Lake Environmental, Inc. v. Arnold

                             Illinois Official Reports

                                     Supreme Court



                     Lake Environmental, Inc. v. Arnold, 

2015 IL 118110

Caption in Supreme      LAKE ENVIRONMENTAL, INC., Appellee, v. DAMON T.
Court:                  ARNOLD, Director of Public Health, et al., Appellants.



Docket No.              118110



Filed                   September 24, 2015



Decision Under          Appeal from the Appellate Court for the Fifth District; heard in that
Review                  court on appeal from the Circuit Court of St. Clair County, the Hon.
                        Stephen McGlynn, Judge, presiding.



Judgment                Appellate court judgment reversed.
                        Cause remanded.

Counsel on              Lisa Madigan, Attorney General, of Springfield (Carolyn E. Shapiro,
Appeal                  Solicitor General, and Linda Boachie-Ansah and Laura Wunder,
                        Assistant Attorneys General, of Chicago, of counsel), for appellants.

                        David L. Antognoli, of Goldenberg Heller Antognoli & Rowland,
                        P.C., of Edwardsville, for appellee.



Justices                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 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. 

2014 IL App (5th) 130109

. 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 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

         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).

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       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. 

2014 IL App (5th) 130109, ¶ 7

. 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 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


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       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 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). Subparagraph (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


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       prevent abuse of the judicial process by penalizing claimants who bring vexatious and
       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 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).


                                                     -5-
¶ 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.

¶ 20      Appellate court judgment reversed.
¶ 21      Cause remanded.




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