Illinois Supreme Court Holds Mortgagee Trespass Not ‘Extreme and Outrageous’ as Matter of Law

The Supreme Court of the State of Illinois recently affirmed the dismissal of a borrower’s claims for intentional and negligent infliction of emotional distress against her mortgagee, property inspection and preservation company and its local subcontractors, who entered the home after the borrower’s default to secure the property.

In so ruling, the Court held that:

(a) a direct victim’s claim for emotional distress must include an allegation of contemporaneous physical injury or impact that caused emotional distress, or that she was a bystander in a zone of physical danger that caused her to fear for her own safety and that she suffered physical injury or illness as a result of the emotional distress; and

(b) as a matter of law, the conduct was not so extreme and outrageous that it went beyond all possible bounds of decency.

A copy of the opinion in Schweihs v. Chase Home Finance, LLC is available at:  Link to Opinion.

The borrower signed a promissory note secured by a mortgage on her home in 1997 and defaulted in 2007.  The mortgage contained a paragraph allowing the mortgagee to enter the property in the event of default in order to protect its rights in the property and make repairs.

The mortgagee filed a foreclosure action and obtained a final judgment of foreclosure on May 25, 2010. Under Illinois law, the borrower had the right to continue in possession until her redemption period expired on Aug. 25, 2010.

The mortgagee contracted with a company to provide property inspection and preservation services (the “preservation company”), which in turn contracted with local vendors to perform the inspections and repairs.

In June 2010, the preservation company received a report that the subject property was vacant and asked its local contractor to obtain access to the property by changing one of the locks and “winterize” the house by turning off the utilities. The local contractor hired two individual subcontractors to carry out the work order.

When the two individual subcontractors arrived at the property, they observed that the landscaping was overgrown and there was a “for sale” sign on the property. There was a car and dumpster parked in the driveway. One of the men knocked on the front door, but there was no answer.

One of the subcontractors spoke with a neighbor, who told him that the house was unoccupied, but that a woman came and went occasionally. The neighbor also said she did not recognize the car, but that there was a school nearby and sometimes people from the school would park there because the property was vacant.

The two subcontractors tried knocking on the front door again, with the same result, then proceeded through a gate to the back, where they observed through a glass door boxes and debris on the floor.

They then removed the lock to the back door and one of them entered by climbing over the boxes. Once in, he was confronted by the borrower, who asked him to leave. The subcontractor explained that he was with the mortgage company and asked the borrower to go to the front door, but when he went around she did not answer.

The borrower called the police, who investigated by speaking with the parties and neighbor, but made no arrest.

In October 2010, the borrower filed a five-count complaint against the mortgagee, the preservation company, and the two subcontractors, alleging claims for trespass, negligent trespass, private nuisance, intentional infliction of emotional distress, and negligence.

The defendants moved for summary judgment on all counts, and in response the borrower sought leave to amend by dropping the negligence claim and adding a claim for negligent infliction of emotional distress.

The trial court granted the defendants’ motions for summary judgment as to the claims for private nuisance and intentional infliction of emotional distress, but denied summary judgment as to the trespass and negligent trespass claims. The trial court then dismissed the borrower’s negligent infliction of emotional distress claim. The borrower appealed.

The Appellate Court affirmed the trial court’s ruling.

Addressing the negligent infliction of emotional distress claim first, the Appellate Court reasoned that there are “two types of victims in emotional distress cases: bystanders and direct victims.” It then found that the borrower’s negligent infliction of emotional distress allegations indicated she “was a direct victim and must allege ‘some physical impact’ from defendants’ conduct.” Because the borrower did not plead any physical contact, the Appellate Court found she could not state a claim for negligent infliction of emotional distress and that count was properly dismissed.

Turning to the intentional infliction of emotional distress claim, the Appellate Court found that summary judgment in the defendants’ favor was proper because plaintiff could not show that the defendants’ conduct was “extreme and outrageous.” One justice dissented, arguing that the majority “was wrong in continuing to require physical impact in claims for negligent infliction of emotional distress for direct victims.”

The borrower filed a petition for leave to appeal to the Illinois Supreme Court, which was granted. The Court also granted the Illinois Association of Defense Trial Counsel leave to file a brief amicus curiae in support of the defendants.

The Illinois Supreme Court first addressed the borrower’s argument that her claim for negligent infliction of emotional distress was improperly dismissed because physical impact is not a required element for such a claim by a direct victim.  The defendants and amicus argued, in response, that the impact rule was still good law in Illinois “when a direct victim pleads negligent infliction of emotional distress.”

The Court reviewed the history of the cause of action of negligent infliction of emotional distress and the impact rule, noting that in order “to state a claim for negligent infliction of emotional distress, a plaintiff must allege the traditional elements of negligence: duty, breach, causation, and damages. … And until this court’s decision in Rickey, all plaintiffs were also required to allege a contemporaneous physical injury or impact. … This was known as the ‘impact rule.’ Under the impact rule, a plaintiff could recover damages if he suffered (1) emotional distress and (2) ‘a contemporaneous physical injury or impact.’ … Prior to Rickey, there was no distinction between a direct victim and a bystander in negligent infliction of emotional distress cases.”

The Illinois Supreme Court explained that in Rickey, where a mother sued on behalf of her eight-year-old son for emotional distress caused when he witnessed his brother getting choked by a subway escalator, it “adopted the ‘zone-of-physical-danger rule’ for bystanders who allege negligent infliction of emotional distress.” Under this rule, “a bystander who is in a zone of physical danger and who, because of the defendant’s negligence, has reasonable fear for his own safety is given a right of action for physical injury or illness resulting from emotional distress. … Therefore, this court held that a bystander must show physical injury or illness as a result of the emotional distress, caused by the defendant’s negligence and not a contemporaneous physical injury or impact.”

The Court further explained that in its later Corgan ruling, which involved a patient suing her therapist who held himself out to be a licensed psychologist for sexually abusing her under “treatment,” “this court made it clear that Rickey did not define the scope of negligent infliction of emotional distress as it applies to direct victims. … Corgan was a direct victim case, and the patient satisfied the impact rule; on multiple occasions, the psychologist had sexual relations with her. … Thus, Corgan is an example of the continued application of the impact rule in direct victim cases.”

Finally, the Court noted that in its Pasquale decision, “where the husband of a spectator at a drag race, who was killed when she was struck by flying debris resulting from the failure of a clutch mechanism on a race car,” it determined that the elimination of the contemporaneous injury or impact requirement for bystander recovery for emotional distress in the area of negligence did not eliminate “the element of physical harm for a bystander’s recovery for emotional distress under strict liability theory.”

The Illinois Supreme Court concluded that “[t]his precedent makes clear that a direct victim’s claims for negligent infliction of emotional distress must include an allegation of contemporaneous physical injury or impact.” Contrary to plaintiff’s argument, a close reading of Rickey, Corgan, and Pasquale “indicates that this court did not eliminate the impact rule for negligent infliction of emotional distress claims brought by direct victims.”

Turning to whether the complaint contained sufficient allegations to state a cause of action for negligent infliction of emotional distress, the Court held that while the borrower alleged that the mortgagee and property preservation company negligently trained and supervised their employees, agents and contractors who entered the premises, since plaintiff did not include an allegation of a contemporaneous physical injury or impact, “as a direct victim, she failed to allege a cause of action for negligent infliction of emotional distress” and this count was properly dismissed.

The Illinois Supreme Court then addressed the borrower’s argument that summary judgment on her intentional infliction of emotional distress claim was improper because a question of fact existed as to whether the subcontractors’ conduct in entering the property was extreme and outrageous.

“First, the conduct involved must be truly extreme and outrageous. Second, the actor must either intend that his conduct inflict severe emotional distress or know that there is at least high probability that his conduct will cause severe emotional distress. Third, the conduct must in fact cause severe emotional distress. … It is clear that the tort ‘does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.”

The Court stressed that “[l]iability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.”

Applying this rule, the Illinois Supreme Court held that the conduct of the two subcontractors who entered the home “did not rise to the level of extreme and outrageous” because their investigation into whether the home was occupied was reasonable and they changed the lock not to take possession from the borrower, but to secure the property and make repairs.

The Court acknowledged “that under Illinois law, the sanctity of the home and right to be free from intrusion are important principles of law,” but the Court nevertheless rejected the borrower’s argument that the entry into the home was, by itself, extreme and outrageous conduct, reasoning that the borrower knew that her property was in foreclosure and was still in the redemption period, but still refused to answer the door, which prevented the subcontractors from explaining who they were and why they were there.

Finally, the Court rejected the borrower’s argument that the defendants had no right to enter the home without a court order under Illinois foreclosure laws, distinguishing between “the right to possession for residential purposes, which these statutes address, and the contractual right to enter to make repairs.”

However, because the mortgage gave the mortgagee and its agents the right to enter the property to secure it and make repairs, and the foreclosure judgment also contained language permitting repairs, the Illinois Supreme Court found that the mortgagee had “the right to enter the property to make reasonable repairs for the preservation of the property.”

The Court concluded that as a matter of law “based upon this record in the context of mortgage foreclosure proceedings, it cannot be said that the entry, after which defendants left and never returned, is conduct so extreme and outrageous that it goes beyond all possible bounds of decency.”  As there was no question of fact whether the inspection was outrageous, summary judgment against the borrower was proper on her intentional infliction of emotional distress claim.

The case was remanded to the trial court for further proceedings on the borrower’s remaining claims.

 

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Cole Braun is based in Maurice Wutscher's Chicago office, where he practices in the firm's Commercial Litigation, Consumer Litigation, and Insurance Recovery and Advisory groups. He has significant litigation experience in a number of state and federal jurisdictions in a variety of different types of litigation. Cole graduated magna cum laude from Florida State University College of Law, and earned the distinction to be elected to the Order of the Coif. He was awarded his Bachelor of the Arts degree from the University of Tennessee.