pursuant to the Illinois Franchise Disclosure Act of 1987.
d. Defendants [sic] have failed to properly account for monies paid to it by Defendants, including a franchise fee of $70,000.00, for which various materials, supplies and manuals have not been delivered, thereby preventing Defendants from performing and operating their franchise, and Defendants [sic] have failed to properly credit Defendants with such payments.
e.

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Bluebook (online)
610 N.E.2d 172, 242 Ill. App. 3d 103, 182 Ill. Dec. 748, 1993 Ill. App. LEXIS 310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/european-tanspa-inc-v-shrader-illappct-1993.