After missing the window to hire an attorney and file a court appearance, a $105,523 default judgment will stand, a state appeals panel affirmed last week.
Finding there were no grounds to vacate the judgment or declare it void, the 1st District Appellate Court ruling upholds the award owed by insurance business AZM Group Inc. to Askew Insurance Group over a deal to sublease office space.
In July 2017, Askew Insurance Group LLC sued AZM in Cook County Circuit Court alleging breach of contract and unjust enrichment.
Askew alleged AZM violated an asset purchase agreement the two companies entered in 2014, which included a sublease for Askew’s office space.
Under that agreement, Askew would maintain its existing lease through April 2017, with AZM paying Askew $1,300 per month for rent. Askew would pitch in the remaining $250 balance each month and pay the full rent directly to its landlord.
Askew alleged AZM failed to pay its portion of the rent beginning in February 2017.
In a September 2017 court hearing, two months after the suit was filed, AZM’s principal agent Zelda Matthews filed a pro se appearance and answer on behalf of her company, despite not being a lawyer.
Matthews argued AZM made the rent payments, but sent them directly to the landlord.
Two weeks later, Askew moved for default judgment on its complaint, alleging AZM failed to appear because corporations must be represented by counsel in legal proceedings.
Circuit Judge John C. Griffin continued the proceedings three times over four months to let AZM secure counsel and file a proper appearance.
AZM did not file an appearance or responsive pleading. In February 2018, Griffin granted Askew’s motion and entered a default judgment against AZM. He awarded the $105,523 by prove-up.
In September 2018, now represented by counsel, AZM filed a petition to vacate the default judgment on the grounds that Askew lacked the capacity to sue as a dissolved corporation and challenging several of Askew’s pleadings.
AZM included with its petition an affidavit from Matthews stating she filed an appearance and answer and that she never signed the version of the purchase agreement filed with the court by Askew.
Circuit Judge Daniel J. Kubasiak denied AZM’s petition in December 2018. “AZM has presented no evidence or arguments as to why it failed to file this petition until September 2018, nearly seven months after the default judgment entered against it,” he wrote. “Matthews’ affidavit sets forth no explanation to show that AZM acted with due diligence in bringing this petition and alleges that Matthews never signed or initialed the version of the APA attached to Askew’s filings.”
But the affidavit didn’t address the underlying question of liability or deny other parts of the pleadings, Kubasiak found.
AZM appealed, arguing Kubasiak improperly analyzed section 2-1401 of the Code of Civil Procedure, which addresses motions to vacate default judgments.
AZM argued it filed its petition under subsection (f) of that section, which has looser requirements. Typically, a section 2-1401 petition must show there is a meritorious defense and that the defendant conducted due diligence in both the underlying case and the petition itself. Under subsection (f), those requirements are exempt if the judgment is void.
AZM argued the judgment should be void because Askew dissolved as a corporation in 2015 and therefore lacked the capacity to sue.
Writing for the appeals court, Justice Joy V. Cunningham detailed the three circumstances in which a judgment can be deemed void: if the judgment was entered by a court that lacked jurisdiction, if it was based on an unconstitutional statute or if the judgment imposes a criminal sentence that does not follow statutory requirements.
None of those apply, she wrote.
“The proper vehicle to challenge Askew’s pleadings under the theory asserted by AZM would have been a responsive pleading, alleging that Askew’s pleadings contained fraudulent information,” or it could have moved to dismiss the case.
“This was not done,” Cunningham wrote. “Thus, the default judgment entered against AZM is not void, and AZM’s section 2-1401 petition fails on that ground.”
The panel agreed with Kubasiask’s findings regarding due diligence.
“At no time did AZM explain in its section 2-1401 petition why it failed to file a proper appearance and responsive pleading, although it was aware of the lawsuit from its inception,” Cunningham wrote.
Justices Mary L. Mikva and Sheldon A. Harris concurred in the opinion.
AZM was represented by Ankur Shah of Shah Legal Representation. He could not be reached for comment.
Askew did not file a brief in the appeal process.
This case is Askew Insurance Group, LLC v. AZM Group, Inc., 2020 IL App (1st) 190179.