Appeal from the Circuit Court for the 13th Judicial Circuit La Salle County, Illinois. No. 95 S. Ct. 1417. Honorable William R. Banich, Judge, Presiding.
As Modified on Denial of Rehearing October 2, 1996. Certiorari Denied October 6, 1997,
Present - Honorable Peg Breslin, Presiding Justice, Honorable William E. Holdridge, Presiding Justice, Honorable Michael P. McCUSKEY, Justice. Presiding Justice Breslin delivered the opinion of the court. Holdridge, P.j., and McCUSKEY, J., concur.
The opinion of the court was delivered by: Breslin
MODIFIED UPON DENIAL OF REHEARING
PRESIDING JUSTICE BRESLIN delivered the opinion of the court:
The plaintiff, Western States Insurance Company (Western States), filed the instant case against the defendants, Louis E. Olivero & Associates and David Olivero, alleging that they wrongfully refused to satisfy Western States' claim for subrogation out of the proceeds of a settlement in a personal injury case. The trial court granted the defendants' motion for summary judgment. We hold that Western States was entitled to receive the amount of its subrogation claim from the proceeds of the settlement and that the defendants' failure to honor the subrogation claim amounted to a conversion of Western States' property. Accordingly, we reverse the court's order and grant summary judgment in favor of Western States.
Western States provided automobile insurance to Gaylon and Judy Irvin. After an automobile accident involving the Irvins and Sharon Gualandi, the Irvins retained the defendants to recover damages from Gualandi. The Irvins settled their claims for a total of $20,000. Under Western States' insurance policy with the Irvins, Western States had a subrogation interest in the suit because it had paid for medical treatment received by the Irvins.
Before the settlement checks were issued, the Irvins executed a release which provided that they would satisfy all liens and claims against the settlement, including Western States' claim for medical payments. The settlement checks were made payable to, among others, the Irvins, Louis E. Olivero & Associates, and Western States. The defendants sent these checks to Western States for its endorsement. The letter which accompanied the checks provided that the defendants agreed to reimburse Western States in the amount of $2,005.20, and that a check would be forwarded as soon as the settlement checks cleared. Western States endorsed the checks and returned them to the defendants' office with a demand for payment of $2,005.20.
The defendants cashed the settlement checks and deposited the proceeds into a trust account. The checks cleared the bank on May 4, 1995, but the defendants never paid Western States its share of the proceeds. Then, on May 28, 1995, the Irvins informed David Olivero of their intent to file a bankruptcy petition. On June 1, the Irvins' bankruptcy attorney contacted Olivero and advised him not to disburse any of the settlement proceeds because the proceeds were property of the bankruptcy estate. Nevertheless, on the following day, the defendants disposed of the settlement proceeds by retaining $9,022.99 in attorney fees and costs and disbursing the remaining $10,977.01 to the Irvins. The Irvins did not file their bankruptcy petition until June 20.
In its complaint, Western States alleged, among other things, that the defendants had converted Western States' funds. Both parties filed motions for summary judgment. In granting summary judgment for the defendants, the trial court found that the conversion claim failed because the Irvins maintained control of the settlement proceeds. This appeal followed.
We will confine our discussion in this opinion to whether the trial court erred by granting summary judgment for the defendants on Western States' conversion claim and by denying Western States' motion for summary judgment.
When parties file cross motions for summary judgment, they agree that only a question of law is involved and invite the court to decide the issues based on the record. Andrews v. Cramer, 256 Ill. App. 3d 766, 769, 629 N.E.2d 133, 135, 195 Ill. Dec. 825 (1993). On appeal from the entry of summary judgment, the standard of review is de novo. Andrews, 256 Ill. App. 3d at 769, 629 N.E.2d at 135.
To prevail on a conversion claim, a plaintiff must establish that (1) it has a right to the property; (2) it has an absolute and unconditional right to the immediate possession of the property; (3) it made a demand for possession and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over its property. Springfield Rare Coin Galleries, Inc. v. Mileham, 250 Ill. App. 3d 922, 620 N.E.2d 479, 189 Ill. Dec. 511 (1993). Retention of property after a valid demand for its return constitutes conversion. Harry W. Kuhn, Inc. v. State Farm Mutual Automobile Insurance Co., 201 Ill. App. 3d 395, 559 N.E.2d 45, 147 Ill. Dec. 45 (1990).
In the instant case, the Irvins executed a release which provided that they would satisfy Western States' claim and the Irvins' insurance policy gave Western States the right to recover its medical payments from the personal injury settlement. Moreover, Western States was a named payee on the settlement checks and the defendants promised to pay Western States its share of the settlement amount as soon as the checks cleared the bank. Under these facts, Western States established that it had a right to its share of the proceeds and an absolute and unconditional right to the immediate possession of those proceeds after the checks cleared the bank. Western States made a demand for its share of the proceeds, but the defendants failed to comply with this demand after the checks had cleared. Because it is clear ...