Namur v. Habitat Co.

Annotate this Case
FOURTH DIVISION
FEBRUARY 11, 1998

1--97-1034 and 1--96--4288 cons.

GEORGE NAMUR and MATTHEW TOLF, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellees, ) Cook County
)
v. )
)
THE HABITAT COMPANY, ) Honorable Amanda
) S. Toney, Judge
Defendant-Appellant. ) Presiding.

PRESIDING JUSTICE CERDA delivered the opinion of the court:

Defendant, The Habitat Company, appeals from the denial of
its motion to dismiss the lawsuit of plaintiffs, George Namur and
Matthew Tolf, who are the former tenants of an apartment leased
from defendant. Defendant also appeals from a penalty and
attorney fees imposed pursuant to the Chicago Residential
Landlord and Tenant Ordinance (Chicago Municipal Code 5--12--010
et seq. (amended November 6, 1991)) (hereinafter the ordinance)
based on defendant's failure to attach a summary of the ordinance
to plaintiffs' lease. Plaintiffs argue in their cross-appeal
that they were entitled to the full amount of their attorney fees
and that the trial court erred in finding that defendant did not
commingle their security deposit with defendant's assets.
The issue we address is whether plaintiffs' action alleging
violations of the Chicago Residential Landlord and Tenant
Ordinance sections sought a "statutory penalty" within the
meaning of the two-year statute of limitations found in section
13--202 of the Code of Civil Procedure (735 ILCS 5/13--202 (West
1996)).
FACTS
On December 8, 1991, plaintiffs gave a security deposit and
signed a lease for an apartment for a term running from February
1, 1992, through March 31, 1993. The security deposit was
deposited that month. After plaintiffs vacated the apartment,
they received their security deposit back with interest.
On September 16, 1994, plaintiffs filed a two-count verified
complaint against defendant. Count I sought attorney fees and
damages under the ordinance in the amount of twice the security
deposit for defendant's alleged failure to comply with section
5--12--080(a) of the ordinance, which prohibited security
deposits from being commingled with assets of landlords (Chicago
Municipal Code 5--12--080(a) (amended November 6, 1991)). Count
II sought damages and attorney fees for defendant's alleged
violation of section 5--12--170 of the ordinance, which required
landlords to attach a summary of the ordinance to each written
rental agreement (Chicago Municipal Code 5--12--170 (amended
November 6, 1991)).
Defendant filed a motion to dismiss the complaint on the
basis that the action was not filed within the two-year statute
of limitations contained in section 13--202 of the Code of Civil
Procedure for "[a]ctions for damages *** for a statutory penalty"
(735 ILCS 5/13--202 (West 1996)). Defendant argued that the
causes of action accrued in 1991, when the lease was signed and
when the security deposit was deposited.
The trial court denied the motion to dismiss. The trial
court found that the ordinance was not a "statute" within the
meaning of section 13--202. The trial court instead applied the
five-year statute of limitations for civil actions that were "not
otherwise provided for." 735 ILCS 5/13--205 (West 1996).
On November 22, 1996, the trial court found for plaintiffs
on count I in the amount of $100 and found for defendant on count
II. On February 19, 1997, the trial court entered judgment in
favor of plaintiffs for $1,470 in attorney fees.
Defendant appealed, and plaintiffs cross-appealed.

DISCUSSION
Defendant first argues in its appeal that the trial court
erred in denying its motion to dismiss because the complaint was
not filed within the two-year statutes of limitations for
"[a]ctions for damages *** for a statutory penalty." 735 ILCS
5/13--202 (West 1996). In support of this issue, defendant
argues that section 5--12--080(f) of the ordinance, imposing
damages in the amount of two times the monthly rent for
commingling a tenant's security deposit, and section 5--12--170
of the ordinance, imposing fixed damages in the amount of $100
for failing to attach a summary of the ordinance, are penal
provisions. Plaintiffs argue that the ordinance is a remedial
ordinance.
The ordinance states its purpose:
"It is the purpose of this chapter and the policy of
the city, in order to protect and promote the public health,
safety and welfare of its citizens, to establish the rights
and obligations of the landlord and the tenant in the rental
of dwelling units, and to encourage the landlord and the
tenant to maintain and improve the quality of housing."
Chicago Municipal Code 5--12--010 (amended November 6,
1991).
The ordinance "shall be liberally construed and applied to
promote its purposes and policies." Chicago Municipal Code 5--
12--010 (amended November 6, 1991).
Count I of the complaint was based on section 5--12--080(a)
of the ordinance, which provides:
"A security deposit and interest due thereon shall continue
to be the property of the tenant making such deposit, shall
not be commingled with the assets of the landlord, and shall
not be subject to the claims of any creditor of the landlord
***." Chicago Municipal Code 5--12--080(a) (amended
November 6, 1991).
Section 5--12--080(f) of the ordinance provides the damages
for violation of the commingling prohibition:
"If the landlord or landlord's agent fails to comply
with any provision of Section 5-12-080(a)--(e), the tenant
shall be awarded damages in an amount equal to two times the
security deposit plus interest at five percent. This
subsection does not preclude the tenant from recovering
other damages to which he may be entitled under this
chapter." Chicago Municipal Code 5--12--080(f) (amended
November 6, 1991).
Count II of the complaint was based on section 5--12--170 of
the ordinance, which provides:
"The commissioner of the department of housing shall
prepare a summary of this chapter, describing the respective
rights, obligations and remedies of landlords and tenants
hereunder, and shall make such summary available for public
inspection and copying. A copy of such summary shall be
attached to each written rental agreement when any such
agreement is initially offered to any tenant or prospective
tenant by or on behalf of a landlord and whether such
agreement is for a new rental or a renewal thereof. ***
*** If a tenant in a civil legal proceeding against his
landlord establishes that a violation of this section has
occurred, he shall be entitled to recover $100.00 in
damages." Chicago Municipal Code 5--12--170 (amended
November 6, 1991).
The ordinance does not contain a provision limiting the time
within which actions must be brought.
Section 13--202 of the Code of Civil Procedure states in
part as follows:
"Actions for damages for an injury to the person, or
for false imprisonment, or malicious prosecution, or for a
statutory penalty *** shall be commenced within 2 years next
after the cause of action accrued ***." 735 ILCS 5/13--202
(West 1996).
A statute is penal if it imposes automatic liability for a
violation of its terms and if the amount of liability is
predetermined by the statute and imposed without actual damages
suffered by the plaintiff. McDonald's Corp. v. Levine, 108 Ill.
App. 3d 732, 738, 439 N.E.2d 475 (1982). A statute is remedial
where it imposes liability only for actual damages resulting from
a violation. McDonald's, 108 Ill. App. 3d at 738. The
ordinance has been found to be penal (Szpila v. Burke, 279 Ill.
App. 3d 964, 971, 665 N.E.2d 357 (1996)), but it also has been
characterized as having remedial purposes (Friedman v. Krupp
Corp., 282 Ill. App. 3d 436, 443, 668 N.E.2d 142 (1996)). Some
portions of the ordinance are remedial because they permit
recovery of actual damages. For example, under section 5--12--
060, the tenant may recover actual damages for the landlord's
unlawful entry, although not more than one month's rent, and the
landlord may recover actual damages for the tenant's refusal to
allow lawful access. Chicago Municipal Code 5--12--060 (amended
November 6, 1991).
The sections of the ordinance that are the basis of
plaintiffs' action, sections 5--12--080(f) and 5--12--170, are
penal because they specify either the amount of damages that can
be awarded for violations or the formula by which the amount of
damages is to be calculated. Although damages under section 5--
12--080(f) for commingling security deposits are based on the
actual amount of the security deposit, the damages are not
actual. The tenant would not suffer actual damages if the
commingled security deposit was not seized by the landlord's
creditors, but the ordinance assesses a penalty for endangering
security deposits in the amount of double the security deposit
plus 5% interest. We find that sections 5--12--080(f) and 5--12-
-170 of the ordinance are penal and hold that plaintiffs' action
is one for a "penalty" within the meaning of section 13--202.
The next issue is whether plaintiffs' lawsuit seeks a
"statutory" penalty within the meaning of section 13--202.
Plaintiffs argue that section 13--202 is not applicable because
it does not include actions for damages for penalties imposed by
a municipal ordinance but only penalties imposed by a state
statute.
The primary rule of statutory construction is to give effect
to the true intent of the legislature, and an inquiry into
legislative intent must begin with the language of the statute.
Advincula v. United Blood Services, 176 Ill. 2d 1, 16, 678 N.E.2d 1009 (1996). Words used in a statutory provision must be given
their plain and ordinary meaning. Advincula, 176 Ill. 2d at 17.
Statutes of limitation must be construed in light of their
objectives and must be liberally construed to fulfill the object
for which they were enacted. Mathis v. Hejna, 109 Ill. App. 2d
356, 360, 248 N.E.2d 767 (1969).
Section 13--202 has been applied to an action under a
statute that does not permit recovery for actual damages but
specifies a formula by which damages are to be calculated. See
Sun Theatre Corp. v. RKO Radio Pictures, 213 F.2d 284, 286-88
(7th Cir. 1954) (predecessor of section 13--202 applied to action
under federal antitrust law that provided for treble damages).
Section 13--202 has been held not to apply to an action under a
statute that permits actual damages and exemplary damages with a
cap. Dawson v. W.&H. Voortman, Inc., 864 F. Supp. 77, 79 (N.D.
Ill. 1994) (section 13--202 did not apply to Illinois Sales
Representative Act (820 ILCS 120/0.01 (West 1994)), which did not
impose an automatic figure for a statutory penalty). In Dawson,
the statute providing for payment of commissions only directed
the employer to pay commissions due in a timely manner; the
plaintiff would still have to prove actual damages.
We note a California case that found that a rent-control
ordinance that specified treble damages provided for a penalty
within the meaning of a state one-year statute of limitations
similarly covering actions upon "a statute for a penalty."
Menefee v. Ostawari, 228 Cal. App. 3d 239, 278 Cal. Rptr. 805
(1991); Cal. Civ. Proc. Code 340(1) (West 1982). In Menefee,
plaintiff's complaint alleged wrongful termination of his month-
to-month tenancy in violation of the San Francisco rent control
ordinance. Plaintiff argued that the ordinance's provision for
treble damages was not punitive but had an objective to promote
effective enforcement of the ordinance. Menefee, 228 Cal. App. 3d at 244, 278 Cal. Rptr. at 808. Under California law, claims
based upon statutes that provide for mandatory recovery of
damages additional to actual losses incurred are considered penal
in nature and thus are governed by the one-year statute of
limitations. Menefee, 228 Cal. App. 3d at 243, 278 Cal. Rptr. at
807. The court concluded that, regardless of the purpose of the
provision for treble damages, the provision was a penalty and was
governed by the one-year statute of limitations. Menefee, 228 Cal. App. 3d at 245, 278 Cal. Rptr. at 808.
Defendant contends that the issue of section 13--202's
applicability to actions brought pursuant to a municipal
ordinance was determined by City of Chicago v. Enright, 27 Ill.
App. 559 (1st Dist. 1888). In Enright, defendants sold liquor
without obtaining a license required by a Chicago ordinance, and
the city brought suit to obtain a penalty for violating the
ordinance. Defendants argued that the applicable statute of
limitations was the criminal code's statute of limitations for
prosecutions under a penal statute, but the court held that the
action was not a prosecution. Enright, 27 Ill. App. at 568.
The Enright court stated that an action of debt for a
penalty for the violation of a municipal ordinance was a civil
action governed by "Sec. 14 of the general statute of
limitations, which allows two years after the right accrues
within which to bring the action." Enright, 27 Ill. App. at 568.
The court did not provide a further citation to the statute of
limitations, but the court must have been referring to section 14
of the revised statutes of 1885, which was the two-year statute
of limitations in effect at the time for "[a]ctions for damages
*** for a statutory penalty" (Ill. Rev. Stat. 1885, ch. 83, par.
14). The quoted language is the same in the recodified section
13--202.
In contrast to Enright, the Third District Appellate Court
case of City of Peoria v. Toft, 215 Ill. App. 3d 440, 443-44, 574 N.E.2d 1334 (1991), determined that a fine for violation of a
municipal parking ordinance was not a statutory penalty under
section 13--202. The court distinguished an "ordinance" from a
"statute" on the basis that an ordinance is a local rule enacted
by a unit of government pursuant to authority delegated by the
state while a statute "bears the imprimatur of the State
legislature." Toft, 215 Ill. App. 3d at 443. The court held
that the phrase "statutory penalty" in section 13--202 did not
evince an intent to encompass fines or other penalties exacted
for violations of local laws. Peoria, 215 Ill. App. 3d at 444.
The court did not address Enright.
We reject the reasoning of Toft because an ordinance is a
legislative act and is the equivalent of a municipal statute.
Halford v. Topeka, 234 Kan. 934, 939, 677 P.2d 975, 980 (1984),
citing the definition of "ordinance" in Black's Law Dictionary
989 (5th ed. 1979); see also American Country Insurance Co. v.
Wilcoxon, 127 Ill. 2d 230, 243, 537 N.E.2d 284 (1989) (the court
referred to an ordinance as a "municipal statute"). In addition,
Toft is contrary to Enright's holding that actions for penalties
for the violation of an ordinance are covered by the statute of
limitations for statutory penalties. We hold that section 13--
202 applies to plaintiffs' action under the ordinance because
"statutory" is broad enough to cover municipal ordinances.
The accrual of a cause of action occurs when facts exist
that authorize the bringing of the action. Goodman v. Harbor
Market, Ltd., 278 Ill. App. 3d 684, 689, n.2, 693 N.E.2d 13
(1995). Plaintiffs' cause of action for commingling the security
deposit accrued when the security deposit was deposited in
December 1991. Plaintiffs' cause of action for failing to attach
a summary of the ordinance accrued when the lease was offered to
plaintiffs, which would have been December 1991. The plaintiffs
filed their complaint in 1994. Therefore, plaintiffs' complaint
was untimely filed more than two years from the dates that the
causes of action accrued. The trial court erred in not
dismissing the action as being barred by section 13--202 when it
ruled that the five-year statute of limitations applied.
Plaintiffs argue in the alternative that the two-year
limitations period should have been tolled until the unspecified
time that they discovered their causes of action. See Knox
College v. Celotex Corp., 88 Ill. 2d 407, 414, 430 N.E.2d 976
(1981) (under the discovery rule applying to the statute of
limitations, the starting of the period of limitations is
postponed until the injured party knows or should have known of
his injury). However, the plaintiffs did not plead in their
complaint that they did not discover their causes of action until
after the termination of their lease. It is incumbent upon a
plaintiff seeking to take advantage of the discovery rule to
plead in the complaint that the cause of action remained
undiscovered. Waterford Condominium Ass'n v. Dunbar Corp., 104
Ill. App. 3d 371, 376, 432 N.E.2d 1005 (1982). Because the
failure to discover the ordinance violation was not pled, the
discovery rule is not applicable in this case.
Also, because of strict application of penalties for
violations of municipal ordinances, perhaps the discovery rule is
not applicable in these types of ordinances. However, we do not
make a ruling on this point.
We do not need to decide whether the discovery rule applies
to this cause of action for another reason. We find that we are
unable on this record to determine when the statute of
limitations would be tolled because there was no evidence at
trial of when plaintiffs discovered their causes of action.
Plaintiffs also argue in the alternative that the 10-year
statute of limitations for "actions on *** written leases"
applies. 735 ILCS 5/13--206 (West 1996). We reject this
argument because plaintiffs' action is not based on the lease but
is based on an ordinance.
We do not need to reach the remaining issues raised in the
appeal and the cross-appeal.
The judgment of the trial court is reversed.
Reversed.
McNAMARA and SOUTH, JJ., concur.

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