Williams Montgomery & John Ltd. v. Broaddus
2017 IL App (1st) 161063
| Ill. App. Ct. | 2017Background
- WMJ obtained a $129,538.39 judgment against Bret Broaddus and served third‑party citations to discover assets held by Bradley Associates, LLC (Bradley) and others. Bradley held about $650,000 in cash for Broaddus.
- Broaddus had created a self‑settled revocable trust in October 2010 and formed Stanley, LLC in December 2010 (trust owned 99% of Stanley); in a separate federal case Shields had previously obtained judgment against Broaddus and the federal court found transfers to the trust/Stanley were fraudulent under the Illinois Uniform Fraudulent Transfer Act.
- Stanley (represented by attorney Bert Zaczek) claimed the funds Bradley held belonged to Stanley and that Bradley had mistakenly titled them to Broaddus; Stanley filed a petition opposing turnover and attached an affidavit from Broaddus asserting transfers to Stanley occurred prior to December 2010.
- WMJ moved for turnover under 735 ILCS 5/2‑1402; the circuit court granted turnover (April 1, 2014). WMJ then moved for sanctions under Ill. S. Ct. R. 137 against Stanley and Zaczek; Bradley separately moved for sanctions against Stanley and Broaddus.
- The circuit court granted WMJ’s sanctions motion and later awarded WMJ $74,578 in fees; it also granted Bradley’s sanctions motion but did not enter a monetary award for Bradley. Appellants appealed various orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appealability of turnover order | WMJ: turnover order final and appealable under Rule 304(b)(4) because it arises from 2‑1402 proceeding | Appellants: appealed; late notice | Dismissed appeal of April 1, 2014 turnover order as untimely (notice filed almost two years late) |
| Appealability of sanctions orders | WMJ: sanctions order reduced to a fee award is final and appealable | Appellants: challenged sanction orders | WMJ’s sanctions order (reduced to $74,578) is final and appealable; Bradley’s sanctions order (no dollar award) is not final and appealable and that portion dismissed for lack of jurisdiction |
| Whether Stanley’s petition warranted Rule 137 sanctions | WMJ/Bradley: Stanley’s petition was objectively frivolous—relied on demonstrably false factual claim (transfers prior to Stanley’s formation) and was legally barred by fraudulent‑transfer findings in Shields | Stanley/Zaczek: petition defended the claim; argued waiver and sought hearing | Court affirmed sanctions against Stanley and Zaczek under Rule 137: petition was factually and legally frivolous and filed for delay; sanction decision not an abuse of discretion |
| Adequacy of fee award process | WMJ: submitted fee petition and sought recovery of fees as sanctions | Stanley/Zaczek: requested evidentiary hearing and challenged fees as unsupported | Trial court improperly awarded $74,578 without sufficient evidentiary support; fee award vacated and remanded for evidentiary hearing on reasonableness of fees |
Key Cases Cited
- Archer Daniels Midland Co. v. Barth, 103 Ill. 2d 536 (Ill. 1984) (appellate court must consider jurisdictional timeliness)
- In re Marriage of Verdung, 126 Ill. 2d 542 (Ill. 1989) (final judgment definition for appealability)
- Niccum v. Botti, Marinaccio, DeSalvo & Tameling, Ltd., 182 Ill. 2d 6 (Ill. 1998) (effect of Rule 304(a) findings on appealability in presence of sanctions motion)
- Levaccare v. Levaccare, 376 Ill. App. 3d 503 (Ill. App. Ct.) (orders in 2‑1402 proceedings are immediately appealable)
- D’Agostino v. Lynch, 382 Ill. App. 3d 639 (Ill. App. Ct.) (order in 2‑1402 proceeding final when party can collect against judgment)
- Century Road Builders, Inc. v. City of Palos Heights, 283 Ill. App. 3d 527 (Ill. App. Ct.) (no hearing required on sanctions when record and pleadings suffice)
- Edwards v. Estate of Harrison, 235 Ill. App. 3d 213 (Ill. App. Ct.) (attorney must conduct reasonable factual inquiry; cannot blindly rely on client when third‑party information is available)
- Raintree Health Care Center v. Illinois Human Rights Comm’n, 173 Ill. 2d 469 (Ill. 1996) (requirements for proving attorney fees; detailed fee breakdown and opportunity to contest)