Opinion
No. 2-18-1051 No. 2-18-1052 cons.
02-03-2020
MICHAEL PAWULA and ARTUR SKIBA, Plaintiffs-Appellees, v. DENNIS McCORMICK, Defendant-Appellant.
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1). Appeal from the Circuit Court of Du Page County. No. 18-CH-516 Honorable Bonnie M. Wheaton, Judge, Presiding. JUSTICE JORGENSEN delivered the judgment of the court.
Justices Hudson and Bridges concurred in the judgment.
ORDER
¶ 1 Held: The trial court's order denying defendant's motion to vacate a default judgment must be reversed. Accordingly, the order approving the final custodians' report and for set-off must be vacated. ¶ 2 Plaintiffs, Michael Pawula and Artur Skiba, were minority shareholders of K & I Express, Inc. They sued defendant, Dennis McCormick, K & I's majority shareholder, to dissolve the corporation. Ultimately, the trial court entered a default judgment against defendant in the amount of $2,024,521.89, ordered dissolution of K & I, and approved the custodians' final report and distribution of the liquidation proceeds. Defendant appeals.
¶ 3 I. BACKGROUND
¶ 4 On April 20, 2018, plaintiffs filed their complaint, seeking dissolution of the corporation under section 12.56 of the Illinois Business Corporation Act (805 ILCS 5/12.56 (West 2016), and pleading causes of action for breach of fiduciary duty, conversion, and tortious interference with business relationships. The summons to defendant accompanying the complaint read: "You are Summoned and Required to file an answer to the complaint in this case, a copy of which is hereto attached, or otherwise file your appearance in the office of the Clerk of the Circuit Court, 505 N. County Farm Road, Wheaton, Illinois, within 30 days after service of this summons not counting the day of service. If you fail to do so, a judgment by default may be entered against you for the relief asked in the complaint." (Emphases added.) Plaintiffs' counsel prepared the summons, which reflects that it was mailed to Dennis McCormick, 19466 Woodlands Lane, Huntington Beach, California, 92646. ¶ 5 Also on April 20, 2018, plaintiffs filed an emergency motion for a temporary restraining order (TRO) and injunction. The notice of motion was directed to defendant's California address (same as listed above), with the certificate of service reflecting that: (1) it was sent to that address via overnight delivery; (2) personal service was attempted at that address; (3) it was sent via text message to defendant's cell phone; and (4) it was sent to three email addresses that presumably related to defendant, including "Dbmccormick64@gmail.com." ¶ 6 On April 23, 2018, the court held a hearing on plaintiffs' motion for a TRO. Defendant appeared and was represented by counsel. The court entered a temporary order, prohibiting any liquidation of K & I's assets or destruction of company records. In addition, per defendant's request, the court continued the hearing for seven days, granting him time to respond to the motion and to answer the complaint. ¶ 7 On May 1, 2018, however, when the parties returned to court, defendant had neither responded to the motion nor answered the complaint. Defense counsel, who formally entered an appearance that day, explained to the court that defendant's mother had died. Later, the court was informed that defendant's mother had actually passed away four weeks earlier (although the funeral was held the week prior to the hearing). Defendant arrived late to the hearing. The court announced that it was concerned with securing the company's assets and, accordingly, it appointed plaintiffs as temporary custodians of the property. Neither party was permitted to act on behalf of the corporation with respect to certain vehicles, equipment, and accounts. Defense counsel requested an additional 28 days to answer the complaint. The court continued the case until May 30, 2018, with defendant's answer due May 29, 2018. ¶ 8 On May 14, 2018, plaintiffs' counsel returned to court, representing that the parties had prepared an agreed order with respect to plaintiffs establishing a bank account, moving certain vehicles, and paying certain expenses. The court entered the agreed order. ¶ 9 On May 21, 2018, defense counsel filed a motion to withdraw. The motion recited that defendant had been notified that: "To ensure notice of any action in this cause, you should retain other counsel or file with the clerk of the court, within 21 days of the entry of the order of withdrawal, a supplemental appearance stating therein the address at which service of notices or other matters may be had on you." (Emphasis added.) Further, the certificate of service attested that the notice and motion were being served upon defendant via Federal Express, email, and certified mail, return receipt requested. The motion listed defendant's address as 19836 Berkshire Lane, Huntington Beach, California, 92646 (we note that this is a different address from that used to serve the complaint), and his email address as dbmccormick64@gmail.com. ¶ 10 On May 30, 2018, the court allowed the motion, announcing that it would give defendant 21 days to file a substitute appearance and setting a status date of June 22, 2018, for appearance of substitute counsel. The written order states that defendant had "21 days or until June 20, 2018, to file a substitute appearance." The common-law record contains nothing reflecting that this order, allowing counsel's withdrawal, was ever served upon defendant. ¶ 11 On June 22, 2018, plaintiffs' counsel informed the court that, although three orders (April 23, May 1, and May 30, 2018) had been entered allowing defendant to file an appearance, an answer, and a response to the TRO, he had filed none of those things. Plaintiffs orally requested entry of an order of default. The court entered the order of default, precipitating two written orders: first, the order signed by the judge, and prepared by plaintiffs' counsel, reads: "Defendant Dennis McCormick has failed to timely file an appearance, answer and response to the pending motion for injunctive relief. Accordingly, Mr. McCormick is found to be in default. Plaintiffs have leave to file a motion for default judgment." Second, the clerk of the circuit court issued an "official notice" of "entry of a default order against certain parties." The notice of default lists plaintiffs' counsel's address at the top. It then reads: "You are hereby notified in accordance with Section 2-1302, Code of Civil Procedure, that a default order was entered *** against certain parties in this case on the date of 6/22/2018. This notice is sent to all parties that have filed an appearance." (Emphasis added.) Nothing in the record reflects that these orders were served upon defendant. ¶ 12 Over the next 60 days (between June 22, and August 22, 2018), plaintiffs appeared before the court concerning defendant's actions with respect to the corporation's assets. Indeed, on July 25, 2018, plaintiffs filed an emergency motion for TRO, preliminary injunction, and issuance of a rule to show cause against defendant for his actions frustrating and interfering with the court's orders concerning K & I's assets. The certificate of service for the emergency motion reflects that plaintiffs served only defendant's initial attorney, who had withdrawn. At hearing, however, plaintiffs' counsel represented that his clients had spoken to defendant, who had agreed not to sell a piece of equipment; however, defendant still possessed titles to equipment that the custodians wished to sell. The court ordered defendant to produce and turn over titles to all equipment on or before August 1, 2018, and continued the emergency motion to August 2, 2018. Nothing in the record reflects that this order was sent to defendant. ¶ 13 However, the record reflects that, on July 27, 2018, defendant signed and emailed to plaintiffs (via his email address dbmccormick64@gmail.com) an agreed order regarding the equipment. The order had been prepared by plaintiffs' counsel, was dated July 25, 2018 (the same day they moved for an emergency TRO, serving only defendant's withdrawn counsel), and lists in the signature line defendant's address as 19466 Woodlands Lane, Huntington Beach, California, 92646. It does not appear that this agreed order, which defendant signed, was ever filed with the court. ¶ 14 On August 2, 2018, plaintiffs' counsel notified the court that plaintiffs had reached a tentative agreement with defendant and a private party to sell approximately 80% of the equipment. Counsel asserted that he was working to obtain agreed orders and requested until August 7, 2018, to prepare an agreed order for court approval. The court entered an order continuing the matter; nothing reflects that it was served on defendant. ¶ 15 On August 7, 2018, plaintiffs' counsel informed the court that there was an agreement on the sale of the equipment and a prior buyer, but the equipment titles remained a "hiccup." Counsel reminded the court that, two weeks earlier, it had entered an order directing defendant to turn the titles over, and "[m]y clients have confirmed that they've sent it to him via email, and they've made the demand over the phone when they've negotiated these sale terms with him, and he just keeps saying he's going to provide them and has not provided them." Plaintiffs requested an order giving them approval to complete the private sale and auction and, if defendant did not deliver the titles by August 9, 2018, that the court would, on August 10, 2018, order the Secretary of State to issue new titles. The court entered the requested order. Again, nothing reflects that defendant was served with this order. ¶ 16 On August 10, 2018, plaintiffs' counsel explained to the court that plaintiffs had spoken to defendant, who represented that he had sent all of the titles to them via overnight delivery and, further, that he had given them the tracking number. However, the delay in producing the titles and the existing litigation made the private buyer "get cold feet" and the sale fell through. Plaintiffs requested authority to move the equipment for purposes of selling it at auction. In addition, plaintiffs noted that they had received bank records reflecting that defendant had, unbeknownst to them, pledged K & I's checking account ($840,000) to secure bank loans he had obtained for other businesses for which he was the sole owner. ¶ 17 On August 20, 2018, plaintiffs filed a verified motion for default judgment. The notice of motion reflects that it was directed "To: Ex Parte." No names or addresses or certificates of service were included. Accordingly, at the August 22, 2018, hearing on the motion, the court asked counsel if he sent defendant notice that plaintiffs were moving for a default judgment. He replied, "The notice was not sent to [defendant] because I'm not sure where I'm supposed to send it. His former counsel withdrew and he hasn't appeared or filed an answer, so --." The court asked if counsel had a last known address for defendant:
"COUNSEL: There is an address that he may reside at in California. I can send it there if you'd like me to.
COURT: Yeah, belts and suspenders. I prefer that you do that.
COUNSEL: Okay.Accordingly, the written court order reflected that, "Plaintiffs['] counsel shall provide written notice of the motion for default judgment to Defendant Dennis McCormick by regular U[nited] S[tates] mail at his last known residence in California." ¶ 18 Instead of immediately serving defendant, however, plaintiffs waited almost one week. Specifically, on August 28, 2018, counsel filed a certificate of service attesting that he sent defendant, via both email (one of the same email addresses that plaintiffs used to serve the initial emergency motion for TRO and to communicate with defendant during the proceedings) and U.S. Mail, the verified motion for default judgment and the court's August 22, 2018, order continuing the matter for prove up. However, although the address used to serve the initial emergency motion for TRO was 19466 Woodlands Lane, Huntington Beach, California, 92646, and that is the address that plaintiffs' counsel listed in the signature line for defendant in the executed agreed order from July 25, 2018, that is not the address that plaintiffs used to serve the motion for default judgment. Rather, the certificate of service reflects that they sent it to 19836 Berkshire Lane, Huntington Beach, California, 92646, which is the same address that defendant's first counsel used to serve the motion to withdraw. ¶ 19 On September 5, 2018 (i.e., 14 days after the August 22, 2018 hearing, but only 8 days after plaintiffs mailed the notice of motion to defendant in California on August 28, 2018), the court found that defendant had been properly served with the motion for default judgment, but had failed to appear or respond. The court granted the motion. It entered judgment against defendant and in plaintiff Pawula's favor in the amount of $968,496.15. It entered judgment against defendant and in plaintiff Skiba's favor in the same amount (i.e., $968,496.15). The court found no just reason to delay either enforcement or appeal of the judgment order. It set a status for an update on the liquidation of corporate assets and resolution of outstanding accounts. Again, two written orders dated September 5, 2018, appear in the record: first, the order signed by the judge, and prepared by plaintiffs' counsel, reflecting the court's oral ruling. Second, the clerk of the circuit court issued an "official notice" of "entry of a default order." The notice lists plaintiffs' counsel's address at the top. It then reads: "You are hereby notified in accordance with Section 2-1302, Code of Civil Procedure, that a default order was entered by Judge BONNIE M WHEATON on the date of 09/05/2018." (Emphasis in original.) Nothing in the record reflects that these orders were served upon defendant; however, as recounted below, he ultimately received notice of entry of the order. ¶ 20 On October 4, 2018, defendant, with counsel, filed an appearance and a one-page motion to vacate the default judgment pursuant to section 2-1301(e) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1301(e)(West 2016)). In the motion, defendant asserted that he learned of the default judgment on or around September 29, 2018, and that he did not respond to the complaint because he had been "dealing with substantial and significant personal matters, including the death of his mother." He did not attach an affidavit. ¶ 21 Plaintiffs opposed the motion to vacate. They argued that, in considering the motion, the court must do substantial justice between the parties. Plaintiffs argued that, throughout the litigation, defendant did not exercise due diligence. Further, he had not established a meritorious defense; indeed, they noted, defendant's motion had not attached an answer, affidavit, or even an argument that there existed a meritorious defense. In addition, plaintiffs argued that not only should defendant's actions and all events leading up to the judgment be considered, but that the two arguments defendant raised in his motion were "blatant misrepresentation." Plaintiffs attached affidavits wherein they attested, in part, that, during the litigation, they had communicated with defendant via email, text messages, and phone conversations and that "[a]t all times defendant was provided with notice of this proceeding." As one example, they attested that "[we] advised defendant that the court had entered an order directing him to turn over the titles and that he had to turn the titles over. We gave him a draft agreed order that our counsel prepared, which represented that he would turn the titles over without further court intervention, and asked him to sign. On July 27, 2018, defendant executed the proposed agreed order that we sent him and sent it back [via] email." (Emphases added.) Plaintiffs also asserted that defendant's claim that the death of his mother precluded his participation in the litigation was not made in good faith, as he continued his business dealings while simultaneously choosing not to participate in the proceedings. Plaintiffs further argued that defendant's emails proved that he had notice of the proceeding, although they attached only one email, with no substantive text and apparently reflecting defendant's execution of the July 27, 2018, proposed agreed order regarding titles. ¶ 22 Defendant replied and also attached his own affidavit. He alleged that his initial appearance to resist plaintiffs' efforts to become custodians to oversee the liquidation should not "be used against him," as he had a right to object. Moreover, "the fact that [d]efendant did not actively participate in the liquidation is irrelevant; he had no obligation to participate." He explained that he had no issue with the liquidation itself, but he wished to receive his proportionate share of the proceeds. Defendant asserted that, although plaintiffs made much of the fact that he had not attached an answer to the motion to vacate, he had no time to do so, since he had just retained counsel two days before filing the motion, and, so, he attached an answer to his reply which, he claimed, reflected a "valid dispute and a meritorious defense." In addition, he noted that the fact that his mother passed away in March 2018 did not mean that her passing did not continue to have an effect upon him and his ability to engage in the lawsuit. ¶ 23 Defendant disagreed that he did not cooperate with the liquidation. He noted that plaintiffs attached the agreed order wherein he agreed to fully cooperate, and that he had numerous conversations with them during the liquidation. "Defendant does not dispute that he did not participate in the case for many months. It was his understanding, however, that the liquidation would proceed, that all of K & I's outstanding bills and payables would be processed, and the shareholders would then be paid." ¶ 24 Defendant attested that, although he had numerous communications with plaintiffs throughout the proceeding concerning the sale of K & I's equipment, he believed that he and plaintiffs were in agreement on what would occur. "I had signed an agreement authorizing [plaintiffs] to act as custodians of K & I's equipment so that K & I's equipment could be sold, creditors paid, and the business liquidated." Defendant denied trying to sell the equipment and attested that he had no knowledge of a dispute related to the equipment being sold until the complaint was filed in this matter. Defendant acknowledged receipt of an email from his attorney stating that the attorney was withdrawing. Specifically:
COURT: Do you have an e-mail address for him?
COUNSEL: My clients might.
COURT: If they have an e-mail address, obviously he's been communicating somehow.
COUNSEL: Right.
COURT: Send it to whatever, snail mail or e-mail.
COUNSEL: Okay. I will see the California--I will try to find the California address and I will send it there and I will talk to my clients about the e-mail.
Should we just come back in seven days for -
COURT: Let's make it longer than that.
COUNSEL: Okay.
COURT: Maybe fourteen.
COUNSEL: Fourteen days.
COURT: That's the 5th, September 5th at 9:00 o'clock."
"On May 31, 2018, I received an email from my attorney *** stating that he was withdrawing representation. I believed that [plaintiffs] demands satisfied [sic] had been satisfied, which they also told me separately. Beyond that, we had agreed on processing any outstanding billing and payables, and that upon completion, all of K & I's financials would be complete and the company could be liquidated accordingly. Because of this, I did not feel that I needed counsel any longer since the matter was essentially resolved."¶ 25 In his reply, defendant asserted that he did not dispute "notices" were sent by plaintiffs, but he had changed addresses and first became aware of the default judgment after it was entered. In his affidavit, he elaborated: "after signing the agreement of July 25, 2018, I never received any correspondence from [plaintiffs] in any form. I first saw the notice of the default judgment granted on September 5, 2018[,] in my mail around the last week of September. I had at one point forwarded my mail to my mother's address when I first relocated to California; the notice of default was sent to that address; since my mother's passing in March 2018, that address has not been occupied." (Emphasis added.) Defendant explained that he had not regularly visited his mother's address to pickup mail since her death in March 2018. Defendant attested that, "since [his] belief was that [he and plaintiffs] were all in agreement as to how the business of K & I was going to be wound up," he did not seek new counsel. As soon as he saw the notice of default, he retained counsel as quickly as possible. He further denied thwarting requests for equipment titles or attempts to sell the equipment. Defendant noted that he provided plaintiffs with the titles, signed the agreed order, and, further, "I have reviewed all my emails and texts from this time and found no urgent requests. I responded to every request made of me in a timely manner." Defendant concluded that there was no substantial delay in the proceedings, as the answer was due May 29, 2018, and default judgment was entered September 5, 2018, (approximately three months) and the liquidation has occurred, so all that remains is a dispute concerning defendant's proportionate share of the proceeds. The court should consider, defendant argued, substantial justice between the parties and that the matter concerned a $2 million judgment. ¶ 26 Plaintiffs moved to strike defendant's reply to the motion to vacate (both because it was filed late and raised arguments not raised in the initial motion) or, alternatively, for leave to file a sur-reply. In their sur-reply, and at argument on the motion, plaintiffs noted, in part, that defendant admitted he had knowledge of the proceeding, but that he intentionally chose not to participate. They argued that the complaint did not just concern liquidation, but also alleged breach of fiduciary duty and other related claims, so it was not sufficient for defendant just assume they would handle the liquidation and he could just step back in and receive his percentage. ¶ 27 Further, they noted that defendant gave his attorneys his mother's California address in April and May 2018, after her death, and, moreover, plaintiffs noted that defendant's affidavit did not deny receipt of the emailed motion for default judgment:
"There is no doubt that he had knowledge of this case. And with respect to knowledge of the motion for default judgment, as I previously advised the court, we were directed by your Honor to not only send it to the address that we have, but also the address on file that his attorney had presented, as well as the e-mail address. And there's substantial evidence that he received that because he received the complaint and that was e-mailed to
him. He received prior orders that were e-mailed to him. He was sending e-mail communications to my client with that same e-mail address, and this was sent to him more than ten days before the hearing on the motion for default judgment. As well as that, we mailed it to the address that he provided to his attorneys in this case to communicate with him. So the evidence shows that he, in fact, did receive notice of the default judgment motion.Plaintiffs further reiterated that defendant, "failed to comply with three court orders directing him to answer and a fourth court order directing him to turn over the titles so that a private sale could be accomplished." ¶ 28 On December 3, 2018, after oral argument, the court denied defendant's motion to vacate the default judgment. The court found that defendant was "extremely diligent" and participated in responding to the notice of the motion for a temporary restraining order, and he participated until plaintiffs were designated as custodians of the company. "Not only did he not thereafter participate in the litigation, he actively prevented the plaintiffs from carrying out their roles as custodian[s] of the business." The court noted that defendant was ordered on several occasions to turn over titles and failed to do so, and that, for a period of time, it seemed plaintiffs' counsel was before the court at least once per week, trying to accomplish what the court had previously ordered. The court found that defendant did not respond to the multiple orders allowing him to file an answer, did not exercise any due diligence when the order of default was entered, nor when the motion for default judgment was entered, and it was only after the judgment and citation to discover assets was issued that defendant exercised any diligence. ¶ 29 As to a meritorious defense, the court noted that defendant's original motion to vacate made no mention of a meritorious defense and that it did not find meritorious the defense he later set forth (i.e., challenging the percentage of shares and certain bank transfers). The court found, looking at all the facts that occurred in the case up until the motion to vacate was filed, defendant did not cooperate and, indeed, actively worked to stymie the orderly liquidation of assets. The court denied the motion to vacate the judgment. ¶ 30 On December 13, 2018, plaintiffs appeared before the court on their final custodians' report and motion for turnover. Neither defendant, nor his counsel were present. Plaintiffs represented that they sent opposing counsel emails and courtesy copies, but received no response. The court entered the order approving the receivers' report and granting the motion for turnover. Specifically, in relevant part, the court found that: (1) plaintiffs had completely and satisfactorily performed their duties as custodians of K & I; (2) after all assets had been liquidated and debts paid, $1,382,498.85 remained; (3) plaintiffs were entitled to $100,000 each in compensation for their services as custodians; (4) the remaining $1,182,498.85 would be distributed to the shareholders in proportion to their ownership with $157,627.10 to Pawula (13.33% owner), $220,772.54 to Skiba (18.67% owner), and $804,099.21 to defendant (68% owner); and (5) defendant's $804,099.21 distribution shall be turned over from K & I to plaintiffs for partial satisfaction of the September 5, 2018, judgment in their favor and against defendant. ¶ 31 In appeal No. 2-18-1051, defendant challenges the court's December 3, 2018, order denying his motion to vacate the default judgment. In appeal No. 2-18-1052, he challenges the court's December 13, 2018, order, approving the custodians' final report and distributing the proceeds of liquidation. On February 28, 2019, we granted defendant's motion to consolidate the appeals.
He claims that he didn't receive the address because--or he didn't receive the sent motion via regular mail because it was sent to his mother's address and he hasn't been there regularly since March of 2018. But that also doesn't make sense because he, in fact, gave it to his attorneys in April and May of 2019 for the purpose of communicating with him in this case." (Emphasis added.)
¶ 32 II. ANALYSIS
¶ 33 Defendant raises five overarching issues on appeal, arguing that the court's orders must be vacated because: (1) his first attorney did not properly withdraw; (2) he was not actually in default when he was held in default; (3) the court's entry of default judgment violated Illinois Supreme Court rules and his due process rights; (4) the court erred in denying his motion to vacate the default judgment; and (5) the final order of distribution must be vacated and set aside. Although the parties separately address the aforementioned issues, we conclude that, collectively, the record reflects that the court should have granted the motion to vacate the default judgment and, consequently, the order approving the receivers' final report and turnover must be vacated. ¶ 34 Section 2-1301(e) of the Code provides that "[t]he court may in its discretion, before final order or judgment, set aside any default, and may on motion filed within 30 days after entry thereof set aside any final order or judgment upon any terms and conditions that shall be reasonable." 735 ILCS 5/2-1301(e) (West 2016). We review for an abuse of discretion the court's denial of a section 2-1301 motion to vacate. Godfrey Healthcare & Rehabilitation Center, LLC v. Toigo, 2019 IL App (5th) 170473, ¶ 38. A court abuses its discretion when its decision is arbitrary or exceeds the bounds of reason and ignores principles of law such that substantial prejudice has resulted. Id. Further, we must determine whether the court's decision was fair and just, such that the result did not deny the movant substantial justice. Id. We note that, in exercising its discretion, the court must remain mindful that a default judgment is a "drastic remedy that should be used only as a last resort." Id. at ¶ 39 (citing In re Haley D., 2011 110886, ¶ 69). Further:
"The law prefers that controversies be determined according to the substantive rights of the parties; the provisions of the Code governing relief from a default judgment are to be liberally construed toward that end. See In re Haley D., 2011 IL 110886, ¶ 69. A party seeking to vacate a default judgment under section 2-1301(e) need not allege the existence of a meritorious defense or a reasonable excuse for not having asserted the defense. [Id.] The overriding consideration is whether substantial justice is being done between the litigants, and whether it is reasonable, under the circumstances, to compel the parties to go to trial on the merits. [Id.] In making its determination, '[t]he court should consider all of the events leading up to judgment and should decide what is just and proper based on the facts of the case.' Larson v. Pedersen, 349 Ill. App. 3d 203, 208 (2004)." Godfrey, 2019 IL App (5th) 170473, ¶ 39.¶ 35 Here, defendant argues first that his initial counsel did not comply with Illinois Supreme Court Rule 13(c)(4) (eff. July 1, 2013), when he withdrew representation. He notes that "entry of a default judgment or other order in the absence of a party who was not given proper notice under Rule 13 is unjust and the judgment may be vacated or reversed on appeal." In re J.P., 316 Ill. App. 3d 652, 660 (2000). Specifically, Rule 13(c)(4) provides:
"If the party does not appear at the time the motion for withdrawal is granted, either in person or by substitute counsel, then, within three days of the entry of the order of withdrawal, the withdrawing attorney shall serve the order upon the party in the manner provided in paragraph (c)(2) of this rule and file proof of service of the order." (Emphases added.) Ill. S. Ct. R. 13(c)(4) (eff. July 1, 2013).Defendant argues that the record does not reflect that he was served with a copy of the order allowing the withdrawal and that the default judgment must, therefore, be vacated. ¶ 36 Indeed, the record reflects that while the motion to withdraw was served upon defendant at his home address and email address, there is no indication that defendant's withdrawing counsel served him with a copy of the order allowing withdrawal. Plaintiffs incorrectly assert that defendant admitted receipt of the order when, in his affidavit, he attested that he received an email from his former counsel "providing him with a copy of the order and notice that they had withdrawn." This is not an accurate representation; defendant's affidavit stated only that: "[o]n May 31, 2018, I received an email from my attorney *** stating that he was withdrawing representation." Thus, although the affidavit acknowledged receipt of an email the day after the order was entered, it does not mention receipt of an order or anything other than notice of the attorney's intent to withdraw. ¶ 37 The fact that defendant admitted to communication with plaintiffs and knew that litigation was proceeding after May 30, 2018, or even that he was aware that he lacked counsel, does not cure the problem. The order allowing withdrawal was the only document that would have communicated to defendant the date by which he needed to act. The motion communicated that, within 21 days of the order allowing withdrawal, he would need to file a supplemental appearance, but there is no record evidence that he was ever provided the date that the order allowing withdrawal was entered. Indeed, it was the written order that informed defendant that he had "21 days or until June 20, 2018, to file a substitute appearance." (Emphasis added.) ¶ 38 This transitions to defendant's next argument, i.e., that he was never notified that he could be held in default if he failed to file an appearance after his first attorney withdrew. He notes that neither the motion to withdraw, nor the order allowing counsel's withdrawal, stated that he would be held in default if he did not file an appearance within 21 days of the May 30, 2018, order. Further, where the default order was entered upon plaintiffs' oral motion only 22 days after defense counsel withdrew, defendant had no notice of his default status. In sum, defendant argues that he was not in default for failing to file a supplemental appearance within 21 days of counsel's withdrawal, he was not given any notice by plaintiffs that they would be making an oral motion for default on June 22, 2019, and at no time was he notified that a failure to file a supplemental appearance would constitute a default. ¶ 39 Plaintiffs respond that it was not defendant's failure to file an appearance that gave rise to the default but, rather, his failure to answer the complaint. Plaintiffs note that defendant was personally present twice when the court set dates for him to file an answer, with the second deadline to do so being May 29, 2018. Defendant did not answer. On May 30, 2018, the court allowed his attorney to withdraw and gave defendant 21 days to file a substitute appearance and answer. He never did so, after three opportunities, so the court properly found him in default. They argue that litigants, "especially those who have previously filed appearances and appeared in court in the case," have an independent obligation to follow the process of litigation. See Marren Builders, Inc. v. Lampert, 307 Ill. App. 3d 937, 942 (1999). Plaintiffs also note that the summons that accompanied the complaint stated that, if he did not file an answer to the complaint within 30 days, "a judgment by default may be entered against you for the relief asked in the complaint." Plaintiffs conclude that, as defendant was on notice that failing to file an answer could subject him to default and as he "ignored" three court orders directing him to file the answer and a substitute appearance, the court did not err in finding him in default. ¶ 40 There are several problems with plaintiffs' arguments. First, the summons to the complaint informed defendant that he "may" be held in default if he failed to file an answer "or otherwise appear." Defendant did appear, with counsel, who filed an appearance. Second, it is true that defendant was twice present when the court set due dates for an answer; however, he was represented by counsel on those occasions, whose primary responsibility it would have been to keep track of those dates and to prepare an answer. Moreover, defense counsel's motion to withdraw was allowed the day after the answer was due; theoretically, defendant might not have known an answer had not been filed. Further, defendant attested that he did not feel that he needed further counsel because he believed that plaintiffs' demands had been satisfied. Indeed, both sides admit that the parties communicated regarding the equipment liquidation, and the record reflects that defendant cooperated in the sense that he executed at least two agreed orders that plaintiffs' counsel had prepared (May 14 and July 27 agreed orders) and overnighted titles to them. Thus, although litigants have an obligation to follow their cases, we cannot necessarily find defendant's affidavit assertions unreasonable, where he was first represented by counsel, later arguably believed that he had negotiated with plaintiffs to resolve the liquidation, and where the record does not establish he was sent or received critical intervening orders. Finally, plaintiffs fault defendant for ignoring the "third" order to file an appearance, issued by the court on May 30, 2018, upon counsel's withdrawal but, again, there is nothing in the record reflecting that he was ever sent or received that order. ¶ 41 Even setting aside the foregoing, and regardless of defendant's alleged knowledge of the requirement to file an answer, the lack of notice of the default is also troubling. See, e.g., Godfrey, 2019 IL App (5th) 170473, ¶¶ 43-46 (substantial justice required vacating a default judgment where the plaintiff made no attempt to notify the defendant of its intent to seek a default judgment); see also, Savage v. Pho, 312 Ill. App. 3d 553, 557 (2000) ("It is when the failure to serve notice prevents a party from appearing and denies the party an opportunity to be heard or to respond, thereby denying a party's procedural due process rights, that an ex parte order entered without notice may be deemed null and void."). With no notice to defendant, plaintiffs here first orally requested that the court enter an order of default. However, "[the] plaintiff was obligated by court rules and common courtesy to notify [the] defendant that [the] plaintiff intended to present an oral motion for default judgment." (Emphasis added.) Id., ¶ 46. Again, although defendant here had not filed an answer (unlike the defendant in Godfrey) or supplemental appearance after counsel withdrew, plaintiffs were, apparently, routinely in communication with him. After their oral motion was granted, two orders issued. First, the June 22, 2018, "notice of default" issued by the clerk of the court, which listed only plaintiffs' counsel's address at the top and reflected it was sent to all parties that had filed an appearance; as defendant had not filed a personal or supplementary appearance, the record does not support that this order was sent to him. Second, the written order issued by the court that same day, notified defendant that he was in default, but, again, the record does not establish it was ever sent to defendant. We note that Rule 13(c)(5) provides that, if, upon an attorney's withdrawal, the party fails to file a supplementary appearance stating an address at which service may be had upon him or her, then "subsequent notices and filings shall be directed to the party at the last known business or residence address." Again, defendant never filed a personal appearance before counsel withdrew, and he never filed a supplemental appearance after withdrawal. Yet nothing in the record reflects that any court order or motion was sent to defendant at his last known address after the motion to withdraw. Ultimately, defendant received in the mail notice that the default judgment had already been entered, although the record does not reflect who sent him this notice, as there is no corresponding certificate of service or other evidence in the record. ¶ 42 We further note that, after orally moving for entry of a default without any notice to defendant, plaintiffs appeared before the court on July 25, 2018, on an emergency motion for TRO, which they served only on defendant's counsel who had withdrawn in May, arguing, in part, that defendant was interfering with the court's orders, but they never established that he had received service of those orders (and the record does not show that he did). In fact, plaintiffs appeared before the court and represented that they had numerous communications with defendant via telephone and email and that they even emailed him an agreed order, dated that same day (i.e., July 25, 2018) and prepared by plaintiffs' counsel, which he executed and returned (although plaintiffs never produced or filed it with the court). That agreed order listed an address for defendant. Nevertheless, on August 20, 2018, they filed a motion for default judgment, giving notice only to "Ex Parte." Plaintiffs reported to the court that they did not know where defendant was or how to contact him, but, upon the court's further questioning, counsel conceded that his clients "might" have an email address and they might find a California address. Counsel asked if he could return for entry of the default judgment in 7 days, and the court rejected the suggestion, ordering 14 days for counsel to effectuate service and return. Counsel then waited almost one week to attempt service, using the email address and not the California address that resulted in successful service of the complaint and that counsel listed for him in the July agreed order, but, rather, the California address last used by defendant's withdrawing counsel (after which, we note, defendant failed to appear, which could have been seen as a red flag that, perhaps, that address was not valid). By waiting, plaintiffs effectively shortened the time upon which defendant could receive notice of the motion and appear to a length already rejected by the trial court. Upon receipt of the notice that the default judgment had been entered, he appeared with counsel within three to five days. We also note that the time period from counsel's withdrawal (May 30, 2018) to entry of the default judgment (September 5, 2018) was approximately only three months, during which time plaintiffs communicated with him. This is not a case where defendant simply disappeared. ¶ 43 The court here could not have made a reasoned decision as to whether substantial justice required vacating the default judgment, because presentation of the events giving rise to the default was incomplete. Courts cannot effectuate substantial justice when presented solely with one-sided representations to the court that the other side "knew" what was going on and allegedly thwarted the court's orders. The court acknowledged that defendant was initially "extremely diligent," and the record supports his assertion that he cooperated with plaintiffs to some extent, as he executed at least two agreed orders that they sent him and sent titles to them via overnight delivery, providing them with the tracking number. However, the court found, based upon plaintiffs' representations, that he did not respond to multiple orders, did not cooperate, worked to stymie plaintiffs' efforts, and had no meritorious defense. This is belied by the record, as it reflects that defendant was not properly served with the order allowing counsel's withdrawal, which would have told him when to act, and that, while plaintiffs were negotiating with a pro se defendant, they were not, apparently, serving him or sending him orders. If plaintiffs did send defendant the court's orders, they have not established such in the record. Although plaintiffs faulted defendant for failing to raise a meritorious defense or a reasonable excuse for not having asserted the defense, he had no burden to do so. Godfrey, 2019 IL App (5th) 170473, ¶ 39. Again, substantial justice is the overriding consideration when deciding whether to vacate a default judgment. Id. Here, given the foregoing, and given that the default judgment resulted in obvious prejudice to defendant because, regardless of proof of ownership percentages, his share was offset to satisfy the judgment, substantial justice requires reversing the court's order denying the motion to vacate the default judgment and vacating the order approving receivers' report and granting the motion for turnover.
Rule 13(c)(2) provides for personal service, certified mail, or by a third-party carrier, directed to the party represented at his or her last known business or residence address. "Alternatively, the attorney may give such notice electronically, if receipt is acknowledged by the party." Ill. Sup. Ct. R. 13(c)(2) (eff. July 1, 2013).
We note that plaintiffs also argue that defendant failed to raise various arguments below and, thus, they are forfeited. Defendant moved to vacate the default judgment and, in the course of doing so, claimed he did not receive notice until after the order was entered. In any event, we decline to enforce the forfeiture rule here, which is a limitation on the parties, not the court. See, e.g., Luss v. Village of Forest Park, 377 Ill. App. 3d 318, 333 (2007). --------
¶ 44 III. CONCLUSION
¶ 45 For the foregoing reasons, the judgments of the circuit court of Du Page County in appeal No. 2-18-1051 is reversed, the judgment in appeal No. 2-18-1052 is vacated, and the cause is remanded. ¶ 46 No. 2-18-1051, Reversed and remanded. ¶ 47 No. 2-18-1052, Vacated and remanded.