Court Opinion

ID: 3207664
Source: CourtListenerOpinion
Date Created: 2016-05-27 20:04:18.384623+00
Date Added: 2024-06-11T14:29:03.867056
License: Public Domain

2016 IL App (1st) 152204
                                             No. 1-15-2204
                                                                        Fifth Division
                                                                        May 27, 2016
     ______________________________________________________________________________

                                         IN THE
                             APPELLATE COURT OF ILLINOIS
                                     FIRST DISTRICT
     ______________________________________________________________________________

                                                    )
     PSI RESOURCES, LLC, an Illinois Limited        )
     Liability Company,                             )
                                                    )   Appeal from the Circuit Court
            Plaintiff-Appellant,                    )   of Cook County.
                                                    )
     v.                                             )   No. 14 L 1239
                                                    )
     MB FINANCIAL BANK, NATIONAL                   )    The Honorable
     ASSOCIATION, as Successor in Interest          )   James E. Snyder,
     to Cole Taylor Bank,                           )   Judge Presiding.
                                                    )
            Defendant-Appellee.                     )
                                                    )
     ______________________________________________________________________________

                JUSTICE GORDON delivered the judgment of the court, with opinion.
                Presiding Justice Reyes and Justice Lampkin concurred in the judgment and opinion.

                                               OPINION

¶1         This appeal arises from plaintiff PSI Resources, LLC’s breach of contract action against

        defendant MB Financial Bank, National Association, which the circuit court below dismissed

        as time-barred under the three-year statute of limitations prescribed in section 4-111 of the

        Uniform Commercial Code (UCC) (810 ILCS 5/4-111 (West 2012)).

¶2         Plaintiff raises two issues on appeal: (1) whether the circuit court erred in subjecting its

        claim to the 3-year limitations period governing claims arising from banking transactions

        involving negotiable instruments (810 ILCS 5/4-111 (West 2012)) rather than the 10-year
     No. 1-15-2204

        limitations period governing claims arising from written contracts (735 ILCS 5/13-206 (West

        2012)) and (2) whether the circuit court erred in finding that plaintiff failed to plead

        sufficient facts supporting the tolling of the limitations period pursuant to the discovery rule.

¶3         For the reasons set forth below we affirm the circuit court’s ruling dismissing plaintiff’s

        claim as time-barred.

¶4                                             BACKGROUND

¶5                                               I. Parties

¶6         Defendant is the successor in interest to Cole Taylor Bank (Cole Taylor), the bank that

        held the deposit accounts at issue in the instant case.

¶7         Plaintiff is the assignee of the claims of three corporations: Placement Solution, Inc.

        (PSI), Legal Solutions, Inc. (LSI), and Technical Solutions, Inc. (TSI) (collectively, the

        corporations). The record does not expressly state whether these three corporations were

        affiliated with one another. However, the Secretary of State’s corporate registration database

        establishes that each of the now-dissolved corporations had an identical registered agent

        street address, and the registered agent of each corporation was listed as “David Thomas”

        (for PSI), “David Thomas Jr.” (for LSI), and “Tina Marie Thomas” (for TSI). See

        Maldonado v. Creative Woodworking Concepts, Inc., 296 Ill. App. 3d 935, 938 (1998)

        (“records from the Illinois Secretary of State’s Office *** are public records that this court

        may take judicial notice of”); Garrido v. Arena, 2013 IL App (1st) 120466, ¶ 35; JP Morgan

        Chase Bank, N.A. v. Bank of America, N.A., 2015 IL App (1st) 140428, ¶ 11 n.1.

        Additionally, the record indicates that the three corporations shared the same corporate

        controller and used the same information technology system to maintain their financial

        records. Finally, the account agreement and signature verification card for each corporation’s

                                                      2
       No. 1-15-2204

          deposit account with Cole Taylor, which was attached to the complaint described below, was

          signed on September 12, 2007, and was signed by both “David Thomas” and “Tina Thomas.”

¶8                                                II. Complaint

¶9           On February 6, 2014, plaintiff filed a one-count complaint against defendant in the circuit

          court of Cook County seeking damages for breach of contract. In this complaint, plaintiff

          alleges that from December 1, 2007, through November 8, 2010, each of the corporations

          maintained separate demand deposit accounts with Cole Taylor and that these accounts were

          governed by the terms and conditions of separate account agreements and account

          verification cards, which Cole Taylor entered into with each of the corporations.

¶ 10         Plaintiff’s complaint further alleges that Cole Taylor, in breach of the account

          agreements, failed to exercise ordinary care in accepting and depositing the corporations’

          deposits. In particular, plaintiff alleges that from October 3, 2008, through March 8, 2010,

          PSI deposited with Cole Taylor a total of $68,901.61 in checks it had received from its

          clients, but Cole Taylor credited those checks to either LSI’s or TSI’s accounts and PSI never

          received payments or credits for those checks. Similarly, plaintiff alleges that from August

          25, 2008, through March 3, 2010, LSI deposited with Cole Taylor a total of $117,483.98 in

          checks it had received from its clients, but Cole Taylor credited those checks to either PSI’s

          or TSI’s accounts, and LSI never received payments or credits for those checks. Finally,

          plaintiff alleges that from December 4, 2007, through November 18, 2010, TSI deposited

          with Cole Taylor a total of $193,957.50 in checks it had received from its clients, but Cole

          Taylor credited those checks to either LSI’s or PSI’s accounts and TSI never received

          payments or credits for those checks.

                                                        3
       No. 1-15-2204

¶ 11            Thus, in total, plaintiff alleges that the corporations collectively sustained $380,343.09 in

           damages as a result of Cole Taylor’s failure to exercise ordinary care in maintaining the

           corporations’ separate deposit accounts. 1

¶ 12            Plaintiff’s complaint further alleges that Cole Taylor deposited several checks that were

           endorsed by the wrong corporation. Specifically, according to plaintiff, 13 checks made

           payable only to PSI had been wrongfully endorsed by either LSI or TSI, 17 checks made

           payable only to TSI had been wrongfully endorsed by either PSI or LSI, and 13 checks made

           payable only to LSI had been wrongfully endorsed by either PSI or TSI. Plaintiff thus alleges

           that Cole Taylor accepted and deposited a total of 43 checks that were endorsed by the wrong

           corporation.

¶ 13            Finally, plaintiff’s complaint alleges that Cole Taylor failed to notify the corporations

           that it had applied their check deposits to the wrong bank accounts. In this regard, plaintiff

           admits that Cole Taylor provided each of the corporations with monthly account statements

           reflecting the monthly deposits and total balance in each of the corporations’ accounts.

           Nevertheless, plaintiff alleges that these monthly account statements did not allow the

           corporations to discover the misapplied check deposits because they did not include images

           or copies of the checks deposited into the corporations’ respective bank accounts.

                1
                  Attached to plaintiff’s complaint were three exhibits containing lists of checks that had been allegedly
       misdeposited. Adding the amounts of those checks results in $380,343.09 in misdeposited checks. However, these
       exhibits further show that all of the allegedly misapplied check deposits were deposited into one of the three
       corporations’ bank accounts, meaning that all of the $380,343.09 was ultimately accounted for. Specifically, while
       there were $68,901.61 in checks that were not deposited into PSI’s account, PSI also received $309,601.48 in
       deposits that should have gone to LSI or TSI. While there were $117,483.98 in checks that were not deposited into
       LSI’s account, LSI received $23,290.66 in deposits that should have gone to PSI or TSI. Finally, while there were
       $193,957.50 in checks that were not deposited into TSI’s account, TSI received $47,450.95 in deposits that should
       have gone to PSI or LSI.

                                                                4
       No. 1-15-2204

¶ 14                                        III. Motion to Dismiss

¶ 15         On March 21, 2014, defendant filed a motion to dismiss plaintiff’s complaint under

          section 2-619(a)(5) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(5) (West

          2012)). In this motion, defendant argued that plaintiff’s claim was time-barred because it was

          not filed within the three-year limitation period governing claims arising from banking

          transactions involving negotiable instruments (810 ILCS 5/4-111 (West 2012)). More

          specifically, defendant argued that the misapplied check deposits alleged in plaintiff’s

          complaint occurred between December 1, 2007, and November 18, 2010, more than three

          years before February 6, 2014, when plaintiff first filed its complaint.

¶ 16         On April 14, 2014, plaintiff filed a verified response to defendant’s motion to dismiss,

          arguing: (1) that its claim was for breach of a written contract and, therefore, was subject to a

          10-year limitations period under section 13-206 of the Code (735 ILCS 5/13-206 (West

          2012)), not a 3-year statute of limitations; and (2) that even under the three-year statute of

          limitations, its claim remained timely filed, as the limitations period was tolled pursuant to

          the discovery rule until June 2011, when the corporations first discovered that Cole Taylor

          had misapplied their check deposits. As part of its argument on the second issue, plaintiff

          explained the circumstances that led to the discovery of the misapplied check deposits,

          namely, that the corporate controller for the three corporations had committed malfeasance

          that did not become apparent until the corporations hired an outside accountant in 2011.

¶ 17         On July 9, 2014, the circuit court denied defendant’s motion to dismiss, finding that

          while plaintiff’s claim was indeed subject to the three-year limitations statute governing

          claims involving negotiable instruments, the claim nevertheless remained timely filed

          pursuant to the discovery rule because plaintiff had raised facts in its response brief

                                                       5
       No. 1-15-2204

           indicating that plaintiff was not aware funds had been misapplied until alerted by an outside

           audit in June 2011.

¶ 18            On July 31, 2014, defendant filed a motion for reconsideration, arguing that plaintiff had

           failed to include in its complaint any factual allegations supporting the application of the

           discovery rule and the tolling of the limitation period. On October 28, 2014, the circuit court

           granted defendant’s motion for reconsideration and granted plaintiff leave to file an amended

           complaint including factual allegations supporting the tolling of the limitations period

           pursuant to the discovery rule.

¶ 19                                              IV. Amended Complaint

¶ 20            On November 18, 2014, plaintiff filed a verified amended complaint, adding allegations

           that the corporations did not know and could not have known about the misapplied check

           deposits until June 2011, when an independent audit revealed to the corporations that Stan C.

           Cavagnetto, who served as the corporate controller for all three of the corporations, was

           embezzling corporate funds and falsifying the corporations’ books and records. 2

¶ 21            More specifically, plaintiff alleges that Cavagnetto, as corporate controller, was charged

           with maintaining the corporations’ accounting records and receiving and depositing the

           corporations’ checks into their respective bank accounts. Cavagnetto was also responsible for

           the corporations’ information technology system and accounting software, which the

           corporations used to maintain their financial records. In January 2011, following the

           corporations’ decision to outsource their payroll operations, Cavagnetto resigned from his

           position as the corporate controller without notice or explanation. Shortly after Cavagnetto’s

                2
                  According to plaintiff’s amended complaint, in 2011, plaintiff filed a separate lawsuit against Cavagnetto
       for misappropriation of corporate funds, breach of contract, conversion, and breach of a fiduciary duty. The record
       does not reveal whether this lawsuit was already resolved or is still ongoing.

                                                                 6
       No. 1-15-2204

           resignation, in February 2011, the corporations discovered that Cavagnetto failed to file the

           corporations’ tax returns for the fourth quarter of 2009 through the final quarter of 2010. As a

           result, the corporations learned that they owed the Internal Revenue Service approximately

           $460,000 in back taxes. The corporations thereafter also discovered that Cavagnetto had

           removed the network drive and backup software containing the corporations’ accounting

           records. These discoveries, as alleged in plaintiff’s amended complaint, led the corporations

           to hire an independent accountant to conduct an outside audit of their accounting books and

           records.

¶ 22           On June 17, 2011, this outside audit was completed and the independent accountant

           issued to the corporations a report detailing his findings. This report, according to plaintiff,

           revealed to the corporations, among other things, that Cole Taylor had applied their check

           deposits into the wrong bank accounts. Plaintiff alleges that Cavagnetto actively concealed

           his conduct from the corporations, including by falsifying reports to management, the outside

           accountant, and the corporations’ insurance company in order to “mask his diversion and

           misappropriation of amounts paid to PSI, LSI and TSI for services rendered to their clients.”

           Plaintiff’s amended complaint thus claims that due to Cavagnetto’s “acts and omissions” and

           Cole Taylor’s failure to inform the corporations that checks had been misdeposited, the

           corporations did not know, and could not have known, that Cole Taylor had misapplied their

           check deposits until June 2011. 3

¶ 23                                  V. Motion to Dismiss Amended Complaint

¶ 24           On December 9, 2014, defendant once again moved under section 2-619(a)(5) to dismiss

           plaintiff’s amended complaint. In this motion, defendant argued that the allegations in

               3
               It is not clear whether the misdeposited checks were a result of Cavagnetto’s malfeasance, given that no
       money was missing and it was all ultimately accounted for, albeit in the incorrect corporation’s account.

                                                               7
       No. 1-15-2204

          plaintiff’s amended complaint did not warrant application of the discovery rule as they

          merely established the corporations’ own “lack of internal due diligence” in overseeing their

          own employee and their own financial operations. Defendant further argued that a cursory

          review of any of the 108 account statements, which Cole Taylor issued to the corporations on

          a monthly basis, would have easily revealed to the corporations whether certain checks were,

          or were not, deposited into the corporations’ respective bank accounts.

¶ 25         On March 4, 2015, the circuit court granted defendant’s section 2-619(a)(5) motion and

          dismissed plaintiff’s complaint with prejudice. In granting defendant’s motion to dismiss, the

          circuit court explained that it agreed with defendant that the factual allegations included in

          plaintiff’s amended complaint did not support the tolling of the limitation period. The court

          further explained that the monthly account statements issued by Cole Taylor to the

          corporations reflected the monthly deposits and balance in each of the corporation’s bank

          accounts and were thus “sufficient to put a reasonable person on notice whether certain

          checks were, or were not, deposited into specific accounts.” The circuit court accordingly

          concluded that plaintiff failed to plead facts supporting the tolling of the limitations period,

          and it, therefore, dismissed plaintiff’s complaint as time-barred.

¶ 26         On April 2, 2015, plaintiff filed a motion for reconsideration, arguing once again that its

          claim was timely filed pursuant to the discovery rule. The circuit court, however, denied

          plaintiff’s motion for reconsideration on July 9, 2015. Plaintiff timely filed a notice of

          appeal, and this appeal follows.

¶ 27                                             ANALYSIS

¶ 28         On appeal, plaintiff asks us to review whether the circuit court erred in granting

          defendant’s motion to dismiss brought under section 2-619(a)(5) of the Code. Section 2-

                                                       8
       No. 1-15-2204

          619(a)(5) provides that a defendant may file a motion for dismissal when an action has not

          been commenced within the time limited by law (735 ILCS 5/2-619(a)(5) (West 2012)).

          Section 2-619 is designed to afford litigants a means to dispose of issues of law and easily

          proven issues of fact at the onset of litigation. Turner v. 1212 S. Michigan Partnership, 355
Ill. App. 3d 885, 891 (2005) (quoting Davis v. Chicago Police Board, 268 Ill. App. 3d 851,

          854 (1994)). A motion to dismiss under section 2-619 admits the legal sufficiency of all well-

          pleaded facts but allows for the dismissal of claims barred by an affirmative matter defeating

          those claims or avoiding their legal effect. Janda v. United States Cellular Corp., 2011 IL

          App (1st) 103552, ¶ 83 (citing DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006)).

¶ 29         When ruling on a section 2-619 motion to dismiss, a trial court must interpret all

          pleadings, affidavits, and other supporting documents in the light most favorable to the

          nonmoving party. Caywood v. Gossett, 382 Ill. App. 3d 124, 129 (2008). The defendant has

          the initial burden of proving the affirmative defense relied upon in its motion to dismiss.

          Kirby v. Jarrett, 190 Ill. App. 3d 8, 12 (1989) (explaining that a defendant raising a statute of

          limitations defense in a motion to dismiss bears the initial burden of demonstrating that the

          action in question was not commenced within the applicable limitation period). Once the

          defendant, however, has met this burden, it becomes incumbent upon the plaintiff to set forth

          facts sufficient to avoid the statutory limitation. Cundiff v. Unsicker, 118 Ill. App. 3d 268,

          272 (1983); Blair v. Blondis, 160 Ill. App. 3d 184, 188 (1987) (explaining that a plaintiff

          seeking to come within the discovery rule exception to the limitations period has the burden

          of proving the date of discovery).

¶ 30         An appeal from a section 2-619 dismissal requires the same analysis as an appeal

          following a grant of summary judgment; in both instances, “the reviewing court must

                                                       9
       No. 1-15-2204

          ascertain whether the existence of a genuine issue of material fact should have precluded the

          dismissal, or absent such an issue of fact, whether dismissal is proper as a matter of law.”

          Ultsch v. Illinois Municipal Retirement Fund, 226 Ill. 2d 169, 178 (2007). In making this

          determination, we apply a de novo standard of review. O'Toole v. Chicago Zoological

          Society, 2015 IL 118254, ¶ 16. Under the de novo standard, we perform the same analysis

          that a circuit court judge would perform. First Merit Bank, N.A. v. Soltys, 2015 IL App (1st)
140100, ¶ 13.

¶ 31         In the case at bar, plaintiff argues that the circuit court made two errors in dismissing

          plaintiff’s amended complaint. First, plaintiff argues that the circuit court erred by subjecting

          its claim to a 3-year limitations period rather than a 10-year limitations period. Second,

          plaintiff argues that even if the three-year period applied, the circuit court erred in finding

          that plaintiff had failed to plead sufficient facts supporting the tolling of the limitations

          period pursuant to the discovery rule. We address each of plaintiff’s arguments in turn.

¶ 32                             I. The Applicable Statute of Limitations

¶ 33         Plaintiff first argues that the circuit court applied the incorrect statute of limitations when

          it determined that a 3-year statute of limitations applied instead of a 10-year statute of

          limitations. Plaintiff claims that the applicable statute of limitations is found in section 13-

          206 of the Code, which provides, in relevant part:

                 “Ten year limitation. Except as provided in Section 2-725 of the ‘Uniform

                 Commercial Code’, actions on bonds, promissory notes, bills of exchange, written

                 leases, written contracts, or other evidences of indebtedness in writing and actions

                 brought under the Illinois Wage Payment and Collection Act shall be commenced

                                                       10
       No. 1-15-2204

                   within 10 years next after the cause of action accrued[.]” 735 ILCS 5/13-206 (West

                   2012).

¶ 34         By contrast, defendant claims the applicable statute of limitations is found in section 4-

          111 of the UCC, which provides:

                   “An action to enforce an obligation, duty or right arising under this Article must be

                   commenced within 3 years after the cause of action accrues.” 810 ILCS 5/4-111

                   (West 2012).

¶ 35         On appeal, plaintiff argues that the circuit court should have applied the 10-year

          limitations period because its claim constituted a “strict common law breach of contract

          action.” Defendant, on the other hand, asserts that plaintiff’s claim relates to banking

          transactions involving negotiable instruments and that the circuit court thus properly applied

          the three-year limitation statute governing claims under Article 4 of the UCC to plaintiff’s

          claim.

¶ 36         In support of its argument, defendant cites our decision in Continental Casualty Co. v.

          American National Bank & Trust Co. of Chicago, 329 Ill. App. 3d 686, 690 (2002), where

          we held that common-law breach of contract claims relating to banking transactions

          involving negotiable instruments are subject to the three-year limitation period. We agree

          with defendant that this First District case is directly on point, and we accordingly find that

          the circuit court properly applied the three-year limitation period to plaintiff’s claim.

¶ 37         In Continental, a corporation brought a common-law breach of contract action against a

          bank, alleging that the bank failed to exercise ordinary care in maintaining the corporation’s

          deposit account and that, as a result, the corporation’s comptroller was able to embezzle

          corporate funds into his own personal account. Continental, 329 Ill. App. 3d at 692. The trial

                                                        11
       No. 1-15-2204

          court, however, dismissed the corporation’s claim as time-barred under the three-year statute

          of limitations set forth in section 4-111 of the UCC. Continental, 329 Ill. App. 3d at 690. On

          appeal, the corporation argued that its claim constituted a common-law breach of contract

          action subject to the Code’s 10-year limitations period, not a UCC claim subject to the

          UCC’s three-year limitations period. Continental, 329 Ill. App. 3d at 696. The bank, on the

          other hand, argued that the corporation’s claim, properly characterized, was either a UCC

          claim for conversion of a negotiable instrument (810 ILCS 5/3-420(a) (West 1994)) or a

          UCC claim for improper payment (810 ILCS 5/4-401(a) (West 1994)), both of which are

          governed by a three-year limitations period. 810 ILCS 5/3-118(g) (West 1994) (applying a

          three-year limitations period to claims for conversion of a negotiable instrument); 810 ILCS

          5/4-111 (West 1994) (applying a three-year limitation period to claims arising under article 4

          of the UCC, including claims for improper payment).

¶ 38         We did not find either party’s argument persuasive. First, we explained that the

          corporation’s claim was not a UCC conversion claim, nor was it displaced by the UCC

          merely because the bank also could have raised a UCC claim for improper payment.

          Continental, 329 Ill. App. 3d at 697-98. Instead, we agreed with the corporation that the

          claim was properly characterized as a common-law breach of contract action. Continental,
329 Ill. App. 3d at 699 (“The UCC does not immunize a bank from its own failure to exercise

          ordinary care in handling its depositor’s accounts.”). Second, we determined that although

          the claim was for breach of contract, it nevertheless was subject to the UCC’s three-year

          limitations period because it was related to banking transactions involving negotiable

          instruments. Continental, 329 Ill. App. 3d at 700.

                                                      12
       No. 1-15-2204

¶ 39         In reaching this conclusion, we explained that where two statutes of limitations arguably

          apply to the same cause of action “ ‘the one which more specifically relates to the action

          must be applied.’ ” Continental, 329 Ill. App. 3d at 699 (quoting Haddad's of Illinois, Inc. v.

          Credit Union 1 Credit Union, 286 Ill. App. 3d 1069, 1072 (1997)). We went on to explain

          that the 10-year limitations statute found in section 13-206 of the Code is a “catch-all” statute

          that applies not only to written contracts, but also to actions for bonds, bills of exchange,

          promissory notes, written leases, and other evidences of indebtedness. Continental, 329 Ill.

          App. 3d at 699. By contrast, we noted that section 4-111 of the UCC “specifically relates to a

          bank’s duties and obligations to its customer when the customer has filed a timely claim.”

          Continental, 329 Ill. App. 3d at 699-700. We noted that a primary purpose of a statute of

          limitations was to promote certainty and finality in the administration of affairs and found

          that “[a]pplying the 10-year limitations period to a breach of contract claim involving

          negotiable instruments that are deposited into and paid by the banking system would not

          foster and promote commercial finality and certainty.” Continental, 329 Ill. App. 3d at 700.

          We accordingly held that the corporation’s common-law breach of contract action was

          governed by the three-year limitations statute because it was more specific than the Code’s

          10-year limitations period. Continental, 329 Ill. App. 3d at 700. See also Newell v. Newell,

          406 Ill. App. 3d 1046, 1050 (2011) (applying the three-year statute of limitations under

          section 4-111 of the UCC instead of the 10-year statute of limitations under section 13-206 of

          the Code and noting that “[the plaintiff’s] allegations of common law breach of contract do

          not insulate his cause of action from the applicable UCC statute of limitations”).

¶ 40         In the case at bar, just as in Continental, we find plaintiff’s common-law breach of

          contract action relates to banking transactions involving negotiable instruments, which are

                                                       13
       No. 1-15-2204

          governed by the three-year limitations statute. See Continental, 329 Ill. App. 3d at 700.

          Indeed, plaintiff’s underlying complaint in the present case, alleging that Cole Taylor failed

          to exercise ordinary care in accepting the corporations’ check deposits, closely mirrors the

          complaint raised in Continental, which was also predicated on allegations pertaining to a

          bank’s failure to exercise ordinary care in maintaining a corporation’s deposit account. Our

          decision in Continental, applying the three-year limitation statute, is thus directly on point,

          and we accordingly find that the circuit court did not err in subjecting plaintiff’s claim to the

          three-year limitations period.

¶ 41         Plaintiff attempts to distinguish the present case from our decision in Continental because

          the corporation in Continental “had a possible UCC 4-401(a) claim against the bank for

          improper payment.” See Continental, 329 Ill. App. 3d at 698. We do not find this argument

          persuasive. As noted above, in Continental we specifically acknowledged that the

          corporation was suing the bank under a common-law breach of contract theory and not for

          improper payment under section 4-401 of the UCC. Continental, 329 Ill. App. 3d at 699. We

          nevertheless applied the three-year limitations period because the claim involved banking

          transactions involving negotiable instruments, an area of the law that is specifically regulated

          by the UCC. Continental, 329 Ill. App. 3d at 700 (“[a]pplying the 10-year limitations period

          to a breach of contract claim involving negotiable instruments that are deposited into and

          paid by the banking system would not foster and promote commercial finality and

          certainty”). We further note that the UCC states that it is to be applied in order to promote its

          underlying purposes and policies, which include “simplify[ing], clarify[ing], and

          moderniz[ing] the law governing commercial transactions” and “permit[ting] the continued

          expansion of commercial practices through custom, usage, and agreement of the parties.” 810

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       No. 1-15-2204

          ILCS 5/1-103(a) (West 2012). We agree with the Continental court that applying the 10-year

          statute of limitations to a claim such as that present in the case at bar would not further the

          purposes of the UCC or promote commercial finality and certainty. Accordingly, we find that

          the circuit court properly subjected plaintiff’s claim to the three-year limitations statute set

          forth in section 4-111 of the UCC.

¶ 42                                         II. Discovery Rule

¶ 43         Plaintiff next argues that even if the three-year statute of limitations applied, the statute of

          limitations had not passed because it was tolled pursuant to the discovery rule until June

          2011. While section 4-111 provides that “[a]n action to enforce an obligation, duty or right

          arising under this Article must be commenced within 3 years after the cause of action

          accrues” (810 ILCS 5/4-111 (West 2012)), there is no definition of when a cause of action

          “accrues,” nor is there any provision as to whether any conduct can toll the running of the

          statute of limitations. “[T]herefore, the pre-UCC law governs the determination of these

          questions.” Continental, 329 Ill. App. 3d at 700.

¶ 44         Several courts have applied the discovery rule to breach of contract claims governed by

          the section 4-111 statute of limitations. See, e.g., Continental, 329 Ill. App. 3d at 700-01;

          Newell, 406 Ill. App. 3d at 1051. “Under the discovery rule, a party’s cause of action accrues

          when the party knows or reasonably should know of an injury and that the injury was

          wrongfully caused.” Clay v. Kuhl, 189 Ill. 2d 603, 608 (2000). “[T]he discovery rule protects

          a plaintiff only until he knows or reasonably should know of the injury, not until he has

          actual knowledge.” (Emphasis in original.) Gale v. Williams, 299 Ill. App. 3d 381, 387

          (1998). “The issue [of] whether an action was brought within the time allowed by the

          discovery rule is generally resolved as a question of fact. [Citations.] The question may be

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       No. 1-15-2204

           determined as a matter of law, however, when the answer is clear from the pleadings.

           [Citations.]” Clay, 189 Ill. 2d at 609-10.

¶ 45            In the case at bar, plaintiff argues that the discovery rule should apply in the instant case

           because the corporations did not become aware that the checks had been misdeposited until

           June 2011, when an independent accountant performed an audit of the corporations’ accounts

           and records after the resignation of the corporations’ controller. 4 It is important to note that

           plaintiffs are expressly not arguing that the statute of limitations should be tolled due to

           fraudulent concealment. 5 Plaintiff’s main argument is that the monthly bank statements

           provided by defendant did not contain sufficient information to place the corporations on

           notice that their checks were being misdeposited or, at least, there was a question of fact on

           that issue. We do not find this argument persuasive.

¶ 46            Plaintiff does not dispute that it received monthly account statements from the bank, and

           defendant attached one of those bank statements to its reply in support of its motion to

           dismiss as an example. The bank statement included in the record on appeal 6 has a section in

           the center of the statement’s first page that lists the beginning balance at the start of the

           statement period, additions to the account, deductions from the account, and the ending

           balance at the end of the statement period. Directly underneath this summary is a section

           entitled “Additions to Your Account,” in which the deposits made are listed. The list is

           itemized by date, with the amount deposited on that date and a description such as the word

           “DEPOSIT.” Plaintiff argues that this does not provide sufficient information to alert the
                4
                   Again, it is unclear whether the controller’s conduct had any relation to the misdeposited checks as all of
       the money was accounted for, even if it was deposited into the wrong corporation’s account.
                 5
                   Indeed, one point heading in plaintiff’s reply brief is “Plaintiff is not claiming any fraudulent concealment
       by defendant, and it is irrelevant,” and the brief characterizes defendant’s discussion of fraudulent concealment as
       “nothing more than a red herring.”
                 6
                   The bank statement states on the top “Page 1 of 23,” but only the first page is included in the record on
       appeal. It is not clear what the rest of the statement contains, but there is no dispute that the statements the
       corporations received did not include copies of the checks.

                                                                  16
       No. 1-15-2204

           corporations to any wrongdoing because the statements only listed the deposits by day, not

           by transaction, so there was no way to tell whether a single day’s deposit was one deposit or

           several. Plaintiff also takes issue with the description of the deposit as simply “DEPOSIT,”

           with no names or more detailed descriptions. Plaintiff also notes that there were no copies of

           any deposit slips or deposited checks as part of the statement. In short, plaintiff states that

           “[o]ne look at that account statement clearly shows that a reasonable person would not be

           alerted to any wrongdoing.” We do not find this argument persuasive.

¶ 47           Plaintiff is correct that defendant could have included more detail in the bank statements

           to make absolutely clear every transaction occurring within the statement period. However,

           the standard in applying the discovery rule is not “absolute clarity.” Instead, the running of

           the limitation period commences at the point when “the injured person becomes possessed of

           sufficient information concerning his injury and its cause to put a reasonable person on

           inquiry to determine whether actionable conduct is involved.” Knox College v. Celotex

           Corp., 88 Ill. 2d 407, 416 (1981); Hoffman v. Orthopedic Systems, Inc., 327 Ill. App. 3d
1004, 1011 (2002). “At that point, the burden is upon plaintiff to inquire further as to the

           existence of a cause of action.” Hoffman, 327 Ill. App. 3d at 1011 (citing Witherell v.

           Weimer, 85 Ill. 2d 146, 156 (1981)). In the case at bar, even if a single misdeposited check

           may have been overlooked, even a cursory review of some of the account statements would

           have caused a reasonable person to inquire further well before June 2011. For instance,

           according to the exhibits attached to plaintiff’s amended complaint, there were several

           months where TSI was missing over $25,000 in checks that should have been deposited to its

           account. 7 Similarly, there were several months where PSI received over $20,000 in checks

               7
                In December 2007, there was $29,892.75 missing from TSI’s account, and in September 2009, there was
       $27,827.50 missing from TSI’s account.

                                                            17
       No. 1-15-2204

           that should have been deposited in the accounts of the other two corporations. 8 The bank

           statement contained in the record shows that as of August 2008, PSI had a balance ranging

           from $66,751.42 at the beginning of the month to $43,880.98 at the end of the month. An

           unexplained difference of over $20,000 represents a significant proportion of such an

           account, and it certainly should have raised a red flag for plaintiff to inquire further.

           Accordingly, we cannot agree with plaintiff that it did not have sufficient notice until June

           2011 of any wrongdoing.

¶ 48           We are also not persuaded by plaintiff’s attempt to draw analogies between its case and

           Timberline, Inc. v. Towne, 225 Ill. App. 3d 433 (1992), and Draper v. Frontier Insurance

           Co., 265 Ill. App. 3d 739 (1994), as those cases have quite different facts and legal issues

           than the case at bar. Timberline concerned the issue of whether a piece of real property was

           described with sufficient specificity in a contract such that specific performance of the

           contract could be awarded. Timberline, 225 Ill. App. 3d at 443. Draper concerned the issue

           of when the cause of action for a wrongful cancellation of an insurance policy accrued.

           Draper, 265 Ill. App. 3d at 744. Both cases found questions of fact, which is presumably

           why plaintiff cited them. However, neither case sheds any light on the issue before us,

           namely, whether the statute of limitations was tolled until June 2011 by the discovery rule,

           and we consequently do not find them instructive in determining that issue.

¶ 49           In the case at bar, we agree with the circuit court that the monthly account statements

           provided by defendant provided sufficient information for plaintiff to be put on notice that

           wrongful conduct had occurred. Accordingly, we affirm the circuit court’s dismissal of

           plaintiff’s amended complaint.

               8
                In December 2007, PSI received $29,892.75 in deposits it was not entitled to; in August 2009, it received
       $21,538.76; and in September 2009, it received $25,077.63.

                                                               18
       No. 1-15-2204

¶ 50                                          CONCLUSION

¶ 51         The dismissal of plaintiff’s amended complaint is affirmed because (1) plaintiff’s claim is

          governed by a three-year statute of limitations and (2) the running of the statute of limitations

          was not tolled by the discovery rule.

¶ 52         Affirmed.

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