author: JUSTICE WHITE

text:
    CHEMICAL BANK, Plaintiff-Appellee, v. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Trustees, et al., Defendants-Appellants. — CHEMICAL BANK, Plaintiff-Appellee, v. 666 ASSOCIATES et al., Defendants-Appellants.
    First District (3rd Division)
    Nos. 1—87—2659, 1—87—3592 cons.
    Opinion filed February 15, 1989.
    Rehearing denied April 11, 1989.

      William J. Kunkle and Michael M. Marick, both of Phelan, Pope & John, Ltd., of Chicago, and Gerard E. Harper and Peter A. Sistrom, both of Paul, Weiss, Rifkind, Wharton & Garrison, of New York, New York, for appellants.
    Glen H. Kanwit, William J. McKenna, Jr., and Mary Kay McCalla, all of Hopkins & Sutter, of Chicago, for appellee.
   JUSTICE WHITE

delivered the opinion of the court:

Defendant, CenTrust Trust (hereinafter CenTrust), appeals from a judgment and decree of foreclosure entered by the circuit court of Cook County on May 8, 1987, and from orders entered by the court on July 24, 1987, and October 29, 1987, respectively, denying Cen-Trust’s motion to vacate or modify the judgment and decree of foreclosure and confirming the foreclosure sale. CenTrust maintains that plaintiff, Chemical Bank, was equitably estopped from asserting the priority of its mortgage liens in the mortgage foreclosure action. Cen-Trust also maintains that the circuit court erred in confirming the foreclosure sale because: (1) the court incorrectly calculated the interest due Chemical Bank; (2) the foreclosure sale took place while Cen-Trust’s motion to vacate or modify the judgment and decree of foreclosure was pending; and (3) the foreclosure sale took place while mechanic’s lien claims were pending. We find that these contentions are without merit, and we affirm the rulings of the circuit court.

Factual background

In 1979, David L. Paul formulated a project to redevelop a large commercial building, located at 666 Lake Shore Drive, Chicago. The project was to convert the commercial building into condominiums, offices, retail and garage space. 666 Associates, an Illinois limited partnership, was formed in 1979 to redevelop the building. Financing for the project was obtained from the Abacus Mortgage Investment Company (hereinafter Abacus), which made a $70 million loan to American National Bank and Trust Company of Chicago (hereinafter American National Bank) as trustee and 666 Associates. On November 20, 1980, American National Bank as trustee and 666 Associates executed a mortgage note whereby they promised to pay the sum of $70 million to Abacus. The note was secured by a mortgage of even date whereby American National Bank conveyed to Abacus all its rights, title and interest in the property, building and improvements at 666 North Lake Shore Drive (hereinafter the property).

On May 24, 1982, Abacus made an additional loan of $20 million to American National Bank as trustee and 666 Associates. The loan was evidenced by a mortgage note whereby American National Bank as trustee and 666 Associates agreed to pay the sum of $20 million to Abacus. The note was also secured by a mortgage whereby American National Bank as trustee conveyed to Abacus all of its rights, title and interest in the property.

Abacus was the nominal lender in the loan transactions. Chemical Bank provided most of the money for the loans and later purchased the interest of Abacus in the loans. Hereinafter, all references to these loan transactions will describe Chemical Bank as the lender and mortgagee.

The project experienced financial difficulties because interest rates increased between the late 1970s and the early 1980s and the condominium market collapsed. By letter dated March 8, 1983, Mr. Paul proposed a “business plan” to deal with the project’s financial problems. The “business plan” consisted of four parts: (1) 666 Associates would syndicate the West Tower apartments in the building; (2) 666 Associates would arrange a loan on the office, retail and garage sections of the building; (3) 666 Associates would sell individual units in the east section of the building as condominiums; and (4) 666 Associates would sell individual units in the south section of the building as condominiums. Chemical Bank agreed to this program. Consequently, in 1983, 666 Associates sold the West Tower apartments in the building. Chemical Bank released its mortgage on that portion of the building, and, in return, received $10 million and a pledge of a $13,500,000 purchase money note. 666 Associates was also successful in obtaining a loan from Homestead Savings Bank on the office and commercial space in the building. The loan was in the principal amount of $11 million. However, under the loan agreement, 666 Associates could obtain extensions of the loan up to $25 million. The loan was secured by a first mortgage in the office, retail and commercial garage portions of the property.

In May 1983, Mr. Paul requested that Chemical Bank apply the proceeds from condominium sales first to the payment of interest on the Chemical Bank loans and second to the payment of principal. Chemical Bank agreed to this arrangement. However, officers of Chemical Bank testified that this arrangement was to be at Chemical Bank’s discretion.

Also in early 1983, Chemical Bank and David L. Paul discussed the need for an additional investment in the project by 666 Associates. By letter dated April 15, 1983, Chemical Bank advised Mr. Paul that the loan to 666 Associates was “out of balance,” and this condition would trigger a default under the loan documents unless 666 Associates contributed additional funds to the project. Mr. Paul approached the limited partners of 666 Associates, including the Westport Company, the predecessor to CenTrust, for additional funds, either in the form of an investment or a loan. The limited partners refused to invest additional monies in the project. However, the Westport Company agreed to make a loan to 666 Associates, subordinate to the loans from Chemical Bank. The minutes of the Westport Company trustees meeting of May 20, 1983, reflect that the trustees approved a loan to 666 Associates on that date. Mr. Paul did not vote on the loan because of his position with 666 Associates and the possible conflict of interest. The loan documents from the Westport Company were formally executed on August 15, 1983. They provided that the Westport Company would make a loan of $7,300,000 to 666 Associates, to be repaid in August 1985. Interest was to be charged at the rate of prime plus 4% per annum until the date of maturity, and, thereafter, at a rate equal to the lesser of (1) 20% per annum or prime plus 4% per annum, whichever is higher, and (2) the highest rate of interest then permitted by law. The loan was secured by a junior mortgage on the premises. All proceeds from the loan were disbursed by March, 1984.

In early 1983, Mr. Paul and the shareholders of the Westport Company proposed to acquire Dade Savings & Loan Association. The acquisition contemplated that, with the approval of the Federal Home Loan Bank Board, the shareholders of the Westport Company would exchange their stock for stock of Dade Savings & Loan Association. The Westport Company would then become a subsidiary of Dade Savings & Loan Association. In July 1983, Mr. Paul had several conversations with officers of Chemical Bank regarding the acquisition. Mr. Paul testified that he was concerned that an officer of Chemical Bank had made certain remarks indicating that Chemical Bank was having problems with the loan to 666 Associates. Chemical Bank denied that any of its officers had made such comments. Also in July, Mr. Paul requested that Chemical Bank provide a letter to the Federal Home Loan Bank Board regarding the status of the loan to 666 Associates. By letter dated July 21, 1983, Chemical Bank informed the Federal Home Loan Bank Board that the loan to 666 Associates was not in default and that 666 Associates and Mr. Paul were valued customers of Chemical Bank. Mr. Paul testified that a copy of this letter was sent to the Westport Company trustees.

In spite of the additional monies from the loans and syndication of the West Tower Apartments, the project’s financial difficulties persisted. In late 1983 or early 1984, Mr. Paul recommended additional syndications of portions of the project. The syndication proposals were rejected by Chemical Bank because they provided for low or no down payments and required Chemical Bank to take a cash flow mortgage at less than market interest rates.

666 Associates fell behind in its payments to Chemical Bank, and on August 29, 1984, Chemical Bank declared the $70 million and $20 million loans in default. On December 7, 1984, Chemical Bank commenced foreclosure proceedings. 666 Associates then filed a petition for bankruptcy. The foreclosure action was automatically stayed under section 362(a) of the Bankruptcy Code (11 U.S.C. §362(a) (1984)). However, on April 25, 1985, Chemical Bank moved for relief from the automatic stay. After trial before the bankruptcy judge, an order was entered directing that the stay be lifted as to any party and interest seeking to enforce its lien rights in or against the property. Chemical Bank then proceeded with the foreclosure action, obtained a judgment and decree of foreclosure, and a sale of the property.

Equitable estoppel

CenTrust asserts that “[a]t the time it agreed to make its loan, and while it was funding the loan, [it] reasonably believed, and was induced by Chemical to believe, that Chemical would follow the practices it had adopted in the business plan — using cash proceeds for interest and improvements — which were critical if the Project was to survive.” CenTrust maintains that Chemical Bank should be estopped from asserting the priority of its mortgage liens in the foreclosure action.

Equitable estoppel arises where the voluntary conduct of one party precludes that party from asserting rights against another person who has, in good faith, relied upon such conduct to change his position for the worse. (Budget Premium, Co. v. American Casualty Co. (1985), 136 Ill. App. 3d 682, 686, 483 N.E.2d 389; Matzen v. Mat-zen (1979), 69 Ill. App. 3d 69, 72, 387 N.E.2d 14.) In order to invoke the doctrine of equitable estoppel, the party asserting the existence of the estoppel must prove six elements:

(1) words or conduct by the party against whom the estoppel is alleged amounting to a misrepresentation or concealment of material facts;

(2) the party against whom the estoppel is alleged must have knowledge, either actual or implied, at the time the representations were made, that they were untrue;

(3) the truth respecting the representations so made must be unknown to the party claiming the benefit of the estoppel at the time they were made and at the time they were acted on by him;

(4) the party estopped must intend or expect that his conduct or representations will be acted on by the party asserting the estoppel or by the public generally;

(5) the representations or conduct must have been relied and acted on by the party claiming the benefit of the estoppel; and

(6) the party claiming the benefit of the estoppel must have so acted, because of such representations or conduct that he would be prejudiced if the first party is permitted to deny the truth thereof.

(Union National Bank & Trust Co. v. Carlstrom (1985), 134 Ill. App. 3d 985, 989-90, 481 N.E.2d 300; National Tea Co. v. 4600 Club, Inc. (1975), 33 Ill. App. 3d 1000, 1003, 339 N.E.2d 515.) Proof of these six elements must be clear, precise and unequivocal. In re Marriage of Schaefer (1987), 161 Ill. App. 3d 841, 847, 515 N.E.2d 710; National Tea Co., 33 Ill. App. 3d at 1003.

In the instant case, the circuit court found that the Westport Company did not rely upon any statement or conduct of Chemical Bank in deciding to make the subordinated loan. Thus, the circuit court refused to estop Chemical Bank from asserting the priority of its liens. We believe that the record amply supports the finding of the circuit court. The Westport Company trustees resolved to make the loan to 666 Associates on May 20, 1983. The letter from Chemical Bank to the Federal Home Loan Bank Board, upon which CenTrust relies to prove the estoppel, was not written until July 21, 1983. Additionally, none of the Westport Company trustees who approved the loan testified that they relied on the letter to the Federal Home Loan Bank Board, or on the business plan as stated in Mr. Paul’s letter to Chemical Bank of March 8, 1983. There was also no testimony that the Westport Company trustees who approved the loan relied on the arrangement that the funds from sales of condominiums would be applied first to interest due on the loans, second to tenant improvements and third to principal. The burden was upon CenTrust to prove reliance by clear, precise and unequivocal evidence. This, it failed to do.

CenTrust would have us look to the actions of Mr. Paul in determining the existence of estoppel. Mr. Paul testified at trial that he presented the proposal for the loan to the Westport Company trustees. He participated in the telephone meeting at which the Westport Company trustees approved the loan. He advised the trustees that the Chemical Bank loans were not in default, that the relationship between Chemical Bank and 666 Associates was cordial and that 666 Associates expected that Chemical Bank would continue to manage the loans in the same manner. Mr. Paul also testified that he would not have presented the proposal for the loan to the Westport Company trustees had he believed that Chemical Bank would not continue to fund tenant improvements or had he not seen the letter to the Federal Home Loan Bank Board. However, Mr. Paul was impeached with prior deposition testimony. In his deposition, Mr. Paul testified as follows:

“QUESTION: You wouldn’t know what representations were made to Westport regarding the loan?
ANSWER: I think I saw a copy after the fact of the loan presentation that Alan Merkur made to the trustees of that trust, but I purposely did not go to that Board meeting. I was not involved in the deliberations of making the loan.”

The circuit court heard the testimony of the witnesses, observed their demeanor at trial, and concluded that CenTrust failed to show that the Westport Company trustees relied upon any statement or conduct of Chemical Bank in approving the loan. The circuit court’s ruling was not against the manifest weight of the evidence and must be affirmed. See Pantle v. Industrial Comm’n (1975), 61 Ill. 2d 365, 335 N.E.2d 491; National Tea Co., 33 Ill. App. 3d at 1004; Armstrong v. Ingram (1972), 7 Ill. App. 3d 370, 373, 287 N.E.2d 532.

CenTrust maintains that the circuit court found that the Westport Company trustees relied on the letter of the Federal Home Loan Bank Board and that Chemical Bank was equitably estopped from foreclosing its mortgage liens for a reasonable period of time following the Westport loan. CenTrust ignores the written findings of fact and conclusions of law adopted by the circuit court and focuses upon certain statements made by the court at the conclusion of trial. We believe that the circuit court’s position, as stated at trial and in its findings of fact and conclusions of law, was that the Westport Company trustees did not rely upon any conduct or statement of Chemical Bank in deciding to make the subordinated loan. However, the circuit court noted at trial that the Westport Company trustees knew that the business plan would not last indefinitely and even if the trustees had relied on the business plan, they could have done so only for a reasonable time. The court noted further that Chemical Bank allowed a reasonable time to elapse prior to declaring the loans in default. The circuit court’s comments at trial were not inconsistent with its holding that the Westport Company trustees did not rely upon any conduct or statement of Chemical Bank. Instead, the circuit court stated an additional, independent reason why equitable estoppel should not apply — that is, a reasonable time had elapsed before Chemical Bank declared the loans in default.

Calculation of interest due chemical bank

The $70 million note and mortgage provide that, in the event of default, 666 Associates shall pay interest at a rate equal to the greater of 20% per annum, or the “Applicable Interest Rate” (defined as 1.80% per annum plus the prime rate of interest charged by Chemical Bank). The $20 million note and mortgage provide that, in the event of default, 666 Associates shall pay interest at a rate equal to the greater of 25% per annum, or 5% per annum plus the “Applicable Interest Rate.” CenTrust asserts that these provisions for higher interest are not reasonably related to any damages that Chemical Bank sustained upon default and constitute penalty clauses. CenTrust maintains that the circuit court erred when it decided that Chemical Bank was entitled to interest at the default rates from the date that the loans were declared in default. We are of the opinion that the provisions for higher interest upon default are valid and enforceable.

In Baker v. Loves Park Savings & Loan Association (1975), 61 Ill. 2d 119, 333 N.E.2d 1, the plaintiffs filed an action seeking a declaration that a clause in a promissory note was unlawful and unenforceable. The clause provided that “upon any default upon this obligation, or the instrument securing it, interest at the rate of one per cent (1%) per annum above the original rate provided herein on the unpaid balance of this indebtedness may be charged for the period of such default.” The plaintiffs argued that the clause was a penalty provision. The Illinois Supreme Court rejected this contention and upheld the validity of the clause. In so holding, the court observed:

“The charge of the additional 1 percent interest may be triggered by any default upon the note or the mortgage. In addition to the covenant not to sell the property without the consent of the mortgagee, the mortgage contains several other covenants, such as: to pay taxes, to keep the improvements insured, not to commit waste, etc. A breach of any one of these covenants may bring about the increased interest charge. We do not consider this increase to be a penalty. [Citation.] Instead, as in the early Illinois cases cited above, we view this as a provision for liquidated damages for a breach of the covenant. The increase in the interest rate is not unreasonable. The additional charge is not for a fixed amount and does not relate back to be computed from a time prior to the breach. Rather it is computed at the stipulated rate only from the date of default and is charged only for the duration of the default. It would appear that actual damages for a breach of any of these covenants would be uncertain and difficult to ascertain or prove. Under these circumstances it would seem appropriate that the parties should agree on an increase in the interest rate as liquidated damages for a breach of a covenant in the mortgage. [Citations.]” Baker, 61 Ill. 2d at 128.

The decision of the Illinois Supreme Court in Baker is controlling in the present case. As in Baker, the provisions for higher interest contained in the notes and mortgages for the $70 million and $20 million loans may be triggered by any default upon the notes or the mortgages including the failure to pay taxes, the failure to keep the premises insured, and the failure to pay any portion of the loans within 10 days after the same is due. The additional interest charges are not for fixed amounts and do not relate back to a time prior to the date of default. Rather, interest is calculated at the higher rates only from the date of default. As in Baker, it would appear that, in the event of default under the $70 million and $20 million loans, actual damages would be uncertain and difficult to ascertain or prove. Thus, it was appropriate for Chemical Bank and 666 Associates to agree on increases in the interest rate as liquidated damages in the event 666 Associates defaulted under the loans.

CenTrust attempts to distinguish Baker on the ground that Chemical Bank’s “damages from default — nonpayment of interest — are precisely ascertainable.” This argument ignores the fact that the higher interest rates provided in the $70 million and $20 million notes and mortgages may be triggered by any default upon the notes and mortgages. We refuse to hold that the provisions for higher interest are enforceable if, for example, the default consists of failure to maintain insurance on the property but are not enforceable if the default consists of failure to pay the interest and principal due under the notes and mortgages.

CenTrust also attempts to distinguish Baker by arguing that the default rates under the $70 million and $20 million notes and mortgages are “wildly out of line with the market” rates and are not at all similar to the “minor increase” from 6% to 7% that was upheld in Baker. We do not believe that Baker should be construed so narrowly. In Baker, the Illinois Supreme Court cited Bane v. Gridley (1873), 67 Ill. 388, and Walker v. Abt (1876), 83 Ill. 226, for the proposition that an increased interest payment after maturity is not a penalty but is considered as liquidated damages. In Bane v. Gridley, the court upheld a provision in a promissory note which required the debtor to pay interest at the rate of 30% per annum after maturity. The Walker v. Abt decision upheld a provision in a note increasing the interest rate from 10% per annum to 20% per annum upon maturity of the note. We realize that Bane v. Gridley and Walker v. Abt predate the usury laws and do not have precedential value to the extent that they allowed lenders to receive interest in excess of the usury provisions. However, these cases provide support for our holding that the provisions for higher interest in the $70 million and $20 million notes and mortgages are valid and enforceable.

We find further support for our holding in the case of Casaccio v. Habel (1973), 14 Ill. App. 3d 822. Defendant Habel borrowed $122,000 for one year at 18% interest. Under the terms of the loan agreement, he promised to pay interest at the rate of 24% per annum upon default. Habel maintained that plaintiffs were liable for the interest payments because he was acting on their behalf when he entered into the loan transaction. This court held that plaintiffs were not party to the loan agreement and were not liable for the high rate of interest. However, this court stated that “Habel must bear the burden of the high interest rates because he entered into such an agreement.” Accordingly, this court affirmed the circuit court’s judgment that Habel was liable for interest at the rate of 24% per annum from the date of default.

CenTrust next argues that the circuit court was obliged to adhere to the Bankruptcy Code in computing interest due Chemical Bank because 666 Associates was in bankruptcy from December 18, 1984, through the date of the circuit court’s judgment. CenTrust maintains that, under the Bankruptcy Code, Chemical Bank “would be entitled only to interest either at a statutory rate *** or at a reasonable contract rate.” CenTrust has not cited, and we have not found, any authority for the proposition that the circuit court was required to follow the Bankruptcy Code. We note that, in its order dated July 11, 1985, the bankruptcy judge found that 666 Associates lacked equity in the property, and lifted the automatic stay, thus enabling Chemical Bank to proceed with the foreclosure proceedings. We also note that the real issue in the foreclosure proceedings has been whether Chemical Bank should be equitably estopped from asserting the priority of its mortgages, so that CenTrust would be paid first out of the proceeds of the foreclosure sale. We do not see why the Bankruptcy Code should apply to a dispute which essentially involves only creditors of 666 Associates and not 666 Associates itself.

666 Associates is a sophisticated entity and should have been aware of the terms and effects of the mortgage notes that it executed. A party is ordinarily bound by the terms of its contracts. We see no reason to relieve 666 Associates from the higher interest provisions that it agreed to. We believe that the circuit court properly calculated the interest due Chemical Bank under the notes and mortgages, and we affirm the finding of the court.

Pending motion

CenTrust’s next argument is that the circuit court erred in confirming the foreclosure sale because the sale took place while Cen-Trust’s motion to vacate or modify the judgment and decree of foreclosure was pending. We reject this argument.

On June 16, 1987, the circuit court held a hearing on CenTrust’s motion to vacate or modify the judgment and decree of foreclosure. At the hearing, counsel for CenTrust indicated to the circuit court that Mr. Gerald Harper, the partner in charge of the CenTrust litigation, and Mr. McNulty, an associate familiar with the litigation, would be leaving town later that week and would not return until the middle of July. Counsel for CenTrust requested that the hearing on the motion be held the week of July 20. Counsel for Chemical Bank expressed his concern that the foreclosure sale could not take place as scheduled because of the delay in the hearing on the motion. The following discussion then took place:

“[COUNSEL FOR CHEMICAL BANK]: The only problem I have with conducting the sale without disposing of the motion is that 2 — 1203(b) *** says timely filing of a motion shall stay enforcement of a judgment. And, if the other side would agree to allow us to proceed with the sale and perhaps just hold off confirmation of the sale pending disposition of sale [sic], then fine.
THE COURT: I think you’ll have to do that because, if the priorities change, somebody might want to have a new sale—
[COUNSEL FOR CHEMICAL BANK]: Sure, if there’s a way to conduct the sale and then hear this motion upon the return of Mr. Harper and Mr. McNulty from their respective vacations, fíne, I don’t have any objection to working it out.
THE COURT: But at the same time the sale, you know, if the sale does go forward it shouldn’t impact on the motion and you shouldn’t be able to argue that the motion should be denied, obviously, because the sale has already been held, et cetera.
[COUNSEL FOR CHEMICAL BANK]: Absolutely, I have no problem with that at all. But the question is will this defendant waive its right under 2 — 1203 to claim, under the timely filing of the motion, enforcement of the judgment is stayed.
* * *
[COUNSEL FOR CENTRUST]: But, I don’t see any problem with going ahead with the sale as your Honor suggests and see how things transpire with respect to the post-trial motions when we are here before your Honor.”

The circuit court then allowed the sale to proceed.

Counsel for Chemical Bank was concerned that a foreclosure sale would be considered a procedure enforcing the judgment and would be stayed, pursuant to section 2 — 1203 of the Illinois Code of Civil Procedure (111. Rev. Stat. 1987, ch. 110, par. 2 — 1203), pending disposition of CenTrust’s motion to vacate or modify the judgment and decree of foreclosure. Section 2 — 1203 provides that a motion to modify or vacate a judgment stays enforcement of the judgment. However, we need not here decide whether the foreclosure sale should have been stayed pending disposition of CenTrust’s motion to vacate or modify the judgment and decree of foreclosure. We believe that the error, if any, that was committed by the circuit court when it allowed the sale to proceed was invited by counsel for CenTrust. Counsel advised the circuit court that he did not “see any problem with going ahead with the sale.” CenTrust is estopped from arguing to this court that the circuit court erred in allowing the sale to proceed. See Blancett v. Taylor (1955), 6 Ill. 2d 434, 128 N.E.2d 916 (plaintiffs were estopped to complain that the master did not comply with the terms specified in the decree of sale where the master changed the terms of the sale at the request of plaintiffs’ attorney).

CenTrust maintains that it did not waive this argument because it agreed to allow the sale to proceed only after the circuit court declared that the sale would be without prejudice to any of its rights. The holding of the circuit court was that the foreclosure sale would be without prejudice to Centrust’s motion to vacate or modify the judgment and decree of sale. The court did not want Chemical Bank to argue that CenTrust’s motion should not be heard because the sale had taken place. However, the issue here is not whether CenTrust has waived any argument that it made in the motion. The issue is whether, after agreeing to allow the sale to proceed, CenTrust could then argue that the sale should not have taken place while the motion was pending. We believe that it could not.

Pending mechanic’s lien claims

Lastly, CenTrust argues that the foreclosure sale should not have taken place while the mechanic’s lien claims were unresolved. We believe that CenTrust has also waived this argument.

On February 6, 1986, Chemical Bank filed a motion to stay litigation of the mechanic’s lien claims in the foreclosure action and compel their resolution in a mechanic’s lien foreclosure action pending before Judge LaPorta. Chemical Bank proposed that the circuit court enter an order severing the mechanic’s lien claims from the foreclosure action but providing that any judgment of foreclosure or foreclosure sale be subject to a determination of the validity, priority and extent of mechanic’s lien claims in the action before Judge LaPorta. On March 11, 1986, the circuit court held a hearing on Chemical Bank’s motion. Early in the hearing, the court asked if there were any objections to the motion. Counsel for CenTrust did not state an objection. Later in the hearing, counsel for CenTrust advised the court: “Again, we don’t really have any objections to this although I believe our office has been in contact with [counsel for Chemical Bank], and we have some minor problems with the proposed order that we can probably work out.” Subsequently, the circuit court entered an order which provided that the mechanic’s lien claims would be litigated before Judge LaPorta. The order also provided that any sale of the property, pursuant to a judgment or decree entered in the foreclosure action, would be subject to all valid existing mechanic’s liens on the property, and would not discharge or extinguish the mechanic’s liens.

The parties to the hearing recognized that a decree of foreclosure might be entered in the foreclosure proceedings, and a foreclosure sale might take place, prior to resolution of the mechanic’s lien claims. The order of the circuit court reflected this understanding and provided that a sale of the property would be subject to the mechanic’s liens. CenTrust did not object to the severance of the mechanic’s lien claims from the foreclosure and must have recognized that the foreclosure action might be resolved prior to the mechanic’s lien claims. Indeed, CenTrust stated that it did not “really have any objection to” the severance. We believe that CenTrust is estopped to argue that the foreclosure sale could not proceed because of the pendency of the mechanic’s lien claims.

We have considered the arguments raised by CenTrust, and we conclude that the circuit court properly found that Chemical Bank was not estopped from asserting the priority of its liens and properly confirmed the foreclosure sale. We, therefore, affirm the judgment of the circuit court.

Affirmed.

FREEMAN, P.J., and RIZZI, J., concur.

      A notice of appeal was filed on behalf of CenTrust and defendant David L. Paul. The notice states that CenTrust and David L. Paul are appealing from the orders and decree listed above as well as “prior adverse rulings” of the circuit court of Cook County. However, David L. Paul has not filed a brief in this court. Also, CenTrust has not presented arguments to the court regarding the “prior adverse rulings.” Consequently, this opinion will only consider the issues raised and briefed by CenTrust.

       666 Associates was the sole beneficiary of the trust.

      As of March 26, 1987, the amount disbursed under the loan agreement was $11,084,325.08.

      Chemical Bank subordinated its interests in those sections of the property to the interest conveyed to Homestead Savings Bank. Chemical Bank has since acquired Homestead Savings Bank’s interest in the property.

      Mr. Paul testified that the proceeds from the sales of condominiums were to be applied first to payment of interest, second to tenant improvements and third to payment of principal.

      The circuit court found that the Westport Company owned 51% of the limited partnership interest in 666 Associates.

      The Westport Company charged a loan fee of $800,000 on the loan. Consequently, the actual proceeds of the loan were $6,500,000.

      The transaction was consummated in November 1983. Dade Savings & Loan Association is now CenTrust Savings Bank and is the parent corporation of CenTrust Trust.

      The loan was actually made by the Westport Company. However, since the West-port Company was the predecessor of CenTrust, the parties, and this court, refer to CenTrust as the lender.

      The proposal for the business plan was made in March 1983. Chemical Bank did not declare the loans in default until August 1984, just four months before the loans were due. At the time Chemical Bank declared the loans in default, 666 Associates owed $4,059,161.06 in interest, sales of individual condominium units were slow, and further syndication of portions of the building did not appear realistic since the proposals for syndication provided low or no down payments and required that Chemical Bank take a cash flow .mortgage at interest rates which would be below market. These facts support the circuit court’s comment at trial that the Westport Company trustees could not reasonably believe that Chemical Bank would not foreclose on its liens.

      It is not disputed by CenTrust that, at the time 666 Associates executed the $70 million mortgage note, the “Applicable Interest Rate” was approximately 22% per annum. Thus, a provision that, in the event of default, interest would be charged at a rate equal to the greater of the “Applicable Interest Rate” or 20% per annum was not “wildly out of line with the market.” We also note that the Westport Company loan and mortgage documents, which CenTrust is seeking to enforce, effectively provide for an interest rate of 20% per annum, upon maturity or default.

      The foreclosure sale had been scheduled for June 18,1987.


source: Caselaw Access Project

author: PRESIDING JUSTICE FREEMAN

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. BOLIVAR BENABE, Defendant-Appellant.
    First District (3rd Division)
    No. 1—87—0489
    Opinion filed February 15, 1989.
    Rehearing denied March 29, 1989.

      Frederick F. Cohn, of Chicago, for appellant.
    Richard M. Daley, State’s Attorney, of Chicago (Inge Fryklund, Al Tomaso, and Robert B. Berlin, Assistant State’s Attorneys, of counsel), for the People.
   PRESIDING JUSTICE FREEMAN

delivered the opinion of the court:

Defendant, Bolivar Benabe, was charged with two counts of murder (111. Rev. Stat. 1983, ch. 38, pars. 9 — 1(a)(1), (a)(2)), two counts of attempted murder (111. Rev. Stat. 1983, ch. 38, par. 8 — 4), two counts of armed violence (111. Rev. Stat. 1983, ch. 38, par. 33A — 2), and three counts of aggravated battery (111. Rev. Stat. 1983, ch. 38, pars. 12— 4(a), (b)(1), (b)(8)). Challenging the constitutionality of his warrantless arrest, he filed motions to suppress his confession. Following a hearing, the motions were denied. Defendant then was convicted of murder, attempted murder, and aggravated battery after a jury trial in the circuit court of Cook County, and he was sentenced to serve concurrent prison terms of 33 years for murder and 25 years for attempted murder. On appeal, defendant contends that his confession should have been suppressed because his warrantless arrest was not justified by any exigent circumstances which would have obviated the need for a warrant. He contends further that the pattern jury instruction on voluntary manslaughter incorrectly set forth the State’s burden of proof and was prejudicially erroneous. Finally, he contends that the admission of hearsay evidence also was reversible error and was exacerbated by the State during closing arguments.

About 11 p.m. on August 24, 1985, Neal Summit was fatally shot and his brother-in-law, Donald Roedersheimer, was shot and wounded in an alley near Hamlin Park in Chicago, Illinois. Hamlin Park is located within two blocks of the Lathrop Homes, a public housing project where defendant lived with his mother at 2960 North Clybourn.

Roedersheimer testified at trial that he was a passenger in a pickup truck being driven on Damen Avenue by Summit. When they turned onto Wellington, the truck was pelted with bricks and bottles. Summit then drove into Hamlin Park to try to escape because a car was blocking their way on Wellington. However, benches blocked their way in the park, and they then made a U-turn out of the park. Summit lost control of the truck when he was struck by an object hurled through his open window. Roedersheimer then noticed an individual riding a bicycle and told Summit, “[L]ook out, you are going to hit him.” The rider managed to get off the bicycle in time but the truck hit the bicycle, which became attached to the front end of the truck. When Summit repeatedly shifted the truck backward and forward in order to dislodge the bicycle, the truck struck a car and tipped over. Summit then told Roedersheimer to jump out. Roedersheimer started to run, but Summit called him back and threw a bag of tools and clothing to him. They then ran down the street and into a dark alley. About two blocks into the alley, Roedersheimer heard a “flurry of shots, like the Fourth of July,” and was struck by at least two bullets. He did not see Summit. Finally, Roedersheimer denied that he was a member of a street gang.

Richard Selover happened to be sitting in a parked car near 2231 West Wellington at the time of the crime. He testified at trial that he saw the victims’ truck proceeding the wrong way down Wellington, which was a one-way, eastbound street. At that time no one was chasing the truck, which was dragging a bicycle. The driver of the truck then backed up, dislodging the bicycle, before he turned, hit a car, and the truck tipped over. Two occupants emerged from the truck and ran down the alley. Selover testified that three persons, one of whom was on a bicycle, chased the victims down the alley. Selover testified further that the individual on the bicycle appeared to have “a weapon, like a gun or something” in one of his hands. The other hand was on the bicycle. Selover did not actually see a gun. When the individual on the bicycle turned into the alley, he left the bicycle in an empty lot. Another individual who was running appeared to have a bag which was shaped like a gun. About a minute later Selover heard at least four gunshots and saw everyone scatter. He was unable to recognize any of the persons involved.

About 11 p.m. Chicago police detectives O’Brien and Cole responded to a report concerning the shootings. O’Brien testified that he found Roedersheimer leaning against a tree and Summit lying on the ground. An open folding knife was recovered near Summit’s body. O’Brien indicated that the alley where the shootings occurred was very long, extending from Wellington to Barry with no intersecting alley. A bicycle was found at the mouth of the alley near the pickup truck.

About 9:30 or 10 a.m. on August 26, 1985, Chicago police detective O’Leary was assigned to investigate the shootings, and he spoke to Danny Greco at that time. The trial court sustained defense counsel’s objections to the State’s questions as to whether Greco supplied O’Leary with the alleged offender’s nickname. After speaking to Greco, O’Leary consulted Chicago police detective Brennann, who specialized in gang crimes.

Brennann testified that he was assigned to assist in the investigation about 11 a.m. O’Leary asked him to check a nickname in the gang file. Brennann then looked up the nickname “Little Jap” in the file on the Insane Deuces street gang but did not find any information. After Greco supplied further information, Brennann and O’Leary, along with three other officers, O’Quinn, Martinez, and Thiel, went to defendant’s home at 2960 North Clybourn. We will describe the events at defendant’s home in connection with our discussion of the motion to suppress. For the present, however, it is sufficient to note only that defendant was taken to the police station at Belmont and Western, where he eventually supplied a written confession to Assistant State’s Attorney Michael J. Kelly, who testified at trial concerning defendant’s confession. Defendant told Kelly that he was a member of the Deuces gang, which was feuding with a rival gang called the Simon City Royals. He and Danny Greco were drinking scotch with friends in Hamlin Park when defendant saw a pickup truck speeding toward them. Defendant claimed that the two occupants in the truck indicated that they were members of the Royals. As the truck drove away, defendant stated, “Deuce love.” The truck then swerved as if to hit a couple crossing the street, and then drove onto the baseball diamond. Defendant rode a bicycle to the parking lot of the Lathrop housing project to summon help from the Kings, who were allies of the Deuces. However, defendant told Kelly that when he reached the parking lot, only some girls were there. He then cut through the parking lot to get a small pistol from the gang’s “stash.” The pistol he wanted was missing so he “grabbed” a .38 caliber revolver instead.

Defendant then returned to the park and saw Danny Greco throwing a bottle at the truck. Defendant asked where the occupants were, and Danny Greco replied that they were in the alley. When defendant turned the comer, he noticed the overturned truck in the middle of the street. Defendant “peeked” down the alley to see how far away the occupants were. With the gun in his hand, defendant told Danny Greco, “[Ljet’s get these motherfuckers,” and they ran down the alley, intending only to “scare them off.” Defendant saw the victims slow down and straighten their clothes in preparation to walk out of the alley. Defendant was 10 feet away when he said, “[Hjey.” When one of the victims turned around, defendant saw him flash a “shiny thing” in his hand. Defendant then “just quickly got up the gun and pow, pow, pow, kept shooting.” Defendant stated that he shot “without hesitation” and admitted that he fired up to five times. He then saw one of the victims fall. After defendant froze momentarily, he ran away. When he reached the housing project, he threw the gun on the floor. He did not throw it away because he “figured” that his fingerprints were “all over it.” Another member of defendant’s gang picked up the gun. Defendant indicated that he was giving the statement because “it’s the truth.”

At trial, defendant testified that he was pressured into making the confession, that Kelly told him what to say, and that he was not the gunman. He denied that he had a gun and claimed instead that an unknown individual jumped out of a gangway into the alley and fired the gunshots at the victims.

During rebuttal by the State, Kelly testified that he did not suggest what defendant should say in the confession.

The trial court gave the jury a number of instructions, including a modified pattern murder instruction and the following modified pattern voluntary manslaughter instruction:

“To sustain the charge of voluntary manslaughter, the State must prove the following propositions:
First: That the defendant performed the acts which caused the death of Neal Summit; and
Second: That when the defendant did so, he intended to kill or do great bodily harm to Neal Summit; or he knew that his acts would cause death or great bodily harm to Neal Summit; or he knew that his acts created a strong probability of death or great bodily harm to Neal Summit; and
Third: That when the defendant did so he believed that circumstances existed which would have justified killing Neal Summit; and
Fourth: That the defendant’s belief that such circumstances existed was unreasonable.
Fifth: That the defendant was not justified in using the force which he used.
If you find from your consideration of all the evidence that each one of these propositions has been proved beyond a reasonable doubt, you should find the defendant guilty.
If you find from your consideration of all the evidence that any one of these propositions has not been proved beyond a reasonable doubt, you should find the defendant not guilty.”

See Illinois Pattern Jury Instructions, Criminal, No. 7.06 (2d ed. 1981) (Issues in Voluntary Manslaughter — Intentional—Belief of Justification). The record discloses that there was no objection to the above instruction. On appeal, however, citing People v. Reddick (1988), 123 Ill. 2d 184, 526 N.E.2d 141, defendant contends that the above instruction was prejudicially erroneous because it incorrectly set forth the State’s burden of proof. Defendant contends that the jury should have been instructed that the State was required to prove beyond a reasonable doubt that defendant did not believe that circumstances existed which would have justified killing Neal Summit. We agree that the two paragraphs of the above instruction which are prefaced with the words “Third” and “Fourth” are improper.

In People v. Reddick (1988), 123 Ill. 2d 184, 197, the Illinois Supreme Court ruled that the burden is upon the State to disprove the mitigating mental condition for voluntary manslaughter of unreasonable belief in justification:

“The burden-of-proof instructions regarding both voluntary manslaughter and murder in both of these cases were thus incorrect in placing upon the People the burden of proving the existence of intense passion or unreasonable belief in justification. The instructions should have placed upon the People the burden of disproving the existence of either of these two states of mind.”

Application of Reddick to the instruction here would require that the paragraph beginning with the word “Fourth” be deleted and that the immediately preceding paragraph be revised to state as follows:

“Third: That when the defendant did so he did not believe that circumstances existed which would have justified killing Neal Summit.”

Although the State contends that the Reddick decision should be given prospective effect only, we recently ruled that Reddick applies retroactively to pending proceedings because the pattern jury instructions for murder and voluntary manslaughter “failed to correctly set the State’s burden of proof and constituted grave, nonwaivable error.” (People v. Flowers (1989), 192 Ill. App. 3d 292, 296; People v. Brooks (1988), 175 Ill. App. 3d 136, 142, 529 N.E.2d 732.) Therefore, the failure to apprise the jury of the State’s correct burden of proof was reversible error. The error was not harmless given defendant’s statement that he saw the victim flash a shiny object in his hand and given the fact that a knife was found near the victim’s body. (Cf People v. Carter (1988), 177 v. App. 3d 593.) However, given the facts in the instant case, a jury could reasonably find beyond a reasonable doubt that defendant did not believe he was acting in self-defense. Because a jury could find beyond a reasonable doubt that defendant did not act in the belief that he was defending himself, defendant is entitled at this point to a new trial but not an acquittal. (See People v. Reddick (1988), 123 Ill. 2d 184, 201.) We note further that the double jeopardy clause does not preclude defendant’s retrial because the reversal is based upon trial error. See Lockhart v. Nelson (1988), 488 U.S. _, 102 L. Ed. 2d 265, 109 S. Ct. 285.

Next, it is undisputed that the police officers did not obtain a warrant for defendant’s arrest. Defendant contends that the trial court erroneously denied his motion to suppress because no exigent circumstances justified the absence of a warrant. The evidence was conflicting at the suppression hearing. Chicago police detective Thiel testified that he was assigned to the case at 9 a.m. on August 26, 1985. About 10:30 that morning, he spoke to Danny Greco, who told him that defendant fired a gun at the victims near the mouth of the alley. About 1:30 p.m. Thiel, O’Leary, and three other officers went to 2960 North Clybourn. According to Thiel, they knocked on the door and a male voice asked who was there. Thiel testified that they responded, “[Pjolice,” and that defendant then opened the door. When the officers told defendant that they wanted to discuss the case with him, he told them not to stand in the hallway and to come inside. He then agreed to accompany them to the police station. Thiel denied that defendant was sleeping when they arrived, and denied further that they had to walk up any stairs. Although they did not handcuff defendant at that time or tell him that he was under arrest, defendant was not free to leave. When defendant’s sister yelled and pushed Thiel, she was arrested. The officers then transported defendant and his sister to the police station at Belmont and Western. Thiel initially testified that they arrived at the station about 1 p.m. but subsequently changed his response twice, to 2:30 and to between 2 and 2:30.

Defendant testified that he was sleeping at 9 a.m. on August 26, 1985, and was awakened about 10 a.m. by a scream. He recognized Brennann and asked what he was doing there. Brennann responded, “[Ljet’s go, let’s go. You’re under arrest.” Defendant asked whether they had a warrant, and Brennann answered that they did not. Defendant asked Brennann how they had gained entrance, and Bren-nann said that defendant’s mother had let them enter. When defendant asked his mother whether that was true, she denied that she had let them inside. They arrived at the police station around 10:30 a.m. Defendant testified that he had no personal knowledge of what happened when the police officers were at his front door, but he admitted that their guns were not drawn, that they did not strike him, and that they did not handcuff him. He cooperated with them.

Defendant’s mother (Carmen Benabe), sister (Doha or Dahlia Colon), and next-door neighbor (Rosemary Robetaille) all corroborated that the officers were at defendant’s home about 9:30 a.m. The neighbor testified further that the police officers knocked once and let themselves inside the unlocked doors without waiting for an answer. She admitted that the police neither drew their guns nor kicked down the doors. She claimed that both defendant and his sister were handcuffed when the officers escorted them out of the apartment about 10 a.m.

Defendant’s mother testified through an interpreter that defendant was sleeping when the police arrived about 9:30 a.m. She testified that she heard a ring, not a knock on the door, and that the police opened the door themselves. She called to her daughter to speak to them because, despite having lived in this country for 26 years, she allegedly spoke no English. She denied that she said anything to the police. She indicated that defendant was not handcuffed.

Defendant’s sister testified that she asked one of the police officers whether he had a warrant and that he replied that he did not need one. She conceded that their guns were not drawn and that she did not see them strike defendant. She stated that defendant was not handcuffed.

The State presented several rebuttal witnesses. Chicago police officer Martinez initially indicated that he was at defendant’s home with the other officers at 1:30 p.m., but subsequently stated that he arrived there during the morning. They knocked on the door and rang the doorbell several times. They then noticed a woman by the window and identified themselves as police officers. She motioned with her hand, and Martinez believed that she said in English, “[C]ome on up.” He admitted, however, that he was not sure of what she said. The door was unlocked and they entered and went upstairs. When Martinez told her in Spanish that they wanted to speak to defendant, she pointed to a bedroom and said that he was sleeping. Finally, Martinez testified that Brennann allowed defendant to use the washroom.

Brennann testified that five police officers in two cars went to defendant’s apartment. He was at defendant’s home with O’Quinn and Martinez at 1:30 p.m. One of them knocked on the door. After a moment, someone rang the doorbell. A woman appeared at a window, motioned for them to come upstairs, and said, “[C]ome up.” He admitted, however, that he was not sure of the words, although Bren-nann believed that she spoke in English. The officers then went inside. They walked upstairs, where Martinez spoke to the woman. She hollered defendant’s name, and Brennann looked in an open bedroom door and saw defendant sitting on the bed. Brennann stated, “[C]an you come with us? There was a problem in the park the other night with that guy with the truck,” and defendant answered, “[0]kay.” While defendant dressed and used the washroom, Brennann heard the commotion involving defendant’s sister. Defendant was not handcuffed when they transported him to the police station five blocks away at Belmont and Western.

O’Leary testified that he, Thiel, O’Quinn, Martinez and Brennann went to defendant’s home around 1:30 p.m. They rang the bell and knocked on the door. When a woman appeared at the window on the second floor, they identified themselves as police officers, and she said “[C]ome on up.” They went upstairs where they saw her again. Bren-nann asked her whether defendant was home and she called defendant’s name. She and Brennann then went to the other room and emerged with defendant. When they left the apartment about 2 p.m., defendant was not handcuffed.

It is undisputed that the police officers did not obtain a warrant for defendant’s arrest. Defendant contends that the warrantless arrest was unconstitutional and required suppression of his subsequent statements, including his confession. The only issue on appeal is whether exigent circumstances excused the officers’ failure to obtain a warrant. We hold that it was not manifestly erroneous for the trial court to find that exigent circumstances existed under the totality of the circumstances.

A trial court’s finding on a motion to suppress evidence will not be disturbed unless it is manifestly erroneous. (People v. Long (1983), 99 Ill. 2d 219, 231, 457 N.E.2d 1252; People v. Reynolds (1983), 94 Ill. 2d 160, 165, 445 N.E.2d 766.) In the absence of exigent circumstances, the police may not enter a suspect’s home to arrest him without a warrant for his arrest and reason to believe that he is within. (Payton v. New York (1980), 445 U.S. 573, 574-75, 590, 602-03, 63 L. Ed. 2d 639, 643-44, 653, 660-61, 100 S. Ct. 1371, 1374, 1382, 1388; People v. White (1987), 117 Ill. 2d 194, 209, 512 N.E.2d 677, cert. denied (1988), 485 U.S. 1006, 99 L. Ed. 2d 698, 108 S. Ct. 1469.) Reasonableness is the guiding principle in determining whether exigent circumstances existed to justify a warrantless arrest. (People v. White (1987), 117 Ill. 2d 194, 216.) Factors to be considered are (1) whether the crime was recently committed, (2) whether there was deliberate or unjustified delay by the police officers during which time they could have procured a warrant, (3) whether a grave offense is involved, particularly a crime of violence, (4) whether the police officers reasonably believed that the suspect was armed, (5) whether the police officers were acting upon a clear showing of probable cause, (6) whether there was a likelihood that the suspect would escape if not quickly captured, (7) whether there was strong reason to believe that the suspect was on the premises, and (8) whether the entry by the police officers was peaceful. (People v. White (1987), 117 Ill. 2d 194, 216-17.) The above factors are to be treated as “guidelines” and not as “cardinal maxims.” People v. White (1987), 117 Ill. 2d 194, 217.

In the case at bar, we are satisfied that the requisite exigent circumstances existed. With respect to the first and second of the above factors, the crime was committed about 11 p.m. on August 24, 1985. Defendant was arrested on August 26, 1985. Although the evidence was conflicting as to the exact time that the officers went to defendant’s home on August 26, 1985, we note that their testimony at the suppression hearing was given about one year after the arrest. Furthermore, it is apparent that they went to defendant’s home shortly after Danny Greco supplied them with information that incriminated defendant. Given these circumstances, we do not believe that there was a deliberate or unjustified delay on the part of the police officers. Next, a grave and violent offense was involved, the fatal shooting of Summit and the wounding of Roedersheimer, and the police officers reasonably could have believed that defendant, a street gang member incriminated in the shootings, was armed. Although defendant contends that the officers’ failure to handcuff him belied their belief that he was dangerous or a flight risk, we believe that the totality of the circumstances demonstrates the existence of exigent circumstances at the time of the arrest. Furthermore, the officers were acting upon a clear showing of probable cause, despite defendant’s contention that Greco lacked sufficient credibility to provide probable cause for defendant’s arrest. Defendant and Greco were members of the same street gang and the investigation was of a gang-related crime. The officers would have a strong reason to believe that defendant would be on the premises at 2960 North Clybourn because he lived there. Finally, it was undisputed that the officers neither drew their guns nor broke down the doors and that their entry was peaceful. Given these circumstances, the trial court’s denial of defendant’s motion to suppress did not contravene the manifest weight of the evidence.

Finally, because this matter is being remanded for a new trial, we need not address defendant’s contention that there were prejudicially erroneous violations of the hearsay rule.

The judgment of the circuit court is reversed and the cause is remanded for a new trial.

Reversed and remanded.

McNAMARA and WHITE, JJ., concur.


author: JUSTICE BUCKLEY

text:
    MOON LAKE CONVALESCENT CENTER, Plaintiff-Appellee, v. JEREMY MARGOLIS, Acting Director of the Department of Public Health, et al., Defendants-Appellants.
    First District (1st Division)
    No. 1—87—2967
    Opinion filed February 21, 1989.
    Rehearing denied April 11, 1989.

      Neil F. Hartigan, Attorney General, of Springfield (Shawn W. Denney, Solicitor General, and Valerie J. Peiler, Assistant Attorney General, of Chicago, of counsel), for appellants.
    Malcolm A. Chandler, of Chicago, for appellee.
    Bruce Stratton and William A. Radkey, both of Stratton, Dobbs, Nar-dulli & Lestikow, of Springfield (Thomas J. Reed and Patricia A. Korn, of counsel), for amicus curiae Illinois Health Care Association.
   JUSTICE BUCKLEY

delivered the opinion of the court:

Following an administrative hearing on violations of the Minimum Standards, Rules and Regulations for the Licensure of Skilled Nursing Facilities and Intermediate Care Facilities (1980) (the Rules), the Director of the Department of Public Health, State of Illinois (IDPH), affirmed the hearing officer’s decision to impose penalties on and revoke the license of Moon Lake Convalescent Center (Moon Lake), a long-term intermediate and skilled nursing-care facility located in Hoffman Estates, Illinois. On administrative review, the circuit court reversed the Director’s decision, finding that the hearing officer lacked authority to hear the matter, that IDPH had no jurisdiction to proceed against Moon Lake, that the proceedings to revoke Moon Lake’s license were moot, and that the Director’s decision was contrary to the manifest weight of the evidence. The court also ordered IDPH to pay costs and attorney fees under section 2 — 611 of the Code of Civil Procedure (111. Rev. Stat. 1985, ch. 110, par. 2 — 611). IDPH appeals from that judgment. For the reasons set forth below, we reverse.

These proceedings arose from an incident which occurred at Moon Lake on November 13, 1983. At approximately 10 a.m. on that morning, Moon Lake’s nursing assistant Lionel Deere prepared a tub bath for one of its residents, 73-year-old Benjamin Ovitz. Ovitz, as a result of a stroke, had paralysis of his right side, wore a brace on his right leg, and articulated only by the words “yes” and “no.” After checking the water temperature with his hand, Deere bathed Ovitz in the bathtub. Between 1 and 1:30 p.m. later that day, nurse Elizabeth Timm noticed that Ovitz’ leg was bleeding and that Ovitz’ skin was sloughing off of his leg. Moon Lake then contacted the paramedics.

Members of the responding paramedic team determined that Ovitz had suffered a third degree bum and transported Ovitz to Hu-mana Hospital. From there, Ovitz was transferred to the burn unit at Evanston Hospital. Dr. Charles Dmeck III, the surgeon in charge of the bum unit at Evanston Hospital, observed that Ovitz had suffered third degree bums over 40% of his body, primarily on his back, buttocks, both sides, genitals and lower legs. Ovitz’ knees were not burned, nor were there splatter burns. The burns were consistent with immersion in a discrete body of water.

During his hospitalization, Ovitz developed pneumonia and died on January 15, 1984. Dmeck diagnosed Ovitz’ cause of death as complications following his burns.

On March 12, 1984, IDPH issued a notice of complaint findings and determinations, stating that Moon Lake had violated a number of the Rules. Moon Lake, on March 23, 1984, requested a hearing on the violations. Before IDPH issued notices of penalty assessment and license revocation on July 18, 1984, Moon Lake had sold its facility to Midwest Carbridge, Inc., and surrendered its license. Discussions concerning this purchase had initiated in October 1983, and the sale was consummated in May 1984.

Hearings on the violations opened on July 31, 1984. At the first evidentiary session held on October 18, 1984, hearing officer William Stanley White announced that one of IDPH’s witnesses, nurse Barbara Whelan, had been the office nurse of his parents for 17 years, working full time until 1979 and occasionally since then. White refused Moon Lake’s request to recuse himself because of this relationship. White also denied Moon Lake’s motions to dismiss the proceeding on grounds that White was not an “employee” of the Department, that the matter was moot based upon the sale of Moon Lake, and that IDPH had violated its own regulations by failing to provide prompt notice of the violations.

The testimony at the administrative hearing disclosed the following responses and investigations to the November 13 incident. On the day of the incident, Moon Lake supervisor Ada Irene Morris Wiren questioned Deere, who stated that he had given Ovitz a shower. Barbara Suchecki, the person with the highest authority present at the facility on November 14, collected additional information and informed director of nurses Judy Ann Schillace of the incident that afternoon. Schillace already knew that Jean Hefner, the night supervisor on November 13, was informed by Evanston Hospital that it was the medical staff’s opinion that Ovitz had suffered an immersion burn. Ovitz’ injury was reported to IDPH on November 16,1983.

Detective Robert Syre from the Hoffman Estates police department investigated the incident. Syre interviewed Ovitz at Evanston Hospital, and Ovitz responded affirmatively when asked if he had received a bath. Drueck also expressed to Syre the opinion that Ovitz was burned in a bath. In an interview with Deere, Deere told Syre that he might have left the shower area for a couple of seconds to fetch a towel and that Ovitz received a shower, although on January 31, 1984, he acknowledged during testimony before a grand jury that he had in fact given Ovitz a bath.

On November 17, 1983, IDPH sent three investigators to Moon Lake to investigate a complaint of abuse and neglect. Deere told the investigators that he had given Ovitz a shower. Farrell did not issue her report regarding her investigation until January 11, 1984. The report noted citations issued to Moon Lake on November 17 for failing to timely report the Ovitz incident and for employing an unlicensed nurse who was unconnected with the November 13 incident.

On November 18, another IDPH inspector visited Moon Lake to examine its plumbing and water systems. He noted the absence of vacuum breakers and backflow preventers in some systems but issued no citations.

On February 1, 1984, registered nurse Barbara Ann Whalen and sanitarian Theodore. Zelinski conducted a reinvestigation of the incident. Upon examining its records, they noted that Moon Lake’s daily water temperature log for the day of Ovitz’ injury showed a temperature of 110 degrees Fahrenheit. The log indicated that during November 1983, the average water temperature exceeded 110 degrees on the 5th, 7th and 22nd of the month. In January 1984, the temperature measured 130 degrees on January 18.

Upon testing the water temperature on Ovitz’ floor, Zelinski and Whelan found that at different times of the day, the temperature of the water in sinks and bathtub exceeded 110 degrees. Zelinski also observed that the in-line thermometer reading of the hot water system in the basement fluctuated between 105 and 120 degrees. Ze-linski cited Moon Lake for the temperatures exceeding 110 degrees in violation of the Rules requiring facilities to have protective measures to ensure that water temperatures do not exceed 110 degrees Fahrenheit.

Whalen further examined Moon Lake’s “Manual of Policy and Procedure,” which contained a bath policy requiring that water temperature range between 95 and 100 degrees. Whalen interpreted this policy to require its staff to use thermometers to measure bath temperatures, but she admitted that no Moon Lake written policy required it to have thermometers at the baths. Whalen also admitted that no State or Federal regulation prescribed temperatures between 95 degrees and 100 degrees and that no law, policy or regulation of the State of Illinois required the use of thermometers to measure bath temperatures. Schillace informed Whalen that the bath thermometers had all been broken since September or October 1983 and that she submitted a purchasing request for new thermometers in January 1984 but the thermometers had not yet been purchased. Moon Lake’s witnesses testified that Moon Lake had never regarded the 95- to 100-degrees temperature range to be absolute or as requiring thermometers to ensure that water temperature range.

After subpoenaeing documents from Evanston Hospital and from the coroner’s office, Whalen completed her report on the reinvestigation on February 28, 1984. Whalen and Zelinski submitted a combined statement of deficiencies, citing Moon Lake and its staff for five violations of the Rules.

At the conclusion of the hearing on February 13, 1985, White affirmed the revocation of Moon Lake’s license and the monetary penalties imposed upon Moon Lake. His decision was thereafter affirmed by the Director.

The first question presented for our review is whether the trial court erred in finding that the Nursing Home Care Reform Act of 1979 (the Act) (111. Rev. Stat. 1983, ch. HV-k, par. 4151 — 101 et seq.) requires that hearing officers be IDPH employees and that hearing officer White’s acts were void because he was not an IDPH employee. IDPH advances three arguments in support of its position that the trial court erred in this regard.

The gist of IDPH’s first argument is that the issue of the hearing officer’s authority was not properly before the circuit court because the hearing officer’s contract, a copy of which was attached to Moon Lake’s complaint before the circuit court, was never introduced into evidence during the administrative proceedings. Section 3 — 110 of the Administrative Review Law provides that “[n]o new or additional evidence in support of or in opposition to any finding, order, determination or decision of the administrative agency shall be heard by the court.” 111. Rev. Stat. 1985, ch. 110, par. 3 — 110.

Moon Lake has not responded to the merits of IDPH’s contention but urges that this issue be deemed waived because IDPH failed to object to the exhibit in the circuit court. We find that the issue is not waived, as it involves a question of the circuit court’s jurisdiction. Because the circuit court’s subject matter jurisdiction on administrative review is a special statutory jurisdiction (Rosecky v. Department of Public Aid (1987), 157 Ill. App. 3d 608, 614, 511 N.E.2d 167, 171; Ill. Const. 1970, art. VI, §9), its jurisdiction is limited to the language of the Act conferring jurisdiction (Fredman Brothers Furniture Co. v. Department of Revenue (1985), 109 Ill. 2d 202, 210, 486 N.E.2d 893, 895-96; see also Moore v. Board of Trustees of the Sanitary District Employees’ & Trustees’ Annuity & Benefit Fund (1987), 157 Ill. App. 3d 158, 162, 510 N.E.2d 87, 91; Brewton v. Civil Service Comm’n (1969), 115 Ill. App. 2d 460, 466, 253 N.E.2d 504, 507 (a circuit court lacks jurisdiction where it considers questions not presented in the administrative record in violation of section 3 — 110 of the Administrative Review Law)). As our supreme court has stated: “In the exercise of special statutory jurisdiction, if the mode of procedure prescribed by statute is not strictly pursued, no jurisdiction is conferred on the circuit court. *** The Administrative Review Act was ‘an innovation and departure from the common law, [and] the procedures it establishes must be pursued.’ ” [Citation.] Fredman, 109 Ill. 2d at 210, 486 N.E.2d at 895.

Nonetheless, after reviewing the record, we find that hearing officer White’s contract was sufficiently in issue at the administrative proceedings and that the circuit court properly received the contract as evidence. The issue of the hearing officer’s jurisdiction was timely presented before the administrative agency. Although Moon Lake did not submit the hearing officer’s contract into evidence, the contents of the contract were discussed. White stated that he was a “contractual attorney” with a written contract. Moon Lake attempted to procure his contract to introduce into evidence. In a document request to IDPH, it requested that copies of White’s contract be furnished to them. White, however, refused to order IDPH to turn over these documents. Under these circumstances, we find that the circuit court did not violate section 3 — 110 by admitting the contract into evidence.

IDPH next argues that hearing officer White’s status with IDPH satisfied statutory requirements. The statutory provision in issue here, section 3 — 704 of the Act, which governed the review of decisions of IDPH at the time of the hearings before the administrative agency and the circuit court, provides: “Upon the receipt of a request in writing for a hearing, the Director or a duly qualified employee of the Department designated in writing by the Director as a hearing officer shall conduct a hearing to review the decision.” (Emphasis added.) Ill. Rev. Stat. 1983, ch. HV-k, par. 4153 — 704(a).

White acknowledged that his status with IDPH is that of an independent contractor. His contract with IDPH provides: “Services rendered pursuant to this agreement are not rendered as an employee of the State of Illinois and amounts paid pursuant to this agreement do not constitute compensation to an employee.”

Moon Lake argues that since White is not the Director or an employee of IDPH, he had no authority under the plain language of the Act. IDPH, however, refutes Moon Lake’s interpretation of the Act, contending that section 3 — 704(a) must be read in conjunction with sections 1 — 102 and 1 — 110 for a proper construction of the Act. Section 1 — 102 states that the terms defined in the article have the meanings ascribed to them unless the context otherwise requires. (111. Rev. Stat. 1983, ch. IllVz, par. 4151 — 102.) Section 1 — 110 defines “Director” as the “Director of Public Health or his designee.” (111. Rev. Stat. 1983, ch. HV-k, par. 4151 — 110.) Inserting the definition of “Director” into the provisions of section 3 — 704(a) (111. Rev. Stat. 1983, ch. HV-k, par. 4153 — 704(a)), it reads “[t]he Director or his designee or a duly qualified employee of the Department designated in writing by the Director as a hearing officer.” White, IDPH contends, is a designee, as his contract states that White would “serve as a hearing officer on behalf of the Director of Public Health for the administrative proceedings for which the contractor is appointed by the Director.”

Moon Lake responds that section 3 — 704(a) provides for a specific requirement that the designee be a Department employee and that IDPH’s version of the Act would create a redundancy and render surplus the specific qualifications that the General Assembly intended. If anyone can be a “designee,” Moon Lake asserts, then the “duly qualified employee” provision becomes utterly meaningless.

Both parties cite Heritage Bank & Trust Co. v. Harris (1985), 132 Ill. App. 3d 969, 478 N.E.2d 526, as supporting its position. In issue in Heritage was whether a savings and loan bank, which clearly was a “bank” under the general definition section of the Illinois Banking Act, was also a “bank” under the section of the act providing that “[a] state bank may elect to dissolve voluntarily and wind up its affairs by the act of the bank in the following manner *** [upon adopting a resolution recommending that the bank be dissolved voluntarily, attaching] [a]n executed copy of the contract *** with *** another bank.” (Emphasis added.) Ill. Rev. Stat. 1983, ch. 17, par. 380.

In finding that the trial court erroneously concluded that the savings and loan was not “another bank” under this dissolution section, this court noted that where an act defines its terms, those terms must be construed according to the definitions in the act, and there is no rule of construction which authorizes a court to declare that the legislature did not mean what the plain language of the statute imports. (Heritage Bank, 132 Ill. App. 3d at 973, 478 N.E.2d at 529.) We rejected the argument that if “another bank” were not read as “another state bank,” the word “another” would be meaningless or superfluous.

In the case at bar, the legislature has given the term “Director” a specific definition. Its inclusion of “or his designee” in the definition of “Director” recognizes that the Director of an agency cannot possibly perform all of the functions of the agency. Contrary to Moon Lake’s assertion, it is not clear that the legislature intended to deviate from this principle by placing specific eligibility requirements on hearing officers.

Our conclusion is strengthened by the fact that the legislature, after the circuit court’s decision in this case, amended section 3— 704(a) by replacing the expression “duly qualified employee of the Department” with the word “person” (Pub. Act 85 — 1183, eff. August 13, 1988 (amending Ill. Rev. Stat. 1987, ch. lllVz, par. 4153— 704(a))), thereby permitting any person designated in writing by the Director to serve as a hearing officer. We do not believe this amendment demonstrates a change in attitude, but reflects the legislature’s original intent in this matter. See People v. Youngbey (1980), 82 Ill. 2d 556, 563, 413 N.E.2d 416, 420.

Because we hold that White satisfied the statutory requirements as a “designee” of the Director, we need not address IDPH’s final argument that White was a defacto officer whose acts are valid.

The next issue before us is whether the statutory time frames within which IDPH is to make a determination about a complaint are mandatory or directory. The circuit court found that IDPH had no jurisdiction to proceed against Moon Lake because it failed to determine the alleged violations within the time limits of the Act. At the time of IDPH’s investigation of this matter, section 3 — 702(d) of the Act provided:

“A determination about a complaint which alleges a Type A violation shall be made by the Department, in writing, within 7 days after the complaint’s receipt. A determination about a complaint which alleges a Type B or C violation shall be made by the Department, in writing, within 30 days after the complaint’s receipt. The determination shall state the reasons therefor.” (Emphasis added.) Ill. Rev. Stat. 1983, ch. IllVz, par. 4153 — 702(d).

The initial complaint here was received by IDPH on November 16, 1983, yet it did not issue its notice of complaint findings and determination that Moon Lake had committed one Type “A” and several Type “B” and “C” violations until March 12, 1984. IDPH concedes that it did not comply with either the 7-day or 30-day time frames set forth in section 3 — 702(d), but it argues that section 3— 702(d)’s time frames are merely directory.

Under Illinois case law, while the use of the word “shall” or “must” in statutory provisions is generally regarded as mandatory, the term “shall” can be construed flexibly to mean “may,” depending on the legislative intent. (Andrews v. Foxworthy (1978), 71 Ill. 2d 13, 21, 373 N.E.2d 1332, 1335; Grove School v. Department of Public Health (1987), 160 Ill. App. 3d 937, 941, 513 N.E.2d 973, 976.) However, where the protection of an intended class depends upon giving a mandatory meaning to the word, it cannot be given a permissive meaning (Andrews, 71 Ill. 2d at 21, 373 N.E.2d at 1335; Grove School, 160 Ill. App. 3d at 941, 513 N.E.2d at 976), although to properly interpret a statute a court must also consider the nature, object and consequences of construing it one way as opposed to another. Andrews, 71 Ill. 2d at 21, 373 N.E.2d at 1335; Grove School, 160 Ill. App. 3d at 941, 513 N.E.2d at 976; Youngbey, 82 Ill. 2d at 562, 413 N.E.2d at 421.

Our analysis under the above principles leads us to conclude that the section 3 — 702(d) time frames are directory rather than mandatory. The primary purpose of the Act undoubtedly is to protect nursing home residents. The legislature promulgated the Act amid concern over reports of inadequate and degrading treatment of nursing home residents. (Harris v. Manor Healthcare Corp. (1986), 111 Ill. 2d 350, 357-58, 489 N.E.2d 1374, 1377; 81st Ill. Gen. Assem., Senate Proceedings, May 14, 1979, at 184 (statement of Senator Kare Beming).) While we acknowledge that prompt notice and determination by IDPH is important to nursing home facilities, our focus in construing the Act is on the legislature’s intent and the consequences to nursing home residents, the Act’s intended protected class.

The consequences of a mandatory interpretation on nursing home residents are somewhat obvious. Such a finding could result in many unaddressed resident abuses, as one can envision a myriad of circumstances and events which may cause delay. A mandatory construction would also place IDPH in a position of having to file potentially incomplete and inaccurate determinations or be forever barred from proceeding. Moreover, it would encourage facilities to obscure issues and delay in providing necessary information. We find that the legislature could not have intended such a result.

While we agree that prompt action by IDPH is important to ensure that conditions which threaten the residents’ health and safety are corrected, we do not believe that the protection of the residents depends upon a mandatory interpretation. Such a construction would be more injurious to residents than the benefits the residents would receive. As the court in Grove School, in finding section 3 — 704’s time frames for commencing hearings on violations to be directory, succinctly stated:

“[T]he legislative purpose of the Act is to protect nursing home residents from acts of abuse. The rights of these people will be far more adversely affected if defendant is unable to address charges of abuse because of a mandatory interpretation of the statute which would result in a dismissal of the proceeding, than they would be by a hearing delay.” Grove School, 160 Ill. App. 3d at 941, 513 N.E.2d at 976.

Moon Lake distinguishes Grove School on the ground that the time requirements were in the period after the issuance of the complaint, at a time when the facilities had notice and opportunity to correct. It contends that, unlike the delay here, the delay in Grove School did not hurt the residents by continuing to expose them to potentially dangerous conditions. We do not believe the fact that the delay occurred at different stages mandates a different outcome, as both delays occurred before final action could be taken against the facilities, either by revoking their licenses or imposing penalties.

Nor do we find persuasive Moon Lake’s contention that Springfield-Sangamon County Regional Plan Comm’n v. Fair Employment Practices Comm’n (1978), 71 Ill. 2d 61, 373 N.E.2d 1307, is more analogous to the case at bar because it involves the time frame under which an agency must issue its complaint. In Springfield-Sangamon, the Illinois Supreme Court considered whether the Fair Employment Practices Commission had jurisdiction to issue a complaint against an employer after the 180-day time period given in the statute. Holding the time limit mandatory, the court stated:

“Certainly, periods of inaction on behalf of the FEPC would tend to hamper the remedial and reconciliatory procedures which underlie the very purpose of the Fair Employment Practices Act, and should the FEPC find against the respondents the financial burden of the administrative order could be substantially increased by virtue of any extended delay. Consequently, the 180-day period prescribed in the statute was intended to ensure expeditious action on behalf of the FEPC, and must be considered mandatory.” Springfield-Sangamon, 71 Ill. 2d at 68, 373 N.E.2d at 1310.

Springfield-Sangamon is clearly distinguishable from the case at bar. As the above language indicates, the underlying purpose of the Fair Employment Practices Act is to encourage remedial and reconcil-iatory procedures. Unlike the instant case, a directory construction in Springfield-Sangamon would be injurious to the statute’s purpose and a mandatory construction necessary to preserve its purpose.

We next address whether the license revocation proceedings were moot from their inception. The circuit court found that since Moon Lake surrendered its nursing home license before IDPH notified Moon Lake of its intent to revoke the license, the revocation was moot and the proceedings to revoke thereby void. On appeal, Moon Lake advances a number of arguments in its brief to support the circuit court’s ruling, none of which are relevant to the mootness issue. An issue is moot if no actual controversy exists or where events occur which make it impossible for the court to effectively grant relief. (Wheatley v. Board of Education (1984), 99 Ill. 2d 481, 484-85, 459 N.E.2d 1364, 1366; People v. Lynn (1984), 102 Ill. 2d 267, 272, 464 N.E.2d 1031, 1034.) Illinois courts have found exceptions to the mootness doctrine where there is substantial public interest involved or where the issues are likely to recur but unlikely to last long enough to allow appellate review to occur. (Wheatley, 99 Ill. 2d at 485, 459 N.E.2d at 1367.) It is unnecessary for us to consider IDPH’s alternative contention that these exceptions apply because we agree with IDPH that an actual controversy existed here.

IDPH contends that an actual controversy existed, despite the surrendering of Moon Lake’s license, to the extent that Moon Lake, an entity still in existence on September 10, 1987, was barred from obtaining a license for the five years after its license was revoked. Section 3 — 117 of the Act lists the revocation of a license during the previous five years as a ground for denial of a license. (111. Rev. Stat. 1983, ch. lllVa, par. 4153 — 117(5).) Section 3 — 109 of the Act also provides:

“[T]he Director shall issue a license if he finds: *** [t]hat [the entity] *** is a person responsible and suitable to operate or to direct or participate in the operation of a facility by virtue of financial capacity, appropriate business or professional experience, a record of compliance with lawful orders of the Department and lack of revocation of a license during the previous 5 years.” 111. Rev. Stat. 1983, ch. lll1^, par. 4153 — 109(1).

The Illinois Supreme Court has addressed a similar issue in Madison Park Bank v. Zagel (1982), 91 Ill. 2d 231, 437 N.E.2d 638. The issue there was whether a taxpayer which had an overall loss in terms of Federal taxable income but a gain from municipal bonds under the Illinois income tax could enter a negative number as its taxable income or whether the figure it had to enter was “zero.” After the appellate court ruled that the same deduction could not be taken twice, the taxpayer paid the amount of loss it had previously carried back to an earlier year. Although the supreme court recognized that the determination of the disputed question would determine whether the taxpayer could in future tax years carry back a Federal loss to offset earlier years’ gains, it found no present controversy between the litigants since the Department of Revenue would have no greater present rights against the bank were it to receive the ruling it requested. Madison Park, 91 Ill. 2d at 235, 437 N.E.2d at 639.

The instant case is distinguishable from Madison Park. Here, the revocation of Moon Lake’s license would affect Moon Lake’s present status or rights in that it no longer would have the present ability to obtain a license by complying with the Act’s conditions. IDPH, in turn, would have a greater present right against the entity. Accordingly, we find that an actual controversy existed and the revocation proceedings were not moot.

Finally, we review the circuit court’s holding as to the merits of this controversy. The circuit court commented on hearing officer White’s findings in the administrative proceedings as follows:

“The findings of neglect are against the manifest weight of the evidence as well as being capricious and arbitrary ***. The findings rest on untrue and unreasonable allegations that plaintiff’s written bath procedures required the use of thermometers instead of human hands to determine whether bath water was in a comfortable range. All the testimony was to the contrary, and defendants twisted and distorted the written procedures to support the ‘neglect’ allegations. There was no competent evidence of the temperature or duration of the bath in which the resident may have suffered immersion bums, and substantial evidence that he was cared for by an attentive staff throughout.”

At the administrative proceedings, White found that Moon Lake had committed six violations of the Rules: (1) an act of neglect, a type “A” violation of Rule 16.04.01.00 for fine of $1,000; (2) failing to follow its own resident care policies, two type “B” violations of Rule 03.01.01.00 for fines of $2,492.60 and $618; (3) the director of nurses failed to maintain the musing standards of the facility, a type “B” violation of Rules 06.02.02.00 and 06.02.02.05 for a $618 fine; (4) failed to notify IDPH of the Ovitz incident within 24 hours as prescribed by Rule 09.01.06.00 for a $309 fine; (5) failed to have protective devices to ensure that water temperatures did not exceed 110 degrees, a type “C” violation of Rule 15.13.03.05 for a $309 fine.

On administrative review, the findings of fact made by an administrative agency are prima facie true (Ill. Rev. Stat. 1985, ch. 110, par. 3 — 110), and the reviewing court’s inquiry is limited to ascertaining whether the agency’s findings and decision are against the manifest weight of the evidence. Sheehan v. Board of Fire & Police Commissioners (1987), 158 Ill. App. 3d 275, 287, 509 N.E.2d 467, 471.

In defending the circuit court’s reversal of the neglect violation, Moon Lake claims that the hearing officer improperly based its decision on the unsupported opinion of Nurse Whelan, who was the office nurse of White’s parents for 17 years, that Moon Lake’s policy required the use of thermometers. WTiile it is true that Moon Lake’s policy did not mention thermometers and Moon Lake’s witnesses did not so interpret its policy, a review of the record reveals that the circuit court misapprehended the hearing officer’s findings as to the neglect violation. Rule 16.04.01.00 provides that “an owner, licensee, administrator, employee or agent of a facility shall not abuse or neglect a resident.” “Neglect” is defined in section 1 — 117 of the Act as “a failure in a facility to provide adequate medical or personal care or maintenance, which failure results in physical *** injury to a resident.” (111. Rev. Stat. 1983, ch. IIIV2, par. 4151 — 117.) The essence of the neglect violation under these provisions was not Moon Lake’s failure to have thermometers, but that its aide placed a resident in a bath causing his death because Moon Lake did not provide adequate personal care by taking adequate measures to protect its residents from accidents from excessive water temperatures.

Substantial evidence supports the neglect violation. First, IDPH sufficiently proved that a resident suffered physical injury from the personal care of Moon Lake. Contrary to the circuit court’s finding that there was “no competent evidence of the temperature or duration of the bath in which a resident may have suffered immersion burns,” IDPH presented substantial evidence showing that Ovitz was burned and ultimately died because of his immersion in bath water at the facility. It was undisputed that Ovitz had no burns on his body before his bath that morning and that Ovitz suffered third degree burns over 40% of his body on that day, requiring emergency attention and hospitalization and ultimately causing his death. Ovitz’ treating physician at Evanston Hospital testified that Ovitz’ burns were caused by immersion in a discrete body of water such as a tub bath, that water temperatures must minimally measure between 106 and 109 degrees to cause third degree burns, and that although the elderly’s skin burns more easily, the early crusting of Ovitz’ skin indicated to him that the water temperature in Ovitz’ bath exceeded 120 degrees.

Substantial evidence was also introduced showing that Moon Lake did not provide adequate personal care or maintenance to Ovitz, resulting in his death. Facilities are required to have written procedures governing all services to its residents. (Rule 13.01.01.00.) Moon Lake’s bathing policy, “Prevent accidents — do not make water too hot (95 degrees to 100 degrees F.),” indicates it recognized the importance of safe water temperatures with elderly residents who are susceptible to burns. Moon Lake’s daily temperature logs for November 1983 also indicate that it knew that the water temperature in its system at times fluctuated above its bathing policy, at times exceeding 110 degrees. Yet, Moon Lake failed to take adequate measures to protect elderly residents from accidents from excessive water temperatures.

This evidence is likewise sufficient to establish violations of Rules 03.01.01.00 and 06.02.02.05. Rule 06.02.02.05 provides that the director of nurses shall oversee the nursing services and develop and maintain standards of nursing practice and written policies. The director of nurses here violated her duty to maintain standards of nursing practice by not following its own bath policy in failing to develop standards to prevent accidents from excessive temperatures. Similarly, Moon Lake violated Rule 03.01.01.00, which requires that facilities follow their written policies and procedures governing all services provided by the facility, by failing to provide an adequate means for its employees to follow its policy of preventing accidents to ensure that the water temperatures did not exceed 100 degrees.

In addition to the above violation of Rule 03.01.01.00, the hearing officer found a second infraction of this rule for leaving Ovitz unattended in his bath in violation of written policy. Moon Lake’s bathing policy requires the aide to remain with the resident while the resident is in the bath. As Moon Lake points out, the policy does not prohibit an aide from leaving momentarily if the resident is not in the tub. The only evidence introduced by IDPH was testimony from Detective Syre that Deere stated he left the bath area to fetch a towel. The record is devoid of evidence showing at what point Deere left the bath area or that Ovitz was in the tub at the time. Thus, the trial court correctly found the hearing officer’s finding as to this violation to be against the manifest weight of the evidence.

As to the hearing officer’s finding of a late notification and its assessment of a penalty for that infraction, the evidence indisputably showed that Moon Lake did not notify IDPH of the Ovitz incident within 24 hours as required by Rule 09.01.06.00. Nonetheless, Moon Lake argues that this infraction should not have been a basis for a penalty assessment because no violation level is assigned to the rule and the Act only authorizes penalty assessments for “A,” “B” and “C” violations. IDPH responds that in failing to assign a specific “type” violation to this rule, the legislature recognized that the seriousness of a failure to promptly report an incident would vary depending upon the seriousness of the incident.

Prompt reporting of incidents and accidents is vital to the protection of the residents remaining in the facility where the incident occurred. We find nothing in the Act that prohibits a penalty for late notification. Section 3 — 305 outlines the penalties for “A,” “B,” and “C” violations, but also provides “the license of a facility which is in violation of this Act or any rule adopted thereunder may be subject to the penalties or fines levied by the Department.” (Emphasis added.) (Ill. Rev. Stat. 1985, ch. IIIV2, par. 4153 — 305.) We, therefore, find the hearing officer did not err in assessing a penalty for this violation.

The hearing officer assessed the last penalty against Moon Lake for its failure to have protective measures implemented to “ensure” that water temperature does not exceed 110 degrees in violation of Rule 15.13.03.05. The evidence showed that water temperatures exceeded 110 degrees on February 1, 1985. Moon Lake asserts that it had a mixing valve and daily water temperature checks as suggested in the rule and that, after the temperature rose above 110 degrees during the February 1 inspection, the maintenance supervisor adjusted it. The rule, however, requires Moon Lake to implement protective measures to “ensure” that the water temperature does not exceed 110 degrees. We agree with IDPH that the fact that water temperatures exceeded 110 degrees on February 1, 1985, is overwhelming evidence that Moon Lake’s measures did not “ensure” temperatures would not exceed 110 degrees.

Accordingly, we hold that the circuit court erred in finding the hearing officer’s findings as to all violations except that relating to Ovitz’ unattended bath to be against the manifest weight of the evidence.

In view of our above findings, it is apparent that the circuit court erred in awarding section 2 — 611 fees. (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 611.) IDPH’s allegations were not “untrue,” as they were supported by substantial evidence.

For the foregoing reasons, we reverse the circuit court’s order setting aside the decision of the Director of IDPH, and we reinstate the order revoking Moon Lake’s license and imposing fines for all violations found by the Director except the $618 fine for violation of Rule 03.01.01.00.

Affirmed in part; reversed in part.

CAMPBELL and O’CONNOR, JJ., concur.

      This section of the Act was subsequently amended by Public Act 83 — 1530, effective July 1, 1985, to provide that Type “A” complaints must be “investigated” in seven days (except within 24 hours where a resident’s life or safety is in imminent danger), and Type “B” and “C” violations must be “investigated” in 30 days. The amendment also requires all complaints to be classified, and for those classified as valid reports, IDPH must determine within 30 working days whether any rule or provision has been violated. Pub. Act 83 — 1530, eff. July 1, 1985 (amending Ill. Rev. Stat. 1983, ch. lllVz, par. 4153-702(d)).

      The Act defines a “Type A” violation as one which creates a condition or occurrence presenting a “substantial probability that death or serious mental or physical harm to a resident will result.” (Ill. Rev. Stat. 1985, eh. IIIV2, par. 4151 — 129.) It also classifies a condition or occurrence directly threatening the health, safety and welfare of a resident as a “Type B” violation, while one that does so indirectly is classified as a “Type C” violation. Ill. Rev. Stat. 1985, ch. IIIV2, pars. 4151— 130, 4151-131.

      Moon Lake argues that prompt notice and determination are essential to nursing home facilities since fines can accrue under the Act from the discovery date until the date a violation is corrected or a plan of correction is filed by the home. (Ill. Rev. Stat. 1983, eh. HV-k, par. 4153 — 305.) The Act has been amended subsequent to the administrative proceedings in this case to limit the assessment of fines from the date of service of notice of violation rather than the date of discovery of a violation. Pub. Act 85 — 1378, eff. September 1, 1988 (amending Ill. Rev. Stat. 1983, ch. ■1111/2, par. 4153-305).

      Rule 15.13.03.05 was promulgated on November 15, 1983, after the Ovitz incident.