Bailment in Illinois

Bailment is the temporary placement of control over, or possession of personal property by one person, the bailor, into the hands of another, the bailee, for a designated purpose upon which the parties have agreed. Ownership is not transferred in a bailment situation. An example is a coat check at a play or an opera. Predictably, when a property owner entrusts his or her property with another, things sometimes go wrong. Below, is a sampling of Illinois case law pertaining to bailment and the problems that may arise in a bailment context.

In Kammerer v. Graymont Hotel Corp., 337 Ill. App. 434, 437 (1st Dist. 1949), the plaintiff sued to recover money deposited in a box located in the defendant hotel’s office.  When the plaintiff returned to the hotel office to retrieve her money, nearly all of what she had originally deposited was missing.  In affirming judgment in favor of the plaintiff the appellate court held, “where a bailee receives property and fails to return it, the presumption arises that the loss was due to his negligence, and the law imposes on him the burden of showing that he exercised the degree of care required by the nature of the bailment.”  Kammerer at 437.  In other words, if a bailment occurs, the bailee has to demonstrate that its employees were not negligent in disposing of the personal property which was being stored.

In Wausau Insurance Co., v. All Chicagoland Moving and Storage Co., 333 Ill. App. 3rd 1116 (2d Dist. 2002), the plaintiff sued to recover the value of a microscope entrusted to the defendant to move, which was ultimately returned in a damaged condition.  In holding the moving company liable for the damage to the microscope the appellate court in Wausau Insurance held, “A bailment is the delivery of property for some purpose upon a contract, express or implied, that after the purpose has been fulfilled, the property shall be redelivered to the bailor, or otherwise dealt with according to his directions or kept until he reclaims it.”  Wausau Insurance at 1121.  This case demonstrates that a bailor has a legal duty to return personal property at the conclusion of the bailment.

Similarly, in Magee v. Walbro, Inc., 171 Ill. App. 3rd 774 (1st. Dist. 1988), the plaintiff sued to recover the value of a fur coat plaintiff had entrusted to the defendant for storage in its locked and alarmed vault at the defendant’s premises.  In holding the defendant liable for the lost or stolen fur coat the appellate court in Magee held in favor of the customer finding that the mere existence of the fur storer’s safety and security measures did not rebut the presumption of negligence.  This case demonstrates that even if a room is secured there still may be presumption of negligence in permitting the loss, theft or destruction of personal property.  See also, Dunne v. South Shore Country Club, 230 Ill. App. 11 (1st. Dist. 1923) (country club, as bailee, held liable for a fur coat checked with club staff that was either lost or stolen from the club’s secure storeroom as a result of the club’s negligence).

In Cornelius v. State of Illinois, 38 Ill. Ct. Cl. 254 (Illinois Court of Claims 1985), a former prison inmate was able to recover the value of items taken from him which he had deposited with the prison at the outset of his incarceration.  The Court of Claims in Cornelius held that “While bailment is ordinarily a voluntary contractual transaction between bailor and bailee, various types of constructive and voluntary bailments have been recognized: ‘A constructive bailment can be created between an owner of the property and one in possession thereof. . . .Where, otherwise than by mutual contract or bailment, one person has lawfully acquired the possession of personal property of another and holds it under circumstances whereby he ought, upon principles of justice, to keep it safely and restore it or deliver it to the owner, such person and the owner of the property as, by operation of law, generally treated as bailee and bailor under a contract of bailment, irrespective of whether or not there has been any mutual assent, express or implied, to such relationship.”  Cornelius at 254. The Cornelius case demonstrates that by agreeing to store property, an absence of a formal written agreement may not prevent a bailment agreement, and therefore may create liability in the person or entity maintaining the property.

In Wright v. Autohaus Fortense, Inc., 129 Ill. App. 3d 422 (4th Dist. 1984), the appellate court affirmed a judgment in favor of an automobile owner against a repair shop for damage to the automobile that occurred while it was stored on the defendant’s premises.  The appellate court in Wright rejected the repair shop’s argument that because the automobile owner retained a set of keys to the automobile the shop could not be held liable for the damage. This point of law was repeated in  Liberty Mutual Insurance Co. v. Zurich Insurance Co., 402 Ill. App. 3d 37 (1st Dist. 2010): “The owner’s simultaneous access to the property at issue does not preclude a finding of care, custody or control.” (The hotel was held liable for guest’s jewelry stolen from a wall safe located in their hotel room given that protection of those valuables forms an intrinsic part of the hotel’s work as an innkeeper).  The Wright and Liberty Mutual cases demonstrate, the mere fact that the owner has access to the bailed property will not prevent a potential bailee from being held liable as bailee. 

If you have any questions or concerns regarding Illinois litigation, please feel free to call the attorneys at Perl & Goodsnyder (312/243-4500) or visit our website http://www.perlandgoodsnyder.com/. We have over 50 years combined experience and are eager to use our experience to assist you reach the best available outcome. 

Motion to Dismiss in Illinois

Illinois law provides for two types of motions to dismiss: 735 ILCS 5/2-615 and 735 ILCS 5/2-619. Defendant’s counsel must review the facts of the case in order to determine which type of motion to dismiss is appropriate. This blog post is meant to provide an introduction to the two types of Illinois motions to dismiss.

In general, Section 2-615 allows for the dismissal of a complaint, if the complaint is “substantially insufficient in law.” 735 ILCS 5/2-615. The main question to be determined “by a motion to dismiss under section 2-615 is whether sufficient facts are contained in the pleadings which, if proved, would entitled the plaintiff to relief.” Barber-Coleman Co. v. A & K Midwest Insulation Co., 236 Ill. App. 3d 1065, 1069 (5th Dist. 1992). There are six bases for attacking pleadings under 2-615: 1. That the pleading be made more definite and certain; 2. That designated immaterial matter be stricken; 3. That necessary parties be added or misjoined partied be dismissed; 4. That the pleading fails to allege essential elements in the cause of action; 5. That the pleadings fail to state a claim upon which relief may be granted and 6. That the pleadings entitle the moving party to judgment. Id.

On the other hand, Section 2-619 allows for dismissal of a complaint for “certain defects or defenses.” Said defects must appear on the face of the pleading or be supported by affidavit. 735 ILCS 5/2-619. 2-619(a) lists nine basis for dismissal: 1. That the court does not have subject matter jurisdiction; 2. That the Plaintiff or Defendant does not have the legal capacity to be sued; 3. That there is another action pending between the same parties for the same cause; 4. That the action is barred by prior judgment; 5. That the action is outside the relevant statute of limitations; 6. That the claim has been release, satisfied of record or discharged in bankruptcy; 7. That the claim is barred by the statute of frauds; 8. That the claim is unenforceable because of Defendant’s minority or other disability; 9. That the claim is barred by other affirmative matter “appearing on the face of the complaint or established by external submissions, which defeats the plaintiff’s claim” or, in other words, “negates the plaintiff’s cause of action.” Abruzzo v. City of Park Ridge, 3870 N.E.2d 1012, 1017-1018 (1st Dist. 2007). In deciding a section 2-619 motion to dismiss, the court must accept the facts of the complaint as true. Leach v. Lauhoff Grain Co., 51 Ill.App.3d 1022, 1026 (4th Dist. 1977). 

If you have any questions or concerns regarding Illinois litigation, please feel free to contact the attorneys at Perl & Goodsnyder (312/243-4500) or visit our website http://www.perlandgoodsnyder.com/. We have over 50 years combined experience and are eager to use our experience to assist you reach the best available outcome. 

Real Party in Interest

The issue of “real party in interest” may arise in insurance litigation when there is a subrogation claim. Imagine a car crash where the injured party was not at fault. If the injured party’s insurance company fully compensates her, it is subrogated to her rights against the negligent party. The question becomes who should be the named plaintiff in litigation: the insured or the insurer?

Illinois appellate courts provide that the interest of a subrogee cannot be “concealed in any proceeding brought for its benefit, but it must either be named as the plaintiff or disclosed as the real party in interest.” Prudential Ins. Co. v. Romanelli, 243 Ill.App.3d 246, 250 (1st Dist 1993). However, if the insured has even a de minimis pecuniary interest in the lawsuit, said lawsuit can be brought in his or her name. Shaw v. Close, 92 Ill.App.2d 1, 4 (Ill. App. Ct. 1968); Orejel, 287 Ill.App.3d at 604.

Put simply, the general rule is that if the insured has not been fully compensated by the insurance company the lawsuit can proceed in the insured’s name. However, if the insured has no pecuniary interest in the outcome of the case, then the case should proceed in the insurance company’s name. Obviously, this is the general rule and different facts can bring different results.

 If you have any questions related to insurance litigation, please feel free to give the attorneys at Perl & Goodsnyder a call at 312/243-4500 or visit our website: http://www.perlandgoodsnyder.com/. The attorneys of Perl & Goodsnyder have substantial litigation experience and are able to help individuals and businesses navigate the complexities associated with litigation. 

STANDING TO LITIGATE AFTER BANKRUPTCY

            A client’s bankruptcy can have a significant impact on state litigation. One common situation is what happens when a client with a personal injury case fails to disclose said case in her bankruptcy petition. One issue might be judicial estoppel, but another potential problem is that the failure to schedule a personal injury claim may divest your client of standing to pursue the case.

            The failure to schedule a cause of action in a bankruptcy petition divests a Plaintiff of standing to bring the claim. Dailey v. Smith, 292 Ill.App.3d 22, 24 (Ill. App. Ct. 1997). Filing a bankruptcy petition creates an estate compromising all “legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. 541(a)(1). The bankruptcy estate is extensive and “has been found to encompass every conceivable interest of the debtor, future, non-possessory, contingent, speculative, and derivative.” Dailey, 292 Ill.App.3d at 24 (internal citations omitted). “The preceding principles apply regardless of whether the bankruptcy petitioner has scheduled the property or assets.” Id. Lawsuits are included in this definition of the bankruptcy estate, and, “even if such claims are scheduled, a debtor is divested of standing to pursue them upon filing his petition.” Id. Instead, the bankruptcy trustee is the representative of the bankruptcy estate who has the capacity to sue or be sued. 11 U.S.C. 323(a) and (b) (see also Dailey, 292 Ill.App.3d at 26 “Once a bankruptcy petition is filed, all claims belong to the estate, and the bankruptcy trustee alone has standing to pursue them.”). Most importantly, if an asset is not scheduled in a bankruptcy petition, it remains property of the bankruptcy estate after the close of the bankruptcy. 11 U.S.C. 554 (See also Aspling v. Ferrall, 232 Ill.App.3d 758, 767 (Ill. App. Ct. 1992), which held that even property not scheduled in a bankruptcy petition remains property of the bankruptcy estate at the close of the bankruptcy case).

            The principle is explained clearly in Dailey v. Smith. 292 Ill.App.3d 22 (Ill. App. Ct. 1997). In Dailey, the Plaintiff and Defendants had an oral partnership to sell decorative wall coverings. Dailey, 292 Ill.App.3d at 24. Plaintiff alleged Defendants withheld profits which ultimately led him to seek bankruptcy protection. Id. Plaintiff filed for bankruptcy in September 1986 but did not schedule his claim against Defendants as an asset. Id. The bankruptcy case concluded in June 1988. Id. Plaintiff pursued the cause of action for partnership profits and in February 1994 won a jury verdict for $288,000. Id. However, after trial Defendants were awarded a judgment notwithstanding the verdict based on Plaintiff’s lack of standing to bring the cause of action and judicial estoppel. Id. As for the standing issue, the appellate court held that Plaintiff “clearly did not have standing” to pursue the cause of action. Id. The cause of action belonged to the bankruptcy trustee and said trustee “alone [had] standing to pursue” the claim. Id at 26.

            This blog post is intended to offer readers a general discussion of state court standing issues related to bankruptcy. Hopefully, this blog provides some issue spotting for state court litigators dealing with the complexities of the bankruptcy code. 

What is a Default Foreclosure

A default foreclosure occurs when the homeowner has been served with a foreclosure complaint, but does not file an appearance or attend court in the case. After a default judgment is entered, the bank can move forward with the foreclosure process, which may include selling the home at auction and eventually evicting the homeowner.

Default foreclosures happen more often than they should. One way to prevent a default foreclosure is for the borrower to go to the courthouse, file an appearance and attend the first court date listed in the foreclosure documents. Generally, Illinois law allows borrowers 30 days from the service of the complaint to file their appearance.

If you have any questions about the foreclosure process, please feel free to call the attorneys at Perl & Goodsnyder at 312/243-4500 or visit our website at www.perlandgoodsnyder.com/. We have over 50 years of combined litigation experience and can assist you with your foreclosure litigation. 

JUDICIAL ESTOPPEL AFTER CHAPTER 7 BANKRUPTCY

            The Bankruptcy Code is a highly technical area of the law. Most practicing in bankruptcy make it their specialty or niche. State court litigation does not often encounter the Bankruptcy Code, but when it does attorneys often find themselves out of their element. One common intersection between the Bankruptcy Code and state court litigation that practitioners should be aware of is the defense of judicial estoppel after a Plaintiff’s bankruptcy. 

            The typical situation arises when a Plaintiff has a potential lawsuit (usually a personal injury claim) prior to filing a bankruptcy, files a bankruptcy but does not disclose the potential litigation to the bankruptcy court. After the bankruptcy, the Plaintiff files the lawsuit. The failure to disclose the litigation in the bankruptcy might cause Plaintiff to be judicially estopped or barred from maintaining the lawsuit because litigation possessed by the debtor is considered property of the bankruptcy estate. In re FBN Food Services, Inc., 185 B.R. 265, 273 (N.D. Ill. 1995), citing In re Geise, 992 F.2d 651, 655 (7th Cir.1993) and In re Marriage of Burt, 144 Ill.App.3d 177 (1986).

“The law of judicial estoppel prevents a party who makes a representation in one case from taking a contrary position in another case.” Berge v. Mader, 2011 IL App. (1st) 103778, 957 N.E.2d 968, ¶ 12 (Sept. 30, 2011). Judicial estoppel serves “to preserve and protect the integrity of our system of justice.” Berge, 2011 IL App (1st) 103778 ¶ 12. It applies where a party takes inconsistent positions, under oath, in two judicial proceedings if the party successfully maintained the first position and received a benefit. Berge, 2011 IL App (1st) 103778 ¶ 13.

The First District Appellate Court addressed a similar scenario and held that, when a plaintiff failed to list state court litigation in her bankruptcy petition, her subsequent suit should be dismissed based upon judicial estoppel.  Berge v. Mader, 2011 IL App. (1st) 103778, 957 N.E.2d 968 (Sept. 30, 2011). In Berge, Plaintiff filed for bankruptcy under Chapter 13 in April of 2006. Id. at ¶ 3. One month later the Plaintiff was involved in a car accident which formed the basis of a personal injury lawsuit which she filed in November of 2007.  Id.  Plaintiff thereafter converted her Chapter 13 petition into a Chapter 7 petition in May of 2009.  Id.  Plaintiff received a “no asset” discharge order, and her Chapter 7 petition was closed in October of 2009.  Id.  Plaintiff never listed her personal injury complaint as an asset in her bankruptcy petition.  Id.  The court in Berge held that Plaintiff was judicially estopped from later asserting her personal injury claim, and affirmed the trial court's dismissal of the action pursuant to Section 2-619(a)(9).  Id.  at ¶ 21.  See also, Dailey v. Smith, 292 Ill. App. 3d 22, 28 (1997).

In Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006), the 7^th Circuit Court held that “a debtor in bankruptcy who denies owning an asset, including a chose in action or other legal claim, cannot realize on that concealed asset after the bankruptcy ends.” The Berge court agreed, holding that a bankruptcy debtor who failed to disclose a cause of action in her sworn submissions to the bankruptcy court was bound by those submissions and barred under the doctrine of judicial estoppel from later pursuing the undisclosed cause of action. Berge, 2011 IL App (1st) 103778 ¶¶ 16-17, 21.  See also Dailey v. Smith, 292 Ill. App. 3d 22, 28 (1997).

It should be noted that judicial estoppel is an equitable defense, so different fact patterns may have different results. Additionally, defenses based on judicial estoppel are often paired with a lack of standing arguments, as can be seen in Dailey v. Smith. 292 Ill.App.3d 22 (Ill. App. Ct. 1997).

If you have any questions or concerns related how a bankruptcy may impact state court litigation, or any state court litigation matter in general, please feel free to contact the attorneys at Perl & Goodsnyder (312/243-4500) or visit our website www.perlandgoodsnyder.com/. We have over 50 years combined experience and are eager to use our experience to assist you reach the best available outcome. 

Options for Chicago Homeowners in Foreclosure

Our foreclosure clients usually come to us confused and nervous after being overwhelmed in what seems like endless paper. They often feel like they don’t have any options and that the bank is going to come and immediately take back their house. This isn’t necessarily the case. Borrowers almost always have several options and banks are often willing to work with homeowners, especially when the borrower has counsel. Some of the options in foreclosure may include refinancing, a loan modification, a deed in lieu of foreclosure, a short sale, fighting the foreclosure in court or even a bankruptcy. Figuring out the best option depends on your individual circumstances.

Please feel free to give the attorneys at Perl & Goodsnyder a call regarding your foreclosure case. We are general practice attorneys with years of litigation and real estate experience. Please feel free to contact our office via telephone, 312/243-4500, or visit our website at www.perlandgoodsnyder.com/