Court Opinion

ID: 3145494
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:09:00.548017+00
Date Added: 2024-06-11T12:06:13.529472
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                        Appellate Court

           Mutual Management Services, Inc. v. Swalve, 2011 IL App (2d) 100778

Appellate Court            MUTUAL MANAGEMENT SERVICES, INC., Plaintiff-Appellant, v.
Caption                    RICHARD D. SWALVE and KIMBERLY S. SWALVE, Defendants-
                           Appellees.

District & No.             Second District
                           Docket No. 2-10-0778

Filed                      August 30, 2011

Held                       Collection agency’s amended complaint to collect assigned debts owed
(Note: This syllabus       to medical providers was properly dismissed with prejudice where the
constitutes no part of     effective dates of the assignments did not comply with the Collection
the opinion of the court   Agency Act to the extent that they were not clear, they were not the same
but has been prepared      assignments as those attached to the initial complaint, and they were
by the Reporter of         signed on different dates from the original assignments
Decisions for the
convenience of the
reader.)

Decision Under             Appeal from the Circuit Court of Winnebago County, No. 09-AR-629;
Review                     the Hon. Gwyn Gulley, Judge, presiding.

Judgment                   Affirmed.
Counsel on                 James C. Thompson, of Shriver, O’Neill & Thompson, of Rockford, for
Appeal                     appellant.

                           Nathan Reyes and Jonathan Schaefer, both of Szymanski Koroll
                           Litigation Group, of Rockford, for appellees.

Panel                      JUSTICE McLAREN delivered the judgment of the court, with opinion.
                           Justices Hudson and Birkett concurred in the judgment and opinion.

                                             OPINION

¶1           Plaintiff, Mutual Management Services, Inc. (MMS), appeals from the orders of the trial
        court dismissing with prejudice its amended complaint and denying its motion to reconsider.
        We affirm.
¶2           On July 10, 2009, MMS filed a three-count complaint against defendants, Richard and
        Kimberly Swalve, seeking to collect debts of just over $10,000 allegedly owed to three
        medical providers: SwedishAmerican Hospital, Radiology Consultants of Rockford, and
        Northern Illinois Imaging. MMS attached to the filed complaint assignments of the claims
        to MMS but failed to attach copies of those assignments to the complaint served on the
        Swalves. The Swalves filed a motion to dismiss, alleging, among other things, the lack of
        proper exhibits. The trial court granted the motion without prejudice and granted MMS leave
        to file an amended complaint, which it did on December 22, 2009. MMS attached as exhibits
        assignments of the claims from the three medical providers, all dated in December 2009,
        authorizations for legal action, and patient consent forms.
¶3           The Swalves then filed a motion to dismiss and, later, an amended motion to dismiss,
        which was brought pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Code)
        (735 ILCS 5/2-619(a)(9) (West 2008)). The Swalves presented two grounds for dismissal:
        (1) the assignment documents violated section 8b of the Collection Agency Act (Act) (225
        ILCS 425/8b (West 2008)); and (2) they received improper notice of the assignments under
        section 9-406 of the Uniform Commercial Code (UCC) (810 ILCS 5/9-406 (West 2008)).
        The trial court denied the amended motion to dismiss on the Act grounds but granted the
        motion on the UCC grounds and dismissed the amended complaint with prejudice. The court
        subsequently denied MMS’s motion to reconsider, and this appeal followed.
¶4           Section 2-619(a)(9) of the Code provides for the dismissal of a cause of action where the
        claim asserted “is barred by other affirmative matter avoiding the legal effect of or defeating
        the claim.” 735 ILCS 5/2-619(a)(9) (West 2008). If the grounds for dismissal do not appear
        on the face of the pleading being attacked, the motion shall be supported by affidavit. 735
        ILCS 5/2-619(a) (West 2008). A section 2-619 motion admits the legal sufficiency of the

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     complaint along with all well-pleaded facts and reasonable inferences drawn from those
     facts. Giannini v. Kumho Tire U.S.A., Inc., 385 Ill. App. 3d 1013, 1015 (2008). In deciding
     a motion brought under section 2-619, a court is to interpret all pleadings in the light most
     favorable to the nonmoving party. See Floyd v. Rockford Park District, 355 Ill. App. 3d 695,
     699 (2005). Our review of a trial court’s decision regarding a section 2-619 motion is de
     novo. Giannini, 385 Ill. App. 3d at 1015.
¶5        As an initial note, the Swalves insist that their section 2-619 motion to dismiss “should
     have been characterized” as being brought under section 2-615 of the Code. While appellate
     review of decisions regarding motions to dismiss brought under both sections is de novo (see
     Terraces of Sunset Park, LLC v. Chamberlin, 399 Ill. App. 3d 1090, 1092 (2010)), the
     analysis applied to each is different. In re Estate of Malbrough, 329 Ill. App. 3d 77, 79
     (2002). Section 2-615 attacks the legal sufficiency of the complaint by alleging defects on
     the face of the complaint; section 2-619 assumes that a cause of action has been stated but
     asserts that the claim is defeated by other affirmative matter. In re Estate of Malbrough, 329
Ill. App. 3d at 79. These motions differ “significantly.” Becker v. Zellner, 292 Ill. App. 3d
116, 122 (1997). We will not consider the application of a Code section that was not raised
     or argued before the court below and that requires a different analysis.
¶6        MMS first contends that the Swalves failed to support their amended motion to dismiss
     with required affidavits. According to MMS, since “it is clear that the face of the Amended
     Complaint did not provide the grounds upon which the Defendants’ Motion was based,”
     affidavits were mandatory; in the absence of any affidavits, the Swalves “failed to meet their
     burden on the motion.” However, MMS did not object to the absence of affidavits in the trial
     court, and thus it forfeited the issue on appeal. See People ex rel. Abraham v. Allman, 299
Ill. App. 189, 192-93 (1939).
¶7        MMS next contends that the trial court erred in determining that the Act “does not
     control the requirements of assignments and notices in consumer debt collection actions.”
     MMS argues that, when statutes conflict, specific language trumps general language;
     therefore, the more “specific” Act should be applied instead of the “general” UCC.
¶8        The fundamental rule of statutory construction is to give effect to the legislature’s intent;
     in seeking to ascertain that intent, we consider the statutes in their entirety, noting the subject
     matter that they address and the legislature’s apparent objective in enacting them. State of
     Illinois, Secretary of State v. Mikusch, 138 Ill. 2d 242, 247 (1990). It is presumed that the
     legislature, in enacting statutes, acts rationally and with full knowledge of all previous
     enactments. Mikusch, 138 Ill. 2d at 247-48. We also presume that the legislature will not
     enact a law that completely contradicts another statute without an express repeal of it and that
     statutes that relate to the same subject are to be governed “by one spirit and a single policy.”
     Mikusch, 138 Ill. 2d at 248.
¶9        Subpart 4 of the UCC is entitled “RIGHTS OF THIRD PARTIES.” Within this part,
     section 9-406(a) is addressed to, among other things, discharge of account debtors and
     notification and identification of, and restrictions on, assignment of accounts, and it provides
     in relevant part:
          “[A]n account debtor on an account *** may discharge its obligation by paying the

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            assignor until, but not after, the account debtor receives a notification, authenticated by
            the assignor or the assignee, that the amount due or to become due has been assigned and
            that payment is to be made to the assignee. After receipt of the notification, the account
            debtor may discharge its obligation by paying the assignee and may not discharge the
            obligation by paying the assignor.” 810 ILCS 5/9-406(a) (West 2008).
       Section 8b of the Act provides in part:
            “An account may be assigned to a collection agency for collection with title passing to
            the collection agency to enable collection of the account in the agency’s name as assignee
            for the creditor provided:
                (a) The assignment is manifested by a written agreement, separate from and in
            addition to any document intended for the purpose of listing a debt with a collection
            agency. The document manifesting the agreement shall specifically state and include:
                     (i) the effective date of the assignment; and
                     (ii) the consideration for the assignment.
                                                   ***
                (e) No litigation shall commence in the name of the licensee as plaintiff unless: (i)
            there is an assignment of the account that satisfies the requirements of this Section ***.”
            225 ILCS 425/8b (West 2008).
¶ 10        MMS fails to demonstrate that the Act and the UCC sections dealing with assignments
       are actually in conflict. MMS notes that, in enacting the Act, the legislature could have
       included language requiring notice of assignment and demand, as it did in section 9-406(a)
       of the UCC, but it did not do so. However, this is not evidence of a conflict between the
       enactments; there would be no reason to include the same requirements in two separate
       statutes. This is an example of two statutes relating to the same subject that are to be
       governed “by one spirit and a single policy.” Mikusch, 138 Ill. 2d at 248. The UCC provides
       that an account debtor must be provided with notice of an assignment before he can be
       required to pay an assignee; the Act specifies what assignment documents must show before
       an assignee may begin litigation. Thus, the provisions of the Act and the UCC should be read
       together, not set against each other, and neither statute should be read to “control” all of the
       requirements concerning assignments and notices in consumer debt collection actions.
¶ 11        Assuming, arguendo, that the Act were the exclusive governing statute regarding
       assignments and notices, we would still grant MMS no relief. In ruling on the Swalves’
       motion to dismiss, the trial court denied the motion as it related to the Act but granted it as
       to MMS’s “failure to provide notice of assignment” under section 9-406(a) of the UCC (810
       ILCS 5/9-406(a) (West 2008)). However, this court is not bound by the trial court’s
       reasoning and may affirm on any basis supported by the record, regardless of whether the
       trial court based its decision on the proper grounds. Rabin v. Karlin & Fleisher, LLC, 409
Ill. App. 3d 182, 186 (2011).
¶ 12        Section 8b(a) of the Act provides that the document manifesting an assignment shall
       “specifically state and include” the effective date of the assignment and the consideration for
       the assignment. 225 ILCS 425/8b(a) (West 2008). The Act requires that the terms of an

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       assignment be “open and precise” to protect the consumer from repetitive litigation and debt
       collection abuse. Business Service Bureau, Inc. v. Webster, 298 Ill. App. 3d 257, 260 (1998).
¶ 13       Here, MMS filed its initial complaint on June 30, 2009. The three assignment documents
       contained clauses allowing consideration to the assignee “not to exceed” various percentages
       of the money recovered. The trial court dismissed that complaint without prejudice on
       various grounds, including “concerns” regarding the rate of compensation contained in the
       assignments. The court granted MMS leave to file an amended complaint, telling MMS that
       it “would recommend specifying the level of compensation” in the assignments.
¶ 14        MMS filed its amended complaint on December 22, 2009, and attached new assignment
       documents. These documents contained specific percentages for consideration and the same
       effective dates as the assignments attached to the initial complaint; however, the documents
       bore new execution dates. The assignment of claim from SwedishAmerican Hospital stated
       that the assignment was effective February 6, 2009; however, the signature of
       SwedishAmerican’s representative was not notarized until December 16, 2009. The
       assignment from Radiology Consultants was purportedly effective May 17, 2007, but the
       president’s signature was not notarized until December 21, 2009; the assignment from
       Northern Illinois Imaging bore an effective date of October 17, 2007, and a notary seal of
       December 15, 2009.
¶ 15       Although MMS cleared up the issue of specificity of consideration under section 8b(a)(ii)
       of the Act (225 ILCS 425/8b(a)(ii) (West 2008)), the amended complaint still runs afoul of
       the Act. First, the effective dates of the assignments are not clear, as required by section
       8b(a)(i) (225 ILCS 425/8b(a)(i) (West 2008)). While the purported effective date of each
       assignment is clearly labeled, those dates are from 10 to 31 months prior to the notarized
       signatures of the assignors’ representatives on the assignments. “It is important that a debtor
       know the exact date of the assignment so that he will know when he must deal with the
       assignee and when he must cease dealing with the assignor.” Business Service Bureau, Inc.,
298 Ill. App. 3d at 259. Such large gaps between the purported effective dates and the actual
       signatures on the documents do not provide the specificity required by the Act or
       contemplated by Business Service Bureau, Inc.
¶ 16       Further, section 8b(e)(i) of the Act specifies that “No litigation shall commence in the
       name of the licensee as plaintiff unless: (i) there is an assignment of the account that satisfies
       the requirements of this Section ***.” 225 ILCS 425/8b(e)(i) (West 2008). The assignments
       attached to the amended complaint were not the same assignments attached to the initial
       complaint; they had different terms and were signed by the assignors’ representatives on
       dates different from the original assignments. These were new assignments obtained well
       after this litigation was commenced on July 10, 2009. Thus, the assignments were improper
       under the Act, and application of the Act would not have prevented the dismissal of MMS’s
       suit.
¶ 17       Since we have concluded that dismissal pursuant to the Act was proper, we need not
       address MMS’s other arguments regarding the UCC.
¶ 18       MMS next contends that, even if dismissal was warranted, dismissal with prejudice was
       not supported by the facts. We disagree. We have concluded that the assignments that were

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       the subject of the amended complaint were improper under the Act. The trial court dismissed
       the amended complaint because “the documents submitted by Plaintiff do not provide
       sufficient notice of demand to Defendants” under the UCC. These documents were related
       to the defective assignments. There is no method available to cure the defective assignments
       and notices of demand.
¶ 19        However, a party does not get only one shot at obtaining and executing upon an
       assignment. See National Recovery Ltd. Partnership v. Pielet, 306 Ill. App. 3d 686, 689
       (1999). Dismissal of the amended complaint with prejudice does not preclude MMS from
       obtaining new, proper assignments of the debts from these creditors, giving proper notice of
       demand under the Act and the UCC, and, if unsuccessful in its attempts to collect, filing a
       new suit based on the new assignments.
¶ 20        For these reasons, the judgment of the circuit court of Winnebago County is affirmed.

¶ 21      Affirmed.

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