Lake Environmental, Inc. v. Arnold, 2015 IL 118110

In 2008 the Illinois Department of Public Health issued an emergency stop-work order and delisted Lake Environmental as an approved asbestos contractor; the Department later voluntarily dismissed those administrative proceedings after remediation.
The Department later sought to revoke Lake Environmental’s asbestos-abatement license and filed a separate civil action seeking monetary penalties for the 2008 conduct; the civil action was dismissed on res judicata grounds because penalties should have been sought in the earlier administrative proceeding.
The Department revoked Lake Environmental’s license via administrative proceedings; Lake challenged the revocation in circuit court and obtained summary judgment, with the court holding the revocation barred by res judicata.
Lake moved for sanctions under Illinois Supreme Court Rule 137, arguing the Department should have known the res judicata defense barred its revocation effort; the circuit court denied the motion without explanation and denied reconsideration.
The appellate court reversed and remanded, holding (relying on Second District cases) that Rule 137 requires circuit courts to explain decisions on motions for sanctions whether sanctions are imposed or denied.
The Illinois Supreme Court reversed the appellate court, holding Rule 137 requires an explanation only when sanctions are imposed and remanded for the appellate court to review the record for abuse of discretion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 137 requires a circuit court to explain denial of sanctions	Lake: appellate remand was proper because record insufficient; courts must remand when there is no explanation	Dept: Rule 137’s plain language requires explanation only when sanctions are imposed; no explanation required for denials	Court: Rule 137 requires explanation only when sanctions are imposed; appellate court erred in automatic remand and must review the record for abuse of discretion
Standard of review for denial of Rule 137 sanctions	Lake: appellate review may remand if rationale absent	Dept: denial reviewed for abuse of discretion based on record	Court: denial reviewed for abuse of discretion; appellate court should determine whether record supports denial
Proper role of appellate court when lower court gives no reasons	Lake: remand to obtain reasons acceptable under Rule 366	Dept: appellate court should review record and may affirm on any basis in record	Court: appellate court should review record first; remand only if record insufficient
Construction of Rule 137 (ambiguity and remedial scope)	Lake: policy supports explaining denials for reviewability	Dept: plain text unambiguous and penal rules construed narrowly so no added requirement	Court: rule’s text is unambiguous—explanation required only when sanctions are imposed; narrowly construe penal rule

Vision Point of Sale, Inc. v. Haas, 226 Ill. 2d 334 (explaining de novo review of rule interpretation)
Roth v. Illinois Farmers Insurance Co., 202 Ill. 2d 490 (use plain language to discern drafter intent)
Waste Management of Illinois, Inc. v. Illinois Pollution Control Board, 145 Ill. 2d 345 (courts should not insert words into rules)
People v. Roberts, 214 Ill. 2d 106 (statutory construction principles apply to court rules)
Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460 (Rule 137 is penal and thus narrowly construed)
In re Estate of Wernick, 127 Ill. 2d 61 (purpose of predecessor rule to penalize frivolous suits)
Leonardi v. Loyola University of Chicago, 168 Ill. 2d 83 (appellate courts may affirm on any ground appearing in record)
Beacham v. Walker, 231 Ill. 2d 51 (same: appellate court can affirm on alternate grounds)
Sullivan v. Eichmann, 213 Ill. 2d 82 (record can suffice for appellate review even without a transcript of hearing)
In re Marriage of O’Brien, 2011 IL 109039 (abuse-of-discretion standard for sanctions review)