Toushin v. Ruggiero

2015 IL App (1st) 143151
FIRST DIVISION
August 3, 2015
No. 1-14-3151
STEVEN TOUSHIN, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) Cook County
)
v. )
)
GINA RUGGIERO, )
) No. 13 CH 10090
Defendant-Appellant, )
)
(First Merit Bank, a National Banking )
Institution, Trustee Under Trust Numbers )
78-03-2431 and 88-03-5438, ) Honorable
) Mary L. Mikva,
Defendant). ) Judge Presiding.
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Delort and Justice Cunningham concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, Steven Toushin, brought a declaratory judgment action against defendants, First
Merit Bank (First Merit) 1 and Gina Ruggiero (defendant), in which he asked the circuit court to
declare that he had a 50% beneficial interest in two Illinois land trusts in which First Merit
served as trustee and defendant possessed the remaining beneficial interest. Plaintiff based his
claim on two assignments of beneficial interest, both dated February 16, 1994, in which he
claims defendant assigned 50% of the beneficial interest in each trust to him. First Merit
refused to lodge the assignments when plaintiff first presented them in April of 2013, citing the
1
Despite filing an appearance before the circuit court, First Merit Bank did not actively
participate in the proceedings and has not participated in this appeal. We will refer to defendant
Gina Ruggiero as defendant and defendant First Merit Bank as First Merit.
No. 1-14-3151
age of the assignments and noting that a dispute existed between plaintiff and defendant
regarding the validity of the assignments.
¶2 After a bench trial, the circuit court found in plaintiff's favor and entered a declaratory
judgment finding that plaintiff may lodge, and First Merit shall accept, the assignments of
beneficial interest. Defendant presented numerous affirmative defenses to plaintiff's action,
including that the cause of action was barred by the five-year statute of limitation period
provided for in section 13-205 of the Illinois Code of Civil Procedure (Code). 735 ILCS
5/13-205 (West 2012). In rejecting defendant's statute of limitation affirmative defense, the
circuit court found that no events adverse to plaintiff's interests occurred until he attempted to
lodge the assignments of beneficial interest in April of 2013, well within the five-year limitation
period of section 13-205.
¶3 Defendant raises the following issues for our review: (1) whether the circuit court erred in
entering a declaratory judgment against her; (2) whether plaintiff's claims are time-barred
pursuant to section 13-205 of the Code (Id.); (3) whether plaintiff's claims are barred by the
doctrine of res judicata; (4) whether the circuit court should have dismissed plaintiff's claim
pursuant to the doctrine of collateral estoppel; (5) whether the circuit court failed to apply the
doctrine of judicial estoppel; (6) whether plaintiff's evidence of a prior adjudication defeats his
claim; (7) whether the circuit court erred in denying defendant's motion to dismiss pursuant to
section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2012)); and (8) whether the circuit court
erred when it denied defendant's motion for summary judgment. Due to our conclusion in this
matter, however, we only need to address defendant's contention that plaintiff's claim is
time-barred pursuant to the statute of limitations period provided for in section 13-205 of the
Code. 735 ILCS 5/13-205 (West 2012). Accordingly, we hold plaintiff's cause of action in
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this case is time-barred because the evidence at trial showed that plaintiff knew, or at the very
least should have known, of the existence of his injuries outside of the five-year limitation period
provided for in section 13-205 of the Code.
¶4 JURISDICTION
¶5 On October 14, 2014, the circuit court entered a declaratory judgment in plaintiff's favor.
The court reserved ruling on defendant's counterclaims, and, regarding its entry of a declaratory
judgment, found "no just reason for delaying either enforcement or appeal or both" pursuant to
Illinois Supreme Court Rule 304(a). (eff. Feb. 26, 2010) (allowing this court to review
judgments as to fewer than all of the claims or parties when such a finding is made by the circuit
court). On October 15, 2014, defendant timely appealed. Accordingly, we have jurisdiction
pursuant to Illinois Supreme Court Rule 304(a). Id.
¶6 BACKGROUND
¶7 On April 15, 2013, plaintiff filed a verified complaint against defendants. Relevant to
this appeal, plaintiff asked for declaratory relief based on two assignments of beneficial interest
he possessed that he alleged assigned him 50% of the beneficial interest in two Illinois land trusts
that held title to property commonly known as 1349 and 1365 North Wells Street in Chicago,
Illinois. First Merit, as trustee, held title to the properties in the trusts as follows: in trust
number 78-03-2431, created March 16, 1978, it held title to 1349 North Wells Street; and in trust
number 88-03-5438, created March 5, 1988, it held title to 1365 North Wells Street. Plaintiff
alleged that defendant acquired 100% of the beneficial interest to the trusts in 1978 and 1988 "by
virtue of the [p]laintiff providing her and her husband, Angelo Ruggiero, with ownership of said
beneficial interests, in a fiduciary capacity since the [p]laintiff, for reasons well known to the
individual [d]efendant, were not intended to be made permanent." Plaintiff alleged that Angelo
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Ruggiero, in turn, transferred his interest in the trusts to defendant, Angelo's wife. Plaintiff
alleged that the transfer documents, as well as the trust documents creating the trusts, were lost
or misplaced.
¶8 In his complaint, plaintiff further alleged that "[f]rom their inception, [he] paid all the
expenses in connection with the properties held in the said [t]rusts, including the debt service on
the mortgage, real estate taxes, insurance and maintenance and/or improvements to the property."
Plaintiff and defendant own the Festival Theater Corporation which operates the Bijou Theater.
Plaintiff alleged defendant later assigned him 50% of the beneficial interest in the trusts as
consideration for plaintiff's expenditures, maintenance, and expenses related to the properties.
Plaintiff alleged that "[f]or reasons best known to the individual parties *** the [a]ssignments
were not submitted to the [t]rustee for acceptance until April 1, 2013." On that date, plaintiff's
attorney sent the assignments to First Merit for acceptance, which First Merit declined to honor
on April 5, 2013. Plaintiff alleged that "[o]n information and belief *** [defendant] has found
a prospective purchaser for the properties held in said [t]rusts; that she intends to convey the
property to said purchaser without disclosing or recognizing the [his] interest in said properties."
Accordingly, plaintiff asked that the circuit court enter a declaratory judgment pursuant to
section 2-701 of the Code (735 ILCS 5/2-701 (West 2012)) declaring the February 16, 1994,
assignments giving him a 50% beneficial interest in both trusts are valid, have full force and
effect, and were made with adequate consideration. Plaintiff asked that the circuit court direct
and order First Merit to recognize his interest, as well as for damages "as the Court may deem
appropriate."
¶9 In support of his complaint, plaintiff attached the two assignments, a letter from his
attorney to First Merit, and a letter in response from First Merit. The letter from plaintiff's
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attorney indicates that plaintiff attempted to lodge the assignments with First Merit on April 1,
2013. First Merit, however, refused to accept the assignments, stating the assignments "bear a
date from nearly 20 years ago and are the subject of a heated dispute between the original
beneficiary and your client." First Merit did indicate, however, that it would accept the
assignments "[u]pon provision of a court order resolving the legitimacy of the assignment or
consent from the current beneficiary."
¶ 10 The single page assignments of beneficial interest are both dated February 16, 1994, and
with the exception of the name of the individual trust involved, are nearly identical.
Specifically, the first assignment provides as follow:
"For value received I hereby sell, assign, transfer and set over unto
[plaintiff] Fifty (50%) per cent [of] my rights, powers, privileges and beneficial
interest in and under that certain trust agreement dated the 5th day of March ***
1988, and known as the The Midwest Trust Services, Inc. Trust Number
88-03-5438, including all interest of the undersigned in the property held subject
to said trust agreement.
The power of direction under this trust hereafter shall be exercised by
[plaintiff], [defendant]."
¶ 11 The second assignment is nearly identical to the first, except for that the trust listed is
"Trust Number 78-03-2431" and is from March 16, 1978. Defendant signed the assignments,
and plaintiff signed under a section titled "Acceptance." On both assignments, the section titled
"Trustee's Receipt" is blank.
¶ 12 On September 27, 2013, defendant filed a motion to strike and dismiss plaintiff's
complaint pursuant to section 2-619.1 of the Code. 735 ILCS 5/2-619.1 (West 2012).
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Relevant here, defendant sought dismissal of plaintiff's declaratory judgment action pursuant to
the five-year statute of limitations period provided for in section 13-205 of the Code. 735 ILCS
5/13-205 (West 2012). On January 16, 2014, the circuit court denied defendant's motion to
dismiss plaintiff's claim for declaratory relief.
¶ 13 Defendant filed a four-count counterclaim, seeking that her own declaratory judgment be
entered regarding her claim to possess 100% of the beneficial interest in both trusts. Defendant
also alleged slander of title, sought an action for possession, and asked the circuit court to order
an accounting be performed.
¶ 14 On March 7, 2013, defendant filed an answer to the complaint. Relevant here, she
argued, as an affirmative defense, that plaintiff's claim was time-barred pursuant to section
13-205 of the Code. Id.
¶ 15 On May 23, 2014, defendant filed a motion for summary judgment and a motion to
appoint a receiver. On July 3, 2014, the circuit court denied defendant's motion for summary
judgment and ordered that the motion for an appointment of a receiver be taken with the case.
¶ 16 Trial
¶ 17 At trial, plaintiff testified on his own behalf and called defendant, defendant's husband
Angelo Ruggiero, and Roseann Dupass, the vice president and trust officer at First Merit, as
witnesses.
¶ 18 Plaintiff testified that he gained ownership of the property at 1349 North Wells street as a
result of litigation against his business partners in the late 1970s. Angelo Ruggiero, defendant's
husband and a licensed attorney, represented plaintiff in the litigation. In 1983, plaintiff
received 11 subpoenas from the Internal Revenue Service. Angelo advised plaintiff that it
would be in his best interest to transfer some of his interest in the property located at 1349 North
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Wells Street to him. Angelo told plaintiff that in order to protect the property from the
imposition of a tax lien; he should transfer 50% of his beneficial interest in the land trust holding
title to 1349 North Wells Street. Accordingly, plaintiff assigned 50% of the beneficial interest
in the land trust holding title to 1349 North Wells Street to Angelo. Plaintiff successfully
entered into evidence an assignment dated April 4, 1983, which assigned a 50% interest in trust
78-03-2431 to Angelo.
¶ 19 Plaintiff testified that in January or February of 1984, Angelo told him that as his partner
in Festival Theatre Corporation, he would purchase the property located at 1365 North Wells
Street on his behalf because plaintiff could not obtain a mortgage. Plaintiff explained that
"Angelo said, you can't get a mortgage. I could help with you *** later on. I'll purchase the
building. It's your building. I'll purchase it. That's exactly what transpired." Angelo
purchased the building around April 1, 1984.
¶ 20 Plaintiff testified he moved his business into 1365 North Wells Street, where he has
remained since that time. Plaintiff testified that he and Angelo prepared leases for the property,
which "were drawn up for the bank's purposes because they held the mortgage and then they
were - moneys that paid the mortgages came through me." Specifically, they came "[t]hrough
the payments of corporation, tenants of the building."
¶ 21 Regarding the assignments at issue here, plaintiff testified that on February 16, 1994, he
spoke with defendant and Angelo in the kitchen of their home at around eight at night.
According to plaintiff, defendant handed him the assignments, and he observed defendant sign
the assignments. The assignments, however, were not dated, did not indicate the power of
direction, did not acknowledge the collateral assignee, or include his name, address, or social
security number. In 2013, plaintiff added the above information to the assignment, including
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the language indicated that he and defendant possessed the power of direction. Plaintiff
explained that when he went to lodge the assignments in 2013, the trustee, First Merit, refused to
accept them.
¶ 22 Plaintiff testified that Angelo represented him in numerous legal matters, including tax
disputes. He denied owing Angelo fees for his legal work. Plaintiff pled guilty to various tax
charges, and was incarcerated for a period of 18 months. Plaintiff also lost a civil tax case in
the 1990s, in which Angelo was involved in his representation, and was assessed a penalty of "7
or $800,000." The government never collected and did not try to levy his assets. Plaintiff
testified that in 1988, he faced a potential 45-year prison term when Angelo advised him that he
should transfer the remaining 50% beneficial interest in the land trust holding title to 1349 North
Wells Street to him. Plaintiff explained that Angelo told him "if you don’t get out of this alive,
if you don't get out of this, you have lost everything. If you turn the remaining 50% over to me
of what you owe, depending on the conviction, you get convicted, I could sell the assets and I
could set something up for your children." Plaintiff agreed to Angelo's arrangement to transfer
the remaining 50% of his interest in 1349 North Wells Street to Angelo for legal fees. Angelo
then drew up documents giving plaintiff back the property with defendant's signature on it. By
1988, he had given up 100% of the beneficial interest in 1349 North Wells. Plaintiff was also a
party to two divorce proceedings. Plaintiff explained that, based on Angelo's advice, he
testified during the divorce proceedings that he did not have an interest in either trust.
¶ 23 Plaintiff testified that he "sat down in 2006 with Angelo and just said here's money that is
owed us, what have you been doing for the building. Here are all these loans that have been
going on. Number one, I realized I was not in a good situation. I hadn't filed the [assignments
of beneficial interest]." Plaintiff testified that he had other assignments from defendant giving
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him 100% of the beneficial interest in the trusts, but, as a compromise, he was only going
forward on the 1994 assignments giving him a 50% beneficial interest in the trusts.
¶ 24 In 2013, plaintiff had a series of meetings with Angelo and defendant regarding selling
the property. He also had meetings with defendant's children who "indicated to me that the
paper that the [assignments of beneficial interest] was written on was not worth a penny, had no
value whatsoever." The children, however, did not deny the existence of the assignments or
indicate that the signatures were not legitimate.
¶ 25 On cross-examination, defense counsel asked plaintiff if he remembered being sued in a
2000 mortgage foreclosure matter, No. 2000 CH 07074, concerning both trusts, to which he first
responded "I didn't get sued." He later stated that he did not remember being sued. When
shown a document showing that a summons was returned with his name on it, plaintiff answered,
"If it says I got it, I got it." When shown that the return of service was filed on June 2, 2000,
plaintiff responded, "[t]hen I received it then." When asked "[w]ould you agree with me that if
that case were not successfully resolved, that you and your companies could have lost your
interest in the property?" to which he responded, "[e]veryone would have lost their properties,
yes."
¶ 26 Defendant successfully entered into evidence both the mortgage foreclosure summons
and the mortgage foreclosure complaint. The summons, dated May 9, 2000, lists plaintiff as a
defendant. The mortgage foreclosure complaint indicated that it was filed on May 9, 2000,
against the following defendants: Angelo Ruggiero; defendant; Midwest Bank and Trust
Company, as Trustee under Trust Agreement dated March 16, 1978 and known as Trust No.
78-032431; Midwest Bank and Trust Company, as Trustee under Trust Agreement dated March
5, 1988, and known as Trust No. 88-03-5438; plaintiff; Festival Theatre Corp.; Images of the
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World, Ltd.; unknown owners and non-record claimants. The mortgages and the notes are
attached to the complaint, and are dated June 22, 1999. The amount of original indebtedness
secured by each mortgage is listed as $725,000. The complaint lists the trusts as mortgagors
but Angelo and defendant as personally liable for a deficiency because they signed the notes
securing the mortgages. The mortgages were signed by the trustee.
¶ 27 Plaintiff also admitted that "between 2004, 2005" he learned about a new mortgage taken
out by defendant in 2003. He was "[a]nnoyed" by the mortgage. He explained, "I expressed
to them that I was annoyed. If you're going to take out a loan, why don't you come to me, why
don't you talk to me. Restructure it differently, instead of putting everything on mortgages and
keep paying a large sum of money over a long period of time. It's much easier way to pay back
loans than do that."
¶ 28 On redirect examination, plaintiff's counsel brought up the foreclosure action in the
following exchange:
"Q. what happened to the foreclosure action which is
defense exhibit Number 30?
A. I don't know because I wasn't involved in that. I must
have received it. I was not brought into the case.
After - when I looked at the document, my questioning was at a
certain point in time that the money was put into the account, so I
have no idea what happened to the money from that account or
whether there should be a foreclosure at that point in time."
Q. Were the properties foreclosed upon?
A. No, they were not."
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¶ 29 Defendant testified that plaintiff had been to her home five or six times and that he went
to her daughter's wedding. When asked whether the signatures on the February 16, 1994,
assignments were hers, she responded "I don't know. It looks like my signature, but, again, I
don't know." Defendant could not remember if plaintiff came to her home on February 16,
1994. She denied assigning any interest in the trusts to plaintiff, stating they were gifts from
her husband that she would never give to plaintiff. On cross-examination, she testified she is
not actively involved in the management of the buildings and Angelo did not tell her about his
clients. She both denied that the alleged February 16, 1994, meeting occurred and testified that
she could not remember if plaintiff came to her home on that date.
¶ 30 Roseann Dupass testified she worked at First Merit. In 2013, plaintiff presented her
with an assignment. The assignment, however, had "nothing filled in other than [plaintiff's]
signature." She informed plaintiff that all parties had to sign the document. Plaintiff later
brought her a signed assignment, but defendant's family had informed her that they disputed the
assignments. She testified that the blank assignment had defendant's signature on it.
¶ 31 Angelo Ruggiero, defendant's husband, testified that he represented plaintiff, who he
described as both a friend and a client, in a 1975 dispute. As a result of a settlement, plaintiff
received the real estate commonly known as 1349 Wells Street, $150,000 worth of film, and a
property in Indianapolis. Angelo placed the real estate at 1349 Wells Street in a land trust with
plaintiff owning 100% of the beneficial interest. Angelo denied meeting with plaintiff on
February 16, 1994. Subsequently, plaintiff assigned him half of the beneficial interest in the
property at 1349 Wells Street, half of the Indianapolis property, and half of $150,000 worth of
film. Angelo testified he bought the property located at 1365 North Wells Street himself.
Angelo testified that as a tenant, plaintiff's lease provided that he pay all mortgages, taxes, and
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maintenance. Angelo denied that he ever advised plaintiff to conceal his ownership interest in
the trusts. Angelo admitted that 10 years prior to trial, he had been suspended from the practice
of law for one year.
¶ 32 At the close of evidence, defendant moved for judgment as a matter of law. Relevant
here, defendant argued that plaintiff's claim was barred by the statute of limitations. The court
denied the motion, finding the statute of limitations did not run until First Merit refused to lodge
the assignments.
¶ 33 Defendant presented testimony from plaintiff, and her son Michael Ruggiero. During
defendant's case, plaintiff testified that he never tried to lodge the 1994 assignments at issue
"[b]ecause [he] never thought of it." He later testified both that he never thought "it was
necessary," and that he had an agreement with defendant and her husband. Regarding the
foreclosure action, plaintiff testified that "I got served with something, and then it went back to
Angelo, and he took care of it. No money was paid into those mortgages. What he did with the
money I don't know." He explained that "the Ruggieros *** were taking care of the problem."
In response to questioning from the court, plaintiff admitted that he knew about the mortgages
and he knew that he did not sign the mortgages. When the court asked if "the Ruggieros ha[d]
your permission to take out the mortgages," plaintiff answered, "[n]ot to refinance them, no."
He clarified that he and Angelo took out the original mortgage. Regarding the refinancing, he
testified he "was not privy to any information until 2004." He later testified that he did not file
his 1994 assignments because "I didn't feel I had to. I had it. I felt comfortable with it. I
didn't file it until I felt threatened, and that was now."
¶ 34 Michael Ruggiero testified he met with plaintiff who showed him blank assignment
forms.
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¶ 35 The circuit court found plaintiff to be a more credible witness than defendant and her
husband as to what occurred with the assignments of beneficial interest. Specifically, plaintiff's
testimony "matched better" with his documented divorce and tax litigation than the defendant's
claims regarding legal fees. The circuit court found defendant to be incredible. The court
found that it was her signature on the assignments, and noted that she did not dispute the validity
of her signature. Regarding the statute of limitations defense, the court found that it did "not
think that anything adverse to [plaintiff's] purported interest occurred until he tried to lodge the
assignments, the trustee refused and the Ruggieros apparently instructed the trustee not to accept
the assignments."
¶ 36 On October 14, 2014, the circuit court entered its judgment order finding in favor of
plaintiff and against defendant and First Merit. The court entered a declaratory judgment
finding that plaintiff may lodge the assignments of beneficial interest dated February 16, 1994,
and that First Merit shall permit the lodging. Pursuant to Illinois Supreme Court Rule 304(a),
the court found no just reason to delay enforcement or appeal of its declaratory judgment.
¶ 37 ANALYSIS
¶ 38 Defendant argues that plaintiff's claim for declaratory relief is barred by section 13-205
of the Code (735 ILCS 5/13-205 (West 2012)) because plaintiff knew, or should of known, of his
claim more than five years before he filed the present action in April of 2013. According to
defendant, plaintiff's cause of action can be characterized as either an action regarding personal
property or "civil actions not otherwise provided for" under section 13-205 of the Code. Id.
Defendant points to the following facts in the record in support of her argument: plaintiff was a
defendant in a 2000 mortgage foreclosure action; plaintiff testified he learned in 2004 that
defendant placed a mortgage on the property; and plaintiff met with defendant's husband in 2006
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in attempt to reconcile the parties' disagreement over the ownership of the property.
Accordingly, defendant argues that the five-year limitation period of section 13-205 of the Code
bars plaintiff's cause of action for declaratory relief. Id.
¶ 39 In response, plaintiff argues that any statute of limitation here could only begin to run
against him when he attempted to lodge the assignments of beneficial interest in the trusts with
the trustee in 2013, a time within the statute of limitations. Plaintiff disputes the relevance of
the 2000 mortgage foreclosure proceeding against him, arguing that no harm fell upon him, he
was only named in the proceedings because he resided at the property, and the mortgages at issue
were subsequently reinstated. Plaintiff stresses that defendant failed to cite any authority that
would require him to lodge his assignments of beneficial interest within a certain time frame.
In distinguishing authority relied upon by defendant, plaintiff maintains that "[t]he case at bar
involved neither tort issues [n]or breach of contract issues."
¶ 40 An Illinois land trust is a "unique" type of trust "created by the Illinois bar, with the aid
and acceptance of the Illinois bench, in the nineteenth and early twentieth centuries." Stable
Investments Partnership v. Vilsack, 775 F.3d 910, 912 (7th Cir. 2015). Land trust agreements
are widely used in real estate transactions and allow for both secrecy of ownership and ease of
transferability. People v. Chicago Title & Trust Co., 75 Ill. 2d 479, 488 (1979). Under such
an agreement, the true ownership of the land in question remains with the beneficiary despite the
trustee holding both legal and equitable title. Podvinec v. Popov, 168 Ill. 2d 130, 137 (1995).
A trustee of an Illinois land trust acts only as a representative of the beneficiary, and only when
directed to do so by the beneficiary, for the beneficiary's benefit. Id. Therefore, "[o]utside of
relationships based on legal title, the trustee's title has little significance." Id.
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¶ 41 It is well-established that a beneficiary of an Illinois land trust possesses an interest in
personal, not real property. In re Estate of Alpert, 95 Ill. 2d 377, 382 (1983). Therefore, "[a]n
assignment of a beneficial interest does not give the assignee a direct interest in the realty res of
the trust." Id. Outside of holding title, however, the beneficiary exercises and manages all
rights of ownership. 23-25 Building Partnership v. Testa Produce, Inc., 381 Ill. App. 3d 751,
755 (2008). Specifically, "[t]he 'owner of a beneficial interest in a land trust is accorded four
basic powers: (1) to possess, manage and physically control the real estate; (2) to receive all
income generated by the property; (3) to direct the trustee in dealing with title to the real estate;
and (4) to receive the proceeds of any sale of the property made pursuant to the power of
direction.' " LaSalle National Bank v. 53rd-Ellis Currency Exchange, Inc., 249 Ill. App. 3d
415, 429-430 (1993) (quoting Patrick v. Village Management, 129 Ill. App. 3d 936, 939 (1984)).
¶ 42 Statutes of limitation “discourage the presentation of stale claims and *** encourage
diligence in the bringing of actions.” Sundance Homes, Inc. v. County of Du Page, 195 Ill. 2d
257, 265-66 (2001). They “represent society’s recognition that predictability and finality are
desirable, indeed indispensible, elements of the orderly administration of justice.” Id. at 266.
A defendant, therefore, may invoke a particular statute of limitations as an affirmative defense to
a cause of action. John Doe A. v. Diocese of Dallas, 234 Ill. 2d 393, 413 (2009). The
appropriate statute of limitations to apply to a cause of action "is determined by the nature of the
plaintiff's injury rather than the nature of the facts from which the claim arises." Id. Stated
differently, the nature of the liability determines the appropriate statute of limitations.
Travelers Casualty & Surety Co. v. Bowman, 229 Ill. 2d 461, 469 (2008). Accordingly, we
must “look behind the allegations in a complaint to discover the true character of plaintiffs’
cause of action.” Armstrong v. Guigler, 174 Ill. 2d 281, 290 (1996). Therefore, type of injury,
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and not the pleader’s designation of the nature of the action, controls our determination. Id. at
286.
¶ 43 Illinois courts "have held that a statute of limitation begins to run when the party to be
barred has the right to invoke the aid of the court to enforce his remedy." Sundance Homes,
Inc., 195 Ill. 2d at 266. "Stated another way, a limitation period begins 'when facts exist which
authorize one party to maintain an action against another.' " Id. (quoting Davis v. Munie, 235 Ill.
620, 622 (1908)). Under the discovery rule, however, the commencement of the applicable
statute of limitations is delayed “ ‘until the plaintiff knows or reasonably should know that he has
been injured and that his injury was wrongfully caused.’ ” Hermitage Corp. v. Contractors
Adjustment Co., 166 Ill. 2d 72, 77 (1995) (quoting Jackson Jordan, Inc. v. Leydig Voit & Mayer,
158 Ill. 2d 240, 249 (1994). When a plaintiff knows, or should know, such information, "the
statute begins to run and the party is under an obligation to inquire further to determine whether
an actionable wrong was committed." (Internal quotation marks omitted.) Id. at 86. The
discovery rule developed in order to avoid harsh results due to the literal application of statutes
of limitation. Id. at 77. Whether a statute of limitations applies to a cause of action is a legal
question subject to de novo review. Travelers Casualty & Surety Co., 229 Ill. 2d at 466.
¶ 44 In this matter, plaintiff filed a declaratory judgment action pursuant to section 2-701 of
the Code, which allows the circuit court to, “in cases of actual controversy, make binding
declarations of rights, having the force of final judgments.” 735 ILCS 5/2-701 (West 2012).
“The essential requirements of a declaratory judgment action are: (1) a plaintiff with a legal
tangible interest; (2) a defendant having an opposing interest; and (3) an actual controversy
between the parties concerning such interests.” Beahringer v. Page, 204 Ill. 2d 363, 372
(2003). Section 2-701 “is strictly remedial” and “does not create substantive rights or duties,
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but merely affords a new, additional, and cumulative procedural method for the judicial
determination of the parties’ rights.” Id. at 373. Its purpose “is to allow the court to address a
controversy one step sooner than normal after a dispute has arisen, but before the parties take
steps that would give rise to a claim for damages or other relief.” Universal Underwriters
Insurance Co. v. Judge & James, Ltd., 372 Ill. App. 3d 372, 379 (2007). Plaintiff, therefore,
alleged that defendants’ failure to recognize his interest in the trusts “causes [him] irreparable
damage.” Accordingly, he asked the circuit court to declare that the February 16, 1994,
assignments giving him a 50% beneficial interest in each trust “are valid, are in full force and
effect and were made for a full and adequate consideration.” He further asked the court to order
First Merit to recognize his interest and for damages "as the Court may deem appropriate."
¶ 45 In response, defendant invoked section 13-205 of the Code as an affirmative defense to
plaintiff’s declaratory judgment action. 735 ILCS 5/13-205 (West 2012). Section 13-205
provides, in relevant part, that "actions on unwritten contracts, expressed or implied, or on
awards of arbitration, or to recover damages for an injury done to property, real or personal, or
to recover the possession of personal property or damages for the detention or conversion
thereof, and all civil actions not otherwise provided for, shall be commenced within 5 years next
after the cause of action accrued." (Emphasis added.) Id. Specifically, defendant argued that
plaintiff's action is barred because it is an action for personal property and because it is a civil
action "not otherwise provided for" as stated in section 13-205. Id.
¶ 46 Initially, we hold that section 13-205 of the Code is the appropriate statute of limitations
to apply in this matter based on the nature of plaintiff's alleged injury in this case. The nature
of plaintiff's alleged injury is that defendant's actions prevented him from receiving the benefits
of owning a percentage of the beneficial interests in the land trusts at issue here. As a
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beneficiary of the land trusts, plaintiff would be entitled to: " '(1) to possess, manage and
physically control the real estate; (2) to receive all income generated by the property; (3) to direct
the trustee in dealing with title to the real estate; and (4) to receive the proceeds of any sale of the
property made pursuant to the power of direction.' " LaSalle National Bank., 249 Ill. App. 3d at
429-30 (quoting Patrick,129 Ill. App. 3d at 939). Furthermore, plaintiff's beneficial interest is
personal property. In re Estate of Alpert, 95 Ill. 2d at 382. The evidence in the record shows
that defendant and her husband directed the trustee to enter into mortgage agreements, and later,
they attempted to sell the property. These actions infringe upon plaintiff's personal property
rights as an owner of 50% of the beneficial interest in the trusts because plaintiff's ownership
rights would allow him to share the power of direction with defendant in determining how to
direct the trustee actions regarding the mortgage agreements and potential sale of the properties.
Furthermore, the end result of both actions would be that plaintiff, as a beneficiary, would be
entitled to a percentage of either the mortgage proceeds or the proceeds of sale. Section 13-205
of the Code provides for a five-year statute of limitations in "actions *** to recover damages for
injury done to property, real or personal, or to recover possession of personal property or
damages for the detention or conversion thereof." 735 ILCS 5/13-205 (West 2012).
Accordingly, we hold that section 13-205 of the Code is the appropriate statute of limitations to
apply here based on the nature of plaintiff's alleged injury.
¶ 47 Applying section 13-205 of the Code to the evidence presented at trial, we hold that
plaintiff's claim for declaratory relief is barred because he knew, or at the very least should have
known, of the existence of his cause of action outside of the five-year limitation period. Id.
According to the assignments of beneficial interest possessed by plaintiff, he had a 50%
beneficial interest in both trusts, with a shared power of direction with defendant, since February
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No. 1-14-3151
16, 1994. He filed his complaint for declaratory relief in this matter in April of 2013. The
evidence at trial showed that in 2000, plaintiff was served as a defendant in a mortgage
foreclosure action based on mortgages entered into by the trustee with promissory notes signed
by defendant and her husband. Although plaintiff's testimony regarding the foreclosure suit
was initially evasive, he later admitted that he "got served with something." The foreclosure
suit threatened his ownership interest and put him on notice that defendant had directed the
trustee to enter into mortgages secured by the properties held in the trusts. Absent from the
record is any indication that plaintiff received any of the proceeds from the mortgages, despite
his ownership interest in the proceeds of the trust. Furthermore, it shows that plaintiff could
easily have filed his present declaratory action in 2000 in order to secure his share of any
potential proceeds from the impending foreclosure sale.
¶ 48 Regardless of the 2000 foreclosure suit, plaintiff provided further testimony showing that
he knew, or should have known, that his ownership interest in the land trusts were threatened by
defendant's actions outside of the five-year limitation period of section 13-205 of the Code. Id.
First, plaintiff testified that "between 2004, 2005" he learned about a new mortgage taken out by
defendant in 2003. This "[a]nnoyed" him. He testified that "I expressed to them that I was
annoyed. If you're going to take out a loan, why don't you come to me, why don't you talk to me.
Restructure it differently, instead of putting everything on mortgages and keep paying a large
sum of money over a long period of time. It's much easier way to pay back loans than do that."
As plaintiff's testimony shows, defendant's actions in taking out a mortgage in 2003 infringed
upon his ownership rights because plaintiff, as owner of 50% of the beneficial interest in both
trusts, had 50% of the power to direct the trustee to enter into the 2003 mortgage and had the
right to a portion of the proceeds of the mortgage. Most importantly for our purposes here,
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No. 1-14-3151
plaintiff knew of this information in a time period outside of the five-year statute of limitations
provided for in section 13-205 of the Code. Id.
¶ 49 Additionally, defendant testified at trial that in 2006, he met with defendant's husband
regarding the property. Plaintiff explained that he "sat down in 2006 with Angelo and just said
here's money that is owed us, what have you been doing for the building. Here are all these
loans that have been going on. Number one, I realized I was not in a good situation. I hadn't
filed the [assignments of beneficial interest]." Accordingly, the above testimony shows that
plaintiff knew as early as 2006, another time period outside of the five-year limitation period
provided for in section 13-205 of the Code, that he "was not in a good situation" because he had
not lodged the assignments of beneficial interest. Plaintiff's testimony regarding the time
period of 2004 to 2006 show that he knew, or should have known of his injury and its cause.
Therefore, he had an obligation of inquiring further into the situation. See Hermitage Corp.,
166 Ill. 2d at 86 ("We hold, therefore, that when a party knows or reasonably should know both
that an injury has occurred and that it was wrongfully caused, the statute begins to run and the
party is under an obligation to inquire further to determine whether an actionable wrong was
committed." (Internal quotation marks omitted.)). Plaintiff, however, did not do so.
Accordingly, his cause of action is barred pursuant to section 13-205 of the Code. 735 ILCS
5/13-205 (West 2012).
¶ 50 We disagree with plaintiff's contention, and the circuit court's finding, that the statute of
limitations did not begin to run until plaintiff attempted to lodge the assignments of beneficial
interest in 2013. The nature of a land trust agreement is that the trustee acts only when directed
to do so by the beneficiary and for the benefit of the beneficiary. Podvinec, 168 Ill. 2d at 137.
Accordingly, the trustee in this matter did not accept the assignment based on the dispute
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No. 1-14-3151
between the parties, as shown by Roseann Dupass's testimony. Plaintiff's theory of the case is
that defendant assigned him the beneficial interests on February 16, 1994. Based on the
assignments, plaintiff and defendant agreed that they would each have 50% of the beneficial
interest in each trust. In a dispute regarding ownership rights of beneficial interest holders, the
relevant parties are the beneficial interest holders, not the trustee who is merely a representative
of the beneficiaries. See Id. ("Outside of relationships based on legal title, the trustee's title has
little significance."). Therefore, the relevant parties to this dispute, plaintiff and defendant,
were allegedly in agreement in regard to sharing the power of direction of the trusts since 1994.
The 1994 assignment would then give the parties equal say in how to direct the trustee to act. It
follows that plaintiff was put on notice in 2000, and then later in 2004 or 2005, that defendant
was not sharing the power of direction when she entered into mortgages secured by the property.
Plaintiff testified further that, in 2006, he "realized [he] was not in a good situation" because he
had not lodged the assignments. A statute of limitations begins to run "when the party to be
barred has the right to invoke the aid of the court to enforce his remedy." Sundance Homes,
Inc., 195 Ill. 2d at 266. Plaintiff could have filed a similar declaratory judgment action in 2000,
or in 2004 or 2005, or even in 2006, to assert his ownership rights, but did not do so. As
previously discussed, the appropriate statute of limitations is determined by the nature of the
liability. Travelers Casualty & Surety Co., 229 Ill. 2d at 469. In this matter, the nature of the
liability is not that the trustee refused to accept the assignments. Rather, the nature of the
liability is that defendant's actions are not consistent with the parties alleged 1994 agreement to
each receive a 50% beneficial interest in the land trusts. That beneficial interest, in turn, would
give plaintiff a 50% interest in the powers and ownership rights accorded to the beneficiary of an
Illinois land trust.
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No. 1-14-3151
¶ 51 In conclusion, we stress that we do not intend this decision to be interpreted as placing a
time limitation for the lodging of assignments of beneficial interests in Illinois land trusts. We
hold that, under the facts of this case, and the nature of plaintiff's injury here, plaintiff knew, or
should have known of his injury outside the statute of limitations provided for in section 13-205
of the Code. 735 ILCS 5/13-205 (West 2012). The circuit court concluded that plaintiff had
indeed met his burden of proof regarding his right to a 50% beneficial interest in the property,
but the court's analysis could not end there. The statute of limitations as applied to the facts had
to be a factor in the court's analysis. Furthermore, although the circuit court clearly believed
that plaintiff had the better part of the argument and that defendant actively sought to take
plaintiff's 50% beneficial interest unjustly, we must accept the facts as we find them.
Specifically, in this case, regardless of the chicanery by defendant, plaintiff had many
opportunities to meet the statutory obligations in order to protect his interest and yet he failed to
do so within the time allowed by section 13-205 of the Code. Id. Indeed, defendant admits as
much and put the circuit court on notice by filing an affirmative defense. In short, the
defendant's affirmative defense essentially says, even if plaintiff had the 50% beneficial interest
that he claims, he has forfeited that interest. Understandably, the circuit court found this unjust
and sought to give plaintiff his rightful share. Accordingly, defendant's affirmative defense
presented sufficient evidence supporting our holding that plaintiff, knew, or at the very least
should have known, of his injury outside of the statute of limitations.
¶ 52 CONCLUSION
¶ 53 The judgment of the circuit court of Cook County is reversed, and the cause is remanded.
¶ 54 Reversed and remanded.
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REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
STEVEN TOUSHIN,
Plaintiff-Appellee,
v.
GINA RUGGIERO,
Defendant-Appellant,
(First Merit Bank, a National Banking Institution,
Trustee Under Trust Numbers 78-03-2431 and 88-03-5438,
Defendant)
No. 1-14-3151
Appellate Court of Illinois
First District, First Division
August 3, 2015
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Delort and Justice Cunningham concurred in the judgment and opinion.
Appeal from the Circuit Court of Cook County.
The Honorable Mary L. Mikva, Judge Presiding.
Torshen, Slobig, Genden, Dragutinovich and Axel, Ltd., 105 West Adams Street, Suite 3200,
Chicago, IL 60603, (Robert J. Slobig, of counsel), for APPELLANT.
Goldwater & Associates, 30 North La Salle Street, Suite 3200, Chicago, IL 60602,
(Ben Goldwater, of counsel), for APPELLEE.