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Whitledge v. Klein
State: Illinois
Court: 4th District Appellate
Docket No: 4-03-0820 Rel
Case Date: 05/19/2004

NO. 4-03-0820

IN THE APPELLATE COURT


OF ILLINOIS

FOURTH DISTRICT



JOHN WHITLEDGE, NICOLE BUNDY, EDWARD
WHITE AND CHRISTINE ROBINSON,
                       Plaintiffs-Appellees,
                       v.
WILLIAM KLEIN,
                       Defendant,
                       and
NOLAN REAL ESTATE SERVICES, INC., and
K.C. CHATHAM HILLS, LLC,
                       Defendants-Appellants.
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Appeal from
Circuit Court of
Sangamon County
No. 00L200



Honorable
Leslie J. Graves,
Judge Presiding.


JUSTICE MYERSCOUGH delivered the opinion of the court:

This matter is before the court pursuant to Supreme CourtRule 308 (155 Ill. 2d R. 308) and presents four questions certifiedfor review. The questions are as follows:

"[(1)] Do lease provisions of a tenant'sresidential lease--which provide in substancethat the landlord shall not be responsible forproperty damage to the tenant's personal property in case of accident and that the tenant isto purchase and look solely to his own rentalinsurance for any such loss--require dismissalof such tenant's suit for property damage dueto fire allegedly caused by the negligence ofthe owner/property manager, where the tenant infact purchases such rental insurance and recovers thereunder for such property damage?

[(2)] Does the Landlord and Tenant Act[(Act) (765 ILCS 705/1 through 5 (West 2000))]prohibit the preclusive effect of the leaselanguage set forth in [q]uestion 1?

[(3)] Where the suit described in [(1)]above is actually being pursued by the tenant'ssubrogated rental insurer, in the name of thetenant, shall such insurer be afforded the sameprotections as its tenant under the [Act]?

[(4)] Shall the [p]laintiffs' claimsagainst Nolan Real Estate Services, Inc.[,] andK.C. Chatham Hills, LLC, be dismissed pursuantto [section 2-619 of the Code of CivilProcedure (735 ILCS 5/2-619 (West 2000))] as aresult of the language contained within each[p]laintiff's respective lease?"

Because we answer the second question in the affirmative, questionsone and four must be answered in the negative. We answer questionthree in the affirmative.

I. BACKGROUND

The relevant facts are not in dispute. On April 5, 2001,plaintiffs, John Whitledge, Nicole Bundy, Edward White, and ChristineRobinson, each filed a first-amended complaint against defendants,Nolan Real Estate Services, Inc. (Nolan), and William Klein, as anemployee or agent of Nolan, for negligence related to its fireplacesin the apartments. The plaintiffs all lived in separate apartmentsin Chatham Hills Apartments, which was managed by Nolan. Thecomplaint alleged that as a direct result of Nolan's negligence, onFebruary 19, 1997, a fire occurred at Chatham Hills Apartmentscausing severe damage to plaintiffs' property. Plaintiff JohnWhitledge started a fire in his fireplace, which spread beyond thefirebox and into other units.

On May 10, 2001, Nolan filed a motion to dismissplaintiffs' first-amended complaint pursuant to section 2-619 of theCode of Civil Procedure (735 ILCS 5/2-619 (West 2000)). The motionargued that because each plaintiff had been reimbursed by his or herown insurance company for the loss of his or her property, thecomplaint should be filed in the name of their respective insurancecompanies or for the use of their respective companies. The motionfurther alleged the action was barred by certain lease provisions ineffect at the time of the fire. Nolan alleged each plaintiff's leasecontained the following provision:

"Resident understands and agrees it shall beResident's own obligation to ensure Resident'sproperty and persons for whom Resident is ormay be responsible. The owner is notresponsible for Resident's property in case ofaccident."

Plaintiff John Whitledge's lease contained a separate endorsementthat read, in pertinent part, as follows:

"THIS LETTER IS TO ADVISE YOU THAT UPONBECOMING A RESIDENT OF CHATHAM HILLSAPARTMENTS, IT WILL BE YOUR RESPONSIBILITY TOCARRY RENTERS['] INSURANCE.

THE INSURANCE IS TO PROVIDE PROTECTION FOR YOURPERSONAL POSSESSIONS. CHATHAM HILLS APARTMENTSIS NOT RESPONSIBLE FOR YOUR PROPERTY IN CASE OFAN ACCIDENT."

Plaintiff Edward White's lease contained a similar endorsement. Nolan argued that "[a] number of court decisions in Illinois haveindicated that, in the event property is damaged due to fire[,] ***certain provisions in a lease agreement can bar recovery of propertydamage caused by the fire where available insurance exists to coversuch property damage. An express provision of the lease may providesuch exculpation, or such an intent can be inferred from the lease asa whole." Nolan cited Dix Mutual Insurance Co. v. LaFramboise, 149Ill. 2d 314, 597 N.E.2d 622 (1992), for this proposition.

On June 20, 2001, plaintiffs filed a response to Nolan'smotion to dismiss, arguing Illinois case law and statute prohibitNolan from escaping liability for his negligence. Specifically,plaintiffs argued Nolan was seeking a "reverse application" of theDix decision and that section 1 of the Act prevented Nolan from usinglanguage in the lease to escape liability. Section 1 of the Actprovides as follows:

"Every covenant, agreement[,] orunderstanding in or in connection with orcollateral to any lease of real property,exempting the lessor from liability for damagesfor injuries to person or property caused by orresulting from the negligence of the lessor,his or her agents, servants[,] or employees, inthe operation or maintenance of the demisedpremises or the real property containing thedemised premises shall be deemed to be void asagainst public policy and whollyunenforceable." 765 ILCS 705/1 (West 2000).

On February 26, 2002, following a hearing, the trial courtdenied Nolan's motion to dismiss. On March 22, 2002, Nolan filed amotion to reconsider and a motion to certify questions to this courtpursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308). On June 12,2002, the court denied Nolan's motion to certify questions becausethe court did not believe that interlocutory appeal resolved allissues in this matter. On December 23, 2002, plaintiffs filed asecond-amended complaint, and on August 18, 2003, Nolan filed anothermotion to certify questions stating plaintiffs were in agreement to acertification. On September 16, 2003, the court entered an orderpursuant to Rule 308 certifying the questions stated above.

II. ANALYSIS

This court must address the second certified questionfirst, because if the Act prohibits the preclusive effect of thelease language, then dismissal of plaintiffs' suit would not berequired by those lease provisions. To answer the second question,we must construe the Act. "Because our decision today involves theconstruction of a statute, the question before us is one of law, andour review is de novo." Hutton v. Consolidated Grain & Barge Co.,341 Ill. App. 3d 401, 406, 795 N.E.2d 303, 307 (2003). We adhere tothe familiar and well-settled rule of statutory construction thatrequires this court to ascertain and give effect to the intent of thelegislature, which is best found in the plain language of thestatute. City of Decatur v. Page, 339 Ill. App. 3d 316, 320, 789N.E.2d 1269, 1272 (2003). We will go beyond the plain and ordinarymeaning of the statutory language and employ aids for constructiononly if the statute is ambiguous or if a literal reading would leadto an absurd result. Grams v. Autozone, Inc., 319 Ill. App. 3d 567,570, 745 N.E.2d 687, 690 (2001). "A statute is ambiguous if it iscapable of more than one reasonable interpretation." In re TimothyT., 343 Ill. App. 3d 1260, 1263, 799 N.E.2d 994, 997 (2003).

Nolan argues the lease provisions are not exculpatory butmerely compel tenant indemnification of a landlord and, therefore,are not prohibited by the Act. Nolan asks this court to decline tofollow cases that suggest the Act forbids not only exculpatoryclauses but also clauses compelling tenant indemnification. Nolancites McMinn v. Cavanaugh, 177 Ill. App. 3d 353, 357, 532 N.E.2d 343,345 (1988), where the First District held as follows:

"[A]n indemnity clause in a lease has the sameeffect as a lease exculpatory clause: thelandlord does not pay. We cannot believe thatthe legislature, while prohibiting landlordsfrom avoiding paying claims throughexculpation, intended to allow landlords toavoid paying claims through indemnity. We holdthat the Act, by clear and necessaryimplication, forbids indemnity agreements inleases as well as exculpatory agreements."

While this court is not bound to follow the decisions of otherdistricts, when dealing with similar facts and circumstances, acompelling reason exists to do so. In re May 1991 Will County GrandJury, 152 Ill. 2d 381, 398, 604 N.E.2d 929, 938 (1992); see alsoPeople v. Antoine, 286 Ill. App. 3d 920, 925, 676 N.E.2d 1374, 1377(1997) ("stare decisis commands greater respect when, as here, atissue is a judicial construction of a statute").

Nolan argues this court should decline to follow McMinnbecause (1) the plain language of the Act does not expressly prohibitindemnification clauses in a lease agreement, and (2) "not allefforts by a landlord to seek indemnification from its tenantimplicate the common[-]law problems the Act sought to cure." TheFirst District found that "[t]he Act expressly forbids leaseexculpatory agreements--not indemnity agreements." McMinn, 177 Ill.App. 3d at 357, 532 N.E.2d at 345. Nolan's argument that the plainlanguage of the Act does not prohibit indemnification clauses wasspecifically rejected by the First District and does not provide abasis for departing from its holding. Moreover, we agree with theFirst District's rationale. Statutes should be interpreted to avoidabsurd results. Gerwin v. Livingston County Board, 345 Ill. App. 3d352, 361, 802 N.E.2d 410, 417 (2003). An interpretation of thestatute that would prohibit exculpatory clauses in leases but wouldpermit landlords to nonetheless escape liability by requiring tenantsto indemnify landlords for the landlord's own negligence isillogical. As the First District noted, "[d]espite the distinctionbetween exculpation and indemnification, an indemnity clause in alease has the same effect as a lease exculpatory clause: the landlorddoes not pay." McMinn, 177 Ill. App. 3d at 357, 532 N.E.2d at 345.

We reiterate at this point that this matter is before thecourt on certified questions for review. Therefore, the scope of ouranalysis is limited by the questions certified (In re Detention ofBailey, 317 Ill. App. 3d 1072, 1076, 740 N.E.2d 1146, 1149 (2000)),and we may only address Nolan's argument within the context of thosequestions. Nolan asserts the evil the Act sought to remedy wasexculpation for negligence. Nolan does not argue that the statute isambiguous on its face; therefore, examination of the evils thelegislature sought to cure may be inappropriate. See Grams, 319 Ill.App. 3d at 569-70, 745 N.E.2d at 690. However, because this courthas gone beyond the plain language of the statute and determined thata literal interpretation would yield an absurd result, we willaddress Nolan's argument.

We have previously interpreted "exculpation" to include atleast some efforts by a landlord to seek "indemnification" from itstenant. The question before us then is whether the Act prohibitslease language that, as characterized by Nolan, requires a tenant toindemnify a landlord for a fire allegedly caused by the landlord'snegligence. This is precisely the evil Nolan asserts the Act waswritten to prevent: a landlord escaping liability for its ownnegligence. Other efforts at indemnification, not involving thelandlord's negligence, are not a proper matter for our considerationat this time. Nor is Nolan's argument that "[r]isk allocationthrough insurance is not an evil which the Act sought to cure."

Next, we consider whether the insurer shall be affordedthe same protections as the tenants under the Act. Nolan argues theinsurance carriers do not warrant protection under the Act because"the Act was designed to correct the evil at common law ofmonopolistic landlords forcing tenants to accept lease agreementswith 'take-it-or-leave-it' exculpatory lease provisions." Evenaccepting that as true, another evil the Act was designed to correct,as noted by Nolan, was landlords avoiding liability for their ownnegligence. If, in this case, the subrogee insurance carriers werenot permitted to use the Act, the landlords would be able to do justthat. A subrogee-insurer stands in the shoes of its subrogor-insured, and we see no reason to depart from that rule. SeeInsurance Co. of North America v. Andrew, 206 Ill. App. 3d 515, 519,564 N.E.2d 939, 942 (1990) (subrogee entitled to protections ofstatute applicable to subrogor).
 

III. CONCLUSION

The second certified question is answered in theaffirmative. Certified questions one and four are answered in thenegative. Question three is answered in the affirmative.

Certified questions answered.

KNECHT, P.J., and TURNER, J., concur.

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