By:  Carson Griffis*

In Lakeshore Centre Holdings, LLC v. LHC Loans, 2019 IL App (1st) 180576, a divided panel of the Illinois Appellate Court, First District, held that a finding pursuant to Illinois Supreme Court Rule 304(a) — which allows an appeal from a final judgment entered as to fewer than all parties or all claims in a case — triggers the 30-day time limit to file a sanctions motion under Illinois Supreme Court Rule 137.

The plaintiff filed suit over the defendant’s alleged failure to perform under an option contract.  The defendant filed a counterclaim, alleging that the plaintiff had breached the contract.  The circuit court dismissed the plaintiff’s complaint in its entirety, disposing of all of the plaintiff’s claims, and entered a finding under Rule 304(a) because the defendant’s counterclaim was still pending.  Rule 304(a) provides that, when a case involves multiple claims or parties, a final judgment as to at least one of those claims or parties, but not all of them, is appealable if the circuit court finds “that there is no just reason for delaying either enforcement or appeal or both.”

The plaintiff appealed from the circuit court’s dismissal of its complaint, and the appellate court ultimately affirmed the dismissal.  While the plaintiff’s appeal was pending, and about five months after the circuit court made its Rule 304(a) finding, the defendant filed a Rule 137 sanctions motion against the plaintiff alleging that it made false allegations in its complaint.  The circuit court granted the sanctions motion in part and awarded the defendant some of its attorney fees.  Both parties cross-appealed from the circuit court’s judgment on the sanctions motion.

After ordering supplemental briefing on the issue of the circuit court’s jurisdiction over the sanctions motion, the appellate court vacated the circuit court’s order.  It noted that Rule 137 requires that a sanctions motion be filed within “30 days of the entry of final judgment.”  The appellate court then emphasized that Rule 304(a) judgments are final judgments, even though they do not dispose of all claims against all parties.  And the court noted that timely Rule 137 motions toll the time for filing a notice of appeal.  Because a notice of appeal may be filed from a Rule 304(a) judgment within 30 days, the appellate court stressed that it would make sense that only a Rule 137 motion filed within 30 days would toll the time to file that notice of appeal.  Finally, the appellate court found that the defendant's pending counterclaim did not change its analysis because its sanctions motion was not related to any pleadings, motions, or documents relevant to the counterclaim.  Because the defendant's sanctions motion was not filed within 30 days of the Rule 304(a) finding, the circuit court lacked jurisdiction to consider it.

Justice Mikva dissented, asserting that, because the case as a whole was still pending when the defendant filed its sanctions motion, it was timely.  Justice Mikva noted that Rule 137 requires a sanctions motion to be filed in the same “civil action” in which the allegedly sanctionable conduct occurred.  Because the civil action was still pending while the defendant’s counterclaim remained pending, the sanctions motion could be filed until all claims against all parties had been disposed of.

*Carson Griffis is an Assistant Attorney General in the Civil Appeals Division of the Office of the Illinois Attorney General.  No comments made in this post are made on behalf of the Office of the Illinois Attorney General, nor do they reflect the views or opinions of the Office of the Illinois Attorney General.