Janowiak v. Tiesi, No. 1-09-1273 (Ill. App. 5/7/2010)
| Decision Date | 07 May 2010 |
| Docket Number | No. 1-09-1273.,1-09-1273. |
| Parties | MICHAEL JANOWIAK, Individually, and as Trustee of the Michael H. Janowiak Trust Under the Janowiak GST Trust, Dated October 1, 1995, Plaintiff-Appellant, v. ANGELO TIESI, Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
Appeal from the Circuit Court of Cook County, 08 L 585, The Honorable Barbara A. McDonald, Judge Presiding.
Richard C. Leng, Law Offices of Richard C. Leng, 330 West Main Street, Barrington, IL, Plaintiff-Appellant.
Michael L. Shakman, Diane Klotnia, Daniel M. Feeney, Alexandra Block, Miller Shakman & Beem LLP, 180 N LaSalle, Suite 3600, Chicago, IL 60601, 312/263-3700, Defendant-Appellee.
In this appeal, we review the circuit court's dismissal of plaintiff's complaint alleging causes of action for breach of fiduciary duty and fraud. In the case sub judice, plaintiff alleged that defendant breached his fiduciary duty to plaintiff as trustee of an irrevocable family trust by failing to disclose material information concerning the true value of shares owned in the family business and in securing plaintiff's release of his fiduciary duties. The circuit court found that the release barred plaintiff's claims as defendant had effectively resigned as trustee prior to his execution and thus defendant did not owe plaintiff a fiduciary duty, nor did defendant commit any fraud. For the following reasons, we reverse and remand the matter to the circuit court.
Plaintiff, Michael H. Janowiak, was an employee and principal stockholder of a family business called Professional Education International, Inc. (PEI), along with his father, Robert Janowiak, and brother, John Janowiak. Defendant, Angelo Tiesi, was plaintiff's father's attorney for estate and tax planning, and was the trustee of an irrevocable trust, which held the stock of PEI, and of which plaintiff was a beneficiary. Plaintiff's father did not provide plaintiff with financial, strategic or operations information of PEI.
According to plaintiff, around 1997 plaintiff's brother John commenced a scheme to defraud plaintiff of his interest in PEI. Both John and the father, Robert, conspired to portray PEI's situation and future as dire and withheld material information to force plaintiff to sell his shares below their true value. In or about the fall of 2004, upon being informed of poor prospects for PEI, and the purported value of his shares, plaintiff contacted defendant, his trustee, attempting to ascertain the true value of his shares. Defendant refused to provide such information, informing plaintiff he would need the permission of Robert to disclose it. In turn, defendant resigned as trustee, representing to plaintiff that his resignation was based on a conflict of interest as Robert's attorney. In resigning, defendant requested that plaintiff sign a document under which plaintiff was appointed as successor trustee, and pursuant to which defendant was released from any liability, which plaintiff later signed.
Plaintiff maintains that defendant knew that Robert and John were planning to force plaintiff to sell his shares below value and also possessed material information regarding the actual value of plaintiff's shares and the true financial state of PEI. Defendant was also aware of transactions by Robert, such as taking excessive compensation, making payments to family members and engaging in related party transactions which were intended to depress the value of PEI shares. Further, plaintiff maintains, defendant knew plaintiff was unaware of these facts.
In or about December 2004, Robert informed plaintiff he would commission a neutral evaluation of the value of plaintiff's stock. Subsequently, in May 2005 Robert provided plaintiff with a report prepared by Friedman & Associates, Ltd. (hereinafter the Friedman report), which falsely reflected poor prospects for PEI, did not disclose other material information about transactions impacting PEI and future revenue, and reflected a depressed value of plaintiff's shares at $1.01 million. Moreover, when plaintiff's accountant attempted to review documents relating to the Friedman report, no documents were provided. According to plaintiff, defendant was also aware of the Friedman report, and knew that Friedman refused to provide information to plaintiff's accountant. However, plaintiff fails to acknowledge how and when defendant became aware of the Friedman report.
On June 30, 2005, plaintiff sold his shares for $1.01 million, the value stated in the Friedman report. Thereafter, Robert amended his will to bequeath all of his shares in PEI to John, and when he died John received the shares. In July 2006, concerned that he had sold his shares for a grossly inadequate price, plaintiff ordered his own independent valuation report by Hilco Enterprise Valuation Services, LLC (Hilco). Hilco's report found serious flaws in the Friedman report and determined the value of plaintiff's shares at the time of sale was actually $2.924 million. In turn, plaintiff filed suit against defendant, the estate of Robert, PEI, and John.1
Plaintiff's first amended complaint alleged claims against defendant in count I for fraud and in count IV for breach of fiduciary duty. Plaintiff maintains that as a result of defendant's failure to disclose the fraud by John and Robert he sold his shares in PEI to Robert for a grossly inadequate price. The complaint alleged that defendant resigned as trustee in a letter to plaintiff dated December 8, 2004, and that defendant "sought" the release of all liability on January 17, 2005. Plaintiff further alleged that while he signed the acceptance of office and release after this date, defendant inserted an effective date of December 31, 2004.
Defendant moved to dismiss under sections 2-615 and 2-619 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 2008)) asserting, inter alia, that the release barred plaintiff's claims because defendant had resigned before plaintiff signed the release. The circuit court dismissed count I for fraud and count IV for breach of fiduciary duty, finding that because defendant had resigned, he did not owe plaintiff any fiduciary duty, including a duty of disclosure, on the date the release was signed. The circuit court's order further provided that, pursuant to Supreme Court Rule 304(a) (210 Ill. 2d R. 304(a)), there was no just reason to delay enforcement or appeal of the order. The instant appeal followed.
Plaintiff first maintains that the circuit court erred in granting dismissal based on the release he signed after defendant resigned as trustee. Section 2-619(a)(9) permits involuntary dismissal where "the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." 735 ILCS 5/2-619(a)(9) (West 2008). The provision provides a means for disposing of issues of law or easily proved issues of fact at the outset of the case. Lang v. Silva, 306 Ill. App. 3d 960, 969, 715 N.E.2d 708, 714-15 (1999), citing Zedella v. Gibson, 165 Ill. 2d 181, 185, 650 N.E.2d 1000, 1002 (1995).
When ruling on a section 2-619 motion, the circuit court may consider pleadings, depositions, and affidavits. Lang, 306 Ill. App. 3d at 969, 715 N.E.2d at 715, citing Zedella, 165 Ill. 2d at 185, 650 N.E.2d at 1002. However, courts must "interpret all pleadings and supporting documents in the light most favorable to the nonmoving party." In re Chicago Flood Litigation, 176 Ill. 2d 179, 189, 680 N.E.2d 265, 270 (1997). Additionally, if evidentiary facts asserted in affidavits filed in support of the motion are not refuted by a counteraffidavit, those facts will be deemed admitted. Lang, 306 Ill. App. 3d at 969-70, 715 N.E.2d at 715, citing Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116, 619 N.E.2d 732, 735 (1993).
When considering an appeal from a section 2-619 dismissal, reviewing courts must determine whether a genuine issue of material fact exists which should have precluded dismissal and, if no such issue exists, whether dismissal was proper as a matter of law. Lang, 306 Ill. App. 3d at 970, 715 N.E.2d at 715. Our review of dismissals under section 2-619 of the Code is de novo. Van Meter v. Darien Park District, 207 Ill. 2d 359, 368, 799 N.E.2d 273, 278 (2003); Lang, 306 Ill. App. 3d at 970, 715 N.E.2d at 715, citing Spiegel v. Hollywood Towers Condominium Ass'n, 283 Ill. App. 3d 992, 998, 671 N.E.2d 350, 441 (1996).
As noted, defendant contends that plaintiff's claims are barred by the release he signed which fully encompasses plaintiff's claims. Defendant maintains that he owed no fiduciary duties to plaintiff after his resignation became effective, which occurred before he tendered the release and before plaintiff signed it, and, in any event, he did not fraudulently induce its execution by plaintiff. Plaintiff argues that the release is ineffective because defendant's resignation did not sever fiduciary liability for transactions begun during the fiduciary relationship. Plaintiff asserts that the defendant drafted and presented the release prior to his resignation without disclosing all material information, thus constituting fraudulent concealment, thereby negating the validity of the release. Plaintiff also contends that fraud in the inducement of a release renders the release ineffective. Plaintiff further maintains that, regardless of whether defendant still owed any fiduciary duties, under contract law a general release does not operate to bar claims not specified in the document.
We first address defendant's contention that the release was not presented until after his resignation. Notwithstanding this contention, plaintiff maintains that the release was drafted and presented to him prior to that date. However, plaintiff, by his December 31, 2008, affidavit acknowledged that defendant "tendered" the acceptance...
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