Chicago Dist. Council v. Fritzshall

Annotate this Case
FIRST DIVISION
March 30, 1998

No. 1-97-0835

CHICAGO DISTRICT COUNCIL OF CARPENTERS
WELFARE FUND,

Plaintiff-Appellant,

v.

GLEASON & FRITZSHALL, RICK A. GLEASON,
and STEVEN N. FRITZSHALL,

Defendants-Appellees. )
)
)
)
)
)
)
)
)
)
) Appeal from the
Circuit Court of
Cook County

Honorable
David G.
Lichtenstein,
Judge Presiding.

JUSTICE O'BRIEN delivered the opinion of the court:
On November 1, 1993, plaintiff, the Chicago District Council
of Carpenters Welfare Fund, filed a complaint alleging that
defendants, Gleason & Fritzshall, Rick A. Gleason, and Steven N.
Fritzshall, had converted a check made payable to both plaintiff
and defendants. Plaintiff also sought punitive damages in
connection with defendants' alleged conversion of the check. On
March 17, 1994, the trial court entered an order striking the
prayer for punitive damages. On October 29, 1996, the court
granted summary judgment for defendants on plaintiff's conversion
action. Plaintiff appeals. We reverse both orders and remand for
further proceedings.
The Chicago District Council of Carpenters Welfare Fund
(Welfare Fund) is a self-funded employee welfare benefit plan
created by the Chicago and Northeast Illinois District Council of
Carpenters to provide health and medical care benefits to
participating members. During the time period of this case, Joseph
Klimas was a member of the Welfare Fund. In May 1990, Klimas was
injured in an automobile accident, and he later submitted a claim
to the Welfare Fund for payment of medical expenses incurred as a
result of the accident. The Welfare Fund made the requested
payments on Klimas' behalf.
On September 13, 1990, Klimas signed a reimbursement agreement
stating that he would reimburse the Welfare Fund "for all benefits
so paid in the event of recovery, from any third person legally
responsible for said injuries, whether by suit, settlement, or
otherwise, to the extent the net amount of such recovery is
attributable to hospital, surgical, medical, dental and vision
expenses for which [he] received benefits from [the Welfare Fund.]"
Klimas retained the law offices of Gleason & Fritzshall to
represent him in a personal injury action against Joseph Walski,
the driver of the vehicle that struck him. Rick A. Gleason was the
attorney responsible for the day-to-day handling of Klimas'
personal injury claim. In December 1991, Gleason settled Klimas'
claim for $50,000.
On December 9, 1991, Walski's insurance carrier issued a check
for $50,000 payable to "Joseph Klimas and his Attorney Fritzshall
& Gleason & Blue Cross Blue Shield Company and Carpenters Welfare
Fund." Klimas endorsed the check. Defendant Steven Fritzshall,
Gleason's law partner, wrote under Klimas' endorsement: "Blue
Cross Blue Shield Company Carpenters Welfare fund by Perry Bronson
their agent." (Perry Bronson was the Welfare Fund's benefits
coordinator.) Beneath that endorsement, Gleason wrote:
"Fritzshall & Gleason Payable to Gleason & Fritzshall account #22-
6460-4 by Rick A. Gleason, partner."
Shortly thereafter, Gleason deposited the endorsed check in a
client trust account at the LaSalle National Bank of Chicago and
transferred $16,701.66 to Gleason & Fritzshall's own account for
payment of their fees and outstanding expenses. Gleason then sent
Klimas a check in the amount of $16,631.67 as payment for his share
of the settlement. The remainder was left in the trust account.
On or about September 18, 1992, the Welfare Fund's plan
administrator, Blue Cross and Blue Shield, wrote Gleason
complaining that it had not received payment for its lien on
Klimas' personal injury claim. In October 1992, Gleason tendered
a check in the amount of $13,491.67, which Gleason explained
represented the Welfare Fund's pro-rata share of the $50,000
settlement. The Welfare Fund refused to accept the $13,491.67
check as payment of the amount owed, contending instead that
Gleason should pay it the entire $50,000 settlement, plus interest.
On November 1, 1993, the Welfare Fund filed this conversion
action, claiming that, without its knowledge or consent, defendants
forged Perry Bronson's signature on the settlement check and cashed
the check based on the forged signature. The complaint prayed for
compensatory damages in the full amount of the check, which the
Welfare Fund claimed was less than the amount owed it under the
reimbursement agreement, and punitive damages.
The trial court struck the prayer for punitive damages and
granted defendants' motion for summary judgment on the conversion
action. The Welfare Fund (hereinafter plaintiff) appeals.
First, we examine whether the trial court erred in granting
defendants' motion for summary judgment. Then, we examine whether
the trial court erred in striking plaintiff's prayer for punitive
damages.
Summary judgment is appropriate when the pleadings, together
with any depositions, admissions or affidavits on file, demonstrate
no genuine issues of material fact exist and that the movant is
entitled to judgment as a matter of law. 735 ILCS 5/2-1005 (West
1992); City of Chicago Heights v. Crotty, 287 Ill. App. 3d 883, 885
(1997). Plaintiff argues that the trial court erred in granting
summary judgment because factual questions exist regarding whether
defendants converted the check at issue. Defendants argue they
were entitled to summary judgment as a matter of law because
plaintiff cannot state a cause of action for conversion. See In re
Estate of Albergo, 275 Ill. App 3d 439, 446 (1995) ("[i]f a
plaintiff fails to establish an element of the cause of action,
then summary judgment for the defendant is proper").
To state a cause of action for conversion, plaintiff must
allege (1) defendant's unauthorized and wrongful assumption of
control, dominion or ownership over plaintiff's personal property;
(2) plaintiff's right in the property; (3) plaintiff's right to
immediate possession of the property, absolutely and
unconditionally; and (4) plaintiff's demand for possession of the
property. Roderick Development Investment Co. v. Community Bank,
282 Ill. App. 3d 1052, 1057 (1996).
Defendants argue that since the $50,000 check was made payable
to them, as well as to plaintiff, they had as much right as
plaintiff to possession of the check and to the funds the check
represented. Therefore, defendants contend that plaintiff cannot
establish they engaged in unauthorized and wrongful assumption of
ownership or control over the check. We disagree.
In Crahe v. Mercantile Trust & Savings Bank, 295 Ill. 375
(1920), Olga Crahe obtained a judgment against the Chicago Surface
Lines for $1000. Her attorney, J. Marion Miller, settled the
judgment for $750 and costs and took in payment of the same a check
for $761.85. Crahe, 295 Ill. at 376. The check was made out as
follows: "Pay to the order of Olga A. Crahe, judgment creditor,
and order of J. Marion Miller, attorney for judgment creditor."
Crahe, 295 Ill. at 376. Miller endorsed Olga's name, as well as
his own, on the back of the check. Crahe, 295 Ill. at 376.
Later, the Mercantile Trust and Savings Bank, the drawee of the
check, paid it. Crahe, 295 Ill. at 376.
Crahe brought a conversion action against Mercantile Trust,
alleging the endorsement of her name was a forgery. Crahe, 295 Ill. at 376. Following a bench trial, the court entered judgment
for Mercantile Trust. Our supreme court reversed, holding that
where an instrument is payable to the order of two or more persons,
all must endorse unless the one endorsing has the authority to
endorse for the others. Crahe, 295 Ill. at 377. The court held
that the liability of Mercantile Trust to Crahe for her share of
the proceeds of the check was not affected by the fact that her
attorney also had an interest in the proceeds of the check, where
he had no authority to endorse Crahe's name. Crahe, 295 Ill. at
377.
In Hoffman v. First National Bank, 299 Ill. App. 290 (1939),
J.H. Kraemer & Son delivered to Abe Symons a $4,804.75 check made
payable to Abe and his ex-wife, Rae Hoffman. Rae's signature was
later forged on the back of the check, which was deposited in the
predecessor bank to the First National Bank of Chicago. Hoffman,
299 Ill. App. at 291-92. Rae subsequently sued First National for
conversion. The trial court dismissed Rae's complaint.
The appellate court reversed. Citing Crahe, the court held
that First National was liable to Rae for her share of the proceeds
of the check. Hoffman, 299 Ill. App. at 295-96. The court
remanded the cause to the trial court, since "the question of fact
as to [Rae's] interest in the check must be made an issue so that
she may have an opportunity to prove what interest *** she had in
the check which was payable jointly to her and her exhusband, Abe
Symons." Hoffman, 299 Ill. App. at 296.
Thus, Crahe and Hoffman hold that where a check is made out to
plaintiff and defendant and defendant forges plaintiff's
endorsement, plaintiff is entitled to a trial on the question of
his interest in the check. In the present case, the parties
dispute whether defendants had the authority to endorse Perry
Bronson's name to the $50,000 check. Given this issue of material
fact, as well as the holdings of Crahe and Hoffman, the court
should have denied the motion for summary judgment and allowed the
cause to proceed to trial.
Defendants argue, though, that since the $50,000 check was
also made payable to defendants, plaintiff cannot establish it had
the absolute and unconditional right to immediate possession of the
check, as required to state a conversion cause of action. In
support, defendants cite General Motors Corp. v. Douglass, 206 Ill.
App. 3d 881 (1990). In Douglass, General Motors filed a complaint
alleging that in May 1984, it issued a check payable to Douglass
Chevrolet, among others, for $50,201.24. Douglass, 206 Ill. App.
3d at 882. Jack Douglass, in his capacity as president of Douglass
Chevrolet, endorsed the check and deposited it at the First
National Bank of Hinsdale. Douglass, 206 Ill. App. 3d at 883.
General Motors subsequently learned that it had overpaid Douglass
Chevrolet by $37,364.36. General Motors charged that, by endorsing
and negotiating the check, Douglass converted $37,364.36 to his own
use. Douglass, 206 Ill. App. 3d at 883. The trial court granted
summary judgment for General Motors and against Douglass.
Douglass, 206 Ill. App. 3d at 885.
The appellate court reversed, holding that since Douglass
Chevrolet was the payee of the $37,364.36 check, Jack Douglass, as
president of Douglass Chevrolet, was entitled to possession of the
check. Douglass, 206 Ill. App. 3d at 887. Thus, General Motors'
immediate right of possession as against Douglass was lacking, and
accordingly General Motors failed to establish that Douglass had
committed an act of conversion by endorsing and negotiating the
check. Douglass, 206 Ill. App. 3d at 887.
Douglass is inapposite to the present case, since it did not
involve an action by the named payee of a check or an allegedly
forged endorsement. Crahe and Hoffman are more closely on point,
and as discussed above, their holdings require us to reverse the
trial court's order granting summary judgment for defendants.
Defendants also argue that plaintiff has a right only to an
indeterminate sum of money, and therefore its conversion action
cannot be maintained. In support, defendants cite MidAmerica Fire
& Marine Insurance Co. v. Middleton, 127 Ill. App. 3d 887 (1984),
and Sutherland v. O'Malley, 882 F.2d 1196 (7th Cir. 1989).
In Middleton, the plaintiff's insureds were killed in a car
accident. Plaintiff paid $6,000 each under the respective
liability insurance policies to the decedents' daughter as the
administrator of her parents' estates. Middleton, 127 Ill. App. 3d
at 889. At the time the administrator accepted the $12,000 in
insurance proceeds, she signed a release agreeing to reimburse
plaintiff out of the proceeds of any wrongful death recovery, less
the reasonable costs incurred in effecting the recovery.
Middleton, 127 Ill. App. 3d at 889.
The administrator brought a wrongful death action and retained
defendants to represent her. The wrongful death action was settled
for $30,000, with the settlement check made payable to the
administrator and the defendants. Middleton, 127 Ill. App. 3d at
890. A dispute arose between plaintiff and defendants as to the
share of the proceeds to which each was entitled. Middleton, 127
Ill. App. 3d at 890. Plaintiff subsequently brought a conversion
action against defendants. Following a bench trial, the court
ruled in favor of plaintiff. Middleton, 127 Ill. App. 3d at 890-
91.
The appellate court reversed, holding that plaintiff must
identify a specific fund or specific money in coin or bills as the
property that was wrongfully taken and converted. Middleton, 127
Ill. App. 3d at 892. The court noted that pursuant to the release
signed by the administrator, plaintiff had a right to reimbursement
from any settlement growing out of the wrongful death actions.
However, according to the release, that reimbursement was to be
reduced by plaintiff's "proportionate share of all reasonable costs
incurred in effecting said recovery." Middleton, 127 Ill. App. 3d
at 892. Thus, the court determined that plaintiff had a right only
to an indeterminate sum of money, and therefore it could not sense
recover for conversion. Middleton, 127 Ill. App. 3d at 892.
In Sutherland, two attorneys, Sutherland and O'Malley, agreed
to serve as co-counsel in the representation of one of Sutherland's
clients. They arranged to split the attorney fees "on a fifty-
fifty basis or [by some] other equitable arrangement based on the
degree of effort [of each attorney.]" Sutherland, 882 F.2d at
1198. A $127,000 settlement was obtained, resulting in attorney
fees of $50,800. Sutherland, 882 F.2d at 1198. O'Malley caused
the settlement payments to be sent to him and deposited the $50,800
in his firm's client fund account. Sutherland, 882 F.2d at 1198.
O'Malley informed Sutherland about the settlement and told her that
his handling of the case had been so time-consuming that "division
of attorney's fees would have to be based upon fundamental fairness
and equity." Sutherland, 882 F.2d at 1198. Sutherland brought an
action for conversion. The trial court granted summary judgment
for O'Malley and the appellate court affirmed. The appeals court
held that because Sutherland had a claim only for an indeterminate
amount of the attorney fees, she could not make a claim for a
specific identifiable fund that was wrongly converted. Sutherland,
882 F.2d at 1201.
In the present case, the reimbursement agreement signed by
Klimas entitles plaintiff to reimbursement from the $50,000
settlement check. However, according to the agreement, that
reimbursement is only for the "net amount *** such recovery is
attributable to hospital, surgical, medical, dental and vision
expenses for which [Klimas] received benefits from [plaintiff.]"
The settlement did not identify which part of the $50,000 was for
hospital, surgical, medical, dental, or vision expenses.
Therefore, defendants argue that, as in Middleton, plaintiff has a
right only to an indeterminate sum of money, and accordingly its
conversion claim cannot stand.
Defendants also argue that, as in Sutherland, their
contingency fee contract entitled them to some portion of the
settlement check. Therefore, since plaintiff has a right only to
an indeterminate amount of the check, it cannot make a claim for a
specific identifiable fund capable of being the subject of a
conversion.
We disagree. In Roderick Development Investment Co. v.
Community Bank, 282 Ill. App. 3d 1052 (1996), plaintiff had a 5%
interest in certain payments made to defendant. When defendant
refused to recognize plaintiff's interest and kept his money for
itself, plaintiff brought a conversion cause of action. Defendant
claimed the conversion action could not lie because the sum
allegedly converted was indeterminate since it was alleged only as
a percentage. Roderick, 282 Ill. App. 3d at 1062. The appellate
court disagreed, holding that money may be identified by its source
or description. Roderick, 282 Ill. App. 3d at 1063. The court
determined that the allegedly converted funds were adequately
identified by description, 5% of the final payment under the
purchase agreement, and their source, the payment transferred to
defendant. Roderick, 282 Ill. App. 3d at 1063.
Similarly, in the present case, the allegedly converted funds
were adequately described by their source, the $50,000 check made
in settlement for Klimas' cause of action against Gleason, and by
description, that amount attributable to hospital, surgical,
medical, dental, and vision expenses for which Klimas received
benefits from plaintiff. The issue of how much of the check is
attributable to those expenses is a question of material fact that
must be resolved by a jury. Accordingly, the trial court erred by
granting summary judgment for defendants on plaintiff's conversion
cause of action.
Defendants further argue that plaintiff's claim to the
$50,000 settlement check is premised on the debt Mr. Klimas owes
plaintiff for the medical expenses it paid on his behalf.
Defendants argue that a conversion action will not lie for money
owing on such a general debt or obligation. In support, defendants
cite In re Thebus, 108 Ill. 2d 255, 261 (1985). In Thebus,
respondent withheld funds from his employees' wages to pay their
Federal income taxes and their contributions under the Federal
Insurance Contributions Act (26 U.S.C. 3101 et seq. (1976)), but
he failed to remit the withheld funds to the Internal Revenue
Service (IRS). Thebus, 108 Ill. 2d at 257. Our supreme court held
that respondent had not converted his employees' funds. One of the
reasons the court gave for its holding was that respondent was
under an obligation to remit to the IRS the amount of money
withheld as taxes, which obligation was in the nature of a debt
and, thus, not a specific identifiable fund capable of being the
subject of a conversion. Thebus, 108 Ill. 2d at 262. However, as
noted above and in contrast to Thebus, plaintiff here has
specifically identified the funds converted. See Marc Development,
Inc. v. Wolin, 904 F. Supp. 777, 794 n. 9 (N.D. Ill. 1995) ("where
the money withheld to fulfill a debt is specific and identifiable,
*** a conversion claim based on a debt is actionable"). Thus,
Thebus is inapposite to the present case.
Defendants also argue that the trial court properly granted
summary judgment in their favor because the $50,000 check did not
at all times belong to plaintiff. See Thebus, 108 Ill. 2d at 261
("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"). We disagree, as plaintiff pleaded
that, pursuant to the reimbursement agreement signed by Klimas, it
at all times had the sole right to the portion of the settlement
check representing the hospital, surgical, medical, dental and
vision expenses which plaintiff paid on Klimas' behalf. Plaintiff
also pleaded that defendant converted the check by forging
plaintiff's endorsement thereto. The question of what interest, if
any, plaintiff actually had in the check, and whether defendants
forged plaintiff's endorsement and converted the check, are factual
questions inappropriate for resolution on a summary judgment
motion.
Next, we address whether the trial court erred in striking
plaintiff's claim for punitive damages pursuant to section 2-1115
of the Code of Civil Procedure. Section 2-1115 provides in
pertinent part:

"In all cases, whether in tort, contract or
otherwise, in which the plaintiff seeks damages by
reason of legal *** malpractice, no punitive,
exemplary, vindictive or aggravated damages shall
be allowed." 735 ILCS 5/2-1115 (West 1994).
Thus, section 2-1115's prohibition of punitive damages is
applicable only if the behavior alleged in the complaint amounts to
legal malpractice. Cripe v. Leiter, 291 Ill. App. 3d 155, 158
(1997).
Here, no attorney-client relationship existed between
plaintiff and defendants, and therefore the behavior alleged in
plaintiff's complaint did not amount to legal malpractice. See
Cripe, 291 Ill. App. 3d at 158 (the existence of an attorney-client
relationship is necessary to state a cause of action for legal
malpractice). Accordingly, section 2-1115 did not bar plaintiff
from seeking punitive damages, and the trial court erred when it
granted defendants' motion to strike.
For the foregoing reasons, we reverse the trial court's orders
granting summary judgment for defendants on plaintiff's conversion
cause of action and striking plaintiff's prayer for punitive
damages. We remand for further proceedings.
Reversed and remanded.
BUCKLEY, P.J., and GALLAGHER, J., concur.

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