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Appeals panel: Sybaris can't shake potential liability for 2006 plane crash that claimed founder's life

By Jonathan Bilyk | May 5, 2017

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Sybaris Clubs, the company that owns and operates a chain of romantic getaway resorts and hotels in and around the Chicago area, can’t yet shake a lawsuit brought by the family of a man killed in a 2006 airplane crash that also claimed the life of the company’s founder, as a state appeals court said courts have not yet determined how much business the Sybaris founder was doing on the ill-fated trip aboard the aircraft he – and not Sybaris - co-owned.

On May 3, a three-justice panel of the Illinois First District Appellate Court ruled a Cook County judge had improperly granted Sybaris summary judgment in the action. The decision reversing the ruling of Cook County Circuit Judge Irwin J. Solganick was delivered as an unpublished order issued under Supreme Court Rule 23, which limits its use as precedent, except under limited circumstances.

Justice James G. Fitzgerald Smith authored the order, with justices Cynthia Y. Cobbs and Aurelia Pucinski concurring.

“Sybaris repeatedly urges us to decide that it cannot be vicariously liable for negligently entrusting something it did not own or control, but fails to cite case law to that effect,” the justices wrote.

However, they said, “vicarious liability is, in fact, quite broad, and extends to the ‘negligent, willful, malicious, or criminal acts of its employees when those acts are committed within the scope of employment.’

“Sybaris’ argument, then is unconvincing where … an employer’s liability for its employee’s negligent entrustment while that employee is acting within the scope of employment flows not from the employer owning the entrusted instrumentality, but from the employer-employee relationship itself.”

In 2006, Sybaris founder Kenneth Knudson was among a group of businessmen killed in the crash of a Cessna 421B aircraft at Palwaukee Municipal Airport in Wheeling. The Jan. 30 crash also claimed the lives of passengers Scott Garland and Michael Waugh, and Mark Turek, a novice pilot and businessman who was piloting the craft at the time of the crash.

The men had flown together to Kansas earlier that day on a business trip. Turek and Garland were traveling ostensibly on behalf of investment firm Morgan Stanley, while Knudson was purportedly meeting with a potential business partner to discuss opening a hotel near Kansas City, according to court documents. Waugh was general manager and chief operating partner of Joe’s Seafood, Prime Steak & Stone Crab in Chicago.

The aircraft was owned by a corporation established by Knudson and another business partner, for the purposes of operating the aircraft to help conduct Sybaris business. However, the aircraft was not owned by Sybaris, court documents said.

Court documents said Turek was piloting the aircraft to give Knudson a chance to evaluate his flying abilities, and determine if he could be added as a co-owner of the corporate entity that owned the ill-fated aircraft.

According to court documents, before departing the Kansas airport that day, Knudson had expressed misgivings about Turek’s pilot skills, yet had not intervened to prevent Turek from flying the group home to the Chicago area.

The aircraft later crashed while on approach for landing at Palwaukee.

Litigation has wound through the courts in the years since.  Morgan Stanley, for instance, agreed in 2009 to settle with Waugh’s family for $15 million, according to published reports.

However, wrongful death and negligence actions against Sybaris Clubs has continued, despite Sybaris’ repeated attempts to persuade courts to dismiss the action against it, arguing it did not own the aircraft and could not control where it went or who was piloting it.

In 2016, Judge Solganick appeared to grant Sybaris the relief it sought, granting summary judgment to the company over the claims brought by Garland’s family.

On appeal, however, the appellate justices said Solganick’s summary judgment order was issued improperly, as it came despite the appeals court’s 2014 ruling in the case, in which justices said at that time too many questions remain unanswered as to what Knudson was doing on the trip, and whether his business dealings on the trip can render Sybaris at least partially liable for the crash, even though Sybaris did not directly own the aircraft.

With too many questions left outstanding, the justices said Sybaris may yet be sued for Knudson’s alleged decision to allegedly entrust operation of the aircraft to Turek, leading to the crash.

They said they reached that conclusion now, as they did in 2014, while being “fully aware that Sybaris had no ownership interest in the airplane” and while they “recognized that Sybaris was neither an owner nor a de facto owner of the airplane.”

Garland’s widow, Jennifer Garland, is represented in the case by the Clifford Law Offices, of Chicago.

Sybaris was defended by the Hoff Law Group, of Chicago, according to Cook County court records.

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Organizations in this Story

Hoff Law GroupIllinois First District Appellate CourtClifford Law