Stiffle v. Marz
2016 IL App (1st) 150180
Ill. App. Ct.2017Background
- Kimberly and Scott Stiffle sued contractor Baker Epstein Marz for breach of contract and breach of implied warranty of habitability for construction defects to their residence. Plaintiffs initially alleged a written (AIA) contract existed but could not produce a signed copy.
- Plaintiffs first filed a complaint averring a written contract existed (affidavit attached), then a first amended complaint attaching an unsigned modified AIA form and alleging the parties agreed to that modified form, then a second amended complaint abandoning the written-contract theory and alleging an oral agreement dated August 27, 2007.
- Defendant moved to dismiss and submitted affidavit evidence that no executed AIA or written contract was ever agreed; negotiations and counter-proposals remained unresolved. Court dismissed pleadings without prejudice and granted leave to amend into an oral-contract theory.
- Defendant then moved for sanctions under Illinois Supreme Court Rule 137, arguing plaintiffs and counsel repeatedly filed pleadings and affidavits they knew or should have known were false (claiming a written/modified AIA contract). Defendant sought dismissal with prejudice and fees.
- The circuit court found Rule 137 violations (pleadings not well grounded in fact; repeated falsehoods), imposed sanctions and dismissed the second amended complaint with prejudice. Plaintiffs appealed.
- The appellate court affirmed the Rule 137 violation finding but vacated the dismissal-with-prejudice portion and remanded for specific findings required under Santiago about why lesser sanctions were inadequate. The court declined to impose appellate (Rule 375) sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs and counsel violated Rule 137 by filing pleadings/affidavits claiming a written/modified AIA contract when none existed | Plaintiffs reasonably investigated and believed a written contract existed; changes in pleadings reflect evolving facts as investigation continued | Plaintiffs and counsel knew or should have known no executed contract existed and nevertheless filed/maintained false pleadings to pursue the claim | Court: Not against manifest weight — Rule 137 violation established (pleadings not well grounded; repeated falsehoods) |
| Whether dismissal with prejudice was an appropriate sanction under Rule 137 | Dismissal was too drastic; lesser sanctions (striking allegations, fees) would suffice | Plaintiffs’ repetitive, egregious conduct justified dismissal because it increased litigation cost and showed disregard for court process | Court: Sanctions warranted, but dismissal-with-prejudice vacated and remanded for specific Santiago findings showing lesser sanctions would be inadequate |
| Whether appellate (Rule 375) sanctions for frivolous appeal were warranted | N/A (plaintiffs appealed) | Defendant sought Rule 375 sanctions arguing appeal was unfounded | Court: Appeal not frivolous; decline to impose Rule 375 sanctions |
Key Cases Cited
- Sanchez v. City of Chicago, 352 Ill. App. 3d 1015 (standard for reviewing Rule 137 violation)
- Peterson v. Randhava, 313 Ill. App. 3d 1 (Rule 137 not to punish reasonable zealous advocacy)
- Rubino v. Circuit City Stores, Inc., 324 Ill. App. 3d 931 (burden on movant to show untrue allegations made without reasonable cause)
- Couri v. Korn, 202 Ill. App. 3d 848 (denial of sanctions where attorney reasonably relied on client’s claims)
- Berg v. Mid-America Industrial, Inc., 293 Ill. App. 3d 731 (remand required when trial court imposed dismissal without adequate findings)
- People v. Stefanski, 377 Ill. App. 3d 548 (objective standard and need for subjective bad faith for certain sanctions)
- In re Marriage of Sykes, 231 Ill. App. 3d 940 (Rule 137 gives trial court discretion whether to impose sanctions)
- Gonzalez v. Nissan N. Am., Inc., 369 Ill. App. 3d 460 (Rule 137 not appropriate basis for sanctions tied solely to discovery violations)
- Smith v. City of Chicago, 299 Ill. App. 3d 1048 (drastic sanctions must be proportional to misconduct)
- Santiago v. E.W. Bliss Co., 2012 IL 111792 (dismissal with prejudice allowed only when clear record of willful conduct and lesser sanctions found inadequate)
- Swanson v. Cater, 258 Ill. App. 3d 157 (appellate sanctions analysis)