Peterson v. Randhava, No. 1-98-2514

1st District, March 27, 2000

FIRST DIVISION

PRESIDING JUSTICE O'MARA FROSSARD delivered the opinion of the court:

Plaintiff, Richard C. Peterson, appeals the trial court's order granting summary judgment in favor of defendants, Susan B. Randhava and Koenig & Strey, Inc., and dismissing his five-count amended complaint with prejudice. On appeal, plaintiff raises two claims of error: (1) that the trial court erred in transforming defendants' motion for sanctions into a motion for summary judgment sua sponte; and (2) that the trial court erred in granting summary judgment to defendants. Randhava has filed a cross-appeal of the denial of her motion for sanctions. For the reasons that follow, we reverse in part, affirm in part, and remand for further proceedings consistent with this opinion.

FACTS

On August 2, 1996, plaintiff filed an action against both Susan B. Randhava, a real estate agent, and Koenig & Strey, Inc. (Koenig), Randhava's employer, a real estate agency. The complaint alleged that on October 30, 1994, plaintiff entered into a written real estate contract to purchase property on Old Glenview Road in Wilmette, Illinois (the Glenview property). Defendant Randhava and codefendant Koenig acted as plaintiff's agents in connection with this purchase. Plaintiff alleged that in order for him to collect the funds necessary for his purchase, he needed to sell his current home, located on Asbury Road in Evanston (the Asbury property). To sell the Asbury property, plaintiff signed a listing agreement executed by Randhava, which named Randhava as the listing salesperson for the Asbury property.

Plaintiff alleged that Randhava devised a scheme to acquire the Glenview property for herself. As part of the scheme, she convinced plaintiff that he would not be able to obtain financing for the Glenview property unless she and plaintiff purchased the property together as partners. As a result of these representations, plaintiff agreed to purchase the Glenview property as a joint venture partner with Randhava. Under the joint venture agreement, plaintiff had an option to purchase Randhava's ownership interest in the property until July 31, 1995. Plaintiff's right to purchase the Glenview property terminated after that date. At that time, Randhava would then acquire the right to purchase the property.

Next, plaintiff alleged that Randhava took steps to prevent the sale of the Asbury property by pricing it in excess of its market value. In support of this claim, he alleged that he obtained an appraisal of the fair market value of the Asbury property and that as of November 16, 1994, its estimated fair market value was appraised at $185,000. Plaintiff alleged that Randhava knew of the estimated fair market value of the Asbury property, but, in furtherance of her scheme to obtain the Glenview property for herself, she listed the Asbury property at $212,500, a price that plaintiff alleged was excessive in light of its actual market value. When plaintiff questioned Randhava regarding the listing price, Randhava assured plaintiff that she had priced the property appropriately for the market. She also informed plaintiff that lowering the listing price would not hasten the property's sale.

In addition to intentionally overpricing the property and subsequently refusing to lower its listing price, plaintiff also alleged that Randhava failed to communicate offers to buy the property to him and did not make a good-faith effort to sell the Asbury property by actively discouraging prospective purchasers and failing to return telephone requests for information about the property. Consequently, plaintiff alleged, he failed to sell the Asbury property before July 31, 1995, and was unable to purchase the Glenview property. Plaintiff alleged that he subsequently sold the Asbury property for a sum of $180,000 on August 4, 1995. However, by that time the deadline for plaintiff to purchase Randhava's interest in the Glenview property had expired. Randhava acquired plaintiff's interest in the Glenview property on August 7, 1995.

On August 2, 1996, plaintiff filed this action against both defendant Randhava and codefendant Koenig. Each filed motions to dismiss plaintiff's original complaint pursuant to section 2-615 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-615 (West 1998). The trial court granted both motions without prejudice and allowed plaintiff to file an amended complaint. On March 26, 1997, plaintiff filed his amended complaint, which included five counts. Plaintiff's amended complaint alleged: (1) count I, breach of fiduciary duty by Randhava; (2) count II, breach of the listing agreement by Koenig; (3) count III, breach of fiduciary duty by Koenig; (4) count IV, violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1998)) by Randhava; and (5) count V, violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1998)) by Koenig.

Randhava moved to dismiss count I pursuant to both sections 2-615 and 2-619, and count IV pursuant to section 2-615, while codefendant moved to dismiss counts II, III, and V pursuant to section 2-615. 735 ILCS 5/2-615, 2-619 (West 1998). The trial court denied both defendants' motions with respect to counts I, III, IV and V, but dismissed with prejudice count II against Koenig for breach of the listing agreement. Thereafter, Randhava filed her answer, affirmative defenses and a counterclaim against plaintiff on August 25, 1997. Codefendant filed its answer and affirmative defenses on September 19, 1997.

On September 12, 1997, Randhava filed a motion for rule to show cause and to strike plaintiff's amended complaint. In her motion, Randhava alleged that the sale of the Asbury property for the lower price of $180,000 was the only factual allegation in plaintiff's complaint that would enable him to recover. However, Randhava further alleged that this was not the actual final purchase price of the Asbury property, but that the true purchase price was $210,000. In addition, Randhava claimed that plaintiff made the false allegation that the property sold for the sum of $180,000 with knowledge of its falsity and sought a rule to show cause why plaintiff should not be held in contempt for filing a knowingly false pleading.

The court continued the hearing on Randhava's motion until September 17, 1997. On September 17, 1997, Randhava filed another motion, this time for sanctions pursuant to Supreme Court Rule 137. 155 Ill. 2d R. 137. Randhava based this motion on the same allegedly false allegation of the purchase price contained in plaintiff's complaint. The motion for sanctions sought the dismissal with prejudice of plaintiff's complaint and an order requiring plaintiff to compensate Randhava for her attorney fees. The trial court allowed codefendant to join in Randhava's motion for sanctions and continued Randhava's motion for rule to show cause. The court stayed all discovery in the matter, with the exception of discovery regarding the purchase price of the Asbury property. On March 18, 1998, the court heard arguments on the motion. On June 10, 1998, the court denied defendants' motion for sanctions, but decided to grant summary judgment sua sponte in favor of both defendants although no motion for summary judgment was pending at that time.

In addition, the trial court's order, entered June 10, 1998, contains the court's denial of

defendants' motion for rule to show cause, in light of the court's oral finding that the entry of summary judgment rendered the motion moot. Plaintiff now appeals the order granting summary judgment, and Randhava cross-appeals the denial of her motion for sanctions. Koenig did not file a separate brief but adopted the arguments and brief of Randhava.

ANALYSIS

I. Rule 137 Sanction Motion Was Not Premature

Plaintiff asserts that the trial court erred in allowing Randhava to file her motion for Rule 137 sanctions at such an early stage of the proceedings. Plaintiff emphasizes that Randhava filed her motion for sanctions prior to the start of discovery on the substantive issues involved in the case. In fact, the court had ordered a stay on all discovery proceedings, other than those related to the single issue of the final purchase price of the Asbury property. Moreover, plaintiff notes that Randhava's motion for sanctions came a mere 2