{ "id": 182754, "name": "WESTERN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. LOUIS E. OLIVERO AND ASSOCIATES, Defendants-Appellees", "name_abbreviation": "Western States Insurance v. Louis E. Olivero & Associates", "decision_date": "1996-08-29", "docket_number": "No. 3\u201496\u20140170", "first_page": "307", "last_page": "312", "citations": [ { "type": "official", "cite": "283 Ill. App. 3d 307" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "112 S. Ct. 1644", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 6512125, 6237415 ], "year": 1992, "opinion_index": 0, "case_paths": [ "/br/138/1644-01", "/us/503/0638-01" ] }, { "cite": "503 U.S. 638", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6237415 ], "weight": 2, "year": 1992, "opinion_index": 0, "case_paths": [ "/us/503/0638-01" ] }, { "cite": "11 U.S.C. \u00a7 541", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1994, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "559 N.E.2d 45", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1990, "opinion_index": 0 }, { "cite": "201 Ill. App. 3d 395", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2594269 ], "year": 1990, "opinion_index": 0, "case_paths": [ "/ill-app-3d/201/0395-01" ] }, { "cite": "620 N.E.2d 479", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1993, "opinion_index": 0 }, { "cite": "250 Ill. App. 3d 922", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2918071 ], "year": 1993, "opinion_index": 0, "case_paths": [ "/ill-app-3d/250/0922-01" ] }, { "cite": "629 N.E.2d 133", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1993, "pin_cites": [ { "page": "135" }, { "page": "135" } ], "opinion_index": 0 }, { "cite": "256 Ill. App. 3d 766", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5382792 ], "weight": 2, "year": 1993, "pin_cites": [ { "page": "769" }, { "page": "769" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/256/0766-01" ] } ], "analysis": { "cardinality": 480, "char_count": 10037, "ocr_confidence": 0.765, "pagerank": { "raw": 2.7430144043851367e-07, "percentile": 0.832100249860127 }, "sha256": "eb037374bc304649a66feb9595703df95af7d9ed58b59668f53aec1ff788c62c", "simhash": "1:66879829685ca51d", "word_count": 1603 }, "last_updated": "2023-07-14T17:57:33.654874+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "WESTERN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. LOUIS E. OLIVERO AND ASSOCIATES, Defendants-Appellees." ], "opinions": [ { "text": "PRESIDING JUSTICE BRESLIN\ndelivered the opinion of the court:\nThe plaintiff, Western States Insurance Company (Western States), filed the instant case against the defendants, Louis E. Olivero & Associates and David Olivero, alleging that they wrongfully refused to satisfy Western States\u2019 claim for subrogation out of the proceeds of a settlement in a personal injury case. The trial court granted the defendants\u2019 motion for summary judgment. We hold that Western States was entitled to receive the amount of its subrogation claim from the proceeds of the settlement and that the defendants\u2019 failure to honor the subrogation claim amounted to a conversion of Western States\u2019 property. Accordingly, we reverse the court\u2019s order and grant summary judgment in favor of Western States.\nWestern States provided automobile insurance to Gaylon and Judy Irvin. After an automobile accident involving the Irvins and Sharon Gualandi, the Irvins retained the defendants to recover damages from Gualandi. The Irvins settled their claims for a total of $20,000. Under Western States\u2019 insurance policy with the Irvins, Western States had a subrogation interest in the suit because it had paid for medical treatment received by the Irvins.\nBefore the settlement checks were issued, the Irvins executed a release which provided that they would satisfy all liens and claims against the settlement, including Western States\u2019 claim for medical payments. The settlement checks were made payable to, among others, the Irvins, Louis E. Olivero & Associates, and Western States. The defendants sent these checks to Western States for its endorsement. The letter which accompanied the checks provided that the defendants agreed to reimburse Western States in the amount of $2,005.20, and that a check would be forwarded as soon as the settlement checks cleared. Western States endorsed the checks and returned them to the defendants\u2019 office with a demand for payment of $2,005.20.\nThe defendants cashed the settlement checks and deposited the proceeds into a trust account. The checks cleared the bank on May 4, 1995, but the defendants never paid Western States its share of the proceeds. Then, on May 28, 1995, the Irvins informed David Olivero of their intent to file a bankruptcy petition. On June 1, the Irvins\u2019 bankruptcy attorney contacted Olivero and advised him not to disburse any of the settlement proceeds because the proceeds were property of the bankruptcy estate. Nevertheless, on the following day, the defendants disposed of the settlement proceeds by retaining $9,022.99 in attorney fees and costs and disbursing the remaining $10,977.01 to the Irvins. The Irvins did not file their bankruptcy petition until June 20.\nIn its complaint, Western States alleged, among other things, that the defendants had converted Western States\u2019 funds. Both parties filed motions for summary judgment. In granting summary judgment for the defendants, the trial court found that the conversion claim failed because the Irvins maintained control of the settlement proceeds. This appeal followed.\nWe will confine our discussion in this opinion to whether the trial court erred by granting summary judgment for the defendants on Western States\u2019 conversion claim and by denying Western States\u2019 motion for summary judgment.\nWhen parties file cross-motions for summary judgment, they agree that only a question of law is involved and invite the court to decide the issues based on the record. Andrews v. Cramer, 256 Ill. App. 3d 766, 769, 629 N.E.2d 133, 135 (1993). On appeal from the entry of summary judgment, the standard of review is de novo. Andrews, 256 Ill. App. 3d at 769, 629 N.E.2d at 135.\nTo prevail on a conversion claim, a plaintiff must establish that (1) it has a right to the property; (2) it has an absolute and unconditional right to the immediate possession of the property; (3) it made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over its property. Springfield Rare Coin Galleries, Inc. v. Mileham, 250 Ill. App. 3d 922, 620 N.E.2d 479 (1993). Retention of property after a valid demand for its return constitutes conversion. Harry W. Kuhn, Inc. v. State Farm Mutual Automobile Insurance Co., 201 Ill. App. 3d 395, 559 N.E.2d 45 (1990).\nIn the instant case, the Irvins executed a release which provided that they would satisfy Western States\u2019 claim and the Irvins\u2019 insurance policy gave Western States the right to recover its medical payments from the personal injury settlement. Moreover, Western States was a named payee on the settlement checks and the defendants promised to pay Western States its share of the settlement amount as soon as the checks cleared the bank. Under these facts, Western States established that it had a right to its share of the proceeds and an absolute and unconditional right to the immediate possession of those proceeds after the checks cleared the bank. Western States made a demand for its share of the proceeds, but the defendants failed to comply with this demand after the checks had cleared. Because it is clear from the undisputed facts that the defendants were authorized to hold Western States\u2019 share of the proceeds only until the checks cleared, the defendants\u2019 retention of the proceeds constituted a conversion.\nThe defendants excuse their actions, however, based upon the rule of professional conduct requiring attorneys to hold all property subject to a dispute (see 134 Ill. 2d Rs. 1.15(a), (c)). They also argue that they could only dispose of the Irvins\u2019 funds if directed to do so by them.\nBefore the settlement checks cleared, the defendants and the Irvins had recognized their obligation to honor Western States\u2019 subrogation claim. Therefore, the fact that Western States was entitled to receive $2,005.20 from the proceeds of the settlement checks was not subject to any dispute. In addition, under the Illinois Rules of Professional Conduct, the defendants had an affirmative duty to disburse Western States\u2019 share of the settlement proceeds. See 134 Ill. 2d R. 1.15(b). Accordingly, we reject the defendants\u2019 argument that the rules of professional conduct limited their duty to return Western States\u2019 share of the settlement proceeds.\nThe defendants also argue that Western States forfeited its right to pursue the subrogation claim by failing to attend a creditors meeting with the Irvins\u2019 bankruptcy trustee. They maintain that the amount owed to Western States was a debt which was discharged by the bankruptcy court. We disagree.\nThe filing of a bankruptcy petition creates an estate comprised of all property in which the debtor has a legal or equitable interest. See 11 U.S.C. \u00a7 541(a) (1994). An insurer with a valid subrogation claim has an equitable right to a portion of the debtor\u2019s recovery from a third-party tortfeasor, and the amount of the recovery that represents the costs expended by the insurer does not become part of the debtor\u2019s bankruptcy estate. In re Squyres, 172 Bankr. 592, 595 (C.D. Ill. 1994). Since both the Irvins and the defendants had previously recognized their obligation to honor Western States\u2019 subrogation claim and Western States was a named payee on the settlement checks, the Irvins had no right or interest in Western States\u2019 share of the settlement proceeds. Thus, Western States\u2019 share of the proceeds did not become part of the Irvins\u2019 bankruptcy estate and Western States was not obligated to attend the creditors meeting. In addition, Western States\u2019 subrogation claim was not a debt of the Irvins that could be discharged by the bankruptcy court. See In re Squyres, 172 Bankr. 592, 595 (C.D. Ill. 1994).\nMoreover, as discussed above, the defendants\u2019 failure to return Western States\u2019 share of the settlement proceeds after the checks cleared amounted to a conversion of Western States\u2019 funds. This conversion occurred before the bankruptcy petition was filed and before the creditors meeting took place. The defendants have cited no authority to support the proposition that their liability to Western States was affected by Western States\u2019 failure to attend the creditors meeting or the discharge of the Irvins\u2019 debts by the bankruptcy court. Thus, while we recognize that Western States subsequently forfeited its right to recover the amount of its subrogation claim from the Irvins (see Taylor v. Freeland & Kronz, 503 U.S. 638, 118 L. Ed. 2d 280, 112 S. Ct. 1644 (1992)), it did not forfeit its right to assert a conversion claim against the defendants.\nWhile we recognize that the defendants could have mistakenly believed that they were required to turn over Western States\u2019 share of the settlement proceeds to the Irvins, this mistake does not relieve the defendants of their liability to Western States. Attorneys are well advised to proceed cautiously whenever a client files a bankruptcy petition. However, an attorney is liable to a third party if he wrongfully releases that party\u2019s funds to his client. Accordingly, we hold that the defendants\u2019 liability to Western States was not vitiated by Western States\u2019 failure to attend the creditors meeting or by the discharge of the Irvins\u2019 debts by the bankruptcy court.\nBecause we reverse the trial court\u2019s judgment and grant summary judgment in favor of Western States, we need not address the additional grounds for reversal raised by Western States.\nFor the foregoing reasons, the judgment of the circuit court of La Salle County is reversed, and summary judgment is entered in favor of Western States.\nReversed.\nHOLDRIDGE, P.J., and McCUSKEY, J., concur.", "type": "majority", "author": "PRESIDING JUSTICE BRESLIN" } ], "attorneys": [ "Sheryl H. Kuzma (argued), of Myers, Daugherity, Berry & O\u2019Conor, Ltd., of Ottawa, for appellant.", "Louis E. Olivero (argued) and Larry E. Sittler (argued), both of Louis E. Olivero & Associates, of Peru, for appellees." ], "corrections": "", "head_matter": "WESTERN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. LOUIS E. OLIVERO AND ASSOCIATES, Defendants-Appellees.\nThird District\nNo. 3\u201496\u20140170\nOpinion filed August 29, 1996.\nModified on denial of rehearing October 2, 1996.\nSheryl H. Kuzma (argued), of Myers, Daugherity, Berry & O\u2019Conor, Ltd., of Ottawa, for appellant.\nLouis E. Olivero (argued) and Larry E. Sittler (argued), both of Louis E. Olivero & Associates, of Peru, for appellees." }, "file_name": "0307-01", "first_page_order": 325, "last_page_order": 330 }