Presiding Justice POPE delivered the judgment of the court, with opinion.
¶ 1 On December 13, 2013, the trial court entered an order finding Country Mutual Insurance Company (Country) willfully failed to comply with orders the court entered on October 26, 2012, and
¶ 3 Because the background in this case was extensively covered in this court's earlier opinion (see Country Mutual Insurance Co. v. Hilltop View, LLC, 2013 IL App (4th) 130124, 376 Ill.Dec. 240, 998 N.E.2d 950), we need not repeat background facts here except as necessary. In that appeal, Country argued the trial court erred by (1) denying its motion for partial summary judgment, which relied on the pollution-exclusion clause found in Country's umbrella insurance policy and (2) granting Hilltop's and PSM's respective cross-motions for partial summary judgment, holding Country was responsible for defending them in the underlying case because Country alleged additional, and still unresolved, defenses to coverage under the umbrella policy. We refer to these rulings as the October orders. What occurred after those October orders is at issue in this appeal.
¶ 4 After the trial court issued the October orders, on November 5, 2012, attorney Jennifer Martin, who was representing Hilltop and PSM in the declaratory judgment action, wrote a letter to attorney Keith G. Carlson, who was representing Country, demanding payment of Hilltop's and PSM's defense costs in the underlying case in the amount of $176,937. (No itemized time records were attached.)
¶ 5 On November 14, 2012, Hilltop and PSM filed a joint petition for further relief pursuant to section 2-701(c) of the Code of Civil Procedure (Procedure Code) (735 ILCS 5/2-701(c) (West 2010)). The petition alleged the following. Attorney Martin received no response to her letter to attorney Carlson. On November 9, 2012, attorney Alexander Bullock, Hilltop and PSM's counsel in the underlying litigation, advised Country of the status of the underlying case and sought confirmation of defense coverage from Country in light of the trial court's October 26, 2012, order. Country responded by electronic mail, stating it did not believe the trial court's October 26, 2012, order was enforceable or appealable at that time pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb. 26,
¶ 6 On November 26, 2012, Country filed a motion to vacate and reconsider judgment pursuant to section 2-1203 of the Procedure Code (735 ILCS 5/2-1203 (West 2010)) and a motion to stay enforcement of the judgment. Country argued the trial court erred in denying its partial motion for summary judgment. In the alternative, Country argued the court should vacate its order "granting Defendants' cross-motion, which states that Country is responsible for Defendants' defense, and instead deny Defendants' cross-motions." Country argued the court erred in granting Hilltop's and PSM's cross-motion for partial summary judgment because Country's complaint for declaratory judgment raised many coverage defenses the parties had not briefed and the court did not address.
¶ 7 In the motion for a stay, Country stated it also did not agree either of the October orders was final or enforceable. However, in the alternative, given Hilltop's and PSM's attempts to enforce the trial court's determination Country was responsible for the defense in the underlying litigation, Country sought a stay of enforcement of the judgment pending resolution of Country's section 2-1203 motion as well as through the conclusion of any appeal that might be allowed. Country also filed a response to Hilltop and PSM's joint petition for further relief, utilizing the same arguments it made in the motion to vacate and reconsider judgment.
¶ 8 On December 18, 2012, Hilltop and PSM filed joint responses to Country's motion to vacate and reconsider the judgment and Country's motion to stay enforcement of the judgment. They argued the trial court did not err in its application of existing law regarding the pollution exclusion found in the umbrella policy. Further, according to Hilltop and PSM, the court's ruling regarding Country's responsibility for their defense in the underlying action was not premature and should not be vacated. Finally, they noted the order granting their motions for summary judgment was a final judgment because it determined Country's obligation to defend the insureds in the underlying action. They did not object to a Rule 304(a) finding on the issue. However, they did oppose Country's request for a stay.
¶ 9 On January 10, 2013, the trial court heard arguments on and denied Country's motion for reconsideration and motion to vacate its partial summary judgment order but granted Country's request for a Rule 304(a) finding. The trial court took Hilltop and PSM's joint petition for further relief and Country's motion for stay under consideration.
¶ 10 On February 11, 2013, Country filed its notice of appeal for the October orders (No. 4-13-0124). Later that month, on February 21, 2013, the trial court issued orders on Hilltop and PSM's joint petition for further relief and Country's motion to stay enforcement of the judgment. With regard to Hilltop and PSM's joint petition for further relief, the court noted it was ordering a stay of the underlying case (case No. 2008-L-2) negating the need for defense costs in that case. The court also stated it would not take up the issue of past defense costs in the underlying case at that time but would wait for a decision from the appellate court. The court denied a stay as to the proceedings in the declaratory judgment action and found Country was responsible for costs of litigation with regard to the declaratory judgment action. However, the court had never held a section 155 hearing to determine whether Country's decision not to provide
¶ 11 After the trial court issued these February orders, Country sought leave to amend its existing notice of appeal of the trial court's October orders to include the February orders. Hilltop and PSM opposed the motion. This court denied Country's request because Country had not obtained a Rule 304(a) finding.
¶ 12 On May 9, 2013, attorney Martin sent attorney Carlson a letter with an invoice requesting Country pay, pursuant to the trial court's February order, $16,992.69 for the insureds' legal fees in this case for the period between February 21, 2013, and April 30, 2013. (No itemized time records were attached.) On May 30, attorney Carlson responded the summary of fees provided by Martin, "even if there was any obligation to pay these fees," was inadequate and improper under the law.
¶ 13 On June 3, 2013, attorney Richard Wilderson, who was also representing Hilltop and PSM, sent attorney Carlson a letter for payment of $3,443.50 in attorney fees for the period between February 11, 2013, to April 30, 2013, pursuant to the trial court's February 21, 2013, order. (No time records were attached.) On June 18, 2013, attorney Carlson responded to attorney Wilderson's letter, repeating what he told attorney Martin.
¶ 14 On June 18, 2013, Hilltop and PSM filed a verified joint petition for adjudication of civil contempt. According to the petition, Country had willfully failed to comply with the trial court's October 2012 orders, which held Country was responsible for Hilltop's defense in the underlying litigation, and February 2013 orders, which held that Country was responsible for Hilltop and PSM's legal costs and fees in connection with the declaratory judgment action. Hilltop and PSM further alleged:
¶ 15 On July 19, 2013, Country filed its response to the verified joint petition for adjudication of civil contempt. According to its response:
¶ 16 On October 8, 2013, the trial court held a hearing on the motion for indirect civil contempt. Hilltop and PSM took the position the court's February 2013 order required Country to prospectively pay their defense costs in the declaratory judgment action from the date of the order. According to Hilltop and PSM:
¶ 17 Country made several arguments to the trial court, including that the February order was not enforceable without a Rule 304(a) finding because Hilltop and PSM had a counterclaim pursuant to section 155 of the Insurance Code (215 ILCS 5/155 (West 2010)) requesting their coverage costs in the declaratory judgment action. Country also argued the court made no finding Country's actions in denying coverage were vexatious and unreasonable, which is a prerequisite to a finding Country is responsible for coverage costs in the declaratory judgment action pursuant to section 155 of the Insurance Code (215 ILCS 5/155 (West 2010)). Indeed, the court never held a hearing to determine whether Country's decision to deny coverage was vexatious and unreasonable under section 155 of the Insurance Code (215 ILCS 5/155 (West 2010)).
¶ 18 According to Country, its decision not to pay the costs pursuant to the February order was more than just a matter of Country disagreeing with the court's February order. Instead, Country was "looking for indicia that it was time to pay." Country argued it did not willfully disobey any court orders and did not intend to embarrass or hinder the trial court.
Thus, the trial court found Country's failure to pay Hilltop's and PSM's litigation costs in the declaratory judgment action pursuant to the court's February 2013 order was vexatious and unreasonable, in other words, contemptuous. The court has never determined in a section 155 hearing Country's decision to seek a declaratory judgment regarding coverage was vexatious and unreasonable. Rather, when the court refers to Country's obligation to provide "coverage" to defendants in the declaratory judgment action, it appears to be referring to "costs of defense" in the declaratory judgment action. The following exchange then occurred between Attorney Hadden, representing Country, and the trial court:
¶ 20 On December 13, 2013, the trial court entered an order, making the following findings: (1) Country willfully failed to comply with the court's order entered on October 26, 2012, which held that Country was responsible for the insureds' defense in the underlying case under Country's umbrella policy; (2) Country willfully failed to comply with the trial court's February 21, 2013, order which held Country responsible for Hilltop's and PSM's legal fees and costs incurred in connection with the declaratory judgment proceeding; and (3) Country's course of conduct with regard
¶ 21 On December 30, 2013, Country filed its notice of appeal. On January 7, 2014, the trial court approved Country's appeal bond in the amount of $349,164.06. The court noted the appeal bond effected a stay of the order appealed from pursuant to Illinois Supreme Court Rule 305 (eff. July 1, 2004).
¶ 22 This appeal followed.
¶ 24 Country raises three issues on appeal: (1) whether the circuit court erred in holding Country in contempt for not making immediate payment of the defense costs in the underlying case pursuant to the October 2012 orders; (2) whether the trial court erred in holding Country in contempt for not making immediate payment of Hilltop's and PSM's attorney fees in the declaratory judgment action pursuant to the February 2013 orders; and (3) whether the trial court erred in finding Country's conduct in response to the October orders and the February orders was vexatious, unreasonable, and in bad faith, when there was at least a bona fide dispute regarding Country's position.
¶ 25 Any finding of indirect civil contempt requires the existence of an order of the court and proof of willful disobedience of the order. In re Marriage of Spent, 342 Ill.App.3d 643, 653, 277 Ill.Dec. 476, 796 N.E.2d 191, 200 (2003). "The burden rests upon the alleged contemnor to show that noncompliance was not willful and contumacious and that he or she has a valid excuse for failure to follow the court order." Id. Because findings of indirect civil contempt involve questions of fact, we will only overturn a trial court's finding of indirect civil contempt if it is against the manifest weight of the evidence. Busey Bank v. Salyards, 304 Ill.App.3d 214, 217, 238 Ill.Dec. 197, 711 N.E.2d 10, 14 (1999). However, "[w]hen the facts are not in dispute, their legal effect may be a question of law, which this court considers de novo." Id. "[I]f divergent inferences could have been drawn from the undisputed facts, a question of fact remained to be determined and the manifest weight of the evidence standard is applied on review [citation]." Id.
¶ 26 Generally, assuming a trial court has the necessary jurisdiction, a party must obey a trial court's respective orders, regardless of whether the court erred in entering the respective orders, until any erroneous order is set aside. Faris v. Faris, 35 Ill.2d 305, 309, 220 N.E.2d 210, 212 (1966). Further, the fact a party disagrees with a court's order does not mean the party can simply ignore the order. In re Estate of Steinfeld, 158 Ill.2d 1, 19, 196 Ill.Dec. 636, 630 N.E.2d 801, 810 (1994). A party's failure to comply with a court order is prima facie evidence of
¶ 27 The parties dispute when the trial court's October and February orders, with regard to the court's judgment Country was responsible for Hilltop's and PSM's defense in the underlying case (October order) and cost of litigation in the case sub judice (February order), became enforceable. The court and counsel for Hilltop and PSM clearly believed the orders became enforceable at the moment the court issued those orders. However, Country has argued throughout this case the court's orders in question were not enforceable without a ruling pursuant to Rule 304(a).
¶ 28 Rule 304(a) states:
Because the case sub judice involves multiple claims by Country and against Country, Rule 304(a) affects the enforceability of any "judgment that adjudicates fewer than all the claims" in this case.
¶ 29 Both Hilltop and PSM filed counterclaims against Country. Both counterclaims asked the court to enter a declaratory judgment ruling, which included, among other requests for relief, requests for the trial court to find Country (1) had a duty and obligation to defend and indemnify Hilltop and PSM in the underlying case and (2) pay Hilltop's and PSM's costs, including attorney fees, in the declaratory judgment action pursuant to section 155 of the Insurance Code (215 ILCS 5/155 (West 2010)).
¶ 30 As a result, Country views the portions of the October 2012 and February 2013 orders at issue in this appeal as judgments adjudicating claims raised by Hilltop and PSM in their case against Country. Because these "judgments" adjudicated fewer than all the claims in the case, Country contends the trial court's orders requiring payment of Hilltop's and PSM's attorney fees and costs in the underlying case and the declaratory judgment action were not enforceable until either judgment had been reached on all the claims in the case or a Rule 304(a) finding was made by the trial court "that there is no just reason for delaying either enforcement or appeal or both" of the orders. See Ill. S.Ct. R. 304(a) (eff. Feb. 26, 2010) ("In the absence of such a finding, any judgment that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties is not enforceable or appealable and is subject to revision at any time before the entry of a judgment adjudicating all the claims,
¶ 31 With regard to the October orders, the trial court did make a written Rule 304(a) finding on January 29, 2013, finding no just reason for delaying either enforcement or appeal or both of the court's October orders. At that point, the court's October orders became appealable, and Country appealed. At that time, the trial court was still considering Country's motion to stay enforcement of those October orders pending a decision on appeal. (We note Country made clear it did not believe the October orders were enforceable at the time it filed its motion for stay but filed the motion because Hilltop and PSM clearly believed the order was enforceable at that time and were demanding immediate payment.)
¶ 32 Just over three weeks later, on February 21, 2013, the trial court denied Country's motion for a stay as to the declaratory judgment action but entered a stay on the underlying case. When ruling on Hilltop and PSM's joint petition for further relief, the court stated:
The court let Country off the hook on February 21, 2013, for Hilltop's and PSM's defense costs in the underlying case, at least for the time being, by staying that case and putting off payment of past costs in that case until after this court issued its judgment in the original appeal. In light of the stay, Country's decision not to pay any money for the cost of defense in the underlying action pursuant to the October orders cannot constitute contempt. It was therefore error for the court to hold Country in contempt for not paying fees in the underlying litigation.
¶ 33 In addition, Country's actions with regard to the February orders do not rise to the level of contempt. Both parties concede trial court orders on ancillary issues must be obeyed until the order is set aside. (As noted earlier, Country contends the order to pay attorney fees was a judgment on a claim in the litigation, not an ancillary order.) In the February orders, the trial court made a broad ruling Country was responsible for Hilltop's and PSM's litigation costs in the declaratory judgment action. However, the trial court never determined an amount to be paid. Further, neither Hilltop nor PSM provided Country with anything other than a bill showing a gross amount due for litigation costs. They never provided Country with time records to support their various invoices.
¶ 34 Section 155 of the Insurance Code (215 ILCS 5/155 (West 2010)) allows a trial court to award reasonable attorney fees once a court finds the insurer vexatiously and unreasonably denied coverage. However, the party seeking attorney fees has the burden of establishing the reasonableness of the fee. In Kaiser v. MEPC American Properties, Inc., 164 Ill.App.3d 978, 983-84, 115 Ill.Dec. 899, 518 N.E.2d 424, 427-28 (1987), the court stated:
Based on the transcript of the contempt hearing, neither the trial court nor Country had seen any itemized bills establishing the reasonableness of the attorney fees in this case. Without an order directing Country to pay a sum certain for attorney fees, the court could not appropriately hold Country in contempt for failing to pay an amount determined solely by Hilltop's and PSM's attorneys. Thus, the court erred when it found Country in contempt for failing to pay attorney fees in this case pursuant to the court's February order.
¶ 35 The trial court also erred in its February order by directing Country to pay Hilltop's and PSM's attorney fees in the declaratory judgment action because it had not found, pursuant to section 155 of the Insurance Code (215 ILCS 5/155 (West 2010)), that Country's decision to deny coverage was vexatious and unreasonable. Hilltop and PSM needed to litigate and prove Country's conduct was in fact vexatious and unreasonable if they wanted the court to impose attorney fees. Instead, the court applied the vexatiousness standard of section 155 to Country's failure to pay the fees, rather than its failure to provide coverage. The coverage action has not been fully decided as of yet, and without a finding there is coverage, and that Country vexatiously and unreasonably denied coverage, the attorney-fee issue in the declaratory judgment action was not ripe.
¶ 37 For the reasons stated, we reverse the trial court's contempt order in its entirety. The appeal bond posted by Country should be returned. We remand this case for further proceedings pursuant to our decision in the case sub judice and our prior opinion in Country Mutual Insurance Co. v. Hilltop View, LLC, 2013 IL App (4th) 130124, 376 Ill.Dec. 240, 998 N.E.2d 950.
¶ 38 Reversed; cause remanded with directions.
Justices HARRIS and APPLETON concurred in the judgment and opinion.