Kalman v. Bertacchi

• Decision Date: 08 February 1978
• Docket Number: D,No. 77-451,No. 5240,5240,77-451
• Citation: 15 Ill.Dec. 204,57 Ill.App.3d 542,373 N.E.2d 550
• Parties: , 15 Ill.Dec. 204 William KALMAN and Joyce Kalman, Plaintiffs-Appellees, v. Rino BERTACCHI, Louis Bertacchi and Mary Bertacchi, Individually and as Beneficiaries of Trustof Oak Park Trust and Savings Bank, Oak Park Trust and Savings Bank as Trustee under Trustefendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 550

373 N.E.2d 550

57 Ill.App.3d 542, 15 Ill.Dec. 204

William KALMAN and Joyce Kalman, Plaintiffs-Appellees, v. Rino BERTACCHI, Louis Bertacchi and Mary Bertacchi Individually and as Beneficiaries of Trust No. 5240 of Oak Park Trust and Savings Bank, Oak Park Trust and Savings Bank as Trustee under Trust No. 5240, Defendants-Appellants.

No. 77-451.

Appellate Court of Illinois, First District, Third Division.

Feb. 8, 1978.

Robert J. Anderson, Palatine, for defendants-appellants.

Myron M. Cherry and Peter A. Flynn, Chicago, for plaintiffs-appellees.

JIGANTI, Presiding Justice.

This appeal arises from a judgment entered pursuant to a settlement apparently reached by the parties but subsequently repudiated by one of the defendants, Rino Bertacchi. The underlying litigation began in 1973 when the plaintiffs, William and Joyce Kalman, sought to compel specific performance of a real estate sales contract entered into by all the defendants and to require Rino Bertacchi to complete construction of a single family residence in Deerfield, Illinois. In addition to an answer, Rino Bertacchi filed a counterclaim seeking both compensatory and punitive damages for the alleged defamation of his business reputation. A supplemental counterclaim sought to have the court declare a forfeiture or a rescission of the real estate contract. Following 33 days of trial from May to October, 1976, the plaintiffs and one of the defendants, Rino Bertacchi, entered into a settlement agreement, which Rino disavowed approximately 30 minutes after it was recorded by a court reporter. This appeal is taken from the judgment order entered pursuant to the settlement dismissing the complaint, counterclaim, and supplemental counterclaim with prejudice, and from a subsequent order denying the defendants' motion to vacate that judgment. No issues are raised on the pleadings, nor concerning any other aspects of the litigation which preceded the settlement. The defendants contend that the oral agreement should not be binding when one of the parties enters into such agreement under a misapprehension of a material fact and subsequently disavows it; that the agreement should be set aside since it is manifestly unfair and inequitable and the plaintiffs will not be prejudiced by such an action; that the settlement is not binding on the other defendants, Mary and Louis Bertacchi who were not present and did not participate or authorize their attorney to settle; and that the agreement is unenforceable under the Statute of Frauds.

The title to the subject property is held by Oak Park Trust and Savings Bank as trustee; 50% Of the beneficial interest is owned by Rino Bertacchi; the remaining 50% Is owned jointly by Mary and Louis Bertacchi. Power of direction over trust assets is held jointly by Rino and Louis Bertacchi. The contract between the defendants and the Kalmans basically provided for the sale of the real estate and construction of a single family residence for $79,000 plus subsequently approved "extras". The Kalmans later agreed to pay $5,500 for extras. Since this appeal is concerned solely with the validity of the settlement, further detailed discussion of events leading up to that event is unnecessary.

Prior to the beginning of the trial itself in May, 1976, the case had been pending for more than three years. From May to October 7, the case was actually on trial 33 days, during which time there were several settlement conferences between the parties, their attorneys, and the court. At no time, however, did defendants Mary and Louis Bertacchi come to court, attend the trial or participate in any settlement discussions. On October 7, 1976, the trial judge suggested another possible settlement for the parties to consider. The settlement proposed that Rino Bertacchi finish the partially completed structure to his own specifications and that it be sold to the highest bidder, with the proceeds to be divided between the parties according to a formula devised by the court. Following discussions between the parties, their counsel, and the court, the attorney for the defendants advised the court that the proposed settlement was acceptable. The plaintiffs asked to be allowed to think about the matter overnight.

The next morning, October 8, 1976, plaintiffs' counsel requested a conference in chambers, during which he advised the court that his clients wanted the house and the property, and would be willing to pay a total of $52,000 for a conveyance of the property and the partially completed structure. Defendants' attorney rejected the counter-proposal on the grounds that it provided insufficient compensation, demanding $72,490. According to notes kept by the court, the attorney for the plaintiffs then offered to pay $59,000. This would consist of a payment of $39,000 in cash, plus a $20,000 deposit held by the defendants. That deposit had been earning interest for over three years which would be retained by the defendants, bringing the actual total to approximately $67,000. None of the parties was present during these discussions. It was then agreed that before resolving the question of money, the question of the subcontractors completing certain work should be settled. At this point, one of the plaintiffs, William Kalman, and defendant, Rino Bertacchi, were asked to join the discussion in chambers. Following negotiations, agreement was reached regarding what work would be completed by Bertacchi or his subcontractors and what would be the Kalmans' responsibility. At the conclusion of that agreement, the trial judge announced that he was going to lunch, stating that:

"Kalman is offering you (Bertacchi) $59,000. On the question of money, I have no recommendation. That's between you two men. Now if you want to discuss it in here (chambers) all right, you may stay here while I go to lunch."

The attorneys for both parties also left, leaving only Kalman and Bertacchi in chambers. When the judge returned about an hour later, he was advised that the parties had settled their differences, agreeing on the $59,000 figure. The judge later stated for the record:

"They both told me that they were very happy that they had settled their lawsuit; that it is too bad they hadn't done it before, and that they were both pleased."

The parties and their attorneys then proceeded to the courtroom to record the settlement. During the process of making the agreement a matter of record, the court questioned the parties as to their understanding of the terms being dictated and the voluntariness of their assent. At the conclusion of the recording of the settlement, the court again questioned the parties:

"THE COURT: Mr. and Mrs. Kalman, do you have any objection to this agreement?

"MR. KALMAN: No.

"THE COURT: If you say no, I can hold you to it. I can make you do it later. So, if you have any objections, voice it now. Don't be afraid.

"MRS. KALMAN: No, I don't.

"THE COURT: Mr. Bertacchi?

"MR. BERTACCHI: No.

"THE COURT: You understand, if you agree to this now, I can enforce it.

"MR. BERTACCHI: I understand."

Approximately 30 minutes after the hearing was concluded, Rino Bertacchi and his attorney returned to the judge's chambers informing the court that the defendant had agreed to accept the $59,000 offer on the misapprehension that the court had recommended the figure. At that time, following the plaintiffs' refusal to voluntarily set aside the agreement, the matter was set for a hearing at which time Rino Bertacchi was to testify as to what occurred at the private meeting with Kalman in the judge's chambers. That hearing took place October 18, 1976, when both Bertacchi and Kalman testified as to their meeting. At the hearing, the defendants' counsel, on behalf of all the defendants, formally withdrew the oral acceptance of Rino Bertacchi. Bertacchi testified that Kalman had a piece of paper with some figures on it and from Kalman's remarks and reference to that paper, he received the impression that the judge had recommended the $59,000 figure. However, in response to questioning by the court, he admitted that the court never made any recommendations regarding money. He further testified that upon leaving the building immediately following the recording of the agreement, he remarked to his attorney that he "was losing too much. I saw I was losing a lot of money on it. * * * It was unfair, that's all." Kalman testified that he recalled the statement by the court that "(o)n the question of money, I have no recommendation", and that he himself never told Bertacchi that the judge had recommended the $59,000 settlement figure. After hearing the arguments of counsel, the court found that there was a valid settlement, and pursuant to the plaintiffs' petition to enforce the settlement agreement, entered an order finding that the settlement agreement reached by the parties in open court on October 8, 1976, was a "valid, subsisting, and enforceable agreement." The defendants were granted leave to file formal objections to the agreement drafted by the plaintiffs' attorney, apparently based on alleged inconsistencies between that document and the October 8 transcript.

On October 28, 1976, the plaintiffs' motion to compel observance of the settlement agreement was heard by the court. The defendants objected on the grounds that the settlement was in violation of the Statute of Frauds, that it resulted in an unconscionable advantage to the plaintiffs, and that the agreement of Rino Bertacchi did not bind Louis and Mary Bertacchi. The court signed the order submitted by the plaintiffs, deleting the word "agreed" from its heading, allowing the defendants five days in which to file any objections, and instructing the clerk not to enter the judgment until the defendants' objections were heard.

On November 8, 1976, the court heard the objections of the defendants: (1) that the order disposed of the beneficial interests of Louis and Mary Bertacchi without their...