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Home Healthcare of Illinois, Inc. v. Jesk

Court of Appeals of Illinois, First District, First Division

November 27, 2017

HOME HEALTHCARE OF ILLINOIS, INC., an Illinois Corporation, Plaintiff-Appellant,
v.
ROBIN P. JESK, Individually and d/b/a Robin P. Jesk & Associates, Defendant-Appellee.

         Appeal from the Circuit Court of Cook County No. 15 L 1231 Honorable Margaret Ann Brennan, Judge Presiding.

          JUSTICE MIKVA delivered the judgment of the court. Presiding Justice Pierce and Justice Simon concurred in the judgment and opinion.

          OPINION

          MIKVA, JUSTICE

         ¶ 1 The plaintiff in this case, Home Healthcare of Illinois, Inc. (Home Healthcare), brought claims for breach of contract and breach of fiduciary duty against the defendant, attorney Robin Jesk, who served as the escrow agent in a real estate transaction in which Home Healthcare was the buyer and Mr. Jesk's client was the seller. Home Healthcare alleged that Mr. Jesk violated the parties' escrow agreement when he released a $100, 000 down payment to the seller without having received a letter from Home Healthcare certifying that all relevant conditions precedent had occurred or been expressly waived by Home Healthcare. The Cook County circuit court granted summary judgment in favor of Mr. Jesk, on the basis that the escrow agreement contained an exculpatory clause making him liable only for "willful misconduct or gross negligence" and Home Healthcare had neither pleaded nor submitted any evidence that Mr. Jesk engaged in such conduct. For the reasons that follow, we affirm.

         ¶ 2 BACKGROUND

         ¶ 3 Through a series of agreements, Home Healthcare sought to purchase the home healthcare businesses known as Samland South Healthcare Services, Inc., an Illinois corporation, and Samland Health Care Services, Inc., a Florida corporation (collectively, Samland Healthcare). In one of these agreements, titled "Articles of Agreement for a Deed" (purchase agreement), Home Healthcare, through its president Jason Rivchin, agreed to purchase Samland Healthcare and the property located at 15300 S. Cicero Avenue in Oak Forest, Illinois, from Samland's owner and president, Flora Sampang, for a total of $1.6 million. The purchase agreement detailed a type of seller-financed transaction in which Home Healthcare would pay a down payment of $100, 000 at an "initial closing" on August 12, 2010, and maintain possession of the property while making monthly installment payments, plus interest, with a final closing to be held at a later date. Section 3 of the purchase agreement described the nature of the installment payments, after stating "Buyer has paid [a] $100, 000.00 down payment to Seller upon the initial closing." (Emphasis added.)

         ¶ 4 The escrow agreement, which is the agreement directly at issue here, expressly incorporated the terms of the purchase agreement as they related to the escrow agent, and provided in relevant part:

"WHEREAS, Buyer shall deposit upon initial closing the down payment in the amount of $100, 000.00 (hereinafter referred to as the "Deposit"); and
* * *
WHEREAS, in furtherance of such Transaction, the parties desire and the Escrow Agent is willing to hold the Deposit and Documents in escrow on the terms and conditions hereinafter set forth."

         ¶ 5 The exculpatory language that the circuit court relied on was as follows:

"7. The Escrow Agent is acting as a Stakeholder only with respect to the Deposit and the Documents. It is agreed that the duties of the Escrow Agent are only as herein specifically provided, and are purely ministerial in nature, and that the Escrow Agent shall incur no liability whatsoever except for willful misconduct or gross negligence. The Seller and the Purchaser each release the Escrow Agent from any act done or omitted to be done by the Escrow Agent in good faith in the performance of its duties hereunder as Escrow Agent."

         ¶ 6 The escrow agreement also provided:

"2. The Deposit and Documents, upon delivery to the Escrow Agent, will be directly issued upon closing to Seller after approval of all documentation by Buyer and Buyer's lender to be signed in accordance with the terms of the Agreement and all loan agreements, and; (ii) [sic] maintain the Documents, in a safe and secure place within the office of the Escrow Agent as described hereinbelow.
3. When the initial closing of the Transaction takes place, the Escrow Agent shall deliver the Deposit to or upon the Seller, provided the Buyer has executed and delivered to the Escrow Agent a letter certifying that all of the conditions precedent to be performed by Seller set forth in the Agreement between the Seller and the Buyer have been duly satisfied or have been expressly waived by Buyer, which letter shall be delivered personally by Buyer representative Jason Rivchin to the Escrow Agent.
4. In the event the Seller is unable to satisfy the conditions at initial closing, any Deposit held by the Escrow Agent shall be returned to the Buyer by the Escrow Agent, and the Documents shall be returned to the Seller whereupon the Agreement and this Escrow Agreement shall be cancelled and none of the parties hereto shall have any further rights and obligations hereunder, except as provided in the [purchase agreement]."

         ¶ 7 Section 5 of the purchase agreement explained what was to happen at the initial closing on August 12, 2010. It provided that Home Healthcare, which had taken possession of the property before that initial closing date, would be granted "continued possession at [the] time of [the] initial closing *** provided that the full down payment due in favor of Buyer, [wa]s paid to Seller in cash or by cashier's or certified check on the initial closing date." Section 8(iii)(e) of the purchase agreement provided that "taking possession of the Property" would be "conclusive evidence that [Home Healthcare] in all respects accepts and is satisfied with the physical condition of the Property, all matters shown on the survey and the condition of the title to the Property as shown to him on or before the initial closing."

         ¶ 8 Paragraphs 5 and 6 of "Rider A" to the purchase agreement further provided that the seller's attorney, Mr. Jesk, would hold in escrow, until a later "final" closing date, both a general warranty deed for the property and the original stock certificates for the business.

         ¶ 9 Notably, the text of paragraph 2 of the escrow agreement regarding the deposit to be delivered to the escrow agent, as quoted above, is the text of that provision after handwritten changes were made by Mr. Rivchin and initialed by the parties at the initial closing. Paragraph 2 originally provided as follows:

"2. The Deposit and Documents, upon delivery to the Escrow Agent, will be deposited by Escrow Agent into i) for the Deposit, to the IOLTA account of Escrow Agent at ___ Bank, if not disbursed to Seller at the initial closing after approval of all documentation by Buyer and Buyer's lender to be signed in accordance with the terms of the Agreement and all loan agreements, and; (ii) maintain the Documents, in a safe and secure place with the office of the Escrow Agent as described hereinbelow."

         ¶ 10 Home Healthcare alleged in its complaint that its president, Jason Rivchin, delivered to Mr. Jesk at the initial closing on August 12, 2010, a check for $100, 000, made payable to Ms. Sampang, but that at no time did Mr. Rivchin or any other representative of Home Healthcare deliver a letter, pursuant to paragraph 3 of the escrow agreement, certifying that all conditions precedent to the purchase agreement had occurred or been waived. Home Healthcare alleged that, by giving Ms. Sampang the check without first receiving the letter required by paragraph 3, Mr. Jesk breached the escrow agreement and, as a result, his fiduciary duty as an escrow agent.

         ¶ 11 In his answer to the complaint, Mr. Jesk admitted that he agreed to serve as escrow agent for the transaction pursuant to the terms of the parties' purchase and escrow agreements but denied ever receiving a check payable to Ms. Sampang. According to Mr. Jesk, "the deposit of $100, 000 was paid by the buyer directly to the seller and was never placed in the hands of the defendant as escrow agent or in any capacity whatsoever." In his responses to Home Healthcare's requests to admit, Jesk further contended that he "was directed by the parties to hold the documents only and the deposit of $100, 000 was to go directly to the seller upon the initial closing" on August 12, 2010.

         ¶ 12 Throughout discovery, the parties adhered to their opposing versions of what took place at the initial closing and professed very different understandings of Mr. Jesk's duties as escrow agent.

         ¶ 13 At his deposition, Mr. Jesk testified that he is engaged in the general practice of law, with approximately 25% of his work involving real estate transactions but with "[v]ery limited" experience as an escrow agent. In Mr. Jesk's experience, "[t]here was never a reason to hold money in escrow in an articles of agreement deal" like the one at issue here; in such transactions, the initial payment and all subsequent payments are made by the buyer directly to the seller, and only the deed and other relevant documents are held in escrow. As Mr. Jesk explained, "usually a buyer wants the deed held to know that it's available if he fulfills his contractual terms." Mr. Jesk acknowledged ...


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