Armstrong v. Guigler

• Decision Date: 18 October 1996
• Docket Number: No. 79354,79354
• Citation: 174 Ill.2d 281,220 Ill.Dec. 378,673 N.E.2d 290
• Parties: , 220 Ill.Dec. 378 Ralph E. ARMSTRONG et al., Appellees, v. Walter F. GUIGLER et al., Appellants.
• Court: Illinois Supreme Court

Page 290

673 N.E.2d 290

174 Ill.2d 281, 220 Ill.Dec. 378

Ralph E. ARMSTRONG et al., Appellees, v. Walter F. GUIGLER et al., Appellants.

No. 79354.

Supreme Court of Illinois.

Oct. 18, 1996.

Rehearing Denied Dec. 2, 1996.

Bozeman, Neighbour, Patton & Noe, Moline (John P. Harris, of counsel), for appellants Walter F. Guigler and Russell V. Smith.

Heyl, Royster, Voelker & Allen, Peoria (Karen L. Kendall, Brad A. Elward, William I. Covey, Gary D. Nelson and Craig L. Unrath, of counsel), for appellant Robert F. Smith, d/b/a The Bob Smith Agency.

Thomas E. Leiter and Garrett K. Williams, of The Leiter Group, Peoria, for appellees.

Justice McMORROW delivered the opinion of the court:

In this case, we are asked to decide whether the 10-year statute of limitations for actions on a written contract (735 ILCS 5/13-206 (West 1992)), or the five-year statute of limitations for "all civil actions not otherwise provided for" (735 ILCS 5/13-205 (West 1992)), applies to a cause of action for breach of an implied fiduciary duty. A divided appellate court held that the implied duty at issue here was "created in a written document" and therefore the longer period of limitations controlled. 273 Ill.App.3d 85. We granted leave to appeal (155 Ill.2d R. 315) and now reverse the judgment of the appellate court.

Background

On December 31, 1993, plaintiffs, Ralph and Rema Armstrong, filed a single-count complaint in the circuit court of Peoria County against the Bob Smith Agency (a real estate brokerage firm), its owner, and two of its employees. The complaint alleged that plaintiffs had entered into a written multiple listing agreement with the Agency for the purpose of selling plaintiffs' property. Under the terms of the agreement, plaintiffs granted the broker an irrevocable and exclusive right to advertise and sell certain parcels of property for the gross amount of $625,000. Plaintiffs were obligated "to furnish a complete abstract showing good and merchantable title to the premises, or to furnish a title guaranty policy and to convey said premises by warranty deed clear of all encumbrances, except general taxes." In the event of a sale, plaintiffs were required to pay a broker's commission to be calculated at 5% of the actual sales price.

The agreement, which originally terminated by its own terms on November 30, 1983, was later extended by the parties to February 28, 1984. Prior to that date, defendant Russell Smith, a sales agent for the broker, presented plaintiffs with a written offer to purchase the property on behalf of himself and certain other undisclosed individuals. The offer was subject to the condition that the first mortgagees, the Chillicothe Federal Savings & Loan and the Security Savings & Loan, modify the current mortgages so as to grant the buyers a right of assumption. Plaintiffs accepted the offer and, on December 31, 1983, the parties closed the sale on the property. The mortgages, however, were never assumed.

According to the complaint, both Smith and another defendant, Walter Guigler, knew that the buyers did not intend to assume the mortgages. Guigler, in addition to serving as manager and chief operating officer of the Chillicothe Federal Savings & Loan, also worked as a sales agent for the broker. Despite the fact that both Smith and Guigler owed plaintiffs a "duty of loyalty and fidelity" as agents under the listing agreement, plaintiffs claimed that neither defendant disclosed to them the buyers' intention to forgo the mortgage assumption. Plaintiffs filed suit against defendants for breach of an implied fiduciary duty, seeking $1 million in compensatory and punitive damages, respectively. Although plaintiffs later voluntarily struck their prayer for punitive damages, which ordinarily are not recoverable for breach of contract, the complaint in the instant case did not specify the basis for plaintiffs' claim that they suffered $1 million in compensatory damages. ¹

Defendants moved to dismiss the complaint pursuant to section 2-619(a)(5) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(5) (West 1992)), arguing that plaintiffs' claim for breach of fiduciary duty was governed by the five-year statute of limitations set forth in section 13-205 of the Code (735 ILCS 5/13-205 (West 1992)). This provision, residual by nature, covers all actions for which no limitations period is otherwise prescribed. It states in pertinent part:

"[A]ctions on unwritten contracts, expressed or implied, or on awards of arbitration, or to recover damages for an injury done to property, real or personal, or to recover the possession of personal property or damages for the detention or conversion thereof, and all civil actions not otherwise provided for, shall be commenced within 5 years next after the cause of action accrued." (Emphasis added.) 735 ILCS 5/13-205 (West 1992).

Defendants point out that plaintiffs should have discovered the alleged breach of duty no later than November 24, 1986, the date on which a judgment of foreclosure was entered against the property. Defendants urge that the complaint was not filed until seven years later, on December 28, 1993, and therefore was not filed in the time prescribed by section 13-205.

Plaintiffs, on the other hand, claim that their cause of action is governed by the 10-year statute of limitations for written contracts. 735 ILCS 5/13-206 (West 1992). In contrast to the general five-year statute of limitation, section 13-206 provides in relevant part:

"[A]ctions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness in writing, shall be commenced within 10 years next after the cause of action accrued * * *." (Emphasis added.) 735 ILCS 5/13-206 (West 1992).

Plaintiffs argue that the implied duty of fidelity and loyalty was as much a part of the written contract as were the terms expressly stated therein. According to the plaintiffs, because the breach occurred on December 31, 1983, the date of the closing, the complaint filed on December 28, 1993, was timely filed.

The circuit court granted defendants' motions to dismiss, and plaintiffs appealed. On appeal, a majority of the appellate court reversed the circuit court's decision and remanded the matter for further proceedings. 273 Ill.App.3d 85, 209 Ill.Dec. 815, 652 N.E.2d 355. The court found that "the law which imposes a fiduciary duty upon an agent becomes a part of the written contract between the parties even though the duty is not expressly stated in that contract," and thus the ten-year period of limitations applied. 273 Ill.App.3d at 88, 209 Ill.Dec. 815, 652 N.E.2d 355. We now reverse the appellate court.

Analysis

The determination of the applicable statute of limitations is governed by the type of injury at issue, irrespective of the pleader's designation of the nature of the action. Williams v. Ali, 145 Ill.App.3d 458, 463, 99 Ill.Dec. 317, 495 N.E.2d 1052 (1986); Weaver v. Watson, 130 Ill.App.3d 563, 567, 85 Ill.Dec. 799, 474 N.E.2d 759 (1984). We have long held that "it is the nature of the plaintiff's injury rather than the nature of the facts from which the claim arises which should determine what limitations period should apply." Mitchell v. White Motor Co., 58 Ill.2d 159, 162, 317 N.E.2d 505 (1974); Handtoffski v. Chicago Consolidated Traction Co., 274 Ill. 282, 113 N.E. 620 (1916). Thus, even though isolated allegations in a tort complaint may speak in terms of a contractual breach, the claim is not necessarily afforded the longer, 10-year period of limitations applicable to actions based on written contracts. Schreiber v. Eastern Airlines, Inc., 38 Ill.App.3d 556, 348 N.E.2d 218 (1976) (applying personal injury limitations to coffee burn inflicted by careless flight attendant despite victim's attempt to frame complaint as breach of contract). A party simply may not circumvent a shorter period of limitations, or attempt to breathe new life into a stale claim, merely by means of artful pleading.

In the present case, defendants argue that the appellate court erred in holding that plaintiffs' claim qualifies as an "action on a written contract" within the meaning of section 13-206. Plaintiffs contend that their complaint comes within the purview of that statute, even though the fiduciary duty sued upon is not expressed in a written contract, but rather is implied in law. Despite their divergent contentions, both parties cite cases from parol evidence jurisprudence in an attempt to clarify the meaning of the phrase "action on a written contract." See, e.g., Ames v. Crown Life Insurance Co., 85 Ill.App.3d 203, 40 Ill.Dec. 521, 406 N.E.2d 222 (1980); In re Estate of Garrett, 24 Ill.App.3d 895, 322 N.E.2d 213 (1975). Those cases, however, are inapposite to the case at bar.

In the parol evidence cases, the dispositive question is whether evidence of oral representations is necessary to establish the existence of a written contract. If such evidence is required, then the contract is treated as oral for purposes of the statute of limitations. In other words, where a party is claiming a breach of a written contract, but the existence of that contract or one of its essential terms must be proven by parol evidence, the contract is deemed oral and the five-year statute of limitations applies.

For example, in Toth v. Mansell, 207 Ill.App.3d 665, 152 Ill.Dec. 853, 566 N.E.2d 730 (1990), the owner of a supply company sought to recover monies owed by defendant under an open account. The owner claimed that certain invoices and monthly statements established either a written contract or other evidence of indebtedness. As a result, the owner argued, the 10-year statute of limitations for written contracts applied. Ill.Rev.Stat.1989, ch. 110, par. 13-206, now codified at 735 ILCS 5/13-206 (West 1994).

In rejecting that argument, the appellate court initially noted that Illinois courts strictly interpret the meaning of a "written" contra...