{ "id": 3439405, "name": "PRECISION COMPONENTS, INC., Plaintiff-Appellant and Cross-Appellee, v. KAPCO COMMUNICATIONS et al., Defendant-Appellee and Cross-Appellant", "name_abbreviation": "Precision Components, Inc. v. Kapco Communications", "decision_date": "1985-03-08", "docket_number": "No. 83\u20143046", "first_page": "555", "last_page": "562", "citations": [ { "type": "official", "cite": "131 Ill. App. 3d 555" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "358 N.E.2d 1171", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "44 Ill. App. 3d 901", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2815529 ], "weight": 2, "pin_cites": [ { "page": "911" }, { "page": "911" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/44/0901-01" ] }, { "cite": "273 N.E.2d 752", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "1 Ill. App. 3d 125", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5313406 ], "pin_cites": [ { "page": "128" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/1/0125-01" ] }, { "cite": "421 N.E.2d 1078", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "97 Ill. App. 3d 139", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3107444 ], "pin_cites": [ { "page": "144" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/97/0139-01" ] }, { "cite": "432 N.E.2d 1035", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1981, "opinion_index": 0 }, { "cite": "104 Ill. App. 3d 403", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5478232 ], "weight": 2, "year": 1981, "pin_cites": [ { "page": "405" }, { "page": "405" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/104/0403-01" ] }, { "cite": "417 N.E.2d 167", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "93 Ill. App. 3d 234", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3135108 ], "pin_cites": [ { "page": "243" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/93/0234-01" ] }, { "cite": "444 N.E.2d 628", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "111 Ill. App. 3d 747", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5439451 ], "pin_cites": [ { "page": "750" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/111/0747-01" ] }, { "cite": "295 N.E.2d 580", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "11 Ill. App. 3d 24", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2936781 ], "pin_cites": [ { "page": "28" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/11/0024-01" ] } ], "analysis": { "cardinality": 684, "char_count": 17521, "ocr_confidence": 0.747, "pagerank": { "raw": 1.4860036955202853e-07, "percentile": 0.6620924617612841 }, "sha256": "82c5c9b16509d851cb4681665770eb3e9d5a6168bcf880a91fb9d28e1943a0f2", "simhash": "1:73cf403d8ec59560", "word_count": 2841 }, "last_updated": "2023-07-14T21:36:35.805575+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "PRECISION COMPONENTS, INC., Plaintiff-Appellant and Cross-Appellee, v. KAPCO COMMUNICATIONS et al., Defendant-Appellee and Cross-Appellant." ], "opinions": [ { "text": "PRESIDING JUSTICE MEJDA\ndelivered the opinion of the court:\nPlaintiff, Precision Components, Inc., appeals from an order granting defendant\u2019s, Ken Rubel, d/b/a Kapco Communications, motion for expenses and attorney fees (Ill. Rev. Stat. 1983, ch. 110, par. 2 \u2014 611) in the amount of $1,297.40. The issues presented are: (1) whether the trial court erred in finding that plaintiff\u2019s allegations seeking recovery from defendant individually were untrue and made without reasonable cause; (2) whether the trial court erred in finding that plaintiff\u2019s allegation claiming additional damages was untrue and made without reasonable cause and in ruling on the truth of this claim prior to a trial on the merits; and (3) whether defendant showed that actual expenses were incurred as a result of plaintiff\u2019s allegations. Defendant cross-appeals, raising the issue of whether the trial court erred in reducing the award of expenses and attorney fees because a portion of the trial time might be used in a subsequent lawsuit. We reverse.\nDuring 1982, Kapco Communications (Kapco) contracted with plaintiff for the purchase of battery chargers. The original purchase order for these goods issued to plaintiff bore the purchaser\u2019s designation as \u201cKapco Communications.\u201d This purchase order did not identify Kapco as a division of K. L. Rubel & Associates, Ltd. (K. L. Rubel, Ltd.). Plaintiff invoiced these and subsequent purchases to Kapco\u2019s account. Apparently, correspondence regarding these purchases from plaintiff was received by defendant at Kapco. Checks received in payment on the account were drawn on Kapco\u2019s account and signed by defendant without any indication that he was signing the checks in a corporate capacity.\nIt appears that defendant was the president of K. L. Rubel, Ltd. In June 1978, K. L. Rubel, Ltd., purportedly registered the name of Kapco, one of its divisions, as an assumed name of the corporation in the office of the Cook County recorder of deeds. In February 1983, defendant sent a letter to Art Sears (Sears), plaintiff\u2019s sales representative. This letter revealed that neither K. L. Rubel, Ltd., nor Kapco was in existence any longer. It also informed plaintiff that the proper corporate name was Kapco, Inc., although this name change was not to be effected until April 1983, some two months later. A check of the office of the Cook County recorder of deeds disclosed no record of an assumed name filing by K. L. Rubel, Ltd. As of March 30, 1984, no assumed name filing had been made in the office of the Secretary of State. The Secretary of State\u2019s records also showed that K. L. Rubel, Ltd., never filed a name change, that on December 1, 1978, Kapco, Inc., was involuntarily dissolved, and that there is no current corporation by the name of Kapco, Inc.\nOn June 13, 1983, with Kapco in arrears in payments on its account, plaintiff sued both Kapco Communications and Ken Rubel d/b/a Kapco Communications alleging breach of contract and seeking damages in the amount of $11,597.24. Plaintiff filed suit against both defendants due to its confusion regarding responsibility for the account.\nIn its complaint, plaintiff alleged that $11,597.24 was due and owing. After the complaint was filed, plaintiff\u2019s counsel learned that payments made by Kapco in April 1983 had been inadvertently overlooked in arriving at the above figure. In a letter dated July 27, 1983, plaintiff\u2019s counsel informed defense counsel that the amount alleged as due and owing would be reduced to $6,503.96 to reflect the April 1983 payments, but that figure would be increased to account for additional damages not included in the complaint. These additional damages included: $2,530.94 for unused materials allocated to Kapco\u2019s outstanding purchase orders; $3,935.07 for efforts expended securing Underwriters Laboratories, Inc.\u2019s, approval of the product; and $1,200 for tooling and fabrication charges incurred in the production of the battery chargers sold to defendant. When defendant failed to respond to either the complaint or the July 27 letter, plaintiff moved for entry of a default judgment and for an increase in damages to include the additional damages, resulting in a total sum due and owing of $14,169.96.\nDefendant moved to dismiss the complaint on the ground that he was an improper party. The trial court granted the motion. On September 15, an order was entered on the motion to dismiss granting plaintiff leave to refile. Subsequent to the dismissal of the instant litigation, plaintiff did file a new action against K. L. Rubel, Ltd., in the amount of $14,169.96. A second amended complaint reduced that figure to $6,503.96.\nOn October 17, 1983, defendant moved for an award of expenses and attorney fees, asserting that plaintiff\u2019s allegations were untrue and made without reasonable cause. Defendant based his motion on (1) plaintiff\u2019s claim that defendant owed $11,597.24 when its own records showed this to be untrue; (2) plaintiff\u2019s suit against defendant Rubel personally when it knowingly dealt with a corporation; and (3) plaintiff\u2019s motion to increase the damages to which defendant contended plaintiff was not' entitled. After the hearing, the trial court found that these allegations were untrue and made without reasonable cause. Defendant requested $4,201.25 in actual costs and attorney fees. Judgment was granted for defendant, but because the court was of the opinion that some of the time spent in this lawsuit would be useful in a subsequent suit, it awarded defendant only $1,297.40. Plaintiff appeals from the trial court\u2019s order, and defendant cross-appeals on the trial court\u2019s reduction of attorney fees.\nOpinion\nPlaintiff\u2019s first contention on appeal is that the trial court erred in finding that plaintiff knew it was dealing with K. L. Rubel, Ltd., and that plaintiff\u2019s allegations seeking recovery from defendant Rubel individually were untrue and made without reasonable cause.\nSection 2 \u2014 611 of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2 \u2014 611) provides:\n\u201cAllegations and denials, made without reasonable cause and found to be untrue, shall subject the party pleading them to the payment of reasonable expenses, actually incurred by the other party by reason of the untrue pleading, together with a reasonable attorney\u2019s fee, to be summarily taxed by the court upon motion made within 30 days of the judgment or dismissal.\u201d\nThe purpose of section 2 \u2014 611 is to penalize a litigant who pleads frivolous or false matters or brings suit without basis in law whereby another party shoulders the burden of expending money for an attorney to defend against an untenable suit. (In re Estate of Palm (1973), 11 Ill. App. 3d 24, 28, 295 N.E.2d 580.) Because the statute is penal in nature, it may be invoked only in cases falling strictly within its terms. (Fewer v. Grant (1982), 111 Ill. App. 3d 747, 750, 444 N.E.2d 628.) When the allegations in question are proved to be both untrue and made without reasonable cause, allowance of attorney fees is proper. (Third Establishment, Inc. v. 1931 North Park Apartments (1981), 93 Ill. App. 3d 234, 243, 417 N.E.2d 167.) The burden of proving these two elements rests with the party seeking relief. (Demos v. Ericson (1982), 104 Ill. App. 3d 403, 405, 432 N.E.2d 1035.) Allowance of fees and costs is discretionary with the trial court and will not be disturbed on review absent a clear abuse of discretion. Whirlpool Corp. v. Bank of Naperville (1981), 97 Ill. App. 3d 139, 144, 421 N.E.2d 1078.\nPlaintiff contends that the trial court erred in charging plaintiff with the knowledge that Kapco was an assumed name of the corporation K. L. Rubel, Ltd., and not a name under which defendant personally conducted business. It argues that this finding was erroneous because at the time that defendant allegedly filed the assumed name of Kapco, it was contrary to public policy for a corporation to conduct business under any name other than the corporate name registered with the office of the Secretary of State.\nDefendant argues that plaintiff knew it had dealt with K. L. Rubel, Ltd., because defendant told Sears that his company represented a corporation and because in 1982 it provided business cards indicating that Kapco was a division of K. L. Rubel, Ltd. Additionally, in February 1983 a letter was sent to plaintiff stating that K. L. Rubel, Ltd., and Kapco were no longer in existence and that Kapco, Inc., was the current corporate name.\nIn 1978, the year K. L. Rubel, Ltd., allegedly filed its assumed name, a corporation had no legal right to use any name other than the name under which it was organized, and use by a corporation of a name different from its legal corporate name was against the public policy of the State. (Anzalone v. Durchslag (1971), 1 Ill. App. 3d 125, 128, 273 N.E.2d 752.) We agree that the purported assumed name filing was not allowed under the law in effect at that time and, even if made, of which there is no evidence, could not have served as legal notice to plaintiff that Kapco was a division of K. L. Rubel, Ltd. Defendant\u2019s argument is unpersuasive because in addition to revealing that neither K. L. Rubel, Ltd., nor Kapco was in existence, its February 1983 letter to Sears also stated that Kapco, Inc., was the new corporate name. That name change, however, was never made, because defendant failed to file the proper documents with the office of the Secretary of State.\nPlaintiff further posits that a legislative amendment enacted subsequent to the alleged assumed name filing in 1978 permits a corporation to use an assumed name. (Ill. Rev. Stat. 1981, ch. 32, par. 157.9a.) Defendant, however, failed to make the requisite statutory assumed name filing pursuant to this amendment which would have served as notice to the plaintiff of the corporation\u2019s proper name.\nThe later amendment to the Act permits a corporation to elect to adopt an assumed name provided certain procedures are followed. That section provides:\n\u201cA corporation may elect to adopt an assumed name that is not the same as, or deceptively similar to, the corporate name or assumed name of any other domestic corporation existing under the laws of this State or of any foreign corporation authorized to transact business in this State, or the same as, or deceptively similar to, any name registered or reserved under the provisions of this Act; ***.\nSuch election shall be made by filing with the Secretary of State an application executed by an officer of the corporation, pursuant to a resolution adopted by the corporation, setting forth such assumed name and paying to the Secretary of State the filing fee prescribed in this Act.\u201d (Ill. Rev. Stat. 1981, ch. 32, par. 157.9a.)\nBecause these procedures were not followed, the use of the name Kapco served neither to establish Kapco as a legal entity nor to inform creditors that Kapco and K. L. Rubel, Ltd., were the same corporation.\nBecause K. L. Rubel, Ltd., failed to comply with the statutory requirements for adopting an assumed name, the corporate name is the name under which it was required to conduct business. However, \u201ca corporation may use any divisional designation or trade name without complying with the requirements of this Act, provided the corporation also clearly discloses its corporate name.\u201d (Ill. Rev. Stat. 1981, ch. 32, par. 157.9.) In the instant case, the proper corporate identity was never clearly disclosed to the plaintiff. The purchase orders identified Kapco as the buyer without any further designation of Kapco as a division of K. L. Rubel, Ltd. Invoices sent were apparently received at Kapco, and checks drawn on the \u201cKapco Communications\u2019 \u2019 account were received in payment of these invoices. The checks carried the defendant\u2019s signature but bore no designation that would indicate he was signing in any official capacity. In its letter to the plaintiff, defendant states that neither K. L. Rubel, Ltd., nor Kapco were in existence and that the new corporate name was Kapco, Inc. Because no filing of the new name was ever made with the proper State office, the letter did not constitute a clear disclosure of the purchaser\u2019s name. We find that the record does not support a finding that plaintiff knew that K. L. Rubel, Ltd., was in fact the proper party and that the allegations against defendant Rubel individually were untrue and made without reasonable cause. Accordingly, the finding was against the manifest weight of the evidence.\nSecondly, plaintiff contends that the trial court erred in finding that the allegation claiming additional damages was untrue and made without reasonable cause and that such a finding was improper prior to a trial on the merits. Specifically, plaintiff argues that its claim for additional damages, which was part of its motion for default judgment, was never considered by the trial court and, therefore, was not properly before the trial court at the hearing on attorney fees.\nThe record reveals that plaintiff\u2019s position is correct. In its original complaint, plaintiff did not seek the additional damages. Plaintiff\u2019s later motion for default judgment sought additional damages, but this motion was never before the trial court, because, in the interim, plaintiff\u2019s original action against defendant was dismissed pursuant to his motion. In the absence of the trial court\u2019s consideration of the issue of additional damages, it should never have been considered on the motion for attorney fees. Therefore, the trial court erred in ruling that these allegations were untrue and made without reasonable cause.\nWe turn to plaintiff\u2019s third and last contention that defendant failed to show that any actual expenses were incurred as a result of plaintiff\u2019s allegations as required by section 2 \u2014 611. (See Ill. Rev. Stat. 1983, ch. 110, par. 2 \u2014 611.) As discussed earlier, we find that plaintiff\u2019s allegations against defendant Rubel personally were not untrue and were not made without reasonable cause. Because section 2 \u2014 611 applies only where allegations are found to be untrue and made without reasonable cause, we need not discuss the issue of whether any actual expenses were incurred in defending against this allegation.\nWith respect to plaintiff\u2019s allegations that the sum due and owing was $11,597.24, plaintiff maintains that it made a mistake in arriving at this figure by using a computerized recapitulation of the account which it later realized was not then current. Defendant argues that plaintiff knew this figure to be false and that he incurred expenses defending against this untrue allegation.\nWe believe this allegation falls into the category of an honest mistake which does not support an award of attorney fees. Confusion or an honest mistake should not be the grounds for a finding of bad faith. (Dudanas v. Plate (1976), 44 Ill. App. 3d 901, 911, 358 N.E.2d 1171.) It is assumed that, in filing pleadings, attorneys have due regard for their duties and responsibilities as officers of the court and are permitted to exercise broad discretion, based on honest judgment, from the facts presented to them. (Demos v. Ericson (1982), 104 Ill. App. 3d 403, 405, 432 N.E.2d 1035; Dudanas v. Plate (1976), 44 Ill. App. 3d 901, 911, 358 N.E.2d 1171.) Our conclusion that plaintiff made an honest mistake is further supported by the fact that after plaintiff\u2019s counsel discovered the mistake, he informed defense counsel in a letter dated July 27 that the amount was incorrect and would be corrected. After the dismissal of the original suit, plaintiff refiled its claim crediting defendant with the April 1983 payments and seeking damages of $14,169.96. The complaint was later amended, claiming only $6,503.96 in damages, the amount due minus the additional damages. Further, we believe that defendant did not incur any actual expenses defending against the statement that $11,597.24 was due and owing, because that statement was not mentioned as a basis for his motion to dismiss. Rather, the only basis for that motion was that defendant was an improper party. Accordingly, even if we accept defendant\u2019s position that the allegation is untrue and made without reasonable cause, defendant failed to show that any actual expenses were incurred in defending against this allegation.\nRegarding plaintiff\u2019s allegation that additional damages were due, we previously stated that this issue was never considered by the trial court and, therefore, could not possibly have been the basis for incurring any expenses or attorney fees. We find that defendant did not show that any money was expended defending against these allegations.\nDefendant cross-appeals, contending that the trial court erred in reducing the award of expenses and attorney fees because a portion of the trial time might be useful in a subsequent lawsuit. Because we conclude that the award of attorney fees and costs was an abuse of discretion, we need not address the issue of the propriety of the amount awarded.\nFor the foregoing reasons, we reverse the order of the trial court granting defendant\u2019s motion for expenses and attorney fees.\nReversed.\nLORENZ and PINCHAM, JJ., concur.", "type": "majority", "author": "PRESIDING JUSTICE MEJDA delivered the opinion of the court:" } ], "attorneys": [ "Arnstein, Gluck, Lehr, Barron & Milligan, of Chicago (Patrick Mazza and Sally Y. Mengo, of counsel), for appellant.", "Eugene F. Friedman, of Chicago, for appellee." ], "corrections": "", "head_matter": "PRECISION COMPONENTS, INC., Plaintiff-Appellant and Cross-Appellee, v. KAPCO COMMUNICATIONS et al., Defendant-Appellee and Cross-Appellant.\nFirst District (5th Division)\nNo. 83\u20143046\nOpinion filed March 8, 1985.\nArnstein, Gluck, Lehr, Barron & Milligan, of Chicago (Patrick Mazza and Sally Y. Mengo, of counsel), for appellant.\nEugene F. Friedman, of Chicago, for appellee." }, "file_name": "0555-01", "first_page_order": 577, "last_page_order": 584 }