2015 IL App (1st) 140948
Ill. App. Ct.2015Background
- Property at 522 E. Washington St. was the subject of a contested sale and later tax-sale proceedings; William & Jan Baczek recorded claims (memorandum of sale, lis pendens) asserting an interest.
- Property Group (owned by Benjamin Bass) bought 2002 tax lien and pursued a tax deed; the Baczeks redeemed the 2002 taxes but later, via agreement with Bass, sought expungement of that redemption so Bass received a tax deed and then conveyed the property to the Baczeks by warranty deed for $65,000.
- Patricia Kelver filed a successful 735 ILCS 5/2-1401 petition vacating the tax deed as procured by fraud/deception (court found Baczeks were not bona fide purchasers) and revesting title in Patricia; Patricia was ordered to reimburse taxes to Bass and the Baczeks.
- Chicago Title paid the Baczeks $115,000 under their title policy and incurred attorney fees, then obtained a settlement/assignment/subrogation from the Baczeks to pursue claims against Bass for breach of warranty and unjust enrichment.
- Chicago Title sued Bass for breach of the warranty deed and unjust enrichment; the trial court granted Bass summary judgment. Chicago Title appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can Chicago Title (as assignee/subrogee) sue Bass for breach of the warranty deed? | Chicago Title stood in the Baczeks’ shoes via assignment/subrogation and Bass breached his warranty when title was later lost. | The insurer can only enforce rights the Baczeks had; the Baczeks were not induced by Bass’s warranty and cannot maintain breach claim. | No—Chicago Title cannot sue for breach because the Baczeks could not have maintained that claim. |
| Did the Baczeks rely on Bass’s warranty as an inducement to purchase? | Warranty deed itself creates enforceable covenant of title; reliance not required per some authority. | The Baczeks initiated the transaction and were not induced by Bass’s warranty. | No reliance; court finds Bass did not use the warranty to induce the Baczeks. |
| Can Chicago Title recover under unjust enrichment for the $65,000 paid to Bass? | Equity should require return of proceeds because Bass retained funds after his tax deed was voided. | Unjust enrichment unavailable where an express contract (warranty deed) governs the parties. | No—unjust enrichment barred because the warranty deed is an express contract and allegations rely on that contract. |
| Is Chicago Title entitled to subrogation or damages (including attorney fees) from Bass under policy assignment? | Assignment/subrogation agreement allows Chicago Title to pursue Bass for indemnity and fees. | Additional policy defenses (coverage exclusion) and limits may bar recovery; but court need not address these given disposition. | Not reached—court disposed of case on standing/substantive contract grounds; affirmed summary judgment for Bass. |
Key Cases Cited
- Dix Mutual Insurance Co. v. LaFramboise, 149 Ill. 2d 314 (1992) (subrogee/assignee stands in insured’s shoes and can assert only insured’s rights)
- Midfirst Bank v. Abney, 365 Ill. App. 3d 636 (2006) (purchaser may enforce warranty deed where seller used assurances to induce purchase and purchaser relied on them)
- In re Application of the Cook County Collector for Judgment & Sale Against Lands & Lots Returned Delinquent for Nonpayment of General Taxes for the Year 1985 & Petition for Tax Deed of Barnard, 228 Ill. App. 3d 719 (1992) (tax-deed grantees subject to relief if they had notice of an owner’s claim; bona fide purchaser doctrine in tax-deed context)
- Guinn v. Hoskins Chevrolet, 361 Ill. App. 3d 575 (2005) (unjust enrichment unavailable where plaintiff’s allegations incorporate and rely on an express contract)