# Home Healthcare of Illinois, Inc. v. Jesk

> Appellate Court of Illinois · November 27, 2017 · 112 N.E.3d 594

URL: https://www.frixlaw.com/law-library/cases/4223793

## Case

- **Full name:** HOME HEALTHCARE OF ILLINOIS, INC., an Illinois Corporation, Plaintiff-Appellant, v. Robin P. JESK, Individually and D/B/A Robin P. Jesk & Associates, Defendant-Appellee.
- **Court:** Appellate Court of Illinois
- **Decided:** November 27, 2017
- **Citations:** 112 N.E.3d 594; 2017 IL App (1st) 162482
- **Precedential status:** Unpublished
- **Opinion:** Opinion by Mikva
- **Judges:** Mikva
- **Cited by:** 6 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4223793

## How later opinions describe it (automated extraction)

- noting that an exculpatory clause may be viewed as an affirmative defense

## Opinion text

2017 IL App (1st) 162482

FIRST DIVISION
November 27, 2017

No. 1-16-2482

HOME HEALTHCARE OF ILLINOIS, INC., an Illinois )
Corporation, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. )
) No. 15 L 1231
ROBIN P. JESK, Individually and d/b/a Robin P. Jesk & )
Associates, )
) Honorable
Defendant-Appellee. ) Margaret Ann Brennan,
) Judge Presiding.
)

JUSTICE MIKVA delivered the judgment of the court.
Presiding Justice Pierce and Justice Simon concurred in the judgment and opinion.

OPINION

¶1 The plaintiff in this case, Home Healthcare of Illinois, Inc. (Home Healthcare), brought

claims for breach of contract and breach of fiduciary duty against the defendant, attorney Robin

Jesk, who served as the escrow agent in a real estate transaction in which Home Healthcare was

the buyer and Mr. Jesk’s client was the seller. Home Healthcare alleged that Mr. Jesk violated

the parties’ escrow agreement when he released a $100,000 down payment to the seller without

having received a letter from Home Healthcare certifying that all relevant conditions precedent

had occurred or been expressly waived by Home Healthcare. The Cook County circuit court

granted summary judgment in favor of Mr. Jesk, on the basis that the escrow agreement

contained an exculpatory clause making him liable only for “willful misconduct or gross
No. 1-16-2482

negligence” and Home Healthcare had neither pleaded nor submitted any evidence that Mr. Jesk

engaged in such conduct. For the reasons that follow, we affirm.

¶2 BACKGROUND

¶3 Through a series of agreements, Home Healthcare sought to purchase the home

healthcare businesses known as Samland South Healthcare Services, Inc., an Illinois corporation,

and Samland Health Care Services, Inc., a Florida corporation (collectively, Samland

Healthcare). In one of these agreements, titled “Articles of Agreement for a Deed” (purchase

agreement), Home Healthcare, through its president Jason Rivchin, agreed to purchase Samland

Healthcare and the property located at 15300 S. Cicero Avenue in Oak Forest, Illinois, from

Samland’s owner and president, Flora Sampang, for a total of $1.6 million. The purchase

agreement detailed a type of seller-financed transaction in which Home Healthcare would pay a

down payment of $100,000 at an “initial closing” on August 12, 2010, and maintain possession

of the property while making monthly installment payments, plus interest, with a final closing to

be held at a later date. Section 3 of the purchase agreement described the nature of the

installment payments, after stating “Buyer has paid [a] $100,000.00 down payment to Seller

upon the initial closing.” (Emphasis added.)

¶4 The escrow agreement, which is the agreement directly at issue here, expressly

incorporated the terms of the purchase agreement as they related to the escrow agent, and

provided in relevant part:

“WHEREAS, Buyer shall deposit upon initial closing the down payment

in the amount of $100,000.00 (hereinafter referred to as the “Deposit”); and

***

WHEREAS, in furtherance of such Transaction, the parties desire and the

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No. 1-16-2482

Escrow Agent is willing to hold the Deposit and Documents in escrow on the

terms and conditions hereinafter set forth.”

¶5 The exculpatory language that the circuit court relied on was as follows:

“7. The Escrow Agent is acting as a Stakeholder only with respect to the

Deposit and the Documents. It is agreed that the duties of the Escrow Agent are

only as herein specifically provided, and are purely ministerial in nature, and that

the Escrow Agent shall incur no liability whatsoever except for willful

misconduct or gross negligence. The Seller and the Purchaser each release the

Escrow Agent from any act done or omitted to be done by the Escrow Agent in

good faith in the performance of its duties hereunder as Escrow Agent.”

¶6 The escrow agreement also provided:

“2. The Deposit and Documents, upon delivery to the Escrow Agent, will

be directly issued upon closing to Seller after approval of all documentation by

Buyer and Buyer’s lender to be signed in accordance with the terms of the

Agreement and all loan agreements, and; (ii) [sic] maintain the Documents, in a

safe and secure place within the office of the Escrow Agent as described

hereinbelow.

3. When the initial closing of the Transaction takes place, the Escrow

Agent shall deliver the Deposit to or upon the Seller, provided the Buyer has

executed and delivered to the Escrow Agent a letter certifying that all of the

conditions precedent to be performed by Seller set forth in the Agreement

between the Seller and the Buyer have been duly satisfied or have been expressly

waived by Buyer, which letter shall be delivered personally by Buyer

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No. 1-16-2482

representative Jason Rivchin to the Escrow Agent.

4. In the event the Seller is unable to satisfy the conditions at initial

closing, any Deposit held by the Escrow Agent shall be returned to the Buyer by

the Escrow Agent, and the Documents shall be returned to the Seller whereupon

the Agreement and this Escrow Agreement shall be cancelled and none of the

parties hereto shall have any further rights and obligations hereunder, except as

provided in the [purchase agreement].”

¶7 Section 5 of the purchase agreement explained what was to happen at the initial closing

on August 12, 2010. It provided that Home Healthcare, which had taken possession of the

property before that initial closing date, would be granted “continued possession at [the] time of

[the] initial closing *** provided that the full down payment due in favor of Buyer, [wa]s paid to

Seller in cash or by cashier’s or certified check on the initial closing date.” Section 8(iii)(e) of the

purchase agreement provided that “taking possession of the Property” would be “conclusive

evidence that [Home Healthcare] in all respects accepts and is satisfied with the physical

condition of the Property, all matters shown on the survey and the condition of the title to the

Property as shown to him on or before the initial closing.”

¶8 Paragraphs 5 and 6 of “Rider A” to the purchase agreement further provided that the

seller’s attorney, Mr. Jesk, would hold in escrow, until a later “final” closing date, both a general

warranty deed for the property and the original stock certificates for the business.

¶9 Notably, the text of paragraph 2 of the escrow agreement regarding the deposit to be

delivered to the escrow agent, as quoted above, is the text of that provision after handwritten

changes were made by Mr. Rivchin and initialed by the parties at the initial closing. Paragraph 2

originally provided as follows:

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No. 1-16-2482

“2. The Deposit and Documents, upon delivery to the Escrow Agent, will

be deposited by Escrow Agent into i) for the Deposit, to the IOLTA account of

Escrow Agent at _________________ Bank, if not disbursed to Seller at the

initial closing after approval of all documentation by Buyer and Buyer’s lender to

be signed in accordance with the terms of the Agreement and all loan agreements,

and; (ii) maintain the Documents, in a safe and secure place with the office of the

Escrow Agent as described hereinbelow.”

¶ 10 Home Healthcare alleged in its complaint that its president, Jason Rivchin, delivered to

Mr. Jesk at the initial closing on August 12, 2010, a check for $100,000, made payable to Ms.

Sampang, but that at no time did Mr. Rivchin or any other representative of Home Healthcare

deliver a letter, pursuant to paragraph 3 of the escrow agreement, certifying that all conditions

precedent to the purchase agreement had occurred or been waived. Home Healthcare alleged

that, by giving Ms. Sampang the check without first receiving the letter required by paragraph 3,

Mr. Jesk breached the escrow agreement and, as a result, his fiduciary duty as an escrow agent.

¶ 11 In his answer to the complaint, Mr. Jesk admitted that he agreed to serve as escrow agent

for the transaction pursuant to the terms of the parties’ purchase and escrow agreements but

denied ever receiving a check payable to Ms. Sampang. According to Mr. Jesk, “the deposit of

$100,000 was paid by the buyer directly to the seller and was never placed in the hands of the

defendant as escrow agent or in any capacity whatsoever.” In his responses to Home

Healthcare’s requests to admit, Jesk further contended that he “was directed by the parties to

hold the documents only and the deposit of $100,000 was to go directly to the seller upon the

initial closing” on August 12, 2010.

¶ 12 Throughout discovery, the parties adhered to their opposing versions of what took place

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No. 1-16-2482

at the initial closing and professed very different understandings of Mr. Jesk’s duties as escrow

agent.

¶ 13 At his deposition, Mr. Jesk testified that he is engaged in the general practice of law, with

approximately 25% of his work involving real estate transactions but with “[v]ery limited”

experience as an escrow agent. In Mr. Jesk’s experience, “[t]here was never a reason to hold

money in escrow in an articles of agreement deal” like the one at issue here; in such transactions,

the initial payment and all subsequent payments are made by the buyer directly to the seller, and

only the deed and other relevant documents are held in escrow. As Mr. Jesk explained, “usually a

buyer wants the deed held to know that it’s available if he fulfills his contractual terms.” Mr.

Jesk acknowledged that, in those few instances where he has held funds as an escrow agent, he

received some documentation authorizing him to release the funds before he did so.

¶ 14 Mr. Jesk testified that, a week or two before the initial closing in this case, he prepared

and sent to Mr. Rivchin an initial draft of the purchase agreement, which he based on a form

agreement. Although Mr. Rivchin then had the agreement “typed up in another fashion,” Mr.

Jesk determined that it was “substantially the same” as the form agreement he prepared. Mr.

Rivchin, alone or with the assistance of his lawyer, prepared all of the parties’ other agreements,

including the escrow agreement, and Mr. Jesk only became aware that an escrow agreement

would be part of the transaction a few days before the initial closing. Mr. Jesk stated that he

received a title report from Mr. Rivchin before the initial closing, ascertained that a mortgage on

the property was listed inappropriately, and took action with the lender to have it removed from

the report. Mr. Jesk recalled the title report showing “real estate taxes that everybody has” but

not any liens against the property. He did not do any investigation regarding the debt status of the

property in advance of the initial closing.

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No. 1-16-2482

¶ 15 Per the parties’ agreements, the initial closing was held on August 12, 2012, and was

attended by Flora and Alfredo Sampang and Mr. Jesk, for the seller, and by Mr. Rivchin, his

mother Julie Rivchin, Mariano Lising, and Wameed and Abdul Yousif, for the purchaser. Mr.

Jesk testified that the Sampangs chose to go ahead with the transaction despite his advice to them

that they should not go forward with the deal, which advice was based in part on the fact that the

closing had already been delayed and that Mr. Rivchin was suggesting for the first time that the

initial deposit of $200,000 be reduced to $100,000.

¶ 16 Mr. Jesk testified that, although he had instructed Mr. Rivchin on the day before the

initial closing to wire both the $100,000 down payment and the $4000 in legal fees owed to Mr.

Jesk by Ms. Sampang—which Home Healthcare had agreed to pay as part of the deal—to Mr.

Jesk’s IOLTA account, Mr. Rivchin did not do so. Instead, Mr. Rivchin brought two checks with

him to the closing, delivering the one for $4000 to Mr. Jesk and the one for $100,000 directly to

Ms. Sampang. Mr. Jesk testified that it was Mr. Rivchin who “really was conducting the

closing.” Mr. Jesk recalled actually seeing Mr. Rivchin hand the check to Ms. Sampang and

stated that this was consistent with his understanding that she would not have signed the

purchase agreement—which she did—“if [she] didn’t have $100,000 in her hand.” In Mr. Jesk’s

view, this was also consistent with Mr. Rivchin’s handwritten change to paragraph 2 of the

escrow agreement, which previously stated that the deposit would be deposited into Mr. Jesk’s

IOLTA account “if not disbursed to [the] Seller at the initial closing,” but which Mr. Jesk

modified to say “[t]he Deposit and Documents, upon delivery to the Escrow Agent, will be

directly issued upon closing to Seller after approval of all documentation by Buyer.”

¶ 17 Mr. Jesk acknowledged that he signed the escrow agreement, which he stated “was thrust

at [him] the day of the closing.” It was his understanding that the portion of the “whereas”

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No. 1-16-2482

paragraph, stating that he was willing to hold a “deposit” in escrow along with the relevant

documents, did not apply, as Mr. Rivchin had chosen not to deposit the required funds in Mr.

Jesk’s account prior to the closing but had, consistent with his modification to paragraph 2 of the

escrow agreement, instead brought and delivered a check directly to Ms. Sampang at the initial

closing. As Mr. Jesk understood the parties’ agreement, paragraph 3 of the escrow agreement

would only have applied if, as initially planned, Mr. Rivchin had deposited the $100,000 in Mr.

Jesk’s IOLTA account in advance of the initial closing. Mr. Jesk would then have required an

authorization letter from Home Healthcare at the initial closing to release those funds to Ms.

Sampang. Because Mr. Rivchin elected not to deposit the $100,000 in the IOLTA account but

instead to bring a check directly to the closing, Mr. Jesk believed that there was no “deposit” for

him to hold in escrow. When asked why he did not strike out references to a deposit in paragraph

3 of the escrow agreement or elsewhere in the parties’ agreements, Mr. Jesk explained:

“A. When somebody brings [documents] in en masse [sic] on the day of a closing

that’s been long delayed, some of them don’t get the attention that they should in terms of

striking out irrelevant and impertinent information that should be stricken out.

There’s no reason to strike out deposit, deposit, deposit, if the agreement says

itself that there is no deposit. That it’s given directly to the seller.”

¶ 18 Mr. Jesk testified that other language in the agreements signed at the initial closing on

August 12, 2010, was not applicable to the transaction. For example, paragraph 2 of the escrow

agreement also called for documentation to be provided to Home Healthcare’s lender, but this

was a seller-financed transaction, and Home Healthcare had no lender.

¶ 19 Mr. Jesk acknowledged in his deposition that he never received a letter, as referenced in

paragraph 3 of the escrow agreement, from Home Healthcare stating that all conditions precedent

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No. 1-16-2482

to the release of the $100,000 had been satisfied. But as Mr. Jesk understood his responsibilities

under the parties’ agreements, he was only required to maintain in a safe and secure place after

the initial closing the warranty deed from the seller to the buyer, the stock certificates to the two

corporations that were part of the sale, and the parties’ original signed documents, which he did.

It was his understanding that, “[i]f all of [the parties’] agreements were read, agreed to and

signed, the hundred thousand [dollars] would be given to Flora Sampang.” In Mr. Jesk’s view,

any ambiguity in the escrow agreement was resolved by the language of the purchase agreement,

which made clear that the $100,000 was to be paid to the seller simultaneously with the signing

of all of the parties’ various agreements at the initial closing. If the money was not paid there and

then, according to Mr. Jesk, “everyone would have walked out of the room without a closing.”

¶ 20 Mr. Rivchin’s deposition testimony described the closing differently than Mr. Jesk’s. Mr.

Rivchin testified at his deposition that the deal was originally intended to be “just a straight

purchase and sale,” in which Home Healthcare would receive financing from a lender to

purchase the property, but after several delays and Ms. Sampang’s failure to “provide[ ]

everything she needed to for the lender,” the parties instead began to structure the deal around

articles of agreement for a deed, a type of transaction with which Mr. Rivchin had no prior

experience. According to Mr. Rivchin, Mr. Jesk stated at the initial closing that he did not want

to hold any funds in his IOLTA account and instructed Mr. Rivchin and the other buyer’s

representatives to leave and bring back separate checks for $100,000 and $4000. Mr. Rivchin

stated that they did as they were instructed and, upon returning, Wameed Yousif, Home

Healthcare’s sole shareholder, “actually handed both [checks] to Mr. Jesk” as the parties sat back

down. When asked if he saw Mr. Yousif physically hand the checks over, Mr. Rivchin stated:

“We all did, to Mr. Jesk directly.”

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No. 1-16-2482

¶ 21 Mr. Rivchin acknowledged that the purchase agreement called for the $100,000 to be

paid to the seller at the initial closing. However, it was his position that paragraph 3 of the

escrow agreement, which was drafted by Mr. Rivchin’s attorney and stated that the money could

not be released until all conditions precedent were satisfied, was controlling. Mr. Rivchin also

acknowledged that he modified paragraph 2 of the escrow agreement as described above. He

denied, however, that his signing of the purchase agreement at the initial closing constituted his

“approval of all documentation,” as contemplated in that paragraph. In his view, the initial

closing remained open-ended while Home Healthcare tested “its ability to move forward in the

ownership,” and it was Mr. Jesk’s duty to hold the check for $100,000, until told otherwise.

¶ 22 When Mr. Rivchin was asked to comment on section 5 of the purchase agreement, which

made continued possession of the property contingent upon payment of the $100,000 at the

initial closing, he indicated that, in his view, the initial closing did not really conclude when the

parties parted ways on August 12, 2010:

“Q. So in order to stay in possession of the business and to conduct the

business of Samland South, the down payment needed to be made at the initial

closing?

A. Yes and no. Again we had to get past the initial closing, but we never

really did because we never got past the issues ***.

So that’s why we never could provide Mr. Jesk a release as far as a letter

confirming that all the conditions had been satisfied. So that’s why we sat in this

sort of really awkward position where we didn’t have this control over the

business. And we really didn’t have the ability to move forward in the ownership.

We never got past the issues and more just kept coming.”

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No. 1-16-2482

¶ 23 According to Mr. Rivchin, after the initial closing Home Healthcare encountered some

difficulties taking over management of Samland Healthcare and became concerned with issues

raised in the companies’ corporate minutes. Mr. Rivchin testified that a meeting was eventually

held with Mr. Jesk, at which “there were a number of acknowledgments of a lot of wrongdoing

and a lot of problems,” including undisclosed debts for which the business had been pledged as

collateral. Through further negotiations, Home Healthcare ultimately “walked [away] from the

business.” According to Mr. Rivchin, it was not until this time that Home Healthcare learned that

the $100,000 down payment had already been paid to Ms. Sampang.

¶ 24 The record also includes the depositions of the parties’ expert witnesses, who offered

their own opinions, as attorneys with experience in transactional real estate, regarding the proper

construction of the parties’ agreements and whether an escrow agent would be in violation of

those agreements under various hypothetical scenarios. There is no need to summarize that

testimony here, as these opinions are not a proper subject for expert opinion, at least in reference

to the issues before us on this appeal. See Caracci v. Patel, 2015 IL App (1st) 133897, ¶ 28 (“It

is well settled that an expert witness may not testify with respect to legal conclusions.”).

¶ 25 Mr. Jesk moved for summary judgment pursuant to section 2-1005 of the Code of Civil

Procedure (735 ILCS 5/2-1005 (West 2016)), arguing that Home Healthcare had failed to plead

or present any evidence supporting a finding that Mr. Jesk acted with “willful misconduct or

gross negligence,” as provided in the exculpatory clause in paragraph 7 of the escrow agreement.

Mr. Jesk raised other provisions in the purchase agreement and escrow agreement, particularly

the handwritten change to paragraph 2 of the escrow agreement made by Mr. Rivchin, that he

argued rendered the escrow agreement’s references to a deposit to be held in escrow ambiguous.

Because Mr. Jesk reasonably and “firmly believe[d] that he was in compliance with his duties as

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No. 1-16-2482

escrow agent in th[e] deal,” he insisted that the most Home Healthcare could argue “was that

[he] made a mistake in his interpretation of the contracts in this transaction” and thus was not

liable in light of the exculpatory language in paragraph 7 of the escrow agreement.

¶ 26 In response, Home Healthcare focused on paragraphs 3 and 4 of the escrow agreement,

arguing that the $100,000 check was “deposited” with Mr. Jesk, that he was not provided with a

letter from Home Healthcare releasing the check to Ms. Sampang, and that nothing excused Mr.

Jesk from returning the money to Home Healthcare. Home Healthcare insisted that the

exculpatory clause found in paragraph 7 of the escrow agreement could not protect Mr. Jesk

from liability because this was a breach of contract case, “not a negligence case or a malpractice

case,” and “negligence [wa]s not an issue.”

¶ 27 In his reply, Mr. Jesk reiterated that the escrow agreement incorporated by reference and

was to be read in conjunction with the purchase agreement. He argued that any requirement for

him to hold the $100,000 check in escrow beyond the initial closing contradicted numerous

provisions in the purchase agreement and the escrow agreement providing that the payment was

to be made directly to the seller at the initial closing. Mr. Jesk urged the circuit court to conclude

that the limitations on liability in paragraph 7 of the escrow agreement did apply and that

summary judgment in Mr. Jesk’s favor was appropriate where Home Healthcare failed to plead

or to present any evidence supporting a finding that Mr. Jesk acted with gross negligence or

willful misconduct as to his contractual obligations. Mr. Jesk maintained that he simply

“reviewed the instructions of a poorly worded and specifically modified Escrow Agreement in

conjunction with the original agreement, and acted in accordance with the intentions of the

parties,” as he understood them.

¶ 28 At oral argument on Mr. Jesk’s motion for summary judgment, counsel for Home

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No. 1-16-2482

Healthcare maintained that, on a claim for breach of contract, the notion of willful and wanton

conduct was “sort of a figment of [Mr. Jesk’s] imagination” but argued in the alternative that, if

the concept applied, it was an affirmative defense that Mr. Jesk had the burden of proving.

¶ 29 The circuit court granted Mr. Jesk’s motion, concluding that summary judgment in Mr.

Jesk’s favor was proper because not only had Home Healthcare failed to plead “that Mr. Jesk

acted in a willful manner in his capacity as the Escrow Agent” but there was “no evidence at all”

that he had so acted. The circuit court stated: “It is the [plaintiff’s] burden to bring forth

everything in order to defeat that summary judgment. Simply it has not been met, and therefore

judgment will be entered in favor of the defendant.” Home Healthcare now appeals.

¶ 30 JURISDICTION

¶ 31 The circuit court entered its final judgment in this case on August 4, 2016, and Home

Healthcare timely filed its notice of appeal on September 1, 2016. We have jurisdiction under

Illinois Supreme Court Rules 301 and 303 governing appeals from final judgments. Ill. S. Ct. R.

301 (eff. Feb. 1, 1994); R. 303 (eff. Jan. 1, 2015).

¶ 32 ANALYSIS

¶ 33 We review a grant of summary judgment de novo (Doria v. Village of Downers Grove,

397 Ill. App. 3d 752, 756 (2009)) and may affirm “on any basis appearing in the record” (Urban

Sites of Chicago, LLC v. Crown Castle USA, 2012 IL App (1st) 111880, ¶ 21). Summary

judgment is appropriate where “the pleadings, depositions, and admissions on file, together with

the affidavits, if any, show that there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2016).

¶ 34 On appeal, Home Healthcare argues that the circuit court’s grant of summary judgment in

Mr. Jesk’s favor based on the exculpatory clause in paragraph 7 of the parties’ escrow agreement

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No. 1-16-2482

was erroneous because that clause only limits Mr. Jesk’s liability for tortious conduct and has no

application on this claim for breach of contract. Home Healthcare also argues that, if the

exculpatory clause does apply, it is an affirmative defense on which the circuit court improperly

shifted the burden of proof from Mr. Jesk to Home Healthcare. While we agree with Home

Healthcare that the exculpatory clause may be an affirmative defense, we agree with the circuit

court that summary judgment in favor of Mr. Jesk was proper.

¶ 35 1. The Exculpatory Clause is an Enforceable Limit on Contract Liability

¶ 36 It is clear from the parties’ briefs that contested issues of fact exist concerning who

physically handed the $100,000 check to Ms. Sampang and whether Mr. Jesk failed to comply

with paragraph 3 of the escrow agreement. However, for purposes of Mr. Jesk’s motion for

summary judgment, these are not material issues of contested fact. See Heiden v. Cummings, 337

Ill. App. 3d 584, 588 (2003) (noting that “facts which would not affect the outcome of a party’s

case, regardless of how sharply those facts are controverted, will not warrant the denial of a

motion for summary judgment” (internal quotation marks omitted)). The sole argument Mr. Jesk

made in his motion was that, as a matter of law, even if he had a duty to hold the check beyond

the initial closing and even if he breached that duty under paragraph 3 by giving the check to Ms.

Sampang without having first received an authorization letter from Home Healthcare, the

exculpatory clause at paragraph 7 of the escrow agreement shielded him from liability. Although

this position is inconsistent with Mr. Jesk’s insistence that he could not have breached the

agreement because the $100,000 check was never given to him in the first place, is well

established that a defendant may assert inconsistent defenses in the alternative. See, e.g., People

v. Ford, 39 Ill. 2d 318, 320-21 (1968) (holding a defendant may deny doing the act giving rise to

a criminal charge and simultaneously argue that, even if she did do it, she should be found not

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No. 1-16-2482

guilty by reason of insanity); People v. Norfleet, 29 Ill. 2d 287, 290-91 (1963) (finding a

defendant may deny that he made incriminating statements and simultaneously challenge the

voluntariness of those statements).

¶ 37 On appeal, we are concerned only with whether the exculpatory clause at issue can be

applied in the context of a claim for breach of contract and, if it can, whether there is a contested

issue of fact as to whether Mr. Jesk’s conduct fell outside the protections of that clause.

¶ 38 Paragraph 7 of the escrow agreement contains two sentences purporting to exculpate Mr.

Jesk from liability. The first states that “the Escrow Agent shall incur no liability whatsoever

except for willful misconduct or gross negligence.” The second provides that “[t]he Seller and

Purchaser each release the Escrow Agent from any act done or omitted to be done by the Escrow

Agent in good faith in the performance of its duties hereunder.”

¶ 39 Home Healthcare argues that exculpating Mr. Jesk from liability for anything that is not

“willful misconduct or gross negligence” makes his obligations under the contract illusory.

Although Home Healthcare does not cite the case directly, its argument touches on principles

articulated by our supreme court in Jewelers Mutual Insurance Co. v. Firstar Bank Illinois, 213

Ill. 2d 58 (2004). In Jewelers, a clause in a bank’s safety deposit box rental agreement purported

to exculpate the bank from all liability for loss or damage to the boxes’ contents. Id. at 63. But in

the very next sentence of the agreement the bank expressly assumed a duty to exercise ordinary

care to prevent the unauthorized opening of the boxes. Id. Concluding that the clauses could not

be reconciled, the court in Jewelers held that the exculpatory clause was unenforceable. Id. at 64­

65. Jewelers stands for the principle that “[a] party cannot promise to act in a certain manner in

one portion of a contract and then exculpate itself from liability for breach of that very promise

in another part of the contract.” Id. at 65.

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¶ 40 In the escrow agreement at issue here, Mr. Jesk promised to undertake certain duties. If

an exculpatory clause in that same agreement categorically shielded Mr. Jesk from liability for

any breach of that promise, we agree with Home Healthcare that the clause would render the

contract illusory and, under Jewelers, could not be enforced. But it is clear that the exculpatory

clause in paragraph 7 of the escrow agreement does not make Mr. Jesk’s promises illusory. The

net effect of the two relevant sentences in that clause is that Mr. Jesk is not liable for acts of

ordinary negligence committed in good faith but is still liable for actions taken in bad faith, i.e.,

acts constituting “willful misconduct or gross negligence.” Applied to a claim for breach of

contract, the clause shields Mr. Jesk from liability for accidental or negligent breaches of

contract, but not from intentional breaches or breaches resulting from gross negligence. The

clause does not run afoul of the prohibition in Jewelers against exculpatory clauses that render

contractual promises illusory. Indeed, the court in Jewelers distinguished a decision of the

Florida appellate court on this basis, nothing that the clause in that case—which limited liability

to “instances of gross negligence, fraud, or bad faith,” was only a “partial exculpatory clause”

that did not completely absolve the defendant of liability under the parties’ contract. Id. at 68

(citing Federal Deposit Insurance Corp. v. Carré, 436 So. 2d 227, 229-30 (Fla. Dist. Ct. App.

1983)).

¶ 41 Moreover, although it is true that “exculpatory provisions do not enjoy special favor in

the law” (Meyers v. Rockford Systems, Inc., 254 Ill. App. 3d 56, 62 (1993)), they are generally

upheld “unless (1) it would be against a settled public policy of the State to do so, or (2) there is

something in the social relationship of the parties militating against upholding the agreement”

(internal quotation marks omitted) (Harris v. Walker, 119 Ill. 2d 542, 548 (1988)). Home

Healthcare does not argue that paragraph 7 of the escrow agreement violates either of these

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principles.

¶ 42 Home Healthcare insists that the phrase “willful misconduct and gross negligence” used

in paragraph 7 of the escrow agreement references tort concepts that simply cannot be applied in

the context of a claim for breach of contract. In support of this argument, Home Healthcare relies

on certain statements made by our supreme court in Valfer v. Evanston Northwestern

Healthcare, 2016 IL 119220. We find Home Healthcare’s reliance on those statements to be

misplaced.

¶ 43 The plaintiff in Valfer was a doctor whose privileges to practice at the defendant hospital

were revoked by the hospital’s peer review board. Id. ¶ 1. The doctor alleged, among other

things, that the hospital violated its own bylaws by failing to reinstate him. Id. The hospital

moved for summary judgment, arguing that it was immune from damages under a provision of

the Hospital Licensing Act (210 ILCS 85/1 et seq. (West 2012)), which provides that hospitals

are not liable for civil damages resulting from the acts or omissions of their review boards,

except those acts “involving wilful or wanton misconduct.” Valfer, 2016 IL 119220, ¶¶ 1, 23

(citing 210 ILCS 85/10.2 (West 2012)). The doctor argued that the review board’s conduct was

willful because revocation of the doctor’s privileges was an intentional act that the board knew

would cause him harm. Id. ¶¶ 21, 26. Our supreme court disagreed, concluding, as the appellate

court did, that elsewhere in the same provision the legislature had provided a much narrower

definition of “wilful and wanton misconduct,” clarifying that the exculpatory provision did not

apply only where the “harm” intended by a defendant was physical harm. Id. ¶ 25. Because the

doctor alleged no physical harm, the hospital was not liable for damages stemming from the

board’s decision. Id. at ¶¶ 16, 25.

¶ 44 Home Healthcare completely overlooks both the facts and holding of Valfer and instead

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seizes on statements the court made after it announced its holding, in which it acknowledged that

the language in the statute was not “flawless” because it “incongruously engrafted” tort concepts

onto a statute providing immunity for contract claims. Id. ¶ 27. The court noted both that

“ ‘wilful and wanton’ is a tort concept that applies only to reckless or intentionally tortious

conduct that causes physical harm to a person or property” and that the concept generally “has no

application to a nontort claim such as a routine breach of contract.” Id. However, in making this

observation, the court did not, as Home Healthcare suggests, hold that tort concepts can never be

used to define the boundaries of a party’s immunity for breach of contract. In fact, our supreme

court in Valfer referenced Morrow v. L.A. Goldschmidt Associates, Inc., 112 Ill. 2d 87 (1986)

(see Valfer, 2016 IL 119220, ¶ 27 n.4), a case in which it recognized that a breach of contract

may by willful and wanton and went on to hold that, as a matter of public policy, punitive

damages are not available for willful and wanton breaches of contract, except where the conduct

constituting the breach is also the basis for an independent tort claim. Morrow, 112 Ill. 2d at 94,

98-99. Home Healthcare also relies on Morrow. However, again, nothing in that case suggests

that there can be no such thing as a willful and wanton breach of contract. Rather, our supreme

court held in that case that such a breach will not give rise to punitive damages.

¶ 45 Neither Valfer nor Morrow offers any support for Home Healthcare’s argument that a

contractual provision that purports to exculpate parties from liability for all breaches of contract

except those involving bad faith, willfull misconduct, or gross negligence is not enforceable.

Home Healthcare has provided us with no other authority suggesting that parties lack the ability

to agree to limit contract liability to such conduct. Indeed, because “[p]ublic policy strongly

favors freedom to contract” (internal quotation marks omitted) (Harris, 119 Ill. 2d at 548), we

see no reason why parties should not be free to agree to such provisions.

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¶ 46 In fact, Mr. Jesk cites several cases in which this court has upheld exculpatory provisions,

like the one at issue here, that limit contract liability based upon the nature of a party’s conduct.

For example, in Meyers, 254 Ill. App. 3d at 62-63, this court upheld an exculpatory provision

that relieved an escrow agent from any liability for surrendering stock in the event that the

plaintiff defaulted in making contractually required installment payments, unless the agent

“failed to act in good faith in making that surrender.” And in Axelrod v. Giambalvo, 129 Ill. App.

3d 512, 516, 519 (1984), we upheld an exculpatory clause in a trust agreement that protected

trustees from liability for breach of their duties under that agreement, so long as they operated

“in good faith and with reasonable care.” These cases are consistent with our supreme court’s

recognition in Jewelers that partial exculpatory clauses limiting a party’s liability to “instances of

negligence, fraud, or bad faith” do not completely and impermissibly foreclose contract liability.

Jewelers, 213 Ill. 2d at 68 (citing Carré, 436 So. 2d at 229-30). While the facts of the cases Mr.

Jesk relies on are different than this one in that the good-faith errors at issue there were not, as

Mr. Jesk claims to be the case here, possible good-faith misinterpretations of a party’s

contractual responsibilities, those cases make it clear that Illinois does recognize the right of

parties to a agree to limit their contract liability.

¶ 47 Courts in other states have gone a step further, to expressly recognize that an exculpatory

clause may protect a party to a contract from liability when the party relies on its own good-faith

misunderstanding of what the law provides. In New Mexico v. Colonial Penn Insurance Co., 812

P.2d 777 (N.M. 1991), for example, the State of New Mexico sued its investment firm for breach

of contract for recommending to the state’s investment officer that he purchase certain stocks

prohibited by the state’s constitution. Id. at 782. The New Mexico Supreme Court concluded that

a claim for breach of contract against the firm was cognizable because the contract should be

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read to include a requirement that all recommended purchases were legal. Id. at 784. However, a

clause in the contract exculpated the firm from liability except for actions constituting

“ ‘knowing willful misfeasance, bad faith, or reckless disregard,’ ” and the court concluded that

summary judgment was not proper because contested issues of material fact existed with respect

to whether the investment firm’s conduct rose to that level, “including whether [the firm] had

notice of the constitutional limitations” that the state’s purchases were subject to. Id.

¶ 48 In short, we conclude that paragraph 7 of the parties’ escrow agreement constitutes an

enforceable limitation on Mr. Jesk’s liability for breach of contract and reject Home Healthcare’s

suggestion that it is not a limitation that the parties were entitled to agree to as part of their

escrow agreement or that it has no meaning in the context of the claim against Mr. Jesk.

¶ 49 2. Home Healthcare Failed to Meet Its Burden of Producing
Some Evidence of Willful Misconduct or Gross Negligence

¶ 50 Home Healthcare also argues that, even if the exculpatory clause is enforceable in the

context of a contract claim, by granting summary judgment in favor Mr. Jesk based on Home

Healthcare’s failure to plead or present evidence of willful misconduct or gross negligence, the

circuit court “wrongfully shift[ed] the burden of proof, as to what is essentially an affirmative

defense, from the defendant to the plaintiff.”

¶ 51 What Home Healthcare fails to recognize in this second argument is that on a motion for

summary judgment, although the burden of persuasion remains with the moving party, the

burden of production can shift. See Moline School District No. 40 Board of Education v. Quinn,

2016 IL 119704, ¶ 44 (noting that the movant in that case “bore the burden of persuasion, as well

as the initial burden of production” (emphasis added)). A defendant who moves for summary

judgment can meet its initial burden of production by either (1) affirmatively introducing

evidence that, if uncontroverted, would disprove the plaintiff’s case (see Purtill v. Hess, 111 Ill.

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2d 229, 240-41 (1986)) or (2) establishing that a lack of sufficient evidence will prevent the

plaintiff from proving an essential element of the cause of action (see Willett v. Cessna Aircraft

Co., 366 Ill. App. 3d 360, 368 (2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

(1986)). Where a defendant meets its initial burden of production, that burden shifts to the

plaintiff to show some factual basis to support the elements of his claim or to defeat the defense.

Soderlund Brothers, Inc. v. Carrier Corp., 278 Ill. App. 3d 606, 615 (1995).

¶ 52 An affirmative defense is some “other affirmative matter” by which a party “seeks to

avoid the legal effect of or defeat the cause of action set forth in [a] complaint, counterclaim, or

third-party complaint.” 735 ILCS 5/2-613(d) (West 2016). Although Mr. Jesk did not assert

paragraph 7 of the escrow agreement as an affirmative defense in his answer, Home Healthcare

acknowledges that “an affirmative defense may be raised in a motion for summary judgment

even though it had not been raised previously in the pleadings.” A.C. Cannon v. Bryant, 196 Ill.

App. 3d 891, 894 (1990). We agree with Home Healthcare that it may be appropriate to view an

exculpatory clause as an affirmative defense. See Meyers, 254 Ill. App. 3d at 66 (concluding that

the exculpatory clause in an escrow agreement constituted an “affirmative matter[ ], evident from

the pleadings, which defeated or negated [the] plaintiff’s claim” against the escrow agent for

breaching his duties under the agreement).

¶ 53 However, we do not agree that the circuit court improperly shifted the burden to Home

Healthcare on this issue. Although the burden of proof at trial on an affirmative defense would

ultimately be Mr. Jesk’s, his burden of production, as the party moving for summary judgment,

would properly shift to Home Healthcare if he presented evidence supporting his factual position

on that affirmative defense. Soderlund, 278 Ill. App. 3d at 615 (“Once the movant has carried

this burden, the respondent may not rely on the factual issues raised by the pleadings, but must

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submit affidavits or refer to depositions or admissions on file which present” “a factual basis

which would arguably entitle them to judgment in their favor, based on the applicable law.”

(Internal quotation marks omitted.)).

¶ 54 The record reflects that Mr. Jesk met his initial burden of production on the exculpatory

clause by presenting evidence that his actions did not constitute “willful misconduct or gross

negligence.” In support of his motion, Mr. Jesk pointed to provisions in the purchase agreement,

“Rider A” to that agreement, and Mr. Rivchin’s handwritten change to the escrow agreement

itself, all calling for the $100,000 down payment to be paid directly to Ms. Sampang at the initial

closing. Section 5 of the purchase agreement further provided that continued possession of the

property by Home Healthcare beyond the date of the initial closing was expressly conditioned on

that payment being made at the initial closing. Paragraphs 5 and 6 of “Rider A” referred only to

Mr. Jesk holding the general warranty deed and original stock certificates in escrow, not the

payment of $100,000. And although paragraph 3 of the escrow agreement provided that Mr. Jesk

should only deliver the deposit to Ms. Sampang upon receipt from Home Healthcare of a letter

certifying that all conditions precedent to the transaction had occurred or were waived, paragraph

4 immediately following it provided that the conditions were to be satisfied “at closing”

(emphasis added). If they were not, the deposit was to be returned to the buyer, and there would

be no deal. Mr. Jesk and Mr. Rivchin both testified that the deal was in fact not called off at the

initial closing; the parties left with signed copies of the various agreements, and Home

Healthcare continued to possess the property.

¶ 55 Mr. Jesk and Mr. Rivchin also both testified that the parties initially planned for the

$100,000 to be deposited in Mr. Jesk’s IOLTA account. Although they disagreed regarding what

led them to change that plan, it is undisputed that no deposit was made into the account. Instead,

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both parties agree that Mr. Rivchin brought a check with him to the initial closing and made a

handwritten change to paragraph 2 of the escrow agreement. That provision, which previously

called for the money to be deposited in the IOLTA account “if not disbursed to Seller at the

initial closing,” was changed to provide that “[t]he Deposit and Documents, upon delivery to the

Escrow Agent, w[ould] be directly issued upon closing to Seller after approval of all

documentation.”

¶ 56 Drawing all reasonable inferences in Home Healthcare’s favor, we conclude that Mr. Jesk

met his initial burden of production on his affirmative defense. The undisputed facts—including

the last-minute change in plans regarding the form the $100,000 payment would take, as well as

Mr. Rivchin’s conduct in signing the agreements, leaving the closing without canceling the deal,

and continuing to occupy the property—all support Mr. Jesk’s professed belief that no “deposit”

had been made, that all conditions precedent to the deal had occurred, and that his contractual

duties did not include holding any funds in escrow for the parties beyond the initial closing.

Thus, if, as Home Healthcare claims, Mr. Jesk released the check for $100,000 to Ms. Sampang

at the closing, his doing so did not constitute willful misconduct or gross negligence but rather

coincided with his good-faith understanding of what the escrow agreement required him to do.

¶ 57 Our supreme court has recognized that a party who acts pursuant to a mistaken belief

regarding what is permitted or required of that party does not act willfully. In O’Leary v. Allphin,

64 Ill. 2d 500, 503, 512 (1976), the director and a manager of the Illinois Department of Revenue

were convicted of criminal contempt for willfully violating an injunction restraining the

department from enforcing certain cigarette taxes. Our supreme court reversed the convictions,

concluded that the evidence was insufficient to establish beyond a reasonable doubt that the

defendants were guilty of willful violations of the court’s order. Id. at 512-13. In the court’s

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view, “[a] pertinent factor [to] be considered [wa]s the specificity of the injunction order,” which

it preliminarily construed and concluded “was not so specific and clear as to be susceptible of

only one interpretation.” Id. at 513-14.

¶ 58 In our view, Mr. Jesk presented sufficient evidence that, even if he breached the parties’

agreement, he did not do so in bad faith, through willful misconduct, or through gross

negligence. Mr. Jesk’s interpretation of his duties under the parties’ agreement was reasonable,

and certainly as reasonable as Mr. Rivchin’s contention that, despite the fact that the parties

signed all necessary papers and parted ways on August 12, 2010, without calling off the

transaction and with Home Healthcare still occupying the property, the initial closing was never

really concluded but continued on indefinitely.

¶ 59 Since Mr. Jesk met this burden of producing evidence to show his good faith and to

negate a finding that he engaged in willful misconduct or gross negligence, it then fell to Home

Healthcare to demonstrate a contested issue of material fact by presenting some evidence to the

contrary. Although the circuit court perhaps erroneously viewed the existence of bad faith,

willful misconduct, or gross negligence on Mr. Jesk’s part as something Home Healthcare had

the burden to plead and ultimately prove at trial—as opposed to a shifted burden of production

on summary judgment—the court’s conclusion that Home Healthcare presented no evidence of

such conduct in opposition to summary judgment was entirely correct.

¶ 60 On appeal, Home Healthcare likewise points to no evidence of Mr. Jesk’s bad faith,

instead insisting that the word “willful” means nothing more than intentional and that Mr. Jesk’s

conduct was willful if he intended to hand the $100,000 check to Ms. Sampang, as opposed to

accidentally allowing it to come into her possession. As an initial matter, Home Healthcare

quotes only one definition of “willful” provided in Black’s Law Dictionary. However, that

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edition, like later ones, clearly provides two opposing definitions of the word. Black’s Law

Dictionary (5th ed. 1979) (defining “willful” as “intentional; not accidental or involuntary,” but

also “to do something the law forbids, or with the specific intent to fail to do something the law

requires to be done; that is to say, with bad purpose either to disobey or to disregard the law”).

Moreover, Home Healthcare ignores the fact that paragraph 7 of the escrow agreement refers not

to any willful act but to “willful misconduct.” “[M]isconduct” is defined as “[a] dereliction of

duty” or “unlawful, dishonest, or improper behavior.” Black’s Law Dictionary (10th ed. 2014).

Home Healthcare offers no interpretation of these two words together that equates them with

conduct that is simply intentional. Home Healthcare presented no evidence that, at the time of

the initial closing, Mr. Jesk acted in bad faith or engaged in willful misconduct or gross

negligence. There was no evidence, for example, that Mr. Jesk was told anything about the

problems with Samland Healthcare that would later cause Home Healthcare to walk away from

the deal and seek the return of its down payment and likewise nothing to suggest that Mr. Jesk’s

interpretation of what he was required to do under the parties’ escrow agreement was contrived

or unreasonable.

¶ 61 We conclude that summary judgment in favor of Mr. Jesk on Home Healthcare’s breach

of contract claim was proper.

¶ 62 C. Breach of Fiduciary Duty

¶ 63 For all of the reasons stated above, we likewise conclude that summary judgment in Mr.

Jesk’s favor was also warranted on Home Healthcare’s breach of fiduciary duty claim. An

escrow agent owes a fiduciary duty to both the purchaser and the seller in a transaction to act in

accordance with escrow instructions in the parties’ contract. International Capital Corp. v.

Moyer, 347 Ill. App. 3d 116, 123 (2004). The parties here agree that Home Healthcare’s claims

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for breach of contract and breach of fiduciary duty, which are based on the same conduct, must

stand or fail together.

¶ 64 CONCLUSION

¶ 65 For the above reasons, we affirm the circuit court’s grant of summary judgment in favor

of Mr. Jesk.

¶ 66 Affirmed.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4223793. Public record. Not legal advice.