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SECOND DIVISION
Date Filed: September 28, 2004

The plaintiff, Canada Life Assurance Company, filed adeclaratory judgment action against the defendant, Ayodhia Salwanseeking determination that it was entitled to a refund of moneypaid to the defendant, based upon a reimbursement agreementbetween the parties. The defendant filed a counterclaim forbenefits he alleged were wrongfully withheld from him by theplaintiff. The circuit court of Cook County entered judgment infavor of the plaintiff on its complaint and entered summaryjudgment in favor of the plaintiff on the defendant'scounterclaim. The defendant appeals only the dismissal of hiscounterclaim.

The sole issue on appeal is whether the trial court erred ingranting summary judgment to the plaintiff on the defendant'scounterclaim. The following facts are taken from the pleadings,affidavits and depositions contained in the record on appeal.

The defendant had been employed by Abrasive-Form as agrinder since 1979. Abrasive-Form provided its employees withdisability benefits under a policy with the plaintiff. In 1990,the defendant was injured in an automobile accident, unrelated tohis employment, and informed his employer that he could no longerperform his job. Effective, May 5, 1990, the plaintiff beganpaying disability benefits to the defendant in the amount of$1,144 gross per month.

The disability policy provided in pertinent part as follows:

"Proof of continued disability and regular attendanceof a physician must be given to us within thirty days of thedate we request the proof. The proof must cover:

1. The date the disability began.

2. The cause of the disability.

3. How serious the disability is."

The disability policy further provided that the paymentsunder the policy would be reduced by income received from othersources and contained the following provision:

"If, at the time of calculating the amount of anypayments to be made under this policy, the benefit which aperson is entitled to apply for and receive under any othersource described in this provision has not been awarded nordenied, we will estimate the amount of such benefit. Theestimate will be used to reduce the amount of the paymentsunder this policy until such time as the benefit under suchsource has been awarded or denied. However, such estimatewill not be used if, within six months of becoming disabled,the person meets both the following conditions.

1. The person has applied for the benefit under theother sources; and

2. The person completes and signs our ReimbursementAgreement. This agreement states that the person promisesto repay to us any overpayment caused by an award of thebenefit under the other source."

On February 5, 1993, the defendant signed the ReimbursementAgreement, acknowledging that he had made a claim with SocialSecurity Administration. In consideration for the plaintiff'spayment of the full monthly disability benefit to him, uponpayment of his claim, the defendant agreed to "refund immediatelyto [the plaintiff] the amount awarded to the extent of the fullamount they paid us under this Agreement." On March 24, 1994,the defendant was awarded $800 in monthly social securitybenefits, retroactively to February 3, 1990.

The defendant had submitted proof of continuance ofdisability claim and attending physician's statement ofdisability forms in 1991 and 1992. In a June 10, 1993, letter tothe defendant, the plaintiff advised the defendant that if he didnot provide it with updated medical information within 30 days,his claim may be terminated. The plaintiff sent the requiredinformation on June 24, 1993.

In an April 15, 1994, letter to the defendant, the plaintiffreferenced a February 2, 1994, visit by its representatives tothe defendant and requested that the defendant furnish the nameand address of the physician he had seen and the address of thehospital where he had undergone testing. The letter alsorequested the name and address of the attorney representing thedefendant in the litigation over medical bills.

On June 14, 1994, the plaintiff notified the defendant thatit had received the information regarding the $800 socialsecurity payments the defendant was now receiving and that hisnew net monthly benefit would be $344. The plaintiff calculatedits overpayment to the defendant to be $36,800 and requested thatthe defendant reimburse that sum to the plaintiff within 15 days. The letter also advised the defendant that it would not issue anyfurther benefits until the overpayment was recovered in full.

On July 19, 1994, the defendant wrote to the plaintiffacknowledging that the plaintiff had ceased paying him hismonthly benefit and that the plaintiff wanted the $36,800. Thedefendant also acknowledged the plaintiff's April 15, 1994,letter and advised that his attorney had died, and nothing washappening in the case. Finally, the defendant pleaded financialhardship and requested that the plaintiff send his benefit checkas soon as possible. The defendant did not supply the medicalinformation requested in the April 15, 1994, letter.

On February 20, 1995, an attorney for the plaintiff wrote tothe defendant advising him as follows:

"This letter is in regards to your indebtedness toCanada Life. Originally, the amount was $36,800. Iunderstand this amount has decreased due to withheldbenefits, dating back to your failure to repay.

By agreement dated February 5, 1993, we agreed tocontinue your benefits unreduced until the outcome of yourSocial Security claim, in exchange for your agreement toimmediately refund any overpayment resulting from afavorable outcome. You have breached the agreement.

Please contact me at your first convenience to discussyour prompt repayment of the indebtedness. Should youcontinue in breach of the agreement we shall have no choicebut to continue to withhold your benefits, and to considerother appropriate legal action."

On April 28, 1998, the plaintiff filed its verifiedcomplaint seeking a declaration that it was entitled to paymentfrom the defendant under the terms of the reimbursement agreementand an order for payment in the amount not reimbursed by thedefendant. The defendant answered the complaint on or aboutAugust 6, 1998.⁽¹⁾ On September 26, 2001, the defendant filed amotion to amend his pleadings to add a counterclaim. On December17, 2001, the circuit court granted the defendant's motion toamend.

On January 22, 2002, the plaintiff filed an amended motionfor summary judgment on both its complaint and the defendant'scounterclaim. In support of its motion, the plaintiff arguedthat the uncontroverted facts established that the defendant hadsigned the reimbursement agreement agreeing to reimburse theplaintiff from the money received from his social security claim,that the defendant had received $36,800 in social securitybenefits, that the disability policy required the defendant toprovide proof of continued disability, that the defendant failedto respond to the plaintiff's April 15, 1994, letter requestingsuch information, and that the defendant's benefits wereterminated effective May 15, 1994, for his failure to provideproof of continuing disability.

In his response to the motion for summary judgment, thedefendant disputed the facts relied on by the plaintiff. Thedefendant pointed out that, in its June 14, 1994, letter, theplaintiff advised the defendant that it would not be issuing anyfurther benefits until the $36,800 had been repaid in full andthat, in the February 20, 1995, letter, the plaintiff had advisedthe defendant that the $38,600 amount had been reduced due to thewithheld benefits. The defendant further pointed out that in hisdeposition, Daniel Trzos, the plaintiff's manager, testified thatthe defendant's failure to supply the name and address of hisattorney, requested in the April 15, 1994, letter, would not be areason to terminate his benefits. The defendant maintained thatthe plaintiff already had the address of Dr. Penchal and that theaddress of the hospital was readily available from other sources. Finally, the defendant maintained that he never received anynotice that his benefits were terminated as opposed to beingwithheld and that, according to Mr. Trzos, the claim file did notcontain the customary documentation memorializing the terminationof the plaintiff's benefits.

In its reply, the plaintiff submitted the followingadditional facts. The defendant had failed to submit any proof ofcontinuing disability and attending physician's statement ofcontinuing disability forms after December 31, 1993. Accordingto a report in the defendant's claim file, on February 2, 1994,employees of the plaintiff visited the defendant at his home. They discussed with the defendant the upcoming social securityhearing, the integration of benefits to him. The "continuousprovision" and "final payment date" were also discussed. Theplaintiff also provided a copy of its computerized paymenthistory to the defendant showing that it needed furtherdisability evidence to continue payments to the defendant. Finally, the plaintiff pointed out that, in his July 19, 1994,letter, the defendant acknowledged that the plaintiff had stoppedhis monthly benefit but did not provide any proof of continuingdisability as he had done in the past.

In addition, the plaintiff now argued that the defendant'sclaim for further benefits was barred under the disability policybecause without proof of disability, he was no longer disabledbut had not returned to work for the employer. The plaintiffalso argued that the defendant's counterclaim was time-barred bythe disability policy's three-year limitations period.

On January 2, 2003, the circuit court granted theplaintiff's motion for summary judgment. The court found that,pursuant to the reimbursement agreement, the defendant had agreedto reimburse the plaintiff the money he received from his socialsecurity claim and that the defendant had failed to reimburse theplaintiff. The court further found that the defendant had failedto provide the plaintiff with proof of continued disability andthat proof of continued disability was a condition precedent todisability payments. The court ordered the defendant toreimburse the plaintiff the $36,800 plus costs, fees and interestand dismissed the defendant's counterclaim.

Subsequently, the circuit court denied the defendant'smotion for reconsideration and modified the judgment amount nuncpro tunc to reflect prejudgment interest and costs. This appealfollowed.

In appeals from summary judgment rulings, the court's reviewis de novo. City of Chicago v. Holland, 206 Ill. 2d 480, 487,795 N.E.2d 240 (2003).

The purpose of summary judgment is not to try a question offact but to determine whether one exists. Summary judgment isproper where pleadings, depositions, admissions, and affidavitson file, when viewed in the light most favorable to the nonmovingparty, reveal that there is no genuine issue of material fact andthat the moving party is entitled to judgment as a matter oflaw.'" Holland, 206 Ill. 2d at 487-88; 735 ILCS 5/2-1005(c)(West 2000).

The defendant contends that the granting of summary judgmentin this case was erroneous because the circuit court'sdetermination that proof of continuing disability was a conditionprecedent to the disability payments was incorrect as a matter oflaw and that there were contested issues of material fact.

What is before us on review is the circuit court's judgment,not the reasoning the court employed. Holland, 206 Ill. 2d at491-92. Our function is to determine whether the circuit courtreached the proper result. Holland, 206 Ill. 2d 492. Thereasons given by a lower court for its decision or the findingson which a decision is based are not material if the judgment iscorrect. Holland, 206 Ill. 2d at 492. As a reviewing court, wecan sustain the decision of the circuit court on any groundswhich are called for by the record regardless of whether thecircuit court relied on the grounds and regardless of whether thecircuit court's reasoning was sound. Holland, 206 Ill. 2d at492.

The plaintiff contends that it was entitled to summaryjudgment because the defendant's counterclaim was filed beyondthe three-year limitations period of the disability policy. Theplaintiff argues that the defendant had three years from the timehis benefits were terminated in 1994, or until 1997, to file suitto recover his disability benefits. However, the defendant didnot file his counterclaim until 2001. The disability policyprovided in pertinent part as follows:

No action at law or in equity may be brought to recoverunder this policy until sixty days after written proof ofloss has been given to us. No such action may be broughtmore than three years after the time within which proof ofloss is required to be given."

The defendant argues, first, that the plaintiff's suit isbarred under the disability policy because it was not filed until1998. However, the defendant cites no case law in support of hisargument and, therefore, it is waived. Official Advance SheetReports No. 21 (October 17, 2001), Rule 341(e)(7), eff. October1, 2001.

Next, the defendant argues that his counterclaim was timelyfiled pursuant to section 13-207 of the Code of Civil Procedure(the Code) (735 ILCS 5/13-207 (2000)). Section 13-207 providesin pertinent part as follows:

"A defendant may plead a set-off or counterclaim barred by the statute of limitation, while held and owned by him orher, to any action, the cause of which was owned by theplaintiff or person under whom he or she claims, before suchset-off or counterclaim was so barred, and not otherwise." 735 ILCS 5/13-207 (West 2000).

Pursuant to this provision, a defendant is allowed to file acounterclaim even though, if no suit had been commenced by theplaintiff, the defendant's claim would have been time-barred. Cameron General Corp. v. Hafnia Holdings, Inc., 289 Ill. App. 3d495, 505-06, 683 N.E.2d 1231 (1997). Under section 13-207, aparty waives its statute of limitations defense against a setoffor counterclaim brought by his opponent, even if the counterclaimis not related to the claims in his primary complaint, as long asthe counterclaim was not barred when the cause of action formingthe basis of the claims in the primary complaint arose. CameronGeneral Corp., 289 Ill. App. 3d at 506. The purpose of section13-207 is to prevent plaintiffs from intentionally filing theirclaims as late as possible in order to preclude defendants from areasonable opportunity to file their counterclaims within theoriginal limitations period. Cameron General Corp., 289 Ill.App. 3d at 506.

Although the statutory limitations period for breach of awritten contract is 10 years, parties to a contract may agreeupon a shortened contractual limitations period to replace astatute of limitations as long as it is reasonable. Medrano v.Production Engineering Co., 332 Ill. App. 3d 562, 566, 774 N.E.2d371 (2002); 735 ILCS 5/13-206 (West 2000). The defendant doesnot argue that the disability policy's three-year limitationsperiod is unreasonable.

In International Business Lists, Ltd. v. American Telephone& Telegraph Co., 878 F.Supp. 102 (N. D. Ill. 1994), applyingIllinois law, the court held that section 13-207 did not apply tocontractually-established limitation periods, stating as follows:

"The plain language of the statute - - which refers to 'aset-off or counterclaim barred by the statute of limitation"- - indicates that the section was meant to apply tostatutory limitation periods." (Emphasis in original.) International Business Lists, Ltd., 878 F. Supp. at 106.

Therefore, section 13-207 does not preserve the defendant'scounterclaim.

Finally, the defendant argues that the plaintiff is estoppedfrom raising the three-year contractual limitations period. Thedefendant maintains that he was unaware that his disabilitybenefits had been terminated, relying on the February 20, 1995,letter from the plaintiff stating that the defendant's benefitpayments were being applied to the reimbursement of the $36,800the defendant owed to the plaintiff. The defendant furthermaintains that waiver or estoppel is a question of fact. Cassidyv. Luburich, 49 Ill. App. 3d 596, 600, 364 N.E.2d 315 (1977).

If a party's conduct has reasonably induced another tofollow a course of action that otherwise would not have beenfollowed and that would be to the latter's detriment if he didnot later repudiate such course of action, an estoppel arises toprevent injustice or fraud. Beynon Building Corp. v. NationalGuardian Life Insurance Co., 118 Ill. App. 3d 754, 763, 455N.E.2d 246 (1983). "[G]eneral principles of equitable estoppelrequire the party asserting the estoppel to have relied on theact or representation and because of that reliance refrained fromcommencing an action within the limitations period; the conductmust have been of such character as to prevent inquiry, eludeinvestigation, or mislead the party with the cause of action.[Citation.]" Benyon Building Corp., 118 Ill. App. 3d at 763.

The gist of the defendant's counterclaim is the failure ofthe plaintiff to pay him his disability benefits. As early asJune 1994, the defendant was aware he was no longer receivingdisability benefits from the plaintiff. In the defendant'sJanuary 12, 1999, deposition, the defendant was questioned asfollows:

"Q. So you were contemplating taking some actionagainst Canada Life about a year ago?

A. Right.

Q. Because they weren't paying you the $344 a month?

A. Right.

Q. Okay. And that never happened?

A. That never happened because my attorney was sick,so after that, we received letter from you."⁽²⁾

Finally, the filing of the complaint in 1998, put thedefendant on notice that his withheld disability payments werenot being credited to the reimbursement amount. In an affidavitin support of his response to the plaintiff's summary judgmentmotion, the defendant stated in pertinent part:

"3. I believed that benefits due me were beingwithheld and applied to the money Canada Life claims I owed.

4. I never received any statement from Canada Lifethat my benefits were terminated because I failed to supplymedical information or otherwise except this litigation."

Moreover, in his answer to the complaint, the defendant did notraise an affirmative defense indicating that the withhelddisability payments should be credited against the amountsclaimed by the plaintiff.

Therefore, even assuming that as a result of the February20, 1995, letter, the defendant was unaware until April 1998,when the complaint was filed, that his disability payments hadbeen terminated rather than withheld, he still failed to file hiscounterclaim until December 2001, beyond the three-yearlimitations period of the disability policy. The record in thiscase does not present an issue of fact as to whether theplaintiff's conduct induced the defendant not to pursue hiscounterclaim until the expiration of the disability policylimitations period.

We conclude that the defendant's counterclaim was barred bythe limitations period in the disability policy. Therefore, weaffirm the grant of summary judgment to the plaintiff. Decidingthis case as we do, we need not address the parties' remainingarguments.

Affirmed.

HOFFMAN, P.J., and SOUTH, J., concur.

1. In its motion to default the defendant, the plaintiffstates that it filed a verified amended complaint on August 11,1998. On April 20, 1999, the circuit court granted summaryjudgment to the plaintiff. However, that decision was reversedand remanded by this court. It does not appear from the recordon appeal that the defendant filed an answer to the verified amended complaint.

2. Not the attorney who died.