In the closing days of its November term, the Illinois Supreme Court agreed to decide a simple issue with potential implications across a wide variety of civil litigation: is a trial court’s order granting or denying sanctions under Supreme Court Rule 137 per se reversible error when it fails to include reasons for the trial court’s action? The case is Lake Environmental, Inc. v. Arnold, and the Fifth District’s answer to the question presented was “yes.”
Lake Environmental arises from an administrative order revoking the plaintiff’s license as an asbestos contractor. During that proceeding, the Illinois Department of Public Health filed a complaint seeking civil penalties and injunctive relief. The plaintiff filed a petition for administrative review in Circuit Court of the administrative ruling of revocation. The trial court reversed the license revocation and remanded for consideration of whether the plaintiff’s license should be suspended or revoked. Subsequently, the plaintiff filed a motion for sanctions under Supreme Court Rule 137, which is (more or less) Illinois’ state-law version of Federal Rule 11. The trial court denied the motion in a one-sentence order which included no explanation.
The Appellate Court reversed. The Court chose to follow a line of decisions from the Second District holding that a trial court “must provide specific reasons for his or her ruling, regardless of whether sanctions are granted or denied.” The Court held that without an explanation for why the trial court ruled as it did, it would be unable to evaluate the court’s action, and the Court declined to infer the basis for the trial court’s order. The Court rejected scattered decisions from other Districts which the defendant argued stood for the proposition that an explanation of reasons is merely preferred practice, as opposed to being a requirement.
We expect Lake Environmental to be decided in eight to ten months.