Quan v. Arcotech Uniexpat, Inc.

2018 IL App (1st) 180227FIRST DIVISION
December 10, 2018
No. 1-18-0227
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
WEI QUAN, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County
)
v. )
) No. 16 L 8545
ARCOTECH UNIEXPAT, INC., an Involuntarily )
Dissolved Illinois Corporation, Merged With Arcotech )
Uniexpat, LLC, d/b/a InternshipDesk, and CRAIG )
PIATTI, ) The Honorable
) Diane M. Shelly,
Defendants-Appellees. ) Judge Presiding.
JUSTICE PIERCE delivered the judgment of the court, with opinion.
Justices Griffin and Walker concurred in the judgment and opinion.
OPINION
¶1 Plaintiff Wei Quan sued defendants, Arcotech Uniexpat, Inc. (Arcotech) and Craig Piatti,
after defendants failed to issue plaintiff a refund for services. Relevant to this appeal, the circuit
court granted Piatti’s motion to dismiss plaintiff’s conversion claim pursuant to section 2­
619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2016)). Plaintiff
appeals. For the reasons that follow, we reverse the judgment of the circuit court and remand for
further proceedings.
No. 1-18-0227
¶2 BACKGROUND
¶3 For the purposes of this appeal, we accept as true all the well-pleaded facts in plaintiff’s
complaint and draw all reasonable inferences in his favor. Edelman, Combs & Latturner v.
Hinshaw & Culbertson, 338 Ill. App. 3d 156, 164 (2003).
¶4 In August 2014, plaintiff moved from China to pursue an undergraduate degree in civil
and environmental engineering at the University of Illinois Urbana-Champaign. He enlisted the
help of InternshipDesk, an assumed name of Arcotech, to secure an internship within his field of
study for the summer of 2015. On October 5, 2014, plaintiff executed a written service
agreement in which Arcotech guaranteed that it would secure a paid internship offer in plaintiff’s
chosen field of study in the city of Chicago, along with a weekly stipend. Plaintiff agreed to pay
a total of $7250. On October 5, 2014, plaintiff paid a $1000 nonrefundable deposit to secure his
place in Arcotech’s program. Plaintiff paid the remaining balance within 30 days of the
execution of the service agreement. The service agreement sets forth Arcotech’s refund policy,
which provides in relevant part, “If for any reason InternshipDesk is unable to secure the
participant an internship offer in their field by the start of the program, $1000 of the program
tuition is non-refundable.” Piatti executed the service agreement on behalf of InternshipDesk in
his capacity as executive director.
¶5 On June 1, 2015, Piatti sent an e-mail informing plaintiff that “[i]t’s not looking too
positive.” Plaintiff then sought the services of a different internship placement company. On
June 5, 2015, plaintiff e-mailed defendants and requested a refund. Defendants provided plaintiff
with a refund agreement that stated that a $6250 refund would be processed within 120 days of
the execution of the refund agreement. Plaintiff provided all the information required, and he
signed and returned the refund agreement on June 17, 2015. Defendants failed to authorize the
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refund within 120 days. In November 2015, defendants requested plaintiff’s banking information
to process the refund. Plaintiff again provided the requested information. Defendants never
remitted the $6250 refund to plaintiff. On May 13, 2016, Arcotech was involuntarily dissolved
by the Illinois Secretary of State, as Arcotech had failed to pay its annual report fee and franchise
tax.
¶6 Plaintiff initiated this action on August 29, 2016, by filing a five-count initial complaint.
He asserted claims under the Consumer Fraud and Deceptive Business Practices Act (Consumer
Fraud Act) (815 ILCS 505/1 et seq. (West 2016)) against Arcotech and Piatti (counts I and II,
respectively), and for breach of contract against Arcotech and Piatti (counts IV and V,
respectively). Plaintiff also asserted a claim of conversion against Piatti (count III). Plaintiff’s
conversion claim alleged that plaintiff was entitled to immediate possession of the $6250 no later
than October 15, 2015, and that Piatti never authorized the refund despite plaintiff’s demand.
Plaintiff alleged that it was within Piatti’s power as president of Arcotech and the executive
director of InternshipDesk to authorize the refund, and that by failing to remit the funds, Piatti
“maintained wrongful control of funds owed to [plaintiff] in the refund amount of [$6250].”
Plaintiff alleged that Piatti “actively participated in the authorized deprivation of [$6250]
rightfully belonging to [plaintiff].” With respect to the conversion claim, plaintiff sought
compensatory damages, punitive damages, court costs, and prejudgment interest.
¶7 Defendants moved to dismiss counts I, II, III, and V of the initial complaint pursuant to
section 2-619(a)(9) of the Code. Relevant to issues before us on appeal, defendants argued that
the conversion claim in count III should be dismissed because the $6250 was in the nature of a
general obligation or debt, and “the funds tendered by [plaintiff] were not subject to any special
designation, were never promised to be so held, were in fact not so held[,] and therefore cannot
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be a proper subject of conversion under applicable Illinois law.” The motion to dismiss was fully
briefed. On March 17, 2017, the circuit court granted the motion to dismiss counts I, II, III, but
denied the motion as to count V. The circuit court subsequently granted plaintiff leave to file an
amended complaint.
¶8 The amended complaint again asserted claims under the Consumer Fraud Act against
Arcotech and Piatti (counts I and II, respectively), a conversion claim against Piatti (count III),
breach of contract claims against Arcotech and Piatti (counts IV and V respectively), and added
an additional claim of common law fraud against Piatti (count VI). Plaintiff specifically
repleaded count III in order to preserve his claim for appellate review. Defendants moved to
dismiss counts I, II, III, V, and VI of the amended complaint pursuant to section 2-619(a)(9) of
the Code, which the circuit court granted with prejudice. The circuit court transferred count IV of
the amended complaint—the breach of contract claim against Arcotech—from the law division
to the first municipal division based on the amount in controversy. Plaintiff then moved for
summary judgment on his breach of contract claim against Arcotech. On January 8, 2018, the
circuit court granted summary judgment in favor of plaintiff on his breach of contract claim
against Arcotech in the amount of $6250. Plaintiff filed a timely notice of appeal from the circuit
court’s orders dismissing his conversion claim against Piatti set forth in count III of the initial
and amended complaints.
¶9 ANALYSIS
¶ 10 On appeal, plaintiff argues that the circuit court erred by dismissing his conversion claim
against Piatti pursuant to section 2-619 of the Code. Plaintiff argues that, in addition to alleging
facts to support each element of a conversion claim, his claim was not barred by any affirmative
matter. Specifically, he argues that the $6250 was a “specific identifiable fund capable of
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sustaining a conversion action.” He argues that the $6250 is not in the nature of a general
obligation or debt because no creditor-debtor relationship exists between him and Piatti, since
plaintiff paid money to Arcotech, not Piatti. Plaintiff further argues that if this court reverses the
circuit court’s dismissal of his conversion claim, we should remand to the circuit court with
instructions to transfer this case to the law division as opposed to the first municipal division.
¶ 11 We review de novo a circuit court’s ruling on a motion to dismiss. Lyons v. Ryan, 201 Ill.
2d 529, 534 (2002). A motion to dismiss under section 2-619 of the Code admits the legal
sufficiency of the complaint and asserts an affirmative matter outside the pleading that avoids the
legal effect of or defeats the claim. Relf v. Shatayeva, 2013 IL 114925, ¶ 20. In ruling on a
section 2-619 motion, we accept as true all well-pleaded facts in plaintiff’s complaint and draw
all reasonable inferences in plaintiff’s favor. Hermitage Corp. v. Contractors Adjustment Co.,
166 Ill. 2d 72, 85 (1995). An affirmative matter in a section 2-619(a)(9) motion is a defense that
negates the cause of action completely or refutes conclusions of law or conclusions of fact
contained in the complaint that are unsupported by allegations of specific fact upon which the
conclusions rest. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 486 (1994). The affirmative
matter must be apparent on the face of the complaint or supported by affidavits or other
evidentiary materials. Epstein v. Chicago Board of Education, 178 Ill. 2d 370, 383 (1997). The
defendant bears the initial burden of establishing that the affirmative matter defeats the plaintiff’s
claim; if the defendant satisfies the burden, the burden shifts to the plaintiff to demonstrate that
the defense is unfounded or requires the resolution of a material fact. Doe v. University of
Chicago Medical Center, 2015 IL App (1st) 133735, ¶ 37.
¶ 12 Conversion is any unauthorized act that deprives a person of their property permanently
or for an indefinite amount of time. In re Thebus, 108 Ill. 2d 255, 259 (1985). “The essence of
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conversion is the wrongful deprivation of one who has a right to the immediate possession of the
object unlawfully held.” (Internal quotation marks omitted.) Roderick Development Investment
Co. v. Community Bank of Edgewater, 282 Ill. App. 3d 1052, 1057 (1996) (citing In re Thebus,
108 Ill. 2d at 259). In order to state a claim for conversion, a plaintiff must allege (1) the
defendant’s unauthorized and wrongful assumption of control, dominion, or ownership over the
plaintiff’s personal property, (2) the plaintiff’s right in the property, (3) the plaintiff’s right to
immediate possession of the property, absolutely and unconditionally, and (4) the plaintiff’s
demand for possession of the property. General Motors Corp. v. Douglass, 206 Ill. App. 3d 881,
886 (1990). “Money may be the subject of conversion, but it must be capable of being described
as a specific chattel, although it is not necessary for purposes of identification that money should
be specifically earmarked.” In re Thebus, 108 Ill. 2d at 260. “[T]he general rule is that
conversion will not lie for money represented by a general debt or obligation. It must be shown
that the money claimed, or its equivalent, at all times belonged to the plaintiff and that the
defendant converted it to his own use.” Id. at 261.
¶ 13 Here, the allegations in count III of plaintiff’s initial and amended complaint stated a
claim for conversion against Piatti. Plaintiff alleged that (1) Piatti, in his role as president of
Arcotech, agreed to refund the $6250 within 120 days of the date on which plaintiff submitted a
written refund request; (2) by refusing to authorize the refund, Piatti maintained wrongful control
over the $6250; (3) plaintiff had a right of immediate possession of the $6250 after the 120-day
period lapsed and that his right was absolute and unconditional; and (4) plaintiff made a demand
for the money, which was never honored. Plaintiff further alleged that Piatti was liable for
conversion because Piatti “actively participated in the unauthorized deprivation of $6,250.00
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rightfully belonging to” plaintiff. These factual allegations are sufficient to state a conversion
claim against Piatti.
¶ 14 We next turn to the issue before us on appeal and find that Piatti’s motion to dismiss did
not identify any affirmative matter that, if true, would negate plaintiff’s conversion claim. Piatti
relies on In re Thebus and Eggert v. Weisz, 839 F.2d 1261 (7th Cir. 1988) to argue that the $6250
was in the nature of a general debt or obligation because plaintiff “cannot identify a specific fund
or money and therefore there is simply a debt rather than an action for conversion.” Additionally,
in the circuit court, Piatti argued that the $6250 was “[p]laintiff’s payment for the services to be
rendered by Arcotech” and was “no more than a payment received from a customer and thus not
a proper subject of a conversion action.” Piatti also relies on two nonbinding federal district court
decisions, 3Com Corp. v. Electronic Recovery Specialists, Inc., 104 F. Supp. 2d 932 (N.D. Ill.
2000) and Rasmussen v. Sports Media Sales, Inc., 691 F. Supp. 153 (N.D. Ill. 1988), to argue
that the $6250 was “not segregated in any account or otherwise earmarked or kept as distinct,”
and was thus not the proper subject of a conversion action.
¶ 15 We rejected similar arguments in Roderick. There, the defendant bank received monthly
payments from the purchaser of an apartment building, and the bank was to distribute 5% of the
monthly payments to the plaintiff. When the purchaser made a final lump sum payment to pay
off the balance of the purchase agreement, the bank refused to distribute 5% of the lump sum
payment to the plaintiff. The plaintiff sued the defendant bank for conversion. The circuit court
dismissed the complaint pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West 1992))
and the plaintiff appealed. We reversed. In defense of the circuit court’s judgment, the bank
argued that “an action for conversion may not be maintained for a mere failure to pay money
unless it is capable of being described as a specific chattel.” Roderick, 282 Ill. App. 3d at 1058.
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In addressing this argument, we examined our supreme court’s decision in In re Thebus, an
attorney discipline case, in which the court held that an attorney had not been shown to have
converted government funds by failing to remit federal withholdings to the federal government
that the attorney withheld from his employees’ paychecks. In re Thebus, 108 Ill. 2d at 264. The
supreme court examined the nature of the funds withheld and determined that the funds
represented a general debt or obligation rather than an identifiable fund. Id. at 262. In Roderick,
however, we determined that the plaintiff’s 5% interest in the trust was an identifiable fund
because the amount was easily determined. Roderick, 282 Ill. App. 3d at 1059. The same is true
here. There is no dispute that plaintiff demanded a refund of $6250, as that amount was
specifically refundable under the original service agreement, and that defendants never refunded
that amount. Furthermore, we believe that the $6250 was not merely a debt or general obligation
to pay money. Plaintiff did not have any contract with Piatti individually because the service
agreement was between plaintiff and Arcotech. In other words, Piatti never had any individual
debt or obligation to plaintiff, and thus no debtor-creditor relationship existed between plaintiff
and Piatti. The thrust of plaintiff’s complaint is that Piatti exercised unauthorized control over
money legally due plaintiff and kept that money for himself when he refused to authorize
Arcotech to refund the money due plaintiff.
¶ 16 Furthermore, there is no requirement in Illinois that, in order to be the proper subject of a
conversion action, identifiable funds must be earmarked or kept segregated from other money. In
In re Thebus, our supreme court specifically observed that a fund need not be earmarked in order
to be specifically identifiable for the purposes of a conversion action. In re Thebus, 108 Ill. 2d at
260. In Roderick, we held that, for the purposes of a conversion action, money need not be
segregated from other funds. Roderick, 282 Ill. App. 3d at 1062-63. And as we observed in
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Roderick, a rule prohibiting a conversion claim for funds that are not segregated would give the
converter the ability to control whether funds are subject to a conversion claim. Id. at 1063. In
Illinois, it is sufficient that the money be adequately identified by description, which is
undoubtedly the case here. Furthermore, the nonbinding federal district court cases on which
Piatti relies for a contrary rule we view as persuasive authority only, and we believe that those
decisions place too much emphasis on the segregation of funds element. Piatti’s reliance on those
cases is particularly misplaced here, where the money can easily be identified as a fixed sum.
¶ 17 Finally, Piatti argues that corporate officers are generally not liable for corporate
obligations and that “there is nothing put forth by [plaintiff] that would justify a finding that
[Piatti] individually acted in any conversion.” That is a matter of proof, and should not be
decided on a motion to dismiss. Plaintiff’s complaint asserted that Piatti wrongfully exercised
control over the $6250, which is enough to survive a motion to dismiss. Whether plaintiff can
ultimately prove that allegation is yet to be determined.
¶ 18 In sum, we conclude that Piatti failed to identify any affirmative matter that would negate
plaintiff’s conversion claim. The circuit court erred by dismissing count III of plaintiff’s
complaint pursuant to section 2-619 of the Code. We therefore reverse the judgment of the
circuit court as to count III and remand for further proceedings. Although plaintiff requests a
remand to the law division because he seeks punitive damages, we note that punitive damages
are also available in proceedings in the first municipal division. We express no opinion as to
whether count III of plaintiff’s claim belongs in the law division or first municipal division of the
circuit court. We therefore remand this matter to the presiding judge of the law division for
assignment and further proceedings consistent with this decision.
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¶ 19 CONCLUSION
¶ 20 For the foregoing reasons, the judgment of the circuit court is reversed, and we remand
this matter to the presiding judge of the law division to determine which division of the circuit
court should hear plaintiff’s conversion claim.
¶ 21 Reversed and remanded with directions.
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