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05/15/87 Jerome A. Urbik, v. Robert Derose

May 15, 1987





509 N.E.2d 526, 156 Ill. App. 3d 278, 108 Ill. Dec. 830 1987.IL.631

Appeal from the Circuit Court of Cook County; the Hon. Walter B. Bieschke, Judge, presiding.


PRESIDING JUSTICE SULLIVAN delivered the opinion of the court. LORENZ and MURRAY, JJ., concur.


Plaintiff, Jerome Urbik, brought this action for reimbursement of amounts he paid as guarantor of three life insurance premium loans. On appeal, defendant, Robert DeRose, contends that the trial court erred in (a) entering summary judgment for Urbik and (b) denying his motion to file a counter claim for contribution.

Although it is neither practicable nor necessary to present a detailed review of the entire record before us -- which consists of nearly 1,500 pages divided almost equally between pleadings and transcripts -- an understanding of the issues raised requires at least a brief chronological summary of the extensive procedural history of the litigation.

On November 22, 1982, Urbik filed a six-count complaint against DeRose and Charles Clary, Sr.,1 alleging, in substance, that he (Urbik) was the general manager of Hinsdale Associates, an insurance agency authorized to underwrite policies of insurance issued by Mutual of New York Insurance Company ; that DeRose was employed by MONY to work under his supervision as a field underwriter of such policies; that in December 1975, DeRose entered into a "Prime Participation Agreement" with Key Resources, Inc. (Key), a subsidiary of MONY, under which he was authorized to participate in a program for the financing of premiums on policies of insurance underwritten by him, including those at issue here on the lives of Charles Clary, Sr., and Clary's two sons; that pursuant to the terms of the agreement DeRose unconditionally guaranteed that he would pay Key, in prescribed monthly payments, all principal and interest due on the notes for the loans -- which totaled $67,506.89 -- in the event of a default by the Clarys and he assigned all of his interests in and rights under the policies to Key as security for his performance; that in February 1976, he (Urbik) signed as a guarantor of the comprehensive financing agreement between DeRose and Key; that in August 1982, Key notified him that the loans were in default and demanded full payment thereof; that on August 23 he executed three promissory notes for the amounts due; that on August 30, Key assigned to him its interests and rights under the financing agreements; and that as assignee thereof, he thereafter demanded from DeRose reimbursement of the sums he paid on each loan -- which totaled $15,678.76 -- but DeRose refused to pay the amounts owed. The complaint sought reimbursement thereof plus costs and attorney fees.

On April 11, 1983, DeRose moved to dismiss the complaint on the ground that the agreement was invalid because MONY and Key were not properly licensed to do business in Illinois and because, under the Illinois Insurance Code (Ill. Rev. Stat. 1973, ch. 73, par. 1065.62), Clary was not qualified to receive premium financing. Following denial of the motion, DeRose filed his answer, reasserting as affirmative defenses the allegations stated above and additionally arguing that Urbik's payment of the amounts due on the notes constituted novation, which released him from any liability therefor.

In September 1983, Urbik filed a motion for summary judgment in response to which DeRose reiterated the defenses raised in his answer and further argued that the financing agreement was a contract of adhesion because, despite his ineligibility to participate in the premium financing program, he was required to execute the agreement as a condition of employment with Hinsdale Associates. Following a hearing -- the transcript of which does not appear in the record -- the trial court denied the motion without prejudice.

Depositions were thereafter taken, following which Urbik filed an amended motion for summary judgment together with his affidavit, various exhibits, and a memorandum in support thereof. No written response or counteraffidavits were filed by DeRose at that time. A hearing was held on May 23, 1984, and, in addition to lengthy arguments by both attorneys regarding the points raised in the pleadings, depositions, and exhibits on file, counsel for DeRose also alleged in his oral argument that his client had been fraudulently induced to enter into the financing agreement by reason of certain material misrepresentations made to him by Urbik regarding the advantages of participation in the premium financing program and the low risks associated therewith. Rejecting counsel's argument that triable issues of fact existed as to this defense theory, the trial court granted summary judgment for Urbik on those counts of his complaint concerning DeRose's liability for the amounts due on the loans. The case was initially set for a June 14 trial on damages but was subsequently continued to June 28, the day after the scheduled hearing on DeRose's motion for reconsideration and vacatur of summary judgment as to liability. When counsel for DeRose appeared before the motion Judge on June 27 and advised the court that the attorney who had filed the motion had since left his firm and that he was not prepared to argue it that day, the court declined to grant another continuance and denied the motion without prejudice, explaining that such an order would allow the prove-up of damages to proceed as scheduled without precluding DeRose from thereafter renewing his motion.

Nevertheless, the next day, defense counsel advised the jury trial assignment Judge that he intended to refile his motion for reconsideration and requested another continuance of the hearing on damages. The matter was then referred back to the motion Judge, who offered to hear arguments at that time, but when defense counsel repeated that he was unprepared to do so, the court -- after noting the strenuous objections of opposing counsel and admonishing defense counsel regarding his responsibility to be prepared to argue his own motion -- agreed to hear the motion at the next available opening on his contested motion calendar -- which was determined to be September 25.

On September 20, counsel for DeRose filed a motion, supported by affidavit, for another continuance because of a conflict in his trial schedule. Over plaintiff's objection, the matter was continued to October 5 and then to October 10, whereupon DeRose sought to have admitted a counteraffidavit filed without leave of court the previous day in which he averred that Urbik had made fraudulent misrepresentations to induce him to enter into the financing agreement. Noting, again, the objections of plaintiff's counsel and commenting on the numerous delays and the "appearance of dilatory tactics" by the defense, the court nonetheless permitted the filing of DeRose's counteraffidavit and allowed Urbik 45 days to respond.

DeRose thereafter also filed, without leave of court, (1) the affidavit of a former colleague who alleged that he too had been fraudulently induced by Urbik's misrepresentations to enroll in the premium financing program and (2) a counterclaim charging Urbik with fraud and interference in his settlement negotiations with Key. After further continuances, the hearing on DeRose's motion for reconsideration was held on March 28, 1985.2 Following argument by counsel, the motion was denied and the matter was thereafter set for a September 17, 1985, trial on damages. On August 22, DeRose filed an amendment to his answer, asserting Urbik's (a) failure to mitigate damages and (b) interference in settlement negotiations as additional affirmative defenses. The case was continued to September 20 for a hearing on pretrial motions, and, on September 24, the court entered an order (1) granting Urbik's motion in limine as to matters previously decided in the summary judgment proceedings, (2) denying Urbik's motion to exclude evidence relating to the settlement negotiations with Key, (3) denying DeRose's motion to set aside the assignment by Key to Urbik of the contracts at issue, and (4) denying DeRose's motion for leave to file ...

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