O'Banner v. McDonald's Corporation

NOTICE: Under Supreme Court Rule 367 a party has 21 days after the filing of
the opinion to request a rehearing. Also, opinions are subject to
modification, correction or withdrawal at anytime prior to issuance of the
mandate by the Clerk of the Court. Therefore, because the following slip
opinion is being made available prior to the Court's final action in this
matter, it cannot be considered the final decision of the Court. The official
copy of the following opinion will be published by the Supreme Court's
Reporter of Decisions in the Official Reports advance sheets following final
action by the Court.


Docket No. 79547--Agenda 11--January 1996.
REGINALD O'BANNER, Appellee, v. McDONALD'S CORPORATION et al. (McDonald's
Corporation, Appellant).

Opinion filed May 31, 1996.

JUSTICE HARRISON delivered the opinion of the court:
Reginald O'Banner brought an action in the circuit court of Cook County
to recover damages for personal injuries he allegedly sustained when he
slipped and fell in the bathroom of a McDonald's restaurant. In his
complaint, O'Banner named as defendants McDonald's Corporation (McDonald's)
and certain "unknown owners." See 735 ILCS 5/2--413 (West 1994). McDonald's
promptly moved for summary judgment on the grounds that the restaurant was
actually owned by one of its franchisees and that it neither owned, operated,
maintained, nor controlled the facility.
After initially denying McDonald's motion, the circuit court granted
summary judgment in favor of the company and made an express written finding
that there was no just reason to delay an appeal. 155 Ill. 2d R. 304(a). The
appellate court subsequently reversed and remanded, with one justice
dissenting. 273 Ill. App. 3d 588. We granted McDonald's petition for leave to
appeal (155 Ill. 2d R. 315) and have allowed Amoco Oil Company, Burger King,
the Illinois Association of Defense Trial Counsel and the Illinois Trial
Lawyers Association to file briefs as friends of the court (155 Ill. 2d R.
345). For the reasons that follow, we now reverse and remand to the circuit
court.
Before addressing the substantive issues before us, we note, as did the
appellate court, that there has been some confusion as to the basis for
appellate review. The appellate court realized that the circuit court had
entered a written finding under Rule 304(a) (155 Ill. 2d R. 304(a)), which
governs final judgments as to fewer than all parties or claims, but it did
not understand the purpose for such a finding. It believed that appellate
jurisdiction was proper only under Rule 301 (155 Ill. 2d R. 301), which
pertains to final judgments that dispose of an entire proceeding.
What the appellate court overlooked was that McDonald's was not the only
defendant named in O'Banner's complaint. As we have previously indicated,
O'Banner named "unknown owners" as well. The "unknown owners" were not
involved in McDonald's motion for summary judgment, and the circuit court's
order granting McDonald's motion did not affect the continued viability of
O'Banner's claims against these remaining defendants. Accordingly, the
circuit court's order did not dispose of the entire proceeding and an appeal
could not have been brought under Rule 301. Because summary judgment was
granted to fewer than all of the defendants, the only basis for an immediate
appeal was under Rule 304(a). McDonald's itself clearly appreciated this, for
its summary judgment motions consistently included a request for entry of the
requisite Rule 304(a) findings.
Although O'Banner's notice of appeal invoked Rule 301 rather than Rule
304(a), that mistake is of no consequence. Nothing in our rules requires a
notice of appeal to even mention whether review is sought under Rule 301 or
304(a). What is important is that the notice specify "the judgment or part
thereof or other orders appealed from and the relief sought from the
reviewing court" (155 Ill. 2d R. 303(b)(2)) so that the successful party is
advised of the nature of the appeal (see Burtell v. First Charter Service
Corp., 76 Ill. 2d 427, 433-34 (1979)). There is no question that this
requirement was satisfied here. Accordingly, O'Banner's citation to the wrong
rule was nothing more than harmless surplusage. His notice of appeal was
sufficient to invoke the appellate court's jurisdiction.
The substantive issue before the appellate court, and the question which
concerns us today, is whether the circuit court erred in granting McDonald's
motion for summary judgment. Under section 2--1005(c) of the Code of Civil
Procedure (735 ILCS 5/2--1005(c) (West 1994)), a party is entitled to summary
judgment
"if the pleadings, depositions, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to
judgment as a matter of law."
In applying this statute, the court must construe the pleadings, depositions
and affidavits strictly against the moving party and liberally in favor of
the opponent. Although use of the summary judgment procedure can be an
efficient means for disposing of certain lawsuits, it is a drastic measure
that should be employed only when the right of the moving party is clear and
free from doubt. Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263, 271 (1992).
The circuit court here entered summary judgment in favor of McDonald's
based on the company's argument that it was merely the franchisor of the
restaurant where O'Banner was injured and, as such, had no responsibility for
the conditions that caused his accident. O'Banner challenged this conclusion
in the appellate court by theorizing that even though McDonald's was a
franchisor, it could nevertheless be held liable for the franchisee's
negligence under principles of respondeat superior because there was
sufficient evidence in the record to establish that the franchisee served as
McDonald's actual agent. In the alternative, O'Banner contended that
McDonald's could be vicariously liable for the acts and omissions of the
franchisee based on the doctrine of apparent agency.
The appellate court rejected the actual agency theory based on the
documentary evidence, but held that there remained genuine issues of material
fact with respect to O'Banner's alternative theory of apparent agency.
Accordingly, it reversed and remanded for further proceedings. One justice
dissented, arguing that reliance on apparent agency was improper because the
theory was not properly raised in the circuit court and there was no factual
basis for it in the record. 273 Ill. App. 3d at 596-97 (Rakowski, J.,
dissenting). The dissenting justice further protested that the majority's
analysis was not supported by precedent from Illinois or elsewhere. 273 Ill.
App. 3d at 598-99 (Rakowski, J., dissenting).
In the appeal before this court, the issue of actual agency has not been
pursued. The sole question before us is whether the appellate court erred in
reversing and remanding based on the theory of apparent agency. Although the
dissenting appellate court justice believed that the question of apparent
agency was not properly before the court for review, resolution of that issue
is unnecessary. Even if O'Banner had properly raised the theory of apparent
agency in the circuit court, summary judgment against him was nevertheless
proper.
Apparent agency, also known in Illinois as apparent authority, has long
been recognized in this state and was recently discussed by our court in
Gilbert v. Sycamore Municipal Hospital, 156 Ill. 2d 511 (1993). The doctrine
is based on principles of estoppel. The idea is that if a principal creates
the appearance that someone is his agent, he should not then be permitted to
deny the agency if an innocent third party reasonably relies on the apparent
agency and is harmed as a result. Gilbert, 156 Ill. 2d at 523-24.
Under the doctrine, a principal can be held vicariously liable in tort
for injury caused by the negligent acts of his apparent agent if the injury
would not have occurred but for the injured party's justifiable reliance on
the apparent agency. Gilbert, 156 Ill. 2d at 523-24. The fundamental obstacle
to O'Banner's recovery in this case concerns this element of reliance. Even
if one concedes that McDonald's advertising and other conduct could entice a
person to enter a McDonald's restaurant in the belief it was dealing with an
agent of the corporation itself, that is not sufficient. In order to recover
on an apparent agency theory, O'Banner would have to show that he actually
did rely on the apparent agency in going to the restaurant where he was
allegedly injured. See, e.g., Miller v. Sinclair Refining Co., 268 F.2d 114,
118 (5th Cir. 1959) (apparent agency theory rejected in affirming directed
verdict for Sinclair Oil because there was absolutely no evidence as to the
reason why appellant patronized filling station where he was injured).
No amount of liberal construction can alter the fact that the record
before us is devoid of anything remotely suggesting that the necessary
reliance was present here. The pleadings and affidavit submitted by O'Banner
in the circuit court state only that he slipped and fell in the restroom of
a McDonald's restaurant. They give no indication as to why he went to the
restaurant in the first place. The fact that this was a McDonald's may have
been completely irrelevant to his decision. For all we know, O'Banner went
there simply because it provided the closest bathroom when he needed one or
because some friend asked to meet him there.
If O'Banner had any basis to support his position, he was obliged to
present it to the circuit court. He did not do so, and the time for
substantiating any claim of reliance has passed. The appellate court was
therefore wrong to reverse the circuit court's entry of summary judgment in
McDonald's favor based on the apparent agency doctrine.
For the foregoing reasons, the judgment of the appellate court is
reversed, the judgment of the circuit court is affirmed, and the cause is
remanded to the circuit court for further proceedings consistent with this
opinion.

Appellate court judgment reversed;
circuit court judgment affirmed;
cause remanded.

CHIEF JUSTICE BILANDIC, dissenting:
I respectfully dissent from the majority's conclusion that summary
judgment against Reginald O'Banner was proper. The majority opinion holds
that the record is "devoid" of any facts suggesting that O'Banner relied on
an apparent agency in going to the McDonald's restaurant where he was
allegedly injured. Judges' proof at 9-10. I disagree with the majority's
assessment of the record.
In addressing the issue of whether summary judgment was properly entered
against O'Banner, we must keep in mind that summary judgment is a drastic
remedy. In re Estate of Hoover, 155 Ill. 2d 402, 410 (1993). A court should
only grant summary judgment when the resolution of a case hinges on a
question of law and the moving party's right to judgment is clear and free
from doubt. Hoover, 155 Ill. 2d at 410; Colvin v. Hobart Brothers, 156 Ill. 2d 166, 169-70 (1993). If the court finds that the record contains any
genuine issue of material fact, it should deny the motion for summary
judgment. Because of the severity of the summary judgment remedy, the court
has a duty to construe the record strictly against the movant and liberally
in favor of the nonmoving party. Hoover, 155 Ill. 2d at 411; Colvin, 156 Ill. 2d at 170. When construing the record, the court may draw inferences from the
undisputed facts. Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263, 272 (1992); Pyne v. Witmer, 129 Ill. 2d 351, 358 (1989).
Applying these principles to the case at bar, summary judgment should
not have been granted in McDonald's Corporation's favor. When the record is
viewed liberally in favor of O'Banner and strictly against McDonald's
Corporation, there remains a genuine issue of material fact concerning the
existence of an apparent agency relationship between McDonald's Corporation
and its franchisee, who operated the restaurant where O'Banner was allegedly
injured.
The apparent agency doctrine recognizes that a "principal will be bound
not only by that authority which he actually gives to another, but also by
the authority which he appears to give." Gilbert v. Sycamore Municipal
Hospital, 156 Ill. 2d 511, 523 (1993). In other words, if the principal
creates the appearance that someone is his agent, the principal will not then
be permitted to deny the agency where an innocent third party has relied on
it and has been harmed as a result. Gilbert, 156 Ill. 2d at 524.
This court recently applied the apparent agency doctrine in a tort case
in the context of a hospital setting in Gilbert v. Sycamore Municipal
Hospital, 156 Ill. 2d 511 (1993). There, a patient suffered a heart attack
after being treated and released by a physician at a hospital emergency room.
The patient sued the hospital for negligence, and the trial court granted the
hospital summary judgment on the theory that the hospital could not be held
vicariously liable because the emergency room physician was an independent
contractor, not an actual agent of the hospital. This court reversed the
grant of summary judgment in the hospital's favor, finding that a genuine
issue of material fact remained as to whether the physician was an apparent
agent of the hospital. Gilbert, 156 Ill. 2d at 526.
Similarly, the apparent agency doctrine can and should be applied in a
franchisor-franchisee setting. See Shaffer v. Maier, 68 Ohio 3d 416, 627 N.E.2d 986 (1994); Watson v. Howard Johnson Franchise Systems, Inc., 216 Ga.
App. 237, 453 S.E.2d 758 (1995); Parker v. Domino's Pizza, Inc., 629 So. 2d 1026 (Fla. App. 1993); Gizzi v. Texaco, Inc., 437 F.2d 308 (3d Cir. 1971);
Crinkley v. Holiday Inns, Inc., 844 F.2d 156 (4th Cir. 1988). For a
franchisor to be vicariously liable for the acts of its franchisee under the
apparent agency doctrine, a plaintiff must show that: (1) the franchisor has
represented or permitted it to be represented that the party dealing directly
with the plaintiff is its agent; and (2) the plaintiff, acting in justifiable
reliance on such representations of the franchisor, has dealt with the agent
to the detriment of the plaintiff. Crinkley, 844 F.2d at 166; see Gilbert,
156 Ill. 2d at 525. The first element is satisfied where the franchisor holds
itself out as the provider of certain goods and services without informing
the patron that the goods and services are provided by another, whom it
considers to be a nonagent, such as a franchisee. The element of justifiable
reliance is satisfied if the plaintiff relies on the franchisor to provide
the goods and services, rather than on the franchisee.
In the present case, the record contains facts from which it may
reasonably be inferred that McDonald's Corporation holds itself out as being
the entity responsible for the operation of McDonald's restaurants.
McDonald's Corporation's wide, national advertising and its reach into
virtually every aspect of its franchisee's business make a patron's
assumption that McDonald's Corporation runs McDonald's restaurants natural.
These facts can be gleaned from the license agreement, which is contained in
the record. The license agreement states: "McDonald's Corporation *** has
developed and operates a restaurant system (`McDonald's System'). *** The
McDonald's System is operated and is advertised widely within the United
States of America." The license agreement further reveals that McDonald's
Corporation strives, through its contractual agreements, to ensure that it
alone controls how the public perceives its restaurants. McDonald's
Corporation's "system" is described as being "comprehensive," the foundation
of which is the franchisee's adherence to McDonald's Corporation's "standards
and policies" "providing for the uniform operation of all McDonald's
restaurants within the McDonald's system." This includes requiring the
franchisee to serve only designated food and beverage products; to use only
prescribed equipment and building layout and designs; to have all employees
wear McDonald's Corporation's uniforms; to train management personnel at
McDonald's Corporation's "Hamburger University"; and to adhere strictly to
McDonald's Corporation's prescribed standards of "Quality, Service and
Cleanliness" in the franchisee's restaurant operation. The McDonald's
Corporation's national advertising also promotes its "system" without
distinguishing between company-owned and franchised properties. Pursuant to
this national advertising, the public is presented with an identical menu,
brand names and promotional offers in all McDonald's Corporation's
restaurants. Given these facts, a jury could reasonably conclude that
McDonald's Corporation acted in such a way as to create the appearance that
it owned and operated the McDonald's restaurant at which the plaintiff was
allegedly injured.
The second element is whether O'Banner justifiably acted in reliance on
McDonald's Corporation's representations in going to the McDonald's
restaurant where he was allegedly injured. The majority opinion finds that
the record provides no indication as to why O'Banner went to the McDonald's
restaurant in the first place. Judges' proof at 10. I disagree with this
finding. O'Banner's reasons are readily inferable from the record. In his
response to McDonald's Corporation's motion for summary judgment, O'Banner
stated that he was a business invitee of a McDonald's restaurant. And in his
attached affidavit, he averred: "Upon information and belief, the executed
license agreement *** contains language which establishes that *** McDonald's
Corporation maintained control in the operation of the franchise and over the
daily procedures and business" of the McDonald's restaurant. As I noted above
in my discussion of the holding-out element, the license agreement shows a
great deal of control by McDonald's Corporation over the franchisee's
operation of the restaurant at issue. It further details how McDonald's
Corporation nationally advertises its "comprehensive" and "uniform"
restaurant "system" to the public as, inter alia, a "clean, wholesome
atmosphere." From these facts, a jury may infer that the public perception is
that a McDonald's restaurant is what it proclaims to be and not "ABC," the
franchisee's restaurant. Thus, when O'Banner's reply and affidavit are
considered along with the license agreement, there remains a genuine issue of
material fact as to whether O'Banner justifiably acted in reliance on the
franchisee's apparent authority in entering the McDonald's restaurant.
After considering the record liberally in favor of O'Banner, I find that
it presents a genuine issue of material fact as to whether McDonald's
Corporation could be vicariously liable for the acts of its franchisee based
on the doctrine of apparent agency. O'Banner is thus entitled to his day in
court to resolve this factual controversy.
As a final matter, McDonald's Corporation contends that O'Banner waived
the issue of apparent agency because he did not plead it. This waiver
argument fails. In his complaint, O'Banner alleged that McDonald's
Corporation "was doing business in Illinois and owning or leasing, operating,
maintaining and/or controlling" the McDonald's restaurant at issue. These
allegations are sufficient to plead an agency relationship. See Gilbert, 156 Ill. 2d at 527. I further find that McDonald's Corporation's position is
disingenuous in this regard. In its motion for reconsideration, McDonald's
Corporation itself acknowledged that O'Banner was seeking to hold it liable
based on an apparent agency theory. Consequently, McDonald's Corporation is
not entitled to an affirmance of the summary judgment entered in its favor on
this ground.
For the reasons stated, there exists a genuine issue of material fact
regarding the existence of an apparent agency relationship between McDonald's
Corporation and the franchisee involved in this case. Summary judgment should
not have been granted because McDonald's Corporation's right to judgment is
not clear and free from doubt. The cause should be remanded to the trial
court for further proceedings.

JUSTICE FREEMAN joins in this dissent.