Kroot v. Chan , 429 Ill. Dec. 825 ( 2019 )

2019 IL App (1st) 181392
FIFTH DIVISION
Opinion filed: April 5, 2019
No. 1-18-1392
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
______________________________________________________________________________
MEREDITH PAGE KROOT and JASON M. KROOT, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellees, ) Cook County
)
)
v. ) No. 17 L 2553
)
SHU B. CHAN and YVONNE LAU, ) Honorable
) James E. Snyder,
Defendants-Appellants. ) Judge, presiding.
______________________________________________________________________________
JUSTICE HOFFMAN delivered the judgment of the court, with opinion.
Presiding Justice Rochford and Justice Lampkin concurred in the judgment and opinion.
OPINION
¶1 The defendants, Shu B. Chan and Yvonne Lau, appeal from an order of the circuit court
of Cook County entered on June 4, 2018, awarding the plaintiffs, Meredith Page Kroot and Jason
M. Kroot, $67,336.76 for attorney fees, costs, and expenses. For the reasons that follow, we
reverse that portion of the circuit court’s order that awarded the plaintiffs $58,712.50 for attorney
fees.
¶2 The plaintiffs filed the instant action against the defendants seeking recovery for,
inter alia, a violation of the Residential Real Property Disclosure Act (Act) (765 ILCS 77/1
No. 1-18-1392
et seq. (West 2012)) and common-law fraud in the sale of property commonly known as 3833
North Claremont, Chicago, Illinois, and improved with a single-family residence (hereinafter
referred to as the Claremont Property). Following a bench trial, the circuit court entered a written
order on March 28, 2016, finding (1) in favor of the plaintiffs and against Chan on the plaintiffs’
claim pursuant to the Act, (2) in favor of Lau and against the plaintiffs on the plaintiffs’ claim
under the Act, and (3) in favor of the plaintiffs and against both defendants on the plaintiffs’
common-law fraud claim. Based upon those findings, the circuit court entered judgment in favor
of the plaintiffs and against the defendants in the amount of $64,518.67 “plus costs and fees.”
Thereafter, the plaintiffs filed a petition for an award of attorney fees and costs. On June 23,
2016, the circuit court entered an order granting the plaintiffs’ petition and entering judgment in
favor of the plaintiffs in the amount of $28,130.16 for attorney fees. That order states that the
judgment was entered “against defendant.” Although the order states that the judgment was
entered against a singular defendant, it does not state which defendant the judgment was entered
against. On appeal from the circuit court’s orders of March 28, 2016, and June 23, 2016, this
court affirmed the $64,518.676 judgment, vacated the order awarding the plaintiffs $28,130.16
for attorney fees, and remanded the matter to the circuit court with directions to conduct an
evidentiary hearing on the plaintiffs’ petition for attorney fees and costs. Kroot v. Chan, 2017 IL
App (1st) 162315, ¶¶ 39-40.
¶3 As directed, the circuit court on remand conducted an evidentiary hearing on June 4,
2018. Following that hearing, the circuit court entered an order, which states: “Judgment is
entered in favor of the plaintiffs and against the defendants [plural] for attorney fees, costs &
expenses in the amount of $67,336.76.” Although the circuit court’s order does not enumerate
the portion of the judgment that was awarded for attorney fees, the transcript of the proceedings
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on June 4, 2018, makes clear that, of the $67,333.76 judgment entered in favor of the plaintiffs,
$58,712.50 was awarded for attorney fees and the remaining $8624.26 was awarded for
“expenses.”
¶4 On June 25, 2018, the defendants filed their notice of appeal from the circuit court’s June
4, 2018 order, invoking this court’s jurisdiction under Illinois Supreme Court Rules 301 and 303.
Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. July 1, 2017). In urging reversal, the defendants
argue both that (1) the evidence submitted by the plaintiffs in support of their fee petition
consisted of hearsay, supposition, and guess, which they contend is insufficient to support an
award of attorney fees, and (2) the plaintiffs failed to establish that they incurred attorney fees
and, as a consequence, the circuit court erred in awarding attorney fees pursuant to section 55 of
the Act (765 ILCS 77/55 (West 2012)). For the reasons that follow, we reverse that portion of the
circuit court’s order of June 4, 2018, awarding the plaintiffs $58,712.50 for attorney fees.
¶5 A plaintiff seeking an award of attorney fees has the burden of proving an entitlement to
fees. Schorsch v. Fireside Chrysler-Plymouth, Mazda, Inc., 286 Ill. App. 3d 1028, 1033 (1997).
At common law, the unsuccessful party in a civil action is not liable for the payment of attorney
fees incurred by the successful party. State Farm Fire & Casualty Co. v. Miller Electric Co., 231
Ill. App. 3d 355, 359 (1992). “In the absence of [a] statute ***, attorney[ ] fees and the ordinary
expenses and burdens of litigation are not allowable to the successful party.” House of Vision,
Inc. v. Hiyane, 42 Ill. 2d 45, 51-52 (1969); see also Young v. Alden Gardens of Waterford, Inc.,
2015 IL App (1st) 131887, ¶ 96.
¶6 As noted earlier, on the trial of this cause, Lau was only found liable to the plaintiffs on
their claim for common-law fraud. The circuit court found in favor of Lau and against the
plaintiffs on the plaintiffs’ claim under the Act. Having only been found liable to the plaintiffs
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for common-law fraud, Lau was not, as a matter of law, liable for the payment of the plaintiffs’
attorney fees. Nevertheless, the circuit court apparently entered its $67,336.76 judgment in favor
of the plaintiffs for attorney fees, costs, and expenses against both defendants. As Lau was only
found liable to the plaintiffs on their common-law fraud claim, attorney fees could not, as a
matter of law, be assessed against her. We, therefore, reverse $58,712.50 of the judgment entered
against Lau on June 4, 2018, that sum being the portion of the judgment attributable to attorney
fees.
¶7 We next address the defendants’ claims of error as they relate to that portion of the June
4, 2018, judgment entered against Chan that is attributable to an award of attorney fees. In
entering judgment against Chan on the plaintiffs’ claim brought pursuant to the Act, the trial
court found that Chan made false statements in the Residential Real Property Disclosure Report
required under sections 20 and 35 of the Act (765 ILCS 77/20, 35 (West 2012)), which was
tendered to the plaintiffs prior to their execution of an offer to purchase the Claremont Property.
Kroot, 2017 IL App (1st) 162315, ¶ 31. As noted earlier, this court affirmed that judgment. Id.
¶ 40.
¶8 Section 55 of the Act provides, in relevant part, that
“[a] person who knowingly violates or fails to perform any duty prescribed by any
provision of this Act or who discloses any information on the Residential Real
Property Disclosure Report that he knows to be false shall be liable in the amount
of [the] actual damages and court costs, and the court may award reasonable
attorney fees incurred by the prevailing party.” 765 ILCS 77/55 (West 2012).
As a statute allowing for recovery of attorney fees, section 55 is in derogation of the common
law and must be strictly construed. See Sandholm v. Kuecker, 2012 IL 111443, ¶ 64.
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¶9 Resolution of the issue of whether the circuit court erred in awarding attorney fees to the
plaintiffs under section 55 of the Act involves a matter of statutory construction. On that issue,
our review is de novo. In re Detention of Lieberman, 201 Ill. 2d 300, 307 (2002).
¶ 10 As the supreme court held in In re Detention of Powell, 217 Ill. 2d 123, 135 (2005):
“The primary goal of statutory construction is to ascertain and give effect
to the intent of the legislature. [Citations.] All other rules of statutory construction
are subordinate to this cardinal principle. [Citations.] The most reliable indicator
of legislative intent is the language of the statute, which is to be given its plain,
ordinary and popularly understood meaning. [Citations.] Where the language is
clear and unambiguous, courts are not to resort to aids of statutory construction.
[Citation.]”
¶ 11 The phrase “reasonable attorney fees” when appearing in a fee-shifting statute has
generally been interpreted to require use of the prevailing market rate in calculating a fee award.
Palm v. 2800 Lake Shore Drive Condominium Ass’n, 2013 IL 110505, ¶ 51. The language does
not indicate that recoverable attorney fees are limited to those actually incurred or paid by the
plaintiff. Id. However, unlike the language employed by the legislature in other fee-shifting
statutes, which merely provide that “reasonable attorney” fees should, or may, be awarded to a
prevailing plaintiff (see Whistleblower Act (740 ILCS 174/30 (West 2016)); Consumer Fraud
and Deceptive Business Practices Act (815 ILCS 505/10a(c) (West 2016))), section 55 of the Act
contains additional language. It provides that the circuit court “may award reasonable attorney
fees incurred by the prevailing party.” (Emphasis added.) 765 ILCS 77/55 (West 2012).
¶ 12 In construing a statute, courts must, where possible, attribute reasonable meaning to
every word, clause, or section of the statute. In re Marriage of Freeman, 106 Ill. 2d 290, 297
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No. 1-18-1392
(1985). Words appearing in a statute cannot be ignored under the guise of construction. Id. In
section 55, the legislature chose to limit the attorney fees that may be awarded to those
“incurred” by a prevailing plaintiff. Incurred is defined as “to render liable or subject to.”
Webster’s Third New International Dictionary 1146 (1981).
¶ 13 We find no ambiguity in the language of section 55 of the Act. The plain, ordinary, and
popularly understood meaning of the language of section 55 of the Act leads us to conclude that
a defendant who discloses any information on the Residential Real Property Disclosure Report
that he knows to be false is liable for actual damages and court costs, but the trial court only has
the discretion to award reasonable attorney fees that have been incurred by the prevailing party.
If no attorney fees have been incurred by the prevailing party, the trial court has no authority
under the statute to award such fees.
¶ 14 The trial court found that Chan violated the Act by disclosing information on a
Residential Real Property Disclosure Report that he knew to be false, and as a consequence,
section 55 of the Act authorized the trial court, in its discretion, to award “reasonable attorney
fees incurred” by the plaintiffs. The defendants argue, however, that the plaintiffs incurred no
attorney fees and, as a consequence, the circuit court lacked the discretion to award attorney fees
under section 55 of the Act.
¶ 15 The plaintiffs called three attorneys with the law firm of Goldberg, Weisman and Cairo
(GWC) as witnesses during the evidentiary hearing on their petition for an award of attorney fees
and costs: John P. Sorce, Bennett J. Baker, and Kirsten M. Dunne. GWC is the law firm that
represented the plaintiffs in this case before the circuit court during the original trial, the
evidentiary hearing on remand, and also in the defendants’ earlier appeal. The plaintiff Jason M.
Kroot is an attorney employed by GWC.
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¶ 16 During their testimony, Sorce, Baker, and Dunne were shown an exhibit attached to the
plaintiffs’ petition for an award of attorney fees and costs. The document is entitled “Attorney
Invoice—Amended on 4-16-18” and labeled as exhibit 19. Exhibit 19 contains entries under the
headings of date, service, hours, rate, and fee. Under these headings are individual entries setting
forth the date that legal services were performed, the initials of the attorney at GWC who
performed the service, a description of the legal service performed, the time taken to perform the
service, the hourly billing rate of the attorney who performed the service, and the fee for the
service, being the attorney’s hourly billing rate multiplied by the time taken to perform the
service.
¶ 17 Sorce admitted that GWC does not keep detailed billing records on its litigation files; it is
a contingent fee law firm. He stated that no timesheets or time slips were made for any of the
entries on exhibit 19 and, to the best of his knowledge, no time records were kept in connection
with this case and he did not keep records of his own time. Sorce did not know who prepared
exhibit 19. On cross-examination, Sorce admitted that the testimony he gave as to the amount of
time that he spent working on this matter as reflected on exhibit 19 was an estimate. He was also
asked the following questions and gave the following answers:
“Q. Was an invoice—Other than the amended invoice attached as Exhibit
19, was any invoice for legal services rendered or costs advanced ever sent to Mr.
or Mrs. Kroot?
A. No.
Q. Was any payment made by Mr. or Mrs. Kroot on the basis of the
invoice here?
A. Not to my knowledge.”
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No. 1-18-1392
¶ 18 Baker testified that he believed that the entries on exhibit 19 reflecting the work that he
performed in this case represent the minimum number of hours he worked on the file. However,
he too admitted that he kept no time slips or records of the actual time that he spent working on
this case. He stated: “I did not keep count of the time.” When questioned about the time he spent
in representing the plaintiffs at their depositions as reflected on exhibit 19, he responded that it
was his “best estimate.”
¶ 19 Dunne testified that the work that she performed on this case related to the defendants’
earlier appeal. According to Dunne, she made the entries on exhibit 19 relating to the work that
she performed. She admitted, however, that she did not keep any time records and that she made
the entries on exhibit 19 about eight months after the work was performed.
¶ 20 Exhibit 19 was never offered or received in evidence, and neither plaintiff testified at the
evidentiary hearing. The defendants rested without calling any witnesses.
¶ 21 The defendants argue that the circuit court erred in awarding attorney fees to the plaintiffs
pursuant to section 55 of the Act, as there is no evidence in the record that the plaintiffs incurred
legal fees. Relying upon two affidavits attached as exhibit 7 to their petition for an award of
attorney fees and costs, the plaintiffs contend that there is evidence in the record that they were
billed for the legal services rendered by GWC. The affidavits that make up exhibit 7 are from the
plaintiff Jason M. Kroot and Sorce. Jason M. Kroot’s affidavit states: “The Attorney Invoice,
attached as Exhibit C to the Plaintiffs’ Petition for Costs and Attorney Fees reflects the charges
billed to the Plaintiffs.” Sorce’s affidavit states: “The Attorney Invoice, attached as Exhibit C to
the Plaintiffs’ Petition for Costs and Attorney Fees reflects the charges billed to the Plaintiffs by
Goldberg Weisman Cairo.”
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¶ 22 The affidavits relied upon by the plaintiffs to establish that they were billed for the legal
services rendered by GWC are out-of-court statements that the plaintiffs now rely upon to
establish the truth of facts asserted therein. They are hearsay (see Ill. R. Evid. 801(c) (eff. Oct.
15, 2015)) and do not fall under any exception to the rule against hearsay. The fact that the
defendants never objected to those affidavits is understandable; they were never offered into
evidence.
¶ 23 The record in this case contains no evidence that (1) the plaintiffs ever agreed to pay for
the legal services rendered by GWC or, if they did agree to pay for those services, the terms of
their agreement and the hourly rate to be paid; (2) they were ever billed for the legal services
rendered by GWC; (3) they ever paid for legal services rendered by GWC; or (4) GWC expected
to be paid by the plaintiffs for the legal services rendered by the firm in this case. There is
evidence in the record that one of the plaintiffs is an attorney employed by GWC, that, other than
the unaddressed document entitled “Attorney Invoice—Amended on 4-16-18” and labeled
exhibit 19, no invoices were ever sent to the plaintiffs, and that the plaintiffs never paid any legal
fees. Stated otherwise, there is no evidence in the record before us to establish that the plaintiffs
incurred attorney fees. As it relates to their ability to recover attorney fees from Chan pursuant to
section 55 of the Act, it was the plaintiffs’ burden to establish that they incurred legal fees.
¶ 24 Aside from the argument that the plaintiffs failed to prove that they incurred legal fees in
the prosecution of their claim brought pursuant to the Act, the defendants also argue that the
plaintiffs failed to introduce any competent evidence of the reasonableness of the fees that they
were awarded. We agree.
¶ 25 As the parties seeking an award of attorney fees, the plaintiffs had the burden of proving
their entitlement to the fees sought. Schorsch, 286 Ill. App. 3d at 1033. An award of attorney fees
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must be based upon facts in evidence (First National Bank of Decatur v. Barclay, 111 Ill. App.
3d 162, 164 (1982)) and cannot be based upon speculation or conjecture as to the attorney’s time
expended in performing legal services (Berdex International, Inc. v. Milfico Prepared Foods,
Inc., 258 Ill. App. 3d 738, 742 (1994) (citing Kaiser v. MEPC American Properties, Inc., 164 Ill.
App. 3d 978, 984 (1987))).
¶ 26 It is clear from the testimony of Sorce, Baker, and Dunne that no timesheets, time slips,
or contemporaneous billing records were kept by GWC in relation to the legal services rendered
to the plaintiffs in this case and that they kept no time records of their own. Sorce and Baker
admitted that their testimony as to the amount of time that they spent in performing legal services
in this case was their best estimate of the minimum amount of time spent. Dunne admitted that
the entries she made on exhibit 19 reflecting the time that she spent representing the plaintiffs in
the defendants’ prior appeal were made eight months after the work was performed. The fact that
GWC is, as Sorce testified, a contingent fee law firm does not excuse the failure to keep records
of the time spent representing the plaintiffs in this case. Flynn v. Kucharski, 59 Ill. 2d 61, 67
(1974).
¶ 27 Sorce, Baker, and Dunne testified that they reviewed the file in this case along with the
pleadings and document that they prepared. And although they testified that the time reflected on
exhibit 19 for the legal services which they performed was conservative and represented the
minimum amount of time spent, in the absence of contemporaneous time records or testimony
that they had an independent recollection of the actual amount of time spent in performing each
task, their testimony as to the amount of time they expended in representing the plaintiffs is the
product of estimates and conjecture as to the time that they probably expended. Their testimony
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in this regard was speculation and, therefore, insufficient to establish the amount of reasonable
attorney fees incurred by the plaintiffs in the prosecution of their claim under the Act.
¶ 28 Based on the foregoing analysis, we find that the plaintiffs failed to satisfy their burden of
proving an entitlement to an award of legal fees against Chan pursuant to section 55 of the Act.
We conclude, therefore that the circuit court abused its discretion in awarding $58,712.50 for
attorney fees against Chan and, as a consequence, reverse $58,712.50 of the judgment entered
against him on June 4, 2018.
¶ 29 Although we have reversed $58,712.50 of the $67,333.76 judgment entered against the
defendants on June 4, 2018, there remains $8624.26 of that judgment that was not awarded for
attorney fees. The order of June 4, 2018, states that the judgment in favor of the plaintiffs was for
“costs and expenses” in addition to attorney fees. The defendants have made no argument on
appeal as to the propriety of the trial court having awarded the plaintiffs $8624.26 for costs and
expenses. Points not argued on appeal are forfeited. Ill. S. Ct. R. 341(h)(7) (eff. May 25, 2018).
As a consequence, any claim of error in the circuit court’s $8624.26 award against the
defendants for costs and expenses has been forfeited. See Meyers v. Kissner, 149 Ill. 2d 1, 8
(1992).
¶ 30 For the reasons stated, we reverse $58,712.50 of the $67,333.76 judgment entered against
the defendants on June 4, 2018, and affirm $8624.26 of that judgment against both defendants.
¶ 31 Affirmed in part and reversed in part.
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