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FIRST DIVISION
September 8, 2003

PRESIDING JUSTICE GORDON delivered the opinion of the court:

The instant suit arises from a dispute between plaintiffs Frank Sterdjevich (Sterdjevich)and Tracy Green (Green) and defendants NHP Management Corporation (NHP) and RescorpRealty, Inc. (Rescorp), stemming from gas utility charges that defendants allegedly billed toplaintiffs in violation of the Tenant Utility Payment Disclosure Act (Act) (765 ILCS 740/1 et seq.(West 1996)) and in breach of their respective lease agreements. On appeal, defendants NHP andRescorp contend that the trial court erred in denying their motions for sanctions against plaintiffSterdjevich. who, they assert, knowingly made false material allegations in his pleadings. NHP,alone, further asserts that the trial court erred in denying its motions for attorney fees and otherexpenses incurred during litigation of the instant case to which it would have been entitled underthe express provisions of the operative lease. In his cross-appeal, plaintiff Sterdjevich allegesthat the trial court erred in granting NHP's motion for summary judgment with respect to hissecond amended complaint. For the reasons that follow, we affirm the trial court's judgment withrespect to summary judgment and the denial of attorney fees and other litigation expenses, andreverse with respect to sanctions.

BACKGROUND

In March 1995, plaintiffs Sterdjevich and Green filed a class-action⁽¹⁾ complaint on behalfof themselves and as representatives of the other tenants of the building located at 200 ArlingtonPlace in Arlington Heights, Illinois (200 Arlington Place), against RMK ManagementCorporation (RMK) and Arplace Limited Partnership (Arplace).⁽²⁾ The complaint alleged thatRMK and Arplace breached their respective lease agreements, violated the Illinois ConsumerFraud and Deceptive Business Practices Act (815 ILCS 505/2 (West 1996)) and violated the Actwhen they assessed a monthly gas utility charge to tenants at 200 Arlington Place withoutproviding an assessment formula for master metered utilities. Thereafter, in March 1996,plaintiffs filed a first amended complaint wherein they named additional defendants, includingDraper & Kramer, Incorporated (Draper & Kramer),⁽³⁾ Rescorp and NHP. With respect toRescorp and NHP, plaintiffs made the following allegations which are relevant to the instantappeal: (1) that defendants "breach[ed] lease agreements entered into with the tenants at 200Arlington Place, by assessing tenants a monthly 'gas charge' in violation of the terms of the leaseand in violation of Illinois law"; (2) that defendants committed deceptive practices by failing todisclose that tenants would be required to pay a monthly gas charge; and (3) that the leasesexecuted between defendants and plaintiffs contained a provision which provided that tenantswould be responsible only for payment of individually metered utility charges.

Prior to filing their first amended complaint, plaintiffs filed a motion stating the reasonswhy they sought leave to amend. In the motion, plaintiffs asserted that they deposed KateWojciechowski, the manager of 200 Arlington Place, and that she testified that Rescorp and NHP"engaged in the practice of charging tenants for Gas Charges despite explicit lease provisions andIllinois law prohibiting same." In support of this contention, plaintiffs attached to their motionan excerpt from Wojciechowski's deposition, wherein she stated that Rescorp and NHPconstructed 200 Arlington Place and that Rescorp subsequently managed the building from 1987until 1989. NHP then took over management duties until 1991. In the excerpted portion of thedeposition, Wojciechowski further stated that she worked as an assistant manager for NHP, andtestified that NHP used the same leases as those utilized by other managing companies in thebuilding, which contained the following provision, hereinafter identified as Paragraph 7:

"7. UTILITIES: Unless otherwise agreed in writing, if the Apartment is individually metered, payment to the utility company or authorized metering agency of the applicable charges for gas, electricity or water consumed by Tenant in the Apartment, including, if applicable, current use for electrical heating, ventilation, airconditioning, hot water, etc. shall be Tenant's sole responsibility."

She could not say whether Rescorp also used leases containing a provision similar to Paragraph7. Wojciechowski averred that Draper & Kramer took over management of 200 Arlington Placein May 1992 and continued in that capacity until December 1992. She averred that Draper &Kramer included language in its lease such as that set forth in Paragraph 7. Although notincluded in the excerpted testimony provided by plaintiffs, Wojciechowski testified in herdeposition that she executed a lease with Rescorp for a unit at 200 Arlington Place for the periodof April 19, 1991, through May 31, 1992. Notably, nowhere in the deposition excerpt providedby plaintiffs did Wojociechowski state, as plaintiffs represented, that NHP and Rescorp chargedtenants for gas utilities.

On May 26, 1996, defense counsel wrote a letter to plaintiffs' counsel regarding theallegations made in the first amended complaint. In the letter, defense counsel advised that theleases actually used by Rescorp and NHP were materially different from the leases used by theother management agencies, upon which plaintiffs' complaint was based. Defense counselindicated that the NHP and Rescorp leases "spell out how that charge [utility charge] will beassessed." With the letter, defense counsel provided copies of the 1991 lease executed betweenSterdjevich and NHP, as well as the form lease utilized by Rescorp for 200 Arlington Place. Finally, defense counsel advised plaintiffs that it would be filing a motion to dismiss thecomplaint in the event that plaintiffs decided to proceed with their suit in light of the informationprovided and would also seek attorney fees because the pleading filed was "baseless." Plaintiffschose to proceed, and on May 31, 1996, NHP and Rescorp filed a motion to dismiss the firstamended complaint. In that motion, defendants contended that dismissal of plaintiffs' firstamended complaint was warranted because plaintiffs failed to allege that they entered into a leaseagreement with either of the defendants and failed to provide the written instrument upon whichtheir claim was based.

On August 8, 1996, plaintiffs filed their "Response to Defendants Rescorp Reality, Inc.and NHP Management Company's Motion to Dismiss." In that response, plaintiffs asserted thatthey filed their first amended complaint "[b]ased on Wojciechowski's testimony in which shestated that NHP committed the same practices as the original defendants (RMK and Arplace)with respect to assessing gas charges, and that she did not know whether Rescorp committedsuch practices." Plaintiffs also argued that defendants' motion to dismiss did not raise adequatepleading defects because "the mere fact that the plaintiffs have not attached a copy of the leaseswhich forms the basis of their allegations against defendant Rescorp and NHP is inconsequentialsince the leases are or were within the custody and control of the defendants." Plaintiffs went onto assert that "defendants NHP and Rescorp have not produced the leases which their agentadmitted exist." Plaintiffs also reiterated that Wojciechowski's deposition supported the facts intheir complaint because she stated that NHP entered into leases, which were similar to those ofother management companies, "in which gas charges were assessed in violation of the terms ofthe lease, *** the Consumer Fraud Act, and *** [the Act]."

Defendants, in turn, filed a reply in support of their motion to dismiss wherein theyreasserted that the first amended complaint was deficient because it did not allege that plaintiffswere involved in a landlord/tenant relationship with defendants and did not have, as anattachment, a copy of the leases upon which the complaint was based. Defendants also pointedout that copies of the subject leases were turned over to plaintiffs with defendants' May 26, 1996,letter, and in support, attached copies of the letter as well as the subject leases to their replymemorandum. On September 17, 1996, the trial court granted defendants' motion to dismiss andallowed plaintiffs 28 days to file an amended complaint.

On October 15, 1996, plaintiff Sterdjevich filed his second amended complaint, whichdid not include Rescorp as a defendant but did name NHP. Notably, the second amendedcomplaint was brought by Sterdjevich only and eliminated Green as a putative classrepresentative.⁽⁴⁾ In count IV of the complaint, plaintiff alleged that he entered into a leaseagreement with NHP on December 12, 1991, for a term commencing on January 5, 1992, andcontinuing through January 31, 1993. With respect to gas utility charges, the lease stated that gasutilities would be master metered for all apartments and that tenants would be charged monthlyfor their gas usage at a rate proportional to the charges incurred for the entire building based on aratio between the space leased by the tenant and the total space in the building. Plaintiff allegedin the complaint that the lease did not provide a sufficient formula for the allocation of gascharges to tenants.⁽⁵⁾ Plaintiff further alleged that NHP allocated a gas charge to him but did notprovide a copy of the utility bill from which payment was demanded. In addition to including acopy of the lease in the second amended complaint, plaintiff also included a letter that he wroteon April 9, 1993, to Wojciechowski, the assistant property manager of the building. In the letter,plaintiff stated that he "recently" received notices advising him that a payment of $28.56 was pastdue on his rent obligation resulting from his failure to pay gas utility charges from December 15,1992, to January 15, 1993.

NHP subsequently deposed Sterdjevich. In his deposition, Sterdjevich stated that whenhe leased the apartment at 200 Arlington Place in December 1991, it was his understanding thathis heating, ventilation and air conditioning charges (HVAC) would be free for the first sixmonths of the lease and that he would be required to pay for these utilities once the six-monthperiod ended. Sterdjevich testified that he did not pay for HVAC utilities, which included gas,during the first six months of his lease, and that he continued to receive these utilities withoutbeing charged for nearly a full year, until February or March 1993, when he first received abilling statement for December 1992 through January 1993. Sterdjevich stated that he paid thegas charges assessed to him in order to retain his lease at 200 Arlington Place. Prior to makingthe payments for gas utilities, Sterdjevich indicated that his wife contacted Northern Illinois Gas,which provided gas services at 200 Arlington Place, and learned that there was only one mastermeter, rather than individual meters, for each apartment at the property. The master meter wasregistered to Draper & Kramer, and not NHP, at that time.

Sterdjevich also stated that he was aware that NHP ceased serving as the managing agentof the company prior to the expiration of his lease. In this regard, Sterdjevich acknowledged thathe sent a letter to the managing agent of the building on November 30, 1992, three to fourmonths before he received a demand for payment of utility charges, and the letter was addressedto Draper & Kramer. Sterdjevich stated that he did not receive any gas utility charges in hismonthly statements between January 1992 and February 1993, and that NHP was replaced byDraper & Kramer sometime before November 30, 1992. Sterdjevich agreed that he had neverbeen charged for gas utilities prior to November 1992. He also admitted that he had not sufferedany damages as a result of any conduct by NHP regarding the collection or imposition of gasutility charges.

NHP next filed "Defendant NHP Management Company's Request to Admit Directed toPlaintiffs," wherein plaintiffs were asked to admit: (1) that plaintiff Green never entered into alease with NHP; (2) that NHP never demanded payment for master metered utilities fromplaintiff Green; (3) that plaintiff Sterdjevich entered into only one lease with NHP, a copy ofwhich was attached; (4) that Sterdjevich wrote a letter to Wojciechowski on April 9, 1993,wherein he stated that he never received any prior gas bills during his tenancy at 200 ArlingtonPlace; and (5) that NHP never made a demand upon Sterdjevich for payment of master meteredutilities. Plaintiffs admitted statements one through four, but denied the final statement.

NHP subsequently filed a motion to dismiss asserting that the Act did not apply to theinstant case because Sterdjevich's lease agreement was entered into prior to the effective date ofthe Act; that, in any event, NHP complied with the requirements set forth in the Act; and thatSterdjevich waived any objection relating to utilities when he signed his lease agreeing not tocontest utility charges.

NHP also filed a motion for summary judgment asserting that a violation of the Act didnot occur because no demand for payment of gas charges incurred by plaintiff Sterdjevich wasever made, and because Sterdjevich never paid NHP for utility charges. In support of itssummary judgment motion, NHP presented the trial court with an affidavit signed and sworn to by Brenda Smaller, the property manager of 200 Arlington Placefrom November 1990 until April 1993. Smaller attested that NHP managed 200 Arlington Placewhen Sterdjevich signed his lease on December 12, 1991, but was replaced by Draper & Kramerin May 1992.⁽⁶⁾ Smaller stated that in a letter issued to her assistant property manager, KateWojciechowski,⁽⁷⁾ Sterdjevich indicated that he had not been billed for gas charges before early1993. Smaller pointed out that, at the time gas charges were assessed to Sterdjevich, NHP wasno longer affiliated with the 200 Arlington Place property. Smaller further stated that NHP neverdemanded payment for gas utility charges from Sterdjevich and was likewise never paid for suchcharges. Attached to Smaller's affidavit was a letter she wrote to Sterdjevich on April 15, 1993,wherein she reminded Sterdjevich that he received one year of free heating and air conditioningin 1992, and thus demanded payment of $28.56 for two months worth of gas utility expenses. The letter reminded Sterdjevich that, according to his lease agreement with NHP, he was entitledto only six months of heating and air conditioning without charge, but due to an administrativeerror, he continued to receive heating and air conditioning without charge after the six-monthperiod had elapsed.

There is some indication in the record that plaintiff responded to these motions; however,we are unable to locate his response in the record and it is not included in the record cites madeby the parties. According to NHP's reply memorandum to plaintiff response, however, plaintiffasserted in his response, as he does herein, that NHP should be held liable for the conduct ofother management companies acting during the term of NHP's lease with plaintiff, even if thoseacts occurred after NHP was replaced by its successor, Draper & Kramer.

After a hearing, the trial court granted defendants' motion to dismiss and motion forsummary judgment. In doing so, the trial court reasoned that, although Sterdjevich alleged aviolation of the Act in his second amended complaint, the Act "had no application to the leaseagreement" between NHP and Sterdjevich because "[p]laintiff Sterdjevich and NHP entered intosaid lease to [sic] December 12, 1991. The [Act] did not go into effect until January 1, 1992." The trial court added that it was granting defendant's motion to dismiss and motion for summaryjudgment because plaintiff failed to allege, and the "uncontroverted evidence" showed, that NHPnever demanded payment from plaintiff for master metered utility services and that plaintiff didnot suffer any injury as a result of NHP's conduct.

Prior to the trial court granting summary judgment, NHP, joined by defendant Rescorp,filed a motion for sanctions against plaintiffs asserting that plaintiffs knowingly made falseallegations in their first and second amended complaints, as well as in other documents filedduring the pendency of the suit. Specifically, defendants asserted that: (1) in their first amendedcomplaint, plaintiffs alleged that defendants used a lease containing the provision previouslyidentified as Paragraph 7, stating that tenants would be responsible for individually meteredutilities only, which, in fact, was not used in NHP or Rescorp's leases; (2) plaintiffs did notwithdraw the erroneous allegations in their complaint regarding the contents of defendants' leaseseven after they were presented with copies of NHP and Rescorp's leases which clearlydemonstrated that the provision was not included; (3) plaintiffs pled that NHP and Rescorpcharged them for utilities in violation of the terms of their leases when Green never entered into alease with either company and Sterdjevich only entered into a lease with NHP; (4) plaintiffSterdjevich denied the statement in defendants' request to admit stating that NHP neverdemanded payment from him for master metered utilities, even though he admitted in hisdeposition that he was never charged by NHP and suffered no damages as a result of NHP'sconduct; (5) Sterdjevich admitted in his deposition that he was aware of the terms of his leasewith NHP and knew that his lease required him to pay for utilities for 6 months of his 12-monthlease, despite the fact that he originally pled that the utility provision in the lease was the same asthat used by other management companies in the building; (6) plaintiff sought to recoverdamages in his second amended complaint against NHP for gas charges assessed against him,even though he admitted in his deposition that he suffered no damages from NHP's conduct; and(7) plaintiffs could have learned of these issues through reasonable inquiry.

The trial court initially granted defendants' motion for sanctions, stating:

"This Court supports the Defendants' position that any reasonable inquiry on the part of the plaintiffs' counsel as required by Illinois Supreme Court Rule 137,would reveal that the Plaintiffs' initial allegations regarding the text of NHP and Rescorp's leases were false; that the Plaintiffs' initial allegations about having beenmisled and deceived by NHP and Rescorp were false, that neither NHP nor Rescorp ever made demand upon either Plaintiff for the payment of false charges, thatneither Plaintiff ever paid for gas charges incurred while NHP or Rescorp was associated with the property, and that neither plaintiff suffered any damages as aresult of any conduct by NHP or Rescorp. Plaintiffs not only failed to make such an inquiry, but ignored the documentary evidence provided by counsel for NHP and answered their Request to Admit in a manner contrary to the testimony of their own client."

After making this ruling, the trial court granted defendants leave to file a motion for attorney feesand costs of litigation.

Plaintiffs subsequently filed a motion to vacate the sanctions order. In their motion,plaintiffs asserted that their right to due process was violated because the trial court imposedsanctions without giving them an opportunity to file a response to defendants' sanctions motion. Plaintiffs also filed a motion to reconsider of the order granting sanctions, asserting that theyfiled their first amended complaint against Rescorp and NHP because Wojciechowski testifiedthat Rescorp owned the property and NHP managed it through 1991. Sterdjevich testified in hisoriginal deposition that he entered into a lease on the property in 1991, and therefore, he believedRescorp was affiliated with 200 Arlington Place during the term of his lease. Plaintiffs furtherasserted that they filed their second amended complaint against NHP only because they learned,after receiving a copy of Sterdjevich's lease with NHP, that Rescorp did not own the property,and therefore, they did not include Rescorp in the complaint. They likewise stated that review ofNHP's lease showed a violation of the Act based on the fact that NHP did not set forth a formulafor calculating monthly gas charges and did not disclose to tenants that the cost of gas consumedfor hot water would be charged to them. Plaintiffs also pointed out that Sterdjevich was billedfor gas charges incurred during the last month of his lease with NHP, and they asserted that therewas no evidence demonstrating that NHP was not responsible for damages incurred during theterm of its lease, especially where NHP did not inform Sterdjevich that it had assigned the leaseto another entity.

After considering these motions, the trial court granted plaintiffs' motion forreconsideration and denied defendants' motion for sanctions. In doing so, the trial court stated:

"In reviewing all of these pleadings, in reviewing this case again, this Court feels that it made an error in leveling sanctions. I'm not going to penalize the lawyers thatway or the plaintiff. A lawyer, when he looks at a deposition and extracts the testimony, thinks myopically, his side only. This Court erred in leveling sanctions; andin reconsidering it, I'm going to deny sanctions."

Prior to the trial court's reconsideration of its order granting sanctions, NHP filed itspetition for attorney fees and expenses against plaintiff Sterdjevich. In that petition, defendantreasserted the claims set forth in its sanctions motion and provided documentation regardingattorney fees incurred during this litigation. Defendant then filed an amended petition,designated by NHP as an "Amended Petition for Attorneys' Fees to be Awarded Against PlaintiffFrank Sterdjevich Pursuant to the Lease Between the Parties." The amended petition assertedthat NHP was entitled to attorney fees under the express provisions of the lease. The petitionalleged that NHP entered into a lease agreement with Sterdjevich in its capacity as the agent forthe owner of the property, that it acted on behalf of the owner in entering into the lease, and thatplaintiff is thus liable for expenses incurred by NHP, including "reasonable attorneys fees" and"out-of-pocket expenses." NHP argued that Sterdjevich was bound to pay these fees based onParagraph 20(e) of the lease, which provides:

"Tenant shall pay upon demand all Lessor's costs, charges and expenses, including the fees of counsel, agents and others retained by Lessor, incurred in enforcingTenant's obligations hereunder or incurred by Lessor in any litigation, negotiations, or transactions in which Tenant causesLessor, without Lessor's fault, to become involved or concerned." 

At this point in the litigation, NHP sought attorney fees of $28,875.75 and costs of $2,038.98.

Sterdjevich moved to strike NHP's claim on the basis that NHP was the managing agentand not the lessor of the property, and therefore, the provision of the lease upon which its petitionfor fees relied did not apply. The trial court agreed and granted Sterdjevich's motion stating:

"I have been privy to this case for a long, long, long time. IsNHP deducting the real estate taxes paid by Arlington, the owner, off of their income tax? The answeris no. They are not the lessor, the are the managing agents. And I have to agree that the plaintiff, this type of action was not contemplated. If NHP wants its fees tellthem to talk to their employer."

NHP subsequently filed a motion to reconsider, asserting that it was the lessor because it enteredinto the lease agreement as the owner's agent, had the authority to enforce all of the provisions ofthe lease and was required to defend the litigation stemming from those lease provisions. Thetrial court rejected these arguments and denied NHP's motion.

On appeal, defendants NHP and Rescorp assert that the trial court erred in denying theirmotions for sanctions. NHP, individually, further asserts that the trial court erred in denying itsmotion for attorney fees and litigation expenses. On cross-appeal, plaintiff asserts that the trialcourt erred in granting summary judgment in favor of NHP. Because we need not consider theissues of sanctions and attorney fees in the event that summary judgment was erroneous, we firstconsider the claims raised in plaintiff's cross-appeal.

ANALYSIS

Summary Judgment

In his cross-appeal, Sterdjevich⁽⁸⁾ asserts that the trial court erred in granting NHP's motionfor summary judgment with respect to his second amended complaint because the uncontrovertedfacts show that NHP violated the Act in that a demand for payment for master metered public gasutilities was made upon plaintiff during the term of his lease with NHP, and plaintiff was nevergiven a formula explaining how the charges were allocated. The Act provides:

"