Wednesday, February 2, 2011

Finality of Judgments

[This is Part 1 of a four part series concerning advanced collection techniques. The introductory post can be found HERE.]

In the Dexia case, one of the issues raised on appeal was that the plaintiff was attempting to enforce a judgment that was not a final order.  Because that case took place in federal court, the defendants cited Federal Rule of Civil Procedure 54(b).  That rule is substantially similar to Illinois Supreme Court Rule 304(a).  For purposes of this blog, I will refer to the Illinois Supreme Court Rule.

Rule 304(a) is titled "Judgments As To Fewer Than All Parties or Claims--Necessity for Special Finding."  When your judgment order resolves all claims against all parties, it is deemed a final order and there is no need for a special finding.  However, if the judgment does not resolve all claims against all parties--for instance, when there is another defendant out there who you can't get served, or a defendant consents to judgments involving certain claims, but contests other claims--the court must issue a 304(a) finding for the order to be final and enforceable.  A 304(a) finding requires language that the trial court finds "no just reason for delaying either enforcement or appeal or both" of the order.  The rule provides that such a finding may be made at the time of the entry of the judgment or thereafter on the court's own motion or on motion of any party.

Supreme Court Rule 277(a) provides that supplemental proceedings authorized by Section 2-1402 of the Code of Civil Procedure may be commenced at any time with respect to a judgment which is subject to enforcement.  In the absence of a 304(a) finding, any judgment that adjudicates fewer than all the claims against all the parties is not subject to enforcement.

In the Dexia case, the original judgment did not resolve all claims against all parties, nor did it contain a special finding making it a final order.  However, after citations were issued, the trial court entered an order nunc pro tunc dismissing two remaining parties.  At that point, the judgment resolved all claims against all parties and became final.  The Dexia defendants argued on appeal that the citations were invalid, and the turnover orders entered during the citations were void, because the citations stemmed from a non-final judgment order.  They argued that the plaintiff should have started over and reissued new citations after the judgment became final.   

The Court disagreed.  They noted that the defendants made no attempt to explain what purpose would be served by requiring the citations to be re-issued.  They reasoned that requiring the plaintiff  "jump through the procedural hoop" of refiling their citations does not "comport with the efficient administration of justice."

Moreover, the Court found that the district court's actions were consistent with considerations of finality in those situations where a judgment becomes final during an appeal.  The Court cited Lovelette v. S. Ry. Go., 898 F.2d 1286 (7th Cir. 1990) for the proposition that the failure to certify a judgment as final under Rule 54(b) can be cured where the rest of the claims and parties are dismissed during the pendency of an appeal.

So, it is important for creditor's lawyers to consider the finality of their judgments before beginning collections.  But even if the defendant does raise a valid finality argument later in the proceedings, it is worth considering the possibility that the judgment could be finalized retroactively to "comport with the efficient administration of justice," using the Dexia case for authority.

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