June 29, 2017

Illinois Appellate Court Rejects Palm II-Based Defense in Eviction Action

On June 28, 2017, the Illinois appellate court reversed a trial court decision dismissing an eviction lawsuit for allegedly failing to comply with Palm II . This is an important victory for all condominium associations as it will prevent defendants from citing the Palm II decision in an effort to challenge an eviction lawsuit to avoid liability for unpaid assessments. Levenfeld Pearlstein, LLC is proud to have represented the condominium association in this appeal that makes favorable law for condominium associations mired in a contested eviction lawsuit. 
 
In the case, Lake Point Tower Condominium Association v. Diane Waller, 2017 IL App (1st) 162072, the First District held that:
(1) alleging that the “board voted at an open meeting to initiate litigation” is not an essential element of a plaintiff’s prima facie case in an eviction lawsuit, and
(2) Palm II does not preclude an association’s Board of Directors (“BODs”) from delegating authority to initiate collection/eviction lawsuits to the managing agent.  
 
In Lake Point, the plaintiff condominium association brought a simple eviction lawsuit against a unit owner that had failed to timely pay assessments.  The Association filed the lawsuit based upon an earlier adopted rule that provided “when any portion of the Unit Owner's account becomes forty-five (45) days past due, the Board shall forward that account to an attorney to initiate legal proceedings to collect…”    
 
In defense of the lawsuit, the defendant argued:
(1) the association was required to plead as an essential element of its prima facie case that it held a BODs meeting open to all unit owners that voted in favor of initiating the litigation, and
(2) the lawsuit was barred because the plaintiff association had not complied with Palm II and Section 18(a)(9)(A) of the Condominium Act by holding an open meeting voting in favor of initiating the specific eviction lawsuit.  
 
The circuit court accepted these arguments, dismissed the case with prejudice, and later refused to allow the association to amend the complaint based upon a subsequent open meeting of the BODs specifically authorizing this lawsuit.  
 
On appeal, at the outset of the opinion, citing North Spaulding Condominium Ass'n v. Cavanaugh, 2017 IL App (1st) 160870, ¶22, the First District made clear that “an association's complaint is not required to allege as an element of a forcible entry and detainer action that the association's board voted at an open meeting to initiate litigation.”
 
With respect to the association’s authority to delegate the initiation of litigation to the management company, the First District turned to Palm II, which has received little treatment since its publication two years ago.  The Court stated: 
 
"While the board in Palm had delegated the responsibility of handling unit owner delinquencies and collection activities to the management company, Palm involved the defense of litigation, rather than collection activities.  Thus, the reviewing court was not called upon to directly address whether the board's purported delegation of the authority to initiate collections was valid. Additionally, Palm did not indicate that the delegation occurred through a vote of the board, as was the case here, let alone hold that this specific means of delegation would be ineffective. Furthermore, Palm did not address whether either of the defects considered were cognizable defenses to an association's forcible detainer action. Cf. Spanish Court Two Condominium Ass'n v. Carlson, 2014 IL 115342, ¶32 (recognizing in a forcible detainer and entry action that a unit owner could challenge 'the manner in which the assessment was adopted' (emphasis added))."
 
This, of course, makes clear that the First District did not believe Palm II precludes the type of delegation at issue here.  
 
Ultimately, however, the First District held that the circuit court abused its discretion by denying the association leave to amend.  Moreover, the Court held that any perceived issues with the association’s capacity to sue would have been cured by amendment and that amendment would “further the ends of justice.”