Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Story

578 N.E.2d 1129, 218 Ill. App. 3d 829, 161 Ill. Dec. 483, 1991 Ill. App. LEXIS 1425
CourtAppellate Court of Illinois
DecidedAugust 23, 1991
DocketNo. 1-89-3073
StatusPublished
Cited by5 cases

This text of 578 N.E.2d 1129 (Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Story) 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
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Story, 578 N.E.2d 1129, 218 Ill. App. 3d 829, 161 Ill. Dec. 483, 1991 Ill. App. LEXIS 1425 (Ill. Ct. App. 1991).

Opinion

PRESIDING JUSTICE RAKOWSKI

delivered the opinion of the court:

Plaintiff-appellee Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch) sued below, seeking to recover damages for breach of a written contract. The trial judge entered a default judgment against defendant-appellant William K. Story (Story) for the failure of Story to appear at trial after Story received notice according to Supreme Court Rule 237 (107 Ill. 2d R. 237). Merrill Lynch subsequently filed a petition for attorney fees. After a hearing, the trial court granted Merrill Lynch fees in the amount of $6,500. Story appeals both the entry of default judgment against him and the award of attorney fees granted to Merrill Lynch.

Merrill Lynch filed the underlying complaint against Story on August 24, 1983, alleging that Story breached a standard option agreement between the parties, dated September 15, 1982. Merrill Lynch sought to recover from Story payment for purchases of securities which the agreement authorized. The agreement, entered into in Florida, provided that New York law would control disputes arising thereunder.

On May 5, 1989, Merrill Lynch filed a Rule 237 (107 Ill. 2d R. 237) notice upon Story which requested Story be “present in court for testimony as witness in this action.” The week before the date of trial, counsel for Merrill Lynch telephoned counsel for Story. At that time, counsel for Story voiced no objection to the Rule 237 notice and confirmed that Story would be present at trial. On June 12, 1989, the case was set for trial before the Honorable John P. Tully. Story was not present. According to Story’s counsel, Story was in Florida and was unable to appear. Story’s counsel could not give the court a reason for his client’s absence. The trial court offered to set the matter over until later in the afternoon, but when it became apparent that Story would not appear, the trial court indicated that he would enter a judgment of default against Story on the principal amount claimed by Merrill Lynch, and a jury was impanelled to hear the case on the issue of interest. Subsequently, an order was entered in favor of plaintiff and against defendant to include principal and interest, in the amount of $5,148.57. Story does not challenge the awarding of interest in any respect.

In accord with the June 12, 1989, order, Merrill Lynch’s oral petition for attorney fees was continued. Merrill Lynch later filed a petition for attorney fees, which was supported by affidavit. After the petition was fully briefed, the trial court conducted hearings on the petition and awarded Merrill Lynch attorney fees in the amount of $6,500.

The first issue we address is whether the entry of the sanction of default pursuant to Rule 237 for the failure of Story to appear at trial was an abuse of the trial court’s discretion.

Supreme Court Rule 237(b) provides in pertinent part:

“The appearance at the trial of a party or a person who at the time of trial is an officer, director, or employee of a party, may be required by serving the party with a notice designating the person who is required to appear. *** Upon a failure to comply with the notice, the court may enter any order that is just, including any order provided for in Rule 219(c) that may be appropriate.” (107 Ill. 2d R. 237(b).)

Illinois Supreme Court Rule 219(c) (107 Ill. 2d R. 219(c)(v)) specifically provides that the entry of a default judgment against an offending party or an order dismissing the offending party’s action are authorized sanctions. As Merrill Lynch points out:

“The particular sanction imposed rests largely in the trial court’s discretion, the exercise of which will not be disturbed absent an abuse of discretion, and the burden is on the offending party to establish that his failure to comply was justified by extenuating circumstances.” Quarles v. Nationwide Insurance Co. (1978), 66 Ill. App. 3d 455, 465, 383 N.E.2d 1234.

In arguing that the trial court’s action was an abuse of discretion in this case, Story relies primarily on the case of Ryan v. Bening (1978), 66 Ill. App. 3d 127, 383 N.E.2d 681. There, the court held that the entry of a default judgment in response to a defendant’s failure to appear pursuant to Rule 237 was not an appropriate sanction in the absence of the plaintiff proving a -prima facie case. Though the parties have not cited it, a similar situation was presented in the more recent case of People ex rel. Hartigan v. Organization Service Corp. (1986), 147 Ill. App. 3d 826, 498 N.E.2d 597. There, as in Quarles, the defendant had failed to show up at trial pursuant to notice under Rule 237. The court held as follows:

“One of the sanctions provided by section 219(c) is the entry of a default judgment against the offending party. [Citation.] We realize that where a defendant has appeared and placed in issue the allegations in the complaint, a trial court cannot enter a default judgment merely because defendant failed to appear at trial. Plaintiff must proceed to prove his claim as if defendant had been present to try the case. [Citing Ryan, 66 Ill. App. 3d at 131.] However, we believe that this condition has been satisfied in the instant case.” People ex rel. Hartigan v. Organization Service Corp., 147 Ill. App. 3d at 831.

Ryan, which appears to be the first case to apply the general “nonappearance at trial” rule in the Rule 237 sanctions scenario, cited a number of cases in support of its holding. None of these cases involved the levying of a statutorily permitted sanction. The legislature’s mandate that the sanction of default be available as a result of noncompliance with Rule 237 is undercut by the application of the Ryan rule in situations where the plaintiff requires defendant’s testimony to establish plaintiff’s prima facie case. This is because the plaintiff could not prove a prima facie case without the defendant’s presence, and, under the rule, a court cannot enter a default judgment until such is shown. Thus, a distinction between the entry of judgment as a sanction and the entry of default due to the simple failure to appear at trial appears warranted. It must be remembered that in the sanction scenario, the entry of judgment is premised upon the statutory grant of authority to ameliorate a party’s noncompliance with court orders and authority. In the Rule 219 noncompliance situation, which is somewhat analogous to the Rule 237 noncompliance situation, it has been observed that the legislative grant of power to enter judgment for violation of discovery rules is premised upon the presumption that the withholding of documentation or testimony is sufficient to establish liability. (See Day v. Schoreck (1975), 31 Ill. App. 3d 851, 853, 334 N.E.2d 864, citing People ex rel. General Motors Corp. v. Bua (1967), 37 Ill. 2d 180, 226 N.E.2d 6.) In our view, the presumption of liability, which validates the use of the default sanction, is present in Rule 237 cases as well.

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Cite This Page — Counsel Stack

Bluebook (online)
578 N.E.2d 1129, 218 Ill. App. 3d 829, 161 Ill. Dec. 483, 1991 Ill. App. LEXIS 1425, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merrill-lynch-pierce-fenner-smith-inc-v-story-illappct-1991.