Jackson v. Callan Publishing, Inc.
| Decision Date | 30 June 2021 |
| Docket Number | 1-19-1458 |
| Citation | 2021 IL App (1st) 191458,198 N.E.3d 1099,459 Ill.Dec. 722 |
| Parties | Talmitch JACKSON and Michael Byrne, Individually and on Behalf of the Classes, Plaintiffs-Appellants, v. CALLAN PUBLISHING, INC., d/b/a Public Safety Services; Safety Publications, Inc.; Adam Herdman; Arthur Olivera ; Salvatore Triveri; Jimmie Koronakos, a/k/a Jimmy Koronakos; and Fraternal Order of Police Lodge No. 7, Defendants (Callan Publishing, Inc., d/b/a Public Safety Services; and Fraternal Order of Police Lodge No. 7, Defendants-Appellees). Talmitch Jackson and Michael Byrne, Individually and on Behalf of the Classes, Plaintiffs-Appellants, v. Callan Publishing, Inc., d/b/a Public Safety Services; John Chenault, Individually and d/b/a Public Awareness, Inc.; Mark Valentine, Individually and d/b/a Public Awareness, Inc.; Public Awareness USA, Inc.; Rhonda Chenault; Danile Dugo; Juan Brown; Robert Gentile; and Fraternal Order of Police Lodge No. 7, Defendants (Callan Publishing, Inc., d/b/a Public Safety Services; and Fraternal Order of Police Lodge No. 7, Defendants-Appellees). |
| Court | United States Appellate Court of Illinois |
Michael Rothmann, Law Office of Martin L. Glink, of Arlington Heights, for appellants.
Marty J. Schwartz and Tyler Manic, of Schain, Banks, Kenny & Schwartz, Ltd., of Chicago, for appellee Callan Publishing, Inc.
Maureen A. McGuire, Christopher C. Heery, and Catherine O Suilleabhain, of Anderson, Rasor & Partners, LLP, and Ira N. Helfgot, of Law Offices of Ira N. Helfgot, both of Chicago, for appellee Fraternal Order of Police, Lodge No. 7.
¶ 1 This case concerns two civil actions by plaintiffs Talmitch Jackson and Michael Byrne against defendants including Callan Publishing, Inc. (Callan); Public Awareness, Inc., and Public Awareness USA, Inc. (Public Awareness); Safety Publications, Inc. (Safety Publications); and Fraternal Order of Police Lodge No. 7 (FOP). Plaintiffs’ claims concerned alleged improprieties in solicitation of donations on behalf of FOP by Callan, Public Awareness, and Safety Publications (collectively, Telemarketers) including representing to donors that their donations would benefit FOP-member disabled police officers and families of FOP-member officers killed in the line of duty (collectively, the Class). On allegations that Telemarketers retained about 80% of donated funds and FOP used the remainder for purposes other than benefitting the Class, plaintiffs sought imposition of a constructive or charitable trust for benefit of the Class and damages for unjust enrichment. Following certification of the Class and a bench trial, the court found for plaintiffs against Public Awareness for $2,143,234.96 and against Safety Publications for $1,454,921.63, found for FOP and Callan, and declined to impose a constructive or charitable trust.
¶ 2 On appeal, plaintiffs contend that the trial court erred in (1) finding no agency relationship between FOP and Telemarketers or amongst Telemarketers, (2) not imposing a charitable trust, (3) finding no wrongful conduct by FOP and not imposing a constructive trust, (4) not finding that FOP and Callan breached their duties as trustees over the donations by wasting, mismanaging, and commingling funds, and (5) finding no unjust enrichment. For the reasons stated below, we affirm.
¶ 4 Upon plaintiffs’ March 2003 complaint in case No. 03-CH-5765 and June 2003 complaint in case No. 03-CH-10108, the trial court certified the plaintiff Class in 2006 and 2008 and held trial in 2018. The court issued its judgment on June 14, 2019, and plaintiffs filed their notice of appeal on Monday, July 15, 2019. Accordingly, this court has jurisdiction in this matter pursuant to article VI, section 6, of the Illinois Constitution ( Ill. Const. 1970, art. VI, § 6 ) and Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994) and Rule 303 (eff. July 1, 2017) governing appeals in civil cases.
¶ 6 In March 2003, plaintiffs filed their complaint in case No. 03-CH-5765 against FOP, Callan, Safety Publications, Adam Herdman, Arthur Olivera, Salvatore Triveri, and Jimmy Koronakos concerning solicitation of businesses. Herdman and Olivera were allegedly owners, directors, and officers of Safety Publications while Triveri and Koronakos were allegedly persons employed by Safety Publications as solicitors for FOP. In June 2003, plaintiffs filed their complaint in case 03-CH-10108 against FOP, Callan, Public Awareness, John Chenault, Mark Valentine, Daniel or Danile Dugo, Juan Brown, and Robert Gentile concerning solicitation of individual donors. Valentine and Chenault were allegedly owners, directors, and officers of Public Awareness, while Dugo, Brown, and Gentile were allegedly persons employed by Public Awareness as solicitors for FOP. Both complaints were subsequently amended.
¶ 7 Both complaints alleged that FOP contracted with Callan in June 2000 to solicit and collect funds, and the contracts allegedly gave Callan "proprietary use" of FOP's name for fundraising as well as authority to subcontract the fundraising. Callan hired Safety Publications and Public Awareness to perform some of the fundraising. Pursuant to these agreements, Telemarketers (including Triveri, Koronakos, Dugo, Brown, and Gentile) allegedly solicited donations from June 2000 onward on behalf of disabled officers, officers killed in the line of duty, and their wives, widows, and families without disclosing that their fee was about 78% of donations.
¶ 8 For 2001, Safety Publications reportedly raised $381,981.18 and charged fees and commissions of $297,945.36; for 2002 through the end of June, Safety Publications reportedly raised $179,423 and charged fees and commissions of $139,949.94. For 2001, Public Awareness reportedly raised $601,627.27 and charged fees and commissions of $483,301.83; for 2002 through the end of June, Public Awareness reportedly raised $404,347.81 and charged fees and commissions of $323,478.26. Plaintiffs alleged that Telemarketers raised additional funds that were not reported to the State as required by statute. Plaintiffs alleged that FOP spent little of its 22% on the Class on whose behalf the funds were raised, but upon golf outings, fishing tournaments, and political donations.
¶ 9 Plaintiffs alleged that they were disabled FOP-member police officers and thus members and suitable representatives of the Class. On allegations that donors made donations expecting that most of their donations would go to the Class but then little, if any, of the donations went to the Class, plaintiffs alleged that defendants breached their duty as trustees of the donations and sought an accounting, creation of a charitable or constructive trust on behalf of the Class, damages for unjust enrichment, and attorney fees and costs.
¶ 10 The record includes two agreements of July 1, 2000, between FOP and Callan. One is a "royalty and licensing agreement" providing Callan the "exclusive right to use [FOP's] name" in soliciting advertising revenue for a newspaper in exchange for "royalties" to FOP of 18% of the first $100,000 of "collected advertising revenue" and 20% thereafter. The other agreement created a "sponsorship" program "of telemarketing contacts to the general public to procure sponsors of the FOP *** and to communicate a sponsor service message" and provided Callan "the right and license during the term hereof to use [FOP's] name in connection with [the p]rogram" in exchange for "royalty payments" to FOP of 22% of "collected sponsorship revenue." The sponsorship agreement provided that "[p]rogram materials will not be utilized by [Callan] or its contractors without the prior approval of FOP." Both agreements recited that FOP was "a membership and labor organization serving its members" rather than a charitable organization, Callan was an independent contractor and not an agent of FOP, FOP "understands and agrees that contractors secured by [Callan] will be permitted during the term of this Agreement to contact prospective" advertisers or sponsors, and no person or entity performing services regarding the newspaper or sponsorship program would be an employee or agent of FOP.
¶ 12 In September and November 2003, the trial court granted motions to dismiss case No. 03-CH-5765 against Callan, Safety Publications, Herdman, and Olivera. The court found that the pleadings did not establish a fiduciary relationship between Callan and plaintiffs and, at most, plaintiffs may be able to enforce the contract between Callan and FOP, but plaintiffs did not allege a breach of that contract. The court also found that the Illinois Attorney General had exclusive standing to enforce the Solicitation for Charity Act (Charity Act) ( 225 ILCS 460/0.01 et seq. (West 2002)).
¶ 13 This court reversed the dismissals. Jackson v. Callan Publishing, Inc. , 356 Ill. App. 3d 326, 292 Ill.Dec. 272, 826 N.E.2d 413 (2005). "The central issues [were] whether plaintiffs’ complaint alleged a legally cognizable wrong predicated on a fiduciary relationship against defendants Callan and Safety, and whether plaintiffs have the standing to complain." Id. at 332, 292 Ill.Dec. 272, 826 N.E.2d 413. We noted that "[t]he parties do not dispute the existence of a fiduciary relationship between the FOP and plaintiffs, as they were members of that fraternal organization," but "this appeal is concerned with whether plaintiffs may maintain their action against Callan, retained as an independent contractor by the FOP, and Safety, Callan's subcontractor." Id.
¶ 14 We found that plaintiffs sufficiently alleged the elements of charitable trust formation by alleging that Callan and Safety Publications represented to the public that they were soliciting funds on behalf of members of the Class so that a trier of fact could reasonably infer that people did not buy "sponsorships" as the contract recited but intended to make...
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