Continental Casualty Co. v. American National Bank & Trust Co.

896 N.E.2d 340, 385 Ill. App. 3d 687, 324 Ill. Dec. 554, 2008 Ill. App. LEXIS 937
CourtAppellate Court of Illinois
DecidedSeptember 25, 2008
Docket1-07-0627
StatusPublished
Cited by5 cases

This text of 896 N.E.2d 340 (Continental Casualty Co. v. American National Bank & Trust Co.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Casualty Co. v. American National Bank & Trust Co., 896 N.E.2d 340, 385 Ill. App. 3d 687, 324 Ill. Dec. 554, 2008 Ill. App. LEXIS 937 (Ill. Ct. App. 2008).

Opinion

JUSTICE O’BRIEN

delivered the opinion of the court:

Plaintiff, Continental Casualty Company, as assignee of General Automation, Inc. (hereinafter GAI), appeals the order of the circuit court granting summary judgment in favor of defendant, American National Bank & Trust Company of Chicago (hereinafter ANB), on plaintiffs action for breach of contract and violation of section 9 of the Illinois Fiduciary Obligations Act (760 ILCS 65/9 (West 1996)). We reverse the entry of summary judgment and remand for further proceedings thereon.

From 1992 until approximately July 1994, Lawrence Cohn was a partner with the accounting firm of Friedman Eisenstein Raemer & Schwartz, LLP (hereinafter FERS). From approximately July 1994 to May 1996, Mr. Cohn was a partner in the accounting firm of Mann Cohn Weitz, LLC (hereinafter MCW). GAI was a client of Mr. Cohn. Plaintiff was MCW’s insurer.

While at FERS and MCW Mr. Cohn embezzled $1.32 million from GAI. Specifically, while Mr. Cohn was a partner at FERS in 1992 and 1993, GAI’s president and owner, Max Starr, gave Mr. Cohn nine checks (totaling $370,000) that were signed by Mr. Starr and made payable to ANB. These checks were drawn on GAI’s corporate checking account at ANB and were intended to pay GAI’s payroll taxes. Mr. Cohn attached the checks to a deposit ticket made out to his own checking account and then deposited the checks into an automated teller machine at ANB. In short, ANB allowed Mr. Cohn to deposit those checks into his own account.

Mr. Cohn left FEES and became a partner at MCW in 1994. While at MCW Mr. Cohn continued to embezzle money from GAI. Mr. Cohn took GAI checks made payable to the Internal Revenue Service (IRS) for the payment of GAI’s taxes and sent them directly to the IRS for payment of his own income taxes.

GAI contends that it first discovered Mr. Cohn’s embezzlements in May 1996, when agents of the IRS informed GAI that it was delinquent in its payment of payroll taxes. In December 1996, a settlement agreement was signed settling GAI’s claims against FEES and MCW resulting from Mr. Cohn’s embezzlements. In that settlement agreement, both FEES or its insurer and plaintiff as insurer for MCW contributed to a lump-sum payment of $660,000 to fully settle all of GAI’s potential claims against MCW and FEES relating to Mr. Cohn’s embezzlements. In return, GAI assigned plaintiff any cause of action it may have against ANB arising out of Mr. Cohn’s embezzlements. ANB did not participate in the settlement agreement.

Plaintiff, as assignee of GAI, filed a two-count complaint against ANB for breach of contract and violation of section 9 of the Illinois Fiduciary Obligations Act (760 ILCS 65/9 (West 1996)). Plaintiff sought to obtain reimbursement of GAI’s losses in the amount of $370,000, resulting from the nine checks that were payable to ANB and intended to pay GAI’s payroll taxes, but were instead deposited in Mr. Cohn’s checking account.

ANB moved to dismiss the sixth-amended complaint on the grounds that the complaint was substantially insufficient at law and was time-barred by the applicable statute of limitations. The trial court granted the motion to dismiss. On appeal, the appellate court reversed and remanded. See Continental Casualty Co. v. American National Bank & Trust Co. of Chicago, 329 Ill. App. 3d 686 (2002).

On remand, the trial court granted ANB’s motion for summary judgment on the ground that the Joint Tortfeasor Contribution Act (hereinafter the Contribution Act) (740 ILCS 100/2(e) West 1996)) bars plaintiffs action because plaintiff, as a settling party, cannot seek contribution from ANB, a nonsettling party. Plaintiff now appeals that order.

Summary judgment is appropriate where the pleadings, depositions and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 43 (2004). Review is de novo. Adams, 211 Ill. 2d at 43.

The Contribution Act provides in pertinent part:

“(a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, even though judgment has not been entered against any or all of them.
(b) The right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability, and his total recovery is limited to the amount paid by him in excess of his pro rata share. No tortfeasor is liable to make contribution beyond his own pro rata share of the common liability.
(c) When a release or covenant not to sue or not to enforce judgment is given in good faith to one or more persons liable in tort arising out of the same injury or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the release or the covenant, or in the amount of the consideration actually paid for it, whichever is greater.
(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor.
(e) A tortfeasor who settles with a claimant pursuant to paragraph (c) is not entitled to recover contribution from another tortfeasor whose liability is not extinguished by the settlement.” 740 ILCS 100/2 (West 1996).

The Contribution Act provides that contribution is permitted between parties who are both subject to “liability in tort.” 740 ILCS 100/2(a) (West 1996). In Joe & Dan International Corp. v. United States Fidelity & Guaranty Co., 178 Ill. App. 3d 741 (1988), the appellate court considered what constitutes “liability in tort” for purposes of the Contribution Act. In Joe & Dan International, the plaintiff sued its insurance broker, the insurance company and the agent of the insurance company for failing to provide insurance. Joe & Dan International Corp., 178 Ill. App. 3d at 743-44. The agent sought contribution against the insurance company, which the trial court denied because the plaintiff’s causes of action sounded in contract rather than tort. Joe & Dan International Corp., 178 Ill. App. 3d at 750. The appellate court reversed, holding that the theory under which the plaintiff sued the defendants was not dispositive of whether both defendants might also be subject to liability in tort to the plaintiff for the same injury for purposes of contribution between them. Joe & Dan International Corp., 178 Ill. App. 3d at 750.

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Bluebook (online)
896 N.E.2d 340, 385 Ill. App. 3d 687, 324 Ill. Dec. 554, 2008 Ill. App. LEXIS 937, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-casualty-co-v-american-national-bank-trust-co-illappct-2008.