Petition for Writ of Certiorari — Green v. Merrill Lynch, Pierce, Fenner & Smith Inc.

Supreme Court of the United States

GERTRUDE GREEN, as Administratrix of the

Estate of Sol Green and Individually,

Petitioner,

v.

MERRILL LYNCH, PIERCE, FENNER & SMITH,

a Delaware Corporation, and CANTWELL & CANTWELL,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI

TO THE ILLINOIS APPELLATE Court, First DistRICT

PETITION FOR A WRIT OF CERTIORARI

CLINTON A. KRISLOV

Counsel of Record

MICHAEL R. KARNUTH

KrisLov & AssociaATEs, LTD.

Attorneys for Petitioner

Civic Opera Building

20 North Wacker Drive

Suite 1350

Chicago, Illinois 60606

(312) 606-0500

166797 cel

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

i

QUESTIONS PRESENTED FOR REVIEW

Whether an Illinois resident consumer may collaterally

challenge the enforcement in Illinois of a default California

judgment which patently violated BMW v. Gore, by its

awarding $50,000 punitive damages on $4,000 alleged actual

damages on a consumer credit card debt, obtained by default

by a nationwide financial services company in a California

state court and registered by default in Illinois, where the

Illinois resident consumer, who was elderly and poor, lacked

the resources to defend in the distant forum the alleged debt

asserted on forged documents against her deceased husband.

\

il

RULE 14(b) LIST OF ALL PARTIES TO THE

PROCEEDINGS IN THE COURT BELOW

Plaintiff: Gertrude Green, as Administratrix of the Estate

of Sol Green and Individually

Defendants: Merrill Lynch, Pierce Fenner & Smith, Inc. and

Cantwell & Cantwell

il

TABLE OF CONTENTS

Page

Questions Presented for Review ............... i

Rule 14(b) List of all Parties to the Proceedings in

LR aeerear nenetn eo Pe 5 il

a oes wg oa dab-a d Cee Cas ill

Table of Cited Authorities .................... \

Table of Appendices ......................... Vil

CE ee l

Statement of Jurisdiction ..................... l

Constitutional Provisions and Statutes Involved .. 2

Statement of the Case ........................ 2

I. The Califormia Suit .................... 2

I]. Registration in Illinois of the California

Default Judgment ..................... 5

III. Enforcement of the Illinois Default Judgment

EP ASS Eee a ee ee 9

Reasons for Granting the Writ ................. 10

I. The Invalidity of the California Default

TE tc 0. GaN id hice Gereatane ees 12

lv

Contents

Page

II. The Unconstitutionality of the California

SPE GUI no ccs odnasceecunes 15

REN ac cee au cnwhsanee eee ee cae 17

Poy

TABLE OF CITED AUTHORITIES

Page

Cases:

BMW of North America, Inc. v. Gore, 517 U.S. 559

GRP as nc nud soa kveweee 1, 10, 11, 12, 13, 15, 16

Cates Construction, Inc. v. Talbot Partners, 980 P.2d

0 re re i ie Te 16

Evans v. Corporate Services, 207 Ill.App.3d 297,

565 N.E.2d 724 (2d Dist. 1990) .............. 13

Green Tree Financial Corp. v. Randolph, 531 U.S.

79 (December 11, 2000) ... 2... 0. ccc cc ccc cece Ei, 89

In re Marriage of Verdung, 162 Il.App.3d 374, 515

eee 8 PPT eee ere eres 13

Kalb v. Feurstein, et ux., 308 U.S. 433 (1940) .... 13

Miller v. Balfour, 303 Ill.App.3d 209, 707 N.E.2d

Fae GREE PED once khan hae 13

Pink v. A.A.A. Highway Express, 191 Ga. 502, 13

S.E.2d 337, (1941), affirmed, 314 U.S. 201 (1941),

rth. dem., 314 U.S. TiG CIDEZ) «ooo cen cccanne 1]

Pyshos v. Heart-Land Development Company, 258

Ill.App.3d 618, 630 N.E.2d 1054 (1st Dist. 1994)

vi

Cited Authorities

Page

State Bank of Piper City v. A-Way, Inc., 135

lll. App.3d 1010, 482 N.E.2d 620 (3d Dist. 1985)

<n ens bubadeneuseeaeenee ne 14

United States Constitution:

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Posen PUMINONR soc doce dc ntévieas esas 2

Statutes:

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Ace ce PPS Pree 14

SB yee 8) FS) rere eee 14

Rule:

Illinois Supreme Court Rule 277 ............... 14

ad an lll el tt al it i ——

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TABLE OF APPENDICES

Appendix A — Order Of The Illinois Appellate

Coust Dated AGS BO, BOGO ccccescvccccacecs

Appendix B — Order Of The Circuit Court Of Cook

County, Illinois Dated January 26, 1998 .......

Appendix C — Letter Of The Illinois Supreme Court

Denying Petition For Leave To Appeal Dated

SURG Bic PEE scccccdcesnacvacnsescccasne

Appendix D — Order Of The Circuit Court Of

Cook County, Illinois, County Department, Law

Division Registering By Default The California

Default Judgment Dated September 21, 1989

Appendix E — Default Judgment Of The Superior

Court Of California, County Of San Diego Dated

And Filed November 14, 1988 And Entered

November 15, 1988; And Request For Entry Of

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OPINIONS BELOW

On January 26, 1998, the Cook County Circuit Court of

Illinois granted Defendants-Respondent’s, Merrill Lynch,

Pierce Fenner & Smith (“Merrill Lynch”) and Cantwell

& Cantwell (“Cantwell”) (collectively, “Defendants”

or “Respondents”), Motion to Dismiss. (App. B). Mrs. Green

filed a motion for reconsideration, which the Circuit Court

denied on September 8, 1998.

On October 6, 1998, Mrs. Green filed a Notice of Appeal

with the Illinois Appellate Court, First District. On April

20, 2000, the Appellate Court issued its Order and

Memorandum Opinion (App. A) which affirmed the final

judgment of the Circuit Court. On May 11, 2000, Mrs. Green,

acting pro se, filed a petition for rehearing with the Appellate

Court, which was thereafter denied on June 8, 2000.

Petitioner’s timely petition to the Illinois Supreme Court

for Leave to Appeal was denied on January 29, 2001. (App. C).

STATEMENT OF JURISDICTION

Jurisdiction for review by this court is based on 28 U.S.C.

§ 1257(a) to review a final judgment by the highest court of

a State in which a decision could be had, where a right (here,

due process) is claimed under the Constitution of the United

States.

2

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

United States Constitution; Article 45 Section 1:

Full faith and credit shall be given in each state

to the. . . judicial proceedings of every other state.

United States Constitution, Fifth Amendment:

No person shall . . . be deprived of . . . property,

without due process of law... .

STATEMENT OF THE CASE

Petitioner’s case arises from Merrill Lynch’s initiation

and prosecution of claims against Sol Green in California,

obtaining a default judgment against him for $4,000

(four thousand doilars) for alleged actual damages plus

$50,000 (fifty thousand dollars) punitive damages, followed

by Merrill’s subsequent registration and enforcement of that

judgment in Illinois, also by default, and successfully

asserting res judicata and full faith & credit to preclude

Green’s widow from collaterally challenging the judgment

being enforced.

I. The California Suit

On December 3, 1987, Robert Green, Sol Green’s

nephew, president of a corporation doing business in

California known as Moving Up International Corp.

(“Moving Up”), and an unidentified person, applied to open

money market accounts for Moving Up with a Merrill Lynch

3

office in San Diego. (Complaint 912, RC.5).' Each account

agreement provided for the issuance of VISA cards, and upon

the request of Robert Green, without Sol Green’s knowledge,

VISA cards were issued in the names of Robert Green and

Sol Green (Complaint §912-13, RC.5-6). At that time, the

unidentified individual was allowed, also without Sol

' Green’s knowledge, to sign the name of Sol Green on the

application form (Complaint 413, RC. 5).

As the money market accounts be overdrawn in

early 1988, Robert Green, Alison J. Boyd, another officer of

Moving Up, and others, not including Sol Green, had several

conversations with Merrill Lynch regarding those accounts.

(Complaint 414, RC.6). During those conversations, Merrill

Lynch was expressly informed that Sol Green had resigned

from Moving Up over a year earlier, in October of 1986,

that his signature had been forged on the account agreements,

that he had no knowledge that the accounts existed, and,

further, that he never used the accounts or the VISA cards.

(Complaint 414, RC.6). Nevertheless, Merrill Lynch

commenced an action in California against Moving Up,

Robert Green, Alison Boyd, Sol Green and two other

individuals, alleging that the Merrill Lynch accounts were

overdrawn by $20,450 and that the VISA cards had an

outstanding balance of $4,233.89 (the “California Suit”)

(Complaint 9917-18, RC.7 and 23). The California Suit

allegations of Sol Green’s involvement in Moving Up and

the overdrawn accounts were made on information and belief

and not supported by any evidentiary material. In fact,

throughout this period of time Sol Green was battling severe

1. Petitioner’s Verified Complaint is cited herein as “Complaint

{| __”. The record on appeal to the Illinois Appellate Court is cited

herein as “RC. __”.

4

_ illness and was spending a great deal of time in hospitals

and visiting doctors. (RC. 701-710).

Nonetheless, Merrill Lynch still attempted to

effect service on Sol Green by directing a process server to

an apartment in San Diego, although, Merrill Lynch knew

that Sol Green never resided at that address. (Complaint 419,

RC.8-9). In fact, at the time Merrill Lynch filed the California

Suit it had in its possession the Articles of Incorporation

and By-Laws of Moving Up indicating that Sol Green’s

address was 1322 Seward Street, Evanston, Illinois

(Complaint 420, RC.8). Having failed to effect personal

service upon Sol Green, Merrill Lynch attempted service at

Sol Green’s “usual place of business” by directing a process

server to the office of Moving Up despite possessing the

specific knowledge that Sol Green had resigned from Moving

Up over a year earlier and that the office was closed almost

one month before Merrill Lynch claimed to have effected

service (Complaint 921, RC.8).

On November 14, 1988, Merrill Lynch nonetheless

sought and obtained a California court default judgment

entitling Merrill Lynch to collect $84,955.19 from Moving

Up, Robert Green, Sol Green, Alison Boyd and others, on

the alleged $20,450 overdrawn money market account and

the $4,233.89 credit card debt (the “California Default

Judgment”). (App. E). The California default judgment

included an award of $50,000 in punitive damages and

approximately $10,000 in attorneys’ fees and costs

(Complaint 922, RC. 8 and 47). (App. E at 23a and 25a).

Despite Sol Green’s sole specific act of involvement, as

alleged in Defendant’s California Suit, being merely

providing his signature on the account agreements, which

Alison Boyd and Mrs. Green contend in sworn affidavits

5

were forged, the full amount of the default judgment was

eventually only enforced against Sol Green (RC.162).

Moreover, the allegations contained in the California

Suit on their face showed Sol Green to be liable only for the

$4,233.89 credit card debt. (RC.526-546). The money market

accounts overdrawn by $20,450 were strictly a corporate

obligation and the California Suit did not contain allegations

to show why the corporate veil should be pierced in order to

hold Sol Green personally liable. In fact, the trial court below

acknowledged that the only claim Sol Green may have been

liable for was the $4,000 credit card claim. (RC.43-44, 58).

II. Registration in Illinois of the California Default

Judgment

After obtaining the default judgment in the California

Suit, Merrill Lynch then contacted Respondent Cantwell to

register the judgment in Illinois. On August 3, 1989,

Cantwell, on behalf of Merrill Lynch, filed a Citation to

Discover Assets on Sol Green. (Complaint 426, RC.10). The

Citation to Discover Assets notice commanded Sol Green to

appear before Judge Irwin Cohen on September 1, 1989 to

discover assets not exempt from the enforcement of a

judgment purportedly entered on August 2, 1989. Importantly

for this petition, no judgment had been registered or entered

in Illinois against Sol Green either on or prior to August 2,

1989. In fact, the Petition to Register the default judgment

in the California Suit was not filed in Illinois until August 3,

1989, the same day the Citation to Discover Assets was filed.

Moreover, under Illinois law, it was improper for

Respondents to pursue a Citation to Discover Assets, a

supplemental proceeding, before entry of an enforceable

judgment.

6

At this time, Sol Green was seriously ill and mentally

infirm (he died five months later, on January 12, 1990).

Consequently, Sol Green’s family was in some measure of

disarray. On August 8, 1989, both the Petition to Register

Foreign Judgment and the Citation to Discover Assets were

served by substitute service of process. (Complaint (24,

RC.9).

Because Sol Green was bedridden and seriously

ill, Claire Fischer, Sol Green’s sister-in-law, appeared

on September 1, 1989, and checked in with the clerk

(RC.680-1). It has since been determined that the September

1, 1989, hearing related only to the improperly scheduled

Citation to Discover Assets, not the Petition to Register the

Foreign Judgment. At that hearing, a new hearing date of

October 3, 1989, was set (RC.681). At no time was Claire

informed that a Rule to Show Cause relating to the Citation

to Discover Assets was to issue (RC.681). Indeed, Claire

was never provided with a copy of the Order entered at that

hearing. Mrs. Green later discovered that the Merrill Lynch

attorney wrote the following on that Order: “Defendant

having been served by substitute service on August 8, 1989,

and not appearing [. . .]” (RC.681). The Order also indicated

that a Rule to Show Cause should issue against Sol although

Claire was not advised that a Rule to Show Cause would be

issued.

Claire left the September 1, 1989 hearing having been

led to believe that no action would be taken regarding the

registration of the California Default Judgment until October

3, 1989. In the interim, on September 11, 1989, Merrill Lynch

filed a “Special Motion for Entry of Default Judgment” with

a hearing scheduled for September 18, 1989. While Cantwell

signed a Notice of Motion indicating that this motion had

iY id.

7

been served on Sol Green by mail at his Evanston home, no

member of the Green family ever saw that motion in advance

of the hearing. (RC. 681).

On September 18, 1989, no member of the Green family

appeared at the Special Motion for Entry of Default Judgment

because they had not received notice. Moreover, no order

was entered on that date and no order was served on Sol nor

appears in the court file. Furthermore, the Green family was

led to believe that the October 3, 1989 hearing was scheduled

to address the issues of the judgment and the citation to

discover assets. A default judgment (the “Illinois Default

Judgment”) was entered on September 21, 1989, by Judge

Thomas P. Quinn against Sol Green in the amount of

$84,955.19, with post-judgment interest in the amount of

$7,420.08 for a total judgment amount of $95,195.27, plus

costs of suit (RC.49). (App. D at 21a).

Neither Sol, Claire Fischer or any other member of the

Green family was ever served with a copy of the Illinois

Default Judgment (RC. 681). Claire, not knowing what had

transpired on September 21, 1989, appeared at the October

3, 1989, hearing on the Citation to Discover Assets which

had previously been scheduled. (RC. 681). At the October

3, 1989 hearing, the lawyer from Cantwell advised the court

that the Rule to Show Cause had not been served upon

Sol Green and he asked for a continuance (RC. 681). The

Court ordered that an alias rule to show cause should issue

and continued the matter until November 7, 1989.

By November 7, 1989, the thirty-day clock for vacating the

Illinois Default Judgment would have run.

Claire Fischer also appeared at the November 7, 1989

hearing on behalf of Sol Green. At that time, the court, at

8

the request of Cantwell, continued the matter until December

8, 1989. When the Cantwell attorney drafted the Order

relating to this hearing, he indicated that Sol Green’s attorney

had requested the continuance; however, Sol Green had never

retained an attorney during this period. (RC. 682).

On November 7, 1989, Merrill Lynch issued a Citation

to Discover Assets directed at Mrs. Green. (RC. 682).

The citation examination of Mrs. Green was held on

March 8, 1990. During that proceeding, Mrs. Green was

shown a document on which the purported signature of

Sol Green appeared and was asked if that was his signature.

Mrs. Green stated that the signature was definitely not Sol's

signature; and, despite her requests, Merrill Lynch refused

to produce any receipts indicating that Sol Green ever used

the subject credit card. (RC. 10). Mrs. Green also informed

counsel for Merrill Lynch that Sol Green had never lived in

California, had never worked in California, and was never

indebted to Merrill Lynch. In response, an attorney from

Cantwell told Mrs. Green not to worry because Sol Green

was dead (RC. 10).

At the conclusion of that proceeding, the court entered

an order dismissing the proceeding on the condition that

Mrs. Green produce a copy of the 1987 and 1988 federal

and state tax returns, which she and Sol had filed, as well as

other financial documentation. These tax returns were

subsequently tendered to Defendants and the action was

dismissed.

9

Ill. Enforcement of the Illinois Default Judgment

On January 9, 1992, more than two years after entry of

default in Illinois, Cantwell, on behalf of Merrill Lynch, filed

a Motion to Set Aside a purported fraudulent conveyance of

the Green residence from Sol Green to Mrs. Green and grant

turnover of the Green residence. (Complaint 433, RC. 11)

During these proceedings, Judge Irwin Cohen did not permit

Mrs. Green, though she tried, to challenge the validity of

the California Default Judgment or its registration in Illinois:

I judicially noticed the fact the entry was in

California, the fact it was registered there, the fact

it was filed here, or challenged here, those are

not issues. They are all gone. The only thing of

any matter now that is new and the only thing I

am going to consider in reference to this is two

items, and whether it is a red herring or not, I am

not concerned about it.

(RC. 712). On April 13, 1993, Judge Cohen entered an order

granting Merrill Lynch’s motion (Complaint 4933 and 36,

RC. 12 and 75).

In the interim, on January 8, 1993, Robert Fischer, as

administrator of the Estate of Sol Green, filed a complaint

in California to set aside the underlying default judgment

(RC. 214-220). That action was dismissed by Judge Haden

on purely procedural grounds (for failure to attend a case

management conference) on August 13, 1993 (RC. 223).

The Green family was unable to continue with that California

action due to their inability to afford to retain counsel and

litigate that action thousands of miles away.

10

On October 5, 1993, the beneficial interest held by

Mrs. Green in the Green residence was sold in accordance with

a court ordered judicial sale to Merrill Lynch for $90,000

(Complaint 937; RC. 12 and 56). On November 5, 1993, an

order was entered confirming the sale of the Green residence.

(RC. 853).

In April 1997, Mrs. Green filed her three-count Complaint.

On April 20, 2000, the Appellate Court affirmed the trial court’s

dismissal of the Complaint on grounds of res judicata, collateral

estoppel and statute of limitations. On January 29, 2001, the

Illinois Supreme Court denied petitioner’s timely petition for

leave to appeal.’

REASONS FOR GRANTING THE WRIT

This case presents an important question as to whether the

three-prong due process standard for challenging the

constitutionality of punitive damage awards, as expressed in

BMW v. Gore, 517 U.S. 559 (1996), may be asserted to

collaterally challenge the enforcement of a facially invalid

$50,000 punitive award on $4,000 of alleged actual damages,

where such judgment was obtained by default on forged

documents in California state court against an elderly and poor

resident of Illinois by the judgment creditor, a global financial

services firm, which then enforced that default judgment against

the Illinois resident by taking her home and asserting that res

judicata and full faith and credit precludes the person’s collateral

challenge to the underlying judgment, ignoring that she lacked

the financial resources to defend in California.

2. Given the lower courts’ failure to address the invalidity and

unconstitutionality of the California default judgment, the lower

courts’ grounds for dismissal are not valid or a bar to the relief

Petitioner seeks here.

11

This case thus starkly presents the factual record missing

from Green Tree Financial Corp. v. Randolph, 531 U.S. 79

(December 11, 2000), in which this court recently declined

to permit a consumer’s collateral challenge to an agreement

to arbitrate, because the record there failed to meet the burden

of showing that arbitration there was prohibitively expensive,

effectively constituting a denial of due process. 121 U.S.

at 522-523.

Here, in contrast, the distant California state court

proceedings in which Merrill Lynch sought and obtained a

default judgment against the Illinois resident not only for

the alieged $4,000 actual damages on the credit card, but,

additionally by default, $50,000 in punitive damages, in

violation of Gore as well as California law, because the

Illinois resident defendant lacked the resources to defend

the distant case, is precisely the denial of due process which

should support an exception to Art. 4, § 1’s full faith and

credit obligation on the state courts.

The law in this area is basic hornbook. Before the full

faith and credit clause can become operative, one must have

had his day in court, since it is the essence of “due process

of law” that one must be given an opportunity to be heard.

Pink v. A.A.A. Highway Express, 191 Ga. 502, 13 S.E.2d

337, (1941), affirmed, 314 U.S. 201 (1941), reh. den., 314

U.S. 716 (1942). In BMW v. Gore, 517 U.S. 559 (1996) this

court held that due process precludes punitive damages which

do not meet a 3-prong test, evaluating the punitive damage

award based on: 1-the degree of defendant’s reprehensibility,

2-the ratio of the punitive award to actual/compensatory

damages (generally permitting no more than 3 or 4-times

actual damages), and 3-a comparison to civil and criminal

penalties otherwise imposed on such conduct. Here, the

punitive damages on their face violated Gore (petitioner, the

12

defaulting alleged signer for a credit card had no culpability

for any of the charges and could not afford to appear in

California, the award was 12.5 times the $4,000 alleged

actual damages, and there are no “penalties” imposable on a

consumer debtor under the law of the forum, California,

beyond his obligation to make good for the principal), and

were exacerbated by the fact that they were entered by

default.

Thus, this case is the factual situation appropriate for

this Court to weigh in with the holding that a punitive damage

award obtained in a far-away jurisdiction which on its face

violates Gore, can be challenged collaterally over assertions

of res judicata and full faith and credit. |

In affording the California Default Judgment full faith

and credit the Illinois Appellate Courts blindly accepted the

two default rulings rendered in the prior proceedings and |

ignored their duty to void judgments which are invalid or

unconstitutional on their face.

I. The Invalidity of the California Default Judgment

The use of distantly obtained judgments with inadequate

process and registration, and facially invalid punitive damage

awards are not entitled to full faith and credit or res judicata

effect against Illinois consumers. Mrs. Green, an 82 year

old widow, is faced with losing her house of almost 50 years

as well as her right to have her case heard on the merits.

Given these dire consequences, it is imperative that this Court

do what the lower courts have thus far failed to do — allow

an evidentiary determination of the validity of the California

Default Judgment and its registration, also by default, in

Illinois.

13

The Illinois Courts gave the California Default Judgment

full, faith and credit as if there was no other option available

to them. However, it is well known in Illinois that

“void judgments are always subject to collateral attack for

lack of jurisdiction or fraud.” Miller v. Balfour, 303

Ill.App.3d 209, 215, 707 N.E.2d 759, 764 (2d Dist. 1999)

(citing, In re Marriage of Verdung, 162 Ill.App.3d 374,

389-90, 515 N.E.2d 454 (1987)). Furthermore, void ©

judgments “may be attacked at any time or in any court, either

directly or collaterally”. Evans v. Corporate Services,

207 Ill.App.3d 297, 302, 565 N.E.2d 724 (2d Dist. 1990).

This Court also allows collateral attacks on invalid state court

judgments or those that violate due process rights. See Gore,

517 U.S. 559 (1996); and Kalb v. Feurstein, et ux., 308 U.S.

433 (1940) (allowing collateral attack on state court

foreclosure proceeding; reversing dismissal of action seeking

restoration of possession of farm lost in a state court

foreclosure proceeding because the state action did not

comport with federal law).

The record here shows that at the time the California

Default Judgment was entered Merrill Lynch had knowledge

that Sol Green was not a resident of California (Complaint

420, RC.8), had resigned from Moving Up approximately

one year prior to the subject accounts being open (Complaint

921, RC.8) and that the purported signature of Sol Green

written on the account agreements was placed there without

Sol Green’s knowledge or authorization. (Complaint 414,

RC.6).

Additionally, Defendants’ registration of the California

Default Judgment was also improper and could even be

characterized as fraudulent. Under Illinois law, pursuit of a

Citation to Discover Assets, a supplemental proceeding,

before a judgment has been entered is now, and was then in

14

1989, not allowed. 735 ILCS § 5/2-1402 (formerly, IL ST

CH 110 P 2-1402) (“procedure for conducting supplementary

proceedings shall be prescribed by rules”). Supreme Court

Rule 277 states: “a supplementary proceeding . . . may be

commenced . . . [when] a judgment is . . . subject to

enforcement”; see also Pyshos v. Heart-Land Development

Company, 258 Hll.App.3d 618, 622, 630 N.E.2d 1054, 1057

(1st Dist. 1994) (“[s]upplementary proceedings may only be

initiated after a judgment has been entered”); and State Bank

of Piper City v. A-Way, Inc., 135 Ill.App.3d 1010, 1015, 482

N.E.2d 620, 624 (3d Dist. 1985) (section 2-1402 proceedings

are unavailable to creditors, secured or otherwise, until after

judgment capable of enforcement has first been entered in

their favor”). Here, Defendants initiated the Citation

to Discover Assets proceeding almost two months prior

to the entry of the California Default Judgment. Not only

did Defendants violate Illinois Supreme Court Rule 277

in 1989, but they intentionally misled the lower court into

believing that such a process was appropriate. (RC. 64-65).

Defendant’s violation of, among other things, the rule against

filing supplemental proceedings before entry of the Illinois

judgment, and their subsequent misstatement to the lower

court covering up their violation, had a devastating impact

on Petitioner, resulting in the sale of her home, which is

deserving of a remedy.

The lower courts’ refusal to review the underlying facts

in this case should not deter this Court from doing so now.

The record here shows that service on Sol Green in California

was not proper (Complaint 9919-21, RC.8-9) and, thus, the

California court did not have jurisdiction over him.

Moreover, Defendants’ improper registration of the

California Default Judgment in IIlinois, also by default, and

the Illinois courts’ reliance on that judgment being valid,

15

calls into question its validity in that forum also. And, unlike

the facts presented in Green Tree, the record here supports

rendering the California Default Judgment invalid because

the costs associated with being forced to litigate in a far-

away forum precluded Petitioner from vindicating her legal

rights.

II. The Unconstitutionality of the California Default

Judgment

The Illinois courts also completely ignored the fact that

the California Default Judgment contained an award of

$50,000 in punitive damages, $20,000 of a purely corporate

_ debt and some $10,000 in attorney fees and costs, on

essentially a $4,000 credit card claim. In blindly affording

the California Default Judgment full, faith and credit, the

lower courts failed to make any due process analysis required

by BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996),

nor did they inquire at all into the basis for such an excessive

punitive damage award relative to the underlying obligation.

Ignoring the “degree of reprehensibility” prong, the Illinois

court never permitted any assertion that Sol Green’s conduct,

even as alleged in the California suit, could support a punitive

damage award. Even if the validity of Mr. Green’s alleged

signature was not challenged, it is difficult to envision how

a mere obligation to pay on a credit card default could ever

constitute “reprehensible” conduct permitting a punitive

damage award. Nor are there any penalties for such conduct-

failing Gore’s third prong. Most troubling is the obvious

disproportionality of the punitive damages at 12.5-times-

alleged actual damages. The excessive award of punitive

damages assessed against Petitioner, which has resulted in

the judicial sale of her home of almost 50 years to Merrill

Lynch, grossly violates her right to due process.

16

As stated in Gore, punitive damages may be imposed

to “punish unlawful conduct and deter its repetition”.

Id. at 568. But here, the complaint filed against Sol Green in

California did not allege any allegation of improper conduct.

All assertions against Sol Green, except for his purported

signature on the account agreement, were alleged on

information and belief.

As recognized by Judge Hogan below, Merrill Lynch’s

claim against Sol Green was only for $4,000 arising

essentially from a breach of a credit card agreement.

To award $50,000 in punitive damages against a breach of

contract claim and to tack on the $20,450 corporate claim,

without even considering the additional approximately

$10,000 in attorney fees and other costs, is not only a

violation of Petitioner’s due process rights under the

holding in Gore, but is also a violation of California law,

the jurisdiction that rendered the default judgment.

Cates Construction, Inc. v. Talbot Partners, 980 P.2d 407,

427 (“absent an independent tort, punitive damages are not

recoverable for breach of contract”). Therefore the Petitioner

should have been afforded the opportunity to challenge the

validity of the default judgment being enforced.

In order to provide fundamental due process protection

for consumers nationwide against such creditor abuses, the

Court should grant the petition and declare the appropriate

due process limitations on full faith and credit.

17

CONCLUSION

For all of the foregoing reasons, Petitioner respectfully

requests that this Court issue a writ of certiorari to the Illinois

Appellate Court, so that the judgment of the appellate court

may be reviewed and reversed with instructions to vacate

the judicial sale of petitioner’s home to respondent Merrill

Lynch Pierce Fenner and Smith.

Respectfully submitted,

CLINTON A. KRISLOV

Counsel of Record

MICHAEL R. KARNUTH

KrisLov & AssociaTEs, LTD.

Attorneys for Petitioner

Civic Opera Building

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Chicago, Illinois 60606

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