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Ovnik v. Podolskey

Court of Appeals of Illinois, First District, Sixth Division

September 1, 2017

JOHN OVNIK, KIMBERLEE OVNIK, and CHICAGO MUSIC WORKS, INC. d/b/a Deaf Dog Music, Plaintiffs-Appellees,
v.
GALINA PODOLSKEY and VADIM GOSHKO, Defendants-Appellants.

         Appeal from the Circuit Court of Cook County No. 13 L 12989 Honorable Patrick J. Sherlock, Judge, Presiding.

          HOFFMAN PRESIDING JUSTICE delivered the judgment of the court, with opinion. Justice Rochford concurred in the judgment and opinion. Justice Delort specially concurred, with opinion.

          OPINION

          HOFFMAN PRESIDING JUSTICE

         ¶ 1 The defendants, Galina Podolskey (Galina) and Vadim Goshko (Vadim), appeal from various orders entered by the circuit court in the instant action brought by the plaintiffs, John Ovnik (John), Kimberlee Ovnik (Kimberlee) (collectively, the Ovniks), and Chicago Music Works, Inc. d/b/a Deaf Dog Music (CMW), seeking damages by reason of the defendants' failure to return the security deposit posted with them in connection with the rental of a townhouse plus penalties, interest, attorney fees, and costs under the Chicago Residential Landlord and Tenant Ordinance (RLTO) (Chicago Municipal Code § 5-12-010 et seq. (amended Mar. 31, 2004)). On appeal, the defendants contend, inter alia, that the circuit court erred by: denying, in whole or in part, three motions to dismiss that they brought pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2014)); and granting summary judgment in Kimberlee's favor. For the reasons that follow, we reverse the summary judgment entered by the circuit court and remand the matter for further proceedings consistent with this opinion.

         ¶ 2 The following factual recitation is derived from the pleadings and exhibits of record.

         ¶ 3 In May 2009, the defendants, as the lessors, entered into a two-year lease agreement to lease a townhouse located at 1816 South Indiana Avenue in Chicago. The lease agreement stated that it was "for a private dwelling" and included a copy of the RLTO. The named lessee was CMW and John, CMW's sole shareholder, was a guarantor. Although Kimberlee paid the $6, 375 security deposit with a personal check (the 2009 security deposit), the lease agreement stated that "[l]essee has deposited with [l]essor the security deposit" and that, upon termination of the lease agreement, the security deposit "shall be returned to [l]essee, including interest[ ] ***." In October 2010, CMW fell behind on its rent payments due under the lease. On November 12, 2010, John sent a text message to Galina, stating that she could deduct October's rent from the 2009 security deposit and that he was "not concerned with earning interest on the deposit."

         ¶ 4 The lease agreement was renewed for another two-year term beginning in June 2011. The renewal lease agreement listed both CMW and John as tenants and required an additional security deposit of $6, 757.50, which CMW paid (the 2011 supplemental security deposit), for a total security deposit of $13, 132.50 (the combined security deposit). In May 2013, at the end of the two-year renewal lease term, the townhouse was vacated, but the defendants refused to return the combined security deposit.

         ¶ 5 On November 14, 2013, the Ovniks filed the instant action seeking to recover the combined security deposit plus penalties, interest, attorney fees, and costs under sections 5-12-080(f)(1) and 5-12-180 of the RLTO (Chicago Municipal Code §§ 5-12-080(f)(1) (amended July 28, 2010), 5-12-180 (amended Nov. 6, 1991)).

         ¶ 6 On August 11, 2014, the defendants filed a motion pursuant to section 2-619 of the Code to dismiss that portion of the plaintiffs' complaint seeking interest, penalties, attorney fees, and costs, alleging that John waived the plaintiffs' right to "any interest" on the combined security deposit. In her affidavit filed in support of the defendants' motion, Galina attested that she did not pay interest on the security deposit due to the text message she received from John on November 12, 2010. The Ovniks filed a response and attached an affidavit from John, who claimed that Galina offered to return the combined security deposit with interest if he and Kimberlee signed a release agreement when they vacated the townhouse. The circuit court denied the defendants' motion to dismiss, finding that the plaintiffs could not, as a matter of law, waive their right to interest and were, therefore, not estopped from raising a claim for interest.

         ¶ 7 A three-count second amended complaint was subsequently filed by John, Kimberlee, and CMW, alleging that the defendants: (1) failed to return the combined security deposit (count I); failed to pay interest on the security deposit from June 1, 2011, to May 31, 2012 (count II); and failed to pay interest on the security deposit from June 1, 2012, to May 29, 2013 (count III). The same attorney represented both CMW and the Ovniks.

         ¶ 8 On April 20, 2015, the defendants filed a motion to dismiss the second amended complaint pursuant to section 2-619 of the Code, arguing that the RLTO does not apply to corporate entities such as CMW, and the plaintiffs, therefore, lacked standing to bring a claim under the RLTO. They asserted that the Ovniks were not parties to the lease agreements and that it was CMW that paid both security deposits. The defendants supported their motion with copies of CMW's rent checks.

         ¶ 9 On June 3, 2015, the circuit court granted the defendants' motion in part. Although the circuit court held that the RLTO applied to all three plaintiffs, it, nevertheless, dismissed the Ovniks as party-plaintiffs for lack of standing based upon its finding that they had not paid any security deposit. The circuit court denied the motion as to CMW.

         ¶ 10 On June 10, 2015, the defendants filed their answer to the second amended complaint along with their affirmative defenses and a four-count counterclaim. In their affirmative defenses, the defendants again asserted that the RLTO did not apply to corporate lessees and that John had waived interest on the security deposit in his November 12, 2010, text message.

         ¶ 11 On July 2, 2015, the Ovniks filed a motion to reconsider the circuit court's order dismissing them as plaintiffs. They argued that, contrary to the court's factual determination, Kimberlee had paid the 2009 security deposit. In support of their motion was Kimberlee's affidavit and ...


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