Appeal from the Circuit Court of Cook County. No. 97 L 16360 The Honorable David G. Lichtenstein, Judge Presiding.
The opinion of the court was delivered by: Justice Cohen
Plaintiff Phoebe Medow filed a three-count complaint against defendant Daniel D. Flavin accusing Flavin of slander (count I), libel (count II), and conversion (count III). The trial court granted summary judgment in favor of Flavin on counts I and II of Medow's complaint. Following a trial on count III, a jury found Flavin liable for conversion and awarded Medow $1,500 in compensatory damages and $37,500 in punitive damages. The trial court, however, entered judgment notwithstanding the verdict (JNOV) in favor of Flavin as to punitive damages. On appeal, Medow argues that the trial court erred in: (1) granting summary judgment in favor of Flavin on counts I and II of her complaint; and (2) entering JNOV in favor of Flavin as to punitive damages. For the following reasons, we reverse and remand.
Medow sold her travel agency, Way to Go Travel, to Creative Travel and Tours, Inc. (Creative Travel) for $40,000. In his capacity as vice president of Creative Travel, Flavin entered into an Asset Purchase Agreement (APA) with Medow, which outlined the terms of the sale. Pursuant to the APA, Medow continued working for Way to Go Travel as an independent contractor following the sale. On August 25, 1988, Flavin terminated Medow's association with Way to Go Travel. In 1989, Flavin filed a lawsuit against Medow. *fn1 Medow filed a counterclaim accusing Flavin of slander, libel and conversion. Medow's counterclaim was subsequently dismissed for want of prosecution on January 7, 1997. On December 22, 1997 (within one year of the dismissal for want of prosecution), Medow filed the instant complaint pursuant to section 13-217 of the Code of Civil Procedure. 735 ILCS 5/13-217 (West 1996).
In count I of her complaint, Medow alleged that Flavin had committed slander per se on August 26, 1988, when he told a representative of Della Femina McNamee WCRF (Della Femina), a Chicago advertising firm, that Medow's association with Way to Go travel was terminated "for theft." As evidence of Flavin's alleged August 26 oral statement, Medow attached a November 22, 1988, letter written by Flavin to Della Femina's vice chairman John Wiegand. In the letter, Flavin informed Wiegand that Medow's "association with Way to Go Travel was terminated on August 25, 1988[,] for theft and your office was advised on the 26th." Medow's allegation of libel in count II is predicated on Flavin's written statement in the November 22 letter.
In count III of her complaint, Medow alleged that Flavin converted numerous items of Medow's personal property. Specifically, Medow alleged that when Flavin terminated her employment, he did not permit her an opportunity to remove her personal belongings from the Creative Travel office. Medow further alleged that, through her attorney, she sent letters to Flavin both on September 23, 1988, and October 6, 1988, demanding the return of her personal belongings. Medow alleged that Flavin failed to return a number of items.
On July 27, 1998, Flavin moved for summary judgment on counts I and II of Medow's complaint. Flavin argued that summary judgment was appropriate as to count I because Medow could not present sufficient evidence to prove that Flavin had made an oral statement accusing Medow of theft. In support, Flavin attached a transcript of Medow's deposition. During her deposition, Medow testified that she had never personally heard Flavin accuse her of theft and no one had told her that Flavin accused her of theft. Flavin also attached his own affidavit in support of the summary judgment motion. In his affidavit, Flavin averred that on August 26, 1988, he told an employee of Della Femina that Medow had been terminated but did not tell the employee that Medow had committed theft.
Flavin argued that summary judgment was appropriate as to count II because the November 22 letter containing the allegedly libelous statement was absolutely privileged as a communication pertinent to a legal proceeding. In his affidavit, Flavin admitted that he wrote the November 22 letter and that the letter stated that Medow's "association with Way to Go Travel, Inc., was terminated on August 25, 1988[,] for theft and [Della Femina's] office was advised on August 26." Flavin averred that the quoted language "meant that Della Femina's office was advised on August 26 that Phoebe Medow had been terminated, *** and not that the termination was for theft." Flavin further averred that his purpose in writing the letter was to settle a small claims action, which he had filed in his capacity as managing officer of Creative Travel against Della Femina In support of his summary judgment motion, Flavin attached a copy of the November 22 letter, a December 2, 1988, letter from Della Femina agreeing to settle the small claims suit, and a copy of the single paragraph small claims complaint. *fn2
Medow filed a response to the motion for summary judgment arguing that Flavin's motion and supporting evidence demonstrated the existence of a question of material fact as to whether Flavin orally informed a Della Femina employee that Medow committed theft, thereby precluding summary judgment on count I. As to count II, Medow argued that because section 586 of the Restatement (Second) of Torts (Restatement) (Restatement (Second) of Torts, §586 (1977)) provides an absolute privilege only to communications made by attorneys, the privilege would not extend to Flavin's statements. Medow further argued that Flavin's statements were not privileged because any suggestion that Medow had committed theft was irrelevant to the litigation between Creative Travel and Della Femina.
Following a hearing on October 14, 1998, the trial court granted summary judgment in favor of Flavin as to count I of Medow's complaint and took Flavin's motion under advisement as to count II. On December 2, 1998, the trial court granted summary judgment in favor of Flavin on count II, finding that section 587 of the Restatement (Restatement (Second) of Torts, §587 (1977)) "extends the absolute privilege to communications preliminary to a proposed judicial proceeding by parties and witnesses as well as attorneys." The trial court further found that, pursuant to Skopp v. First Federal Savings, 189 Ill. App. 3d 440, 447-48 (1989), "all doubts will be resolved in favor of a conclusion that the communication is pertinent or relevant."
The matter ultimately proceeded to trial on count III of Medow's complaint. At trial, Medow testified that she decided in early 1988 to sell Way to Go Travel because her husband was suffering from a terminal illness. Medow entered into an Asset Purchase Agreement with Creative Travel, effective May 16, 1988. Medow then continued to work for Way to Go Travel as a commissioned independent contractor pursuant to the APA until her employment was terminated by Flavin on August 25, 1988. Medow testified that Flavin informed her of the termination by telephone and told her that she was no longer welcome in the office. According to Medow, the office contained many of her personal items, items which Flavin never returned.
Shortly after the termination, Medow retained attorney Marty Schwartz. Following negotiations between Schwarz and Creative Travel's attorney, Medow was permitted to return to the office some time after August 1988 to retrieve those of her personal items that were hanging on the office walls. When Medow attempted to open a drawer to the desk she had previously used, Flavin stopped her. Schwarz advised Medow that, under the agreement negotiated by the attorneys, she was limited to recovering only those personal items hanging on the walls. Medow testified that Flavin sent boxes of personal items to her on two occasions after her termination, but that the boxes contained nothing of value to her.
Plaintiff enlisted the assistance of the Illinois Attorney General's office in late 1988 or early 1989. A woman from the Attorney General's office called Creative Travel on Medow's behalf; however, upon learning that a lawsuit had been filed, the Attorney General's office declined to take any further action, explaining that the matter should be resolved as part of the litigation. Finally, Medow testified that Flavin filed an affidavit during the course of the 1989 litigation admitting that he had seen some of the items that Medow claimed had been converted. A file-stamped copy of this affidavit was admitted into evidence.
Testifying next, Schwarz confirmed Medow's account regarding the agreement to permit Medow to remove her belongings from the office walls. Schwarz also identified letters which he had written and sent to Flavin's attorney in September and October 1988 demanding the return of Medow's personal belongings. Schwarz testified that Flavin returned a box containing some of Medow's personal property in October 1988. Schwarz recalled that the box contained primarily items of clothing.
Medow's son Ross Medow testified that he worked at Way to Go Travel until his employment was terminated at the end of June 1988. Ross testified that he removed many of his personal belongings when he was fired, but Flavin prevented Ross from accessing a box containing a set of Ross' knee x-rays, which was stored in a closet at the office. Ross also testified that he had seen many of the allegedly converted items in the office prior to his termination. Ross did not return to the office following the termination.
Called as an adverse witness, Flavin admitted that he had signed the 1989 affidavit during the earlier litigation and acknowledged that, in the affidavit, he had admitted seeing an autographed picture of Medow with Willie Mays when he cleaned off Medow's desk following her termination. Flavin testified that he now believes that he actually saw a photograph of a different baseball player and not the photograph of Medow with Mays. Flavin acknowledged that in the 1989 affidavit he denied seeing some of the items Medow claimed were converted, indicated that he had seen others, and acknowledged that some paper items belonging to Medow could have been "inadvertently discarded" or lost when Creative Travel moved its office.
In his direct testimony, Flavin testified that disagreements arose between him and Medow following the sale of Way to Go Travel and that he noticed that mail was being "intercepted" in early August. Flavin noted an August 11, 1988, letter written to him by Medow. The letter, which was admitted into evidence, expresses Medow's concern with Flavin's lack of diligence in securing regulatory approval from the Airline Reporting Corporation (ARC) for the change in ownership of Way to Go Travel. Medow also complained that Flavin had failed to assume responsibility for the telephone equipment or telephone line of Way to Go Travel. Medow further expressed concern that Flavin was violating ARC rules by exercising control over airline ticket stock and payments for airline tickets prior to ARC approval of the ownership change. Medow's letter concludes by informing Flavin that Medow would "open and retain any and all checks sent in payment of invoices or as commission." Flavin testified that, on the advice of his attorney, Flavin terminated Medow's employment by telephone on August 25, 1988, after Medow took the keys to the safe deposit box in which ticket stock was kept. Flavin testified that he informed Medow that she was not welcome back in the office.
Flavin also testified that the parties' attorneys negotiated an agreement to permit Medow to return to the office in late September or early October 1988 to remove those of her belongings hanging on the walls. Flavin testified that, because Medow arrived so late in the day, there was no opportunity to discuss property that might be located elsewhere in the agency. Following Medow's termination, Flavin told office manager Rod Quiros to go through the office and find personal items belonging to Medow. Flavin testified that the items located by Quiros were boxed and delivered to Schwarz on October 9, 1988.
Flavin testified that he received a telephone call from a woman at the Attorney General's office in January 1999. The woman indicated that Medow wished to retrieve personal property located at the Creative Travel office. Flavin informed the woman that the Attorney General could send someone over with a list, but Medow would not be permitted to come to the office. Flavin testified that did not hear from the Attorney General's office again.
In March 1989, Creative Travel relocated its office. Prior to the move, Flavin hired a woman named Jean Carter and Carter's daughter to sort through papers and property in the office. The two women were provided a copy of the APA, describing what property Medow retained following the sale of the agency. A copy of the APA was admitted into evidence and states that Medow retained ownership of all paintings, pictures, clocks, "[s]ouverniers" [sic], collector's plates, "Nick Nacks," a "[s]hip's wheel," a computer chair, a microwave oven, baseball bats, wall hangings (not including brochure racks), "Phoebe Medow's dictionary," and "any other item of a purely personal nature." Flavin testified that Carter and her daughter were instructed to segregate any personal items belonging to Medow. Flavin testified that, during the office move, two boxes were inadvertently left on a loading dock and never recovered. Flavin could not say whether any of Medow's property had been in those boxes.
Flavin acknowledged receiving an August 17, 1989, letter from Schwarz to Flavin's attorney containing a list of specific property that Medow wished to have returned. Flavin testified that, at the time he received the August 17 letter, neither he nor Creative Travel was in possession of any item on the list with the possible exception of some customer lists. Flavin testified that, shortly after purchasing Way to Go Travel, he cleaned out a closet containing a six-inch-deep stack of papers. According to Flavin, Medow thanked him for cleaning up and commented that the office looked much better after he threw away old papers. Flavin testified that, although ...