Withall v. Capitol Federal Sav. of America

• Decision Date: 04 May 1987
• Docket Number: No. 85-2115,85-2115
• Citation: 155 Ill.App.3d 537,108 Ill.Dec. 202,508 N.E.2d 363
• Parties: , 108 Ill.Dec. 202 Robert A. WITHALL, Plaintiff-Appellant, v. CAPITOL FEDERAL SAVINGS OF AMERICA, formerly known as Capitol Federal Savings & Loan Association and Thomas G. Przyborski, individually and as Executive Vice President of Capitol Federal Savings & Loan Association, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 363

508 N.E.2d 363

155 Ill.App.3d 537, 108 Ill.Dec. 202

Robert A. WITHALL, Plaintiff-Appellant, v. CAPITOL FEDERAL SAVINGS OF AMERICA, formerly known as

Capitol Federal Savings & Loan Association and Thomas G.

Przyborski, individually and as Executive Vice President of

Capitol Federal Savings & Loan Association, Defendants-Appellees.

No. 85-2115.

Appellate Court of Illinois,

First District, First Division.

May 4, 1987.

Ashcraft & Ashcraft, Ltd., Chicago (Timothy J. McGonnegle, John R. Withall, of counsel), for plaintiff-appellant.

McNeela & Griffin, Ltd., Gomberg & Sharfman, Ltd., Chicago, Neal R. Novak, Marjorie E. Schaffner, for defendants-appellants.

Justice O'CONNOR delivered the opinion of the court:

This is an appeal from an order dismissing all five counts of a complaint seeking damages for libel per se, libel per quod and abuse of process. At issue on appeal is: (1) whether a finding that defamatory allegations in the complaint were untrue and made without reasonable cause negates the absolute privilege generally accorded pleadings; (2) whether the discovery rule can be construed to allow the statute of limitations to run from the time of the destruction of the privilege rather than from the time of the publication of the defamatory statements; and (3) whether plaintiff's complaint pleads a cause of action for abuse of process.

On November 21, 1984, the plaintiff, Robert A. Withall (Withall) filed a five-count verified complaint against Capitol Federal Savings of America (Capitol) and Thomas G. Przyborski (Przyborski) individually and as Capitol's Executive Vice President. Withall alleged as follows: For approximately 34 years (from 1946-1980), he had been regularly employed in the banking and thrift industry in increasing positions of trust and confidence. During that time he was required to and did submit to inquiry from bonding authorities to allow his employers to obtain a surety bond to cover any loss that might occur from a violation of this trust.

In August 1976, he was employed by Capitol as a loan officer. As a necessary prerequisite to employment by Capitol, Withall provided Capitol's surety with the information necessary to demonstrate his integrity and to allow the surety to issue a bond covering his employment.

In May 1978, Withall became a member of Capitol's loan committee, then comprised of President C. James Salak and Executive Vice President Przyborski. Despite the fact that he performed all of his duties in an honest, good and workmanlike manner, he was terminated by Capitol on July 15, 1979. He was subsequently reemployed in the banking industry in another position of trust and confidence that also required that a surety issue a bond to cover his employment.

On June 16, 1980, Hinsdale Federal Savings and Loan Association filed an action against Capitol in the Circuit Court of Cook County alleging Capitol's breach of contract and misrepresentation in connection with a loan participation agreement to which both associations had been parties. Przyborski and Capitol's counsel interviewed Withall regarding the loan transaction in question and confronted him with allegations that certain loan documents were missing.

Following the interview, on July 11, 1980, Capitol filed an action against Withall and other defendants. The unverified complaint alleged that Withall conspired to defraud Capitol by obtaining the proceeds of an inflated first mortgage loan on a portion of property and that in furtherance of the conspiracy he removed or concealed certain files and concealed the scheme from Capitol by destroying certain business records.

On November 7, 1980, Capitol Federal, through its Executive Vice President, Przyborski, filed under oath a Proof of Loss under Fidelity Bond with Fidelity & Deposit Company of Maryland. In it, Capitol realleged the statements made in the July 11, 1980, unverified complaint and stated that Capitol had sustained a loss in the amount of $1,135,000. through the dishonesty of loan officer Robert Withall.

In a January 14 1981, unverified amended complaint, Capitol alleged that:

"(e) Defendant Withall removed certain records from the files of Capitol so that the second loan transaction with the Defendants would not be known to the Board of Directors and the Loan Committee of Capitol, and did cause the Plaintiff to disburse the sum of $650,000 to the Defendants, based upon the fraudulent and erroneous appraisal and other documents submitted by the Defendants.

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(g) That each and every Defendant herein concealed the fraudulent scheme from [Capitol] by destroying business records; said conspiracy only being discovered by the Plaintiff on the acquisition of the security property in May 1980."

Thirty-four months after filing its complaint, Capitol voluntarily non-suited Withall. Withall made no payment to or settlement with Capitol. On June 17, 1983, Withall filed a section 2-611 motion for recovery of attorney fees and costs incurred in defending the case filed by Capitol based on the fact that Capitol's allegations against Withall were untrue and made without reasonable cause. 110 Ill.Rev.Stat.1985, par. 2-611.

On December 23, 1983, the trial court granted Withall's section 2-611 motion and entered judgment against Capitol for Withall's attorney fees and costs. Capitol appealed and this court affirmed in a Rule 23 Order Capitol Federal Savings and Loan Association v. Robert Withall (1985) 136 Ill.App.3d 1154, 100 Ill.Dec. 769, 497 N.E.2d 1038.

Withall then filed the complaint at issue here, alleging causes of action for libel per se and libel per quod based on Capitol's publication of the original and amended complaints charging him with fraud and publication of the Proof of Loss under Fidelity Bond charging him with dishonesty. Withall also charged the defendants with abuse of process in maliciously and wrongfully instituting the action against him for the improper purpose of defending themselves against the action filed by Hinsdale Federal and to form a basis for collecting on Withall's bond.

The defendants filed a motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (110 Ill.Rev.Stat.1985, par. 2-619) alleging that (1) all counts were barred by the applicable statute of limitations; (2) the allegedly libelous publications were absolutely privileged or in the alternative, qualifiedly privileged; (3) the abuse of process count failed to state a cause of action; and (4) no facts existed which imputed individual liability to defendant Przyborski. ¹ The trial court dismissed all five counts and this appeal followed.

Counts I-IV of the complaint were dismissed as barred by Chapter 110 Ill.Rev.Stat.1985, par. 13-201 which provides as follows:

Actions for slander, libel or for publication of matter violating the right of privacy, shall be commenced within one year next after the cause of action accrued.

Traditionally, the statute of limitations has been held to run from the time that the last act giving rise to the cause of action has occurred. (Gray v. American Radiator & Standard Sanitary Corp. (1961), 22 Ill.2d 432, 435, 176 N.E.2d 761.) A cause of action accrues when the plaintiff can first institute the action. (Pfeifer v. Bell & Howell Co. (1977), 53 Ill.App.3d 26, 27, 10 Ill.Dec. 925, 368 N.E.2d 520.) The question to be resolved then, is when the limitations period began to run.

Plaintiff's position is that pending the resolution of the 2-611 motion the statements in the complaint were privileged. He argues, however, that the privilege generally afforded pleadings is negated by a party's making untrue allegations without reasonable cause. He also argues that Counts II and IV, which alleged that defamatory statements were made in the Proof of Loss are not absolutely privileged. To the extent that the qualified privilege would apply to protect the defendant's defamatory publications in the Proof of Loss, Withall argues that the defendants are liable for defamation where, as here, the qualified privilege is abused, citing Zeinfeld v. Hayes Freight Lines, Inc. (1968, 41 Ill.2d 345, 350, 243 N.E.2d 217; Colson v. Stieg (1980), 86 Ill.App.3d 993, 997, 42 Ill.Dec. 53, 408 N.E.2d 431, aff'd, 89 Ill.2d 205, 60 Ill.Dec. 449, 433 N.E.2d 246. Thus plaintiff concludes that the defamatory statements were actionable for the first time on May 1, 1984 when the trial court's order finding that Capitol's complaints were untrue and made without reasonable cause became final. Plaintiff contends that he was within the one year statue of limitations since he filed his complaint for libel and abuse of process approximately seven months later on November 21, 1984.

To reach this conclusion, plaintiff invokes the discovery rule, which postpones the starting of a limitation period until a plaintiff has knowledge or should have knowledge of the defendant's wrongful acts. (Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 414, 58 Ill.Dec. 725, 430 N.E.2d 976; see also Tom Olesker's Exciting World of Fashion, Inc. v. Dun & Bradstreet, Inc. (1975), 61 Ill.2d 129, 334 N.E.2d 160 (applying the discovery rule to libel actions).) The purpose of the discovery rule is to alleviate harsh results that might result from the literal application of statutes of limitation. Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 414, 58 Ill.Dec. 725, 430 N.E.2d 976. In all of the cases cited by plaintiff, the discovery rule is limited to the discovery of facts that will apprise a party that he has a cause of action. We have found no cases in which the rule has been applied to the occurrence of a legal event, such as the date that an order of the court becomes final.

In a libel action, the limitation period begins to run when there is publication of the libelous material to a third party. (Tom Olesker's Exciting World of Fashion, Inc. v. Dun & Bradstreet, Inc. (1975), 61 Ill.2d 129, 131-32, 334 N.E.2d 160.) In the present case, publication...