1 2014 IL App (5th) 130227 NOS. 5-13-0227, 5-13-0293 cons.

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

ROBERT SMITH, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Randolph County. ) v. ) No. 11-LM-108 ) JEFF HAMMEL, ) Honorable ) Eugene E. Gross, Defendant-Appellee. ) Judge, presiding.

___________________________________________________ _________________________________________ JULIE GOSS, ) Appeal from the ) Circuit Court of Plaintiff-Appellee, ) Randolph County. ) v. ) No. 10-CH-48 ) SMITH CHIROPRACTIC CENTER, ) ) Defendant-Appellant ) ) (MedStar Ambulance, Inc., Sparta Community ) Honora ble Hospital, and Quality Health Care Clinic, ) Andrew J. Gleeson, Defendants). ) Judge, presiding.

___________________________________________________ _________________________________________ PRESIDING JUSTICE WELCH delivered the judgment of t he court, with opinion. Justices Goldenhersh and Stewart concurred in the judgment and opinion. OPINION ¶ 1 On September 12, 2008, Julie Goss was involved in a n automobile collision in which she suffered personal injuries. She was trea ted for those injuries by chiropractor

NOTICE Decision filed 07/23/14. The text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.2

Robert Smith, who rendered services in the total am ount of $2,777. ¶ 2 Julie Goss instituted a claim against the driver of the other vehicle/tortfeasor through her attorney, Jeff Hammel, seeking recovery for her injuries. That claim was settled without the necessity of court action. ¶ 3 Prior to settlement of the claim, chiropractor Smit h had notified Goss and attorney Hammel of his statutory lien on any settlement proc eeds Goss might receive. That lien is provided by the Health Care Services Lien Act (the Act) (770 ILCS 23/1 et seq. (West 2010)), which provides that every health care provi der that renders any medical services to an injured person shall have a lien upon all cla ims and causes of action of the injured person for the amount of the health care provider's reasonable charges. 770 ILCS 23/10(a) (West 2010). The Act requires the health care provider to notify both the injured party and the party against whom the claim or cause of action exists of the existence of the lien. 770 ILCS 23/10(b) (West 2010). Notice o f the lien may be made by registered or certified mail or in person. 770 ILCS 23/10(b) (West 2010). ¶ 4 The Act further provides for adjudication of lien r ights under the Act: "On petition filed by the injured person or the health care prof essional or health care provider and on the petitioner's written notice to all interested a dverse parties, the circuit court shall adjudicate the rights of all interested parties *** ." 770 ILCS 23/30 (West 2010). 1

1 Subsequent to the commencement of this action, effe ctive January 1, 2013, section 30 of the Act was amended to add a paragrap h providing that "[a] petition filed3

¶ 5 After Goss's claim was settled, attorney Hammel fil ed, in the circuit court of Randolph County, a "Petition to Adjudicate Liens" p ursuant to section 30 of the Act (No. 10-CH-48). Chiropractor Smith was notified of the petition to adjudicate liens by regular and certified mail. There is no dispute that Smith received a copy of the petition to adjudicate liens and a notice of the hearing on the petition. Nevertheless, Smith did not appear at the hearing on the petition to adjudicate liens, and in an order entered September 8, 2010, he was found to be in default. Smith's lien was therefore "discharged and voided." The settlement proceeds were disburse d in accordance with the court's

order. ¶ 6 On March 13, 2012, chiropractor Smith filed a "Moti on to Vacate Void Order" and a "Motion to Declare Order Void," arguing that he h ad not been personally served with summons and a copy of the petition to adjudicate li ens, nor had he otherwise submitted himself to the jurisdiction of the court. He argue d, therefore, that the order finding him in default and discharging and voiding his lien was vo id for lack of personal jurisdiction over him. The motions argue that simply sending a copy of the petition and notice of hearing is not sufficient to confer personal jurisd iction over a party; personal service of a summons and complaint is required. ¶ 7 After a hearing held April 19, 2012, Smith's motion s were denied by order entered April 23, 2012. Smith's motion to reconsider was a lso denied in an order entered May 31,

under this Section may be served upon the intereste d adverse parties by personal service, substitute service, or registered or certified mail ." 770 ILCS 23/30 (West 2012).4

2013. Smith appeals. ¶ 8 In a different but related case, also filed in the circuit court of Randolph County, chiropractor Smith brought suit against attorney Ha mmel for conversion (No. 11-LM108). Smith's complaint, filed September 16, 2011, alleged that by failing to have Smith personally served with summons and complaint on the petition to adjudicate liens, and by appearing in court on the petition and proceeding t o have an order entered discharging and voiding Smith's lien, Hammel had converted Smit h's claim/assets. The suit sought damages in the amount of the lien, $2,777. ¶ 9 Hammel filed a motion to dismiss Smith's complaint, arguing that he had followed proper legal process in adjudicating the lien and t hat the court's order in that case resolved all issues. Smith responded that the court had not had personal jurisdiction over him to validly adjudicate his lien. ¶ 10 On March 1, 2012, the circuit court entered an orde r dismissing Smith's complaint for conversion against attorney Hammel. The court found that its order on the petition to adjudicate liens was res judicata and that Smith's claim for conversion was barred thereby. Smith's motion to reconsider was denied, and Smith appeals. ¶ 11 Because the two cases present precisely the same is sue, they have been consolidated for our decision. In both cases, Smit h argues that the circuit court's order adjudicating his lien rights is void as the court d id not have personal jurisdiction over him

or in rem jurisdiction over the settlement proceeds. We aff irm both judgments. ¶ 12 The parties agree, as do we, that the appropriate s tandard of review is de novo

.5

This appeal presents a question of law only, involv ing the interpretation of a statutory provision. It is well settled that where no genuin e issue of material fact remains in dispute and a circuit court has issued a ruling of law, a reviewing court must use a de

novo standard of review. In re Estate of McInerny , 289 Ill. App. 3d 589, 596 (1997); see

also Jayko v. Fraczek , 2012 IL App (1st) 103665, ¶ 3 (a dispute over per sonal jurisdiction presents a question of law, and rulings as to quest ions of law are considered de novo ). ¶ 13 The parties also agree, as do we, that where person al jurisdiction over the defendant is required, an order entered without per sonal jurisdiction is void ab initio as to that defendant and subject to direct or collateral attack at any time. DiNardo v. Lamela , 183 Ill. App. 3d 1098, 1101 (1989); see also Jayko , 2012 IL App (1st) 103665, ¶ 3. Nevertheless, because we find that the proceeding t o adjudicate the liens was an in rem proceeding, we hold that personal jurisdiction over Smith by service of summons was not required. ¶ 14 Personal jurisdiction pertains to the authority of the court to litigate in reference to a particular defendant and to determine the rights and duties of that defendant. In re Possession & Control of the Commissioner of Banks & Real Estate of Independent Trust Corp. , 327 Ill. App. 3d 441, 463 (2001). It is black le tter law that the alternative to personal jurisdiction is in rem jurisdiction or quasi in rem jurisdiction. In re Possession of Banks & Real Estate , 327 Ill. App. 3d at 463. This form of jurisdicti on is concerned with the relationship between the defendant and the state with respect to specific property. In re Possession of Banks & Real Estate , 327 Ill. App. 3d at 463. In rem or quasi in rem6

proceedings do not require personal service of proc ess. In re Possession of Banks & Real

Estate , 327 Ill. App. 3d at 465. ¶ 15 A proceeding to adjudicate liens has specifically b een held to be an in rem action.

See Zilinger v. Allied American Insurance Co. , 957 F. Supp. 148, 149 (N.D. Ill. 1997); Jayko v. Fraczek , 2012 IL App (1st) 103665, ¶ 23. ¶ 16 In Zilinger , the plaintiffs were injured in an automobile acci dent and received a

settlement from their insurance carrier. One of th e plaintiffs' union benefit plans asserted a lien on the proceeds of the insurance settlement. The plaintiffs filed a motion to adjudicate the lien and served the union benefit pl an by mail in accordance with Illinois Supreme Court Rule 11 (eff. Nov. 15, 1992). Nevert heless, the union benefit plan did not appear at the hearing. ¶ 17 On a motion for remand following removal to federal court, the benefit plan argued that the order adjudicating the lien was voi d because the circuit court had failed to obtain personal jurisdiction over it. The benefit plan argued that in order to have a valid lien adjudication, the circuit court must first obt ain personal jurisdiction through service of summons on the parties. The plaintiffs argued t hat personal jurisdiction was not required, the proceeding being one in rem

. ¶ 18 The district court agreed with the plaintiffs that the lien adjudication was an in rem action which did not require personal service of pr ocess: " 'there [is] a res upon which the court is acting .... [The] proceeding 'in rem' is one which ... is brought to enforce a right in the thing itself.... [J]udgments in rem ...7

operate directly upon the property and are binding upon all persons in so far as their interest in the property is concerned.... [A] judgment in rem ... creates no personal liability, especially as against those wh o, while interested in the property, have not been served with process and have not app eared in the action.' " Zilinger , 957 F. Supp. at 149 (quoting Austin v. Royal League , 316 Ill. 188, 193 (1925)). ¶ 19 The court held that the res was the insurance policy settlement proceeds and t hat the adjudication of the lien was a determination of competing rights in the settlement proceeds. Zilinger , 957 F. Supp. at 150. The circuit court's order d id not create personal liability for the benefit plan, and personal servic e of summons was not required where supreme court rule allowed service by mail. Zilinger , 957 F. Supp. at 150. Accordingly, the lien adjudication was valid. ¶ 20 Jayko v. Fraczek , 2012 IL App (1st) 103665, a decision of the First District of this court, is precisely on point and is the case relied upon by the circuit court in reaching its

decision herein. In Jayko , St. Alexius Medical Center (St. Alexius) appealed from an order denying its motion to readjudicate its health care provider's lien under the Act against Jayko's personal injury action, arguing tha t the original adjudication was void because St. Alexius had not been personally served with summons. ¶ 21 Jayko had been injured when he was struck by a car while riding his bike. He received treatment at St. Alexius. Jayko filed a l awsuit against the driver and owner of the car that had struck him, and St. Alexius notifi ed Jayko's lawyer and the defendantdriver that it was asserting a lien under the Act o n the proceeds of the cause of action. St.8

Alexius delivered this notice by certified mail, as provided for in section 10(b) of the Act (770 ILCS 23/10(b) (West 2006)). Jayko used certif ied mail to notify St. Alexius of the hearing date on the petition for adjudication. St. Alexius did not contend that it did not receive the notice. Nevertheless, St. Alexius did not appear at the hearing and its lien was adjudicated to $0. ¶ 22 In its motion to readjudicate the lien, St. Alexius argued that notice by certified

mail was insufficient to vest the circuit court wit h personal jurisdiction over it, and that it was entitled to be personally served with summons o f process. In denying the motion, the circuit court stated that it was relying on the dec ision in Zilinger for the proposition that a lien adjudication is an in rem proceeding and does not require service of summons to the lienholder because the court does not need to acqui re personal jurisdiction. The appellate court agreed. ¶ 23 Applying principles of statutory construction, the appellate court concluded that it had been the intent of the legislature to allow bot h notice of the existence of the lien and notice of the hearing on the petition to adjudicate the lien to be made by registered or certified mail, or in person. Section 10(b) of the Act refers to "written notice" of the existence of the health care provider's lien and sp ecifically provides that service of that written notice shall be by registered or certified mail or in person. Section 30 of the Act also refers to "written notice" of the petition to adjudicate the lien, but does not specifically mention the method of service of this written notice. Construing these two statutory provisions together, as it must, the appe llate court concluded that the legislature9

intended that both notices were adequately served b y registered or certified mail or in person. The court rejected the notion that the leg islature intended to impose on the injured plaintiff the added expense and responsibil ity of filing a complaint and obtaining personal service of the complaint. Accordingly the court construed section 30 of the Act to provide for written notice of the petition to ad judicate the lien to be served by registered or certified mail or in person. Jayko , 2012 IL App (1st) 103665, ¶ 15. ¶ 24 The court then addressed the question of whether du e process considerations required personal service of the petition to adjudi cate the lien, and it concluded that they did not. Relying on the decision in Zilinger , which it found to be "well founded in Illinois law" ( Jayko , 2012 IL App (1st) 103665, ¶ 22), the court held t hat Jayko's settlement proceeds were a res and that the circuit court's adjudication of the s tatutory liens thereon

was an in rem proceeding for which personal service on and perso nal jurisdiction over the health care provider were unnecessary. Thus, Jayko had not only complied with section 30 of the Act but also satisfied due process when h e gave notice to St. Alexius through certified mailing. Jayko , 2012 IL App (1st) 103665, ¶ 23. ¶ 25 Chiropractor Smith argues that the instant proceedi ng was not one in rem because Goss's settlement occurred prior to the filing of a ny suit. Accordingly, Smith argues, the circuit court never acquired in rem jurisdiction over the res , the settlement proceeds. Smith argues that Jayko is distinguishable in this respect because in Jayko , the plaintiffpatient had filed suit against the tortfeasor and s ettled that lawsuit, creating a res under the jurisdiction of the court.10

¶ 26 Smith's argument is somewhat circular: only by acqu iring personal jurisdiction over the parties who created the res , the settlement proceeds, does the court acquire in

rem jurisdiction over the res itself. But, of course, in rem jurisdiction is not acquired by obtaining personal jurisdiction over the parties wh o create the res . In rem jurisdiction rests exclusively on the situs of the res . McCallum v. Baltimore & Ohio R.R. Co. , 379 Ill. 60, 69 (1942). The funds need not have been paid i nto the court in order for the court to

have in rem jurisdiction over them; the state has in rem jurisdiction over property located

within its borders. McCallum , 379 Ill. at 69. In any event, perhaps the simple answer to this argument is that the court acquired in rem jurisdiction over the res , the settlement proceeds, upon the filing of the petition to adjudi cate liens. ¶ 27 In summary, we hold that for purposes of adjudicati ng Smith's lien, the circuit court did not need personal jurisdiction over Smith , nor was Smith required to be personally served with summons of process. The cou rt had in rem jurisdiction over the settlement proceeds against which the lien had been asserted and could therefore adjudicate Smith's rights with respect to that res . Smith having received proper notice by mail of the proceeding to adjudicate the lien, and having failed to appear thereon, the circuit court did not err in finding Smith to be in default and in adjudicating his lien to $0. Accordingly, we affirm the court's order in No. 10- CH-48. ¶ 28 Furthermore, the circuit court did not err in dismi ssing Smith's complaint against attorney Hammel alleging conversion by Hammel of th e property against which Smith's lien was asserted. Hammel acted pursuant to a vali d court order in disbursing the11

settlement proceeds. He cannot be held liable to S mith in conversion. Accordingly, we

affirm the court's order in No. 11-LM-108. ¶ 29 For the foregoing reasons the orders of the circuit court of Randolph County are hereby affirmed.

¶ 30 Affirmed.2014 IL App (5th) 130227 NOS. 5-13-0227, 5-13-0293 cons.

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

ROBERT SMITH, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Randolph County. ) v. ) No. 11-LM-108 ) JEFF HAMMEL, ) Honorable ) Eugene E. Gross, Defendant-Appellee. ) Judge, presiding.

___________________________________________________ _________________________________________ JULIE GOSS, ) Appeal from the ) Circuit Court of Plaintiff-Appellee, ) Randolph County. ) v. ) No. 10-CH-48 ) SMITH CHIROPRACTIC CENTER, ) ) Defendant-Appellant ) ) Honorable (MedStar Ambulance, Inc., Sparta Community Hospital , ) Andrew J. Gleeson, and Quality Health Care Clinic, Defendants). ) Jud ge, presiding.

___________________________________________________ _________________________________________ Opinion Filed: July 23, 2014

___________________________________________________ ______________________________________ Justices: Honorable Thomas M. Welch, P.J. Honorable Richard P. Goldenhersh, J., and Honorable Bruce D. Stewart, J., Concur

___________________________________________________ ________________________________________ Attorney John D. Alleman, Alleman & Hicks, 310 East Main Str eet, Carbondale, IL 62901 for Appellant

___________________________________________________ ________________________________________ Attorney Jeffrey S. Hammel, Jeffrey S. Hammel Law Firm, 23 S outh First Street, Belleville, IL for 62220 Appellee

___________________________________________________ _________________________________________