No. 2-08-1200 Filed: 3-4-10 ______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT ______________________________________________________________________________
McHENRY SAVINGS BANK, ) Appeal from the Circuit Court ) of McHenry County. Plaintiff-Appellant, ) ) v. ) No. 04--AR--923 ) AUTOWORKS OF WAUCONDA, INC., ) ARTHUR BAUER, CARL BAUER, and ) DAVID W. SCHWAGER, ) ) Defendants ) Honorable ) John D. Bolger, (Eric Hoffman, Defendant-Appellee). ) Judge, Presiding. _________________________________________________________________________________
JUSTICE O'MALLEY delivered the opinion of the court:
Plaintiff, McHenry Savings Bank, and defendant Autoworks of Wauconda, Inc., entered into
a loan agreement under which plaintiff loaned Autoworks $400,000. As part of the agreement,
Autoworks, through its president, defendant Carl Bauer, and its vice president, defendant David W.
Schwager, executed a promissory note in favor of plaintiff, along with a floor plan loan agreement.
Additionally, Carl Bauer, Schwager, defendant Arthur Bauer, and defendant-appellee Eric Hoffman
all executed guaranties guaranteeing the terms of the promissory note. Autoworks eventually
defaulted on the promissory note and plaintiff filed suit to collect the amount due. After an arbitration
and a bench trial, the trial court entered judgment in favor of plaintiff and against all defendants in
varying amounts. Plaintiff appeals, contending that the trial court misinterpreted the language of the No. 2--08--1200
promissory note and Hoffman's guaranty, thereby erroneously reducing the attorney fees to which it
was entitled. Plaintiff also contends that the attorney fees it sought were reasonable and that the trial
court improperly reduced the fees on a summary basis rather than through an evaluation of each entry
in plaintiff's fee petition. We affirm as modified in part and reverse in part.
The following factual summary is drawn from the record on appeal. On October 20, 2002,
plaintiff and Autoworks entered into a loan agreement. Plaintiff agreed to loan Autoworks $400,000.
Autoworks executed a promissory note and a floor plan loan agreement. The promissory note
obligated Autoworks to repay the loan amount in a single balloon payment, including all principal and
interest, due October 20, 2003. The promissory note also identified events of default, including
Autoworks' failure to make any payment when due and Autoworks' failure to comply with any term
of the floor plan loan agreement. The promissory note included a provision dealing with attorney
fees:
"[Plaintiff] may hire or pay someone else to help collect this Note if [Autoworks] does not
pay. [Autoworks] will pay [plaintiff] that amount. This includes, subject to any limits under
applicable law, [plaintiff's] attorneys' fees and [plaintiff's] legal expenses, whether or not there
is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by
applicable law, [Autoworks] also will pay any court costs, in addition to all sums provided
by law."
The promissory note also included a confession-of-judgment provision:
"[Autoworks] hereby irrevocably authorizes and empowers any attorney-at-law to appear in
any court of record and to confess judgment against [Autoworks] for the unpaid amount of
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this Note as evidenced by an affidavit signed by an officer of [plaintiff] setting forth the
amount then due, attorney's fees plus costs of suit, and to release all errors, and waive all
rights of appeal."
In addition to the promissory note, the four individual defendants executed guaranties
guaranteeing the terms of the promissory note. Each guaranty was identical and each was labeled a
"Commercial Guaranty." Each guaranty defined the indebtedness to which it pertained:
"INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this
Guaranty includes the Note, including (a) all principal, (b) all interest, (c) all late charges, (d)
all loan fees and loan charges, (e) all collection costs and expenses relating to the Note or to
any collateral for the Note. Collection costs and expenses include without limitation all of
[plaintiff's] attorneys' fees." (Emphasis in original.)
Each guaranty also defined its duration:
"This Guaranty will take effect when received by [plaintiff] without the necessity of any
acceptance by [plaintiff], or any notice to Guarantor or to [Autoworks], and will continue in
full force until all Indebtedness shall have been fully and finally paid and satisfied and all of
Guarantor's other obligations under this Guaranty shall have been performed in full. Release
of any other guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of any remaining Guarantors under this Guaranty."
Additionally, each guaranty specifically included an attorney fee provision:
"Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of [plaintiff's]
costs and expenses, including [plaintiff's] attorneys' fees and [plaintiff's] legal expenses,
incurred in connection with the enforcement of this Guaranty. [Plaintiff] may hire or pay
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someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses
of such enforcement. Costs and expenses include [plaintiff's] attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. Guarantor also
shall pay all court costs and such additional fees as may be directed by the court." (Emphasis
in original.)
Autoworks eventually defaulted on the promissory note, and, on September 30, 2004, plaintiff
filed suit to recover the outstanding loan balance from Autoworks and the individual defendants. On
January 5, 2005, a default judgment was entered against Autoworks. Hoffman filed affirmative
defenses, which plaintiff answered, and, on August 19, 2005, an arbitration was held between plaintiff
and the individual defendants. Schwager and Arthur Bauer did not attend the arbitration hearing;
Hoffman and Carl Bauer did. The arbitrators found in favor of plaintiff and entered an arbitration
award against all defendants jointly and severally. The amount of the award was $54,159.76,
inclusive of attorney fees.
On September 19, 2005, Hoffman filed his notice rejecting the results of the arbitration. On
September 21, 2005, plaintiff filed a motion to debar Schwager and Arthur Bauer from rejecting the
arbitration award, because they had not attended the arbitration. On October 5, 2005, the trial court
debarred Schwager and Arthur Bauer from rejecting the arbitration award and entered final judgment
against them jointly and severally in the amount of $54,159.76. The case proceeded in the trial court
against Carl Bauer and Hoffman.
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After the arbitration hearing, plaintiff filed a motion seeking partial summary judgment. Later,
plaintiff was given leave to file a memorandum in support of its partial summary judgment motion,
and the trial court set a briefing schedule. As plaintiff proceeded, however, it determined that it
would not pursue a motion for summary judgment.
On October 26, 2006, plaintiff issued a citation to discover assets against Arthur Bauer. The
citation was dismissed following a hearing. Plaintiff also issued a citation to discover assets against
Schwager, but Schwager failed to appear, resulting in the issuance of a rule to show cause. Plaintiff
pursued collection against Arthur Bauer and Schwager, and both filed for bankruptcy. Plaintiff
caused the judgment to be registered in Wisconsin, and it undertook title searches and obtained an
asset turnover order.
Eventually, the matter against Hoffman and Carl Bauer was set for bench trial. On March 25,
2007, the bench trial occurred. Plaintiff called four witnesses and submitted 28 exhibits into evidence.
At the conclusion of the trial, plaintiff filed a verified petition for attorney fees, seeking a total of
$37,445.20. Plaintiff's fee petition detailed the services performed and time spent by the seven
different attorneys who represented plaintiff in its efforts to collect the money due under the
promissory note. Plaintiff averred that the time spent by the attorneys totaled 198.5 hours. The
billing rates of the attorneys ranged from $300 per hour to $125 per hour, averaging $195 per hour.
The fee petition included time spent preparing for and conducting the arbitration proceeding, time
spent in trial preparation and in trial, and time spent attempting to collect the judgment entered
against Schwager and Arthur Bauer. In addition, plaintiff included time spent in the bankruptcy
proceedings filed by Arthur Bauer and Schwager (which were dismissed), in the citation proceedings,
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and in registering the judgment in Wisconsin. Hoffman filed a response to the fee petition but did not
verify it or contest any specific entry contained in the petition.
On July 31, 2008, the trial court ruled. The trial court found in favor of plaintiff and against
Hoffman and Carl Bauer on counts III and IV of the verified complaint. The trial court rejected
Hoffman's affirmative defenses, first concluding that plaintiff did not, as a matter of law, have a
fiduciary duty toward defendants. The trial court also rejected Hoffman's affirmative defense of
estoppel, finding that plaintiff conducted inventory checks of Autoworks consistently with the floor
plan loan agreement. Finally, the trial court determined that plaintiff had properly liquidated the
collateral in a commercially reasonable fashion. The court entered judgment on the guaranties against
Hoffman and Carl Bauer jointly and severally in the amount of $79,653.93.
Turning to the fee petition, although plaintiff had sought $37,445 in fees, the trial court
awarded plaintiff only $13,500. In making this reduction, the trial court held:
"14. The Plaintiff's attorneys have filed a petition for Attorney[] Fees. The
Commercial Guaranty provides that the guarantor will pay the Plaintiff's Attorney[] Fees in
enforcing the Guaranty. Illinois Courts have held that a Trial Court should consider a variety
of factors in determining a reasonable attorney fee including 'the skill and standing of the
attorney employed, the nature of the case, the novelty and difficulty of the issues involved,
the degree of responsibility required, the usual and customary charge for the same or similar
services in the community and whether [there] is a reasonable connection between fees
charged and the litigation.' Robinson v. Calcagno, 333 Ill. App. 3d 1022 (2002). In the
instant case the Petitioner is claiming to have expended in excess of 198 hours in advising and
representing the Plaintiff in this matter. This case is based on a promissory note and personal
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guarantees signed by four (4) individuals. The execution of the note and the guarantees were
not in contest and the only defenses raised by the Defendants at this trial were the affirmative
defenses previously discussed in this Opinion. According to the Petition the Plaintiff's
attorney expended approximately 55 hours through the Arbitration hearing held on August
19, 2005. Substantially all of these hours were billed by Attorney Paul Orenic at $175.00 per
hour for a total of $9,625.00. The Court finds that this time was reasonably expended by the
plaintiff through the Arbitration hearing on August 19, 2005.
15. Thereafter, the Plaintiff's attorneys have billed more than 143 hours to obtain this
Judgment. The case of [Healy v. Tierney, 137 Ill. App. 3d 406 (1985),] held that reasonable
attorney[] fees should not be based solely on the multiplication of the hourly rate by the time
claimed to have been spent. Compensation should be awarded only for work which was
reasonably required for the proper performance of the services involved. Some of the time
billed after the Arbitration hearing was not necessary. For example, the Arbitration Award
was in favor of the Plaintiff and against all four (4) individual Defendants. Only one, Eric
Hoffman, rejected the Arbitration Award. Judgments against the remaining Defendants, Carl
and Arthur Bauer and David Schwager[,] should have been entered at the September 21,
2005[,] hearing for failure to reject the Arbitration Award. Plaintiff, however, continued that
hearing and filed a Motion to Debar these Defendants from rejecting the award and attended
a Court hearing on October 5, 2005. This was unnecessary in order to obtain a Judgment
against these Defendants; and, in fact, no judgment was obtained against Carl Bauer even
though he did not reject the Arbitration Award. Further, the Plaintiff billed more than seven
(7) hours to prepare a Motion for a Summary Judgment which was never filed.
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16. The Court's review of the time billed after the Arbitration hearing shows that the
vast majority of this time from Arbitration Award through 2007 (about 80 hours) was billed
to collect judgments already entered and were not directed at the preparation or trial of the
cause of action against Eric Hoffman.
17. The Plaintiff's Petition for Fees show[s] that forty-six (46) hours were billed in
2008 to prepare for the trial and in addition two lawyers billed six (6) hours each to try the
case for a total of fifty-eight (58) hours. Since all of the discovery was completed prior to the
Arbitration hearing this time seems excessive to try a case that lasted an afternoon and did not
involve any complex issues of evidence or law and which had already been tried to an
Arbitration panel. The Court is permitted to use its own knowledge and experience to assess
the time required to complete particular activities. Cretton v. Protestant Memorial Medical
Center[, Inc.], [371] Ill. App. 3d [841] (2007). Based on the Court's own knowledge and
experience of the time necessary to prepare and try a case of this nature, the Court will allow
thirty (30) hours of time to prepare and try this case at $250.00 per hour for a total of $7,500.
The Court will allow a fee of $6,000 to prepare and try the case before the Arbitration panel.
Accordingly, [the] Court allows a total attorney[] fee of $13,500 for the Plaintiff."
Plaintiff and Hoffman filed motions to reconsider. Hoffman argued that the $79,654 judgment
included over $26,000 in attorney fees and requested the trial court to recalculate the amount due
under the promissory note. Plaintiff argued that it was entitled to a greater award of attorney fees.
The trial court denied plaintiff's motion to reconsider and granted Hoffman's. The trial court then
entered judgment on the note in the amount of $52,976.02 and awarded attorney fees in the amount
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of $13,500, for a total judgment against Hoffman of $66,476.02 plus court costs. Plaintiff timely
appeals.
On appeal, plaintiff contends that the trial court failed to properly construe the commercial
guaranty executed by Hoffman and that a proper reading of the guaranty would have resulted in the
trial court including all of the attorney fees expended in collecting the indebtedness from all
defendants. Plaintiff also contends that the attorney fees submitted were reasonable and that the trial
court erred in reducing the amount of fees awarded, because it did not evaluate each entry included
in the fee petition but reduced the amount of attorney fees on a summary and arbitrary basis. We
consider each contention in turn.
As a preliminary matter, however, we note that Hoffman did not submit an appellee's brief.
Nonetheless, we will decide the merits of this appeal under the principles set forth in First Capitol
Mortgage Corp. v. Talandis Construction Corp., 63 Ill. 2d 128, 133 (1976) (where the record is
simple and the claimed errors are such that the reviewing court can decide them without the
assistance of an appellee's brief, the court should address the merits of the appeal).
Plaintiff's initial contention on appeal concerns the proper interpretation of the guaranty
executed by Hoffman. Plaintiff argues that the guaranty required Hoffman to pay all costs and
expenses and all attorney fees incurred as part of the indebtedness that he guaranteed. Plaintiff also
contends that the attorney fees incurred in attempting to collect the judgment against Schwager and
Arthur Bauer were improperly reduced, not because they were unreasonable, but because, under the
trial court's erroneous reading of the Hoffman guaranty, they were not chargeable to Hoffman.
A guaranty is a contract and is thus interpreted according to the principles that govern the
interpretation of contracts in general. T.C.T. Building Partnership v. Tandy Corp., 323 Ill. App. 3d
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114, 118 (2001). Accordingly, we begin by reviewing the principles of interpreting contractual
language. The primary goal of contract interpretation is to give effect to the parties' intent in entering
the contract. McRaith v. BDO Seidman, LLP, 391 Ill App. 3d 565, 577 (2009). This intent is
discerned by considering the contract as a whole and applying the plain and ordinary meaning to
unambiguous terms. McRaith, 391 Ill. App. 3d at 577. Thus, an unambiguous contract is enforced
as it is written. Bank of America National Trust & Savings Ass'n v. Schulson, 305 Ill. App. 3d 941,
945 (1999). We further presume that each contractual provision was inserted deliberately and for a
purpose consistent with the parties' intent. Schulson, 305 Ill. App. 3d at 946. If possible we must
interpret a contract in a manner that gives effect to all of the contract's provisions. Schulson, 305 Ill.
App. 3d at 946.
Where the meaning of the contract is at issue, we must first determine whether the contract
is ambiguous, which is a question of law. Schulson, 305 Ill. App. 3d at 945. An ambiguity exists if
a contractual provision is susceptible to more than one reasonable interpretation. Schulson, 305 Ill.
App. 3d at 945-46. Any doubts arising from a guaranty's language are resolved in favor of the
guarantor and against the party receiving the benefit of the guaranty. Schulson, 305 Ill. App. 3d at
946. With these principles in mind, we turn to the language of the guaranty executed by Hoffman.
The promissory note that defendants guaranteed provided, in both the "Attorneys' Fees;
Expenses" and the "Confession of Judgment" paragraphs, that plaintiff was entitled to collect attorney
fees and expenses incurred in collecting the money due on the note. Each individual defendant's
guaranty also provided, in the "Indebtedness Guaranteed" paragraph, that plaintiff was entitled to
recover attorney fees, because the indebtedness that each individual defendant was guaranteeing
included "all collection costs and expenses relating to the Note." The guaranty further specified that
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"[c]ollection costs and expenses include[d,] without limitation[,] all of [plaintiff's] attorneys' fees."
The plain language of these provisions indicates that plaintiff's attorney fees incurred in collecting on
the note are added to the "Indebtedness Guaranteed" by the guaranty. The guaranty further provided
that plaintiff could receive its "attorneys' fees and *** legal expenses[] incurred in connection with
the enforcement of th[e] [g]uaranty." We find the language employed by the note and the guaranty
to be unambiguous and to fully entitle plaintiff to recover its attorney fees incurred in all proceedings
relating to the note and the guaranty.
The trial court held that "[t]he [c]ommercial [g]uaranty provides that the guarantor will pay
the [p]laintiff's [a]ttorney[] [f]ees in enforcing the [g]uaranty." Apparently, the trial court viewed the
"Attorneys' Fees; Expenses" provision in the guaranty and failed to identify that the "Indebtedness
Guaranteed" provision of the guaranty provided that any attorney fees incurred in collecting on the
note were part of the indebtedness for which the individual defendants, as guarantors, were liable.
To the extent that the trial court ignored this language, its decision was in error. Thus, as a starting
point, under the note and the guaranty, plaintiff was entitled to recover its attorney fees incurred in
collecting on the note and enforcing the guaranty.
Plaintiff argues that all of its attorney fees claimed in its petition were connected to the note.
Plaintiff argues that this also included postjudgment fees incurred to collect the unpaid indebtedness
from Schwager and Arthur Bauer, which included unpaid principal, interest, late fees, and charges,
as well as attorney fees and expenses. We agree. We see no language limiting attorney fees to those
incurred solely in attempting to enforce an individual guaranty. Rather, any attorney fees, even those
incurred in enforcing the other guaranties, would be connected to the collection of the note. As a
result, the fees incurred in attempting to collect on the guaranty of one of the individual defendants
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would become part of the "Indebtedness Guaranteed" by the other individual defendants' individual
guaranties. Thus, the terms of the guaranties contemplated that plaintiff would be able to recover
from any and all of the individual guarantors all attorney fees incurred in collecting the sum due under
the note. We therefore reject the trial court's implicit starting point that plaintiff could recover only
the attorney fees expended in enforcing Hoffman's guaranty. Instead, all of the attorney fees are
recoverable from Hoffman, even those incurred in pursuing Schwager, Arthur Bauer, and Carl Bauer.
We next consider the propriety of the trial court's determination of the amount of fees to which
plaintiff was entitled.
Whether and in what amount a trial court will award attorney fees is a matter committed to
the trial court's sound discretion, and we review the fee award for an abuse of discretion.
Mountbatten Surety Co. v. Szabo Contracting, Inc., 349 Ill. App. 3d 857, 873 (2004). The award
will consist only of those fees that are reasonable, consisting of reasonable charges for reasonable
services. Mountbatten Surety, 349 Ill. App. 3d at 873. To help the trial court in assessing the
reasonableness of the fees sought, the party seeking fees must provide sufficient information,
including detailed time records maintained throughout the proceeding. Richardson v. Haddon, 375
Ill. App. 3d 312, 314 (2007). The trial court should scrutinize these records for their reasonableness
in the context of the case. Richardson, 375 Ill. App. 3d at 314.
When making its reasonableness assessment, the trial court may consider a number of factors,
including the nature of the case, the novelty and difficulty of the case, the skill and standing of the
attorneys, the degree of responsibility required, the usual and customary charges in the community
for similar work, and the connection between the case and the fees charged. Richardson, 375 Ill.
App. 3d at 314-15. The trial court may and should rely on its own knowledge and experience when
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determining the reasonableness of the fees sought. Richardson, 375 Ill. App. 3d at 315. When a trial
court reduces the amount of fees requested in a fee petition, it should include in its ruling the reasons
supporting each reduction. Richardson, 375 Ill. App. 3d at 315. With these principles in mind, we
turn to plaintiff's particular contentions.
Plaintiff argues that the attorney fees it sought were reasonable. Plaintiff initially contends
that it should have received credit for the fees/hours expended after the arbitration hearing.
Specifically, the trial court disallowed the time spent pursuing a judgment against Schwager, Carl
Bauer, and Arthur Bauer, holding:
"For example, the Arbitration Award was in favor of the Plaintiff and against all four (4)
individual Defendants. Only one, Eric Hoffman, rejected the Arbitration Award. Judgments
against the remaining Defendants, Carl and Arthur Bauer and David Schwager[,] should have
been entered at the September 21, 2005[,] hearing for failure to reject the Arbitration Award.
Plaintiff, however, continued that hearing and filed a Motion to Debar these Defendants from
rejecting the award and attended a Court hearing on October 5, 2005. This was unnecessary
in order to obtain a Judgment against these Defendants; and, in fact, no judgment was
obtained against Carl Bauer even though he did not reject the Arbitration Award."
Plaintiff contends that this holding was erroneous. We agree.
Supreme Court Rule 93 (166 Ill. 2d R. 93) provides that, where there is more than a single
defendant, one defendant's rejection of an arbitration award "shall be sufficient to enable all parties
except a party who has been debarred from rejecting the award to proceed to trial on all issues." A
party who did not attend the arbitration may not take advantage of the rejection made by an attending
party. 145 Ill. 2d R. 91; 166 Ill. 2d R. 93. Here, only Hoffman and Carl Bauer attended the
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arbitration hearing. Thus, under Rule 93, Carl Bauer had the right to proceed to trial as a result of
Hoffman's rejection, and plaintiff was required to prepare for trial against Hoffman and Carl Bauer.
The trial court's holding disallowing time spent pursuing a judgment against Carl Bauer was
erroneous. The court, however, never attributed a fee amount to that time.
The thrust of the trial court's decision quoted above is that plaintiff's motion to debar
Schwager and Arthur Bauer was unnecessary, because they did not attend the arbitration hearing and
thereby waived the right to reject the arbitration award. 145 Ill. 2d R. 91. We agree. Under Rule
92 (155 Ill. 2d R. 92), at any time after the rejection period has elapsed, a party may move the trial
court to enter judgment on the award. The trial court correctly held that judgment should have been
entered against Schwager and Arthur Bauer at the hearing held on September 21, 2005. The trial
court thus properly reduced the number of recoverable hours by the amount of time it took plaintiff
to prepare the motion to debar Schwager and Arthur Bauer from rejecting the arbitration award and
to attend the hearing at which the motion was presented. The time spent drafting the motion to debar
was 0.50 hours; we cannot differentiate the attorney's time spent at the unnecessary hearing from the
time spent on other tasks on the date of the hearing. However, other fee petition entries for attending
court generally run in the vicinity of 1.0 hours. Accordingly, we attribute 1.0 hours to attending the
unnecessary hearing. We find that the trial court properly struck the time spent preparing the motion
to debar and appearing at the court hearing on the motion, resulting in a reduction of 1.50 hours, for
a fee reduction of $262.50.
Next, plaintiff challenges that trial court's determination that 58 hours to prepare and try the
case was too much. The trial court held:
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"[F]orty-six (46) hours were billed in 2008 to prepare for the trial and in addition two lawyers
billed six (6) hours each to try the case for a total of fifty-eight (58) hours. Since all of the
discovery was completed prior to the Arbitration hearing this time seems excessive to try a
case that lasted an afternoon and did not involve any complex issues of evidence or law and
which had already been tried to an arbitration panel. The Court is permitted to use its own
knowledge and experience to assess the time required to complete particular activities.
[Citation.] Based on the Court's own knowledge and experience of the time necessary to
prepare and try a case of this nature, the Court will allow thirty (30) hours of time to prepare
and try this case."
Plaintiff argues that, rather than being a simple case, it was complex because it involved a floor plan
loan. As proof of the case's complexity, plaintiff notes that at trial it presented 28 exhibits to establish
its case. Plaintiff further notes that Hoffman filed "complicated, fact intensive affirmative defenses,"
including breach of fiduciary duty, estoppel, and failure to mitigate, that required extensive
preparation for trial.
While we are sensitive to plaintiff's contention, the trial court was nevertheless fully justified
in resorting to its own knowledge and experience of the time necessary to prepare and try a case like
this one. See, e.g., Richardson, 375 Ill. App. 3d at 315. Further, the trial court noted that the actual
trial in this matter occupied a single afternoon, and it characterized the case as not involving any
complex issues of law or evidence. In contrast, plaintiff asserts only that the subject matter of the
case, a floor plan loan to a car dealership, was complicated because such a loan requires the lender
to conduct inspections of the car dealership to determine whether any of the assets securing the loan
have been sold out of trust. Plaintiff also suggests that the number of exhibits presented at trial
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provides a measure of the complexity. We disagree with plaintiff that the number of exhibits
represents the complexity of the case. We have examined the exhibits and note that the bulk of the
exhibits are the regular inspection reports that accompanied the floor plan loan. They show, as the
trial court determined, that plaintiff conducted regular inspections and negated Hoffman's affirmative
defense of estoppel. Further, while the mechanics of the loan may be complicated by the necessity
of conducting inspections to verify the existence of the assets securing the loan, our review of the
exhibits shows that the evidence appears to have been fairly straightforward. We do not believe that
the trial court's characterization of the complexity of the case amounted to an abuse of discretion
where plaintiff has been unable to demonstrate to this court that enforcing a guaranty of a loan is, in
itself, a complex matter. Thus, because the trial court has offered a reasonable explanation of its
decision to reduce the hours and the fees for trial preparation, we find no abuse of discretion
associated with this reduction. Accordingly, we hold that the trial court appropriately reduced the
number of hours by 28. We note that the trial court utilized an hourly rate of $250 in determining
the fee it would allow for the 30-hour trial preparation. This rate appears to be a rough average of
the rates charged by the two attorneys who engaged in the trial preparation. We find this to be a
reasonable assumption and hold that the trial court's methodology was not an abuse of discretion.
Accordingly, we hold that the trial court properly reduced the fees associated with trial preparation
from the claimed $11,475 to $7,500, a reduction of $3,975.
Plaintiff argues that, where evidence is uncontradicted and is not inherently unbelievable, a
finding contrary to the evidence cannot stand, citing Gold v. Ziff Communications, Co., 196 Ill. App.
3d 425, 433 (1989). Plaintiff notes that its fee petition was verified, while Hoffman's response to the
fee petition was not verified and Hoffman did not present evidence or meritorious argument
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contradicting plaintiff's fee petition. Based on this, plaintiff concludes that the trial court should have
awarded the fees claimed in the fee petition. We disagree.
Gold is inapposite. In Gold, the defendant argued that the plaintiffs had failed to prove an
element of their case. Gold, 196 Ill. App. 3d at 432-33. The appellate court noted that the plaintiffs
put on their evidence and that the defendant was given the opportunity to cross-examine the plaintiffs'
witnesses and to put on evidence of its own, but the defendant did not provide any evidence to
contradict the plaintiffs' evidence. Gold, 196 Ill. App. 3d at 433. The court held that "[d]isbelief of
oral testimony cannot support an affirmative finding that the reverse of that testimony is true, that is,
it cannot supply a want of proof." Gold, 196 Ill. App. 3d at 433. Here, by contrast, the issue is not
whether plaintiff failed to supply essential evidence such that the trial court could have found a want
of proof; rather, the issue is whether disbelief of the evidence presented could allow the court to reach
the result it reached. We hold that it could. We note that plaintiff's argument, if accepted, would
strip the trial court of its discretion to award attorney fees and to use its own knowledge and
experience in making an award if a petitioner filed a verified fee petition. If a verified fee petition
were presented, according to plaintiff's argument, then the trial court would be nothing more than a
rubber stamp, required to approve the fee petition just as it was presented, unless the respondent were
able to expressly contradict portions of the fee petition. Plaintiff has not provided any authority for
such a result and we do not believe that such a result may stand.
Plaintiff also argues that paid attorney fees are presumed to be at the market rate and
reasonable, citing Truserve Corp. v. Flegles, Inc., 419 F.3d 584, 593 (7th Cir. 2005), and Kallman
v. Radioshack Corp., 315 F.3d 731, 742 (7th Cir. 2002). Plaintiff argues that it also presented
evidence that it had paid or agreed to pay all of the fees sought. We note, however, that the question
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of whether the attorney fees were excessive is a matter of opinion, and the opinion that matters is the
trial court's. Truserve, 419 F.3d at 593. The federal courts also use an abuse-of-discretion standard
of review for awards of attorney fees. Thus, while paid fees might raise a presumption that the fees
were commercially reasonable, this presumption is not conclusive; the trial court remains free to use
its own knowledge and experience to evaluate the fees sought. See Richardson, 375 Ill. App. 3d at
315. Here, the trial court set forth a justification for reducing the fees, noting that the trial did not
involve complex legal or evidentiary questions and took a single afternoon to present and that the
case had already been developed and presented to an arbitration panel. Plaintiff has failed to
demonstrate how this justification was arbitrary, was made without conscientious judgment, exceeded
the bounds of reason, or ignored recognized principles of law. See In re Marriage of Pond, 379 Ill.
App. 3d 982, 987 (2008) (an abuse of discretion occurs when a court "acts arbitrarily, acts without
conscientious judgment, or, in view of all of the circumstances, exceeds the bounds of reason and
ignores recognized principles of law"). Based on these considerations, we reject plaintiff's contention.
Plaintiff next challenges the trial court's implicit determination that the fees generated in
plaintiff's attempt to collect the judgment against Schwager and Arthur Bauer were unreasonable.
The court held that its "review of the time billed after the Arbitration hearing shows that the vast
majority of this time from Arbitration Award through 2007 (about 80 hours) was billed to collect
judgments already entered and were not directed at the preparation or trial of the cause of action
against Eric Hoffman."
The court allowed fees of $6,000 for the arbitration hearing and $7,500 for the preparation and
conduct of the trial. Thus, the court, while not expressly stating so, implicitly reduced the fees by the
time (about 80 hours) spent in efforts to collect the judgment. Our de novo review above of the
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terms of the note and the guaranties led us to hold that plaintiff was entitled to recoup these fees
under the plain and unambiguous language of the note and the guaranties. The trial court's denial of
the totality of the fees generated in collection efforts contravenes the terms of the note and the
guaranties and constitutes an abuse of discretion. Our review of the fees incurred in trying to collect
the judgment against Schwager and Arthur Bauer leads us to conclude that these fees were
reasonable. Accordingly, we reverse this portion of the trial court's fee award and restore those fees
to the fee award.
Plaintiff also contends that the trial court abused its discretion in disallowing fees for time
spent on the summary judgment motion it contemplated but did not pursue. We agree with plaintiff.
While fees may be excluded from an award if they were generated pursuing unsuccessful claims, when
a party's claims for relief involve a common core of facts or are based on related legal theories, so that
much of the attorney time is devoted generally to the proceeding as a whole, the fee award should
not be reduced simply because not all of the relief requested was obtained. Becovic v. City of
Chicago, 296 Ill. App. 3d 236, 242 (1998). Here, the proceedings were divided into three parts: the
arbitration, the collection efforts against Schwager and Arthur Bauer, and the efforts in the trial court
to obtain a judgment against Hoffman and Carl Bauer. The contemplated motion for summary
judgment arose from the same facts and legal theories that plaintiff pursued against Hoffman and Carl
Bauer. Had there been grounds to pursue the motion, it could have significantly decreased the time
spent on the prosecution of the claims against Hoffman and Carl Bauer. But to make that reduction
in time, plaintiff needed to explore the viability of the summary judgment motion. The trial court did
not offer a clear explanation as to why it believed the time spent exploring the viability of the
summary judgment motion was unreasonable. In view of the fact that the use of summary judgment
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is favored as a means to dispose of claims (see, e.g., Turner v. City of Chicago, 91 Ill. App. 3d 931,
934 (1980)), we hold that the trial court abused its discretion in disallowing the fees engendered in
exploring a possible motion for summary judgment, and we restore these fees to the trial court's
award.
Next, plaintiff again challenges the trial court's decision to reduce the hours and fees allowed
for conducting and preparing for the trial. This time, plaintiff argues that the trial court erred by
comparing the arbitration to the trial, because arbitration is a streamlined process dispensing with
many of the formalities of a trial. On the other hand, plaintiff notes that at trial its attorneys had to
observe those formalities, prepare 28 exhibits, and prepare for a vigorous presentation of Hoffman's
affirmative defenses along with any case Carl Bauer might present. Plaintiff concludes: "By reducing
the trial based attorneys' fees sought by [plaintiff] and eliminating necessary trial preparation work
from the fee award, the trial court abused its discretion." In light of the trial court's explanation of
its reduction of the fee, relating it to its own knowledge and experience (see Richardson, 375 Ill. App.
3d at 315), and its observation that the matter did not present complex issues of evidence or law, we
reiterate that we cannot discern that the trial court's reduction was arbitrary or without conscientious
judgment or that it exceeded the bounds of reason and ignored recognized principles of law. See
Marriage of Pond, 379 Ill. App. 3d at 987 (an abuse of discretion occurs when a court "acts
arbitrarily, acts without conscientious judgment, or, in view of all of the circumstances, exceeds the
bounds of reason and ignores recognized principles of law"). Accordingly we reject plaintiff's
contention.
We note that paragraph 14 of the trial court's order conflicts with paragraph 17. In paragraph
14, the trial court held that the time preparing and presenting the case for arbitration "was reasonably
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expended by the [p]laintiff." The total fees corresponding to the preparation and presentation of the
arbitration case were $9,625. In paragraph 17, however, the trial court reduced the fees for preparing
and presenting this case at trial. The trial court then stated, with no explanation or rationale, that it
would "allow a fee of $6,000 to prepare and try the case before the Arbitration panel." If the time
and fees of $9,625 were reasonable in preparing and presenting the arbitration case, then the
reduction to $6,000 is clearly arbitrary, inexplicable, and unreasonable, especially where the trial court
provided no insight as to why the "reasonable" fee was reduced. Accordingly, we reverse the trial
court's judgment on that point and restore $3,625 to the fees attributable to the preparation and
presentation of the arbitration case.
Next, plaintiff argues that the trial court improperly reduced the fees without considering each
individual itemization of the charges and services performed. Plaintiff argues that, as a result, the
whole of the trial court's fee award must be reversed. In light of our discussion above, we have
resolved plaintiff's specific contentions regarding its claims of error, and we need not further address
this contention.
To sum up, we have carefully reviewed the language of the note and guaranties to discern and
effect the parties' intent in executing these contracts. Our review determined that, under the note and
the guaranties, plaintiff was eligible to recover from each individual defendant its attorney fees not
only for enforcing the guaranties, but also for its efforts to collect under the note. The individual
defendants all agreed that the indebtedness guaranteed by the guaranties included attorney fees
incurred in collecting on the note. Our review of the trial court's order showed that the trial court
ignored the provisions in the note and guaranties affording this right to plaintiff. Additionally, we did
not accept the trial court's arbitrary reductions in the award of attorney fees. We did, however,
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conclude that the trial court's reduction of $262.50 due to the unnecessary motion to debar and its
reduction of $3,975 for conducting and preparing for the trial did not constitute abuses of discretion,
and we affirmed these reductions. Plaintiff sought a total fee award of $37,445. We carefully
reviewed the trial court's determination of the award and found that it properly made and supported
a reduction of $4,237.50. Accordingly, we affirm in part and reverse in part the trial court's fee
award, modifying it to reflect an award of $33,207.50.
For the foregoing reasons, the judgment of the circuit court of McHenry County is affirmed
as modified in part and reversed in part.
Affirmed as modified in part and reversed in part.
HUDSON, J., concurs.
JUSTICE SCHOSTOK, concurring in part and dissenting in part:
I dissent from the majority's decision that the trial court abused its discretion in determining
that the plaintiff was not entitled to its attorney fees for work done on a summary judgment motion
it contemplated but never pursued. As the majority sets forth, a trial court abuses its discretion when
it "acts arbitrarily, acts without conscientious judgment, or, in view of all the circumstances, exceeds
the bounds of reason and ignores recognized principles of law." Pond, 379 Ill. App. 3d at 987. Here,
the trial court heard the arguments of the parties and made detailed findings. There is no evidence
in the record that its decision as to this issue was made arbitrarily or without conscientious judgment.
Second, the trial court's decision did not contravene any recognized principles of law. In support of
its decision, the majority points to Becovic, 296 Ill. App. 3d at 242. However, that decision dealt
with work that attorneys did on matters that were actually litigated; Becovic did not address
attorneys' work on matters that were merely "contemplated." See Becovic, 296 Ill. App. 3d at 242.
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Furthermore, it cannot be said that the trial court's refusal to award fees for work on matters that
were contemplated but never actually pursued "exceed[ed] the bounds of reason." See Pond, 379
Ill. App. 3d at 987.
In all other respects, I concur with the majority's decision.
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