Archives for August 2013

Fee Petition Doesn’t Extend Time to Appeal Trial Verdict In Commercial Lease Spat

In Naperville South Commons, LLC v. Nguyen, 2013 IL App (3d) 120382-U, a Will County shopping center landlord filed its notice of appeal too late and so a money judgment for the tenant stands.

The case involves a multi-year shopping center lease for tenant’s operation of nail salon. Several months into the lease’s fourth year, the landlord unilaterally increased the tenant’s rent by over $1,200 per month.  Tenant balked and landlord filed joint action for rent and possession.

At trial, the court entered judgment for the tenant on landlord’s rent claim because the landlord failed to prove that the tenant owed rents or other monies at the time landlord served its 5-day notice.  The court also awarded the tenant some $54,000 in attorneys’ fees based on fee-shifting language in the lease.  Landlord appealed.

The appeals court held it lacked jurisdiction over landlord’s appeal and affirmed trial court’s award of attorneys’ fees.

The trial court entered judgment in November 2011 and the landlord didn’t file its appeal until nearly six months later in May 2012 – the day after the court ruled on tenant’s attorneys’ fee petition (which the tenant filed within 30 days of the trial court judgment). 

In Illinois, a notice of appeal must be filed within 30 days of a final judgment or within 30 days of the order which disposes of the “last pending postjudgment motion.”  Ill. Sup.Ct. R. 303.  Here, contrary to landlord’s position, the tenant’s attorneys’ fee petition was not a postjudgment motion since it didn’t directly challenge any of the trial court’s findings but was instead “collateral to” the trial court’s judgment.  ¶ 15.

The Court held that since tenant’s fee petition was not a post-judgment motion, the landlord did not have additional time – beyond the 30 days – to file its notice of appeal.  Because the landlord didn’t file its notice of appeal within 30 days of the underlying judgment, the court lacked jurisdiction to consider the landlord’s appeal.

The Third District did accept landlord’s appeal of the trial court’s fee award for the prevailing tenant.  The Court first held that the tenant was in fact the prevailing party.  The landlord argued that since it obtained possession of the premises, it won the case, since the primary purpose of the case was to dispossess the tenant.

In Illinois, “a party can be considered a prevailing party for the purposes of awarding fees when he is successful on any significant issue in the action and achieves some benefit in bringing suit, receives a judgment in his favor, or obtains some affirmative recovery.” ¶ 17.

The Court held that the landlord didn’t prevail on the possession issue since the tenant voluntarily left the premises: there was no adjudication of possession in landlord’s favor.  ¶ 18.

On the rent issue, the tenant clearly won since the trial court ruled that the tenant owed nothing based on landlord failing to carry its burden of proof that the tenant owed monies at the time landlord served its 5-day notice.

The Court affirmed the fee award to the tenant, noting that the tenant properly supported its fee petition with competent evidence that quantified its fees in defending the landlord’s eviction suit. ¶ 20.

Take-aways:

– When in doubt, file a Notice of Appeal within 30 days of the trial date order, regardless of what motions are filed by other parties after the judgment.  If the notice turns out to be premature, it will take effect automatically when the post – judgment motion is disposed of.

– A fee petition filed by a prevailing party is not a Rule 303 post-judgment motion that extends the 30-day period to file a notice of appeal;

– to be considered a prevailing party for purposes of an attorneys’ fees petition, the party must obtain an on-the-merits adjudication in its favor on a particular issue.

Discovery Rule Saves Plaintiffs’ Fraud Claims Against Investment Firm (IL – 2d Dist)

Rasgaitis v. Waterstone Financial Group, Inc., 2012 IL App (2d) 111112-U, a 20-plus page Second District case, presents a detailed synopsis of Illinois agency law, the discovery rule and the “forward-looking” fraud rule (statements of future intent or opinion do not equal fraud).

Facts: The plaintiffs sued the defendant financial services firm and two of its agents for fraud and other tort claims based on defendants’ misrepresentations in connection with selling investment and insurance products to plaintiffs.  (¶ 10).  Defendants moved to dismiss, arguing that the claims were time-barred, were non-actionable statements of future intent and was too conclusory to show an agency relationship between the individuals and the investment firm.  The trial court agreed and dismissed all 15 complaint counts.

Held: The Second District reversed the trial court on 14 of the 15 counts (the Court sustained dismissal of negligent supervision claim based on economic loss rule) and held that plaintiffs’ suit was timely based on the discovery rule.

Reasoning:

The discovery rule stops the running of the statute of limitations until a plaintiff knows or should know of his injuries and that the injuries were caused by defendant’s wrongful conduct. (¶ 31).  The rule generally presents a fact question (the question being – when did the plaintiff reasonably know he was injured?) but can be an issue of law where the key facts are undisputed.  Id.

Here, the Court held that while the defendants’ underlying misrepresentations were made in 2005 and 2006, and plaintiffs didn’t sue until 2010, the plaintiffs still pled they didn’t learn of the false promises until 2009 when they learned that the chosen investment vehicle wasn’t as good as advertised.  And since plaintiffs filed suit approximately 14 months after they discovered the defendants’ wrongful conduct (in April 2010) – the complaint was timely under the two and three-year limitations periods for suits based on the sale of life insurance policies and annuities.  ¶¶ 24, 32,  735 ILCS 5/13-214.4, 815 ILCS 5/13.

Fraud Claim Analysis

The Second District also sustained plaintiffs’ fraud claims against defendants’ various Section 2-615 arguments.  While acknowledging that statements of opinion, future intent or financial projections are generally not actionable, the Court focused on the context, not the content of defendants’ statements.  (¶ 43)  The Court held that the plaintiffs sufficiently alleged that the defendants’ statements (that plaintiffs’ funds were 100% safe and the investment plan was proven to be successful) were sufficiently factual to state statutory and common law fraud claims under Illinois pleading rules. (¶ 44).

 Agency Analysis

Sustaining the plaintiffs’ agency allegations (and therefore upholding the claims against defendants’ 2-615 motion attack), the Court provided an agency law primer:

– agency is a fiduciary relationship where the principal can control the agent’s conduct and the agent can act on the principal’s behalf;

– an agent’s authority can be actual or apparent;

– actual authority can be express or implied;

– express authority = principal explicitly grants the agent authority to perform a given act;

implied authority = actual authority proved by circumstantial evidence of the agent.  That is, the principal’s conduct reasonably leads the agent to believe that the principal wants the agent to act on the principal’s behalf;

– apparent agency = principal holds out agent as having authority to act on principal’s behalf and a reasonably prudent third party would assume the agent’s authority based on the principal’s conduct.

(¶¶ 49-51).

Applying these rules, the Court held that the plaintiffs pled sufficient facts to establish an agency relationship between the two individual financial agents and the investment firm.  Factors the court considered in its agency calculus included that the defendants used the corporate employer’s offices, business cards and same phone number. ¶ 51.  The Court also cited the fact that plaintiffs had multiple meetings with the individual defendants at the corporate defendant’s office – something that would likely lead a reasonable person to assume that the individual defendants were authorized to act for the corporate principal.  As a result, plaintiffs’ stated colorable claims under Illinois fact-pleading rules.  14 of plaintiff’s 15 claims were reinstated.

Take-aways: The discovery rule applies to common law and consumer fraud claims.  The more detailed a plaintiff’s allegations, the better chance they will survive a limitations defense.  Fraud claims cannot be based on future intent, opinions or financial forecasts unless the statements are sufficiently present-tense and factual.   The case is also instructive on what agency allegations will and won’t satisfy Illinois fact-pleading rules where a plaintiff attempts to impute an agent’s conduct to a corporate principal.