Süd Family Ltd. Partnership v. Otto Baum Co. , 2024 IL App (4th) 220782 ( 2024 )

2024 IL App (4th) 220782FILED
NO. 4-22-0782 March 12, 2024
Carla Bender
4 th District Appellate
IN THE APPELLATE COURT Court, IL
OF ILLINOIS
FOURTH DISTRICT
SÜD FAMILY LTD. PARTNERSHIP, NANCY A. ) Appeal from the
SÜD, and GIAN C. SÜD, ) Circuit Court of
Plaintiffs-Appellants and Cross- ) Peoria County
Appellees, ) No. 09CH310
v. ) 09CH311
OTTO BAUM COMPANY, INC.; ATTORNEYS’ ) 17L105
TITLE GUARANTY FUND, INC.; and )
METHODIST SERVICES, INC., ) Honorable
Defendants-Appellees and ) Paul E. Bauer,
Cross-Appellants. ) Judge Presiding.
______________________________________________________________________________
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Cavanagh and Justice Steigmann concurred in the judgment and
opinion.
OPINION
¶1 Plaintiffs—Süd Family Limited Partnership and its general partners, Nancy A. Süd
and Gian C. Süd (collectively Süd)—filed a second amended complaint against defendants—Otto
Baum Company, Inc. (Otto Baum); Attorneys’ Title Guaranty Fund, Inc. (ATG); and Methodist
Services, Inc. (Methodist)—in an action alleging conversion, fraud, conspiracy to commit fraud,
slander of title, quiet title, breach of warranty under the Uniform Commercial Code (UCC) (810
ILCS 5/1-101 et seq. (West 2020)), and statutory damages under the Mechanics Lien Act (770
ILCS 60/1 et seq. (West 2020)). The trial court dismissed with prejudice the second amended
complaint, as well as amended counterclaims filed by defendants. Süd appeals from the dismissal
of its second amended complaint, and defendants cross-appeal, challenging the court’s dismissal
of their amended counterclaim four. We affirm in part, reverse in part, and remand for further
proceedings.
¶2 I. BACKGROUND
¶3 The present appeal involves three consolidated cases filed in the circuit court—
Peoria County case Nos. 09-CH-310, 09-CH-311, and 17-L-105—and many years of litigation
among the parties. The underlying facts are fully set forth in two prior appellate court decisions
from the Third District—Otto Baum Co. v. Sud Family Limited Partnership, 2016 IL App (3d)
140821-U, and Otto Baum Co. v. Süd Family Ltd. Partnership, 2020 IL App (3d) 190054, 159
N.E.3d 444. We summarize the pertinent facts here.
¶4 In 2004, Süd purchased 40 acres of land in Peoria, Illinois, which consisted of five
lots that became known as the Süd Plaza Subdivision. Süd intended to build an automobile
dealership on one of the lots. In 2006 and 2007, Otto Baum performed grading work on some of
the lots and constructed a roadway that provided ingress and egress to the subdivision. In May
2007, Methodist purchased lots 2 and 5 from Süd, obtaining title insurance in connection with the
sale from ATG.
¶5 In February 2008, Otto Baum recorded mechanic’s liens against (1) lot 5 in
connection with the grading work it completed and (2) all five lots in connection with its
construction of the roadway. In July 2009, it filed two lawsuits. In Peoria County case No. 09-CH-
310, Otto Baum brought suit against Süd and Methodist for the work it completed on lot 5, seeking
foreclosure of its mechanic’s lien and alleging breach of contract. In Peoria County case No. 09-
CH-311, Otto Baum brought suit against Süd, Methodist, and others for its roadway work. Again,
it sought foreclosure of its mechanic’s lien and alleged breach of contract.
¶6 The cases were consolidated for trial and, following a bench trial, the trial court
-2-
entered judgments in Otto Baum’s favor in both cases. In case No. 09-CH-310, the court granted
Otto Baum a mechanic’s lien foreclosure judgment against lot 5 and entered a total monetary
judgment against Süd for $492,750.06. In case No. 09-CH-311, the court granted Otto Baum a
mechanic’s lien foreclosure judgment against lots 2 through 5 and entered a monetary judgment
against Süd for $460,463.26. Both Süd and Methodist appealed, and the judgments were stayed
pending the appeal. As security for the stays, Süd obtained an irrevocable standby letter of credit
from Town and Country Bank in the amount of $1.3 million. Otto Baum was a named beneficiary
in the letter of credit.
¶7 While the appeal was pending, Otto Baum and Methodist entered into an
agreement. Under the agreement, Methodist—through its insurer, ATG—agreed to pay Otto Baum
$400,000 as a settlement to release its two lots from foreclosure. The payment was allocated
between the two judgments, with $238,065.22 being applied to the judgment in case No. 09-CH-
310, and $161,934.78 being applied to the judgment in case No. 09-CH-311. The agreement further
provided that, if Otto Baum collected the balance due on the judgments, it would assign the
judgments to Methodist.
¶8 In February 2016, the Third District affirmed the money judgments against Süd.
Otto Baum Co., 2016 IL App (3d) 140821-U. On November 3, 2016, Otto Baum drew $686,301.10
from Süd’s letter of credit to pay what Otto Baum represented was the balance owed on the
judgments as of that date. On November 17, 2016, Otto Baum filed a motion for postjudgment
attorney fees. In its motion, it asserted that Süd still owed $877.40 on the judgments, representing
(1) additional postjudgment interest through November 9, 2016, when it finally received money
pursuant to its draw on the letter of credit and (2) bank wire fees. In January 2017, the trial court
granted the motion and entered an award of $80,109.64 in Otto Baum’s favor.
-3-
¶9 In February 2017, Süd filed a petition for release of judgments in case Nos.
09-CH-310 and 09-CH-311. On March 3, 2017, Otto Baum made another draw on the letter of
credit for $82,189.54, in connection with the January 2017 award of attorney fees that it obtained,
plus interest. Pursuant to its settlement agreement with Methodist, Otto Baum then assigned its
interests in the judgments and letter of credit to ATG as Methodist’s representative. ATG
determined it was owed $466,283.57 on the assigned judgments and, on March 6, 2017, drew
$194,158.45 from Süd’s letter of credit. Following that draw, ATG and Methodist claimed Süd
continued to owe $272,125.12.
¶ 10 In April 2017, Süd filed a 29-count complaint in case No. 17-L-105 against
defendants, alleging conversion, fraud, conspiracy to commit fraud, slander of title, quiet title, and
breach of warranty under the UCC. Süd maintained that the chancery judgments were fully
satisfied after Otto Baum’s March 3, 2017, draw on the letter of credit. It challenged ATG’s
subsequent draw on the letter of credit, asserting ATG knew both that (1) the chancery judgments
had already been satisfied when it made its draw and (2) it was “not entitled to draw anything.”
Süd further complained that Otto Baum and ATG improperly continued to allow memorandums
of judgment and mechanic’s liens to exist on property owned by Süd despite the chancery
judgments being fully satisfied.
¶ 11 In November 2017, defendants answered the complaint and also filed three
affirmative defenses and five counterclaims. They denied that the chancery judgments were fully
satisfied after Otto Baum’s March 3, 2017, draw on the letter of credit. During the litigation, ATG
maintained that a balance of $466,283.57 remained on the chancery judgments. In May 2018, the
trial court dismissed three of defendants’ counterclaims with prejudice on Süd’s motion.
¶ 12 In July 2018, Süd filed an amended petition for release of judgments in the chancery
-4-
cases, arguing the judgments had been fully satisfied on March 3, 2017. The following month,
defendants moved to consolidate case Nos. 09-CH-310 and 09-CH-311 with case No. 17-L-105,
and the trial court granted the motion.
¶ 13 In October 2018, defendants filed a motion for summary judgment as to all counts
against them in case No. 17-L-105 and as to Süd’s amended petition for release of judgments in
case Nos. 09-CH-310 and 09-CH-311. Their motion was based, in part, on the claim that ATG’s
payment of $400,000 to Otto Baum on behalf of Methodist was a payment from a collateral source
for which Süd could not take credit. In December 2018, the trial court entered an order, denying
Süd’s amended petition in the chancery cases and granting summary judgment in defendants’ favor
in the law case. In so holding, it determined “ATG’s $400,000 payment on behalf of Methodist for
release of foreclosure judgments [was] a collateral source of payment to Otto Baum, not partial
satisfaction of Süd’s judgment obligation.” In January 2019, Süd filed a notice of appeal from the
court’s December 2018 order.
¶ 14 While Süd’s second appeal was pending, a notice was filed in case No. 09-CH-311
that two lots in the Süd subdivision were scheduled to be sold at a foreclosure sale in April 2019.
In March 2019, Süd filed a motion to stay the sale, to which ATG filed an objection. Ultimately,
in July 2019, the trial court stayed the sale until further order of the court based upon Süd’s tender
of $630,914.98 to ATG. The court’s written order stated as follows: “The court finds the tender
made by [Süd] was conditional. The court is not ordering releases of the judgments. The money
paid by [Süd] to [ATG] is satisfaction of the judgment balances as of the date it was paid, and not
as security for the stay ***.”
¶ 15 In May 2020, the Third District, with one justice dissenting, vacated the trial court’s
December 2018 order. Otto Baum Co., 2020 IL App (3d) 190054, ¶ 46. It found the lower court
-5-
abused its discretion in holding ATG’s $400,000 payment to Otto Baum was from a collateral
source, as “ATG was Methodist’s insurer, and Methodist was a defendant” in the chancery cases.
Id. ¶ 27. The court further held that the trial court erred by denying Süd’s amended petition for
release of judgments, finding “that by March 3, 2017, Otto Baum’s judgments from the 2009 cases
had been paid in full by ATG and Süd.” Id. ¶ 32. It stated that “Süd was entitled to a setoff in the
amount of ATG’s payments to Otto Baum” and, “[w]ithout the setoff, Otto Baum would obtain a
double recovery.” Id.
¶ 16 Finally, in holding the trial court erred by granting summary judgment in
defendants’ favor on Süd’s claims, the Third District determined Otto Baum’s assignment of its
interests in the chancery judgments under the settlement agreement was invalid. Id. ¶ 38. The court
stated that, “[o]nce Otto Baum collected the full amount of its judgments, it had nothing to assign.”
Id. Because the assignment was not valid, “ATG had no right to draw on Süd’s letter of credit.”
Id. The Third District remanded the matter to the trial court, stating it “should consider the
affirmative defenses and counterclaims filed by Otto Baum, ATG, and Methodist.” Id. ¶ 45.
¶ 17 On remand, Süd filed motions to enforce the Third District’s mandate, seeking a
release of the judgments in case Nos. 09-CH-310 and 09-CH-311, denial of defendants’ motion
for summary judgment in case No. 17-L-105, and return of the $630,914.98 it paid to ATG when
seeking a stay of the foreclosure sale while its appeal was pending. In January 2021, the trial court
entered an order granting Süd’s motion to deny defendants’ motion for summary judgment. It
entered a separate written order, requiring (1) Otto Baum to tender to Süd releases of the judgments
entered against Süd in case Nos. 09-CH-310 and 09-CH-311 and (2) ATG to tender the sum of
$630,914.98 to Süd within 45 days. The record shows Otto Baum executed releases of its
mechanic’s liens and judgment liens the same month. Shortly thereafter, ATG returned to Süd both
-6-
the $630,914.98 that was the subject of the court’s order and the $194,158.45 it drew from Süd’s
letter of credit on March 6, 2017.
¶ 18 In March 2021, Süd filed a motion for leave to file an amended complaint, asserting
it had discovered additional causes of action against Otto Baum and ATG that arose under the
Mechanics Lien Act (770 ILCS 60/35(a) (West 2020)) “for their failure to release the two
mechanics liens at the time they were fully satisfied.” As a result, Süd sought to add four additional
counts to its complaint. It also sought leave to amend its prayer for relief on its quiet title counts
to include money damages. Süd asserted none of the other counts or paragraphs of its original
complaint would be modified, and it attached its proposed amended complaint to its motion.
¶ 19 During a hearing the same month, counsel for defendants stated they had no
objection to Süd filing an amended complaint but reserved defendants’ “right to make all
objections *** provided by the Code of Civil Procedure with respect to the amended complaint.”
The trial court granted Süd leave to file its amended complaint instanter.
¶ 20 In April 2021, defendants filed a combined motion to dismiss Süd’s amended
complaint under section 2-619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West
2020)). They alleged dismissal of each count of the amended complaint was warranted under both
section 2-615 and section 2-619 of the Code (id. §§ 2-615, 2-619). Süd moved to strike defendants’
motion as it applied to all counts except the four “new” counts added by its amended complaint. It
asserted that defendants waived any pleading defects to the counts contained in its original
complaint when it previously filed an answer addressing those counts. Süd also filed a response to
defendants’ motion.
¶ 21 In August 2021, the trial court entered a written order and denied Süd’s motion to
strike. In the same order, it (1) dismissed, with leave to replead, Süd’s counts alleging conversion,
-7-
fraud, conspiracy to commit fraud, quiet title, and damages under the Mechanics Lien Act;
(2) dismissed Süd’s slander of title counts with prejudice based on a failure to allege malice and
under the “single publication rule”; and (3) denied the motion to dismiss Süd’s count alleging
breach of warranty under the UCC.
¶ 22 In October 2021, Süd filed its 35-count second amended complaint, alleging
conversion (counts I and II), fraud (counts III and IV), conspiracy to commit fraud (counts V and
VI), slander of title (counts VII through XVIII), quiet title (counts XIX through XXX), breach of
warranty under the UCC (count XXXI), and damages under the Mechanics Lien Act (counts
XXXII through XXXV). Regarding the slander of title counts, the second amended complaint
included an acknowledgment that the trial court had previously dismissed those counts with
prejudice. Süd alleged that it disagreed with the court’s ruling, did not intend to abandon its slander
of title claims with the filing of its second amended complaint, and restated and realleged those
counts as set forth in its amended complaint “to preserve review.” The same month, defendants
filed a section 2-619.1 combined motion to dismiss Süd’s second amended complaint, alleging 34
of Süd’s 35 counts were subject to dismissal under section 2-615 of the Code and all 35 counts
were subject to dismissal under section 2-619 of the Code.
¶ 23 In October 2021, ATG also filed a motion for leave to file amended verified
counterclaims, seeking to amend two of the counterclaims it previously filed, which had not been
dismissed—referred to as counterclaims four and six—and to add an additional counterclaim—
referred to as counterclaim seven. Relevant to this appeal, in connection with amended
counterclaim four, ATG brought a claim for attorney fees under section 5-111(e) of the UCC (810
ILCS 5/5-111(e) (West 2020)). It asserted Otto Baum had the right to assign its interest in the letter
of credit and that, thereafter, ATG executed a drawing certificate on the letter of credit “in the
-8-
reasonable exercise of its right of subrogation, and as assignee of [Otto Baum’s] interest.” ATG
alleged that in the event it prevailed on certain of Süd’s alleged counts against it, both ATG and
Otto Baum were entitled to a judgment for reasonable attorney fees and expenses of the litigation.
¶ 24 The trial court granted ATG’s motion, allowing the filing of its amended
counterclaims. In December 2021, Süd filed a section 2-619 motion to dismiss each amended
counterclaim.
¶ 25 In June 2022, the trial court conducted a hearing on both (1) defendants’ motion to
dismiss Süd’s second amended complaint and (2) Süd’s motion to dismiss ATG’s amended
counterclaims. At the conclusion of the hearing, the court took the matter under advisement and
asked the parties to prepare proposed orders. The record reflects the court inadvertently entered a
proposed order prepared by Süd. In August 2022, the court entered a written order, vacating the
order it signed in error and granting both motions to dismiss with prejudice “for the reasons stated
in the parties’ brief[s].”
¶ 26 This appeal and cross-appeal followed.
¶ 27 II. ANALYSIS
¶ 28 A. Süd’s Appeal
¶ 29 1. Dismissal of Süd’s Amended Complaint
¶ 30 On appeal, Süd initially argues the trial court erred by allowing defendants to move
to dismiss its March 2021 amended complaint. It notes that all but four of the counts in its amended
complaint were contained within its original complaint and that defendants filed an answer to that
original pleading. Süd argues that, because defendants elected to answer its original complaint,
they waived any defects in the pleading of the counts in the amended complaint that were also
contained in the original. Süd further argues the court erred by granting defendants’ motion to
-9-
dismiss its March 2021 amended complaint.
¶ 31 Defendants respond by arguing that the legal sufficiency of a complaint may be
challenged at any time. Further, they point out that although they filed an answer to Süd’s original
complaint, that complaint was superseded by the amended complaint, to which they had not yet
filed an answer at the time their challenged motion to dismiss was filed. Defendants also contend
that a trial court’s decision to dismiss a superseded and inoperative amended complaint is not
subject to appellate review.
¶ 32 To support its first contention that defendants waived any defects in the pleading
of the amended complaint, Süd cites the supreme court’s decision in Adcock v. Brakegate, Ltd.,
164 Ill. 2d 54, 60, 645 N.E.2d 888, 893 (1994), for the proposition that, where a “defendant elects
to file an answer to the complaint, the defendant waives any defect in the pleading.” (Emphasis
omitted.) It also relies on this court’s statement in Tyler v. J.C. Penney Co., 145 Ill. App. 3d 967,
972, 496 N.E.2d 323, 327 (1986), that the “proper practice” where a defendant seeks to file a
motion to dismiss after answering a complaint requires “that [the] defendant must also seek the
court’s permission to withdraw its answer.” Significantly, however, the cases Süd relies upon
involved answers and subsequently filed motions to dismiss that were directed at the same
complaint. By contrast, the present case involves filings by defendants directed at different
pleadings—an original complaint and an amended complaint.
¶ 33 “Where an amendment is complete in itself and does not refer to or adopt the prior
pleading, the earlier pleading ceases to be a part of the record for most purposes, being in effect
abandoned and withdrawn.” (Internal quotation marks omitted.) Foxcroft Townhome Owners
Ass’n v. Hoffman Rosner Corp., 96 Ill. 2d 150, 154, 449 N.E.2d 125, 126 (1983). Although Süd,
in its March 2021 amended complaint, decided to replead many of the same claims contained in
- 10 -
its original April 2017 complaint, its amended complaint was complete in itself, neither referring
back to nor adopting any portion of Süd’s original pleading. Under these circumstances, defendants
cannot be said to have waived defects in Süd’s amended complaint by filing an answer to its prior
original complaint. See Pecoraro v. Balkonis, 383 Ill. App. 3d 1028, 1034, 891 N.E.2d 484, 491
(2008) (distinguishing Adcock and finding the defendants, who moved to dismiss a third amended
complaint, had not waived defects in that complaint because they previously filed an answer to the
plaintiff’s second amended complaint); Crawford v. Hayen, 2020 IL App (1st) 200076, ¶ 17, 179
N.E.3d 957 (stating a defendant “did not waive his right to challenge the sufficiency of the
pleadings in [a] third amended complaint merely because he answered the previous complaints”).
¶ 34 As to Süd’s second contention regarding the trial court’s decision to grant
defendants’ motion to dismiss Süd’s March 2021 amended complaint, we note that “a party who
files an amended pleading waives any objection to the trial court’s ruling on the former
complaints.” Foxcroft, 96 Ill. 2d at 153.
¶ 35 In this instance, Süd filed not only an amended complaint in March 2021 but also
a second amended complaint in October 2021. It is Süd’s second amended complaint that was the
operative complaint below. Accordingly, we find that Süd has waived any objection to the
dismissal of its amended complaint through the filing of its second amended complaint, with one
notable exception. In its second amended complaint, Süd explicitly adopted the slander of title
counts from its prior amended complaint. It noted those counts had been dismissed by the trial
court with prejudice, and it asserted its intention not to abandon them. Thus, we find the court’s
dismissal of the slander of title counts has been preserved for review and consider that issue below.
¶ 36 2. Dismissal of Süd’s Second Amended Complaint
¶ 37 On appeal, Süd also challenges the trial court’s dismissal of its October 2021
- 11 -
second amended complaint in its entirety. Süd complains that the court offered “little explanation
for its reasoning.” Ultimately, the record reflects the court granted defendants’ motion to dismiss
based upon the reasons set forth in their filings with the court. In their motion to dismiss,
defendants argued that dismissal was warranted under both section 2-615 and section 2-619 of the
Code.
¶ 38 A section 2-615 motion to dismiss (735 ILCS 5/2-615 (West 2020)) “challenges
the legal sufficiency of a complaint based on certain defects or defenses apparent on the face of
the complaint.” Walworth Investments-LG, LLC v. Mu Sigma, Inc., 2022 IL 127177, ¶ 39, 215
N.E.3d 843.
“A section 2-615 motion presents the critical question of whether the facts alleged
in the complaint, viewed in the light most favorable to the plaintiff and taking all
well-pleaded facts and all reasonable inferences from those facts as true, are
sufficient to state a cause of action upon which relief may be granted.” Village of
Kirkland v. Kirkland Properties Holdings Co., 2023 IL 128612, ¶ 44, 221 N.E.3d
300.
“A court should not dismiss a complaint pursuant to [section 2-615] unless it is clearly apparent
that no set of facts can be proved that would entitle the plaintiff to recovery.” Rehfield v. Diocese
of Joliet, 2021 IL 125656, ¶ 20, 182 N.E.3d 123.
¶ 39 A section 2-619 motion to dismiss (735 ILCS 5/2-619 (West 2020)) “admits the
sufficiency of the complaint but asserts a defense outside of the complaint that defeats it.”
O’Connell v. County of Cook, 2022 IL 127527, ¶ 19, 210 N.E.3d 1251. “The purpose of a section
2-619 motion to dismiss is to dispose of issues of law and easily proved issues of fact at the outset
of litigation.” (Internal quotation marks omitted.) Strauss v. City of Chicago, 2022 IL 127149,
- 12 -
¶ 54, 215 N.E.3d 87.
¶ 40 Relevant to this appeal, section 2-619(a)(6) provides for involuntary dismissal if
“the claim set forth in the plaintiff’s pleading has been released, satisfied of record, or discharged
in bankruptcy.” 735 ILCS 5/2-619(a)(6) (West 2020). Additionally, “[s]ection 2-619(a)(9) of the
Code allows an involuntary dismissal where ‘the claim asserted against defendant is barred by
other affirmative matter avoiding the legal effect of or defeating the claim.’ ” Strauss, 2022 IL
127149, ¶ 54 (quoting 735 ILCS 5/2-619(a)(9) (West 2016)). An “affirmative matter” constitutes
“something in the nature of a defense which negates the cause of action completely or refutes
crucial conclusions of law or conclusions of material fact contained in or inferred from the
complaint.” (Internal quotation marks omitted.) Id. “The affirmative matter must be apparent on
the face of the complaint or otherwise be supported by affidavits or other evidentiary material.”
Id.¶ 41 Like a section 2-615 motion, a section 2-619 motion “admits as true all well-
pleaded facts and all reasonable inferences from those facts.” Cahokia Unit School District No.
187 v. Pritzker, 2021 IL 126212, ¶ 24, 184 N.E.3d 233. Under either section, our review is de novo.
Id. Additionally, no matter the rationale relied upon by the trial court, this court may affirm the
dismissal of a plaintiff’s claim on any ground supported by the record. See Carroll v. Community
Health Care Clinic, Inc., 2017 IL App (4th) 150847, ¶ 18, 81 N.E.3d 122 (“[T]his court may affirm
the circuit court’s granting of a motion to dismiss on any basis or ground established by the record,
regardless of the circuit court’s reasoning.”).
¶ 42 a. Conversion (Counts I and II)
¶ 43 In counts I and II of its second amended complaint, Süd brought claims for
conversion against Otto Baum and ATG, respectively. Süd alleged defendants converted its assets
- 13 -
by making draws on the irrevocable letter of credit it obtained as security for the judgments against
it while its appeal was pending. It asserted Otto Baum improperly drew more on the letter of credit
than its judgment and statutory interest entitled it to collect and that ATG improperly drew
$194,158.45 “when the judgments it had been assigned by [Otto Baum] had already been fully
satisfied prior to assignment and the assignment was void.”
¶ 44 “Conversion is the unauthorized deprivation of property from a person entitled to
its possession.” IOS Capital, Inc. v. Phoenix Printing, Inc., 348 Ill. App. 3d 366, 370, 808 N.E.2d
606, 610 (2004).
“To prove conversion, a plaintiff must establish that (1) he has a right to the
property; (2) he has an absolute and unconditional right to the immediate
possession of the property; (3) he made a demand for possession; and (4) the
defendant wrongfully and without authorization assumed control, dominion, or
ownership over the property.” (Internal quotation marks omitted.) Loman v.
Freeman, 229 Ill. 2d 104, 127, 890 N.E.2d 446, 461 (2008).
“Money may be the subject of conversion, but only if it is shown that the money ‘at all times
belonged to the plaintiff and that the defendant converted it to his own use.’ ” Karimi v. 401 North
Wabash Venture, LLC, 2011 IL App (1st) 102670, ¶ 15, 952 N.E.2d 1278 (quoting In re Thebus,
108 Ill. 2d 255, 261, 483 N.E.2d 1258, 1261 (1985)).
¶ 45 On appeal, Süd argues the letter of credit funds “existed solely to satisfy the
judgments in lieu of an appeal bond” and that “[e]very penny beyond the amount owed on the
judgments belonged to [it].” It emphasizes that, in its previous appeal, ATG’s draw on the letter
of credit was found to have occurred after the chancery judgments were fully satisfied and that the
assignment of Otto Baum’s interests in the judgments and letter of credit was held invalid.
- 14 -
Defendants respond by arguing, in part, that Süd improperly failed to allege the existence of the
second and third elements of a conversion claim—that it had “an absolute and unconditional right
to the immediate possession of the property” or that it made a demand for possession. Loman, 229
Ill. 2d at 127. We agree with defendants.
¶ 46 Süd alleged that Otto Baum and ATG made draws on the letter of credit that they
were, ultimately, not entitled to make. However, “[t]he essence of conversion is not acquisition by
the wrongdoer but a wrongful deprivation of the owner thereof.” Jensen v. Chicago & Western
Indiana R.R. Co., 94 Ill. App. 3d 915, 932, 419 N.E.2d 578, 593 (1981). Süd’s allegations fall
short of showing that the funds in the letter of credit at all times belonged to it. Rather, as Süd
alleged in its second amended complaint, it posted the letter of credit through Town and Country
Bank in favor of Otto Baum and another entity (involved in the underlying chancery cases but not
a party in this appeal) as security for the pending judgments against it. Additionally, the letter of
credit was irrevocable, meaning Süd did not have the absolute and unconditional right to
possession of the funds at issue. With respect to letters of credit, the UCC states as follows:
“(a) A letter of credit is issued and becomes enforceable according to its
terms against the issuer when the issuer sends or otherwise transmits it to the person
requested to advise or to the beneficiary. A letter of credit is revocable only if it so
provides.
(b) After a letter of credit is issued, rights and obligations of a beneficiary,
applicant, confirmer, and issuer are not affected by an amendment or cancellation
to which that person has not consented except to the extent the letter of credit
provides that it is revocable or that the issuer may amend or cancel the letter of
credit without that consent.” 810 ILCS 5/5-106 (West 2020).
- 15 -
¶ 47 As defendants further point out, Süd did not allege facts showing a demand for the
return of the money it claimed was converted. On appeal, Süd does not dispute that claim. Instead,
it asserts that a demand is unnecessary “when an independent action of conversion is established.”
However, as defendants argue, cases in which demands have been held unnecessary involve a
defendant’s sale or disposal of the property at issue. See Fortech, L.L.C. v. R.W. Dunteman Co.,
366 Ill. App. 3d 804, 817, 852 N.E.2d 451, 462 (2006) (stating a demand was not necessary when
an independent action of conversion is established and describing circumstances where the
defendants had sold the property that was the subject of the plaintiffs’ conversion claims).
“In cases which do not impose on a plaintiff the requirement of alleging demand
and refusal, the defendant had sold or otherwise disposed of the property in question
and thus no longer had possession thereof [citations], the rationale being that a
demand for possession would be fruitless where the defendant no longer possesses
the chattel and the law will not require the doing of a useless act. [Citation.]”
Monroe County Water Cooperative v. City of Waterloo, 107 Ill. App. 3d 477, 481,
437 N.E.2d 1237, 1240 (1982).
The present case is unlike those cases upon which Süd relies. Accordingly, it fails to persuade us
that a demand for possession was not a necessary element of its conversion claims.
¶ 48 Here, because defendant failed to allege sufficient facts to support each of the
necessary elements of a claim for conversion, dismissal of counts I and II of Süd’s second amended
complaint was warranted under section 2-615 of the Code. We find no error by the trial court in
dismissing Süd’s claims.
¶ 49 b. Fraud (Counts III and IV)
¶ 50 In counts III and IV of its second amended complaint, Süd raised claims of fraud
- 16 -
against ATG. It alleged ATG made false statements to Town and Country Bank, Süd’s “agent,”
when making a draw on the letter of credit. Specifically, Süd claimed ATG falsely claimed that
Süd continued to owe money on the chancery judgments. Süd asserted Town and Country Bank
reasonably relied on ATG’s false statements, resulting in Süd suffering damages. Süd also alleged
it suffered damages as a result of ATG continuing to (1) claim that Süd owed on the judgments
and (2) maintain liens and memorandums of judgment on Süd’s properties.
¶ 51 In their motion to dismiss the second amended complaint, defendants argued, in
part, that Süd failed to state a cause of action for fraud because it alleged ATG made fraudulent
statements to a third party—Town and County Bank—rather than to Süd. Süd challenges that
contention on appeal, asserting false representations to third persons are actionable, emphasizing
that it “was damaged by the false statements in [ATG’s] drawing certificate.”
¶ 52 To state a cause of action for fraudulent misrepresentation, i.e., fraud, a plaintiff
must establish the following:
“(1) a false statement of material fact (2) known or believed to be false by the
person making it, (3) an intent to induce the plaintiff to act, (4) action by the
plaintiff in justifiable reliance on the truth of the statement, and (5) damage to the
plaintiff resulting from such reliance.” Lewis v. Lead Industries Ass’n, 2020 IL
124107, ¶ 30, 178 N.E.3d 1046.
A common-law fraud claim requires the plaintiff to have relied on the defendant’s allegedly false
representations. Wernikoff v. Health Care Service Corp., 376 Ill. App. 3d 228, 234, 877 N.E.2d
11, 17 (2007). “While privity is not a requisite to recovery for fraud, the misrepresentations must
reach the plaintiff and he must in fact reasonably rely on them.” People ex rel. Peters v. Murphy-
Knight, 248 Ill. App. 3d 382, 391, 618 N.E.2d 459, 466 (1993).
- 17 -
¶ 53 In this instance, Süd alleged false statements made by ATG to Town and Country
Bank that were then relied upon by Town and Country Bank. Significantly, however, Süd alleged
no false statement upon which it reasonably relied to its detriment. We note that, on appeal, Süd
cites sections 532 and 533 of the Restatement (Second) of Torts to support its contention that false
representations to third persons are actionable. Restatement (Second) of Torts §§ 532, 533 (1977).
However, as defendants point out, Süd cites no authority to show that either section of the
restatement has been adopted by our supreme court. Tilschner v. Spangler, 409 Ill. App. 3d 988,
993, 949 N.E.2d 688, 693 (2011) (noting an appellate court does not have authority to adopt a
restatement section and a restatement is binding only if adopted by our supreme court). Moreover,
a plain reading of section 533 shows that it would still require that the false statement to a third
party be repeated or communicated to the plaintiff and that the plaintiff justifiably rely on the
misrepresentation. Restatement (Second) of Torts § 533 (1977) (providing that one who makes a
fraudulent statement is subject to liability to another “who acts in justifiable reliance upon” the
statement if the misrepresentation “is made to a third person and the maker intends or has reason
to expect that its terms will be repeated or its substance communicated to the other, and that it will
influence his conduct in the transaction or type of transaction involved”).
¶ 54 Süd also relies on Leonard v. Springer, 197 Ill. 532, 538, 64 N.E. 299, 301 (1902),
asserting “Illinois has long held that false statements in commercial documents can constitute fraud
upon any injured party,” even absent allegations “that the defendant ever knew the plaintiff or ever
made any representations of any sort to her.” However, that case also involved the plaintiff’s
reliance on the allegedly false statement to her detriment. Id. at 535.
¶ 55 Here, we find allegations that Süd reasonably relied on ATG’s allegedly false
statements to its detriment were essential to its common-law fraud claim. As such allegations were
- 18 -
absent from its pleading, dismissal under section 2-615 was warranted, and the trial court
committed no error in dismissing counts III and IV.
¶ 56 Finally, to the extent Süd contends on appeal that it alleged sufficient facts to
support its fraud claims because it had an agency relationship with Town and Country Bank, we
disagree. First, Süd provides no reasoned argument on appeal to support such a contention and
only briefly references its claims of an agency relationship in its reply brief. See Ill. S. Ct. R.
341(h)(7) (eff. Oct. 1, 2020) (stating the argument section of an appellant’s brief must “contain the
contentions of the appellant and the reasons therefor, with citation of the authorities and the pages
of the record relied on” and “[p]oints not argued are forfeited and shall not be raised in the reply
brief, in oral argument, or on petition for rehearing”). Second, we agree with defendants’ assertions
on appeal that Süd’s allegations of any agency relationship in its second amended complaint were
conclusory. See Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 498, 675 N.E.2d 584, 592 (1996)
(“A complaint relying on agency must plead facts which, if proved, could establish the existence
of an agency relationship. It is insufficient to merely plead the legal conclusion of agency.”).
¶ 57 c. Conspiracy to Commit Fraud (Counts V and VI)
¶ 58 In counts V and VI of the second amended complaint, Süd brought claims of
conspiracy to commit fraud against all defendants. Süd alleged the purpose of the settlement
agreement between Otto Baum and Methodist “was to further a conspiracy among [defendants] to
defraud [Süd] into paying more on the judgments than was owed.” It alleged “ATG’s false drawing
certificate submitted to Town and Country Bank was an overt act of fraud in furtherance of that
conspiracy.”
¶ 59 The necessary elements of a civil conspiracy claim include “(1) a combination of
two or more persons, (2) for the purpose of accomplishing by some concerted action either an
- 19 -
unlawful purpose or a lawful purpose by unlawful means, (3) in the furtherance of which one of
the conspirators committed an overt tortious or unlawful act.” Fritz v. Johnston, 209 Ill. 2d 302,
317, 807 N.E.2d 461, 470 (2004). “A conspiracy is not an independent tort,” however, and where
“a plaintiff fails to state an independent cause of action underlying [the] conspiracy allegations,
the claim for a conspiracy also fails.” (Internal quotation marks omitted.) Illinois State Bar Ass’n
Mutual Insurance Co. v. Cavenagh, 2012 IL App (1st) 111810, ¶ 37, 983 N.E.2d 468.
¶ 60 Defendants argue Süd’s conspiracy claims in count V and VI are based upon its
fraud claims set forth in counts III and IV. They assert that, because Süd failed to properly state a
cause of action for fraud in counts III and IV, it has similarly failed to state a cause of action for
conspiracy. Süd does not dispute this claim on appeal, arguing only that both its fraud and
conspiracy counts were “properly pled.” Given our holding that Süd failed to state a cause of action
for fraud, we find dismissal of its conspiracy counts—which are based upon the same allegations
of fraud—is also warranted under section 2-615 of the Code. Thus, the trial court committed no
error in dismissing counts V and VI of Süd’s second amended complaint.
¶ 61 d. Slander of Title (Counts VII through XVIII)
¶ 62 As noted above, Süd raised slander of title claims against Otto Baum and ATG in
its amended complaint (counts V through XVI). The trial court dismissed those counts with
prejudice, and Süd preserved the issue of their dismissal for review by adopting those claims in
counts VII through XVIII of its second amended complaint.
¶ 63 In its slander of title counts, Süd alleged Otto Baum and ATG “continued to
maintain” memorandums of judgment and mechanic’s liens against Süd’s property after the
chancery judgments had been fully satisfied. Further, it asserted the memorandums of judgment
and mechanic’s liens constituted “false publications” that slandered Süd’s title to its property. In
- 20 -
dismissing Süd’s slander of title counts with prejudice, the trial court stated as follows:
“The allegations fail to allege malice, an element of the offense of slander of title.
While this defect may be curable, and ordinarily would only justify dismissal under
section 2-615 [of the Code], the court further finds the single publication rule, as
argued by Defendants, also bars these claims. It appears all these claims are based
upon the original publication/recording at a time when the recordings were proper
and valid. There being no re-publication at a time when the recordings were false
or wrongful, [the] claims for slander of title cannot stand.”
¶ 64 Case authority provides that “[s]lander of title is a false and malicious publication,
oral or written, of words which disparage a person’s title to property resulting in special damages.”
Whildin v. Kovacs, 82 Ill. App. 3d 1015, 1016, 403 N.E.2d 694, 695 (1980). “The act of
maliciously recording a document which casts a cloud upon another’s title to real estate is
actionable as slander of title.” Id.¶ 65 “A cause of action for slander of title requires proof that (1) the defendant made a
false and malicious publication, (2) the publication disparaged the plaintiff’s title to property, and
(3) the publication caused damages to the plaintiff.” Bozek v. Bank of America, N.A., 2021 IL App
(1st) 191978, ¶ 87, 191 N.E.3d 709. “To prove malice, a plaintiff must show that the defendant
knew that the disparaging statements were false or that the statements were made with reckless
disregard of their truth or falsity.” Chicago Title & Trust Co. v. Levine, 333 Ill. App. 3d 420, 424,
789 N.E.2d 769, 772 (2002). “A defendant acts with reckless disregard if he publishes the allegedly
damaging matter despite a high degree of awareness of its probable falsity or if he has serious
doubts as to its truth.” Id. “However, if the party who records the document has reasonable grounds
to believe that he has title or a claim to the property, he has not acted with malice.” Whildin, 82
- 21 -
Ill. App. 3d at 1016.
¶ 66 The single publication rule has been codified in the Uniform Single Publication
Act, which states as follows:
“No person shall have more than one cause of action for damages for libel or slander
or invasion of privacy or any other tort founded upon any single publication or
exhibition or utterance, such as any one edition of a newspaper or book or magazine
or any one presentation to an audience or any one broadcast over radio or television
or any one exhibition of a motion picture. Recovery in any action shall include all
damages for any such tort suffered by the plaintiff in all jurisdictions.” 740 ILCS
165/1 (West 2020).
“The single-publication rule *** applies where defamatory material is mass-published to the
public in a medium where the delayed receipt of the defamatory material is incidental to the
medium’s mode of distribution.” Ciolino v. Simon, 2021 IL 126024, ¶ 38, 192 N.E.3d 579, 587.
¶ 67 On appeal, Süd initially contends the trial court erred because the single publication
rule “has no bearing” on its slander of title claims. It argues that it was “not trying to file multiple
lawsuits over one publication of defamatory material” and, instead, “filed one lawsuit after the
[chancery] judgments were fully satisfied.” Further, it contends that, by continuing to exist, a
recorded judgment or lien is “ ‘re-publishing’ ” allegations that the property is encumbered “every
single day.”
¶ 68 As stated above, a claim for slander of title requires allegations of a false and
malicious publication. Bozek, 2021 IL App (1st) 191978, ¶ 87. Further, case authority pertaining
to actions for slander of title clearly identifies the “act” of “recording a document which casts a
cloud upon another’s title to real estate” as being an actionable publication. Whildin, 82 Ill. App.
- 22 -
3d at 1016. In this case, there appears to be no dispute that mechanic’s liens and memorandums of
judgment were recorded against Süd’s property and, at the time those recordings were made, they
were accurate and valid. The proper recording of valid documents upon another’s title does not
provide the basis for a slander of title claim.
¶ 69 As noted, Süd argues that continuing to maintain the recordings of the mechanic’s
liens and memorandums of judgment against the property after the chancery judgments were fully
satisfied amounted to a “ ‘re-publishing’ of those allegations every single day.” Ultimately,
however, Süd provides no legal authority to support that claim. Additionally, we agree with the
trial court that Süd’s theory of liability runs contrary to the single publication rule, which applies
to causes of action for slander. Further, under the single publication rule only one cause of action
for slander may be founded upon any single publication. 740 ILCS 165/1 (West 2020). In this
instance, the mechanic’s liens and memorandums of judgment were published once at the time
they were recorded. Allowing the recordings to continue to be maintained, as Süd alleged, did not
amount to separate publications upon which additional causes of action could arise. See Patterson
v. United Companies Lending Corp., 4 F. Supp. 2d 1349, 1356-57 (M.D. Ala. 1998) (rejecting the
defendant’s theory that the “refusal to rescind or remove [a] recorded Mortgage constituted a
continuing or additional publication that would support a claim for slander of title” and finding
such a theory was “clearly contradictory to the ‘single publication’ rule,” under which the initial
mortgage recording would be considered “the sole publication for slander of title purposes”).
¶ 70 On appeal, Süd alternatively argues that, although it titled its counts “slander of
title,” their content essentially established a different cause of action based upon defendants’
refusal to release fully satisfied judgments. Initially, we note Süd did not raise this argument before
the trial court. Rather, in the proceedings below, it maintained only that the conduct alleged in
- 23 -
those counts (counts V through XVI of the amended complaint) was actionable as slander of title.
Under such circumstances, we may deem Süd’s argument, raised for the first time on appeal, to
have been forfeited. Vantage Hospitality Group, Inc. v. Q Ill Development, LLC, 2016 IL App
(4th) 160271, ¶ 49, 71 N.E.3d 1 (“[A] party who fails to make an argument in the trial court forfeits
the opportunity to do so on appeal.”).
¶ 71 Further, even setting aside Süd’s forfeiture, we find no merit to its argument. First,
as asserted by defendants on appeal, each of Süd’s counts that were labeled as “slander of title”
were most obviously an attempt by Süd to plead precisely that cause of action. For example, in
count V, which was in substantially the same form as all of Süd’s “slander of title” counts, Süd
alleged as follows:
“94. [Otto Baum] continued to maintain a memorandum of judgment
against [Süd] in Peoria County, Illinois after its judgments had been fully satisfied.
95. The memorandum of judgment is a false publication in that the
judgments have been fully satisfied.
96. [Süd] owns property located at 2322 West Van Winkle Way, in the City
of Peoria, Peoria County, Illinois.
97. [Otto Baum’s] memorandum of judgment slanders [Süd’s] title to the
property in Peoria County, Illinois.
98. The conduct of [Otto Baum] in continuing to maintain the memorandum
of judgment after it knew the judgments had been fully satisfied was willful and
wanton and justifies the imposition of punitive damages.
WHEREFORE, [Süd] prays the Court enter judgment in its favor and
against [Otto Baum] in an amount greater than $50,000.00 in compensatory
- 24 -
damages, in an amount greater than $50,000.00 in punitive damages, for its costs
of suit, and for such other and further relief as justice and equity require.”
Süd’s allegations were based on claims that documents recorded against its property were false
publications that slandered its title to such property and caused it damages. As noted, “[s]lander of
title is a false and malicious publication, oral or written, of words which disparage a person’s title
to property resulting in special damages.” Whildin, 82 Ill. App. 3d at 1016.
¶ 72 Second, relying on McLaughlin v. First National Bank of Pana, 72 Ill. App. 476(1897), Süd contends Illinois “recognizes a cause of action for damages against a judgment creditor
who refuses to release a fully satisfied judgment.” In McLaughlin, the Third District held as
follows:
“It is actionable for a judgment creditor of a tradesman, after he had been
paid his judgment in full, to refuse or neglect to satisfy of record said judgment
within a reasonable time after he has been paid, and by his said debtor requested so
to do; because the natural and probable effect of such refusal or neglect is to injure
such tradesman in his credit and business; and for such injury such tradesman may
recover such damages as a jury would find to be a reasonable compensation for the
injury to his credit and business caused by such failure or refusal.” Id. at 481.
¶ 73 Notably, McLaughlin was issued in 1897, and appellate court decisions issued prior
to 1935 have no binding authority. Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 95,
672 N.E.2d 1207, 1217 (1996). Süd cites no post-1935 case authority to support its contention,
and our research reveals none. Further, even assuming that McLaughlin provides authority for
recognizing a cause of action for damages based upon the refusal to release a fully satisfied
judgment, Süd’s allegations, again, fall short. Specifically, McLaughlin appears to require a
- 25 -
plaintiff to establish not only the failure to release a fully satisfied judgment but that (1) the
judgment was not released “within a reasonable time after” the judgment was paid, (2) the plaintiff
made a request for release after the judgment was paid, and (3) the plaintiff suffered injury to his
credit and business due to the defendant’s failure to release. Here, Süd did not allege specific facts
supporting any of these elements in counts V through XVI of its amended complaint. Additionally,
on appeal it identifies no allegations in the amended complaint in general that would support those
elements. Although Süd points to allegations in its second amended complaint as setting forth
examples of harm it suffered, the second amended complaint was not before the trial court at the
time it dismissed the slander of title counts.
¶ 74 Accordingly, under the circumstances presented, we find no error by the trial court
in viewing counts V through XVI of Süd’s amended complaint as attempting to raise causes of
action for slander of title. Additionally, we find no error by the court in dismissing those counts.
¶ 75 e. Quiet Title (Counts XIX through XXX)
¶ 76 In counts XIX through XXX of its second amended complaint, Süd brought claims
to quiet title. It alleged Otto Baum and ATG maintained either memorandums of judgment or
mechanic’s liens against its properties that diminished their value. Süd asserted that it was in actual
possession of the subject properties and that the memorandums of judgment and mechanic’s liens
were invalid because the judgments against it had been fully satisfied. In the counts alleging the
defendants’ maintenance of memorandums of judgment, it also alleged that the memorandums of
judgment were “fraudulent and inequitable.” Süd asserted that the clouds on its titles should be
removed by deeming the memorandums of judgment and mechanic’s liens void and cancelling
them of record. Further, it alleged it had incurred attorney fees and costs related to quieting title,
and it sought compensatory damages.
- 26 -
¶ 77 “An action to quiet title in property is an equitable proceeding in which a party
seeks to remove a cloud on his title to the property.” Gambino v. Boulevard Mortgage Corp., 398
Ill. App. 3d 21, 52, 922 N.E.2d 380, 410 (2009). “A cloud on title is the semblance of title, either
legal or equitable, appearing in some legal form but which is, in fact, unfounded or which it would
be inequitable to enforce.” Id. “A plaintiff suing to remove a cloud from title must be in possession
of the property [citation] unless the property at issue is vacant and undeveloped [citation] or other
grounds of equitable relief such as mistake or fraud are established.” Lakeview Trust & Savings
Bank v. Estrada, 134 Ill. App. 3d 792, 812, 480 N.E.2d 1312, 1327 (1985).
¶ 78 Relying on section 2-615 of the Code, defendants sought dismissal of Süd’s quiet
title counts that contained allegations of fraud. They asserted such allegations lacked factual
support and were conclusory. Defendants also moved to dismiss all of Süd’s quiet title counts
under section 2-619(a)(6) of the Code (735 ILCS 5/2-619(a)(6) (West 2020)) on the basis that the
challenged memorandums of judgment and mechanic’s liens had already been released. We agree
with defendants’ latter contention.
¶ 79 Section 2-619(a)(6) provides for the involuntary dismissal of an action based upon
grounds “[t]hat the claim set forth in the plaintiff’s pleading has been *** satisfied of record.” Id.In this instance, there is no dispute that the memorandums of judgment and mechanic’s liens that
are the subject of Süd’s quiet title counts were released in January 2021, prior to the filing of Süd’s
amended complaint in case No. 17-L-105. Thus, the clouds Süd seeks to have removed from its
titles no longer exist.
¶ 80 Süd responds to defendants’ request for dismissal under section 2-619(a)(6) of the
Code by arguing that its quiet title counts existed in its original complaint before the liens and
memorandums of judgment were released and, as a result, it is entitled to recover costs and attorney
- 27 -
fees that are related to the quieting of title. However, as defendants argue, because Süd cannot
establish its entitlement to equitable relief under the quiet title counts of its second amended
complaint, its claim for attorney fees and costs based upon those same allegations also fails. See
American Federation of Technical Engineers, Local 144 v. La Jeunesse, 63 Ill. 2d 263, 267, 347
N.E.2d 712, 715 (1976) (“[U]nless the court has jurisdiction in equity there is no jurisdiction to
award money damages or provide other legal relief.”); Illinois Minerals Co. v. Miller, 327 Ill. App.
596, 605, 65 N.E.2d 44, 48 (1946) (“If the plaintiff is unsuccessful in his suit for injunction, the
right of the court of equity to determine the issue as to damages would fail.”); Butler v. Kent, 275
Ill. App. 3d 217, 229, 655 N.E.2d 1120, 1128 (1995) (“A court’s jurisdiction in equity on damage
claims will fail where *** the claim for equitable relief fails.”).
¶ 81 Further, we note that relevant case authority indicates that attorney fees are
recoverable in an action to quiet title only when the plaintiff has proven a corresponding claim for
slander of title, which requires that the plaintiff prove malice. In Home Investments Fund v.
Robertson, 10 Ill. App. 3d 840, 844, 295 N.E.2d 85, 88 (1973), the Second District found a plaintiff
was entitled to recover costs and attorney fees directly related to claims he raised to quiet title and
for slander of his title. In so holding, the court noted both the rule in Illinois that “a party may not
recover for the ordinary expenses and burdens of litigation” and the exception to the rule for claims
against a defendant that raise allegations of malice. Id. The court reasoned that, because slander of
title actions involve the element of malice, recovery should be permitted for “those costs and
attorney’s fees which directly flow from the wrongful disparagement.” Id.; see Kingston Partners,
LLC v. Lynn Plaza, LLC, 2023 IL App (1st) 220652-U, ¶¶ 38-39 (interpreting Robertson as
standing for the proposition that attorney fees are recoverable in an action to quiet title when the
plaintiff proves a corresponding claim for slander of title).
- 28 -
¶ 82 Here, the case Süd relies upon for the proposition that it could recover attorney fees
and costs relating to the quieting of title cited Robertson and also involved a successful claim for
slander of title. See Gambino, 398 Ill. App. 3d at 67 (“[P]laintiffs were entitled to recover those
costs and attorney fees directly related to the quieting of title and to those damages directly related
to a slander of title.”). In this instance, Süd has not successfully stated a cause of action for slander
of title by defendants.
¶ 83 Under the circumstances presented, we find dismissal of Süd’s claims to quiet title
was warranted under section 2-619(a)(6) of the Code. Accordingly, the trial court committed no
error in granting defendants’ motion to dismiss as to Süd’s quiet title counts.
¶ 84 f. Breach of Warranty Under the UCC (Count XXXI)
¶ 85 In count XXXI of its complaint, Süd brought a claim for breach of warranty against
ATG under article 5 of the UCC, which applies to letters of credit (810 ILCS 5/5-109, 5-110 (West
2020)). It alleged that ATG was the beneficiary of the letter of credit and, on March 6, 2017, ATG
presented a draw on the letter of credit to Town and Country Bank, which was honored. Süd
alleged that, through that presentation, ATG warranted to Süd, as applicant of the letter of credit,
“that the presentation was not forged or materially fraudulent,” as set forth in the UCC. Süd
maintained, however, that the presentation was materially fraudulent, as “there was no sum due
ATG by [Süd] because the judgments were already fully satisfied.” Süd alleged ATG breached its
warranty under the UCC by making a materially fraudulent presentation to Town and Country
Bank and that Süd had “been damaged in the amount of $194,158.45, plus ongoing lost interest on
that sum.”
¶ 86 The record reflects defendants moved to dismiss Süd’s breach of warranty claim
under section 2-619 of the Code. Initially, Süd argues defendants were not permitted to seek
- 29 -
dismissal of this specific claim because the trial court (1) denied defendants’ motion to dismiss the
same count in connection with Süd’s prior amended complaint and (2) ordered defendants to
answer that count. Significantly, however, Süd has failed to present any authority to support this
contention or any argument other than a conclusory statement that such circumstances warrant
reversal. Accordingly, we find this claim forfeited and decline to address it. See Ill. S. Ct. R.
341(h)(7) (eff. Oct. 1, 2020) (requiring an appellant to present a reasoned argument with citation
of authority and stating “[p]oints not argued are forfeited and shall not be raised in the reply brief,
in oral argument, or on petition for rehearing”).
¶ 87 Section 5-110 of the UCC identifies warranties by the beneficiary of a letter of
credit when its draw on a letter of credit is honored by the issuer. 810 ILCS 5/5-110(a) (West
2020). That section states as follows:
“(a) If its presentation is honored, the beneficiary warrants:
(1) to the issuer, any other person to whom presentation is made,
and the applicant that there is no fraud or forgery of the kind described in
Section 5-109(a); and
(2) to the applicant that the drawing does not violate any agreement
between the applicant and beneficiary or any other agreement intended by
them to be augmented by the letter of credit.” Id.¶ 88 The plain language of section 5-110(a) points to section 5-109(a) of the UCC (id.
§ 5-109(a)) for assistance in determining what constitutes a fraud or forgery for warranty purposes.
Id. § 5-110(a). In turn, section 5-109(a) describes situations wherein “a required document is
forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by
the beneficiary on the issuer or applicant.” Id. § 5-109(a).
- 30 -
¶ 89 Additionally, the comments to section 5-109 provide that “fraud must be found
either in the documents or must have been committed by the beneficiary on the issuer or applicant.”
810 ILCS Ann. 5/5-109, UCC Comment 1 (Smith-Hurd 2019). The fraud must also be material.
Id. Further, “[m]aterial fraud by the beneficiary occurs only when the beneficiary has no colorable
right to expect honor and where there is no basis in fact to support such a right to honor.” Id.
¶ 90 Below, defendants moved for dismissal of Süd’s breach of warranty claim,
asserting (1) ATG committed no fraud against Süd because it had a colorable right to expect its
draw on the letter of credit to be honored, and (2) Süd sought inappropriate relief. They make the
same arguments on appeal. As support for their claims, defendants note that attached to their
motion to dismiss was the affidavit of ATG’s “Senior Manager” for “Claims and Litigation,” Traci
Nally. In her affidavit, Nally asserted she had been closely involved with the litigation at issue,
reviewed the case file, and monitored ATG’s defense of Süd’s claims. She described ATG’s
involvement in the matter, including (1) the trial court’s granting of defendants’ motion for
summary judgment on Süd’s original complaint, in part, based on the collateral source rule; (2) the
Third District’s 2020 decision, vacating the trial court’s grant of summary judgment; and
(3) ATG’s refund to Süd of the $194,158.45 it collected from the letter of credit. Nally also averred
as follows:
“10. On March 6, 2017, ATG made a draw of $194,158.45 that remained
on the letter of credit. ATG believed that this draw left a balance owed from Süd of
$272,125.12.
11. At the time ATG made the draw on the letter of credit, ATG believed
that it possessed a valid assignment of judgment and beneficiary interests in the
Letter of Credit pursuant to the Settlement with [Otto Baum].
- 31 -
12. At the time that ATG made the draw on the letter of credit, there was no
agreement between ATG and Süd that prohibited ATG from making said draw.
13. There was never any agreement or contract between ATG and any of
the Süd Parties underlying the Letter of Credit.”
¶ 91 Here, Süd alleged ATG’s presentation to draw on the letter of credit “was materially
fraudulent in that there was no sum due ATG by [Süd] because the judgments were already fully
satisfied.” Defendants argue, however, that Nally’s affidavit, which was uncontroverted by Süd,
proves that ATG had a colorable right to draw on the letter of credit. They contend “ATG’s good-
faith belief in its yet-unadjudicated position at the time of the draw means that it had *** a
colorable right” and that it did not act fraudulently. As to this contention, we find defendants have
failed to allege an affirmative matter that defeats Süd’s claim.
¶ 92 As indicated, a motion to dismiss pursuant to section 2-619 admits that the
complaint was legally sufficient but asserts that some affirmative matter defeats the claim.
Reynolds v. Jimmy John’s Enterprises, LLC, 2013 IL App (4th) 120139, ¶ 31, 988 N.E.2d 984. Its
purpose “is to provide litigants with a method of disposing of issues of law and easily proved issues
of fact—relating to the affirmative matter—early in the litigation.” (Emphasis in original.) Id.
¶ 30. An affirmative matter is “some kind of defense other than a negation of the essential
allegations of the plaintiff’s cause of action” and “does not include evidence upon which defendant
expects to contest an ultimate fact stated in the complaint.” (Internal quotation marks omitted.) Id.
¶¶ 33-34. “In other words, an affirmative matter is not the defendant’s version of the facts as such
a basis merely tends to negate the essential allegations of the plaintiff’s cause of action.” Id. ¶ 34.
¶ 93 Defendants’ claims that ATG had a colorable right to draw on the letter of credit
and, therefore, did not act fraudulently is an attempt to negate an essential allegation of Süd’s
- 32 -
breach of warranty claim. Through Nally’s affidavit, they presented ATG’s own version of the
underlying facts in an attempt disprove Süd’s claim that ATG’s draw on the letter of credit was
materially fraudulent under the UCC. Section 2-619 does not authorize dismissal in such
circumstances. See id. (“Where a defendant seeks to address the complaint’s factual allegations, a
summary judgment motion *** is the proper vehicle.”).
¶ 94 As noted, defendants also contend dismissal of Süd’s breach of warranty claim is
proper under section 2-619 because Süd “had no damages under the UCC warranty.” In particular,
it notes that Nally’s undisputed affidavit shows ATG returned the amount it drew from the letter
of credit, $194,158.45. With respect to Süd’s claim for “ongoing lost interest,” defendants argue
that “prejudgment interest is recoverable only where authorized by the agreement of the parties or
by statute.” Kouzoukas v. Retirement Board of Policemen’s Annuity & Benefit Fund of Chicago,
234 Ill. 2d 446, 474, 917 N.E.2d 999, 1015 (2009). They maintain Süd’s request for interest is not
supported by any agreement of the parties or by statute.
¶ 95 Süd does not dispute that ATG returned the $194,158.45 it received from its draw
on the letter of credit. However, it maintains that section 3-417(d)(2) of the UCC (810 ILCS 5/3-
417(d)(2) (West 2020)) provides authority for its recovery of prejudgment interest.
¶ 96 Article 5 of the UCC, pertaining to letters of credit, includes no explicit provision
for prejudgment interest in breach of warranty cases and, in fact, is silent with respect to the
damages recoverable for a breach of warranty claim under section 5-110. 810 ILCS Ann. 5/5-110,
UCC Comment 3 (Smith-Hurd 2023) (stating “damages for breach of warranty are not specified
in Section 5-111,” which sets forth remedies available under article 5). Nevertheless, the comments
to section 5-110 state that “[c]ourts may find damage analogies in Section 2-714 in Article 2 and
in warranty decisions under Articles 3 and 4.” Id.- 33 -
¶ 97 As noted, Süd relies on section 3-417(d)(2) of the UCC (810 ILCS 5/3-417(d)(2)
(West 2020)) to support its request for interest. That section falls under article 3 of the UCC, which
pertains to negotiable instruments and addresses “presentment warranties.” Id. It states as follows:
“The person making payment [on a draft] may recover from any warrantor for breach of warranty
an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.”
(Emphases added.) Id.¶ 98 Although the portion of the UCC that Süd relies upon provides for recovery for a
loss of interest, we agree with defendants that the comments to section 5-110 direct courts to look
at analogous warranty decisions that arise under article 3 when considering the issue of damages
and not any specific provision of that article. In this instance, defendants cite no decision analogous
to the circumstances of the present case in which prejudgment interest was awarded. We note
“[s]tatutes permitting the recovery of interest are in derogation of common law and, thus, must be
strictly construed.” Kouzoukas, 234 Ill. 2d at 476. We find no statutory basis for the award of
interest in the present case.
¶ 99 Additionally, as defendants further point out, the comments to section 5-110 also
state as follows:
“Unlike wrongful dishonor cases—where the damages usually equal the
amount of the draw—the damages for breach of warranty will often be much less
than the amount of the draw, sometimes zero. *** [A]ssume an underlying
agreement that authorizes a beneficiary to draw only the ‘amount in default.’
Assume a default of $200,000 and a draw of $500,000. The damages for breach of
warranty would be no more than $300,000.” 810 ILCS Ann. 5/5-110, UCC
Comment 3 (Smith-Hurd 2023).
- 34 -
The example provided suggests that, in cases such as the one at bar, any recovery from ATG would
be limited to no more than $194,158.45, the amount ATG received from its draw on the letter of
credit, which it indisputably repaid prior to the filing of both Süd’s amended complaint and second
amended complaint.
¶ 100 Given that ATG repaid Süd the amount it claimed to have been damaged in
connection with its breach of warranty claim and given the lack of a statutory basis for the recovery
of prejudgment interest, we find dismissal of Süd’s breach of warranty claim was proper under
section 2-619 of the Code. Accordingly, the trial court committed no error in granting defendants’
motion to dismiss that claim.
¶ 101 g. Damages Under the Mechanics Lien Act
(Counts XXXII Through XXXV)
¶ 102 Finally, in counts XXXII through XXXV of its second amended complaint, Süd
raised claims for damages against Otto Baum and ATG under the Mechanics Lien Act. It asserted
that, because defendants failed to release mechanic’s liens held against Süd’s property (1) after the
judgments were fully satisfied and (2) within 10 days of Süd’s demand for release, they were liable
for statutory damages, attorney fees, and costs. In its complaint, Süd alleged it made written
demands for the release of mechanic’s liens held upon its property (1) in a letter to Otto Baum
dated January 27, 2017, (2) by filing its amended petition for release of judgments on July 9, 2018,
and (3) in a letter directed to both Otto Baum and ATG dated December 23, 2020.
¶ 103 Relevant to this appeal, section 35(a) of the Mechanics Lien Act states as follows:
“Whenever a claim for lien has been filed with the recorder of deeds *** and is
paid with cost of filing same *** the person filing the same or someone by him
duly authorized in writing so to do, shall acknowledge satisfaction or release
- 35 -
thereof, in writing, on written demand of the owner, *** and on neglect to do so for
10 days after such written demand he or she shall be liable to the owner for the sum
of $2,500, which may be recovered in a civil action together with the costs and the
reasonable attorney’s fees of the owner *** incurred in bringing such action.”
(Emphasis added.) 770 ILCS 60/35(a) (West 2020).
¶ 104 As they did below, defendants argue that dismissal of counts XXXII through
XXXV of the second amended complaint was warranted under section 2-615 of the Code.
Specifically, they assert section 35(a) requires a written demand for release upon the person who
recorded the mechanic’s lien and that Süd failed to allege sufficient facts showing that it made a
written demand for the release of any such lien.
¶ 105 What constitutes a “written demand” for purposes of section 35(a) presents a matter
of statutory construction. “The fundamental rule of statutory construction is to ascertain and
effectuate the legislature’s intent.” Hayashi v. Illinois Department of Financial & Professional
Regulation, 2014 IL 116023, ¶ 16, 25 N.E.3d 570. “The most reliable indicator of the legislative
intent is the language of the statute itself, which must be given its plain and ordinary meaning.”
Id. Additionally, rights under the Mechanics Lien Act “are in derogation of the common law, and
the steps necessary to invoke those rights must be strictly construed.” (Internal quotation marks
omitted.) Gerdau Ameristeel US, Inc. v. Broeren Russo Construction, Inc., 2013 IL App (4th)
120547, ¶ 27, 992 N.E.2d 27.
¶ 106 As noted above, Süd alleged there were three separate occasions when it made
written demands upon defendants to release mechanic’s liens on its property. First, Süd identified
a January 27, 2017, letter directed to Otto Baum, which was attached as an exhibit to the second
amended complaint. However, as defendants point out, that letter referenced only “Otto Baum’s
- 36 -
judgments of July 2, 2014,” and requested release of those judgments. The letter made no reference
to any recorded mechanic’s lien. Section 35(a) provides a method for property owners “to clear a
cloud on the owner’s property created by the filing of a lien.” Krzyminski v. Dziadkowiec, 296 Ill.
App. 3d 710, 712, 695 N.E.2d 1275, 1276 (1998). The written demand required by section 35(a)
gives notice to the lien holder of the action being requested by the property owner. We find that,
at a minimum, the written demand contemplated by section 35(a) must refer to or identify the liens
the property owner is seeking to have released.
¶ 107 Moreover, the January 2017 letter preceded the date upon which the chancery
judgments were ultimately deemed fully satisfied, March 3, 2017. Accordingly, even if we were
to assume the letter constituted a proper demand, it was clearly premature according to the
allegations of the second amended complaint.
¶ 108 Second, Süd relies upon the filing of its amended petition for release of judgments
on July 9, 2018. The record shows Süd’s petition was filed pursuant to section 12-183(b) of the
Code (735 ILCS 5/12-183(b) (West 2018)) and asked the trial court to enter an order (1) holding
that the chancery judgments had been satisfied and (2) “releasing those judgments, releasing all
liens, mechanics liens, and memoranda of judgments relating to those judgments.” Ultimately,
rather than a written demand for release based upon full payment of the underlying claim, Süd’s
petition was directed to the court and asked it to resolve the issue of whether amounts associated
with the judgments and liens at issue had been paid. We agree with defendants that Süd’s July
2018 amended petition for release of judgments did not constitute a written demand upon
defendants as contemplated by section 35(a).
¶ 109 Third, Süd relied upon a letter, dated December 23, 2020, to defendants’ counsel,
which was also attached as an exhibit to its second amended complaint. Süd’s letter stated as
- 37 -
follows:
“As you know, you are currently holding liens on both the dealership property and
vacant lots in [Süd] Plaza Subdivision owned by [Süd] ***. The continued
maintenance of these liens despite the ruling of the Appellate Court is causing
ongoing damage to [Süd] *** for which your clients will be responsible, including
creating conflict in a proposed sale of the dealership itself. In order to mitigate these
damages, we ask that you voluntarily release the liens on those two properties
immediately.”
Although Süd generally referenced liens held on property it owned, it, again, failed to identify the
liens with any particularity. Additionally, we note that, on appeal, it fails to respond to defendants’
assertion in their appellee brief that Süd’s demand was insufficient because it referred to
“unidentified liens” and failed to describe any property by address or parcel.
¶ 110 Under the circumstances presented, we agree with defendants that dismissal of
counts XXXII through XXXV of the second amended complaint was warranted under section
2-615 of the Code. Again, the trial court committed no error.
¶ 111 B. Defendants’ Cross-Appeal
¶ 112 On cross-appeal, defendants argue the trial court erred by dismissing their amended
counterclaim four, wherein ATG brought a claim for attorney fees against Süd under section 5-
111(e) of the UCC (810 ILCS 5/5-111(e) (West 2020)). That section states “[r]easonable attorney’s
fees and other expenses of litigation must be awarded to the prevailing party in an action in which
a remedy is sought under this Article,” i.e., Article 5 of the UCC. Id.¶ 113 In amended counterclaim four, ATG’s allegations included that (1) Süd continued
to owe on the chancery judgments after Otto Baum’s March 3, 2017, draw on the letter of credit;
- 38 -
(2) Otto Baum had the right to assign its interest in the letter of credit to ATG; and (3) ATG
presented a drawing certificate on the letter of credit “in the reasonable exercise of its right of
subrogation, and as assignee of [Otto Baum’s] interest.” ATG further alleged that, in the event it
prevailed on certain of Süd’s counts against it, it was entitled to a judgment for reasonable attorney
fees and expenses of the litigation under section 5-111(e). (Although in its amended counterclaim
four, ATG identified counts I through IV and XXIX as the counts against which its claim for
attorney fees was directed, when presenting argument before the trial court, it clarified that its
claim was actually directed against count XXXI of the second amended complaint, alleging breach
of warranty under the UCC.)
¶ 114 Below, Süd moved to dismiss amended counterclaim four pursuant to section 2-
619(a)(9) of the Code, asserting ATG’s material factual claims in the amended counterclaim had
been “conclusively rejected by” the Third District’s previous opinion in the matter. In particular,
Süd argued the Third District had determined the chancery judgments were fully satisfied as of
March 3, 2017, that Otto Baum’s assignment to ATG of its interests was invalid, and ATG had no
right to draw on the letter of credit.
¶ 115 Although Süd correctly identifies the Third District’s holdings in the case, we note
that the court’s decision did not address or resolve the merits of either Süd’s UCC breach of
warranty claim or any request by ATG for attorney fees. Further, the factual claims in amended
counterclaim four that Süd challenges were not, in fact, material to ATG’s section 5-111(e) claim.
To prove its entitlement to attorney fees and litigation expenses under section 5-111(e), ATG had
to show only that it was the prevailing party in an action in which a remedy was being sought
under Article 5. In this instance, there is no dispute that Süd sought relief under Article 5, alleging
ATG breached warranties set forth in section 5-110.
- 39 -
¶ 116 On appeal, Süd argues that ATG cannot be considered a prevailing party on its
breach of warranty claim. Ultimately, however, such a determination is within the trial court’s
discretion, and the trial court has yet to consider the substance of ATG’s claim. See 810 ILCS Ann.
5/5-111, UCC Comment 6 (Smith-Hurd 2023) (“Determining which is the prevailing party is in
the discretion of the court.”); see also Tanna Farms, L.L.C. v. Golfvisions Management, Inc., 2018
IL App (2d) 170904, ¶ 12, 127 N.E.3d 542 (“[T]he determination of whether a party qualifies as
the ‘prevailing party’ for the purpose of awarding attorney fees is subject to the abuse of discretion
standard of review.”). Süd’s contention that ATG was not a prevailing party in the matter does not
amount to “affirmative matter” that warrants dismissal of amended counterclaim four under
section 2-619.
¶ 117 III. CONCLUSION
¶ 118 For the reasons stated, we affirm the trial court’s dismissal with prejudice of each
count of Süd’s second amended complaint. We reverse the court’s dismissal of ATG’s amended
counterclaim four pursuant to section 2-619(a)(9) of the Code and remand for further proceedings
as to that counterclaim.
¶ 119 Affirmed in part and reversed in part; cause remanded.
- 40 -
Süd Family Ltd. Partnership v. Otto Baum Co., 2024 IL App (4th) 220782Decision Under Review: Appeal from the Circuit Court of Peoria County, Nos. 9-CH-
310, 9-CH-311, 17-L-105; the Hon. Paul E. Bauer, Judge,
presiding.
Attorneys Christopher H. Sokn, of Kingery Durree Wakeman &
for O’Donnell, Assoc., of Peoria, for appellants.
Appellant:
Attorneys Robert M. Andalman and William Norman, of A&G Law, LLC,
for of Chicago, for appellees.
Appellee:
- 41 -