The Ridgeland Corp v. Stonedry, LLC , 2022 IL App (1st) 200259-U ( 2022 )

2022 IL App (1st) 200259-USECOND DIVISION
February 8, 2022
No. 1-20-0259
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
THE RIDGELAND CORP., RUFUS COOK, Individually ) Appeal from the
and BARBARA REVAK, Individually, ) Circuit Court of
) Cook County.
Plaintiffs/Petitioners-Appellants, )
)
v. ) No. 16 L 5474
)
STONEDRY, LLC, and SHERIFF OF COOK COUNTY, )
IL, ) Honorable
) Margaret A. Brennan,
Defendants/Respondents-Appellees. ) Judge Presiding.
______________________________________________________________________________
JUSTICE HOWSE delivered the judgment of the court.
Presiding Justice Fitzgerald Smith and Justice Cobbs concurred in the judgment.
ORDER
¶1 Held: We affirm the trial court’s judgment dismissing the section 2-1401 petition and
remand with instructions; the trial court had jurisdiction of the parties and the subject
matter when it entered its judgment, therefore, the trial court’s judgment whether
erroneous or not was not void; and, the fraudulent conduct petitioner alleged did not
constitute extrinsic fraud, therefore the alleged fraudulent acts are not recognized by
courts as a basis to vacate a judgment entered by a court with personal and subject matter
jurisdiction.
¶2 Plaintiffs, The Ridgeland Corporation, Rufus Cook and Barbara Revak, individually,
(herein collectively Ridgeland) filed a complaint in the circuit court of Cook County seeking
damages for breach of an oral contract. Ridgeland alleged defendant, Stonedry, LLC, breached
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an oral agreement which modified an earlier written settlement agreement between the parties.
(For clarity, we will refer to the subsequent oral agreement modifying the settlement agreement
as the “oral agreement” and the underlying written settlement agreement as the “written
agreement.”) After a bench trial the court entered a judgment in favor of Stonedry.
¶3 Ridgeland did not file a motion for a new trial or a notice of appeal. However, more than
30 days after the judgment Ridgeland filed a petition pursuant to section 2-1401 of the Code of
Civil Procedure (Code) (735 ILCS 5/2-1401 (West 2020)). In the petition Ridgeland argued that
the judgment on the complaint for breach of the oral agreement was void and procured by fraud.
Ridgeland alleged Andres Schcolnik committed fraud when he falsely represented that he was a
member of Stonedry and was authorized to sign the written agreement on behalf of Stonedry;
however, Schcolnik was neither a member nor manager of Stonedry. Stonedry filed a motion to
dismiss the 2-1401 petition pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West
2020)), which the trial court granted. For the following reasons we affirm and remand with
instructions.
¶4 BACKGROUND
¶5 Ridgeland was an owner of a commercial building located at 7411 S. Stony Island
Avenue in Chicago. The property was sold for delinquent taxes at the 2013 scavenger tax sale
conducted by Cook County. Stonedry acquired the certificate of sale for the property taxes and
commenced proceedings in the circuit court to obtain an order for a tax deed. Ridgeland
contested the tax deed proceedings. After protracted litigation in the County Division of the
circuit court and in the municipal department the eviction court, the parties reached a settlement.
The written settlement provided that in exchange for Stonedry paying Ridgeland the sum of
$80,000, Ridgeland agreed not to contest the tax deed proceedings and to allow Stonedry to
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obtain a tax deed. The written settlement also provided that Ridgeland would surrender
immediate possession of the building to Stonedry, except that Ridgeland could occupy a
specified space in the building until April 1, 2016. An individual, Andres Schcolnik, signed the
written agreement on behalf of Stonedry as a “member” of Stonedry.
¶6 Ridgeland did not surrender possession to Stonedry on April 1, 2016 as specified in the
written agreement. Stonedry subsequently filed a forcible detainer action against Ridgeland to
evict Ridgeland from the space it was allowed to possess under the written agreement. After
Stonedry filed an eviction case, Ridgeland filed the underlying complaint at issue in this case
alleging there was an oral agreement between Ridgeland and Stonedry modifying the terms of
the written agreement, which Stonedry breached. The parties engaged in pretrial discovery.
Ridgeland learned through discovery that Stonedry was organized as a manager-managed LLC
and that the only members of Stonedry were Gammadock LLC and S. Bronze LLC. However,
Schcolnik signed the settlement agreement as a “member” of Stonedry.
¶7 Before trial, Ridgeland filed a trial brief in which it argued the written agreement was
void because an unauthorized person signed the agreement for Stonedry:
“Regarding the existence of a contract, as the footnote at page 2 pointed
out, Ridgeland learned through discovery only after the complaint was filed that
Schcolnik neither was then or is now a member or manager of the manager-
managed Stonedry, LLC. (He thus could not, as matter of law, bind Stonedry to
anything including the Settlement Agreement. See 805 ILCS 180/13-5 et seq.)
The evidence and law will show that the December 1, 2015 Settlement Agreement
thus was invalid because Schcolnik couldn’t and didn’t bind Stonedry to that
agreement or any other.”
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¶8 The trial court conducted a bench trial, and on July 12, 2019, entered judgment for
Stonedry. The court found plaintiff’s testimony that an oral agreement existed not credible. The
court also considered and expressly rejected Ridgeland’s claim that it would not have entered
into the written agreement if it knew Schcolnik was not authorized to act for Stonedry. In its
written order the trial court held:
“Lastly, Plaintiffs’ claim that they would not have entered into the
agreement had they known that Andres Schcolnik was [not] the member of the
member LLC rings hollow. In fact, Plaintiffs are not even a party permitted to
complain about Schcolnik not having authority to act; such a complaint is solely
for Stonedry to make.”
¶9 Ridgeland did not file a posttrial motion. Ridgeland initially applied to the trial court for
an extension of time to file a notice of appeal. However, the motion was not filed within 30 days
of the judgement as required by Illinois Supreme Court Rule 303 (eff. Jul 1, 2017). Ridgeland
did not request an extension of time from the appellate court to file a notice of appeal but instead,
on October 2, 2019, filed the 2-1401 petition that is the subject of this case.
¶ 10 In its 2-1401 petition Ridgeland argued that the written agreement and the trial court’s
judgement were void because the written agreement was not signed by a person authorized to act
for Stonedry and the judgment was obtained through fraud. Ridgeland argued that Andres
Schcolnik committed fraud when he falsely represented that he was a member of Stonedry and
authorized to act for Stonedry. Ridgeland also argued that the attorneys for Stonedry were
retained by Andres Schcolnik, who was not authorized to act for Stonedry; therefore, all the
actions by the attorneys hired by Schcolnik were unauthorized and therefore void including the
tax deed petition and defense of this case. Ridgeland alleged Schcolnik’s actions, purportedly
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undertaken for manager-managed Stonedry, in both the tax deed proceeding and in the law
division suit arising therefrom, are legal nullities and a fraud on both courts.
¶ 11 Stonedry argued that Ridgeland is attempting to use a 2-1401 petition as a substitute for
an appeal. Stonedry’s section 2-615 motion to dismiss argued Ridgeland failed to show a
meritorious cause of action and due diligence as required by section 2-1401. Stonedry argued the
judgment was not void because the trial court had jurisdiction of the parties and the subject
matter, therefore Ridgeland was required to demonstrate a meritorious claim and due diligence.
The trial court found Ridgeland failed to allege a meritorious claim and due diligence and
dismissed the petition. Ridgeland filed a timely notice of appeal from the denial of the 2-1401
petition.
¶ 12 This appeal followed.
¶ 13 ANALYSIS
¶ 14 On appeal Ridgeland argues the trial court erred when it dismissed its 2-1401 petition for
failure to allege due diligence and a meritorious claim. Ridgeland argues it is excused from
alleging due diligence and a meritorious claim because the judgment is void. According to
Ridgeland, the actions purportedly taken by Stonedry were actually actions by Schcolnik,
Schcolnik was not authorized to act for Stonedry, and his actions and the unauthorized acts of the
attorneys he hired render the judgment void. Ridgeland argues that because the judgment is void
it were not required to plead due diligence and a meritorious claim, and the trial court erred when
it dismissed the 2-1401 petition for failure to allege due diligence and a meritorious claim.
Ridgeland further argues that all actions taken by Schcolnik on behalf of Stonedry, including
signing the written agreement and hiring lawyers to prosecute the tax deed proceedings and
defend this case, are unauthorized. Ridgeland argues that since the attorneys were not authorized
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by Stonedry, all their actions and the judgments resulting from their actions are void, excusing
Ridgeland from the statutory requirement to plead due diligence and a meritorious claim in the 2-
1401 petition. Finally, Ridgeland argues that Schcolnik’s act of signing the written agreement as
a “member” was fraud, and because the judgement was based on fraud, Ridgeland is excused
from pleading due diligence and a meritorious claim.
¶ 15 Stonedry responds Ridgeland is attempting to use the 2-1401 petition as a substitute for
an appeal. Stonedry argues that the trial court had jurisdiction of the parties and subject matter,
therefore the judgment is not void, and Ridgeland was required to plead due diligence and a
meritorious claim.
¶ 16 This court has jurisdiction of this appeal from an order denying a 2-1401 petition. Ill. S.
Ct. R. 304(b)(3) (eff. Mar. 8, 2016).
¶ 17 STANDARD OF REVIEW
¶ 18 This is an appeal from a dismissal under section 2-615 of a 2-1401 petition. To be
entitled to relief from a final judgment or order under section 2-1401, the petition must set forth
specific factual allegations supporting each of the following elements: (1) the existence of a
meritorious defense or claim; (2) due diligence in presenting this defense or claim to the circuit
court in the original action; and (3) due diligence in filing the section 2-1401 petition for relief.
Warren County Soil and Water Conservation District v. Walters, 2015 IL 117783, ¶ 37 (citing
Smith v. Airoom, 114 Ill. 2d 209, 220-21 (1986)). Petitions pursuant to section 2-1401 are
essentially complaints inviting responsive pleadings. See Ostendorf v International Harvester
Co., 89 Ill. 2d 273, 279 (1982) (“The petition is in fact a new action and is subject to the usual
rules of civil practice.”). The petition is subject to dismissal for want of legal or factual
sufficiency. Brockmeyer v. Duncan, 18 Ill. 2d 502, 505 (1960). Thus, the petition may be
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dismissed upon a challenge that, even taking its allegations as true it does not state due diligence
or a meritorious claim under section 2–1401 case law. “Like a complaint, the petition may be
challenged by a motion to dismiss for its failure to state a cause of action or if, on its face, it
shows that the petitioner is not entitled to relief.” Klein v. LaSalle National Bank, 155 Ill. 2d
201, 205 (1993) (citing Ostendorf, 89 Ill. 2d at 279-80; Brockmeyer, 18 Ill. 2d at 505).
¶ 19 However, the statutory requirement to allege due diligence and a meritorious claim may
be excused if the judgment was procured by fraud. “A judgment entered by a court, otherwise
exercising proper jurisdiction, is open to collateral attack where fraud existed in its
procurement.” Doctor’s Associates, Inc. v. Duree, 319 Ill. App. 3d 1032, 1043 (2001).
¶ 20 JUDGMENT IS NOT VOID
¶ 21 We will first consider whether the underlying judgment is void. Our supreme court has
determined that a trial court judgement is void only when the court lacks jurisdiction of the
parties and the subject matter:
“As we held in Steinbrecher, whether a judgment in a civil lawsuit that
does not involve administrative law is void rests solely on whether the circuit
court which entered the challenged judgment possessed jurisdiction over the
parties and the subject matter. [Citation.] If the circuit court ‘had both subject
matter jurisdiction and personal jurisdiction over the parties [then] the judgment is
not “void.” ’ [Citation.]” (Emphasis added.) LVNV Funding, LLC v. Trice, 2015
IL 116129, ¶ 48 (citing Steinbrecher v. Steinbrecher, 197 Ill. 2d 514, 530-31
(2001)).
¶ 22 A review of the record shows the trial court had personal jurisdiction of the parties when
it entered the judgment. When Ridgeland filed its complaint for breach of contract, it submitted
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to the jurisdiction of the court and invoked the jurisdiction of the trial court to hear its claim.
Ligon v. Williams, 264 Ill. App. 3d 701, 707 (1994) (court’s authority to exercise its jurisdiction
and resolve a justiciable question is invoked through the filing of a complaint or petition). After
the complaint was filed, Ridgeland had the sheriff of Cook County serve both defendants with
the complaint and summons. We find the trial court acquired personal jurisdiction of Ridgeland
when it filed its complaint and the court acquired personal jurisdiction of Stonedry and the
Sheriff of Cook County when they were served. Id.; Department of Healthcare & Family
Services ex rel. Hodges v. Delaney, 2021 IL App (1st) 201186, ¶ 29 (“Serving a copy of a
summons and complaint on a party-defendant is an essential part of the litigation process and
allows a court to obtain personal jurisdiction over that defendant.”).
¶ 23 Ridgeland alleges that because the attorneys Schcolnik hired were not authorized by
Stonedry their actions defending this case were void and Stonedry did not authorize any defense
to this case. Ridgeland argues the lack of a defense in the case renders the judgment in their
favor void. In support, Ridgeland cites Stone Street Partners v City of Chicago, 2014 IL App
(1st) 123654. In that case a building owned by Stone Street Partners was cited for code
violations. Stone Street Partners, 2014 IL App (1st) 123654, ¶ 1. The record did not show Stone
Street was ever served notice of an administrative hearing; however, on the hearing date a
layperson who was a caretaker for one of the partners filed an appearance on behalf of Stone
Street Partners. Id. ¶¶ 3-5. None of the partners authorized the individual to file the appearance.
Id. ¶ 5. However, a judgment was entered against Stone Street for the violations. Id. ¶ 4. Ten
years later Stone Street learned about the judgment and filed a petition before the administrative
agency to have the judgment vacated, arguing they never received notice. Id. ¶ 5. The petition
was denied with prejudice by the hearing officer because more than 10 years had elapsed and the
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hearing officer held he did not have jurisdiction. Id. The circuit court of Cook County denied
relief. Id. ¶ 14. The appellate court affirmed in part and reversed in part and remanded for further
proceedings. Id. ¶ 34.
¶ 24 The parties filed cross-appeals to our supreme court. Stone Street Partners, LLC v. City of
Chicago Department of Administrative Hearings, 2017 IL 117720. Our supreme court found that
the appellate court concluded that Stone Street had not, in fact, been afforded the necessary
notice and opportunity to be heard prior to entry of the September 9, 1999 judgment against it,
and that Stone Street could not be deemed to have waived its objection to proper notice based on
the layperson’s participation at the September 9 hearing. Stone Street Partners, LLC, 2017 IL
117720, ¶ 17. Our supreme court affirmed the appellate court. Id. ¶ 39. The court held that the
unauthorized appearance on behalf of Stone Street, even if had been filed by a licensed attorney,
did not submit it to the jurisdiction of the court because it was not authorized. Id. ¶¶ 28-29.
“A defendant does not waive objection to a tribunal’s exercise of
jurisdiction based on the participation of a person who has not been authorized by
the defendant, expressly or impliedly, to appear on its behalf, and there is no
proof of ratification. That is so even if the purported representative is a licensed
attorney.” Id. ¶ 28.
¶ 25 Ridgeland argues the appearance by the attorneys in this case was not authorized and
therefore, like in Stone Street, there was no jurisdiction and the judgment is void. However,
Stone Street can be distinguished from this case. Our supreme court rejected the argument Stone
Street submitted to the jurisdiction of the court by the filing of an appearance by a person who
was not authorized to file an appearance. Id. Therefore, Stone Street did not submit to the
jurisdiction of the court as a result of the appearance being filed. Id. ¶ 35.
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¶ 26 In contrast, in this case the trial court had already acquired personal jurisdiction of
Stonedry before the allegedly unauthorized attorneys appeared in the case because the sheriff
served the defendants with the summons and complaint. The allegedly unauthorized attorneys
did nothing to divest the trial court of the personal jurisdiction it had already validly obtained
over Stonedry when the sheriff served it with the complaint and summons. Because Ridgeland
submitted to the jurisdiction of the court when it filed the complaint and the defendants were
duly served with summons and complaint, we conclude that the trial court had personal
jurisdiction of the parties when it entered its judgment.
¶ 27 Next, we consider whether the trial court had jurisdiction of the subject matter. “With the
exception of the circuit court’s power to review administrative action, which is conferred by
statute, a circuit court’s subject matter jurisdiction is conferred entirely by our state constitution.”
In re M.M., 156 Ill. 2d 53, 65 (1993) (citing Ill. Const. 1970, art. VI, § 9). Under section 9 of
article VI, that jurisdiction extends to all “justiciable matters.” Ill. Const. 1970, art. VI, § 9. Thus,
in order to invoke the subject matter jurisdiction of the circuit court, a plaintiff’s case, as framed
by the complaint or petition, must present a justiciable matter. See People ex rel. Scott v. Janson,
57 Ill. 2d 451, 459 (1974) (if a complaint states a case belonging to a general class over which
the authority of the court extends, subject matter jurisdiction attaches). The constitution does not
define “justiciable” matter but our courts have.
“Generally, a ‘justiciable matter’ is a controversy appropriate for review
by the court, in that it is definite and concrete, as opposed to hypothetical or moot,
touching upon the legal relations of parties having adverse legal interests.
[Citations.]” Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d
325, 335 (2002).
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¶ 28 In this case, Ridgeland filed a complaint alleging that Stonedry breached an oral
agreement. The dispute between Ridgeland and Stonedry was definite and concrete, was not
hypothetical or moot, and was appropriate for review. Clearly the parties had adverse interests.
We conclude that the issue of whether an oral contract was breached is a justiciable matter, and
since the circuit court has jurisdiction of all justiciable matters, it had subject matter jurisdiction
of this case.
¶ 29 The trial court had personal jurisdiction of the parties and subject matter jurisdiction of
the dispute; therefore, the judgment is not void. Ridgeland is not excused from the requirement
that 2-1401 petitioners plead due diligence and a meritorious claim because the court lacked
personal and subject matter jurisdiction when it entered the judgment. Therefore, we next
examine whether Ridgeland may collaterally attack the judgment on the basis the judgment was
procured through fraud, thereby excusing the need to establish due diligence and a meritorious
claim in the petition.
¶ 30 THE FRAUD ALLEGATIONS
¶ 31 Ridgeland argues Schcolnik fraudulently misrepresented his authority to act for Stonedry
throughout the court proceedings. Ridgeland claims Schcolnik was not authorized to hire lawyers
to prosecute the tax deed case, file the eviction case, defend this case, and Schcolnik was not
authorized to sign the written agreement. Ridgeland correctly states that courts have excused the
requirement to establish due diligence and a meritorious claim when a judgement is procured
through fraud; however, only fraud that is extrinsic, as opposed to intrinsic, will render a
judgment unenforceable. This court has held:
“Not all fraud, however, renders a judgment void. [Citation.] An order is
rendered void not by error or impropriety but by lack of jurisdiction by the issuing
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court. [Citation.] Where fraud prevented a court from acquiring jurisdiction or
merely gave the court colorable jurisdiction, sometimes referred to as ‘extrinsic
fraud,’ the judgment obtained as a result is void. [Citation.] Extrinsic fraud occurs
in situations where an unsuccessful party has been prevented from fully exhibiting
his case by being kept away from the court or is kept from gaining knowledge of
the suit. [Citation.] Such fraud has the purpose and effect of preventing the court
from acquiring personal jurisdiction over the unsuccessful party. [Citation.]”
(Internal quotation marks omitted.) American Advisors Group v. Cockrell, 2020
IL App (1st) 190623, ¶ 24.
By contrast, intrinsic fraud is fraud that occurs after the court acquires jurisdiction, such as false
testimony, and goes to the merits of the case. See Duree, 319 Ill. App. 3d at 1043.
¶ 32 In this case, Ridgeland accuses Schcolnik of misrepresenting his status and authority
when he acted for Stonedry. Ridgeland alleges Schcolnik testified falsely and misrepresented his
authority to enter into agreements on behalf of Stonedry. However, Schcolnik’s
misrepresentations did not prevent Ridgeland from having a fair opportunity to present its case.
The 2-1401 petition filed by Ridgeland alleges intrinsic fraud. Only extrinsic fraud is recognized
by the courts as a basis to vacate a judgment entered by a court with both personal and subject
matter jurisdiction. American Advisors Group, 2020 IL App (1st) 190623, ¶ 24. Because the
fraud complained of by Ridgeland is intrinsic fraud, Ridgeland may not collaterally attack the
judgment as void on the basis of the alleged fraud committed by Schcolnik.
¶ 33 We conclude the fraud allegations in the 2-1401 petition filed by Ridgeland fail to state a
claim under section 2-1401 because, taking Ridgeland’s factual allegations as true, Ridgeland
has not alleged extrinsic fraud, Ridgeland has not alleged due diligence or a meritorious claim,
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and, therefore, Ridgeland has failed to state any grounds for relief. We affirm the trial court’s
dismissal of the petition under section 2-615 because Ridgeland has failed to state a legally
sufficient claim under section 2-1401 law to vacate the judgment.
¶ 34 AMENDMENT OF PETITION
¶ 35 Finally, Ridgeland alleges the trial court abused its discretion when it dismissed it’s 2-
1401 petition and refused to allow Ridgeland to amend the petition. We find no evidence in the
record that the trial court refused a request to amend the petition. There is no written motion in
the record nor is there a transcript from which we can determine whether an oral motion to
amend was made.
¶ 36 More importantly, assuming Ridgeland made an oral motion to amend, there is no
evidence Ridgeland ever tendered a proposed amended petition to the trial court. Ridgeland has
therefore waived any error. A plaintiff’s failure to tender an amended complaint diminishes the
appellate court’s ability to determine whether the proposed amendment would have provided a
viable cause of action and constitutes waiver of the right to review of the denial of a request for
leave to amend. Mendelson v. Ben A. Borenstein & Co., 240 Ill. App. 3d 605, 619 (1992). “The
plaintiff’s proposed amended complaint does not appear in the record; the plaintiff’s failure to
make it a part of the record waives his right to have this court review the trial court’s denial of
his motion.” Kirk v. Michael Reese Hospital & Medical Center, 117 Ill. 2d 507, 521 (1987).
¶ 37 In this case Ridgeland did not make a proposed amended 2-1401 petition a part of the
record; therefore, it has waived any issue that the court improperly denied leave to amend.
¶ 38 RULE 375(b) SANCTIONS
¶ 39 Stonedry argues that the appeal is frivolous and filed for the improper purpose of
delaying the proceedings. We agree.
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“An assessment of Rule 375(b) sanctions is a matter of our discretion.
[Citation.] We apply an objective standard to determine whether an appeal is
frivolous, considering whether it would have been brought in good faith by a
reasonable, prudent attorney. [Citations.]” Victim A. v. Song, 2021 IL App (1st)
200826, ¶ 25.
¶ 40 This court has previously found that Ridgeland failed to abide by the parties’ agreed
order of December 1, 2015, and instead sought to circumvent their agreements by filing dilatory
pleadings. In re Application of the County Treasurer of Cook County, Illinois for General Taxes
for the Years 2009-2011 (Stonedry, LLC v. The Ridgeland Corp.), 2019 IL App (1st) 171539-U,
¶ 56. More importantly, appellants’ arguments in this appeal find no support in the record or in
case law. We find that no reasonably prudent attorney acting in good faith would have brought
this appeal. Therefore, we remand to the trial court for the sole purpose of assessing fees and
costs for defending this appeal against appellants.
¶ 41 Accordingly, the trial court’s judgment is affirmed, and the cause remanded with
instructions.
¶ 42 CONCLUSION
¶ 43 We affirm the judgment of the trial court and remand this matter to the trial court solely
for the purpose of assessing costs and attorney fees against appellants.
¶ 44 Affirmed and remanded, with instructions.
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