                               Illinois Official Reports

                                       Appellate Court



                          Smith v. Hammel, 2014 IL App (5th) 130227



Appellate Court           ROBERT SMITH, Plaintiff-Appellant, v. JEFF HAMMEL,
Caption                   Defendant-Appellee.–JULIE GOSS, Plaintiff-Appellee, v. SMITH
                          CHIROPRACTIC CENTER, Defendant-Appellant (MedStar
                          Ambulance, Inc., Sparta Community Hospital, and Quality Health
                          Care Clinic, Defendants).


District & No.            Fifth District
                          Docket Nos. 5-13-0227, 5-13-0293 cons.


Filed                     July 23, 2014


Held                       In an action arising from a dispute over a chiropractor’s lien for
(Note: This syllabus treating a person injured in an automobile accident, the trial court, in
constitutes no part of the ruling on the “Petition to Adjudicate Liens” filed by the patient’s
opinion of the court but attorney, properly found the chiropractor in default when he failed to
has been prepared by the appear and “discharged and voided” the lien, and, after the settlement
Reporter of Decisions proceeds received by the patient were disbursed and the chiropractor
for the convenience of filed a conversion action against the patient’s attorney in another
the reader.)               attempt to recover for his services, the trial court properly dismissed
                           that claim on the ground that the order adjudicating the lien was
                           res judicata, since the trial court did not need personal jurisdiction
                           over the chiropractor, he was not required to be personally served with
                           summons where the trial court had in rem jurisdiction over the
                           settlement proceeds, the chiropractor had proper notice by mail and
                           was properly found to be in default for failing to appear, his lien was
                           properly adjudicated to $0, and the patient’s attorney properly
                           disbursed the settlement proceeds pursuant to the court’s order.


Decision Under            Appeal from the Circuit Court of Randolph County, Nos. 11-LM-108,
Review                    10-CH-48; the Hon. Eugene E. Gross and the Hon. Andrew J.
                          Gleeson, Judges, presiding.
     Judgment                   Affirmed.


     Counsel on                 John D. Alleman, of Alleman & Hicks, of Carbondale, for appellants.
     Appeal
                                Jeffrey S. Hammel, of Jeffrey S. Hammel Law Firm, of Belleville, for
                                appellees.


     Panel                      PRESIDING JUSTICE WELCH delivered the judgment of the court,
                                with opinion.
                                Justices Goldenhersh and Stewart concurred in the judgment and
                                opinion.


                                                  OPINION

¶1         On September 12, 2008, Julie Goss was involved in an automobile collision in which she
       suffered personal injuries. She was treated for those injuries by chiropractor Robert Smith,
       who rendered services in the total amount of $2,777.
¶2         Julie Goss instituted a claim against the driver of the other vehicle/tortfeasor through her
       attorney, Jeff Hammel, seeking recovery for her injuries. That claim was settled without the
       necessity of court action.
¶3         Prior to settlement of the claim, chiropractor Smith had notified Goss and attorney
       Hammel of his statutory lien on any settlement proceeds Goss might receive. That lien is
       provided by the Health Care Services Lien Act (the Act) (770 ILCS 23/1 et seq. (West
       2010)), which provides that every health care provider that renders any medical services to
       an injured person shall have a lien upon all claims and causes of action of the injured person
       for the amount of the health care provider’s reasonable charges. 770 ILCS 23/10(a) (West
       2010). The Act requires the health care provider to notify both the injured party and the party
       against whom the claim or cause of action exists of the existence of the lien. 770 ILCS
       23/10(b) (West 2010). Notice of the lien may be made by registered or certified mail or in
       person. 770 ILCS 23/10(b) (West 2010).
¶4         The Act further provides for adjudication of lien rights under the Act: “On petition filed
       by the injured person or the health care professional or health care provider and on the
       petitioner’s written notice to all interested adverse parties, the circuit court shall adjudicate
       the rights of all interested parties ***.” 770 ILCS 23/30 (West 2010).1


             1
            Subsequent to the commencement of this action, effective January 1, 2013, section 30 of the Act
       was amended to add a paragraph providing that “[a] petition filed under this Section may be served
       upon the interested adverse parties by personal service, substitute service, or registered or certified
       mail.” 770 ILCS 23/30 (West 2012).

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¶5         After Goss’s claim was settled, attorney Hammel filed, in the circuit court of Randolph
       County, a “Petition to Adjudicate Liens” pursuant to section 30 of the Act (No. 10-CH-48).
       Chiropractor Smith was notified of the petition to adjudicate liens by regular and certified
       mail. There is no dispute that Smith received a copy of the petition to adjudicate liens and a
       notice of the hearing on the petition. Nevertheless, Smith did not appear at the hearing on the
       petition to adjudicate liens, and in an order entered September 8, 2010, he was found to be in
       default. Smith’s lien was therefore “discharged and voided.” The settlement proceeds were
       disbursed in accordance with the court’s order.
¶6         On March 13, 2012, chiropractor Smith filed a “Motion to Vacate Void Order” and a
       “Motion to Declare Order Void,” arguing that he had not been personally served with
       summons and a copy of the petition to adjudicate liens, nor had he otherwise submitted
       himself to the jurisdiction of the court. He argued, therefore, that the order finding him in
       default and discharging and voiding his lien was void for lack of personal jurisdiction over
       him. The motions argue that simply sending a copy of the petition and notice of hearing is
       not sufficient to confer personal jurisdiction over a party; personal service of a summons and
       complaint is required.
¶7         After a hearing held April 19, 2012, Smith’s motions were denied by order entered April
       23, 2012. Smith’s motion to reconsider was also denied in an order entered May 31, 2013.
       Smith appeals.
¶8         In a different but related case, also filed in the circuit court of Randolph County,
       chiropractor Smith brought suit against attorney Hammel for conversion (No. 11-LM-108).
       Smith’s complaint, filed September 16, 2011, alleged that by failing to have Smith personally
       served with summons and complaint on the petition to adjudicate liens, and by appearing in
       court on the petition and proceeding to have an order entered discharging and voiding
       Smith’s lien, Hammel had converted Smith’s claim/assets. The suit sought damages in the
       amount of the lien, $2,777.
¶9         Hammel filed a motion to dismiss Smith’s complaint, arguing that he had followed
       proper legal process in adjudicating the lien and that the court’s order in that case resolved all
       issues. Smith responded that the court had not had personal jurisdiction over him to validly
       adjudicate his lien.
¶ 10       On March 1, 2012, the circuit court entered an order dismissing Smith’s complaint for
       conversion against attorney Hammel. The court found that its order on the petition to
       adjudicate liens was res judicata and that Smith’s claim for conversion was barred thereby.
       Smith’s motion to reconsider was denied, and Smith appeals.
¶ 11       Because the two cases present precisely the same issue, they have been consolidated for
       our decision. In both cases, Smith argues that the circuit court’s order adjudicating his lien
       rights is void as the court did not have personal jurisdiction over him or in rem jurisdiction
       over the settlement proceeds. We affirm both judgments.
¶ 12       The parties agree, as do we, that the appropriate standard of review is de novo. This
       appeal presents a question of law only, involving the interpretation of a statutory provision. It
       is well settled that where no genuine issue of material fact remains in dispute and a circuit
       court has issued a ruling of law, a reviewing court must use a de novo standard of review.
       In re Estate of McInerny, 289 Ill. App. 3d 589, 596 (1997); see also Jayko v. Fraczek, 2012
       IL App (1st) 103665, ¶ 3 (a dispute over personal jurisdiction presents a question of law, and
       rulings as to questions of law are considered de novo).

                                                   -3-
¶ 13        The parties also agree, as do we, that where personal jurisdiction over the defendant is
       required, an order entered without personal jurisdiction is void ab initio as to that defendant
       and subject to direct or collateral attack at any time. DiNardo v. Lamela, 183 Ill. App. 3d
       1098, 1101 (1989); see also Jayko, 2012 IL App (1st) 103665, ¶ 3. Nevertheless, because we
       find that the proceeding to adjudicate the liens was an in rem proceeding, we hold that
       personal jurisdiction over Smith by service of summons was not required.
¶ 14        Personal jurisdiction pertains to the authority of the court to litigate in reference to a
       particular defendant and to determine the rights and duties of that defendant. In re Possession
       & Control of the Commissioner of Banks & Real Estate of Independent Trust Corp., 327 Ill.
       App. 3d 441, 463 (2001). It is black letter law that the alternative to personal jurisdiction is
       in rem jurisdiction or quasi in rem jurisdiction. In re Possession of Banks & Real Estate, 327
       Ill. App. 3d at 463. This form of jurisdiction is concerned with the relationship between the
       defendant and the state with respect to specific property. In re Possession of Banks & Real
       Estate, 327 Ill. App. 3d at 463. In rem or quasi in rem proceedings do not require personal
       service of process. In re Possession of Banks & Real Estate, 327 Ill. App. 3d at 465.
¶ 15        A proceeding to adjudicate liens has specifically been held to be an in rem action. See
       Zilinger v. Allied American Insurance Co., 957 F. Supp. 148, 149 (N.D. Ill. 1997); Jayko v.
       Fraczek, 2012 IL App (1st) 103665, ¶ 23.
¶ 16        In Zilinger, the plaintiffs were injured in an automobile accident and received a
       settlement from their insurance carrier. One of the plaintiffs’ union benefit plans asserted a
       lien on the proceeds of the insurance settlement. The plaintiffs filed a motion to adjudicate
       the lien and served the union benefit plan by mail in accordance with Illinois Supreme Court
       Rule 11 (eff. Nov. 15, 1992). Nevertheless, the union benefit plan did not appear at the
       hearing.
¶ 17        On a motion for remand following removal to federal court, the benefit plan argued that
       the order adjudicating the lien was void because the circuit court had failed to obtain personal
       jurisdiction over it. The benefit plan argued that in order to have a valid lien adjudication, the
       circuit court must first obtain personal jurisdiction through service of summons on the
       parties. The plaintiffs argued that personal jurisdiction was not required, the proceeding
       being one in rem.
¶ 18        The district court agreed with the plaintiffs that the lien adjudication was an in rem action
       which did not require personal service of process:
               “ ‘there [is] a res upon which the court is acting.… [The] proceeding ‘in rem’ is one
               which … is brought to enforce a right in the thing itself.… [J]udgments in rem …
               operate directly upon the property and are binding upon all persons in so far as their
               interest in the property is concerned. [A] judgment in rem … creates no personal
               liability, especially as against those who, while interested in the property, have not
               been served with process and have not appeared in the action.’ ” Zilinger, 957 F.
               Supp. at 149 (quoting Austin v. Royal League, 316 Ill. 188, 193 (1925)).
¶ 19        The court held that the res was the insurance policy settlement proceeds and that the
       adjudication of the lien was a determination of competing rights in the settlement proceeds.
       Zilinger, 957 F. Supp. at 150. The circuit court’s order did not create personal liability for the
       benefit plan, and personal service of summons was not required where supreme court rule
       allowed service by mail. Zilinger, 957 F. Supp. at 150. Accordingly, the lien adjudication
       was valid.

                                                   -4-
¶ 20        Jayko v. Fraczek, 2012 IL App (1st) 103665, a decision of the First District of this court,
       is precisely on point and is the case relied upon by the circuit court in reaching its decision
       herein. In Jayko, St. Alexius Medical Center (St. Alexius) appealed from an order denying its
       motion to readjudicate its health care provider’s lien under the Act against Jayko’s personal
       injury action, arguing that the original adjudication was void because St. Alexius had not
       been personally served with summons.
¶ 21        Jayko had been injured when he was struck by a car while riding his bike. He received
       treatment at St. Alexius. Jayko filed a lawsuit against the driver and owner of the car that had
       struck him, and St. Alexius notified Jayko’s lawyer and the defendant-driver that it was
       asserting a lien under the Act on the proceeds of the cause of action. St. Alexius delivered
       this notice by certified mail, as provided for in section 10(b) of the Act (770 ILCS 23/10(b)
       (West 2006)). Jayko used certified mail to notify St. Alexius of the hearing date on the
       petition for adjudication. St. Alexius did not contend that it did not receive the notice.
       Nevertheless, St. Alexius did not appear at the hearing and its lien was adjudicated to $0.
¶ 22        In its motion to readjudicate the lien, St. Alexius argued that notice by certified mail was
       insufficient to vest the circuit court with personal jurisdiction over it and that it was entitled
       to be personally served with summons of process. In denying the motion, the circuit court
       stated that it was relying on the decision in Zilinger for the proposition that a lien
       adjudication is an in rem proceeding and does not require service of summons to the
       lienholder because the court does not need to acquire personal jurisdiction. The appellate
       court agreed.
¶ 23        Applying principles of statutory construction, the appellate court concluded that it had
       been the intent of the legislature to allow both notice of the existence of the lien and notice of
       the hearing on the petition to adjudicate the lien to be made by registered or certified mail, or
       in person. Section 10(b) of the Act refers to “written notice” of the existence of the health
       care provider’s lien and specifically provides that service of that written notice shall be by
       registered or certified mail or in person. Section 30 of the Act also refers to “written notice”
       of the petition to adjudicate the lien, but does not specifically mention the method of service
       of this written notice. Construing these two statutory provisions together, as it must, the
       appellate court concluded that the legislature intended that both notices were adequately
       served by registered or certified mail or in person. The court rejected the notion that the
       legislature intended to impose on the injured plaintiff the added expense and responsibility of
       filing a complaint and obtaining personal service of the complaint. Accordingly the court
       construed section 30 of the Act to provide for written notice of the petition to adjudicate the
       lien to be served by registered or certified mail or in person. Jayko, 2012 IL App (1st)
       103665, ¶ 15.
¶ 24        The court then addressed the question of whether due process considerations required
       personal service of the petition to adjudicate the lien, and it concluded that they did not.
       Relying on the decision in Zilinger, which it found to be “well founded in Illinois law”
       (Jayko, 2012 IL App (1st) 103665, ¶ 22), the court held that Jayko’s settlement proceeds
       were a res and that the circuit court’s adjudication of the statutory liens thereon was an
       in rem proceeding for which personal service on and personal jurisdiction over the health
       care provider were unnecessary. Thus, Jayko had not only complied with section 30 of the
       Act but also satisfied due process when he gave notice to St. Alexius through certified
       mailing. Jayko, 2012 IL App (1st) 103665, ¶ 23.

                                                   -5-
¶ 25       Chiropractor Smith argues that the instant proceeding was not one in rem because Goss’s
       settlement occurred prior to the filing of any suit. Accordingly, Smith argues, the circuit
       court never acquired in rem jurisdiction over the res, the settlement proceeds. Smith argues
       that Jayko is distinguishable in this respect because in Jayko, the plaintiff-patient had filed
       suit against the tortfeasor and settled that lawsuit, creating a res under the jurisdiction of the
       court.
¶ 26       Smith’s argument is somewhat circular: only by acquiring personal jurisdiction over the
       parties who created the res, the settlement proceeds, does the court acquire in rem
       jurisdiction over the res itself. But, of course, in rem jurisdiction is not acquired by obtaining
       personal jurisdiction over the parties who create the res. In rem jurisdiction rests exclusively
       on the situs of the res. McCallum v. Baltimore & Ohio R.R. Co., 379 Ill. 60, 69 (1942). The
       funds need not have been paid into the court in order for the court to have in rem jurisdiction
       over them; the state has in rem jurisdiction over property located within its borders.
       McCallum, 379 Ill. at 69. In any event, perhaps the simple answer to this argument is that the
       court acquired in rem jurisdiction over the res, the settlement proceeds, upon the filing of the
       petition to adjudicate liens.
¶ 27       In summary, we hold that for purposes of adjudicating Smith’s lien, the circuit court did
       not need personal jurisdiction over Smith, nor was Smith required to be personally served
       with summons of process. The court had in rem jurisdiction over the settlement proceeds
       against which the lien had been asserted and could therefore adjudicate Smith’s rights with
       respect to that res. Smith having received proper notice by mail of the proceeding to
       adjudicate the lien, and having failed to appear thereon, the circuit court did not err in finding
       Smith to be in default and in adjudicating his lien to $0. Accordingly, we affirm the court’s
       order in No. 10-CH-48.
¶ 28       Furthermore, the circuit court did not err in dismissing Smith’s complaint against
       attorney Hammel alleging conversion by Hammel of the property against which Smith’s lien
       was asserted. Hammel acted pursuant to a valid court order in disbursing the settlement
       proceeds. He cannot be held liable to Smith in conversion. Accordingly, we affirm the
       court’s order in No. 11-LM-108.
¶ 29       For the foregoing reasons the orders of the circuit court of Randolph County are hereby
       affirmed.

¶ 30      Affirmed.




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