text:
      In re ESTATE OF CHESTER KOZIOL, Deceased (Benjamin Koziol et al., Petitioners-Appellees, v. Gerald Strelak, Sr., Indiv. and as named Ex’r under a purported Will of Chester Koziol, Deceased, Respondent-Appellant (Theodore Koziol, Independent Adm’r of the Estate of Chester Koziol, Deceased, Intervenor-Appellee)).
    First District (1st Division)
    No. 1—90—3593
    Opinion filed October 13, 1992.

      Kogut & Associates, of Des Plaines (Charles Kogut and Anthony J. Kogut, of counsel), for appellant.
    Shaheen, Lundberg, Callahan & Orr, P.C., of Chicago (Henry N. Novoselsky, of counsel), for appellees.
   JUSTICE O’CONNOR

delivered the opinion of the court:

Chester Koziol died on September 9, 1990. Ten days later, Chester’s stepson, Gerald Strelak, filed a petition for the probate of Chester’s will. On September 24, 1990, the will was admitted to probate, and Strelak was appointed independent executor of the estate. Petitioners, Benjamin Koziol, Sharon Simunjak, and George Swies, heirs at law of Chester, filed a “Petition for Formal Proof of Will” on September 28, 1990. Following proceedings on that petition, the circuit court denied confirmation of its initial admission of the will into probate. Strelak appeals that denial of confirmation.

We reverse and remand.

Chester was predeceased by his wife, Francine. The couple were childless although Francine had two children, Gerald and Richard Strelak, from a previous marriage. Chester was survived by four brothers and sisters and six nieces and nephews, the children of predeceased siblings.

The purported will, dated January 25, 1988, consists of two type-written pages and bears Chester’s signature at the bottom of the first page and at the middle of the second page. Following Chester’s signature, an attestation clause appears, which states:

“The above and foregoing instrument was on the date hereof signed, published and declared by the said CHESTER KOZIOL as and for his last WILL and TESTAMENT in the presence of each other subscirbed [sic] our names and addresses as attesting witnesses thereto and at the time of said signing we believed the testator to be of sound mind and disposing memory.
Is/ Kenneth Simunjak address 3332 W. 37 Place
/s/ Sharon Simunjak address 3332 W. 37th Place
Is/ Robert M. Strelak address 1557 Teal Ln 2-B
SUBSCRIBED AND SWORN to before me this 25th day of January, A.D. 1988.
Is/ Corrine L. Edling, NOTARY PUBLIC”

According to the will’s provisions, all of Chester’s real and personal property devolved to Strelak. Strelak’s son was to take under the will if his father predeceased Chester. Chester’s other stepson, Richard, and each of Chester’s surviving brothers and sisters were to receive $10.

At the subsequent proceedings held pursuant to the petition, Kenneth Simunjak testified that he is the husband of Sharon Simunjak, Chester’s niece. Although he identified the signature on the will as his own, Kenneth stated that he never saw Chester sign the document. In fact, Chester never asked him to witness the will. Strelak simply brought the document to Kenneth’s apartment and asked him to sign it. At the time, Strelak claimed the document was a “power of attorney” for “[his] mother’s bills.” Kenneth stated that both he and his wife signed the document, the first page of which was “turned down.” Kenneth recalled that, at the time he signed the document, Robert Strelak’s signature was not on it. No notary public was present at that time.

Sharon Simunjak’s testimony was similar to Kenneth’s in most respects. She identified her signature as her own; however, Chester never asked her to sign or witness the document nor did he ever show it to her. Strelak asked her to sign the document, which he referred to as a “power of attorney” for his “mother’s checks.” Sharon only “glanced” at the document but did not read it. At the time, Robert Strelak’s signature was not on the document, and no notary public was present.

Robert M. Strelak, Strelak’s nephew, testified that Chester asked him to sign the will as a witness. Robert saw Chester sign the will in the presence of Kenneth and Sharon, as well as Strelak and the notary public. Robert stated that he read the document before signing it.

Over petitioners’ objections, Corrine L. Edling testified that Chester, whom she had known for 32 years, asked her to prepare a will for him. She prepared the document in triplicate, with the help of an attorney. Chester also asked her to notarize the document for him. On January 25, 1988, Edling witnessed Chester and all three attestation witnesses sign the document, which she notarized. Edling did not know Kenneth or Sharon at that time; however, she is Strelak’s former sister-in-law.

Following the testimony, the circuit court ruled that a notary public who notarizes a will at the testator’s request does not qualify as an attesting witness for admission of the testator’s will to probate. The court denied admission of the will into probate, finding that the statutory requirements were not met because the will was not properly attested.

Strelak argues that the circuit court erred in determining that a notary public does not qualify as an attesting witness for purposes of admitting the will to probate.

Section 4 — 3 of the Probate Act of 1975 provides that every will must be in writing and signed by the testator. The will is to be “attested in the presence of the testator by 2 or more credible witnesses.” (Ill. Rev. Stat. 1987, ch. 1101/2, par. 4 — 3.) The Probate Act is silent as to what role, if any, a notary public has during the execution of a will, and our supreme court has only touched upon this issue. In Chimp v. Gowans (1907), 226 Ill. 635, 80 N.E. 1086, a deed which had been acknowledged before a notary public was presented for admission to probate. The notary had affixed his signature to the certificate of acknowledgement. The court stated that perhaps the certificates which show that the maker acknowledged to the notary that she signed the instrument would be sufficient to make the notary a subscribing witness. However, due to the lack of a second competent witness, the instrument was denied probate as a will. In Szarat v. Schuerr (1937), 365 Ill. 323, 6 N.E.2d 625, an attesting witness who had signed the testator’s will later recanted his attestation at the ensuing probate proceedings, claiming that he did not sign the document in the testator’s presence. The circuit court denied the will’s admission to probate. The supreme court reversed, ruling that the witness, who also had served as a notary public and who had attached his jurat reciting that the instrument was subscribed and sworn before him, should have refused to sign the attestation clause if the testator was not then present: “While notarizing can lend no efficacy to a will nor detract from its validity, Baska [the notary] undoubtedly understood that the jurat of a notary public is for the purpose of authenticating or verifying the statements in the instrument to which it is attached.” Szarat, 365 Ill. at 327.

Both Szarat and Gump, therefore, suggest that a notary public’s testimony may be relevant since the notary’s jurat signifies some type of authentication or verification of the statements in the instrument to which it is attached. Moreover, our supreme court has ruled that the proponent of a will may support the will by any evidence competent to establish a will in chancery; however, it is the contestants who are limited to the subscribing witnesses as to evidence of the execution of the will and the testamentary capacity, except where there is fraud, forgery, compulsion, or other improper conduct at the time of the execution of the will. (In re Will of Hamilton (1951), 408 Ill. 187, 96 N.E.2d 562; Spangler v. Bell (1945), 390 Ill. 152, 60 N.E.2d 864; Bley v. Luebeck (1941), 377 Ill. 50, 35 N.E.2d 334; Flynn v. Flynn (1918), 283 Ill. 206, 119 N.E. 304; see also Wright, A Probate Judge Looks At Opening the Estate & Issuance of Letters of Office, 59 Ill. B.J. 324, 325 (1970).) Since Edling’s testimony was offered by the proponent of the will, we rule that Edling’s testimony should have been received into evidence, particularly under the circumstances presented here.

Illinois has long recognized that where an attesting witness impeaches or denies the execution of a will or any fact essential to establish its validity, such testimony is entitled to little credence and should be viewed with suspicion and caution. (In re Estate of Willavize (1960), 21 Ill. 2d 40, 171 N.E.2d 21; Spangler v. Bell (1945), 390 Ill. 152, 60 N.E.2d 864; Brelie v. Wilkie (1940), 373 Ill. 409, 26 N.E.2d 475; Gilbert v. Oneale (1939), 371 Ill. 427, 21 N.E.2d 283; Jenkins v. White (1921), 298 Ill. 502, 131 N.E. 634; In re Estate of Koss (1967), 84 Ill. App. 2d 59, 228 N.E.2d 510.) Edling’s notarization tends to prove the authenticity of the Simunjaks’ signatures and the verification of the attestation clause, which are now in dispute. Indeed, that is the function of a notary public, an official who is defined as “[o]ne who is authorized by the state or federal government to administer oaths, and to attest to the authenticity of signatures.” (Emphasis added.) (Black’s Law Dictionary 956 (5th ed. 1979).) In view of this, the circuit court erred in barring Edling’s testimony.

In so holding, we do not address the question of whether Etiling can be considered an attesting witness. We merely hold that Edling’s testimony should have been admitted to prove the authenticity of the attestation clause and the verification of the signatures.

Strelak next challenges the circuit court’s finding that the will was not attested in the manner mandated by the Probate Act.

Where the testator and two attesting witnesses have signed a will, every presumption will be indulged in favor of the execution and attestation of the will. (In re Estate of Willavize (1960), 21 Ill. 2d 40, 171 N.E.2d 21; In re Estate of Chlebos (1990), 194 Ill. App. 3d 46, 550 N.E.2d 1069.) If the instrument contains an attestation clause which shows on its face that all of the formalities required by law have been met, and the signatures on the instrument are admittedly genuine, a prima facie case has been made in favor of the due execution of the will. (Brelie v. Wilkie (1940), 373 Ill. 409, 26 N.E.2d 475; In re Estate of Koss (1967), 84 Ill. App. 2d 59, 228 N.E.2d 510.) Such a prima facie case cannot be overcome by the testimony of a witness that there was not compliance with all the statutory requisites. (Jenkins v. White (1921), 298 Ill. 502, 131 N.E. 634; In re Estate of Hart (1967), 79 Ill. App. 2d 134, 223 N.E.2d 466.) Moreover, our courts have admitted wills into probate where one of the attesting witnesses did not remember signing the will or complying with the statute. (See Mead v. Trustees of the Presbyterian Church (1907), 229 Ill. 526, 82 N.E. 371; Thompson v. Owen (1898), 174 Ill. 229, 51 N.E. 1046; In re Estate of Salzman (1974), 17 Ill. App. 3d 304, 308 N.E.2d 83; In re Estate of Krausman (1971), 131 Ill. App. 2d 514, 268 N.E.2d 505; In re Estate of Koss, 84 Ill. App. 2d 59, 228 N.E.2d 510; Loomis v. Campbell (1948), 333 Ill. App. 617, 78 N.E.2d 143; see also Wright, A Probate Judge Looks At Opening the Estate & Issuance of Letters of Office, 59 Ill. B.J. 324, 325 (1970).) Indeed, our supreme court has stated:

“[W]e know of no rule of law which makes the probate of a will depend upon the recollection or even the veracity of a subscribing witness. The law, for wise and obvious reasons, requires such instruments to be executed and attested with such precautions as will usually guard against fraud; but if the forgetfulness or falsehood of a subscribing witness can invalidate a will, it would be easy, in many cases, to use such artifices or corruption as would render the best will nugatory. Their evidence is not conclusive either way, nor does the law presume that they are either more or less truthful than others.” (Mead v. Presbyterian Church, 229 Ill. at 530.)

(See also Conway v. Conway (1958), 14 Ill. 2d 461, 153 N.E.2d 11 (court noted that very few wills could be upheld if probate court depended upon the recollection or veracity of subscribing witnesses).) We find these comments to be particularly applicable to the present case where one of the recanting attestation witnesses, Sharon Simunjak, is a niece of the testator who, if the will were denied probate, would inherit part of the estate as one of the heirs at law, but who would take only a nominal amount of money by the express terms of the will if it were admitted to probate.

The execution of a will must be sufficiently proved where one witness testifies positively to the requisites of execution and the other witness does not recollect or denies compliance with statutory requirements. (In re Estate of Chlebos (1990), 194 Ill. App. 3d 46, 550 N.E.2d 1069; Loomis v. Campbell (1948), 333 Ill. App. 617, 78 N.E.2d 143.) Moreover, the circuit court’s decision regarding the admission of a will into probate will not be reversed on appeal unless it is against the manifest weight of the evidence. In re Estate of Carroll (1989), 192 Ill. App. 3d 202, 548 N.E.2d 650.

Here, two of the three attesting witnesses testified that the statutory requirements were not met, effectively impeaching their attestation. Both claimed that, although their signatures were genuine, Chester neither asked them to sign any will nor did he acknowledge the making of any such document. According to their testimony, it was Strelak, himself, who brought the document, purporting to be a “power of attorney,” allegedly for Francine Koziol, to them to sign. However, a review of the second page of the purported will reveals that Chester Koziol’s name appears, in capital letters, in the very attestation clause signed by the Simunjaks, followed almost immediately by the words “last WILL and TESTAMENT.” Additionally, the words “last WILL and TESTAMENT” appear in two other prominent positions on the page. That the Simunjaks believed they were signing a power of attorney for Koziol’s wife is inherently unbelievable in view of the wording which appears prominently on the page both admitted signing. This testimony, when viewed against the document itself and Etiling’s testimony, is insufficient to rebut the presumption of validity to be accorded the attestation clause. Based on the foregoing, the circuit court’s decision denying the admission of the will to probate was against the manifest weight of the evidence.

Although we have some concern about the Simunjaks’ impeachment testimony, an order admitting a will to probate is not final as to the execution or validity of the will. (In re Estate of Ariola (1979), 69 Ill. App. 3d 158, 386 N.E.2d 862.) Indeed, the validity of the will may be challenged in a will contest brought within six months of the admission to probate (Ill. Rev. Stat. 1989, ch. 1101/2, par. 8 — 1), where all such questions may be tried de novo. In re Estate of Ketter (1978), 63 Ill. App. 3d 796, 380 N.E.2d 385.

Therefore, the order of the circuit court is reversed, and the cause is remanded with directions to admit the will of Chester Koziol into probate.

Reversed and remanded.

BUCKLEY, P.J., and MANNING, J., concur.

       Testimony established that the Simunjaks lived in an apartment directly below Koziol’s in the same building.


source: Caselaw Access Project

author: PRESIDING JUSTICE BUCKLEY

license: Public Domain

text:
    G M A C MORTGAGE CORPORATION OF PENNSYLVANIA, Plaintiff and Counterdefendant-Appellee, v. WALTER L. STAPLETON et al., Defendants and Counterclaimants-Appellees (Shirley B. Harding et al., Objectors-Appellants).
    First District (1st Division)
    No. 1—91—3495
    Opinion filed October 13, 1992.

      Kenneth Hanson and William J. Stevens, both of Chicago (Irving Morris, Karen L. Morris, and G. Robert Blakely, of counsel), for appellants.
    Kirkland & Ellis, of Chicago (Chaim T. Kiffel and Sallie G. Smylie, of counsel), for appellee G M A C Mortgage Corporation of Pennsylvania.
    Lawrence Walner & Associates, Ltd., and Law Offices of Daniel A. Edelman, both of Chicago (Lawrence Walner and Daniel A. Edelman, of counsel), for other appellees.
   PRESIDING JUSTICE BUCKLEY

delivered the opinion of the court:

Class members objectors-appellants Shirley B. Harding and Barry Ruder (Objectors) appeal from a final judgment of the circuit court of Cook County which approved a class action settlement agreement proposed by plaintiff and counterdefendant-appellee G M A C Mortgage Corporation of Pennsylvania (GMACM) and defendant and counter-claimant-appellee Walter L. Stapleton (Stapleton). The class action suit, brought by Stapleton on behalf of himself and all others similarly situated, charged GMACM with collecting excessive escrow fees from Stapleton and class members in violation of the escrow provisions of Stapleton’s and each class member’s mortgage. The sole issue on appeal is whether the circuit court abused its discretion in approving the class action settlement. We affirm.

GMACM is a wholly owned subsidiary of General Motors Acceptance Corporation and a Pennsylvania corporation. Stapleton is an Illinois resident and Objectors are nonresidents. The Objectors are also plaintiffs in a separate class action suit against GMACM. Harding v. G M A C Mortgage Corp. (E.D. Pa.), No. 91—15119 (filed March 8, 1991).

As one of the country’s largest mortgage service companies, GMACM lends money to mortgagors and then packages the mortgages for resale to investors. GMACM services the mortgages during their existence by collecting the mortgagors’ monthly payments of principal, interest and escrow monies, which GMACM uses to pay the mortgagors’ taxes and insurance on the mortgaged property. The mortgages GMACM services are printed on standard form contracts authored by the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), the Federal Housing Administration (FHA), and the Veterans Administration (VA).

In November 1990, GMACM filed a foreclosure action against Stapleton and his brother, alleging that he was in default on a promissory note for which a GMACM mortgage served as security. In responding to the foreclosure suit, Stapleton asserted a class action counterclaim which charged GMACM with collecting an amount of escrow money which exceeded the permissible amounts under the class members’ respective standard form contracts. Asserting breach of contract and statutory consumer fraud claims (e.g., Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1989, ch. 1211/2, par. 261 et seq.)), the class sought equitable and monetary relief, penalties and attorney fees.

The class members involved in this suit consist of approximately 590,000 customers of GMACM, with 388,000 members having current mortgages with GMACM, and 202,000 members having mortgages which have been closed. Of the 388,000 current mortgages, 39% are FHA mortgages, 19% are VA mortgages and 42% are FNMA or FHLMC mortgages. The mortgages of Stapleton and Objector Harding are the standard FHA form while that of Objector Ruder is the FNMA/FHLMC form.

The standard FHA form, which substantially mirrors the VA form, provided in part that the monthly escrow payment shall be:

“[a] sum equal to *** the taxes and special assessments next due on the premises covered by this mortgage, plus the premiums that will next become due and payable on policies of fire and other hazard insurance on the premises covered hereby (all as estimated by the Mortgagee) less all sums already paid therefore divided by the number of months to elapse before one month prior to the date when such [items] *** become delinquent.” (Emphasis added.)

The standard FNMA/FHLMC mortgage provided:

“[b]orrower shall pay to the Lender on the day monthly payments are due under the Note, *** a sum [Funds] equal to one twelfth of: [escrow items]. Lender may estimate the Funds due on the basis of current data and reasonable estimates of future escrow items.
* * *
If the amount of the Funds held by the Lender, together with the future monthly payments of Funds payable prior to the due dates of the escrow items, shall exceed the amount required to pay the escrow items when due, the excess shall be, at Borrower’s option, either promptly repaid to Borrower or credited to Borrower on monthly payments of Funds.” (Emphasis added.)

The dispute in this case, at its heart, is nothing more than attributing the proper interpretation to the above provisions. To understand more specifically what this dispute is about, however, it is necessary to comprehend the workings of an escrow account.

Generally, a mortgage escrow account is designed to ensure that customer bills are timely paid by the mortgage service company. To this end, a mortgage servicing company performs an annual analysis of each customer’s escrow requirements for the following 12 months. Using past bills, the servicing company will estimate the amount of money which will be needed for each bill over the next 12 months, calculate the number of months to elapse before each bill comes due, and then set a level monthly escrow payment so that sufficient funds will be available to pay each bill. A one- or two-month cushion may be employed to insure timely payment and guard against inflationary increases. Where a mortgagor has only one bill to pay during the year, which is rare, the calculations are relatively simple. Where, however, bills of varying amounts are due at different times, which is the usual case, escrow calculations are more complex. The present suit calls into question two accounting practices which mortgage servicers employ in these more complex escrow scenarios.

The first accounting practice is called individual item analysis. Under this analysis, the mortgage servicing company establishes separate subaccounts for each individual escrow item (i.e., city taxes, county taxes, insurance, etc.). Significantly, the amount of money in the aggregate escrow account is not a factor under this analysis and, thus, substantial monies in separate subaccounts may exist at the time full payment of another subaccount is made. In addition to the monies in these other subaccounts, a given subaccount may contain the one- or two-month reserve or cushion discussed above. Generally, individual item analysis requires more funds in an escrow account than if the escrow account were maintained without subaccounts.

The second accounting practice employs an aggregate override to limit excessive escrow reserves. Under this method, the mortgage servicing company annually estimates the escrow account’s aggregate annual low point during the upcoming 12-month period. This figure is then related to the monthly escrow payment. When a two-month aggregate override is employed, the mortgagor receives a credit or refund for any amount by which the low point in the aggregate escrow account exceeds one-sixth (two months) of the total amounts expected to be paid diming the next 12 months from the escrow account. Generally, an escrow account serviced with an aggregate override employing a two-month cushion requires less funds than an account maintained on an individual item basis with a one-month cushion.

Although the Objectors claim otherwise, GMACM contends, and Stapleton does not dispute, that GMACM employs individual item analysis with a one-month cushion in servicing its mortgagors’ accounts. GMACM submits to support its assertion the affidavit of its chief financial officer, Frederick A. Henderson, who states that GMACM targets a one-month cushion for each subaccount, allowing GMACM to collect the full amount due for each escrow item one month before GMACM must pay that item. The Objectors have submitted printouts of their individual subaccounts which they claim show that GMACM exceeded one-month cushions on a number of occasions and, in fact, borrowed from one subaccount to correct a deficiency in another subaccount.

Aside from the issue of whether GMACM “in fact” practices individual item analysis with a one-month cushion, Stapleton and the Objectors assert that individual item analysis -with a one-month cushion is, as an accounting practice, at odds with the language of the standard form contracts, and violates the Real Estate Settlement Procedures Act (RESPA) of 1974, 12 U.S.C. §2601 (1988) et seq., which imposes a two-month ceiling on the collection of escrow money. GMACM responds that individual item analysis with a one-month cushion is consistent with both the standard form contracts and RE SPA. GMACM cites a wide variety of authority that RE SPA permits the accounting practices it employs.

To resolve the instant class action suit, Stapleton, individually and as class representative, entered with GMACM a proposed settlement agreement on April 29, 1991. Under the terms of the proposed settlement, in exchange for the class members’ release of GMACM as to any and all claims, GMACM agreed to do the following.

First, as to the estimated 388,000 current mortgages, GMACM would employ a two-month annual aggregate override to avoid the collection of excess reserves. Significantly, this portion of the settlement agreement incorporated prospectively any lower ceiling which might be achieved as a result of a similar suit pending in New York. In that suit, 12 Attorney Generals of various States sued GMACM over their accounting practices. People of the State of New York v. G M A C Mortgage Corp. (S.D.N.Y), No. 90—Civ—7924 (the AG action) (filed December 11, 1990).

On February 4, 1992, after the Stapleton-GMACM settlement in this case was approved by the circuit court, the AG action was settled. When the AG settlement is incorporated into the Stapleton-GMACM settlement, GMACM’s future escrow practices will be as follows: (1) escrows of current mortgages using old FNMA/FHLMC forms will be calculated using a zero aggregate cushion, meaning the projected aggregate trial balance must fall to zero at some time during the year; and (2) escrows of old FHA/VA mortgages will use an individual item analysis with a one-month cushion, or a two-month aggregate override, whichever produces the lower escrow amount.

Second, GMACM agreed under the proposed settlement to refund to current mortgagors any surplus escrow amounts determined by using a two-month aggregate override. GMACM would include in the refund as compensation an amount of money equal to 5V2% of the refund. Prompted by the Objectors at the final settlement hearing, the circuit court deleted the requirement that had existed in the proposed settlement that current mortgagors supply GMACM with a notarized claim form to obtain their refund. Now, under the final settlement approved by the circuit court, no claim form is required.

GMACM next agreed in the proposed settlement to pay the 202,000 closed mortgagors a sum of money calculated by using the following formula: .40 x (3.3 years) x (5^% interest) x (ending escrow surplus). Under this formula, the .40 figure represents a litigation risk factor, and the 3.3 years figure pertains to the applicable statute of limitations period. Again, prompted by the Objectors, the circuit court deleted the requirement that past mortgagors file a notarized claim form. Now, under the final settlement approved by the circuit court, mortgagors with closed mortgages must submit only a claim form.

On June 4, 1991, the circuit court certified a class, gave preliminary approval to the proposed settlement agreement, and directed notice be provided to the class. Under the notice provision of the proposed settlement, GMACM mailed at its expense a court-approved notice form to current mortgagors and, using its computer records, to the 202,000 closed mortgagors. The notice form did not include a copy of the proposed settlement agreement, but did summarize its relevant provisions. The notice directed class members to read the settlement agreement for more information, a copy of which was obtainable through the circuit court. GMACM also twice-published the notice to the class in U.S.A. Today on July 8 and 15, 1991.

Of the 202,000 old mortgagors, less than 20% of the mailings were returned undeliverable. GMACM remailed, at its expense, over 5.000 notices which were returned with address corrections. Of the 590.000 potential class members, only eight members objected, and 26 members elected to opt out.

On August 8, 1991, the Objectors intervened in the instant action, objecting to the proposed settlement and moved the court to allow their March 1991 Federal class action suit against GMACM to proceed forward. The objections the Objectors asserted parallel the arguments they raise on appeal.

On August 19, 1991, the circuit court conducted a lengthy fairness hearing on the merits of the proposed settlement agreement. The court received evidence and oral argument from counsel of the class, GMACM, the Objectors and counsel for the class representative in Marquis v. G M A CM Mortgage Corp. (D. Minn.), No. 4—90—957 (filed Dec. 14, 1990), a class action suit making similar allegations to the present case. The court also had before it written briefs previously submitted by the parties. Of the parties present at the hearing, only the Objectors objected to the settlement; neither the AG attorneys nor the Marquis attorneys objected.

Following the hearing, the court received written briefs from Stapleton, the Objectors and GMACM. Special briefs were also received on the Objectors’ allegation that a recovery under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1961 (1988) et seq., would greatly enhance any damages awarded to the class.

On September 27, 1991, the circuit court entered its “Order of Settlement Approval, Dismissal and Final Judgment.” The court in this order overruled the Objectors’ objections and gave final approval to the proposed settlement, with the only modifications being the less demanding claim filing requirements. The court expressly found the settlement to be “fair, reasonable and adequate to the class” and that Stapleton fairly and adequately represented the class members. The court retained jurisdiction over the case to administer and enforce the terms of the settlement. The Objectors bring this appeal from the court order approving the settlement.

The procedural and substantive standards governing class action settlement hearings are well settled. The standard used by the courts in evaluating a compromise is that the proposal must be fair and reasonable and in the best interest of all those who will be affected by it. (People ex rel. Wilcox v. Equity Funding Life Insurance Co. (1975), 61 Ill. 2d 303, 316, 335 N.E.2d 448, 455; Gowdey v. Commonwealth Edison Co. (1976), 37 Ill. App. 3d 140, 150, 345 N.E.2d 785, 793.) Since the result is a compromise, the court in approving it should not judge the legal and factual questions by the same criteria applied in a trial on the merits. (People ex rel. Wilcox, 61 Ill. 2d at 316, 335 N.E.2d at 455.) Nor should the court turn the settlement approval hearing into a trial. To do so would defeat the purposes of a compromise such as avoiding a determination of sharply contested issues and dispensing with expensive and wasteful litigation. People ex rel. Wilcox, 61 Ill. 2d at 316-17, 335 N.E.2d at 455.

Although review of class action settlements necessarily proceeds on a case-by-case basis, certain factors have been consistently identified as relevant to the determination of whether a settlement is fair, reasonable and adequate: (1) the strength of the case for plaintiffs on the merits, balanced against the money or other relief offered in settlement; (2) the defendant’s ability to pay; (3) the complexity, length and expense of further litigation; (4) the amount of opposition to the settlement; (5) the presence of collusion in reaching a settlement; (6) the reaction of members of the class to the settlement; (7) the opinion of competent counsel; and (8) the stage of proceedings and the amount of discovery completed. City of Chicago v. Korshak (1990), 206 Ill. App. 3d 968, 971-72, 565 N.E.2d 68, 70, citing Armstrong v. Board of School Directors (7th Cir. 1980), 616 F.2d 305, 314.

On appeal, a reviewing court will intervene only upon a clear showing that the trial court was guilty of an abuse of discretion. (People ex rel. Wilcox, 61 Ill. 2d at 316, 335 N.E.2d at 455; Korshak, 206 Ill. App. 3d at 971-72, 565 N.E.2d at 70.) Stated otherwise, a trial court’s approval of a settlement should not be overturned on appeal unless, taken as a whole, the settlement appears on its face so unfair as to preclude judicial approval. Korshak, 206 Ill. App. 3d at 972, 565 N.E.2d at 70; Gowdey, 37 Ill. App. 3d at 149-50, 345 N.E.2d at 793.

In this case, the Objectors make numerous allegations as to why we should disturb the circuit court’s approval of the settlement. For purposes of brevity, the Objectors’ allegations will be categorized and discussed under the appropriate Korshak factor. We now turn to a discussion of each Korshak factor.

The first Korshak factor balances a plaintiff’s likelihood of success on the merits against the relief offered in the settlement. The Objectors make their most strenuous argument under this factor.

The Objectors initially argue that the necessary balancing required by this Korshak factor is not present in the circuit court’s final order approving the settlement. The Objectors next argue that the class has a high likelihood of success on the merits of its action because GMACM’s escrow practices were in clear violation of the standard form contracts and RE SPA, and GMACM has no defenses to its conduct. Finally, the Objectors attack the relief offered the class by asserting that the class is receiving little in exchange for what it is relinquishing. The Objectors’ criticism of the preferred benefits can be particularized as follows: (1) the class members are only being returned monies which GMACM wrongfully took in the first place; (2) the class members having current mortgages will prospectively pay greater monthly escrow payments than if the current mortgages were only enforced as written; (3) the settlement rewards GMACM’s past illegal escrow practices and judicially rewards GMACM by allowing GMACM to collect excessive escrow monies in the future; (4) an estimated 30% of the class will receive no compensation for GMACM’s past practices and, instead, will have their mortgages unilaterally changed for the future; and (5) if class members fail to file or properly file the claim form, GMACM retains its ill-gotten gains.

We find unpersuasive the Objectors’ contentions under the first Korshak factor. We first disagree that reversal is required because the circuit court’s order does not contain a discussion balancing the benefits and burdens of the settlement. The court was well advised by counsel on the settlement’s terms and the potential risks facing the class if the litigation continued. Merely because the final order omits a balancing discussion does not mean the court approved the settlement without weighing the benefits and burdens of the settlement to the class.

Next, we disagree with the Objectors’ assertion that the class’ likelihood of success on the merits is great while that of GMACM is small. Without expressing any opinion on the authority which GMACM cites to support its escrow practices under RE SPA, the mere volume of that authority suggests that the class action may ultimately fail. This authority includes cases, official statements made by Housing and Urban Development officials (HUD) on the propriety of individual item analysis, HUD homeowner advisory booklets given to new homeowners, General Accounting Office interpretations of RE SPA, and the industry-wide practice of individual item analysis. Regarding GMACM’s escrow practices under the language of the individual contracts, the FHA contracts seemingly permit GMACM’s escrow practices, and the FNMA/FHLMC forms do not on their face prohibit individual item analysis with a one-month cushion. In short, GMACM’s authority and arguments on the propriety of individual item analysis present a serious risk to the class of litigating this case on the merits. We believe the circuit court was clearly entitled to consider this risk in assessing the overall fairness of the settlement.

We next disagree with the Objectors’ claim that the benefits the class will receive under the settlement are de minimis. Regarding class members with current mortgages, GMACM’s escrow practices in the future are designed to avoid the collection of excess reserves. The evidence produced at the hearing shows that a two-month aggregate override will produce a lower aggregate escrow amount than individual item analysis with a one-month cushion. Thus, the escrow amounts that GMACM will collect in the future will generally be less than what it collects presently.

Moreover, in light of the incorporation of the AG settlement, GMACM’s future escrow practices will be even more limited. Under the old FNMA/FHLMC mortgages, which 42% of current mortgagors possess, GMACM will employ a zero aggregate cushion analysis. The evidence GMACM produced at the hearing demonstrates that this practice will, on average, operate more favorably than its previous accounting practice. Under the old FHA/VA mortgages, which encompass the remaining active mortgagors, mortgagors get the benefit of alternative formulas, one of which employs an aggregate override with a two-month cushion. Again, the average homeowner will benefit under this new formula.

Under the approved settlement, all new escrow formulas will be immediately implemented. Significantly, the circuit court has retained jurisdiction to administer and enforce the settlement, and Stapleton’s counsel has the right to monitor GMACM’s escrow practices over the next three years.

In addition to GMACM changing its future escrow practices, GMACM will pay compensation to previous and current mortgagors. While the Objectors assert that these monies are nothing more than monies which GMACM wrongfully took in the first place, this assertion merely reiterates the Objectors’ previous argument that GMACM’s conduct was wrongful initially. Indeed, many of the Objectors’ arguments which we previously particularized are premised on the assertion that GMACM was guilty of improper conduct and has no defenses to its conduct. As discussed above, GMACM’s position in this lawsuit is not without authority and, thus, the risk does exist that the class will recover nothing if the case proceeds to trial. Again, the terms of the settlement must be measured within this context.

The second Korshak factor requires this court to analyze GMACM’s ability to pay. No party disputes this factor.

The third Korshak factor is the complexity, length and expense of further litigation. As before, the Objectors assert that the suit against GMACM will resolve itself quickly and to GMACM’s detriment. For the reasons discussed above, we do not find their argument persuasive.

The fourth and six Korshak factors are typically discussed together, and they are the amount of opposition to the settlement and the reaction of class members to the settlement. While the Objectors do not dispute the relatively minor negative reaction the proposed settlement received, they claim the class’ reaction is merely a reflection of the fact that the class received inadequate notice of the terms of the settlement. The Objectors assert the following defects in the notice: .class members were not informed of how any changed escrow formula would affect their individual escrow accounts in the future; that the class was not informed that only some members will receive compensation while others will not; and the amount of compensation each member would receive, if any.

We reject the Objectors’ assertions. The circuit court reviewed the notice which the class was to receive, approved its contents and approved of how GMACM would effectuate the mailing. The notice informed the class that it merely summarized the settlement’s provisions and that the exact terms of the settlement were available from the circuit court if desired. While the settlement did not include how each homeowner would be affected in particular, or how much compensation he or she would receive, our affirmance of the circuit court’s finding of fairness diminishes any claimed deficiency in the notice. Further, if any particular homeowner disliked the terms of the settlement, questioned its particular effect, or approved of how GMACM was currently handling his or her escrow account, he or she could opt out of the settlement. The fact that only 26 of 590,000 members elected to opt out is testimony that the notice adequately informed the class and that the class believes the settlement is fair.

The fifth Korshak factor is the presence of collusion in reaching the settlement. The Objectors assert that Stapleton’s foreclosure prevents him from representing the class fairly, and that because Staple-ton acquiesced in the terms of this allegedly unfair settlement, Staple-ton cannot be representing the class vigorously. The Objectors also cite to Stapleton’s receipt under the settlement of $2,000 for his service as class representative.

We affirm the circuit court’s specific finding that Stapleton fairly and adequately represented the class. The fact that Stapleton is in foreclosure does not persuade us that he could not fairly and adequately represent the interests of the class. Stapleton’s foreclosure is a neutral fact at best.

As for Stapleton’s payment for his representing the class, such payments are not atypical in class action cases (e.g., Bryan v. Pittsburgh Plate Glass Co. (W.D. Pa. 1973), 59 F.R.D. 616 ($17,500 award to class representatives)) and serve to encourage the filing of class action suits. (See Krislov, Scrutiny of the Bounty: Incentive Awards for Plaintiffs in Class Litigation, 78 Ill. B.J. 286 (1990).) Finally, regarding Stapleton’s acquiescence to the terms of this settlement, our affirmance demonstrates that Stapleton properly represented the class.

The seventh Korshak factor is the opinion of counsel. The Objectors assert that this court should give this factor little weight in light of the deficient advice Stapleton has received. We disagree.

Stapleton’s counsel have filed two other mortgage escrow class action suits prior to their filing of the instant case. Counsel has also participated in numerous other class action suits during their professional careers. Aside from Stapleton’s counsel approving the settlement, the Marquis counsel believes the settlement to be fair, and the AG counsel has not objected. The circuit court could appropriately resolve this factor against the Objectors.

The final Korshak factor is the stage of the proceedings and the amount of discovery completed. This factor is important because it bears directly on the ability of the trial court and Stapleton’s counsel to evaluate the merits of the case and assess the reasonableness of the settlement.

On this factor, the Objectors assert that the trial court lacked critical facts pertaining to the monies GMACM collected, the monies GMACM will collect, how the changed escrow practices will effect individual mortgagors, how much money will be refunded, how much GMACM will retain in the event claim notices are not filed, who will and will not receive refunds, and the favored treatment GMACM received in exchange of the large deposits it made with the excess reserves it collected.

We believe that the circuit court was adequately informed. The size of the record in this appeal alone undermines the Objectors’ argument that the circuit court lacked a proper basis upon which to base its decision. This record includes transcripts of the full-day hearing which the circuit court held, the parties’ various submissions to the trial court, and the results of the Attorney General’s two-year investigation into the escrow practices in question.

Moreover, the circuit court had before it representative accounts to determine how GMACM’s past escrow practices worked and how they will effect the average homeowner in the future. While this account was theoretical, it demonstrates that the average class member will (1) benefit from the changed escrow accounting practices and (2) receive compensation for GMACM’s past practices. It is worth reiterating that settlement hearings are not to be full trials on the merits. One of the principal purposes of an early settlement is to avoid costly and lengthy discovery. This is part of the exchange the parties make in achieving settlement. We accordingly reject the Objectors’ arguments under this factor.

In summary, we affirm the settlement. After reviewing the record and the parties’ arguments to determine whether the circuit court abused its discretion in approving the settlement, we conclude that no abuse of discretion has been shown.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

CAMPBELL and MANNING, JJ., concur.


author: JUSTICE McMORROW

text:
    JOEL W. ZIEN, Plaintiff-Appellant, v. THE RETIREMENT BOARD OF THE FIREMEN’S ANNUITY AND BENEFIT FUND OF CHICAGO et al., Defendants-Appellees.
    First District (4th District)
    No. 1—91—0484
    Opinion filed October 15, 1992.

      Steven M. Levin, of Steven M. Levin & Associates, of Chicago, for appellant.
    Fagel & Haber, of Chicago (Maynard B. Russell, Steven J. Teplinsky, and James A. Roth, of counsel), for appellees.
   JUSTICE McMORROW

delivered the opinion of the court:

Joel Zien (Zien) appeals from the trial court’s denial of his petition for administrative review of the decision of the Retirement Board of the Firemen’s Annuity & Benefit Fund of Chicago (the Board) that Zien was not entitled to duty-related disability benefits. Because we determine that the evidence of record establishes that Zien sustained a back injury while on duty on August 20, 1987, that has rendered Zien unable to work as a paramedic, we conclude that Zien should have been awarded duty-related disability benefits. Accordingly, we reverse and remand.

The record from the Board’s proceedings with respect to Zien’s application for duty-related disability benefits reveals the following. Zien testified at the Board’s hearing that he had been a firefighter for the City of Chicago since October 1, 1975. He stated that on August 20, 1987, while on duty as a city paramedic, he was transporting a patient on a stretcher down a set of stairs, slipped on the stairs, lost his footing, and was pushed into a corner of the stairway. Zien testified that the stretcher fell against him when he was pushed into the corner. Zien stated that he was able to assist his partner in taking the patient to a nearby hospital. At that time, Zien was examined by medical personnel, who informed Zien that he had acute lumbar strain.

Zien was absent from work on August 20, 1987, to September 8, 1987. He testified that he returned to work, but was off work again on September 15, 1987, because of “unbearable pain.” The record reflects that Zien did not return to work until April 1988. Thereafter, he again went on leave because of back problems on December 2, 1988. Zien did not return to active duty. His application for duty-related disability benefits was filed on November 7, 1989, while he was still employed as a paramedic by the City of Chicago.

The administrative record of the Board’s proceedings contains extensive medical records and reports regarding the course of Zien’s treatment for back pain following the August 20, 1987, incident. Although the parties’ briefs and the Board’s determination do not restate this evidence in detail, and the documents are not provided in a coherent or chronological order in the record, we will summarize the medical treatments received by Zien as reflected in the record.

The record indicates that Dr. Gregory Palutsis, an orthopedic surgeon who treated Zien extensively following his August 20, 1987, accident, determined that Zien had suffered a compression fracture of the Til and T12 vertebrae. For example, from his examination of Zien on September 21, 1987, Dr. Palutsis recorded in his office notes that Zien had pain in the left paraspinal area at the thoracolumbar junction. The physician’s physical examination revealed marked left thoracolumbar muscle spasm, and that Zien’s pain became worse during right side bending and forward flexion. Dr. Palutsis’ review of X rays led him to believe that it was likely that Zien had sustained a mild compression fracture of the T12 vertebra while lifting. The physician recorded his impression as “probable compression fracture T12 also associated with a musculoligamentous injury to the low back.” Dr. Palutsis determined that Zien’s activities should be restricted and that he should not return to work. Dr. Palutsis noted that he anticipated Zien would be fully recovered in four to six weeks.

Dr. Palutsis reached similar conclusions from his examinations of Zien throughout October and November 1987. The physician recorded in his office notes for this period that Zien continued to experience lower back pain and spasms. Dr. Palutsis concluded from these visits that Zien’s “progress is best characterized as being slow, but steady.”

In late November 1987, Dr. Palutsis’ office examination of Zien revealed that Zien was still complaining of mid-thoracic back pain and that Zien was “still showing mild compression of T12.” The physician noted that Zien was still very stiff, that he would bend to his toes very slowly, and that Zien had pain when he came to a standing position. Dr. Palutsis recommended that magnetic resonance imaging (MRI) be undertaken.

The record indicates that the MRI for Zien’s lumbar spine and lower dorsal spine was performed at Evanston Hospital on December 3, 1987. The report of the MRI states that the “T12 vertebra showed no evidence of fractures.” Following the MRI, Dr. Palutsis recorded in his office notes from an examination of Zien on December 11, 1987, that the “MRI is totally normal with no evidence of disc or compressive phenomenon.” Dr. Palutsis remarked that Zien still had significant left paraspinal muscle spasm, and that when Zien bent forward, “his thoracolumbar spine is not moving at all really.” The physician recorded that Zien was beginning to do a little bit more at home, and so the doctor felt that some improvement was being made. However, because Zien’s recovery was taking longer than the usual course, Dr. Palutsis recommended a bone scan, and “an EMG/NCV of his lower extremities.”

According to Dr. Palutsis’ notes following an office examination of Zien on January 11, 1988, the bone scan and test results were normal. The physician noted that Zien’s lower back spasm had improved, his range of motion had increased, and that his overall movements were a little easier. Dr. Palutsis stated that his plan was to start Zien on a swimming and work-hardening program.

Thereafter, based upon Zien’s participation in a work-hardening program, Dr. Palutsis noticed increased improvement in Zien’s condition during his examinations of Zien in February and March 1988. In late March 1988, Dr. Palutsis found that Zien’s lower back pain was “markedly improved.” The physician observed that Zien’s chief complaint was some right buttock pain extending down the thigh, and that Zien had been experiencing this pain for approximately four weeks. Dr. Palutsis recorded that it was his impression that this pain “may have been related to his physical therapy activities.” The doctor’s physical examination of Zien showed that his muscle spasms in the thoracic spine were markedly decreased and that Zien had good range of motion in this area. Dr. Palutsis also noted that Zien was “point tender over the SI joint on the right side” and decided to inject “this trigger point” with steroids to reduce the pain.

On April 27, 1988, following the injection, Dr. Palutsis found that Zien was doing very well and that the “trigger point” that had been injected was “resolved.” The physician noted that Zien’s only complaint pertained to right hamstring pain. Dr. Palutsis determined that Zien should be released to return to active duty and that he would “see him back in about 2 months if there are any residual problems.”

The record reflects that a company entitled Rehabilitation Consultations for Industry, Inc. (RCI), in Oak Brook, Illinois, was retained from January to April 1988 to follow Zien’s progress. The pertinent progress reports of this company, written by Cathy A. Mora, a registered nurse employed by RCI, recorded similar observations to those stated by Dr. Palutsis regarding Zien’s treatments during this period. For example, in her progress report dated March 29, 1988, Mora stated that she met with Zien on March 28, 1988, at Dr. Palutsis’ office. According to this report, Zien indicated that his back “felt significantly improved.” Mora noted in the progress report that Zien had complained of pain in his right hip. Mora stated in her report that she had also met with Dr. Palutsis, who had advised Mora that Zien’s thoracic problem “seem[ed] to be for the most part resolved at this time.” Mora recorded that Dr. Palutsis had advised that Zien was experiencing some pain in the right hip, but that the physician attributed this to Zien’s aggressive physical therapy program. Thereafter, in her progress report for late April 1988, Mora observed that Dr. Palutsis felt that given Zien’s condition, Zien should be able to return to work without restrictions “at this time.”

Although Zien returned to work as a Chicago paramedic on April 28, 1988, he returned to Dr. Palutsis with complaints of back pain. According to Dr. Palutsis’ office notes of August 12, 1988, Zien related to the physician that Zien was experiencing increased discomfort in his lower thoracic spine and also down his right leg. Dr. Palutsis noted that Zien had returned to full-time active duty and that Zien informed him that heavy lifting at work was particularly painful. The physician noted his impression that Zien “may be having a radicular symptoms [sic] in the right leg.” Dr. Palutsis recorded that he intended to consult with “Dr. McMillan” with respect to whether Zien might be a candidate for an epidural steroid injection as a diagnostic maneuver.

Thereafter, an epidural steroid injection was performed upon Zien on October 5, 1988. Following an office examination in late November 1988, Dr. Palutsis stated that the injection provided approximately two to three weeks’ improvement, after which Zien then felt his lower back and buttock pain recur. Dr. Palutsis noted that Zien “states that his main problems occur when he is lifting” and that as Zien “lifts someone on his job, and does any kind of twisting movement, that he experiences pain in the mid back area.” Dr. Palutsis’ notes specifically state that Zien’s “location of the pain has been consistent throughout his injury. It is in the upper lumbar lower thoracic area.” Dr. Palutsis’ physical examination of Zien revealed tenderness in the lower back. The physician suggested that Zien should perhaps go to Lutheran General Hospital for a second opinion from Dr. David Spencer. It was Dr. Palutsis’ opinion that Zien was “unable to tolerate his work environment.”

Following an examination of Zien on December 15, 1988, Dr. Palutsis found that Zien felt worse. An MRI and bone scan had been performed, but the results were negative. Dr. Palutsis decided to obtain a second opinion after a CT scan had been taken. On December 28, 1988, Dr. Palutsis found that Zien’s CT scan was normal. The physician also determined that Zien had “had an exacerbation of his pain” and that Zien was worse than when the doctor had last seen Zien. Dr. Palutsis noted that the pain was localized in the thoracolumbar junction, and that the pain was worse with flexing, extension, or lifting. The physician again recorded his decision to get a second opinion from Dr. Spencer. Dr. Palutsis stated in his notes, “We may need to contact his work to get this approved, but I think Joel is heading towards some type of workman’s disability.”

The record contains a letter from Dr. David L. Spencer, an orthopedic surgeon at Lutheran General Hospital, dated January 11, 1989, and directed to the Chicago fire department. In his letter, Dr. Spencer noted that Zien’s pain was in the lower back over the right buttock. The physician advised that a physical examination revealed no back spasm or deformity, and that Zien’s neurologic examination was normal. Dr. Spencer related that studies “to date demonstrate a normal bony spine with no evidence of fracture, a normal bone scan with no evidence of a healing or previous fracture, and a normal MRI scan demonstrating no obvious disc herniation in the lumbar spine.” Dr. Spencer stated that in “view of the persistent pain with entirely negative studies to date, one is left with the diagnosis of chronic discogenic back pain.” The physician stated that Zien’s condition “may not be curable” and that it might be necessary to place Zien on permanent restricted duty because of his disability.

From January 1989 through August 1989, Zien underwent physical therapy and participated in a work-hardening program. Because it would unduly lengthen this opinion, we do not state in detail the medical reports and notes appearing in the record with respect to these treatments. In summary, the reports of the pertinent medical health care professionals consistently reported that Zien suffered lower back, hip, and buttock pain, and that he was tender to lower back palpation. Work capacity evaluations and assessments indicated that Zien was unable to lift the amount of weight required to work as a paramedic, although Zien made some progress in his lifting ability and there was also an alleviation of some of the pain he was experiencing.

In October 1989, Zien was examined by Dr. Ivan Ciric, a neurosurgeon with the North Shore Neurosurgeons, S.C., in Evanston, Illinois. In a letter to Dr. Palutsis dated October 14, 1989, Dr. Ciric reviewed Zien’s medical history and stated that in the physician’s opinion, Zien’s “pain is secondary to the persistent fracture at the Til vertebral body.” Dr. Ciric stated that he “suspect[ed] his pain in the lower thoracic area, which is made worse by activities, work, etc., is a consequence of his unhealed fracture.” Dr. Ciric recommended that Zien be fitted with a brace to help heal the fracture and that he stop “any and all forms of exercises involving bending, heavy lifting, etc.”

Zien filed his application for duty-related disability benefits in November 1989. In a report to the Board dated December 13, 1989, the Board’s physician, Dr. George S. Motto, reviewed Zien’s medical history. Dr. Motto advised the Board that he had examined Zien and found that Zien “was an alert cooperative man who walked holding his back straight and in obvious pain.” Dr. Motto reported that Zien “had difficulty getting into and out of a sitting position” and that there “was decreased range of motion of the back.” The physician also stated that there was “tenderness where [Zien] was experiencing pain at the level of T-12 thoracic vertebra.” Dr. Motto commented to the Board that Zien was disabled and “cannot and should not perform paramedic duties.” Dr. Motto also advised that Zien’s “injury dates back to line-of-duty” and that it “does appear that Mr. Zien’s disability is a direct result of injuries he sustained while on duty in 1987.” Dr. Motto observed that the “disability is permanent.”

Dr. Motto also reported to the Board that Zien was scheduled to see another orthopedic surgeon named “Dr. McMillen.” Dr. Motto advised that he had asked Zien to have a copy of this physician’s report sent to Dr. Motto. However, the record does not contain any report from Dr. McMillen. It does, however, contained an unsigned, typed memorandum that is undated and bears the initials “RDM.” This document stated that the writer “strongly doubt[ed]” that there was “in fact any pathology what so ever that would be related to [Zien’s] continued back pain.” The writer related that he believed Zien had “a painful back syndrome but we do not have a specific diagnosis and he has been extensively evaluated for this and I have no additional thoughts over a soft tissue injury to the back which in some fashion is being maintained.” It was the writer’s opinion that Zien had “no structural abnormalities in his back and as such does not require fusion or operative intervention.” The writer recorded that he had suggested “repeat ct [sic] scan in view at our facility to see if there’s any interval change since the previous ct and to characterize this region better with bone windows. This perhaps might give us a more specific diagnosis.”

The Board held its first hearing on Zien’s application for duty-related disability benefits on January 17, 1990. At this hearing, Dr. Motto testified that Zien’s back injury was related to the accident that had occurred while Zien was on duty on August 20, 1987. Dr. Motto also noted that he had received a report from Dr. McMillen, and suggested that Zien be sent to another doctor for an additional evaluation. The Board’s hearing was continued to a later date.

In a letter to Zien dated January 30, 1990, the Board informed him that it had decided to defer his application for duty-related disability benefits “for the reason that there was not sufficient evidence to sustain your disability resulted from an act or acts of duty.” The Board advised Zien that it sought further medical evaluation at the Board’s expense. The Board stated that when the additional medical records and evaluations were made available, the Board would reconvene its hearing on his application.

The record reflects that Zien was sent to Mayo Clinic in Rochester, Minnesota, at the Board’s expense for the additional evaluation. The report of the Mayo Clinic, dated March 7, 1990, and signed by Dr. Sherwin Goldman, noted that X rays of Zien’s thoracic and lumbar spine were normal. Dr. Goldman’s report also related that neurologic consultation of Zien found no neurologic cause for pain, and that Zien’s central nervous system was normal. The physician’s report diagnosed Zien’s condition as chronic dorsal lumbar strain and musculoskeletal deconditioning. It further noted that a pain clinic consultation felt that Zien had muscle attachment pain and chronic strain and that Zien would benefit from local injections and rehabilitation.

At the Board’s resumed hearing on March 21, 1990, Dr. Motto testified that Zien’s problems with pain precluded him from ever performing paramedic duties. In response to a question of what chronic dorsal lumbar strain is, Dr. Motto explained as follows:

“[ajnywhere where there are muscles with an acute stretch or trauma, the muscles and the ligaments that attach the muscle to the bones can be injured. Weakened, if you will. And when you do x-rays there is no obvious fracture, but yet the weakness and the strain or the problem with the inflammation or whatever is there. So, the person can have a persistent problem especially in *** extreme measures of lifting and twisting heavy loads, etc., and really not have a tremendous amount of objective evidence in the form of say nerve root compression or in the form of fractures.”

Dr. Motto testified that he considered the report from Dr. Goldman of the Mayo Clinic to be a “reaffirmation of the initial evaluation.” Dr. Motto stated that Zien had a strained back, in layman’s terms, and that this injury was duty-related from Zien’s accident on August 20, 1987. Dr. Motto related that because of the injury, Zien can no longer work as a paramedic. Dr. Motto testified that “what the Mayo Clinic letter is saying here is that *** this is a permanent diagnosis.”

In a letter to Zien dated March 31, 1990, the Board informed Zien that it had denied his application for duty-related disability benefits, because his disability was not the result of a specific injury, or of cumulative injuries, incurred in or resulting from an act or acts of duty. The Board did grant Zien ordinary disability benefits for the period December 2, 1989, to December 2, 1994, “without prejudice of pursuing any of the rights that you may have for the duty disability benefit.”

Zien filed his complaint for administrative review on April 17, 1990, arguing that the Board’s decision was against the manifest weight of the evidence. The trial court denied Zien’s request for relief, and this appeal followed.

Upon review, Zien argues that the Board’s decision should be reversed because it was against the manifest weight of the evidence. Zien contends that the evidence of record established that his back injury, which rendered him unable to work as a paramedic, was caused by the accident that occurred on August 20, 1987, when he slipped on a set of stairs as he was carrying a stretcher to transport a patient to a nearby hospital.

Under the firefighters’ pension fund act, an active firefighter (including a paramedic) who becomes disabled “as the result of a specific injury, or cumulative injuries *** incurred in or resulting from an act or acts of duty, shall have the right to receive duty disability benefit.” (Ill. Rev. Stat. 1989, ch. 1081/2, par. 6 — 151.) This statutory provision serves an equivalent purpose to the objectives of worker’s compensation. (Mitsuuchi v. City of Chicago (1988), 125 Ill. 2d 489, 493-94, 532 N.E.2d 830.) The terms of the statute should be liberally construed in favor of the applicant to achieve its beneficent purpose. (Olson v. City of Wheaton Police Pension Board (1987), 153 Ill. App. 3d 595, 598, 505 N.E.2d 1387.) Although the Board’s factual determination is entitled to deference upon review, its decision should be reversed where it is against the manifest weight of the evidence. Kellan v. Board of Trustees (1990), 194 Ill. App. 3d 573, 585, 551 N.E.2d 264.

The Board claims that the evidence supports its determination that Zien failed to prove that his back injury was duty-related. Initially, the Board argues that its decision was proper because there was insufficient evidence to prove that Zien suffered from back problems. The Board notes that “[a]ll objective tests regarding Zien’s injury were determined to be normal.” The Board also observes that although Dr. Palutsis diagnosed Zien’s injury as a compression fracture of the T12 vertebra, the “other physicians treating Zien found no compression fracture.” The Board also points out that Dr. Motto testified that “there was no definite physical cause for Zien’s back pain.”

The record does not support the Board’s claims. Dr. Motto specifically testified that there was a definite physical cause for Zien’s back pain. Dr. Motto confirmed the diagnosis of Dr. Sherwin Goldman, of the Mayo Clinic, that Zien suffered chronic dorsal lumbar strain. Dr. Motto additionally testified that this had occurred because Zien’s back muscles and ligaments had suffered an “acute stretch or trauma.” Dr. Motto explained that “when you do x-rays there is no obvious fracture, but yet the weakness and the strain or the problem with the inflammation or whatever is there.” According to Dr. Motto, a person “can have a persistent problem especially in *** extreme measures of lifting and twisting *** and really not have a tremendous amount of objective evidence in the form of say nerve root compression or in the form of fractures.” Based upon this testimony, we cannot accept the Board’s claim that Dr. Motto testified there was “no definite physical cause for Zien’s back pain.”

We also note that the record does not support the Board’s contention that Dr. Palutsis was the only physician who diagnosed Zien’s condition as a compression fracture of the thoracic vertebra. For example, Dr. Ivan Ciric, a neurosurgeon who also examined Zien and his medical records in October 1989, similarly concluded that Zien had suffered a “persistent fracture at the Til vertebral body.” Moreover, virtually all of the health care professionals who treated Zien following his August 1987 injury found that Zien suffered lower back pain, and often was point tender to palpation of the lower back.

In addition, we cannot accept the Board’s claim that Zien’s pain was “wholly subjective.” There is nothing in the record before us to indicate or infer that Zien’s back pain was feigned or exaggerated. We find nothing in the record to warrant an inference that Zien was fabricating a continuing back pain in order to receive duty-related disability benefits.

Next, the Board claims that its decision was supported by the evidence of record because this evidence demonstrates that Zien had completely recovered from his back injury when Zien was released for work in April 1988. The Board notes that “[f]ive months after the alleged injury, Dr. Patutsis [sic] found that Zien has recovered from the compression fracture of the T-12 vertebrae and Zien was released for work without restriction.” The Board contends that “Dr. Patutsis [sic] determined that Zien at that point only had a pulled hamstring” and that Zien “had full motion, full strength, and normal function.” The Board further observes that the “physical therapy report of March 29, 1988, noted that Dr. Patutsis [sic] found Zien’s thoracic problem was resolved and that he should be able to return to work.” According to the Board, “Dr. Patutsis [sic], at that time, found that Zien had some trouble point irritation in the right hip which he attributed to physical therapy not to his injury.”

Again, the Board’s arguments are founded on misstatements of the evidence of record. According to the record, Dr. Palutsis determined in April 1988, almost nine months after Zien’s accident, that Zien had recovered sufficiently that Zien should be allowed to return to work. However, in his office notes, Dr. Palutsis specifically observed that Zien would return in two months “to see if there were any residual problems.” Also, in the reports of RCI by Cathy Mora, the registered nurse who was reviewing Zien’s progress, Mora noted in March 1988 that Zien continued to complain of pain in the right buttock. Thus, the record indicates that these health care professionals had determined that Zien was well enough that he could return to work, not that Zien was completely and finally recovered from the back injury.

The Board additionally argues that although Dr. Palutsis resumed treatment for Zien’s back pain in August 1988, there was no “causal connection between the alleged injury and the disability.” The Board suggests that there were “intervening causes” that precipitated Zien’s continued back pain after he returned to work in April 1988. In this regard, the Board contends that “Dr. Patutsis [sic] did not state his conclusions as to the cause of Zien’s new alleged back pain.” According to the Board, “Dr. McMillan [sic] and Dr. Goldman, likewise, did not attribute Zien’s painful condition to his alleged duty injury.”

However, the Board’s claims mischaracterize the evidence of record. Dr. Palutsis specifically stated his conclusion that the cause of Zien’s back pain in August 1988 was Zien’s accident in August 1987 while Zien was on duty as a city paramedic. Dr. Palutsis recorded in his office notes in August 1988 that Zien’s “location of the pain has been consistent throughout his injury. It is in the upper lumbar lower thoracic area.” Dr. Palutsis also recorded his opinion that Zien was “unable to tolerate his work environment.” Later, in December 1988, Dr. Palutsis recorded that he thought Zien was “heading towards some type of workman’s disability.” It is rather apparent from these remarks of Dr. Palutsis that the physician believed Zien’s resumed back pain in August 1988, and thereafter, was causally connected to Zien’s August 1987 accident in which Zien initially hurt his back.

Moreover, we are unable to rely on a report from Dr. McMillen, as no report from this physician appears in the record. Although the record contains a memorandum from “RDM,” we cannot ascertain who was the drafter of this memorandum. Furthermore, even assuming arguendo that this document constituted the report of Dr. McMillen, the document indicates no more than the writer’s conclusion that there was no “pathology” to Zien’s back pain that would require surgical intervention.

Also, the report of Dr. Sherwin Goldman, from the Mayo Clinic, stated that Zien suffered from chronic dorsal lumbar strain. Dr. Motto testified that this report from the Mayo Clinic confirmed Dr. Motto’s own diagnosis that Zien suffered from a strained back because of Zien’s August 1987 accident. There is nothing in the Mayo Clinic report that contradicts the testimony of Dr. Motto, or the conclusions of Dr. Palutsis, that Zien’s continued back problems were caused by his August 1987 accident.

Lastly, the Board claims that the “basis of both Dr. Motto’s and Dr. Goldman’s conclusion that Zien was disabled was Zien’s own subjective assertion that he suffered pain.” The Board contrasts these physicians’ observations with those of Dr. Palutsis. According to the Board, “Dr. Patutsis [sic] stated [Zien] recovered and could return to work. Dr. Patutsis [sic] found that Zien had full motion, full strength and normal function.” However, as we have noted previously, Dr. Palutsis explicitly recorded his opinion that Zien’s disabling back injury was causally related to Zien’s slip on a set of stairs in August 1987. In addition, both Dr. Motto and Dr. Goldman reached the medical conclusion that Zien suffered chronic dorsal lumbar strain. It was the opinion of both Dr. Motto and Dr. Palutsis that Zien’s back problems were caused by his August 1987 accident.

Based upon our review of the record, and the arguments of the Board on appeal, we find that the Board’s denial of Zien’s application for duty-related disability benefits was against the manifest weight of the evidence. According to the evidence of record, Zien slipped on a set of stairs as he was carrying a patient on a stretcher while Zien was on duty as a city paramedic. Zien was advised after the incident that he had suffered lumbar strain. Dr. Palutsis, the orthopedic surgeon who treated Zien for his back injury, determined that Zien has suffered a compression fracture of the T12 vertebra. Zien was required to undergo approximately nine months of physical therapy and work hardening until, in late April 1988, Dr. Palutsis determined that Zien had made sufficient recovery to return to work as a paramedic. However, Zien’s back problems recurred, and Dr. Palutsis, as well as Dr. Ciric, concluded that Zien’s continued back problems were caused by the compression fracture he sustained at his August 1987 accident. Moreover, Dr. Motto and Dr. Goldman determined that Zien suffered from chronic dorsal lumbar strain. Dr. Motto explained at the Board’s hearing that this condition was caused by Zien’s August 1987 accident. All of the medical personnel were in agreement that Zien’s disability is permanent and will prevent him from resuming his employment as a paramedic for the City of Chicago. In light of this evidence, we conclude that Zien should have been awarded duty-related disability benefits.

For the reasons stated, the decision of the Board is reversed, and the cause remanded to the Board for further proceedings consistent herewith.

In light of this disposition, we need not and do not address the parties’ remaining arguments.

Reversed and remanded.

JIGANTI, P.J., and JOHNSON, J., concur.


author: JUSTICE MURRAY

text:
    RICHARD M. DALEY, Plaintiff-Appellant, v. ZEBRA ZONE LOUNGE, INC., et al., Defendants-Appellees.—RICHARD M. DALEY et al., Plaintiffs-Appellants, v. TROPICAL HUT, INC., et al., Defendants-Appellees.
    First District (5th Division)
    Nos. 1—91—1084, 1—91—1086 cons.
    Opinion filed October 16, 1992.

      Kelly R. Welsh, Corporation Counsel, of Chicago (Lawrence Rosenthal, Benna Ruth Solomon, and Brian Trubitt, Assistant Corporation Counsel, of counsel), for appellants.
    No brief filed for appellees.
   JUSTICE MURRAY

delivered the opinion of the court:

■ Plaintiffs are Chicago Mayor Richard M. Daley (Daley) and the City of Chicago (City). They bring this consolidated appeal against Zebra Zone Lounge, Inc. (Zebra Zone), and the Tropical Hut, Inc. (Tropical Hut). Plaintiffs contend that the trial court erred as a matter of law when it dismissed their actions because they did not have standing to bring a complaint in administrative review. Although defendants have not filed an appellee’s brief in this matter, we will consider the merits pursuant to First Capitol Mortgage Corp. v. Talandis Construction Corp. (1976), 63 Ill. 2d 128, 131-33, 345 N.E.2d 493.

In the Zebra Zone case, Daley, in his capacity as the local liquor control commissioner of the City, filed a complaint for administrative review. In it Daley alleged that defendant Zebra Zone had appealed the refusal of a retail liquor license in its behalf. The License Appeal Commission (Commission) entered an order reversing Daley’s decision. Daley also alleged that, as the local liquor control commissioner, he was seeking judicial review of the Commission’s decision.

In the record is a transcript of the proceedings before the Commission in which Patricia Eugenia Kristopolous, owner of the Zebra Zone Lounge, appealed from Daley’s denial of her application for a liquor license. According to her testimony, the City had previously reassured her that she was eligible for such a license, and in reliance thereon she had invested considerable money to start her new business. Subsequently, however, the City told her that she was in violation of an ordinance and denied her request for the license. Also according to the record, the Commission reversed the order denying the application and denied the City’s petition for a rehearing.

There is no motion to dismiss the complaint in the record. However, in its memorandum in opposition to defendants’ motion to dismiss, plaintiffs argued that the legislative history of the relevant liquor control statute supported the local commissioner’s right to appeal the decisions of the Commission. Nevertheless, following a hearing the trial court granted defendants’ motion to dismiss on February 19, 1991, because Daley lacked standing to bring an action for administrative review in the circuit court.

In the Tropical Hut case, Daley and the City filed their complaint for administrative review, alleging that Ora Dean Hawkins Laster, as sole officer and shareholder of the Tropical Hut, had been denied a retail liquor license. Also, according to the complaint, the Commission reversed the denial of the application and also denied plaintiffs’ application for rehearing. Plaintiffs requested that the Commission’s decision be reversed and the denial of the Laster application be affirmed.

In the record is the transcript of the administrative proceedings before the Commission, as well as what appear to be photocopies of corporate documents of Tropical Hut. Also in the record is the order of the Commission which reversed Daley’s denial of the application, as well as the order which denied his request for a rehearing.

Tropical Hut filed a motion to dismiss plaintiff’s complaint (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 615) contending that Daley, as the local liquor commissioner, did not have statutory authority to seek administrative review from the Commission’s order. (Ill. Rev. Stat. 1989, ch. 43, par. 153.) Following a hearing the trial court granted defendant’s motion to dismiss on February 19, 1991, stating that “the court having no jurisdiction to hear the matter brought before it.”

In this consolidated appeal plaintiffs contend that a local liquor commissioner, such as Daley, has standing to seek judicial review of adverse decisions of the Commission. A circuit court has the power to review administrative actions as provided by law. (Greer v. Illinois Liquor Control Comm’n (1989), 185 Ill. App. 3d 219, 221, 541 N.E.2d 216.) According to Greer, a liquor control commissioner is not a party “aggrieved” by a reversal of his own administrative decision and, therefore, he has no standing, absent a statute, to seek judicial review. Greer, 185 Ill. App. 3d at 223.

Section 4 — 2 of the Illinois Liquor Control Act of 1934 (Ill. Rev. Stat. 1989, ch. 43, par. 111) (Act) reads in relevant part:

“The Mayor *** of each city *** shall be the local liquor control commissioner for their respective cities *** and shall be charged with the administration *** of the appropriate provisions of this Act and of such ordinances and resolutions relating to alcoholic liquor as may be enacted ***.”

Section 7 — 8 of the Act (Ill. Rev. Stat. 1989, ch. 43, par. 152) reads in relevant part:

“For each city *** having a population of 500,000 or more inhabitants, there is established a license appeal commission ** * if

Section 7 — 9 of the Act (Ill. Rev. Stat. 1989, ch. 43, par. 153) reads in relevant part:

“All of the provisions of this Section *** relative to proceedings upon appeals before the State Commission and relative to appeals from the decisions of the State Commission shall apply also to proceedings upon appeals before any license appeal commission and appeals from the decisions of license appeal commission.”

Section 7 — 11 of the Act (Ill. Rev. Stat. 1989, ch. 43, par. 154a) reads in relevant part:

“All final administrative decisions of the State Commission hereunder shall be subject to judicial review pursuant to the provisions of the Administrative Review Law ***.”

This section was amended effective January 1, 1991, to also provide in relevant part:

“Judicial review may be requested by any party in interest, including but not limited to the local liquor control commissioner.” Ill. Rev. Stat. 1991, ch. 43, par. 154a.

If a statute creating or conferring power on an administrative agency expressly adopts the Administrative Review Law, then the provisions of that act govern every action to review the agency’s decision. (Dubin v. Personnel Board of the City of Chicago (1989), 128 Ill. 2d 490, 497, 539 N.E.2d 1243.) The issue before us is whether the amendment to section 7 — 11 of the Act, giving a liquor control commissioner standing to seek judicial review, should be applied retroactively here where the law was changed after the complaint was filed but before final judgment of the circuit court.

The question of whether a statute operates retroactively is one primarily of legislative intent. (National Can Cory. v. Industrial Comm’n (1986), 148 Ill. App. 3d 1079, 1082, 500 N.E.2d 437.) Whether a statute should be applied retroactively must also be decided on whether justice, fairness and equity require retroactive application. (See National Can Cory., 148 Ill. App. 3d at 1083.) Generally, legislation is not yer se unconstitutional merely because it is retroactive. (Sanelli v. Glenview State Bank (1985), 108 Ill. 2d 1, 9, 483 N.E.2d 560.) In fact, subject to due process and impairment-of-contracts limitations, the legislature has the authority to change the law for future cases arising from facts existing prior to the effective date of the legislation which made the change. Sanelli, 108 Ill. 2d at 10.

A subsequent amendment to a statute may reveal the legislature’s intent in enacting a statute, especially where the amendment was enacted soon after controversy developed over the original version. (Seibring v. Parcell’s, Inc. (1987), 151 Ill. App. 3d 1003, 1005, 503 N.E.2d 1126.) Retroactive application is especially appropriate where the amendment does not change the law but merely serves to clarify a statute. (Matviuw v. Johnson (1982), 111 Ill. App. 3d 629, 632-33, 444 N.E.2d 606.) Consequently, in the absence of contrary legislative intent or manifest injustice, courts will apply the law in effect at the time of their decisions. General Teleyhone Co. v. Johnson (1984), 103 Ill. 2d 363, 377, 469 N.E.2d 1067 (if the amendment merely clarified the law as it existed before, then no substantive change occurred which would raise a due process issue); see also Hadley v. Board of Trustees of the Firemen’s Pension Fund (1983), 113 Ill. App. 3d 866, 869, 447 N.E.2d 958 (a substantive statute may provide that entities who are not parties to the administrative proceeding have standing to appeal).

In the case at bar, the statutory amendment giving a mayor authority, as local liquor control commissioner, to bring an action in the circuit court for administrative review was passed soon after Greer was decided. In our opinion the amendment clarified the existing statute, and as the legislative history indicates (86th Ill. Gen. Assem. House Proceedings, May 18, 1990, at 225-26), the amendment was a reaction to overturn the Greer decision. Moreover, the statute states that appeals from the local appeal commission are to be considered procedurally equivalent to those from the State Commission. That being so, it logically follows that a retroactive amendment explicitly giving a local liquor control commissioner standing to bring an action in review would necessarily apply to standing to seek review from a liquor appeal commission. This conclusion would be further supported by the fact that section 7 — 9 of the Act was not simultaneously amended to exclude the modification to section 7 — 11 of the Act.

Retroactive application of the amended statute is also the just and equitable result in this case, because prior to Greer local liquor commissioners had successfully brought similar actions. (See Byrne v. Stern (1981), 103 Ill. App. 3d 601, 602, 431 N.E.2d 1073 (local liquor control commissioner appealed from an order of the circuit court affirming the license appeal commissioner’s decision); Carbondale Local Liquor Control Comm’n v. Illinois Liquor Control Comm’n (1980), 84 Ill. App. 3d 325, 326, 405 N.E.2d 433 (local liquor control commissioner appealed from the judgment of the circuit court); Palmer v. Illinois Liquor Control Comm’n (1979), 77 Ill. App. 3d 725, 726, 396 N.E.2d 325 (mayor, as local liquor control commissioner, appealed to the circuit court); Local Liquor Control Comm’n v. Illinois Liquor Control Comm’n (1978), 59 Ill. App. 3d 1, 2, 374 N.E.2d 1298 (local liquor control commission was plaintiff on administrative review).) Because we have concluded that Daley has standing to seek judicial review of the Commission’s decision based on the amendment to section 7 — 11 of the Act and relevant case law, we need not address plaintiffs’ remaining contentions.

For the above reasons, the orders of the circuit court of Cook County dismissing plaintiffs’ complaints for lack of jurisdiction are reversed and the causes remanded for proceedings consistent with the views expressed in this opinion.

Reversed and remanded.

McNULTY, P.J., and GORDON, J., concur.


author: JUSTICE O’CONNOR

text:
    KEVIN CAHILL, Plaintiff-Appellant, v. EASTERN BENEFIT SYSTEMS, INC., et al., Defendants-Appellees.
    First District (1st Division)
    No. 1—91—1460
    Opinion filed October 19, 1992.

      William R. Dunn, of Oak Lawn, for appellant.
    Beigel & Sandler, Ltd., of Chicago (Lance C. Martin, of counsel), for appellee Eastern Benefit Systems, Inc.
    Couri & Couri, of Winnetka (Phillip E. Couri, of counsel), for appellee Care America.
   JUSTICE O’CONNOR

delivered the opinion of the court:

This appeal questions the propriety of an order of the circuit court dismissing plaintiff Kevin Cahill’s fourth amended complaint, which sought damages from defendants, Eastern Benefit Systems and Care America, for failure to pay all of an insurance claim submitted by Ca-hill.

We affirm.

Cahill’s complaint, as amended, alleged that he was employed by Wieboldt Stores, Inc., and, as a result of his employment, was provided with health insurance for both himself and his family. The insurance claim at issue here concerns the November 11, 1986, admission of Cahill’s son, Stephen, to Palos Community Hospital by his physician, Dr. Voltolina, and his subsequent 36-day stay at the hospital. The hospital ultimately submitted a bill for $13,615.40 to Wieboldt’s for Stephen’s stay. Wieboldt’s, in turn, paid $4,720.05 of the bill, claiming that Stephen’s hospitalization should have only been 14 days as opposed to 36 days.

Cahill further alleged that Eastern was the agent of Wieboldt’s for “the purpose of approving, administering and paying all medical and hospitalization claims submitted by insureds of [Wieboldt’s]” and that Care America was the agent of both Eastern and Wieboldt’s for the “purpose of investigating and making recommendations regarding medical and hospitalization claims submitted to both Eastern and Wieboldt’s.” Cahill stated that the contract between Wieboldt’s, Eastern, and Care America was for the direct benefit of Cahill and his family, that is, to provide insurance coverage and payment of medical and hospitalization costs to Cahill and his family.

In count I of the complaint, Cahill charged defendants with breach of Cahill’s insurance contract because only a portion of the hospital bill was paid. Count II alleged a violation of section 155 of the Illinois Insurance Code (Ill. Rev. Stat. 1989, ch. 73, par. 767.) In count III, Cahill charged that Care America had a duty to review the submitted insurance claims with reasonable care and that Care America breached that duty with regard to its determination that Stephen should have been hospitalized for only 14 days. Cahill further charged that Eastern negligently relied upon Care America’s wrong determination, thereby breaching its duty to administer the submitted insurance claims with care.

Attached to the complaint was a document entitled “Special Benefit Addendum.” This document states that the employee benefits plan “includes a Medical Utilization Review Program involving the services of Care America, an independent medical review organization. The Intent of the program is to eliminate inappropriate medical services while at the same time helping to contain the costs of your medical care.” The document contained instructions that the insured must follow in order to receive “maximum benefits in the event you or a family member may require surgery or hospitalization.” One such requirement was that the insured notify Care America before any hospital admission. The document also identified a “non compliance penalty” which warned that “the fact that a physician or another provider has furnished, ordered or approved a service or supply does not, of itself, make the service medically necessary.” The failure of an insured to contact Care America would “result in a fifty percent (50%) reduction of benefits otherwise payable for covered expenses which are medically necessary.”

Both Eastern and Care America moved to dismiss the complaint, arguing that Cahill had failed to state a cause of action upon which relief could be granted. In a written decision, the circuit court ruled that Cahill failed to allege facts which showed that Care America and Eastern had a contractual duty owing to Cahill. The court also found that the Insurance Code was inapplicable to the facts presented in the complaint. Finally, the court held that Cahill had failed to allege any facts which would create any duty in tort owing to Cahill. As a result, the complaint was dismissed.

Generally, courts are to construe pleadings liberally, with the view to do substantial justice between the parties. (Keller v. State Farm Insurance Co. (1989), 180 Ill. App. 3d 539, 536 N.E.2d 194.) No pleading, therefore, is defective in substance if it contains facts which reasonably inform the opposite party of the nature of the charge to be answered. (Keller, 180 Ill. App. 3d at 546.) A motion to dismiss based upon section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 615), however, challenges the sufficiency of the complaint and should be decided solely upon the allegations the complaint sets forth. (Perkins v. Collette (1989), 179 Ill. App. 3d 852, 534 N.E.2d 1312.) The motion is to be granted only if it is clear that plaintiff cannot prove any set of facts under the pleading which would entitle him to the relief requested. Perkins, 179 Ill. App. 3d at 856.

Cahill contends that his complaint adequately alleged facts which prove that he was a third-party beneficiary to the contracts between Wieboldt’s and Care America and Eastern. We disagree.

In Illinois, an individual not a party to a contract may only enforce the contract’s rights when that contract’s original parties intentionally enter into the contract for the direct benefit of the individual. (Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 178 N.E. 498; Wheeling Trust & Savings Bank v. Tremco Inc. (1987), 153 Ill. App. 3d 136, 505 N.E.2d 1045.) Courts must determine whether the benefit to the third person is direct to him or is but an incidental benefit to him arising from the contract. (Carson Pirie Scott & Co., 346 Ill. at 257, Wheeling Trust & Savings Bank, 153 Ill. App. 3d at 140.) The critical inquiry centers on the intention of the parties, which is to be gleaned from the language of the contract and the circumstances surrounding the parties at the time of its execution. (People ex rel. Resnik v. Curtis & Davis, Architects & Planners, Inc. (1980), 78 Ill. 2d 381, 400 N.E.2d 918.) The promisor’s intention must be shown by an express provision in the contract identifying the third-party beneficiary. People ex rel. Resnik v. Curtis & Davis, Architects & Planners, Inc., 78 Ill. 2d at 385.

Here, the only contractual obligation which can be evinced from the complaint is that between Wieboldt’s and Cahill. Cahill failed to attach to his complaint any contract between Wieboldt’s and Care America and Eastern; therefore, we are unable to ascertain the intention of the parties with regard to Cahill. The attached “Special Benefit Addendum” does not satisfy the requirement for the original contract. Parenthetically, we note that it appears from the record that Cahill failed to follow the hospital preadmission instructions, which conceivably explains the reduction in the benefits received by Cahill. Accordingly, the circuit court did not err in finding that Cahill had failed to state a cause of action for breach of contract.

Cahill next claims that the circuit court erred in finding that Ca-hill failed to allege facts which raise any duty owing in tort to him.

Cahill’s tort claim appears to be one of negligent misrepresentation. Negligent misrepresentation involves the breach of a duty to use care in obtaining and communicating information upon which others may reasonably be expected to rely in the conduct of their affairs. (Zimmerman v. Northfield Real Estate, Inc. (1986), 156 Ill. App. 3d 154, 510 N.E.2d 409, appeal denied (1987), 116 Ill. 2d 578, 515 N.E.2d 129.) The elements needed to sustain a cause of action for negligent misrepresentation include a duty owed by defendant to plaintiff, a breach of such duty, and injury proximately resulting from the breach. (Harkala v. Wildwood Realty, Inc. (1990), 200 Ill. App. 3d 447, 558 N.E.2d 195.) A misrepresentation can result from the failure to provide adequate information when there is a duty to provide such information as well as providing information which is false. (Board of Education v. A, C, & S, Inc. (1989), 131 Ill. 2d 428, 546 N.E.2d 580.) Claims for negligent misrepresentation require a showing of actual reliance. Morse v. Abbott Laboratories (N.D. Ill. 1991), 756 F. Supp. 1108.

In his complaint, Cahill alleges that Care America “made an improper, unreasonable and negligent determination regarding the terms of hospitalization required by Stephen Cahill.” The foregoing is not adequate to state a claim upon which relief can be granted. Cahill did not allege in his complaint that he relied on the alleged negligent determination made by Care America. Rather, he alleges that Eastern negligently relied on Care America’s determination. As noted above, the element of reliance is necessary for a cause of action in negligent misrepresentation. Moreover, the maker of a negligent misrepresentation is subject to liability to only those persons for whose guidance he knows the information is to be supplied and to them only for loss incurred in the kind of transaction in which the information is expected to influence them. (Restatement (Second) of Torts §552 (1977).) In this case, the information was supplied to Eastern and to Wieboldt’s, not to Cahill. Based on the foregoing, Cahill’s complaint cannot be said to adequately state a claim for negligent misrepresentation.

Cahill also asserts that Care America owed him a duty because it acted as an agent of both Wieboldt’s and Eastern and that Eastern owed Cahill a duty because it, too, was an agent of Wieboldt’s. An agent, however, is not liable for injuries to third persons resulting solely from a mere breach of duty which he owes his principal, unless, at the same time the agent owes a separate duty to the third party. (Adkins v. Chicago, Rock Island & Pacific R.R. Co. (1971), 2 Ill. App. 3d 906, 274 N.E.2d 507, rev’d on other grounds (1973), 54 Ill. 2d 511, 301 N.E.2d 729, cert. denied (1976), 424 U.S. 943, 47 L. Ed. 2d 349, 96 S. Ct. 1411. See also Restatement (Second) of Agency §357 (1957) (“An agent who intentionally or negligently fails to perform duties to his principal is not thereby liable to a person whose economic interests are thereby harmed”).) Cahill has not alleged any facts which establish that either Eastern or Care America owed an independent duty to Cahill. As a result, Cahill’s complaint fails to allege a cause of action sounding in tort.

The judgment of the circuit court, therefore, is affirmed.

Affirmed.

BUCKLEY, P.J., and CAMPBELL, J., concur.

       During the pendency of the proceedings in the circuit court, Wieboldt’s filed a bankruptcy petition in the United States District Court. This appeal concerns only defendants Care America and Eastern.