FOURTH DIVI SION September 25, 2008

No. 1-07-0627 CONTINENTAL

CASUALTY COMPANY, ) Appeal from the as Assignee of General Automation, I nc., ) Circuit Court of

) Co ok Co un ty. Plaintiff -Appella nt, ) ) v. ) No. 02 L 10005 ) AMERI CAN NATI

ONAL BANK AN

D TRUST ) COMPANY OF CHICAGO, ) Honorab le ) Da ni el J. Ke ll ey, Defendant-Appellee. ) Judge Presiding JUSTICE O'BRI EN delive

red the o pinion of t

he court : Plaintiff, Continental Casualty Company , as assignee of General Automation, I nc. (hereinafter GAI

), appeals the order of the circuit court g ranting summary

judgment in favor of defendant, American National Bank & Trust Company of Chicago (hereinafter ANB), on plaintiff's action for breach of c ontract and violation of section 9 of the Illinois Fiducia ry Obligations Act (760 ILCS 65/9 (West 1996)). We reverse the entry of summary judg

ment and remand for further proceeding s thereon. From 1992 until approximately July 1994, Lawrence

Cohn was a partner with the accounting firm of Friedman Eisenstein Rae mer & Schwartz, LL

P (hereinafter FERS). From approximately July

1994 to May 1996, Mr. Cohn was a pa rtner in the accounting firm of Mann Cohn Weit z, LLC (her einaft er MCW ). GAI was a clie nt of M r. Coh n. Pl ainti ff was M CW's insurer. Wh il e a t F ER S a nd MC W, Mr . C oh n e mb ez zl ed $1 .3 2 m il li on fr om GA I. S pe ci fi ca ll y, while Mr. Cohn was a partner at FERS in 1992 and 1993, GAI 's president and owner, Max Starr,No. 1-07-0627

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gave M r. Cohn nine checks (totalin g $370,0 00) that were sig ned by Mr. Starr and made

pay able to ANB. These checks were dr awn on GAI' s corporate checking ac count at ANB and were intended to pay GAI 's pay

roll taxes. Mr. Cohn a

ttached the chec ks to a dep osit ticke

t made out

to his own checking account and then deposited the c hecks into an automated teller machine at ANB. In short, ANB allowed Mr. Cohn to deposit those checks into his own account. Mr. Cohn left FERS and became a partner at MCW in 1994. While at MCW, Mr. Cohn continued to embezzle money from GAI . Mr. Cohn took GAI checks made pa yable to the Inte rnal Reve nue Service (I

RS) for the

pay ment of GA

I' s taxes and

sent them d

irectly to the I RS for payme

nt of his own income taxes. GAI contends that it first discovered Mr . Cohn's embezzlements in May 1996, when age nt s of th e IRS in for med GAI t hat it was del in que nt in it s pa ymen t o f pa yrol l t ax es. In December 1996, a settlement agre ement was signed settling GAI 's claims against FERS and MCW resultin

g from M r. Cohn' s embezzlements. I n that sett lement ag reemen t, both FERS or its insurer and plain tiff as in surer f

or MCW contr

ibuted to a

lump sum pa

yme nt of $660, 000 to full

y settl e all o f GAI's pot entia l clai ms agai nst M CW an d FERS relat ing to Mr. Co hn's embezzlements. In return, GAI assigned plaintiff any

cause of action it may

have against ANB arising out of Mr. Cohn's e

mbezzlemen

ts. ANB d

id not par ticipate in the sett

lement ag reemen t. Plaintiff, as assignee of GAI , filed a two-count complaint against ANB for breach of contract and viola

tion of se ction 9 of

the I llinois Fid

uciary Obliga tions Act ( 760 ILCS 65/9 (West 1996)). Plaintiff sought to obtain reimbursement of GAI 's losses in the amount of $370, 000, r esult ing fro m the n ine ch ecks t hat we re payable to ANB a nd in tende d to p ay GAI'sNo. 1-07-0627

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payroll taxes, but were instea d deposited in Mr. Cohn's checking account. ANB moved to dismiss the sixth-amended complaint on the grounds that the complaint was substantially insufficient at law and was time-barred by

the applicable statute of limitations. The trial court granted the motion to dismiss. On appeal, the appellate c ourt reversed and remanded. See Cont inent al Cas ualty Co . v. Am erican Natio nal Ban k & Trus t Co. of Chi cago , 329 Ill. App. 3d 686 (2002). On remand, the trial court granted AN B's motion for summary

judgment on the ground that the Joint Tortfeasor Contribution Act (hereinafter the Contribution Act) (740 I LCS 100/2(e) West 1996)) bars plaintiff's action because plaintiff, a s a settling party , cannot seek contribution from ANB, a nonsettling party . Plaintiff now appeals that order. Summary judgment is appropr iate where the pleadings, depositions and admissions on file, together with any

affidavits, show that there is no genuine issue of materia l fact and that the moving party is e

ntitled to judgment as a matter of law. Adams v. Northern Illinois Gas Co. , 211 Ill. 2 d 32, 43 (2 004). Rev iew is de novo

. Adams , 211 Ill. 2d at 43. The Contr

ibution Act provide s in pertinent part : "(a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property , or the sa me wro ngful d eath, there i s a righ t of co ntrib utio n amon g them, even t hough judgmen t has not be en enter

ed aga inst any or all of t hem. (b) The right of contribution exists only in fa vor of a tortfeasor who has paid more than his pro rata share of the common liability , and his total recovery is limited to theNo. 1-07-0627

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amount paid by him in excess of his pro rata shar e. No tortfeasor is liable to make

co nt ri bu ti on be yon d h is ow n p ro ra ta sh ar e o f t he co mm on li ab il it y. (c) When a relea se or covenant not to sue or n

ot to enforce judg

ment is given in good fa ith to one or more pe

rsons liab le in tort a

rising o ut of the s ame injury or the same wr

ongful death, it does not discharge any of the other tortfea sors fro m liability

for the in jury or wrong ful deat

h unless its

terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the re lease or the covenant, or in the amount of the consideration actually

paid for it, whichever is greater

. (d) The t ortfea sor who se

ttles with a

claimant pursuant to parag raph (c ) is discharged from all liability for any c ontribution to any other tortfea sor. (e) A tor tfeasor who settle s with a cl aimant pu rsuant to parag raph (c ) is not entitled to recover contribution from another tortfeasor whose liability is not extinguished by the settlement." 740 IL CS 100/2 (West 1996). The Contribution Act provides that contribution is permitted between parties who are both subject to "liability in tort." 740 I LCS 100/2(a) (West 1996). I n Joe & Dan International Corp. v. United States Fidelity & G uaranty Co. , 178 Ill. App. 3d 741 (1988), the appellate c ourt considered what constitutes "liability in tort" for purposes of the Contribution Act. In Joe & Dan International , the plaintiff sued its insurance broker, the insurance c ompany and the a gent of the insurance company

for failing to provide insurance. Joe & Dan International Corp. , 178 Ill. App. 3d at 743-44. The agent sought contribution ag ainst the insurance company , which the trial courtNo. 1-07-0627

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denied because the plaintiff's ca uses of action sounded in contract rather than tort. Joe & Dan International Corp , 178 Ill. App. 3d at 750. The appellate c ourt reversed, holding that the theory under wh ich the pl aintiff s

ued the de fendant s was not d ispositive of whether both de fendant s might also be subject to liability in tort to the plaintiff for the sa me injury for purpose s of contribution between them. Joe & Dan International Corp. , 178 Ill. App. 3d at 750. The appellate court held that " '[L ]iability in tort,' governing the right of contribution among tortfea sors [cita

tion], has b een con strued to mean 'p otential'

tort liabi lity . As such, it is determined at the time of the injury to the plaintiff seeking to hold liable under some theory, not

nec ess ari ly a t ort th eor y, le ss th an a ll par ti es w ho w ere pot ent ial ly li abl e th ere for . [ Ci tat io n.] In other words, 'the Contribution Act focuses *** on the culpability of the parties rather than the precise legal means by

which the

plaintiff is ultimate ly a

ble to mak

e each d efenda nt compen sate him for his loss.' [Citation.] Finally, we believe that [the insurance c ompany] as well as [the insurance agent ] was clearly 'potenti ally' liable in tort to plaint iff." Joe & Dan International Corp. , 178 Ill. App. 3d at 750. In the present case, A NB conte nds that MCW a

nd ANB both had pote

ntial tort liability to GAI at the time ANB a

llowed Mr. Cohn to deposit into his own account the $370,000 in checks that were drawn on GAI 's corporate checking account and intended to pay GAI's pay

roll taxes. Therefore, ANB contends that plaintiff ( stepping into the shoes of MCW, its insured) and ANB are both "subject to liability in tort" (740 IL CS 100/2(a) (West 1996)) for purposes of the Contributi on Act. ANB further contends that plaintiff, a settling tortfe asor, sought to obtain indirectNo. 1-07-0627

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contribu tion aga inst ANB, a nonsett

ling tor tfeasor , by

obtaining

an assig nment of G

AI' s claims against ANB for breac

h of contract and violation of the I llinois Fiduciary Oblig ations Act. ANB contends that the trial court correctly granted its motion for summary judgment against plaintiff on the claims for breach of contract a nd violation of the Illinois Fiduciary Obligations Act because plaintiff's attempt to obtain such indirect contribution runs afoul of the Contribution Act. In su pport, AN

B cites BHI Corp. v. L

itgen Concrete Cutting & Coring Co. , 214 Ill. 2d 356 (2005). In BHI Corp. , a building that housed art galleries and studios was destroy ed by fire

. Gallery owne

rs and artists filed complaints against the owners and managers of the building, as well as the general contrac tors and subcontractors hired to renovate the building. BHI Corp. , 214 Ill. 2d at 358. Eventually, the plaintiffs settled all their claims against all the defendants except Litgen. BHI Corp. , 214 Ill. 2d at 358. The settling defe ndants agreed to pay

the plaintiffs $4.5 million for the release of any claims arising from the fire, and they also agreed to pay

the plaintiffs an additional $4.5 million for the assignment of any claims that the plaintiffs may have against Litge

n arising from the fire. BHI Corp. , 214 I ll. 2d at 35 8-59. The settling defenda nts filed a complaint on the assigned claims aga inst Litgen. BHI Corp. , 214 I ll. 2d at 35 9. The ca se eventua lly was appea

led to the supreme court. The supreme court held that the Contribution Act "provides that a settling joint tortfea sor may not recover cont

ribution f rom a nons ettling j oint tortf easor. 7 40 IL

CS 100/2(e ) (West 2002). " This rule

*** foste rs equita ble appor tionment be cause it

prevent s a settlin

g defe ndant, who deci des how to

value its l iability, from obt aining c ontribution from a n onsettling defenda nt, whose pro rata

share of damages h as not yet been fix ed by a fact finder." BHI Corp. , 214 Ill. 2dNo. 1-07-0627

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at 365. The supreme court n oted that even if t he recovery

sought by the settling

defenda nts is grounded on the assignments, it still constitutes contribution from a nonsettling tortfeasor. The supreme court held "[a]n arrangeme nt by which a settling de fendant attempts to obtain indirect contribution from a nonsettling defendant by an assignment of claims violates the Contribution Act. We cannot allow the settling defendants to contract a n end run around section 2(e). Accordingly, we hold t hat the sett ling defendant s may not pursue th e assigned clai ms." BHI Corp. , 214 Ill. 2d at 366. In the present case , ANB contends that MCW was a tortfeasor that settled with GAI and into the shoes of which the plaintiff (as MCW's insurer) stepped. ANB contends that plaintiff sought to obtain indirect contribution against ANB, a nonsettling tortfeasor, by

obtaining an assignment of GAI' s claims against ANB. ANB ar gues that, as in BHI Corp. , such an attempt at indirect contribution violates the Contribution Act. The trial court agreed with ANB and granted its motion f

or summar

y ju dgment. Plaintiff counters that for

the Contri

bution Ac t to apply

, ANB' s and MCW' s liability must arise "out of the same injury " (740 ILCS 100/2(a) (West 1996)) to GAI. Plaintiff contends there is a question of material fact as to this issue. Specifically , plaintiff argues that while Mr. Cohn was a partner at FERS in 1992 and 1993, he embezzled nine checks totaling $370,000 that were signed by the pres ident of GAI and made p ayable to ANB for the pu rpose of ANB p aying GAI's payroll taxes. ANB a

llowed Mr. Cohn to simply deposit those checks into his own personal account. It is the damag es from that embezzlement scheme, in the amount of $370,000, which plaintiff seeks against ANB in this case. Plaintiff contends that MCW was not involved in thatNo. 1-07-0627

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sc he me in an y wa y ( i.e. , that MCW was not liable for GAI's $370,000 injury ), because Mr. Cohn was not employed at MCW at the time he embezzled the nine che cks. Thus, only ANB (and not MCW) was liable for the $370,000 injury at issue he re. Plaintiff argues that MCW's liability a rose out of a separate injury to GAI pursuant to a separa te embezzle

ment sche

me perpe trated by Mr . Cohn in 199 4, after Mr. Cohn le ft FERS to become a partner at MCW. Specifically, plaintiff contends that while a partner at MCW, Mr. Cohn was in

volved in a

differe nt scheme

in which h e embezzle d money from GAI

by s imply taking checks of GAI

made out to the IRS and submitting them to the I RS to pay his own taxes. It is this embezzlement scheme (hereinafter referred to as the I

RS scheme), and the injury suffered there by

GAI, for which MCW is liable. However, pla intiff contends that ANB was not involved i

n the I RS scheme

and, thus, was not lia

ble for the injury

incurre d by

GAI pursuant to that scheme. Thus, only MCW (and not ANB ) was liable for the injury in the IRS scheme. In sum, plaintiff contends that GAI suffered two different injuries pursuant to two distinct embezzleme

nt scheme s perpet

rated by Mr. Cohn. A

NB (and not MCW) wa s involved in the first scheme in 1992 and 1993 to embezzle $370,000 in checks made out to ANB that were intende d to pay GAI 's pay

roll taxes; MCW (and no t ANB) w as involve d in the se cond scheme to emb ezzle GAI checks made

out to the IRS. Plaintiff contends that as ANB's a nd MCW's respective liability arose out of differ ent injuries to GAI, the Contribution Act does not apply to bar plaintiff (standing in the shoes of MCW) from pursuing GAI 's causes of action aga inst ANB. ANB counters that the plain languag e of the settlement agreement supports a finding that the Cohn embezzlement scheme was a single, continuous fraud from January 1992 through MayNo. 1-07-0627

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1996 that i

nvolved b oth MCW and A NB, that there was a singl e injury , and ther efore t hat MCW and ANB were subject to the application of the Contribution Act. Our r eview of the settlement agreement reveals that ther e is no explicit statement therein regarding whether Mr. Cohn was engaged in a single

scheme or fraud involving a single injury to GAI or whether he

was engaged in multiple schemes involving multiple injuries to GAI. Rather, the settlement ag reement notes that Mr. Cohn embezzled money from GAI while he was working for FERS and, later, w hile he was working for MCW; that the embezzlement involved both depositing money s into his own personal account (which occurre d while Mr. Cohn was employed by FERS from 1992 to 1993), and applying

monies as estimated tax payments of Mr. Cohn rather than GAI (which occ

urred while Mr. Cohn was employed by MCW from 1994 to 1996); that Mr. Cohn embezzled approximately $735,000 while employ ed at FERS and approximately $585,000 while e mployed at MCW; and that GAI assigned to plaintiff all ca uses of actions which it may ha ve against ANB arising out of the "embezzlements or the alleged e mbezzlements by Cohn as described" in the agree ment. By noting that Mr. Co hn engaged in "embez zlements " ( i.e. , more tha n one embezzlement) while working at FERS and MCW, for different amounts of money and involving different conduct, the settlement agreement raise s a question of material fact rega rding whether Mr. Cohn's conduct constituted separate schemes or torts involving se parate injuries that may

be divided into two discrete time periods. The first time period is from 1992 to 1993, when Mr. Cohn was employed by

FERS and embezzled $370,000 in checks made pay able to ANB for the payment of GAI's pay

roll taxes; and the second time period is from 1994 to 1996, when Mr.No. 1-07-0627

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Cohn was employed by

MCW, and he embezzled GAI checks made pa yable to the I

RS for the pay ment of GA

I' s taxes. As d

iscussed above, if Mr. Cohn was enga

ged in two separa

te embez zlem ent sc hemes agains t GAI inv olvi ng sepa rate i njuri es, th en ANB's and MC W's respective liability does not ar ise out of the same injury to GAI under the Contribution Act because ANB (and not MCW) was involved in the first embezzlement scheme and MCW (and not ANB) was involved in the second embezzlement scheme. I f ANB's and MCW's respective liability does not a

rise out o f the same

injury to GAI , then the

Contributi on Act doe s not apply to bar plaintiff (standing in the shoes of MCW as MCW's insurer) from pursuing GAI's ca uses of action against ANB. Since there is a question of material fact reg arding whether MCW's and ANB' s respective liability arises out of the same injury to GAI, and whether the

Contribution Act applies to bar plaintiff's causes of action ag ainst ANB, we reverse the g rant of summary judg

ment in favor of ANB and remand f or furth er proc eeding s. Next, ANB contends

that plain

tiff's c omplaint is

time-bar red. I n the pre vious opini on in this case, the appellate court held that the three-y ear limitations period set forth in section 4-111 of the Uniform Commercial Code (810 IL CS 5/4-111 (West 1996)) applies. See Continental Casualty , 329 I ll. App. 3d

at 699-70 0. The ap

pellate c ourt fur

ther hel d that the

discover y r ule applies to determine when the cause of action ac crued. Continenta l Casualty

, 329 Ill. App. 3d at 700-702. ANB requests that we reconsider our holding in Continental Casualty and hold that the discovery rule

does not apply here . We reject ANB's request and c ontinue to adhere to our opinion in Continental Casualty . The discovery rule applies here.No. 1-07-0627

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ANB argues that even if the discovery rule

applies, plaintiff's claim is time-barred because plaintiff has failed to show that the action was filed w ithin three year

s of the alleged injury or within three y

ears of when GAI

reasonably

could have learned of the injury . ANB cites Hermitage Corp. v. Contractors Adjustment Co. , 166 I ll. 2d 72, 85 (1995), i n which th e supreme court he ld that "[w]hen a pla intiff use s the disc overy

rule to de lay

commenc ement of

the statut e of limitations, the plaintiff has the burden of proving the date of discovery." ANB's argument is not well taken, a s plaintiff stated in its answers to interrogatories that GAI first discovered Mr . Cohn's embezzlements in May 1996, when the I RS informed GAI that it was delinquent in its payment of pay roll taxes. Plaintiff's complaint was filed on April 30, 1997, within three yea

rs of the alleged date of discover y. ANB als o contends that GAI knew or should hav e known of Mr. Cohn' s embezzlements in 1993, more than three y ears before the complaint was filed. Specifica lly, ANB cites the deposition testimony of Linda Williams, an ANB employee . Ms. Williams testified that in 1993, she called GAI to see

k approval to pay one

of the embezzled checks (check number 1340) to Mr. Cohn. Ms. Will iams did no t recall the name of the pe rson she s poke to at GAI , althoug

h she did not believe that it was Mr. Cohn. Ms. Williams testified that the person she spoke with at GAI told her that, "Thi s is a goo d check . It' s for taxes ." ANB contends that Ms. Willi ams' pho

ne call should have put GAI on notice of Mr. Cohn' s embezzlements. However, there is a question of material fact as to the identity of the person with whom Ms. Williams spoke at GAI and what authority that person had to g ive approval to pay

the check. Further, even assuming that the person w ith whom Ms. Williams spok e was a G AI e mploy ee with a uthority to give a pproval t oNo. 1-07-0627

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pay the check, his st atement to M s. Will iams that t he check was "good" and was "for taxes " raises a question of material fact as to whether he thought that the check properly was going to be applied to GAI's pa

yroll taxes. As there is a question of mater ial fact regarding w

hether GAI knew of Mr. Cohn's embezzlements in 1993, summary judgment is inappropriate. ANB also contends that GAI should have known of Mr. Cohn's embezzlements in 1993 (more than three y

ears before the complaint was filed) bec ause on February 10, 1993, GAI issued check number 1340, pay

able to ANB. This check was returne d to GAI after pay ment with the notation "OK to pay

L. Cohn" on its face. ANB contends that this notation should have put GAI on notice that Mr. Cohn was embezzling funds. However, as discussed above, Ms. Williams had called a person who she thought was a GA I employ ee regarding c

heck number 1340 and she had been t old t hat th e check was "goo d" and t hat it was "fo r tax es." As discu ssed, the em ployee's response raises a question o f materi al fact r egard ing whe ther GAI was unde r the impr ession, in 1993, that the funds still were going to be applied to GAI 's pay roll taxes. As questions of material fact exist, summary judg ment is inappropriate. ANB also contends that "long befor e IRS agents ar

rived at GAI' s door," GAI should have disco vered ( throu gh its accoun ting re cords ) that Mr. Co hn was embez zlin g funds . ANB's argume nt is not we ll taken, as it reli es on fac ts ( i.e. , the accounting records) not in evidenc e. ANB con tends that " well b efore t he IRS ca me cal ling o n GAI," Mr . Sta rr (GAI's president) had confronted Mr. Cohn rega rding the checks and, thus, that GAI should have been on notice then regarding Mr. Cohn' s embezzlements. In support, ANB cites plaintiff' s pretrial memorandum, which states that "Mr. Starr had questioned Cohn on one or two occ asionsNo. 1-07-0627

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regarding the ac counting entries for the checks at issue." However, elsewhere in the pretria l memorandum, plaintiff states that "Cohn's response on those occasions was that the entries were made simpl

y a s accoun

ting fun ctions, a nd Mr. Star

r had ac cepted t

hat explanation due

to his trust in Cohn as well as Cohn's superior knowledge of ac countancy." Thus, a question of material fact exists as to whether Mr. Starr should have accepted Mr. Cohn's explanations regarding the

accoun ting ent ries. ANB also contends that GAI "should have taken note of the concentra ted pattern of supposed 'tax payments,'

which appeared to be extremely unusual. For instance, GAI issued dual payroll tax depos it checks for $40,000 each in both No vember 1992 a nd in February 1993." ANB contends that such a "conce ntrated pattern" of supposed tax pay ments should have put GAI on notice in 1993 (more than three y ears before the complaint was filed) that Mr. Cohn wa s embezzling funds. We cannot say a s a matter of law that the "concentra ted pattern" of supposed tax payments should have alerted G AI to Mr. Cohn's embezzlements; this is properly a question of fact for a jury

to decide. ANB contends that if GAI had better supervised Mr. Cohn's activities, or instituted "internal controls" over him, it would have been a ware as early

as 1993 that Mr. Cohn was embezzling funds. Again, this is a question of fact for the jury to decide. Next, ANB contends that we should affirm the grant of summary judgme

nt on count II

of plaintiff 's compl aint for v

iolation of

section 9of the Illinois Fid uciary Obliga tions Act b ecause plaintiff has faile d to plead

or prove facts su pporting its cause of action. Section

9 states: "[I]f a fiduciary

makes a deposit in a bank to his personal credit of checks dra wnNo. 1-07-0627

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by him upon an acc ount in his own name as fiduciary , or of checks pay able to him as fiducia ry , or of checks dra

wn by him upon an

accoun t in the na me of his principa

l if he is empowered to draw checks there on, or of checks pay able to his principal and indorsed by him, if he is empowered to indorse such checks, or if he other wise makes a deposit of funds held by him as fiduciar y, the bank re ceiving such deposit is not bound to inquire whether the fiduciary

is committing thereby a

breach of his obligation as fiduciary ; and the bank is authorized to pay the a mount of the deposit or any par t thereof upon the persona l check o f the fidu

ciary without be ing liab le to the principa l, unless the bank receiv es the de

posit or pa

ys t he check with act

ual knowl edge that the fid uciary is committing a breach of his obligation as fiduciary in making such deposit or in drawing such check, or with knowledge of such f acts that its action in receiving the deposit or pay ing the c heck amo unts to bad

faith ." (Emphasis added.) 760 ILCS 65/9 (West 1996).

A plaintiff may re cover under the Illinois Fiduciary Oblig ations Act if he proves: (1) that the bank had actual knowledge of the f iduciary' s misappropriation of the principal's funds; or (2) that the b ank had k

nowledg e of suff

icient fa cts that it s actions

in pay ing the f unds amoun

ted to bad faith. Time Savers, Inc. v. LaSalle Bank, N.A. , 371 Ill. App. 3d 759, 768 (2007). In its sixth-amended complaint, plaintiff pleads that ANB knew Mr . Cohn was a fiduciary of GAI by v irtue of h is prior de alings w

ith ANB on behalf

of GAI ; that Mr. C ohn was not a signatory on GAI's cor

porate checking account with ANB and was not authorized to sign checks for th e accou nt; t hat th e purp ose of the $3 70,00 0 in ch ecks s igned b y Max St arr was to pay GAI'sNo. 1-07-0627

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payroll taxes; that ANB allowe d Mr. Cohn to deposit those checks into his personal bank

accoun t; and that A NB had k nowle dge of s uffic ient f acts t hat it s acti on in receiv ing Mr. Cohn 's deposits was in bad f

aith. I n the pre vious opini on in this c ase, the appella te court held that these allegations were sufficient to plead a c ause of action for violation of the I llinois Fiduciary Obligations Act. See Continenta l Casualty

, 329 Ill. App. 3d at 704-05. ANB argues, though, that plaintiff " has consistently pled as its only basis for Cohn being GAI 's fiduc iary

that Cohn was GAI 's 'of

ficer' or 'comptroller .' [Plaint

iff] now a dmits that these allegations are simply

false." ANB contends that since Mr. Cohn wa s not GAI's fiduciar y, then ANB's dealings with Mr. Cohn cannot constitute a violation of the I llinois Fiduciary Oblig ations Act. Accordingly , ANB argues that we should aff irm the grant of summary judgment in favor of ANB. We disagree, as written discove ry has established tha

t Mr. Cohn was GAI's a

ccountant and auditor, i.e. , t ha t M r. Co hn wa s G AI' s f id uc ia ry. ANB also contends that we should affirm the gr ant of summary judg

ment for ANB on plaintiff's Illinois Fiduciary Obligations Act claim because Linda Williams' testimony conclusively shows that ANB did not act in bad faith in allowing Mr. Cohn to deposit the $370,000 in checks into his personal bank account. ANB points to Ms. Williams' testimony that she soug ht approval from G

AI be fore al lowing M

r. Cohn to d

eposit one

of the checks into

his personal account. However, there were nine checks at issue here, a nd ANB points to no testi mony that it so ught ap prova l for t he dep osit of the other eight c hecks into Mr. Co hn's personal account. Thus, questions of material fact exist as to whether ANB acted in bad faith. Accord ingly, we rev erse the

grant o f summary

judgmen t and remand for f

urther proceed

ings.No. 1-07-0627

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Next, ANB contends

that the tr

ial cour t erred by d eny ing its mot

ion for sa nctions a gainst plaintiff due to plaintiff's failure to preserve e vidence. Although ANB did not file a cross-a ppeal from the denial of its motion for sanctions, ANB contends that we may consider the issue because plaintiff's failure to prese rve evidence provides a basis for af firming the summary judgment against plaintiff. See State Automobile Mutual Insurance Co. v. Habitat Construction Co. , 377 Ill. App. 3d 281, 291 (2007) (the appellate court may af

firm the grant of summary judgment on any

basis in the record). Specifically, we may a ffirm the grant of summary judgment against plaintiff if plaintiff's fa ilure to preserve evidence was a de liberate, contumacious or unwarranted disrega rd of the court's authority . See Shimanovsky v. Genera l Motors Corp. , 181 I ll. 2d 112, 1 23 (1998) ; Adams v. Bath & Body Works, Inc. , 358 Ill. App. 3d 387 (2005).

. ANB sought discovery of certain financial documents from around the y ear 1993 that ANB hoped would answer the question of when GAI reasonably

should have discovered that Mr. Cohn had e

mbezzled the

pay roll tax dep osit chec

ks. The do cuments s ought we re appr oximately 11 or 12 year

s old. Plaintiff, GAI, and Starr all searc hed for the documents, but could not find them. There is no evidence that the documents were pur posely destroy

ed. Further, ANB has access to other documents relevant to the discovery issue, and it has the right to depose Mr. Cohn and Mr. Starr in order to seek facts regarding this issue. We cannot say that the plaintiff's failure to pre serve e viden ce was d elibe rate, c ontu macio us, or an unw arrant ed dis regard o f the co urt's authority; therefor

e, plaintiff's failure to preserve e vidence cannot serve as a basis to affir m the grant of summary

judgment against plaintiff.No. 1-07-0627

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For the foregoing r

easons, we reverse the order g ranting summary

judgment in favor of ANB on plaintiff's sixth-amended complaint for breach of contract and violation of section 9 of the I llinois Fid

uciary Obliga tions Act a

nd reman d for fur ther pro ceeding s. Reversed and remanded. HALL * and MURPHY, JJ.'s concur.No. 1-07-0627

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*Justice P. Scott Neville recused himself prior to oral arguments in this case, thus the case wa s heard by Justi ces Sheil a M. O'B rien and Michael J. Murphy . Justice She lvin L ouise M. Hall was assigned as the third panel member in this appea l by the Chairman of the Executive Committee of the Illinois Appellate Court, First Judicial District. She has listened to the tape of oral arguments and read the brie fs and the record in this case.