APOLLO REAL EState Inv. FUND v. GELBER

Decision Date31 December 2009
Docket NumberNo. 1-09-1538.,1-09-1538.
Citation398 Ill.App.3d 773,935 N.E.2d 949,343 Ill.Dec. 721
PartiesAPOLLO REAL ESTATE INVESTMENT FUND, IV, L.P., a Delaware Limited Partnership, Plaintiff-Appellee, v. Brian GELBER, Gelber Securities, LLC, an Illinois Limited Liability Company, ICE, LLC, an Illinois Limited Liability Company, GO, LLC, an Illinois Limited Liability Company, Joseph Niciforo, Anne M. Niciforo, H. Robert Holmes, Laurence Woznicki, and Gary Scheier, Defendants-Appellants.
CourtUnited States Appellate Court of Illinois

OPINION TEXT STARTS HERE

COPYRIGHT MATERIAL OMITTED.

James E. Dahl, Patrick K. Dahl, Dahl & Bonadies, Chicago, IL, for Defendants-Appellants.

Kevin Keating, Keating & Shure, Ltd., Chicago, IL, for Plaintiff-Appellee.

Justice TOOMIN delivered the opinion of the court:

This matter is before us on interlocutory appeal pursuant to the provisions of Supreme Court Rule 308 (155 Ill.2d R. 308) to consider three questions certified by the trial court. Plaintiff, Apollo Real Estate Investment Fund IV, L.P. (Apollo), was assigned an Ohio judgment obtained by its assignor in 2004 against several corporate entities. In 2005, plaintiff brought an action in the circuit court of Cook County against defendants to collect money it claims was wrongfully transferred to them in 2001 by the judgment debtor corporation to avoid paying for the underlying work performed for the debt. Following dismissal of the complaint, plaintiff voluntarily dismissed the case. Then, in 2007, plaintiff refiled a new action, against these same defendants, again seeking to recover money on the judgment. All counts were dismissed except a claim for unjust enrichment. Pursuant to the parties request, the circuit court then certified the following questions for our review:

“1. Whether an assignment, which expressly distinguishes between claims and judgments, confers standing on the assignee to enforce the monetary judgment by asserting new claims unrelated to the judgment against parties not named in the underlying litigation.

2. Whether, under the standard articulated by the Illinois Supreme Court in Porter v. Decatur Memorial Hospital, 227 Ill.2d 343 [317 Ill.Dec. 703, 882 N.E.2d 583] (Ill.2008), a cause of action for unjust enrichment relating to construction work performed in 2000 that is asserted for the first time as part of a re-filed action, is sufficiently close in character and nature of injury to an original case that focused upon a funds transfer that occurred in 2001 such that it can be considered to ‘relate back’ for purposes of the statute of limitations.

3. Whether Apollo, Divine's assignee, and therefore, a de facto creditor of the debtor company, may maintain a cause of action for unjust enrichment against another co-creditor of the same debtor company when the defendant co-debtor is alleged to have received nothing more than the re-payment of a valid and enforceable pre-existing debt.” For the following reasons, we answer all three certified questions in the affirmative.

BACKGROUND

In 1994, David Lasier founded TWS, Inc., a holding company, and Telecom Wireless Solutions, Inc., an Atlanta-based telecommunications company. Under the umbrella of TWS, Lasier also formed other affiliates and subsidiaries to acquire, develop, and operate wireless networks, which included: TWS International, Inc. (TWS International); OPM Auction Co. (OPM); Blue Sky Communications, Inc.; Blue Sky Communications, L.L.C.; and Blue Sky International. We will refer to these seven corporate entities collectively as the “TWS Companies.”

On December 1, 1997, Gelber Securities, Inc., and Telecom Wireless Solutions, Inc. (Telecom), executed a working capital line of credit agreement, pursuant to which Gelber Securities agreed to establish a $2,400,000 line of credit for Telecom. The credit line was secured by assets of Telecom but did not include assets of OPM. TWS, Inc., was not a party to this loan. However, Gelber Securities was a shareholder of TWS. One of Gelber Securities' principals was Brian Gelber, who was a member of the board of directors of TWS.

On December 31, 1997, Gelber Securities assigned all of its rights and obligations under the working capital line of credit agreement, including its right to repayment of any principal and interest, to Ice, LLC. The members of Ice, LLC, included Go, LLC, whose members in turn included Brian Gelber and his sons. Telecom subsequently drew almost the full balance of the $2.4 million credit line.

In 1999, the TWS companies purchased licenses, at a cost of less than $4 million, to operate wireless networks in West Virginia. OPM did not conduct any business operations, except to hold any licenses. The TWS companies hired an outside company, Divine Tower International Corporation (Divine), to design, develop, and construct the network. In May 1999, Divine and the TWS companies executed a letter of intent providing that Divine was to fund, develop, construct, and lease operating assets to the Blue Sky Companies in specific geographic regions in West Virginia. OPM was awarded the West Virginia licenses, and subsequently the TWS Companies provided Divine with the authority to negotiate with the area telecommunications carriers. TWS International identified each area where it wanted Divine to place the TWS antennas by issuing geographical radiuses where wireless towers were to be located, called search area rings (SARs). The TWS companies gave Divine written approval of 129 primary sites. According to Apollo, the TWS companies and Divine orally agreed that Divine would receive a specific amount for its work on each SAR.

However, on July 21, 2000, the TWS Companies informed Divine that they were ceasing all operations relating to the West Virginia network, and instructed Divine to stop all work. On September 13, 2000, OPM submitted an invoice to Blue Sky Communications for $2,978,500 for the work performed by Divine in designing and engineering the West Virginia network, with 1.5% monthly interest after 30 days. On November 20, 2000, the maturity date of the working capital line of credit agreement, Telecom owed Ice, LLC, as Gelber Securities' assignee, $2.378 million in principal and accrued interest. Telecom and Ice, LLC, subsequently agreed to extend the maturity date to July 31, 2001. On June 29, 2001, OPM sold the West Virginia licenses to Key Communications, Inc., for approximately $14 million. OPM sent the majority of the proceeds of the sale to TWS, and wired $2,385,240 to Ice, LLC, in full repayment of the loan. Shortly thereafter, OPM dissolved. Neither OPM nor any of the other TWS companies paid Divine.

In 2002, Divine filed suit against the TWS companies in the United States District Court for the Southern District of Ohio, Eastern Division, captioned DTIC International Corp. v. Blue Sky Communications, Inc., et al., Case No. 2:02-CV-00905. On April 13, 2004, the district court granted Divine's uncontested summary judgment motion and entered judgment in favor of Divine and against all the TWS Companies in the amount of $4,968,351, plus prejudgment interest in the amount of $1,763,019, for a total judgment of $6,641,376.

The TWS companies did not pay Divine on the judgment, and Divine subsequently filed a chapter 11 bankruptcy petition. 11 U.S.C. 1101 et seq. (2006). Apollo was one of Divine's secured creditors. On December 12, 2004, the bankruptcy court approved Divine's plan of liquidation. As of that date, Apollo had a deficiency claim for its prepetition secured claim against Divine for loans in the amount of $20,646,438.60. Under the plan of liquidation, Apollo was assigned Divine's judgment against the TWS companies.

On June 23, 2005, Apollo filed an action in the circuit court of Cook County against the Gelber defendants and others, captioned Apollo Real Estate Investment Fund IV, L.P. v. Brian Gelber, et al., Case No. 05 L 6954. Counts I and II stated claims against all defendants under the Illinois Uniform Fraudulent Transfer Act (740 ILCS 160/1 et seq. (West 2006)), and count III was a claim for breach of fiduciary duty against Brian Gelber. All three counts were based on the June 29, 2001, transfer of $2,385,240 to Ice, LLC, in repayment of the working capital line of credit, allegedly caused fraudulently by the Gelber defendants. The Gelber defendants' motion to dismiss was granted. On February 21, 2006, Apollo filed its first amended complaint, also setting forth claims for violations of the Illinois Uniform Fraudulent Transfer Act and breach of fiduciary duty. In its May 5, 2006, order, the circuit court granted the Gelber defendants' motion to dismiss Apollo's first amended complaint for failure to state a claim pursuant to section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 2004)). The court further provided in its dismissal order that Apollo had 28 days to amend its complaint. Apollo did not amend its complaint within the 28 days, nor did it appeal the dismissal. Nonetheless, on June 29, 2006, Apollo voluntarily dismissed its case without prejudice.

On May 17, 2007, Apollo filed the instant action in the circuit court of Cook County, again asserting claims for violations of the Illinois Uniform Fraudulent Transfer Act and breach of fiduciary duty, and adding an additional claim for unjust enrichment. The circuit court dismissed the complaint on October 24, 2007. In turn, Apollo then filed a first amended complaint alleging the same four counts. On February 7, 2008, the trial court dismissed counts I, II and III for failure to state a cause of action, but allowed the unjust enrichment claim to stand. This claim alleged that the Gelber defendants were unjustly enriched by the work Divine performed which increased the value of the West Virgina network licenses. As the assignee of the Divine judgment, Apollo alleged that it was now entitled to this payment.

The Gelber defendants filed additional motions to dismiss the unjust enrichment claim,...

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