Süd Fam. Ltd. P'ship v. Otto Baum Co., Inc.

237 N.E.3d 1075

2024 IL App (4th) 220782

SÜD FAMILY LTD. PARTNERSHIP, Nancy A. Süd, and Gian C. Süd, Plaintiffs-Appellants and Cross-Appellees,

v.OTTO BAUM COMPANY, INC.; Attorneys’ Title Guaranty Fund, Inc.; and Methodist Services, Inc., Defendants-Appellees and Cross-Appellants.

NO. 4-22-0782

Appellate Court of Illinois, Fourth District.

Filed March 12, 2024

Appeal from the Circuit Court of Peoria County, Nos. 09CH310, 09CH311, 17L105, Honorable Paul E. Bauer, Judge Presiding.

Christopher H. Sokn, of Kingery Durree Wakeman & O’Donnell, Assoc., of Peoria, for appellants.

Robert ?. Andalman and William Norman, of A&G Law, LLC, of Chicago, for appellees.

OPINION

JUSTICE HARRIS delivered the judgment of the court, with opinion.

¶ 1 Plaintiffs—Sud Family Limited Partnership and its general partners, Nancy A. Süd and Gian C. Sud (collectively Süd)—filed a second amended complaint against defendants—Otto Baum Company, Inc. (Otto Baum); Attorneys’ Title Guaranty Fund, Inc. (ATG); and Methodist Services, Inc. (Methodist)—in an action alleging conversion, fraud, conspiracy to commit fraud, slander of title, quiet title, breach of warranty under the Uniform Commercial Code (UCC) (810 ILCS 5/1-101 et seq. (West 2020)), and statutory damages under the Mechanics Lien Act (770 ILCS 60/1 et seq. (West 2020)). The trial court dismissed with prejudice the second amended complaint, as well as amended counterclaims filed by defendants. Süd appeals from the dismissal of its second amended complaint, and defendants cross-appeal, challenging the court’s dismissal of their amended counterclaim four. We affirm in part, reverse in part, and remand for further proceedings.

¶ 2 I. BACKGROUND

¶ 3 The present appeal involves three consolidated cases filed in the circuit court—Peoria County case Nos. 09-CH-310, 09-CH-311, and 17-L-105—and many years of litigation among the parties. The underlying facts are fully set forth in two prior appellate court decisions from the Third District—Otto Baum Co. v. Sud Family Ltd. Partnership, 2016 IL App (3d) 140821-U, 2016 WL 769354, and Otto Baum Co. v. Sud Family Ltd. Partnership, 2020 IL App (3d) 190054, 442 Ill.Dec. 265, 159 N.E.3d 444. We summarize the pertinent facts here.

¶ 4 In 2004, Süd purchased 40 acres of land in Peoria, Illinois, which consisted of five lots that became known as the Sud Plaza Subdivision. Süd intended to build an automobile dealership on one of the lots. In 2006 and 2007, Otto Baum performed grading work on some of the lots and constructed a roadway that provided ingress and egress to the subdivision. In May 2007, Methodist purchased lots 2 and 5 from Süd, obtaining title insurance in connection with the sale from ATG.

¶ 5 In February 2008, Otto Baum recorded mechanic’s liens against (1) lot 5 in connection with the grading work it completed and (2) all five lots in connection with its construction of the roadway. In July 2009, it filed two lawsuits. In Peoria County case No. 09-CH-310, Otto/Baum brought suit against Süd and Methodist for the work it completed on lot 5, seeking foreclosure of its mechanic’s lien and alleging breach of contract. In Peoria County case No. 09-CH-311, Otto Baum brought suit against Süd, Methodist, and others for its roadway work. Again, it sought foreclosure of its mechanic’s lien and alleged breach of contract.

¶ 6 The cases were consolidated for trial and, following a bench trial, the trial court entered judgments in Otto Baum’s favor in both cases. In case No. 09-CH-310, the court granted Otto Baum a mechanic’s lien foreclosure judgment against lot 5 and entered a total monetary judgment against Süd for $492,750.06. In case No. 09-CH-311, the court granted Otto Baum a mechanic’s lien foreclosure judgment against lots 2 through 5 and entered a monetary judgment against Sud for $460,463.26. Both Süd and Methodist appealed, and the judgments were stayed pending the appeal. As security for the stays, Süd obtained an irrevocable standby letter of credit from Town and Country Bank in the amount of $1.3 million. Otto Baum was a named beneficiary in the letter of credit.

¶ 7 While the appeal was pending, Otto Baum and Methodist entered into an agreement. Under the agreement, Methodist—through its insurer, ATG—agreed to pay Otto Baum $400,000 as a settlement to release its two lots from foreclosure. The payment was allocated between the two judgments, with. $238,065.22 being applied to the judgment in case No. 09-CH-310, and $161,934.78 being applied to the judgment in case No.09-CH-311. The agreement further provided that, if Otto Baum collected the balance due on the judgments, it would assign the judgments to Methodist.

¶ 8 In February 2016, the Third District affirmed the money judgments against Süd. Otto Baum Co., 2016 IL App (3d) 140821-U. On November 3, 2016, Otto Baum drew $686,301.10 from Süd’s letter of credit to pay what Otto Baum represented was the balance owed on the judgments as of that date. On November 17, 2016, Otto Baum filed a motion for postjudgment attorney fees. In its motion, it asserted that Süd still owed $877.40 on the judgments, representing (1) additional postjudgment interest through November 9, 2016, when it finally received money pursuant to its draw on the letter of credit and (2) bank wire fees. In January 2017, the trial court granted the motion and entered an award of $80,109.64 in Otto Baum’s favor.

¶ 9 In February 2017, Süd filed a petition for release of judgments in case Nos. 09-CH-310 and 09-CH-311. On March 3, 2017, Otto Baum made another draw on the letter of credit for $82,189.54, in connection with the January 2017 award of attorney fees that it obtained, plus interest. Pursuant to its settlement agreement with Methodist, Otto Baum then assigned its interests in the judgments and letter of credit to ATG as Methodist’s representative. ATG determined it was owed $466,283.57 on the assigned judgments and, on March 6, 2017, drew $194,158.45 from Süd’s letter of credit. Following that draw, ATG and Methodist claimed Süd continued to owe $272,125.12.

¶ 10 In April 2017, Süd filed a 29-count complaint in case No. 17-L-105 against defendants, alleging conversion, fraud, conspiracy to commit fraud, slander of title, quiet title, and breach of warranty under the UCC. Süd maintained that the chancery judgments were fully satisfied after Otto Baum’s March 3, 2017, draw on the letter of credit. It challenged ATG’s subsequent draw on the letter of credit, asserting ATG knew both that (1) the chancery judgments had already been satisfied when it made its draw and (2) it was "not entitled to draw anything." Süd further complained that Otto Baum and ATG improperly continued to allow memorandums of judgment and mechanic’s liens to exist on property owned by Süd despite the chancery judgments being fully satisfied.

¶ 11 In November 2017, defendants answered the complaint and also filed three affirmative defenses and five counterclaims. They denied that the chancery judgments were fully satisfied after Otto Baum’s March 3, 2017, draw on the letter of credit. During the litigation, ATG maintained that a balance of $466,283.57 remained on the chancery judgments. In May 2018, the trial court dismissed three of defendants’ counterclaims with prejudice on Süd’s motion.

¶ 12 In July 2018, Süd filed an amended petition for release of judgments in the chancery cases, arguing the judgments had been fully satisfied on March 3, 2017. The following month, defendants moved to consolidate case Nos. 09-CH-310 and 09-CH-311 with case No. 17-L-105, and the trial court granted the motion.

¶ 13 In October 2018, defendants filed a motion for summary judgment as to all counts against them in case No. 17-L-105 and as to Süd’s amended petition for release of judgments in case Nos. 09-CH-310 and 09-CH-311. Their motion was based, in part, on the claim that ATG’s payment of $400,000 to Otto Baum on behalf of Methodist was a payment from a collateral source for which Sud could not take credit. In December 2018, the trial court entered an order, denying Sud’s amended petition in the chancery cases and granting summary judgment in defendants’ favor in the law case. In so holding, it determined "ATG’s $400,000 payment on behalf of Methodist for release of foreclosure judgments [was] a collateral source of payment to Otto Baum, not partial satisfaction of Süd’s judgment obligation." In January 2019, Süd filed a notice of appeal from the court’s December 2018 order.

¶ 14 While Süd’s second appeal was pending, a notice was filed in case No. 09-CH-311 that two lots in the Süd subdivision were scheduled to be sold at a foreclosure sale in April 2019. In March 2019, Süd filed a motion to stay the sale, to which ATG filed an objection. Ultimately, in July 2019, the trial court stayed the sale until further order of the court based upon Sud’s tender of $630,914.98 to ATG. The court’s written order stated as follows: "The, court finds the tender made by [Sud] was conditional. The court is not ordering releases of the judgments. The money paid by [Süd] to [ATG] is satisfaction of the judgment balances as of the date it was paid, and not as security for the stay ***."

¶ 15 In May 2020, the Third District, with one justice dissenting, Vacated the trial court’s December 2018 order. Otto Baum Co,, 2020 IL App (3d) 190054, ¶ 46, 442 Ill,Dec. 265, 159 N.E.3d 444. It found the lower court abused its discretion in holding ATG’s $400,000 payment to Otto Baum was from a collateral source, as "ATG was Methodist’s insurer, and Methodist was a defendant" in the chancery cases. Id, ¶ 27. The court further held that the trial court erred by denying Süd’s amended petition for release of judgments, finding "that by March 3, 2017, Otto Baum’s judgments from the 2009 cases had been paid in full by ATG and Süd." Id, ¶ 32. It stated that "Süd was entitled to a setoff in the amount of ATG’s payments to Otto Baum" and, "[without the setoff, Otto Baum would obtain a double recovery."...