author: PRESIDING JUSTICE COCCIA

text:
    ELIZABETH S. CHEN et al., Plaintiffs-Appellants, v. THE DEPARTMENT OF REVENUE, Defendant-Appellee.
    First District (5th Division)
    No. 1—88—2519
    Opinion filed March 30, 1990.

      Daniel T. Harnett, of Silets & Martin, Ltd., of Chicago, for appellants.
    Neil F. Hartigan, Attorney General, of Springfield (Robert J. Ruiz, Solicitor General, and Karen Michels Caille, Assistant Attorney General, of Chicago, of counsel), for appellee.
   PRESIDING JUSTICE COCCIA

delivered the opinion of the court:

I

Taxpayers appeal from an order entered by the circuit court confirming the Illinois Department of Revenue’s decision that they were not entitled to a refund, based upon a valuation limitation deduction, for the taxable year ending December 31, 1983. We affirm for the following reasons.

II

Pursuant to Illinois Supreme Court Rule 323(d) (107 Ill. 2d R. 323(d)), the parties have filed an agreed statement of facts in lieu of a report of proceedings. Monroe-Franklin Properties is a partnership that, during calendar year 1983, conducted business in Illinois and filed a Form IL — 1065 (Partnership Information and Replacement Income Tax Return) on April 15, 1984, for that year. The partners of Monroe-Franklin Properties are the taxpayers who have prosecuted this appeal.

The partnership acquired a building at 230 West Monroe Street, Chicago, in 1971. On July 1, 1979, the building’s valuation was $36,700,000. As the building’s Federal taxable basis on July 1, 1979, was $12,627,926, the building’s valuation exceeded the basis by $24,072,074. The partnership sold the building in September 1983.

On its 1983 return, the partnership reported on line 1 — “Unmodified Base Income” — $30,955,821. The partnership reduced that figure by $24,072,074, which it claimed as a valuation limitation deduction. On the return, the partnership stated that it had calculated the valuation limitation from July 1, 1979, rather than August 1, 1969, which was the date the printed form required.

The Department of Revenue (Department) determined that the partnership had improperly reduced its base income by calculating the valuation limitation amount from July 1, 1979, instead of August 1, 1969; consequently, the Department issued a math error notice. The Department assessed a replacement tax deficiency of $361,081 against taxpayers for 1983.

Taxpayers paid this deficiency, together with interest of $27,095.91, to the Department on December 20, 1984. On the same date, they filed a claim for refund with the Department, requesting that the deficiency be returned to them along with interest as allowed by law. On February 14, 1986, the Department notified taxpayers of its intent to deny their claim. The proposed denial was grounded upon the Department’s determination that the valuation limitation deduction should be calculated from August 1, 1969, instead of July 1, 1979, the date used by taxpayers. On March 28, 1986, taxpayers formally protested the proposed denial, and they requested a hearing before the Department on their claim.

The hearing was held on July 22, 1987. On December 2, 1987, the Department issued a notice of decision concerning taxpayers’ claim for refund of personal property replacement tax for the taxable year ending December 31, 1983. The administrative law judge (ALJ) decided that taxpayers were not entitled to a refund.

The parties entered into a stipulation of fact, which the ALJ adopted as his findings of fact. The parties stipulated that all jurisdictional requirements for an administrative hearing had been met. Otherwise, the stipulation of fact is virtually identical to the agreed statement of facts filed in this court. The ALJ’s conclusions of law include a discussion of the valuation limitation deduction’s history; accordingly, they merit some attention.

According to the ALJ, the parties agreed that the sole issue was whether the valuation limitation deduction provided for partnerships in section 203 of the Illinois Income Tax Act (Act) should be calculated from August 1, 1969, or July 1, 1979. (See Ill. Rev. Stat. 1985, ch. 120, par. 2 — 203.) The ALJ reviewed the relevant legislative history. On July 1, 1979, the General Assembly amended the Act to include a personal property replacement tax. (See Pub. Act 81 — 1st, 1st Special Session, §2, eff. August 14, 1979.) Along with the existing income tax, the replacement tax was placed upon income earned by corporations, trusts and estates, and partnerships. Corporations and trusts had been taxed previously under the Act, but partnership income had been treated as income of the individual partners.

For purposes of the replacement tax, the ALJ observed, partnerships became taxable entities. Section 203(c), now codified as section 203(d), was inserted into the Act to provide for the computation of the replacement tax. (See Ill. Rev. Stat. 1985, ch. 120, par. 2— 203(d).) Section 203(d) provided various addition and subtraction modifications that were used to raise or lower taxable income. Subsection 203(d)(2)(E) allowed the subtraction, from taxable income, of “[t]he valuation limitation amount.” See Ill. Rev. Stat. 1985, ch. 120, par. 2 — 203(d)(2)(E).

The ALJ opined that the interpretation of this phrase was central to the resolution of the dispute before him. The phrase also appeared in subsections 203(a)(2)(G) — regarding individuals — and 203(c)(2)(H) — concerning estates and trusts. (See Ill. Rev. Stat. 1985, ch. 120, pars. 2 — 203(a)(2)(G), (c)(2)(H).) Section 203(f), in turn, enacted:

“Valuation limitation amount.
(1) In general. The valuation limitation amount referred to in subsections (a)(2)(G) and (c)(2)(H) is an amount equal to:
(A) The sum of the pre-August 1, 1969 appreciation amounts (to the extent consisting of gain reportable under the provisions of Section 1245 or 1250 of the Internal Revenue Code) for all property in respect of which such gain was reported for the taxable year; plus
(B) The lesser of (i) the sum of the pre-August 1, 1969 appreciation amounts (to the extent consisting of capital gain) for all property in respect of which such gain was reported for federal income tax purposes for the taxable year, or (ii) the net capital gain for the taxable year, reduced in either case by any amount of such gain included in the amount determined under subsection (a)(2)(F) or (c)(2)(G).” Ill. Rev. Stat. 1985, ch. 120, par. 2 — 203(f).

The ALJ noted that section 203(f) goes on to define the pre-August 1, 1969, appreciation amount in detail. While section 203(f) has been included in the Act since 1971, it was not amended in 1979 to provide a valuation date for subsection 203(d)(2)(E). As a result, taxpayers argued, the valuation date for partnerships under the replacement tax should be July 1, 1979: the date that tax became effective.

After reviewing the Act as a whole, the ALJ determined that the legislature intended that the valuation limitation deduction for partnerships should be based upon the August 1, 1969, date. In amending the Act to include the replacement tax, the ALJ reasoned, the General Assembly neglected to amend section 203(f) to make reference to subsection 203(d)(2)(E).

The ALJ stated that the valuation limitation came into the newly adopted Act in 1969, when the supreme court construed it to provide the limitation. (See Thorpe v. Mahin (1969), 43 Ill. 2d 36, 250 N.E.2d 633.) In response to Thorpe, the legislature amended the Act in 1971 to include a valuation limitation deduction for individuals and trusts and estates, but not for corporations.

In light of the deduction’s history, the ALJ decided, the valuation limitation provided in subsection 203(d)(2)(E) was intended to give a subtraction modification consistent with that provided to individuals and estates and trusts. The ALJ reasoned that his interpretation was supported by the fact that the General Assembly had used the language “[t]he valuation limitation amount” in subsection 203(d)(2)(E), suggesting that it had only one valuation limitation in mind: that in effect since Thorpe.

The ALJ found additional evidence to support his thesis, that the ambiguity in the Act was brought about by a minor drafting error, in the fact that section 203(f) provided detailed rules for computing the valuation limitation. Those rules all relied upon an August 1, 1969, date. Had the General Assembly intended to grant the July 1, 1979, valuation date to partnerships, further computational rules would have been necessary. Failure to amend the Act in this fashion would have been a serious legislative oversight. According to the ALJ, it was more likely that the legislature overlooked including one subsection — namely subsection 203(d)(2)(E) — in section 203(f); it was less likely that the legislature overlooked providing all the detailed rules necessary to implement the July 1, 1979, date.

Finally, the ALJ observed that the General Assembly amended the Act on September 18, 1986, specifically providing an August 1, 1969, valuation date for partnerships. (See Ill. Rev. Stat. 1987, ch. 120, par. 2 — 203(f).) Taxpayers asserted that this amendment confirmed their point that the original replacement tax included a July 1, 1979, valuation date. But the ALJ concluded that the amendment simply corrected a drafting error in the original statute, and that it did not work a substantive change in the law. The amendment’s clear intent was to provide an August 1, 1969, date in all instances. When the Act was read as a whole, and in view of the valuation limitation deduction’s history, the General Assembly’s intent to use an August 1, 1969, date was unmistakable. The ALJ ruled that taxpayers failed to carry their burden of showing entitlement to a claim for refund; therefore, their claim should be denied.

On January 1, 1988, taxpayers filed a complaint for administrative review in the circuit court. Their motion for summary judgment was filed on April 4, 1988. On June 17, 1988, the court heard arguments in connection with the motion. The court confirmed the Department’s decision on July 25, 1988, ruling that the valuation limitation deduction provided for partnerships in section 203(d)(2)(E) of the Act should be calculated from August 1, 1969, the Act’s effective date, instead of July 1, 1979. The court concluded that the legislature intended to include the 1969 date in the 1979 amendments to the Act, that it erroneously omitted that date, and that the Department could supply the omission to carry out legislative intent. Thus, the circuit court determined, the Department’s decision was not contrary to the law.

Taxpayers have appealed from the circuit court to this court. On appeal, the parties agree that no factual issues remain regarding the validity of taxpayers’ claim for refund. They likewise agree that if the personal property replacement income tax is construed to establish a valuation limitation basis date for partnership capital property of July 1, 1979, then taxpayers’ calculation of their valuation limitation deduction on the 1983 Form IL — 1065 was correct. And the parties agree that if the replacement tax is construed to establish a valuation limitation basis date for partnership capital property of July 1, 1979, the partnership is entitled to the refund it claimed on December 20, 1984. As the relevant facts are undisputed, whether taxpayers are entitled to the deduction is a question of law, depending solely upon an application of the appropriate legal standard to those facts. See Girl Scouts of DuPage County Council, Inc. v. Department of Revenue (1989), 189 Ill. App. 3d 858, 861, 545 N.E.2d 784, 786.

Ill

In their initial brief, taxpayers argue that we should reverse the circuit court. This argument is, when reduced to its essence, supported by two premises. First, taxpayers contend that the circuit court violated a canon of statutory construction by not reading the Act in their favor. They assert that for each plausible explanation advanced in support of the 1969 valuation limitation date, an equally valid explanation can be advanced in support of the 1979 date. Given the principle that tax laws should be construed in favor of citizens in cases of doubt, they conclude that the circuit court erred when it decided upon the 1969 date. Second, taxpayers maintain, the circuit court violated another canon of statutory construction, by applying the Act retrospectively rather than prospectively. Since the General Assembly did not specify a date from which to measure the valuation limitation for partnerships, and since the 1969 date was retrospective, taxpayers conclude that the circuit court should have applied the 1979 date.

Ordinarily, a taxing authority has the burden of proof concerning taxpayers’ liability to the government. When taxpayers seek to take advantage of deductions allowed by statute, however, the burden of proof is upon them. This is so because deductions are privileges created by statute, as a matter of legislative grace. (Balla v. Department of Revenue (1981), 96 Ill. App. 3d 293, 295, 421 N.E.2d 236, 238.) As a consequence, deductions are strictly construed in favor of taxation. Balla, 96 Ill. App. 3d at 295, 421 N.E.2d at 238; see also National Realty & Investment Co. v. Department of Revenue (1986), 144 Ill. App. 3d 541, 552, 494 N.E.2d 924, 931.

The opinions of both the circuit court and the ALJ reveal that they appeared to follow the general rule, which requires tax laws to be construed in favor of taxpayers, so it cannot be said that they applied the Act in favor of taxation. But to the extent that the circuit court and the ALJ may have construed the Act against taxpayers, the cases cited above demonstrate that such construction could not be erroneous.

We turn next to taxpayers’ contention that the circuit court applied the Act retrospectively, instead of prospectively. In Warren Realty Co. v. Department of Revenue (1978), 62 Ill. App. 3d 450, 379 N.E.2d 100, the appeals court was faced with a similar argument. Plaintiff in that case was a corporation. Plaintiff purchased realty in 1950 and sold it in 1972, for more than its original cost. On its Federal income tax return, plaintiff reported as gain the amount by which the sale price exceeded the original cost less depreciation, thereby including in its taxable income the appreciation that occurred in prior years. The Illinois Income Tax went into effect on August 1, 1969 (see Ill. Rev. Stat. 1977, ch. 120, par. 1 — 101 et seq.), as we mentioned above. On its 1973 Illinois income tax return, plaintiff deducted the valuation limitation amount from its Federal taxable income in order to arrive at its net income for Illinois tax purposes. The Department disallowed the deduction.

The appellate court held that a tax on appreciation occurring prior to the effective date of a taxing act, yet not realized until after that date, is not truly retroactive. (See Warren Realty, 62 Ill. App. 3d at 452, 379 N.E.2d at 102.) The court discussed the history of the valuation limitation deduction at length. By initiating that deduction in Thorpe, the Warren Realty court stated, the supreme court did not reach the issue of the propriety of taxing prior appreciations of property. In Mitchell v. Mahin (1972), 51 Ill. 2d 452, 283 N.E.2d 465, the appellate court went on to note, the supreme court reaffirmed Thorpe. In Mitchell, Justice Davis filed a dissenting opinion, in which Justice Schaefer joined. As the majority opinion did not address the issue before the appellate court in Warren Realty, the appeals court adopted Justice Davis’ reasoning. Justice Davis said:

“It seems clear from these cases that a tax measured by income is a tax upon realized gain. The fact that a portion of the gain may be attributable to increases in value of the income-producing items prior to the effective date of the [Illinois Income Tax] Act, or may be attributable to something done prior to such date, does not render the taxing statute retroactive so long as the gain or profit is not ‘realized’ until after such date.” (62 Ill. App. 3d at 453, 379 N.E.2d at 102, citing 51 Ill. 2d at 464, 283 N.E.2d at 471. (Davis, J., dissenting).)

Because plaintiff in the case before it actually realized no gain until after the Act’s effective date, the appellate court came to the conclusion that the entire amount of its gain was properly taxed as income. Warren Realty, 62 Ill. App. 3d at 453, 379 N.E.2d at 102.

In light of Warren Realty, we are not persuaded by taxpayers’ retroactivity theory. Taxpayers — like plaintiff in Warren Realty— realized no gain on the sale of their property until after the relevant tax law’s effective date, here 1979. That is, taxpayers acquired their building in 1971, yet they did not realize a gain until it was sold in 1983, well after the partnership replacement tax’s effective date of July 1, 1979. We are faced with no retroactivity issue, then, since the taxable event occurred contemporaneously with the realization of gain. See National Realty and Investment, 144 Ill. App. 3d at 547, 494 N.E.2d at 928 (when receipt of payment, the taxable event upon which tax is levied, takes place in the present, there is no retroactivity question).

Taxpayers have raised further points in their reply brief, answering arguments made in the Attorney General’s brief. As we have not based our opinion upon the contentions advanced by the Attorney General, those points need not be addressed.

IV

For the stated reasons, the circuit court’s decision, upholding the Department’s denial of the taxpayers’ claim for refund, is affirmed.

Affirmed.

MURRAY and GORDON, JJ., concur.

       Justice R. Eugene Pincham participated in this case prior to his resignation. Since that time, Justice Joseph Gordon was designated the third member of the panel and has read the record and briefs and has listened to the oral argument tapes.


source: Caselaw Access Project

author: JUSTICE LORENZ

license: Public Domain

text:
    STEPHEN J. NARDI et al., Plaintiffs-Appellants, v. HELEN KAMERMAN et al., as Co-Ex’rs of the Estate of Joseph M. Kamerman, Defendants-Appellees.
    First District (5th Division)
    No. 1—88—2899
    Opinion filed March 30, 1990.

      Handel, Lipton & Stevenson, Ltd., of Chicago (Richard L. Handel, R. Peter Carey, and Uve R. Jerzy, of counsel), for appellants.
    Ira Gould and James W. Harks, both of Holleb & Goff, of Chicago, for appellees.
   JUSTICE LORENZ

delivered the opinion of the court:

Narco N/K Construction Company, Ltd., and Stephen J. Nardi appeal from judgment, following a bench trial, in favor of the estate of Joseph M. Kamerman.

We affirm.

Joseph M. Kamerman, Steven J. Nardi, and Gary Shifrin were principals in Narco/Cable Kamerman, Inc., later renamed Narco N/K Construction, Ltd. (Narco), a Delaware corporation, which was formed in 1978. Kamerman and Nardi had previously been partners in a number of real estate development ventures. Narco was formed to provide construction services for Nardi’s separate enterprises, known as The Nardi Group. In effect, The Nardi Group operated as a real estate development sales force, generating business for Narco’s construction services. Kamerman and Nardi each owned 47% of Narco’s stock. Kamerman was Narco’s president. Shifrin, who was controller for The Nardi Group, was also Narco’s controller and vice-president. Shifrin owned the remaining 6% of Narco stock.

Narco suffered business losses in fiscal years 1978, 1979, and 1980. By March 1982, Narco had a $575,000 cash deficit, primarily due to obligations owed to Narco’s subcontractors.

Following a dispute among the principals regarding management of Narco, Kamerman resigned. Shifrin and Nardi remained as Narco’s directors. Nardi became president.

Narco and Nardi thereafter sued Kamerman. The allegations made in counts I, II, V, VI, VII, and VIII of plaintiffs’ complaint are ultimately at issue in this appeal. In count I, plaintiffs alleged the existence of an oral pre-incorporation subscription agreement among the three shareholders. The agreement purportedly obligated each to make additional capital contributions or loans to Narco in proportion to their percentage of stock ownership if Narco suffered losses or had debts it was unable to repay. The advances were to be repaid by Narco from profits. Count I alleged Kamerman failed to advance his proportionate share of Narco’s cash deficit in breach of that agreement. Count II alleged Kamerman refused to tender his shares in Narco to the remaining shareholders as Kamerman was obligated to do upon termination with Narco under a stock purchase agreement. Counts V, VI, and VII alleged Kamerman breached fiduciary duties by causing Narco to perform personal construction services on Kamerman’s residences and to pay Kamerman, or others for Kamerman’s benefit, expenses which were not incurred with regard to Narco’s business. Count VIII alleged Kamerman further breached fiduciary duties by causing Narco to pay debts Kamerman had, in whole or part, personally guaranteed from sums received by Narco for construction services performed.

Kamerman was deposed on January 13, 1983, and April 11, 1983. However, Kamerman died before the matter reached trial.

At trial, Kamerman’s estate moved, in limine, to bar Nardi and Shifrin from testifying under operation of the Dead Man’s Act (Ill. Rev. Stat. 1985, ch. 110, par. 8 — 201). The estate also sought to bar plaintiffs from admitting into evidence four items of correspondence, in the nature of memos, written by Kamerman in February and March 1982, on the ground that the items constituted inadmissible offers of settlement. Rulings on both motions were reserved until trial. Ultimately, the trial judge ruled in favor of the estate on both motions and granted judgment for the estate on all counts.

This appeal followed.

Opinion

Plaintiffs contend the trial judge erred in excluding the four memos from evidence. Specifically, plaintiffs argue the memos contain Kamerman’s acknowledgement of obligations to loan Narco money pursuant to the pre-incorporation agreement and to reimburse Narco for personal expenses paid by the company.

Three of the items plaintiffs sought to introduce are dated as written February 11, 1982, March 5, 1982, and March 9, 1982. The fourth, undated memo appears to have been written some time between the memos dated March 5, 1982, and March 9, 1982. Although, presumably, all four items were written to Nardi, only the memos dated March 5, 1982, and March 9, 1982, contain a salutation to him. The other memos contain no salutation. All four items are handwritten in pencil.

We set out below the relevant portions of the memos.

The February 11, 1982, memo, headed “Review of past & future,” contains Kamerman’s analysis of possible causes for Narco’s losses. The memo contains the following closing:

“As I said yesterday I do recognize my obligation and should your opinion be that a change in leadership would be a better solution I would do nothing to prohibit a smooth transition and make every effort to meet my portion of the deficits which I feel greatly responsible, yet not fully responsible for. Should we determine to continue I would like to suggest an open meeting involving you, ***, Gary Shifrin and I [sic] perhaps others to discuss ways to prevent possible reoccurrence of the bloodbath.”

The March 5, 1982, memo states, in part:

“Dear Steve:
Pursuant to our discussion of last evening, as well as prior thought, I would hope neither of us will desire to challenge the other by a waste of energy or pettiness. I have endeavored to recognize the position you will be assuming in terms of cash outlay, etc. [a]s well as your desire to protect your reputation and name. I too covet my reputation and integrity. Recognizing your endeavors to succeed I ask your consideration of my position and 35 years of business endeavor. *** I do not ask your sympathy only your human understanding. I do not wish your financial contribution, nor do I have the wherewithal to give away "mine. It is with this spirit and attitude that I have prepared the analysis I am submitting. To the best of my belief it is fairly accurate and fair. I do not consider this a negotiation, rather a reasonable resolution, I would hope you will see it the same way. I took the liberty of rounding odd dollars (both ways) and endeavored to be all inelusive[,] i.e. any liability or debt of mine.
* * *
It is with the business consideration in mind that we must mutually agree to terminate our relationship. All of the introduction has been my totally honest, objective, and emotional expression of feeling.”

The memo then contains several financial calculations including what Kamerman was prepared to pay in return for release of “all claims now or future.” The memo states:

“I have written this rather than attempting to verbalize it as I believe it will better avoid any personality conflict. I await your comments.”

The memo dated. March 9, 1982, states, in part:

“Dear Steve:
* * *
As I said I searched long and hard for an answer and in this spirit I have made an evaluation which I believe provides an answer. *** To avoid this confrontation [over asset valuation] and allow us both to move on to hopefully better things I will make the following offer after a consideration of a $10,000 calculation error by Gary, a reduced evaluation on my venture interests, personal obligations of mine to the company, etc. For the sum of $84,000 paid to me, title to the Lincoln car, full releases from any and all obligations to you or any of the companys [sic], a paid bill for the construction bills paid on my behalf, a paid bill for the $11,038 worth of receivables attributed to me, a paid note for the $100,000 personal loans, my personal files and Cable Kamerman files, as well as any personal possessions not owned by the company, I will release any claim to any assets of the companys [sic], my interests in Narpod Elmhurst, Narco 350, Narco 534, and Narco Gary Ave. I will further sign over my stock in the company’s [sic] and any interest in Narco Development, as well as claims to anything jointly owned which I may have forgotten.
* * *
Lastly I would hope this will allow us both to maintain our dignity, pride and friendship. Once again I have chosen to write in the hope of avoiding conflict and bitternessf.]”

The undated memo consists of a comparison of Kamerman’s financial calculations with those of Nardi. The memo closes with the following:

“I write this synopsis to once again endeavor a peaceful ending.
* * *
I do not feel I am being unfair or unreasonable and truly desire a peaceful conclusion.”

Decisions respecting admission of evidence are matters within the trial judge’s discretion and may not be reversed absent a clear abuse. (Cole v. Brundage (1976), 36 Ill. App. 3d 782, 344 N.E.2d 583.) In Illinois, matters relating to offers of settlement or compromise are ordinarily inadmissible, but admission of other facts elicited incidentally during settlement discussions may be introduced as evidence. In re Marriage ofPassiales (1986), 144 Ill. App. 3d 629, 494 N.E.2d 541.

After carefully reviewing the memos in their entirety, we con-elude the trial judge did not abuse his discretion in determining that the memos constituted inadmissible offers of settlement. The memos indicate Kamerman’s desire to arrive at a compromise such as would minimize hostilities between the parties in conjunction with Kamerman’s departure from Narco.

However, notwithstanding that the memos constitute offers of settlement, plaintiffs argue the memos contain statements of independent fact inconsistent with Kamerman’s position at trial which the trial judge should have allowed as evidence.

Plaintiffs first cite to language in the February 11, 1982, memo in which Kamerman wrote “I do recognize my obligation” and “[will] make every effort to meet my portion of the deficit which I feel greatly responsible for, yet not fully responsible for.” Plaintiffs state any doubt that those statements refer to Kamerman’s obligations under the alleged pre-incorporation agreement is dispelled by Kamerman’s deposition testimony, portions of which plaintiffs introduced as evidence at trial. Specifically, plaintiffs rely on the following testimony relating to the content of the February 11, 1982, memo:

“Q. [Plaintiffs’ Attorney]: You say you recognize an obligation, and I still don’t think you have told me what obligation you recognize.
The obligation that you are referring to, is that the obligation to contribute more capital?
A. [Kamerman]: I am assuming from what I am reading is that I was talking about two things.
Q. Okay. And those two things are?
A. I reiterated that before.
Q. What you have said before?
A. Yes.
Q. Later on you say quote, ‘Make every effort to meet my portion of the deficits, which I feel greatly responsible for.’
A. ‘Which I feel greatly responsible, yet not fully ***.’
Q. Let’s start over again. And later on you say, and I quote, ‘and make every effort to meet my portion of the deficits which I feel greatly responsible, yet not fully responsible for.’ Period, end quote.
A. I will assume that's what I was talking about.
Q. What did you mean by your portion of the deficits?
A. I will presume that I meant my pro rata portion.
Q. 47 percent?
A. I will assume so.
Q. When you talk about your assumptions, you are talking about your current recollection or your current assumptions of what you meant?
A. Right. It was a rather emotional time.”

We do not read Kamerman’s deposition testimony with the same certainty as plaintiffs. At best, plaintiffs’ attorney was able to elicit, from Kamerman, Kamerman’s assumptions, as of the time of the deposition, of what Kamerman meant at the time of the writing of the February 11, 1982, memo. Contrary to plaintiffs’ arguments, Kamerman’s statements as to his then current assumptions fall short of constituting the type of deliberate, detailed, and unequivocal admissions at pretrial depositions which have been held sufficient to bind party-deponents at trial. See Young v. Pease (1983), 114 Ill. App. 3d 120, 448 N.E.2d 586.

Moreover, we note that, in response to plaintiffs’ attorney’s inquiry as to what obligation Kamerman was recognizing in the February 11, 1982, memo, Kamerman stated he had meant “two things.” Plaintiffs’ attorney then acknowledges that Kamerman’s answer is a reiteration of earlier deposition testimony. Plaintiffs, however, did not refer the trial court to the earlier passage in the deposition and did not include, in the record on appeal, the pages of the transcript of Kamerman’s deposition testimony preceding the pages from which the above passage is quoted. Thus, we cannot conclude that the portion of deposition testimony relied on by plaintiffs unequivocally establishes that Kamerman admitted the existence of any oral pre-incorporation agreement.

Plaintiffs also point out Kamerman used a 47% figure as a multiplier in his calculations in the March 5, 1982, and the undated memos. However, we do not determine, based on that fact, that the trial judge abused his discretion in declining to admit that matter as an admission of Kamerman.

Notations in both memos indicate the calculations are based on analyses other than from Kamerman himself. The calculations in the March 5, 1982, memo are preceded by the notation “Per Shifrin prepared summary thru 2/22/82.” The calculations in the undated memo are preceded by Kamerman’s notation “Were I to accept your analysis and on review per the corrected figures of Gary Shifrin the following figures would be the facts.” The calculations which follow include use of the 47% multiplier. At the bottom of the page containing those calculations, Kamerman noted again “PER YOUR ANALYSIS.” The term “your” is underscored twice. Although Kamerman also used the 47% multiplier on a following page in another calculation without indicating the source of the analysis, we believe it would be mere speculation to conclude that that calculation constitutes an admission by Kamerman.

Plaintiffs also direct our attention to other statements contained in the memos which plaintiffs argue are admissions regarding monies owed by Kamerman as alleged in counts V, VI, VII, and VIII.

• 5 Regarding the March 5, 1982, memo, plaintiffs state Kamerman acknowledged, in pages five and six, that personal expenditures were to be reimbursed in full. Plaintiffs note that such an admission would be inconsistent with Kamerman’s assertion in his deposition testimony, and his estate’s theory at trial, that personal expenditures were perquisites enjoyed by all three principals of Narco.

Page five of the March 5, 1982, memo begins: “In addition to the N/K sums, Kamerman is informed of the following interrelated debt.” Included in calculations written thereafter are the notations for amounts owed, one of which was to “Nardi & Co.” for an airline ticket. Page six contains Kamerman’s offer of exchange in return for the release of the claims noted on the previous pages, but does not contain further notation of any expenditures.

We do not believe the statements on either page can be conclusively construed as admissions. Kamerman only indicated that he was informed of the debts noted and included those items in his offer of settlement. Kamerman’s statement that he was informed of the debts may be as easily read as an acknowledgement only that the amounts were claimed against him as it may be read to constitute an outright admission that he owed the amounts.

Plaintiffs contend the undated memo contains similar admissions. Plaintiffs cite the statement, next to an estimated amount used in calculations, “Kamerman receivables he accepts responsibility.” Plaintiffs also cite Kamerman’s notation “I contend if I am to reimburse for $20,000+ work done at residences you owe $8,000 work done at residences.”

The reference to responsibility for receivables is included in the calculations which, we have noted above, were prepared by Shifrin, not Kamerman, and cannot be reasonably construed as Kamerman’s admissions. Nor are we persuaded that the notation concerning reimbursement for work done on Kamerman’s residences constitutes admissions. That statement indicates Kamerman disputed that reimbursement was required for work done at his residence. The statement is also consistent with Kamerman’s position that such expenditures were perquisites. The statement indicates that the recipient of the memo, presumably Nardi, would also be indebted for similar expenditures if Kamerman had to reimburse the company.

Last, plaintiffs allude to a paragraph in the March 9, 1982, memo as containing an acknowledgement that construction bills had been paid on Kamerman’s behalf and that he was responsible for receivables attributed to him. That paragraph refers, in conjunction with an offer of settlement, to a “paid bill for the construction bills paid on my behalf” and a “paid bill for the $11,038 worth of receivables attributed to me.” We note that those statements do not pertain to new matters but to the same two matters noted by plaintiffs in the undated memo. And, as we have concluded Kamerman’s statements as to those two matters do not constitute conclusive admissions, we are not persuaded that reference to those matters, without more, in the March 9,1982, memo could constitute admissions.

Thus, even if we accepted the argument that the statements plaintiffs noted might have been properly admitted into evidence although contained in offers of settlement, because we do not find the statements can be characterized as admissions of fact, we find no basis to conclude the trial judge abused his discretion in refusing to admit the statements.

Plaintiffs contend Shifrin’s testimony should not have been precluded by the Dead Man’s Act. Under the Dead Man’s Act, persons “directly interested” in an action are rendered incompetent to testify as to conversations with the deceased or to events which took place in deceased’s presence. (Ill. Rev. Stat. 1985, ch. 110, par. 8— 201.) Plaintiffs argue that, although he was a 6% shareholder of Narco, Shifrin was not directly interested in the outcome of the trial because he would not receive any immediate pecuniary gain from a victory against Kamerman’s estate. Plaintiffs state Shifrin’s testimony at trial regarding his competency to testify established that Nardi advanced Kamerman’s share, as well as Nardi’s own, to Narco. Thus, any recovery against Kamerman’s estate would be used by Nardi to recoup his own personal expenditure. Further, plaintiffs argue, payment of Kamerman’s purported share of the deficit by his estate would not increase the value of the corporation’s stock because the payment was to be considered a loan to be repaid by the corporation from profits.

The supreme court has indicated, generally, that where a corporation will gain or lose as a result of a suit, corporate shareholders are incompetent to testify against the representative of a deceased person simply because shareholders are owners of the income and earnings of the corporation. (See Scott v. O’Connor-Couch (1915), 271 Ill. 395, 111 N.E. 272.) We do not find the facts in the instant case warrant departure from that general consideration.

Contrary to plaintiffs’ position, Narco would benefit by a recovery from Kamerman’s estate. Narco’s financial status would be directly enhanced because recovery from Kamerman’s estate would permit Narco to retire the debt incurred for the contribution. That is true regardless of whether or not Nardi contributed Kamerman’s share. Further, Narco would not be deprived of that benefit even if the contribution was, in fact, to be repaid from Narco’s profits. To the extent use of those funds for that purpose would be to the exclusion of the use of those funds for other corporate opportunities, Narco would benefit. Because Shifrin owned 6% of Narco’s stock and because that interest is dependent upon the financial stability or profitability of Narco, we conclude the trial judge properly barred his testimony under the Dead Man’s Act.

Plaintiffs contend Kamerman’s estate waived operation of the Dead Man’s Act disqualification of Shifrin by having Shifrin testify as an adverse witness as to the following matters: whether Shifrin could identify several corporate documents; whether demands, either oral or in writing, were made upon Kamerman for payment of his portion of deficit; the circumstances surrounding Kamerman’s resignation from Narco; and whether Kamerman had promised to repay personal expenditures.

After examining the record of Shifrin’s testimony, we do not find the estate waived application of the Dead Man’s Act. First, as to the estate’s counsel’s questioning of Shifrin, the record reflects an understanding between the parties and the trial judge that Shifrin was testifying both as an adverse witness and for purposes of cross-examination. Specifically, the record reflects that Shifrin was testifying in an adverse capacity for purposes of laying foundation to admit as evidence the corporate documents alluded to above in the presentation of the estate’s case.

As to the estate’s questioning regarding those documents, after having Shifrin identify them, counsel for the estate asked Shifrin if those documents contained evidence, in writing, of a pre-incorporation agreement. That questioning cannot be construed as waiving application of the Dead Man’s Act to prohibit Shifrin’s testimony as to conversations or events surrounding the alleged oral pre-incorporation agreement.

Further, after reviewing the questions put to Shifrin by counsel for the estate, in light of the scope of Shifrin’s direct testimony, we conclude the matters asserted by plaintiffs fall within proper impeachment of Shifrin and do not constitute waiver of application of the Dead Man’s Act. See Buczyna v. Cuomo & Son Cartage Co. (1986), 146 Ill. App. 3d 404, 496 N.E.2d 1116.

Finally, plaintiffs assert the trial judge’s ruling was against the manifest weight of the evidence. However, because Shifrin was plaintiffs’ only witness and because we conclude the trial judge properly determined Shifrin was incompetent to testify under the Dead Man’s Act, we find no basis for plaintiffs’ contention.

For reasons stated above, we affirm the judgment of the circuit court.

Affirmed.

MURRAY and GORDON, JJ., concur.


text:
    EDWARD PASSERO et al., Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
    First District (5th Division)
    No. 1—88—3116
    Opinion filed March 30, 1990.
    Rehearing denied May 11, 1990.

      Edward V. Hanrahan, of Oak Park, for appellants.
    Vincent P. Cook and Peter W. Schoonmaker, both of Condon, Cook & Roche, of Chicago, for appellee.
   PRESIDING JUSTICE COCCIA

delivered the opinion of the court:

I

On June 12, 1987, plaintiffs Edward and Elizabeth Passero filed a complaint, alleging that defendant Allstate Insurance Company unreasonably and vexatiously refused to pay a claim for insured personal property stolen from their home. The circuit court entered summary judgment in Allstate’s favor, and the Passeros have appealed to this court. We affirm for the following reasons.

II

The Passeros’ insurance policy obligated them to take the following steps after a loss:

“3. What You Must Do After a Loss.
In the event of a loss to property that this insurance may cover, you must do the following things: ***
(d) Give us all original bills, invoices and other vouchers,
or certified copies, which we may reasonably request ***; ***
(f) Show the damaged property whenever we reasonably ask you to. You must answer questions about it at our request;
(g) Within 60 days after the loss, give us a signed, sworn proof of loss. This statement should include the following information:
* * *
(2) The interest you and others have in the property
***.
y
(3) The actual cash value and amount of loss of each
item damaged or destroyed;
* * *
(5) Changes in title, use, occupancy or possession of the property during the policy period ***.”

Their policy also provided:

“Concealment or Fraud.
This policy is void if you intentionally conceal or misrepresent any material fact or circumstance, before or after loss.”

The Passeros executed a sworn statement in proof of loss on October 10, 1986, claiming $9,040 as the actual cash value of the property stolen on September 8, 1986. Included in their statement was a $900 stereo system and $1,500 worth of video equipment. Allstate subsequently exercised its right to examine the Passeros under oath.

At her examination under oath, Elizabeth Passero testified that she was employed by J.C. Penney, where her husband purchased their stereo system. She identified the stereo receipt they submitted to Allstate as a true and correct copy of the original. This receipt was dated December 20, 1985; the purchase price was listed as $962.95. She admitted that she was entitled to an employee discount, but denied receiving a discount on the stereo system.

Edward Passero’s testimony regarding the stereo was consistent with his wife’s. He also testified, during his examination, that he purchased the video equipment from J.J.’s Video. Passero identified a receipt from J.J.’s, dated March 23, 1986, as a true and correct copy of the original receipt they submitted to Allstate. This receipt listed the purchaser as “E. Passero.”

However, Allstate’s investigation of the Passeros’ claim revealed that they made misrepresentations concerning both the stereo system and the video equipment. Allstate deposed Sandra K. Gass, an operations manager at J.C. Penney’s. Gass testified that Penney’s had no record of the stereo receipt Elizabeth Passero identified as the original receipt at her examination under oath. Gass went on to identify the true receipt, which listed Elizabeth Passero as the purchaser and the price as $454.71. The true receipt reflected, among other things, Elizabeth Passero’s employee discount.

Allstate likewise secured an affidavit from John Jinacio, the owner of the store where the video equipment was purchased. Jinacio affirmed that, on March 23, 1986, “E. Schullo” purchased Magnavox video equipment bearing a serial number identical to the serial number of the equipment which Edward Passero swore he purchased on that date. Jinacio further affirmed that the true receipt was issued to Schullo and bore his name, rather than Edward Passero’s.

Accordingly, Allstate filed a motion for summary judgment, arguing that the Passeros breached their insurance policy by committing material misrepresentations regarding the stereo system and the video equipment. Specifically, Allstate stated that Elizabeth Passero’s testimony under oath that the stereo was purchased for $962.95 was untrue; her sworn statement that the receipt they submitted to Allstate was the original receipt was untrue; and her sworn statement that she received no employee discounts was untrue. Edward Passero’s testimony under oath concerning the stereo was similarly untrue. In addition, Allstate continued, his sworn statement that he purchased the video equipment was untrue; and his sworn statement that the receipt they submitted to Allstate was the original receipt was untrue. The conclusion that the video equipment receipt was forged — to reflect the name “E. Passero” instead of “E. Schullo” — was inescapable. As a result of these material misrepresentations, Allstate asserted, the Passeros forfeited their rights to recover under the policy.

The circuit court entered summary judgment in Allstate’s favor on July 22, 1988. Following the circuit court’s denial of the Passeros’ motion for reconsideration on September 19, 1988, they prosecuted this appeal. The Passeros are represented by different counsel on review.

III

In this court, the Passeros argue that their misrepresentations were not material. In particular, they maintain that their misrepresentations were immaterial because Allstate did not act differently than it would have acted had the misrepresentations never been made; that their misrepresentations were immaterial under the insurance policy’s language; that their misrepresentations were immaterial under relevant case law; and that Allstate did not meet its burden of showing that their misrepresentations were material. Moreover, the Passeros contend that the circuit court erred by entering summary judgment against them, since the issue of whether their misrepresentations were material was a question of fact for the jury. It is noteworthy that in this court the Passeros neither attempt to deny nor to explain their misrepresentations.

At the outset, we must reject the Passeros’ argument that their misrepresentations were immaterial, as they did not cause Allstate to act differently. This argument is grounded upon a definition of materiality drawn from cases involving common law, statutory, and consumer fraud. (See Buechin v. Ogden Chrysler-Plymouth, Inc. (1987), 159 Ill. App. 3d 237, 511 N.E.2d 1330; Mack v. Plaza Dewitt Limited Partnership (1985), 137 Ill. App. 3d 343, 484 N.E.2d 900; Perlman v. Time, Inc. (1985), 133 Ill. App. 3d 348, 478 N.E.2d 1132.) These cases do not involve insurance, unlike our case. As we shall explain below, the definition of material misrepresentations is quite different in the realm of insurance law.

The Passeros also contend' that their misrepresentations were immaterial in view of the insurance policy’s language. Essentially, they argue that the policy’s terms were changed impermissibly by Allstate’s conduct — in examining them about immaterial matters — and by the circuit court’s interpretation of the policy. Regarding Allstate’s conduct, the Passeros assert that since their policy provided replacement cost coverage, Allstate’s investigation of the stereo system’s price and the identity of the video equipment’s purchaser was improper. In other words, they say, because Allstate was required under the replacement cost policy to pay them the full value of the property at the time it was allegedly stolen, what they originally paid for it or how they originally acquired it was immaterial.

This contention fails for two reasons. In the first place, as stated in the policy provisions quoted above, the Passeros were under an affirmative obligation to provide Allstate with true receipts, to submit to an examination under oath, and to submit a sworn proof of loss. Those provisions aimed to protect Allstate, at least in part, from reimbursing the Passeros for stolen property that did not truly belong to them. In the second place, it has long been held by courts construing insurance policy provisions imposing similar duties upon insureds that the insurer’s right to investigate a claim is broad:

“The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, was to enable the Company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to its rights, to enable it to decide upon its obligations, and to protect it against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured.” (Claflin v. Commonwealth Insurance Co. (1884), 110 U.S. 81, 94-95, 28 L. Ed. 76, 82, 3 S. Ct. 507, 515.)

(See also Gipps Brewing Corp v. Central Manufacturers’ Mutual Insurance Co. (7th Cir. 1945), 147 F.2d 6, 13) (when circumstances surrounding presentation of insured’s claim are suspect, insurer is entitled to conduct a searching examination).) In view of the language of the Passeros’ insurance policy and cases interpreting similar language, we conclude that Allstate’s investigation, which revealed their misrepresentations, was not improper.

Similarly, we reject the Passeros’ contention that the circuit court impermissibly changed their insurance policy’s terms by granting Allstate’s motion for summary judgment. The order from which they appeal does not state the reasons for the circuit court’s decision. This fact takes on additional importance because the Passeros have not favored us with transcripts of the hearing on Allstate’s motion for summary judgment, or the hearing on their motion to reconsider the circuit court’s entry of summary judgment against them. It was incumbent upon them to provide us with the transcripts, if they wished us to review this issue. (See In re Estate of Jacobs (1989), 189 Ill. App. 3d 625, 629, 545 N.E.2d 502, 504.) Since the Passeros neglected to do so, affirmance on this question is dictated. See Davis v. Allstate Insurance Co. (1986), 147 Ill. App. 3d 581, 584-85, 498 N.E.2d 246, 248-49.

Furthermore, the Passeros argue that cases construing replacement cost policies such as that in controversy here demonstrate that their misrepresentations — regarding the stereo system’s price and the identity of the video equipment’s purchaser — were immaterial. They rely upon FSC Paper Corp. v. Sun Insurance Co. (7th Cir. 1984), 744 F. 2d 1279, and Zaitchick v. American Motorists Insurance Co. (S.D.N.Y. 1982), 554 F. Supp. 209, aff'd (2d Cir. 1983), 742 F. 2d 1441. These two cases were primarily concerned with the computation of replacement cost damages, rather than the materiality of misrepresentations. Thus, they are of limited value in a case such as ours, where the materiality of the insureds’ misrepresentations is the dispositive issue, instead of the measure of damages.

In addition, the Passeros have failed to persuade us that Allstate did not show that their misrepresentations were material. Contrary to the Passeros’ narrow definition of materiality, noted previously, courts since Claflin have defined materiality broadly in the context of false swearing. For instance, in Fine v. Bellefonte Underwriter’s Insurance Co. (2d Cir. 1984), 725 F.2d 179, plaintiff suffered a fire loss to his insured property. His insurance policy included a false swearing clause virtually identical to that at issue in the case at hand, which we set forth above. During the insurer’s investigation of his claim, plaintiff made false statements under oath, swearing that he gave certain instructions regarding his building’s heating and sprinkler system, when in fact he gave different instructions. The insurer denied his claim on the basis of the false swearing clause, among other grounds, and he sued in Federal court. Plaintiff prevailed even though the district court found his statements under oath to be false, since the court determined that they were not material.

Upon the insurer’s appeal, the appeals court reversed, holding that plaintiff’s violation of the false swearing provision voided the policy. Because the statements were admittedly false, the second circuit noted that whether they were material was a question of law. (Fine, 725 F.2d at 183.) Specifically, the question was whether a false statement is material only if it relates to a matter that ultimately proves to be significant in the ultimate disposition of the claim, or whether it is sufficient that the false statement concerns a subject reasonably relevant to the insurer’s investigation at the time. According to the Fine court, the law was clear that the materiality of the false statements during the insurer’s investigation is not to be judged by what the facts later turn out to be. The purpose of the provision requiring the insured to submit to examination under oath is to enable the insurer to acquire knowledge that may aid it in its further investigation, or that may otherwise be significant to it in determining its liability and the position it should take regarding the claim. The court reasoned that the materiality requirement was satisfied if the false statement concerns a subject relevant to the insurer’s investigation as it is then proceeding. (Fine, 725 F.2d at 183.) False sworn answers are material if they might have affected the insurer’s action or attitude, or if they may be said to have been calculated to discourage, mislead, or deflect the insurer’s investigation in any area that might have seemed to it, at that time, a relevant area to investigate. In the case before it, the appeals court decided, the false statements were clearly material when measured by the proper standard. Fine, 725 F.2d at 184. See also Cummings v. Farmers Insurance Exchange (1988), 202 Cal. App. 3d 1407, 249 Cal. Rptr. 568 (if misrepresentation concerns a subject reasonably relevant to insurer’s investigation, and if reasonable insurer would attach importance to the fact misrepresented, then it is material).

When the foregoing definition of materiality is applied to our case, it is clear that the Passeros’ misrepresentations were material. Like plaintiff in Fine, they were obliged to be truthful during the claim investigation, and like him they admittedly made false representations. Those misrepresentations are material because they may be said to have been calculated to discourage, mislead, or deflect Allstate’s investigation into a relevant area. That is, the Passeros attempted to conceal, among other things, how much they paid for the stereo system and who purchased the video equipment. This information was relevant because it called into question their ownership of the allegedly stolen property. For example, the undisputed facts are that Edward Passero did not purchase the video equipment, that the true receipt was physically altered in an attempt to show that he did purchase it, and that he lied under oath about the transaction. A reasonable insurer in Allstate’s position would undeniably attach importance to such facts.

The Passeros apparently assert that misrepresentations concerning an item’s price and the identity of its purchaser are immaterial as a matter of law when replacement cost insurance is at issue. But this argument does not withstand scrutiny. Ownership of lost property is material in the context of replacement cost coverage. And the price of an item and the identity of its purchaser are relevant to ownership. If ownership is material to replacement cost, and if price and identity of purchaser are material to ownership, then they are material to replacement cost. That is, ownership is material because the Passeros’ replacement cost policy — quoted previously — required them to state what sort of ownership interest they had in the stolen property, and to furnish Allstate with evidence of purchase, title, use, and possession of the property. We repeat that case law explains the rationale for such requirements, namely that no reasonable insurer would reimburse its insureds for lost property that did not belong to them.

If ownership is material to replacement cost insurance, then an item’s price and the identity of its purchaser are, in turn, material to ownership. In other words, purchase is one method of obtaining ownership. Purchase is the sole method by which the Passeros claim to have acquired the stereo system and the video equipment, in fact. They do not claim, for instance, that those items were gifts.

Focusing upon the identity of the video equipment’s purchaser, the Passeros’ undenied misrepresentations called their ownership of it into question. The Passeros claimed that they owned the equipment, by submitting a purportedly true receipt — which was altered — and by Edward Passero’s testimony under oath that he purchased it — which was false. These misrepresentations cast doubt upon their ownership of the video equipment. As we have stated, since ownership is material to replacement cost coverage, and since the identity of an item’s purchaser is material to ownership, such identity must be material to replacement cost. From this it follows that the Passeros’ misrepresentations, at minimum those regarding the video equipment, were material. Therefore, we cannot say that their misrepresentations were immaterial as a matter of law.

Finally, we come to the Passeros’ argument that the circuit court erred in entering summary judgment against them because the materiality of their misrepresentations was a matter for the jury. Parenthetically, we. note that they failed to demand trial by jury. Be that as it may, it is settled that false swearing by the insured renders the policy void if, as here, the policy provides for that result from such conduct. While false swearing is ordinarily a jury question, it becomes a question of law when the insured’s misrepresentations cannot be seen as innocent. See Folk v. National Ben Franklin Insurance Co. (1976), 45 Ill. App. 3d 595, 596-97, 359 N.E.2d 1056, 1057.

In the cases the Passeros have cited, the insureds’ misrepresentations were relatively innocent. The insured’s expert witness in Jay-Bee Realty Corp. v. Agricultural Insurance Co. (1943), 320 Ill. App. 310, 50 N.E.2d 973, based a replacement cost estimate upon new items, while the insurer’s expert based that estimate upon used items. In Watson v. State Farm Fire & Casualty Co. (1984), 122 Ill. App. 3d 559, 461 N.E.2d 57, the insured neglected to inform his insurer that he was in the company of a woman, who was not his wife, the evening a fire destroyed his home. At that time he was separated from his wife, and she had filed for divorce. Lastly, in Fitzgerald v. MFA Mutual Insurance Co. (1985), 134 Ill. App. 3d 1007, 481 N.E.2d 754, the insured testified that he did not understand the proof of loss form, and that the insurer gave him no assistance in understanding it, although he requested help on two occasions. This prompted him to estimate the value of his lost property upon the basis of a department store catalog.

As stated previously, the Passeros have not denied swearing falsely. Additionally, they have not attempted in this court to come up with any explanation — innocent or otherwise — for their conduct. Consequently, their conduct is not comparable to the relatively innocent conduct of the insureds in the cases they rely upon. Whether their misrepresentations were material, then, was a question of law rather than a question of fact.

IV

In closing, we note that the Passeros’ opening brief does not comply with the rules of our supreme court. The order appealed from is not included in the appendix, contrary to Supreme Court Rule 342(a) (107 Ill. 2d 342(a)). This district’s docket is full, and noncompliance with such rules does not help us resolve appeals expeditiously.

For the stated reasons, we uphold the circuit court’s entry of summary judgment in Allstate’s favor on the Passeros’ complaint.

Affirmed.

LORENZ and GORDON, JJ., concur.

      Justice R. Eugene Pincham participated in this case prior to his resignation. Since that time, Justice Joseph Gordon was designated the third member of the panel and has read the record and briefs and has listened to the oral argument tapes.


text:
    BETTY JO WILSON et al., Plaintiffs-Appellants, v. GORSKI’S FOOD FAIR et al., Defendants-Appellees.
    First District (5th Division)
    No. 1—88—3481
    Opinion filed March 30, 1990.

      John C. Lorenzen, of John J. Henely, Ltd., of Chicago, for appellants.
    Brydges, Riseborough, Morris, Franke & Miller, of Chicago (John W. Norris and Darrell S. Dudzik, of counsel), for appellees.
   JUSTICE LORENZ

delivered the opinion of the court:

Plaintiffs appeal from the entry of summary judgment (Ill. Rev. Stat. 1987, ch. 110, par. 2—1005) in defendants’ favor. We address the following two issues: (1) whether a genuine issue of material fact existed that plaintiff Betty Jo Wilson’s injury was the result of either an unnatural accumulation of water or defendants’ aggravation of a natural accumulation; and (2) whether a genuine issue of material fact existed that defendants voluntarily assumed a duty of care. We affirm.

In their amended complaint, plaintiffs Betty Jo Wilson and her husband James Wilson sought recovery against defendants for negligence, wilful and wanton conduct, and loss of consortium. A fourth count was subsequently dismissed with prejudice and is not involved in this appeal. Plaintiffs alleged that on December 16, 1982, Mrs. Wilson fell on the wet floor inside defendants’ store and sustained personal injuries.

Defendants, Gorski’s Food Fair, Joan Nolte, and Joseph Gorski, filed an answer denying the allegations of the negligence and loss of consortium counts of plaintiffs’ original complaint. They filed a motion to dismiss the wilful and wanton count which was denied. There is no indication from the record that defendants filed an answer to the wilful and wanton count after their motion to dismiss was denied. Subsequently, defendants filed an amended answer to plaintiffs’ amended complaint and stated that their previous answer to the wilful and wanton count would stand. That previous answer, however, is not in the record. Plaintiffs did not raise this as an issue in the trial court or on appeal.

Plaintiffs’ interrogatories asked whether defendants had a “maintenance or safety program,” and defendant Gorski’s Food Fair responded that such a program was in effect on the day Mrs. Wilson was injured. Gorski’s Food Fair explained that “[o]n snow or rain days, a mop and bucket is [sic] kept near the front of the store. A bagger periodically mops in the entrance to prevent any water from getting into the store. *** A large 3’ x 10’ mat is maintained in the entrance of the store to collect any moisture from the outside.” In response to another interrogatory, Gorski’s Food Fair stated that Craig Lindl was responsible for the maintenance program on the day Mrs. Wilson was injured.

Mrs. Wilson was deposed and testified that on the day in question, it was raining periodically outside and the pavement was wet. When she entered the store, she wiped her feet on a cloth mat, took two steps off the mat and fell. She testified the floor was wet with water. As she was lying on the floor after she fell, she noticed that when someone would step on the mat, water ran out from the mat. When asked whether she fell because of “water squeezing out of the rug as people walked by,” she answered, “I walked through the puddle, and down I went, that’s right.”

Defendants moved for summary judgment, relying on Mrs. Wilson’s deposition testimony that she fell in rainwater which was tracked inside defendants’ store.

In response to defendants’ motion for summary judgment, plaintiffs filed Mrs. Wilson’s four-sentence affidavit, which stated the water she fell in came from the mat which was “waterlogged,” that she fell in an “unnatural accumulation” of water, and that she fell inside the store not in the vestibule.

Defendants moved to strike the affidavit, arguing it contained conclusions rather than facts which is prohibited under Supreme Court Rule 191(a) (107 Ill. 2d R. 191(a)). However, defendants did not seek a ruling on the motion at the hearing and there was no indication otherwise in the record that the trial judge ruled on the motion to strike.

On October 25, 1988, the trial judge granted defendants’ motion for summary judgment, and plaintiffs filed a timely notice of appeal.

Opinion

Summary judgment should be granted if the pleadings, affidavits, and depositions reveal there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1987, ch. 110, par. 2—1005(c).) The evidence presented must be construed strictly against the movant and liberally in favor of the opponent. (Chisolm v. Stephens (1977), 47 Ill. App. 3d 999, 365 N.E.2d 80.) To avoid summary judgment, plaintiff must present some factual basis that would arguably entitle him to judgment in his favor. Chisolm, 47 Ill. App. 3d 999, 365 N.E.2d 80.

A landowner is not liable for injuries resulting from the natural accumulation of ice, snow, or water that are tracked inside his premises. (Lohan v. Walgreens Co. (1986), 140 Ill. App. 3d 171, 488 N.E.2d 679.) There may be liability if the injuries resulted from an unnatural accumulation of ice, snow, or water or from a natural condition which was aggravated by the landowner. Bernard v. Sears, Roebuck & Co. (1988), 166 Ill. App. 3d 533, 519 N.E.2d 1160.

Initially, plaintiffs contend that under the facts presented, defendants are liable because either the accumulation of water on the mat was unnatural or the mat aggravated a natural accumulation of water. Plaintiffs rely on Mrs. Wilson’s deposition testimony that after she fell, she noticed that when someone walked on the mat, water would come out of the mat. Plaintiffs also rely on her affidavit where she stated that the mat was “waterlogged.” We note that defendants’ failure to obtain a ruling on their motion to strike Mrs. Wilson’s affidavit resulted in a waiver of that objection on appeal. Oak Trust & Savings Bank v. Annerino (1978), 64 Ill. App. 3d 1030, 381 N.E.2d 1389.

We reject plaintiffs’ contention that the water on the mat was an unnatural accumulation or that the mat aggravated the water’s natural accumulation. Plaintiffs do not cite case law that supports liability under similar circumstances. However, this case falls directly in line with Bernard (166 Ill. App. 3d 533, 519 N.E.2d 1160), and Lohan (140 Ill. App. 3d 171, 488 N.E.2d 679), where summary judgments granted in favor of defendants were upheld on appeal under facts similar to the case at bar.

In Bernard, plaintiffs, a husband and wife, sought recovery for injuries the wife sustained inside defendant’s store. Before entering the store, the wife noticed “a lot of snow” outside. (Bernard, 166 Ill. App. 3d at 534, 519 N.E.2d at 1161.) Inside the store she walked the length of a rug which was saturated with water and “squish[ed]” when stepped on. (Bernard, 166 Ill. App. 3d at 534, 519 N.E.2d at 1161.) She walked one or two steps off the rug and fell. She testified at her deposition that she “imagined” the water was tracked in from outside. (Bernard, 166 Ill. App. 3d at 534, 519 N.E.2d at 1161.) In an affidavit, she stated that she had no direct knowledge of the source of the water. Summary judgment was granted in defendant’s favor and was affirmed on appeal. The court noted that there was no evidence presented that the water was an unnatural accumulation or developed unnaturally as a result of defendant’s actions. Plaintiffs also argued that defendant’s use of the rug created a dangerous condition. The court rejected that argument because no evidence was presented regarding the condition or effect of the rug.

Plaintiffs attempt to distinguish Bernard by claiming that in this case, some evidence was presented as to the condition of the mat. Plaintiffs point to Mrs. Wilson’s deposition testimony that the mat was so saturated with water, that water came out when the mat was stepped on. Also, in an affidavit Mrs. Wilson stated that the mat was “waterlogged.” Similarly in Bernard, some evidence was presented that the rug was so saturated with water it “squish[ed]” when stepped on. There is no significant factual distinction between the two cases that would justify departing from the holding in Bernard.

In Lohan, plaintiff fell inside a common entrance of defendants’ stores on a rainy day. Rubber mats were placed inside the entrance-way, but they were wet as was the floor. Plaintiff stepped off the mat and fell. This court affirmed entry of summary judgment in defendants’ favor because, as a matter of law, defendants could not be liable for a natural accumulation of tracked-in water that caused plaintiff’s injury.

The facts in the present case are virtually identical to Bernard and Lohan. Here, plaintiff fell in rainwater that was tracked inside defendants’ store. Lohan established that such tracked-in water is a natural accumulation for which a landowner is not liable. In this case, plaintiffs argue that the water on the mat is transformed into an unnatural accumulation; however, there is no legal basis for such a finding. The rainwater on the mat was still a natural accumulation of water because the evidence showed it was tracked in from outside. Plaintiffs also argue that the mat aggravated a natural accumulation of water in the store because the mat was saturated with tracked-in water. There is no evidence to support plaintiffs’ claim that the mat aggravated the tracked-in water.

Plaintiffs also argue that defendants voluntarily assumed a duty to remove the water as evidenced by defendant Gorski’s Food Fair’s answers to interrogatories. If a landowner voluntarily assumed a duty to remove a natural accumulation of snow, ice, or water, he is held to a standard of ordinary care. (Erasmus v. Chicago Housing Authority (1980), 86 Ill. App. 3d 142, 407 N.E.2d 1031.) In this case, defendant Gorski’s Food Fair admitted that on the day of Mrs. Wilson’s injury, it had a maintenance program in effect under which on rainy days the floor would be mopped periodically and mats would be placed in the entrance of the store. Plaintiffs argue evidence was presented that defendants did not mop adequately and did not maintain the mat.

Plaintiffs, however, did not allege this in their amended complaint or raise this as an argument in their response to defendants’ motion for summary judgment. At oral argument on the motion, plaintiffs’ attorney merely stated that defendants “assumed a duty when he or she placed this runner on the floor to do so non-negligently.” From the record, plaintiffs never directed the trial court’s attention to defendant Gorski’s Food Fair’s answer to interrogatories. At oral argument in this court, plaintiffs conceded that the issue was not presented below. Contentions not raised in the trial court are waived on appeal (Witek v. Leisure Technology Midwest, Inc. (1976), 39 Ill. App. 3d 637, 350 N.E.2d 242), and therefore, plaintiffs have waived this argument.

Despite plaintiffs’ waiver of this argument, we note that there was no evidence presented that defendants voluntarily assumed a duty to remove tracked-in water. Plaintiffs’ argument is dependent on finding that defendants’ “maintenance or safety program” was a voluntary undertaking and was performed negligently. Defendants admitted that on rainy days, they mopped periodically and put mats in the entranceway. Plaintiffs do not dispute the statement in Lohan that “where the accumulation is a natural one there is no duty to continue a voluntary undertaking to remove it.” (Lohan, 140 Ill. App. 3d at 175, 488 N.E.2d at 682.) Despite defendants’ past performance of mopping and putting mats down, they had no duty to continue such action. There is no evidence that defendants mopped the floor on the day of Mrs. Wilson’s injury; however, they placed mats near the entranceway. The mat became saturated with tracked-in water; however, defendants were not under a duty to continuously remove the water. There is no other evidence to support plaintiffs’ claim that defendants’ use of the mat was negligent. Further, we note that Mrs. Wilson did not fall on the mat, but she fell after she took two steps off the mat.

Lastly, we reject plaintiffs’ argument that this court should depart from the long-standing rule that a landowner has no liability for injuries resulting from a natural accumulation of snow, ice, or water on his property.

For these reasons, the trial court’s entry of summary judgment in defendants’ favor was proper.

Affirmed.

MURRAY and GORDON, JJ., concur.

      Noan Nolte was not named as a defendant in plaintiffs’ original or amended complaints. It appears that Joan Nolte may have been incorrectly sued as Joan Gorski.

      Justice R. Eugene Pincham participated in this case prior to his resignation. Since that time, Justice Joseph Gordon was designated the third member of the panel and has read the record and briefs and has listened to the tape of oral argument.


author: JUSTICE MURRAY

text:
    DAVID HANSON, Plaintiff-Appellant, v. HYATT CORPORATION et al., Defendants-Appellees.
    First District (5th Division)
    No. 1—89—0257
    Opinion filed March 30, 1990.
    Rehearing denied April 30, 1990.

      Edward J. Kionka, of Murphysboro, and John C. Erb, of Paul B. Episcope, Ltd., of Chicago, for appellant.
    O’Connor, Schiff & Myers, of Chicago (Elliot R. Schiff, William C. Brit-tan, and Loretta M. Griffin, of counsel), for appellees.
   JUSTICE MURRAY

delivered the opinion of the court:

Plaintiff David Hanson appeals from three orders of the circuit court of Cook County relative to a negligence action against defendants Hyatt Corporation, Hyatt House of Illinois, Inc., and Chicago Title & Trust, as trustee under trust No. 43151, for personal injuries sustained by him after diving into a swimming pool at defendants’ Hyatt Lincoln wood Hotel. Specifically, he seeks reversal of the court’s order of October 9, 1987, dismissing Hanson’s third amended complaint with prejudice and entering judgment in favor of Hyatt Corporation and Hyatt House of Illinois, Inc., an order entered on September 21, 1987, granting the Hyatt defendants’ motion to dismiss his third amended complaint, and an order entered on December 31, 1988, dismissing his third amended complaint with prejudice as against Chicago Title & Trust. Hanson argues on appeal that the trial court erred in determining that his complaint failed to state a cause of action. For the reasons set forth below, we affirm.

Hanson’s third amended complaint alleged that on June 30, 1983, he was not a registered guest at the Hyatt Lincolnwood Hotel but that he was a frequent visitor and user of the various common areas and facilities of the hotel, including the swimming pool; that the swimming pool was not fully enclosed and was open to access by the public at large; that he entered upon Hyatt’s premises pursuant to Hyatt’s “implied invitation”; that Hyatt either had actual knowledge of his presence or had knowledge of facts from which it should have anticipated his presence; that he dove into Hyatt’s pool and sustained injuries which rendered him a quadriplegic; and that he was 19 years old at the time of the accident. Further, in counts I and II of the complaint, in which Hanson respectively claimed an invitee status and licensee status on Hyatt’s premises pursuant to an “implied invitation,” he alleged as a basis for recovery that his injuries were proximately caused as a result of Hyatt’s negligence in operating the swimming pool without adequate safety equipment, without adequate water depth markings, and without warnings concerning the danger of diving into the pool. In count III of the complaint, which alleged wilful and wanton conduct on the part of Hyatt, Hanson did not claim any status, although he reasserted that he had an “implied invitation” to be upon Hyatt’s premises. The charged basis for recovery in count III was that Hyatt lowered the water depth in the pool without any indication that it had done so, inaccurately marked the water depth, failed to illuminate the pool area, and failed to warn of the dangers of diving.

At a hearing on Hyatt’s motion to dismiss Hanson’s third amended complaint, Hanson explained the circumstances under which he entered Hyatt’s premises, i.e., that he entered the pool area sometime after 9:30 p.m. through a gap/hole in a fence surrounding the pool, it was dark, and the lights around the pool area were off.

It is well settled that a motion to dismiss for failure to state a cause of action admits all facts well pleaded and reasonable inferences to be drawn therefrom. A motion to dismiss should not be granted unless it clearly appears that no set of facts could be proved under the pleadings which would entitle a plaintiff to relief. (Courtney v. Board of Education (1972), 6 Ill. App. 3d 424.) Pleadings are to be liberally construed with a view to doing substantial justice between parties, but even a liberal construction will not overcome the requirement that sufficient facts be alleged to state a cause of action. (Church v. Adler (1953), 350 Ill. App. 471.) The facts alleged by a plaintiff must support the requisite elements of a cause of action. In an action based on a negligence theory, those elements are duty on the part of the defendant to protect the plaintiff from injury of which he complains, breach of that duty, and injury to the plaintiff as a result of that breach. (Gartley v. Chicago Housing Authority (1975), 28 Ill. App. 3d 705.) Conclusory allegations as to any of these elements are wholly insufficient. Klinefelter v. S.J. Groves & Sons Co. (1972), 8 Ill. App. 3d 989.

In the instant case, Hanson argues that he properly alleged the element of duty in counts I and II of the complaint based upon Hyatt’s “implied invitation” to him to enter upon its premises “for the purpose of inspection and use of its restaurant, gift shop, meeting rooms, lobbies, and swimming pool,” as a licensee or invitee. The implied invitation concerning his use of Hyatt’s swimming pool is specifically based on the allegation that the pool “was not fully enclosed and was open to access by the public at large.” In any event, Hanson argues that the question of his status was a question of fact for the jury, not the trial court, which determined that he was neither an invitee nor licensee but rather a trespasser.

We agree with Hanson that his entry status upon Hyatt’s property would be a question of fact for the jury (see Drews v. Mason (1961), 29 Ill. App. 2d 269). However, prior to consideration of his status by a jury, Hanson was required to allege facts to support a relationship which imposed a duty on Hyatt to protect him from his injury. Invitee and licensee status, as claimed by Hanson in counts I and II of his complaint, has been defined as follows:

“An invitee is a person who goes upon the premises of another by an express or implied invitation to transact business in which he and the owner have a mutual interest or to promote some real or fancied material, financial, or economic interest of the owner. [Citations.] A licensee is a person who goes upon the premises of another with the express or implied consent of the owner, to satisfy his own purposes rather than for the mutual benefit of himself and the owner or a purpose connected with the business in which the owner is engaged or permits to be carried on upon the premises. [Citations.]” (Trout v. Bank of Belleville (1976), 36 Ill. App. 3d 83, 87.)

A landowner has a duty to exercise reasonable care for the safety of an invitee. The duty owed to a licensee is not to wilfully and wantonly injure him and to use ordinary care to avoid injuring him after he is discovered in a place of danger. Trout, 36 Ill. App. 3d at 90.

Hanson argues that he properly alleged a duty owed to him by Hyatt, as discussed above, based on Hyatt’s “implied invitation” to him to enter upon its premises. He appears to define an implied invitation as a failure by Hyatt to take reasonable steps to secure access to the pool area, presumably by closing up a hole in the fence through which he entered on the date of the accident, as he argued at the hearing on Hyatt’s motion to dismiss. We find this argument without merit. As our supreme court stated in Geraghty v. Burr Oak Lanes, Inc. (1955), 5 Ill. 2d 153, 157, “[t]o be upon premises by an implied invitation means that the person is there for a purpose connected with the business in which the owner of the premises is engaged.” Here, Hanson simply failed to allege facts to support a position that he was using Hyatt’s swimming pool for a reason connected with Hyatt’s business. Counts I and II alleging the status of an invitee or licensee, therefore, do not allege facts sufficient to support Hanson’s argument that he possessed either status and are merely a conclusory use of those terms. Accordingly, we find that the trial court properly dismissed counts I and II of Hanson’s complaint.

In light of the foregoing, we find that Hanson’s reasserted allegation of an implied invitation in support of an unspecified relationship with Hyatt in count III is also without merit. Additionally, as pointed out above, since Hanson failed to allege facts showing a relationship between himself and Hyatt, the trial court properly dismissed count III of his complaint, notwithstanding that it appears that he was a trespasser, as indicated during the hearing on Hyatt’s motion to dismiss wherein Hanson explained that he had gained access to the swimming pool by passing through a hole in the fence which surrounded the pool after 9:30 p.m. when it was dark and the lights around the pool had been shut off. (See Trout v. Bank of Belleville (1976), 36 Ill. App. 3d 83 (a trespasser is one who enters the premises of another without permission, invitation, or other right, and intrudes for some purpose of his own, or at his convenience, or merely as an idler).) Had Hanson alleged these facts and other facts to support a position that as a trespasser Hyatt owed him a duty to not wilfully or wantonly injure him and to use ordinary care to avoid injuring him after being discovered in a place of danger, he would have properly stated a cause of action. The question of whether Hyatt’s conduct was wilful and wanton in discovering the hole in the fence or not discovering it, which permitted access to the alleged dangerous condition of the swimming pool by trespassers, then would have been a question of fact for the trier of fact. (See Soucie v. Drago Amusements Co. (1986), 145 Ill. App. 3d 348.) It would have been for the jury to determine whether the alleged wilful and wanton injury to Hanson was intentional or “ ‘that the act was committed under circumstances exhibiting a reckless disregard for the safety of others, [including] failure, after knowledge of impending danger, to exercise ordinary care to prevent it, or reckless or careless failure to discover the danger when it could have been discovered by ordinary care.’ ” (Soucie, 145 Ill. App. 3d at 352, quoting Lynch v. Board of Education (1980), 82 Ill. 2d 415, 429.) However, these allegations were made during the hearing on the motion to dismiss, not in count III of Hanson’s complaint. Count III simply does not allege facts establishing a relationship between Hanson and Hyatt necessary to impose a duty owed to Hanson; it only alleges that he was not a registered guest. A court is bound to consider only those facts well pleaded and since no facts giving rise to a duty between the parties were alleged in count III of Hanson’s complaint, that count was properly dismissed for failure to state a cause of action.

For the foregoing reasons, we affirm the orders of the trial court appealed from.

Affirmed.

COCCIA, P.J., and GORDON, J., concur.

      Hanson pleaded his cause of action pursuant to the common law rules with respect to the classification of entrants upon land, rather than the Premises Liability Act (Ill. Rev. Stat. 1987, ch. 80, par. 301 et seq.), which did not become effective until 1984, after he was injured.


text:
    JOHN BASTAS, Plaintiff-Appellant, v. RICHARD A. VICERE et al., Defendants-Appellees (Geraldine Cundari, Defendant).
    First District (5th Division)
    No. 1—89—0416
    Opinion filed March 30, 1990.

      Frank J. Hucek and Ann M. Hucek, both of Berwyn, for appellant.
    Robert C. Farrar, of Heineke, Burke, Healy & Bodach, of Chicago, for appellees.
   JUSTICE LORENZ

delivered the opinion of the court:

Plaintiff, John Bastas, appeals from the dismissal of his complaint with prejudice against defendants, Richard and Jean Vicere, for failure to exercise diligence in obtaining service under Supreme Court Rule 103(b) (107 Ill. 2d R. 103(b)). We address the issues of whether the trial court abused its discretion when it dismissed plaintiff’s complaint with prejudice under Rule 103(b) and whether the trial court’s entry of a finding pursuant to Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)) was improper. We affirm.

On December 13, 1985, plaintiff filed his original complaint against defendants Richard and Jean Vicere, Sir Ric’s, and Geraldine Cundari. The complaint alleged that on December 16, 1983, plaintiff was injured on the premises of Jeannie’s Den, a bar owned by Cundari and operated by the Viceres and Sir Ric’s. The bar was located in an unincorporated part of Leyden Township in Cook County. On the same day the complaint was filed, a summons was issued for Richard and Jean Vicere. The sheriff attempted to serve the Viceres at the bar three times but each time was told they were not in. The summons was returned unserved on January 2, 1986. Plaintiff did not attempt to serve the Viceres again. Plaintiff, however, obtained service on Sir Ric’s but that return of service is not present in the record.

Fifteen months after the complaint was filed, on March 16, 1987, plaintiff obtained a voluntary dismissal under section 2 — 1009(a) of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2—1009(a)) of the action against the Viceres and Cundari, who were not served. The case continued against Sir Ric’s.

A year after the voluntary dismissal, on March 14, 1988, plaintiff refiled his complaint under section 13 — 217 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 13—217) against the Viceres and Cundari. The Viceres were served at their home in Lombard, Illinois, on March 22, 1988. Plaintiff also obtained service on Cundari.

The Viceres moved to dismiss the complaint pursuant to Rule 103(b) supported by their affidavits that stated their home and business addresses were listed in the telephone book since the date of plaintiff’s injury. The Viceres attached copies of the pages in the telephone book showing their current listings. The business address listed in the telephone book was for Jeannie’s Den at the same address where the accident occurred and where plaintiff attempted to serve the Viceres in the original action.

In response to the motion, plaintiff’s attorney filed his own affidavit which stated that he could not obtain the Viceres’ home address from the liquor license application for the bar. The application was not attached to the affidavit. Also, plaintiff’s attorney spoke to Richard Vicere at Jeannie’s Den but he would not give the attorney his home address. Although the Viceres argued that the affidavit should not be given any weight, they did not move to strike it in the trial court.

The Viceres’ motion was granted on June 30, 1988, and plaintiff’s action against Cundari remained pending in the trial court. On July 20, 1988, the Viceres filed a motion for a finding under Rule 304(a) that the dismissal order was final and appealable, which was granted on January 6,1989. Plaintiff filed a timely notice of appeal.

Opinion

Supreme Court Rule 103(b) provides that if a plaintiff failed to exercise reasonable diligence in obtaining service after the statute of limitations expired, the action against an unserved defendant may be dismissed and the dismissal shall be with prejudice. (107 Ill. 2d R. 103(b).) Although each case must be decided on its own facts, in ruling on a motion to dismiss under Rule 103(b), the trial court may consider the length of time used to obtain service, the ease with which defendant’s address could have been ascertained, the efforts of plaintiff, plaintiff’s knowledge of defendant’s address, defendant’s actual knowledge of the action, and any other special circumstances. (Gatto v. Nelson (1986), 142 Ill. App. 3d 284, 492 N.E.2d 1.) In cases where a plaintiff has obtained a voluntary dismissal and subsequently refiled the action, the trial court can consider plaintiff’s failure to exercise diligence in the original suit in deciding whether to grant a Rule 103(b) dismissal. (O’Connell v. St. Francis Hospital (1986), 112 Ill. 2d 273, 492 N.E.2d 1322.) As stated in Muskat v. Sternberg (1988), 122 Ill. 2d 41, 49, 521 N.E.2d 932, 935, “[t]he voluntary dismissal under section 2 — 1009 and the refiling under section 13 — 217 does not insulate the plaintiff from the lack of diligence displayed prior to the dismissal.” However, the trial judge cannot disregard plaintiff’s diligence in serving defendant after the case was refiled. (Martinez v. Erickson (1989), 127 Ill. 2d 112, 535 N.E.2d 853.) On appeal from a Rule 103(b) dismissal, the reviewing court must consider whether the trial court abused its discretion. Segal v. Sacco (1988), 175 Ill. App. 3d 504, 529 N.E.2d 1038.

At oral argument, plaintiff relied on Martinez (127 Ill. 2d 112, 535 N.E.2d 853), where the supreme court reversed the trial court’s Rule 103(b) dismissal of plaintiff’s complaint. In Martinez, plaintiff filed two actions which were factually related, but plaintiff did not attempt to serve the defendants. Plaintiff obtained a voluntary dismissal of one case after seven months, and the other was dismissed for want of prosecution after nine months. After refiling the cases as a single action, plaintiff obtained service on defendants within three weeks. The supreme court reversed the trial court’s dismissal of the action and remanded the case for a new hearing because “the circuit judge may not have accorded adequate weight to the plaintiff’s conduct in effecting service on the defendants following the refiling of his action[.]” Martinez, 127 Ill. 2d at 121, 535 N.E.2d at 857.

Plaintiff apparently urges a similar disposition as in Martinez; however, a review of a Rule 103(b) dismissal is dependent on the facts of the case and we do not believe that a remandment is warranted here. Although plaintiff in this case at least made an attempt to serve the Viceres in the original action, the action remained pending for 15 months without service on the Viceres. In that time, plaintiff issued only one summons for them. The return of service indicated that the Viceres were not present at the time the sheriff attempted to serve them at the bar, but plaintiff did not attempt to serve them again. Plaintiff’s attorney stated in his affidavit that he could not obtain their address from the liquor license application for the bar and that he spoke to Richard Vicere, at the bar, who refused to give him his home address. The Viceres’ affidavits establish that it was relatively simple to locate them as their home and business addresses were listed in the telephone book since the date plaintiff was injured. After refiling his complaint, plaintiff obtained service on the Viceres in eight days.

Although plaintiff’s diligence in serving the Viceres after refiling his complaint cannot be disregarded, plaintiff’s lack of diligence exhibited in the original action outweighs his diligence in the refiled action. The length of time that passed without serving the Viceres, the fact that plaintiff only attempted to serve them once, the fact that their home address was listed in the telephone book, and the fact that plaintiff had their business address are sufficient to justify the trial court’s dismissal of plaintiff’s complaint against them. For these reasons, the trial court’s dismissal of plaintiff’s action was not an abuse of discretion.

Plaintiff also argues that the trial court improperly entered a Rule 304(a) finding on the Viceres’ motion. Plaintiff’s attorney filed an affidavit that stated plaintiff could not afford multiple appeals and, therefore, a Rule 304(a) finding should not have been entered. The Viceres did not address this issue in their appellate brief. Plaintiff did not include a transcript of the January 6, 1989, court hearing in the record. The entry of a Rule 304(a) finding is discretionary (Statistical Tabulating Corp. v. Hauck (1972), 5 Ill. App. 3d 50, 282 N.E.2d 524), and there is no evidence of an abuse of discretion.

Affirmed.

MURRAY and GORDON, JJ., concur.