Gelinas v. Barry Quadrangle Condominium Ass'n , 2017 IL App (1st) 160826 ( 2017 )

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Gelinas v. Barry Quadrangle Condominium Ass’n, 2017 IL App (1st) 160826Appellate Court MATTHEW GELINAS, Plaintiff-Appellant, v. THE BARRY
Caption QUADRANGLE CONDOMINIUM ASSOCIATION, NAEEM
SIDDIQUI, JOHN TENFELDER, SYLVIA FRANKE, KURT
GRUENBERG, NICK BRINKER, STU KIESOW, MIKE
TENZILLO, and DAVID HAGELE, Defendants-Appellees.
District & No. First District, First Division
Docket No. 1-16-0826
Rule 23 order filed December 29, 2016
Rehearing denied January 27, 2017
Rule 23 order
withdrawn February 1, 2017
Opinion filed February 14, 2017
Decision Under Appeal from the Circuit Court of Cook County, No. 14-CH-3732; the
Review Hon. Franklin U. Valderrama, Judge, presiding.
Judgment Affirmed.
Counsel on Stanley A. Kitzinger, Kevin Q. Butler, and Nathan P. Karlsgodt, of
Appeal McKnight, Kitzinger & Pravdic, LLC, of Chicago, for appellant.
Nicholas R. Mitchell, of Kovitz Shifrin Nesbit, of Chicago, for
appellees.
Panel PRESIDING JUSTICE CONNORS delivered the judgment of the
court, with opinion.
Justices Harris and Mikva concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, Matthew Gelinas, appeals the circuit court’s order that granted the motion to
dismiss with prejudice brought by defendants, his condominium association and its board of
directors. Plaintiff contends that the circuit court erred when it determined that the
condominium association’s bylaws and declarations and the Condominium Property Act
(Act) (765 ILCS 605/1 et seq. (West 2012)) allowed the condominium association to assess
an insurance deductible to a single unit owner. Defendants assert that the complaint was
properly dismissed because the bylaws, declarations, and the Act authorized plaintiff to be
charged the amount “not covered by insurance.” We agree with defendants and affirm the
trial court’s ruling.
¶2 BACKGROUND
¶3 This case arises from a dispute between plaintiff, the owner of a unit located at 841 West
Barry Avenue in Chicago, and defendants, plaintiff’s condominium association—the Barry
Quadrangle Condominium Association (Association)—and members of its board of directors
(Board), as result of a fire that originated in plaintiff’s unit and caused damage to the
building. Due to the limited nature of the record on appeal, our recitation of the background
of this case primarily stems from the allegations contained in plaintiff’s second amended
complaint.1
¶4 On June 2, 2012, a fire that originated in plaintiff’s unit damaged some of the structure
and the common areas of one of the buildings of the Barry Quadrangle Condominiums. As a
result, the Board made a claim of loss with the Association’s insurer, which was accepted.
Plaintiff’s second amended complaint alleged that the Association profited and received a
windfall from the insurer’s payout. Specifically, in relevant part, Plaintiff’s second amended
complaint alleged the following:
“28. On information and belief, the insurer estimated the actual cash value of the
Association’s claim to be approximately $202,000.00.
29. On information and belief, based upon that estimate, the insurer tendered the
Board and the Association $192,000.00 to repair and replace the fire-damaged
property.
30. On information and belief, the $192,000.00 represented the actual cash value
of the Association’s claim, minus the $10,000.00 deductible.
31. On information and belief, the Board and the Association accepted those
funds and began to repair and replace the fire-damaged property.
We rely on plaintiff’s second amended complaint because it was the operative pleading on file that
1
was challenged by defendants’ motion to dismiss and subsequently dismissed with prejudice.
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32. On information and belief, the cost of repairing and replacing the
fire-damaged property ended up being only $152,000.00, resulting in a $40,000.00
profit/windfall to the Board and the Association from the insurance proceeds.
33. On information and belief, as a result of the profit/windfall, the Board and
Association were never required to advance a $10,000.00 deductible.
34. Accordingly, any determination by the Board and the Association to pursue
to the $10,000.00 deductible from Gelinas, would necessarily have not been an act to
recoup the deductible, but rather an effort to profit off the insurer and Gelinas.”
¶5 According to plaintiff’s second amended complaint, on September 26, 2013, plaintiff
received an email containing correspondence that was purportedly sent to him by the
Association on September 23, 2013. The Association’s correspondence allegedly informed
plaintiff that he was being assessed $10,000 as reimbursement due the Association for the
deductible it had paid. 2 Plaintiff requested a hearing to contest the validity of the
“charge-back” for the deductible. Plaintiff’s second amended complaint alleged that on
October 21, 2013, plaintiff was informed via email that the Board had scheduled the hearing
for October 23, 2013 at 6:30 p.m. Plaintiff further alleged that when the hearing was
conducted, it was a closed meeting and he was the only Association member who had been
given notice. Also, plaintiff alleged that after the hearing, the Board failed to vote on the
issue of whether he should validly incur the $10,000 charge-back. On October 29, 2013,
plaintiff was informed he was being assessed the $10,000 deductible.
¶6 Plaintiff submitted a check dated February 11, 2014, for $10,000. He subsequently filed
his original complaint in circuit court on March 4, 2014. The parties conducted some
discovery and engaged in motion practice, with defendants filing two motions to dismiss
prior to the motion to dismiss that is at issue here. The court granted in part and denied in
part defendants’ first motion to dismiss on October 6, 2014. Subsequently, plaintiff sought
and was granted leave to file his first amended complaint. Defendants filed a motion to
dismiss the first amended complaint and the court again granted it in part and denied it in
part. In doing so, the court also granted plaintiff leave to file his second amended complaint,
which he did on July 23, 2015. Plaintiff’s second amended complaint contained the following
five counts: (I) constructive trust against the Association and the Board; (II) breach of
contract against the Association and the Board; (III) breach of fiduciary duty against the
Association and the Board; (IV) punitive damages against the Association and the Board; and
(V) action to compel examination of records against the Association and the Board. Count V3
was brought pursuant to sections 19(a)(1-5) and (b) of the Act, which require an association’s
board of managers to keep and maintain certain records and also grant all members of an
association the right to inspect, examine, and make copies of said records at any reasonable
time. 765 ILCS 605/19(a)(1-5), (b) (West 2012). Plaintiff alleged that he made a written
request to the Board to inspect documents required to be maintained by the Association under
the Act but that, despite his request, the documents were not made available to him within 30
days and his request was “deemed denied.”
2
The record does not contain a copy of the September 23, 2013, letter or the September 26, 2013,
email.
3
Count V included a notation that “[t]his Count was previously dismissed on July 14, 2015 and is
repleaded solely for purposes of preserving the issue for appeal.”
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¶7 On August 17, 2015, defendants filed their motion to dismiss plaintiff’s second amended
complaint, arguing that plaintiff’s complaint should be dismissed pursuant to section
2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9)(West 2012))
because his claim was barred by other affirmative matter that negated his cause of action.
Specifically, defendants argued that section 12(c) of the Act permitted the Association to be
reimbursed for the deductible. Defendants also contended that plaintiff’s allegation that the
Association had received a surplus of insurance proceeds was incorrect and that the
Association, in fact, had incurred $371,815.34 in restoration expenses, of which only
$369,279.55 had been paid by the insurer. Further, defendants argued that plaintiff cannot
challenge the notice he received for his hearing before the Board because he attended the
hearing, thus his objections regarding notice are irrelevant. Additionally, they argued that
notice to all association members was not required for a violation hearing. Finally,
defendants asserted that the $10,000 charge-back was approved during an open board
meeting, and they attached the affidavit of Sylvia Franke, who had been a member of the
Board since 2013, to support their position. In Franke’s affidavit, she attested that the Board
approved the charge-back on December 11, 2013, but that the original meeting minutes for
that board meeting “mistakenly omitted said approval.” Her affidavit further stated that the
December 11, 2013, meeting minutes were revised during the July 7, 2015, board meeting.
¶8 Plaintiff filed his response to the motion to dismiss on November 25, 2015. Plaintiff
argued that Franke’s affidavit should be stricken and not considered in ruling on the motion
because much of the information contained therein was based on Franke’s conversations with
others and not on her personal knowledge. Plaintiff cited to portions of Franke’s discovery
deposition, wherein she testified that she did not have any personal knowledge of board
meeting activity during 2011 and 2012, when she was not a member of the Board. Plaintiff
also argued that Franke’s deposition testimony showed she had no personal knowledge of the
origin of the fire and that she admitted that the Board amended the meeting minutes as a
result of this litigation. As to the substance of defendants’ motion, plaintiff contended that
section 12(c) of the Act was permissive in nature, as opposed to mandatory; thus, it did not
conflict with the Association’s governing documents. Plaintiff also argued that defendants’
remaining arguments were not affirmative matters, and if they were, then they were
contradicted by the holding in Palm v. 2800 Lake Shore Drive Condominium Ass’n, 2014 IL
App (1st) 111290, which dealt with the notice required before condominium board meetings.
¶9 Defendants’ reply was filed on December 16, 2015. Defendants argued that Franke’s
affidavit was proper because her personal knowledge was irrelevant where her attestations
were regarding what determinations the Board made, which is what is relevant for this case.
Additionally, defendants attempted to refute plaintiff’s argument regarding the fact that
Franke was not on the Board during the years 2011-12 by pointing out that neither the
complaint nor the motion to dismiss was based on a board meeting that took place during that
time period. Defendants further argued that plaintiff’s interpretation of article VIII of the
declaration contradicted the Act, which would require the declaration deemed void.
Additionally, defendants asserted that they believed that article VIII was consistent with the
Act. Finally, defendants argued that they had established that the Association had not
received a surplus, which plaintiff could not dispute.
¶ 10 The court ruled on defendants’ motion to dismiss plaintiff’s second amended complaint
without a hearing on February 24, 2016. The court’s order read:
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“The motion to dismiss is [granted]. The court finds that the Association properly
charged back the deductible to [p]laintiff in accordance with Section 12 of the Illinois
Condominium Property Act. The court denies [p]laintiff’s request to strike portions of
Sylvia Franke’s affidavit in support of the motion, as the court finds that Ms. Franke
had personal knowledge of the statements contained in the affidavit. This matter is
[dismissed with prejudice].”
¶ 11 Plaintiff filed his timely notice of appeal on March 24, 2016.
¶ 12 ANALYSIS
¶ 13 The trial court dismissed this suit pursuant to section 2-619 of the Code, on the ground
that affirmative matter defeated plaintiff’s cause of action, specifically finding that the
Association properly charged back the deductible to plaintiff. 735 ILCS 5/2-619(a)(9) (West
2012).
¶ 14 A motion for involuntary dismissal pursuant to section 2-619 should be granted only
where there are no material facts in dispute and the movant is entitled to dismissal as a matter
of law. King v. City of Chicago, 324 Ill. App. 3d 856, 858-59 (2001). A section 2-619 motion
admits all well-pleaded facts and the legal sufficiency of the complaint as true. Id. at 859.
Specifically, section 2-619(a)(9) of the Code permits the dismissal of a claim when “ ‘the
claim asserted *** is barred by other affirmative matter avoiding the legal effect of or
defeating the claim.’ ” Poulet v. H.F.O., L.L.C., 353 Ill. App. 3d 82, 89 (2004) (quoting 735
ILCS 5/2-619(a)(9) (West 2012)). Our review of a dismissal pursuant to section 2-619 of the
Code is de novo. Van Meter v. Darien Park District, 207 Ill. 2d 359, 368 (2003). “A
reviewing court is not bound to accept the reasons given by the trial court for its judgment
and the judgment may be sustained upon any ground warranted, regardless of whether it was
relied on by the trial court and regardless of whether the reason given by the trial court was
correct.” King, 324 Ill. App. 3d at 859.
¶ 15 On appeal, plaintiff argues that the trial court erred when it determined that the
declarations, the bylaws, and the Act authorized the Association to assess an insurance
deductible charge-back to a single unit owner. Additionally, plaintiff contends that the trial
court improperly allowed defendants to contradict the factual allegations of his complaint
through the use of Franke’s affidavit. Finally, plaintiff asserts that the trial court erred when
it dismissed count V of the first and second amended complaints with prejudice. Defendants
respond that the Association’s bylaws and the Act authorize the Association to charge
plaintiff for the insurance deductible, Franke’s affidavit is not a basis for reversal, and the
trial court properly dismissed count V of plaintiff’s complaint. We agree with defendants and
affirm the trial court’s decision. We address each of plaintiff’s appellate arguments in turn.
¶ 16 Application of Bylaws and Act
¶ 17 “When a controversy regarding the rights of a condominium unit owner in a
condominium arises, we must examine any relevant provisions in the Condominium Property
Act (765 ILCS 605/1 et seq. (West 2006)), and the declaration or bylaws of the condominium
and construe them as a whole.” Goldberg v. Astor Plaza Condominium Ass’n, 2012 IL App
(1st) 110620, ¶ 47. Further, the Act makes clear that “[a]ny provisions of a condominium
instrument that contains provisions inconsistent with the provisions of this Act are void as
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against public policy and ineffective.” 765 ILCS 605/2.1 (West 2012). In this case, the
provisions at issue are set forth below.
¶ 18 Article VIII of the Association’s bylaws, in relevant part, reads:
“If, due to the act or neglect of an Unit Owner, or of a member of his family or
household pet or of a guest or other authorized occupant or visitor of such Unit
Owner, damage shall be caused to the Common Elements or to a Unit or Units owned
by others, or maintenance, repairs or replacements shall be required which would
otherwise be at the common expense, then such Unit Owner shall pay for such
damage and such maintenance, repairs and replacements, as may be determined by
the Board, to the extent not covered by insurance.”
¶ 19 Section 12(c) of the Act, titled “Deductibles,” states:
“The board of directors of the association may, in the case of a claim for damage to a
unit or the common elements, (i) pay the deductible amount as a common expense,
(ii) after notice and an opportunity for a hearing, assess the deductible amount against
the owners who caused the damage or from whose units the damage or cause of loss
originated, or (iii) require the unit owners of the units affected to pay the deductible
amount.” 765 ILCS 605/12(c) (West 2012).
¶ 20 Plaintiff contends that the court erred when it determined that the Association was able to
charge plaintiff a $10,000 deductible under section 12(c) of the Act. Specifically, plaintiff
argues that section 12(c) of the Act is permissive in nature; thus, in order for it to be binding
on the Association, the Association must have explicitly adopted section 12(c)’s language,
which it never did. Plaintiff explains that rather than adopt the charge-back options listed in
section 12(c), the Association chose to adopt a different charge-back method as evidenced by
the language of article VIII of the bylaws. Plaintiff asserts that the plain meaning of article
VIII’s phrase “to the extent not covered by insurance” is “to the extent the risk (or peril) is
not ‘within the scope of the insurance policy.’ ” Plaintiff further argues that defendant has
confused the term “covered” with the term “indemnified,” because the fact that the
Association was not indemnified for the full amount of the loss does not mean the risk was
not covered. Notwithstanding the foregoing, plaintiff argues that the Act and the bylaws do
not conflict.
¶ 21 In response, defendants contend that plaintiff is essentially asking this court to narrowly
construe the word “covered” within the insurance industry vernacular. Defendants argue that
they spent at least $10,000 in the form of an insurance deductible for the fire restoration
project, and as such, they are allowed to charge-back this amount to plaintiff per the language
of article VIII of the bylaws. In other words, defendants assert that the Association’s insurer
“covered” all expenses incurred in connection with the fire other than the $10,000 deductible;
therefore, the $10,000 deductible was not covered by insurance and chargeable to plaintiff
under article VIII.
¶ 22 We agree with defendants. We find that plaintiff’s argument asks this court to read a
meaning into the language of both the Act and the bylaws that runs contrary to common
sense. “The role of courts in interpreting statutes is to give effect to the legislature’s intent
when enacting a statute. When the statute is plain and unambiguous, we look only to what is
actually contained within the statute by determining its plain and ordinary meaning.”
Goldberg, 2012 IL App (1st) 110620, ¶ 43. Looking at the plain and unambiguous language
of both section 12(c) of the Act and Article VIII, we do not find that these provisions
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conflict, and we find the Association complied with both of these provisions in assessing the
$10,000 deductible against defendant.
¶ 23 According to section 12(c)(ii) of the Act, after notice and an opportunity for a hearing, an
Association may assess the deductible amount against the owners who caused the damage or
from whose units the damage or cause of loss originated. 765 ILCS 605/12(c)(ii) (West
2012). In this case, the Board provided plaintiff notice and opportunity for a hearing, which
is evidenced through the undisputed fact that the hearing occurred and that plaintiff was
present at it. Additionally, it is undisputed that the fire that caused the damage originated in
plaintiff’s unit. Thus, the Association satisfied the requirements of the Act in assessing the
deductible against plaintiff. Plaintiff argues that because of the use of the term “may,” section
12(c) is permissive and thus must be explicitly adopted by an association in order to apply.
Defendants respond that, although section 12(c) used the term “may,” it is not in the context
that plaintiff argues. Instead, defendants assert that the term “may” merely refers to the fact
that an association has the option to choose one of the three means through which a
deductible may be handled by an association. We find defendants’ argument reflects the plain
meaning of the statute. In fact, plaintiff has not presented any case law that supports his
proposed interpretation, and our search has not returned any. Simply put, the statute at issue
is plain and unambiguous. On its face, it states that when an association incurs the payment
of an insurance deductible, it may do one of three things. See id. Here, the Association chose
to assess the deductible against plaintiff, the owner of the unit from which the damage
stemmed, after providing notice and an opportunity to be heard. This conduct by the
Association is in total compliance with the Act. Thus, we disagree with plaintiff’s contention
that the Board was required to expressly adopt the Act in order to use its provisions to charge
plaintiff for the deductible.
¶ 24 Similarly, we find the Association also acted in accordance with the provisions of article
VIII of the bylaws. Article VIII allows the Association to require a unit owner to pay for any
damage caused by his4 act or neglect “to the extent not covered by insurance.” Here, the fire
that caused the damage indisputably originated in plaintiff’s unit. The Association’s
insurance policy covered the damage with the exception of the $10,000 insurance deductible.
It is clear to this court that the language of article VIII referred to any amount of money paid
by the Association that was not covered or, in other words, paid for by insurance. Plaintiff
has failed to present any evidence or supporting law to convince this court that the term
“covered” requires a strict, insurance vernacular-based interpretation. There is nothing in the
bylaws that evidences an intent to use that word in a non-common sense-based manner. We
believe that, on its face, the use of the term “covered” signifies the more familiar, less
technical definition, similar to paid. In other words, article VIII’s phrase “to the extent not
covered by insurance” could more clearly be stated as to the extent not paid by insurance.
¶ 25 The $10,000 at issue in this case was paid by the Association as a deductible. Plaintiff
presents many definitions to this court in support of his arguments. However, he fails to
present the definition of deductible. Black’s Law Dictionary defines deductible as “[u]nder
an insurance policy, the portion of the loss to be borne by the insured before the insurer
4
To be clear, article VIII reflects that a unit owner may be held responsible for his own act or
neglect or that of “his family or household pet or of a guest or other authorized occupant or visitor of
such Unit Owner.”
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becomes liable for payment.” Black’s Law Dictionary 422 (7th ed. 1999). This definition is
particularly significant here because, by definition, an insurer would never cover or pay for
the amount of a deductible, because the insurer does not have a duty to pay the insured until
the insured pays the deductible. Thus, by definition, the amount of the deductible is always
borne by the insured, which in this case is the Association. Looking at this definition,
coupled with the language of article VIII, it is clear that the Association intended a unit
owner who, by act or neglect, causes damage to be financially responsible for the payment of
the deductible, which is, by definition, never “covered” by insurance. Although plaintiff
insists that a more convoluted explanation is required, we disagree. To this court, the
meaning of the language in article VIII is clear. The Association, through unambiguous
language, evidenced its intent to place the burden of payment on the unit owner for any
amount not covered, or paid for, by insurance, whether that amount be in the form of a
deductible, an amount in excess of the policy limits, or an amount for damages resulting from
an occurrence for which the insurer denied coverage. As a result, it is apparent to this court,
as it was to the trial court, that plaintiff’s claim against defendants is defeated as a matter of
law by the Act and the Association’s bylaws and was properly dismissed with prejudice.
¶ 26 Franke Affidavit
¶ 27 A section 2-619 movant may provide an affidavit in support of the motion if the grounds
for the dismissal do not appear on the motion’s face. 735 ILCS 5/2-619 (West 2012).
However, a section 2-619 affidavit may not set forth facts that challenge the allegations of
the complaint. King, 324 Ill. App. 3d at 859.
¶ 28 Plaintiff argues that by refusing to strike Franke’s affidavit, the trial court improperly
allowed defendants to contradict the factual allegations of the complaint. Defendants respond
that Franke’s affidavit was proper because plaintiff alleged various unsupported conclusions
of fact in his complaint, namely assertions made “upon information and belief” that the
Association received more money from the insurance company than that which it spent on
the repairs. The trial court’s February 24, 2016, order states, “The court denies [p]laintiff’s
request to strike portions of Sylvia Franke’s affidavit in support of the motion, as the court
finds that Ms. Franke had personal knowledge of the statements contained in the affidavit.”
¶ 29 Here, we agree with defendants that the record does not contain a transcript, an order, or
any other evidence that shows the trial court relied on Franke’s affidavit in reaching its
decision. Rather, the court’s February 24, 2016, order merely evidences the trial court’s
decision to refuse to strike the affidavit due to its basis in Franke’s personal knowledge. Even
if the trial court had relied on the affidavit, we reiterate that we may sustain the judgment of
the trial court upon any ground warranted, irrespective of whether the trial court’s reasoning
was correct. See id. As explained above, without reliance on Franke’s affidavit, we have
determined that the plain language of both the Act and the bylaws supports the dismissal of
plaintiff’s complaint. Therefore, the trial court did not err in refusing to strike Franke’s
affidavit.
¶ 30 Count V of Plaintiff’s Complaint
¶ 31 Plaintiff’s final argument is that the trial court erred when it dismissed with prejudice
count V of his first and second amended complaints. Count V of plaintiff’s complaints was
an action to compel examination of records against the Association and the Board.
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Defendants respond that plaintiff’s request for records under section 19 of the Act (765 ILCS
605/19 (West 2012)) was issued nearly eight months after the filing of this lawsuit and that
plaintiff issued Rule 214 document requests contemporaneously with the section 19 request.
See Ill. S. Ct. R. 214 (eff. July 1, 2014). Thus, defendants were asked to produce the same
documents twice. The trial court granted defendants’ motion to dismiss count V on July 14,
2015, but did not provide any reasoning. Rather the order merely stated, “[t]he motion with
respect to count V is granted.”
¶ 32 Plaintiff specifically argues that the trial court dismissed count V based on the authority
presented by defendants consisting of Bruske v. Arnold, 44 Ill. 2d 132, 135 (1969). As stated
above, the record is devoid of any explanation as to how the trial court reached its decision in
dismissing count V. Thus, we are perplexed as to how plaintiff is certain that the Bruske case
was the basis for its ruling. In Bruske, the trial court suppressed the defendant’s statement
prior to trial as being illegally and unethically produced where the statement was taken at the
defendant’s home, without notice to her counsel, despite the plaintiff’s counsel’s knowledge
that the defendant was represented. Id. at 134. The Bruske court stated, “[i]n our courts, once
a lawsuit has been filed, and all parties have appeared, the pretrial search for matters relevant
to the pending litigation is controlled by discovery rules promulgated by this court.” Id. at
135.
¶ 33 Plaintiff contends that Bruske is procedurally inapplicable and factually distinguishable.
Defendants respond that, even if the facts of Bruske are not exactly on point, plaintiff still
cannot ignore the fact that courts recognize that once a suit has been filed, the litigation is
controlled by discovery rules. We agree with defendants. It would be duplicative and
contrary to our settled law to require litigants to comply with both the rules of discovery and
a section 19 request that was propounded subsequent to a lawsuit’s filing. Once again, such a
requirement would run contrary to common sense, and we refuse to impose such a burden on
defendants here.
¶ 34 CONCLUSION
¶ 35 Based on the foregoing, we find that the circuit court properly dismissed plaintiff’s
second amended complaint with prejudice as a result of defendants’ section 2-619(a)(9)
motion to dismiss.
¶ 36 Affirmed.
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