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Board of Managers of Inverrary Condominium Association v. Karaganis

Court of Appeals of Illinois, Second District

June 13, 2017

JAMES KARAGANIS and UNKNOWN OCCUPANTS, Defendants (James Karaganis, Defendant-Appellant).

         Appeal from the Circuit Court of Lake County. No. 12-LM-1993 Honorable Michael J. Fusz, Judge, Presiding.

          JUSTICE ZENOFF delivered the judgment of the court, with opinion. Justices Hutchinson and Birkett concurred in the judgment and opinion.



         ¶ 1 Defendant, James Karaganis, appeals a judgment entered in the Lake County circuit court in favor of plaintiff, the board of managers of the Inverrary Condominium Association, pursuant to the Forcible Entry and Detainer Act (forcible statute) (735 ILCS 5/9-101 et seq. (West 2014)). Defendant argues that neither the forcible statute nor the Condominium Property Act (Condominium Act) (765 ILCS 605/1 et seq. (West 2014)) imposes a personal obligation on him to satisfy any money judgment, apart from having to surrender the use and benefit of his condominium unit. Furthermore, he contends that, as part of considering "the nature of the action" when determining the amount of attorney fees to award to plaintiff (735 ILCS 5/9-111(b)(iv) (West 2014)), the trial court should have considered various matters that defendant had raised in his affirmative defenses. Finally, defendant argues that plaintiff should be sanctioned for filing a false affidavit in the trial court regarding discovery compliance. For the reasons that follow, we affirm.

         ¶ 2 I. BACKGROUND

         ¶ 3 Defendant owns a condominium unit in Deerfield, Illinois. On August 29, 2012, plaintiff filed a forcible entry and detainer complaint alleging that defendant had failed to pay common expenses in the amount of $5, 271.15 between December 2009 and July 2012. Plaintiff sought a judgment of possession, as well as a money judgment that included attorney fees and costs. See 735 ILCS 5/9-111(a) (West 2014) (when a condominium owner fails to pay his or her proportionate share of the common expenses and the court finds that such expenses are due, the plaintiff is entitled to possession of the premises and to a judgment for the amount due, including reasonable attorney fees and costs).

         ¶ 4 In September 2012, defendant, pro se, filed a counterclaim. He alleged that on December 16, 2010, he found water leaking into his garage due to a plumbing failure in an adjacent unit. The water flowed through his ceiling, rolled down the interior walls, and entered his living space. According to defendant, plaintiff refused to remediate the problem, and he incurred damages in the amount of $6, 217.

         ¶ 5 In October 2012, defendant filed his answer and affirmative defenses. As his first affirmative defense, defendant alleged that plaintiff breached its contractual duty to maintain and repair the common elements of the condominium property. As his second affirmative defense, defendant alleged that his obligation to pay his monthly assessment was nullified by plaintiff's failure to maintain and repair the common elements, such that he had actually overpaid his assessments between January 2010 and October 2012. In support of his affirmative defenses, defendant relied on this court's decision in Spanish Court Two Condominium Ass'n v. Carlson, 2012 IL App (2d) 110473, ¶ 26, which held that a condominium association's failure to perform its duties with respect to the common elements is a defense to a forcible entry and detainer action.

         ¶ 6 On March 20, 2014, in a 4-to-3 decision, the supreme court reversed our judgment in part. See Spanish Court Two Condominium Ass'n v. Carlson, 2014 IL 115342, ¶ 36. The court held that any purported failure by a condominium association to maintain and repair the common elements does not nullify an owner's obligation to pay assessments; such breach by the association is neither a legally viable defense to a forcible action nor a matter that is germane to such proceedings. Carlson, 2014 IL 115342, ¶ 35.

         ¶ 7 In the period between October 2012 (when defendant filed his original affirmative defenses) and March 2014 (when the supreme court issued its decision in Carlson), the parties engaged in extensive litigation regarding the sufficiency of defendant's pleadings. Neither party requested a stay of the proceedings while Carlson was pending before the supreme court. Defendant represented himself until April 2013, when an attorney first appeared on his behalf. In April 2014, the parties settled defendant's counterclaim. After that point, the dispute between the parties focused primarily on the issue of plaintiff's entitlement to attorney fees. As of April 2014, plaintiff was seeking more than $17, 000 in attorney fees in connection with this action.

         ¶ 8 In August 2014, defendant filed his third amended answer and amended affirmative defenses. Only defendant's second, third, and fifth defenses are relevant to this appeal. As his second defense, defendant alleged that plaintiff had breached its duty to maintain and repair the common elements and that such breach barred plaintiff from recovering contractual attorney fees pursuant to its declarations or its rules and regulations. For similar reasons, as his third defense, defendant alleged that, in deciding whether to award plaintiff attorney fees pursuant to section 9-111 of the forcible statute, the court should consider that (1) plaintiff breached its fiduciary duties, (2) plaintiff had unclean hands, and (3) when this action was originally filed, defendant's arrearage was justified by this court's decision in Carlson. As his fifth affirmative defense, defendant asserted "lack of causation." Specifically, he alleged that plaintiff's attorney fees were a direct result of its own breach of its contractual, fiduciary, and statutory obligations to maintain and repair the condominium's common elements.

         ¶ 9 In January 2015, the court set deadlines for written discovery but ordered that the parties would not engage in oral discovery. In April 2015, defendant filed what he styled as a motion in limine, in which he requested sanctions against plaintiff for failing to comply with the rules of discovery. One of the alleged discovery violations was plaintiff's failure to provide an affidavit of compliance certifying that document production was complete. See Ill. S.Ct. R. 214(c) (eff. July 1, 2014). As a sanction, defendant moved the court to bar plaintiff from prosecuting its claims for late fees and attorney fees.

         ¶ 10 The court denied defendant's motion but ordered plaintiff to answer any outstanding discovery and to furnish an affidavit of compliance. On May 11, 2015, plaintiff's president, Lynne Mastrogany, signed an affidavit attesting that she was familiar with defendant's request for production of documents, plaintiff's response to that request, and the documents produced in response to that request. Mastrogany continued: "The Association's response and production of documents in its possession that are responsive to the Defendant's First Request for Production of Documents is complete, to the best of my knowledge, information and belief."

         ¶ 11 The matter proceeded to trial on August 3, 2015. The parties stipulated that defendant owed $8, 154.75 for assessments, and plaintiff thus decided that it had no need to call any witnesses. Plaintiff tendered its third amended fee petition to the court, requesting attorney fees of $48, 835 and costs of $287.95.

         ¶ 12 In his case-in-chief, defendant introduced evidence detailing both the extensive water damage to his unit that began in December 2010 and plaintiff's failure to timely remediate that damage. For purposes of this appeal, it will suffice to say that defendant's unit remained severely water damaged until 2013, when plaintiff paid for the necessary repairs.

         ¶ 13 During defendant's case-in-chief, he also elicited certain testimony that later became the basis for a second motion for sanctions. Defendant took the position that plaintiff had incurred unnecessary legal expenses in this action, so defense counsel asked a number of questions at trial regarding plaintiff's process of supervising its attorneys. Gyneen Goodwin, an employee of the company that managed the condominium property, testified that she contracted with and communicated with plaintiff's lawyers but that she did not supervise or manage them. She testified that she did not consult with plaintiff's lawyers with respect to the decisions made in connection with the case. When asked who was supervising plaintiff's lawyers, she responded: "Well, Inverrary. We're contracting with them as their attorneys." To her knowledge, there was nobody on plaintiff's board or at the management company who made decisions about what plaintiff's lawyers did in the case. On cross-examination by plaintiff's counsel, Goodwin testified that, when an account is turned over for collection, she does not supervise every aspect of the case. She explained that she received monthly invoices from plaintiff's attorneys and that, to her knowledge, they had not done anything unauthorized.

         ¶ 14 Defendant also questioned Mastrogany, the president of the association, about the supervision of plaintiff's counsel. When asked whether she supervised plaintiff's lawyers during the course of this litigation, she responded: "We do not supervise our attorneys." On cross-examination by plaintiff's counsel, Mastrogany testified that all of the charges in plaintiff's third amended fee petition were in accordance with the collection of assessments and therefore were authorized by plaintiff.

         ¶ 15 Another issue that arose at trial was whether plaintiff had produced all documents in its possession that were responsive to defendant's discovery requests. Defendant was particularly concerned about whether plaintiff's counsel had improperly withheld certain work reports prepared by Dick Fensterle, who at one time had worked as a building engineer at the condominium property. Goodwin testified that she searched her computer for any work reports completed by Fensterle relating to defendant's unit. Asked what she found, she responded: "I don't have it with me. I turned it all over to counsel." When asked specifically whether she found any work orders completed by Fensterle, she testified that she "did see some information from [him] regarding water, " but she "handed it all over to counsel."

         ¶ 16 One final discovery issue that arose at trial pertained to the certificate of discovery compliance that Mastrogany had signed. As noted above, Mastrogany averred in her affidavit that she was familiar with defendant's request for production of documents, plaintiff's response to that request, and the documents produced by plaintiff. At trial, she acknowledged having signed the affidavit. However, she ...

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