Musa v. Saeed, 1-22-0209

CourtUnited States Appellate Court of Illinois
Writing for the CourtHOWSE JUSTICE
Citation2022 IL App (1st) 220209 U
PartiesALI ALI MUSA, MONIR AHMED and SALAAM PROPERTIES, LLC, a limited liability company, Plaintiffs/Counter-Defendants-Appellees, v. HAIL SAEED, individually and on behalf of SALAAM PROPERTIES, LLC, a limited liability company, Defendants/Counter-Plaintiffs-Appellants.
Docket Number1-22-0209
Decision Date22 November 2022

2022 IL App (1st) 220209-U

ALI ALI MUSA, MONIR AHMED and SALAAM PROPERTIES, LLC, a limited liability company, Plaintiffs/Counter-Defendants-Appellees,
v.

HAIL SAEED, individually and on behalf of SALAAM PROPERTIES, LLC, a limited liability company, Defendants/Counter-Plaintiffs-Appellants.

No. 1-22-0209

Court of Appeals of Illinois, First District, Second Division

November 22, 2022


This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of Cook County. No. 17 CH 12357 Honorable Michael T. Mullen, Judge Presiding.

JUSTICE HOWSE delivered the judgment of the court. Presiding Justice Fitzgerald Smith and Justice Ellis concurred in the judgment.

ORDER

HOWSE JUSTICE

¶ 1 Held: We affirm the judgment of the circuit court of Cook County awarding damages for the parties' respective breaches of fiduciary duties based on the parties' individual contributions to the limited liability corporation (LLC), damages in favor of plaintiffs and counter-plaintiffs individually, and declining to award damages on plaintiffs derivative claim, punitive damages, or attorney fees.

¶ 2 This suit involves the parties' creation of an LLC and the subsequent breakdown of their ability to cooperate in its operation. Following a bench trial, the trial court found each party violated their fiduciary duties owed to both the LLC and each other as members-managers of the LLC. The court declined to grant relief on the derivative claim on behalf of the LLC but did

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award damages on claims by the members of the LLC individually. The court declined the requests for punitive damages and attorney fees in light of the respective multiple breaches of fiduciary duties by all of the parties. For the following reasons, we affirm.

¶ 3 BACKGROUND

¶ 4 On September 12, 2017, plaintiffs, Ali Ali Musa, Monir Ahmed, and Salaam Properties, LLC, filed a complaint for injunctive relief, breach of fiduciary duty, and an accounting against defendants, Hail Saeed and Sufwan Laundries, Inc. (hereinafter the "initial complaint"). The initial complaint alleged, in pertinent part, as follows: Musa, Ahmed, and Saeed were members of Salaam Properties, LLC, an Illinois limited liability company formed in May 2010. Salaam is a member-managed LLC with an Operating Agreement. Musa, Ahmed, and Saeed as members have equal voting rights, and unanimous consent is required for business decisions. In June 2010, Salaam purchased property in Chicago "to operate *** in a manner profitable to all members" using contributions of money from each member. The property is a "strip mall" divided into two units. The initial complaint alleges Salaam operated a laundromat in "Unit 1" of the property and leased "Unit 2" to third parties. The complaint also alleges the members formed Sufwan to be a corporate entity and licensee operating on the premises with each member being an equal shareholder in Sufwan. The members agreed to "take turns at agreed-upon times to operate the laundromat" and that each member who was not onsite would receive a minimum payment from the profits from the laundromat. That arrangement lasted until October 2012, when Saeed "began and has continued to act alone" in operating the laundromat onsite.

¶ 5 The initial complaint alleges that during the time Saeed has acted alone to operate the laundromat onsite, he has, inter alia, "refused to consult with [Musa and Ahmed] or share information *** necessary for [them] to participate in the business," has "unilaterally made

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business decisions including leasing or attempting to lease the property," and "indicated an unwillingness and continued refusal to step away from the onsite operation of the premises" and failed and refused to honor their agreement and the law. Count I of the initial complaint for injunctive relief alleges Saeed had "continued to seek to and/or execute leases to third parties without the authority and consent of" Musa and Ahmed and that injunctive relief was needed to prevent further damage to Musa and Ahmed. The initial complaint states: "Because of the impasse in management among [Musa, Ahmed, and Saeed,] and in order to avoid further jeopardy to the rights and investments of all parties, *** [Musa and Ahmed] request that the subject premises should either be managed and operated under court supervision until rights are settled, or the property should be sold under court supervision."

¶ 6 Count II of the initial complaint is for breach of fiduciary duty. Count II alleges Saeed breached his fiduciary duties under Illinois law and the Illinois Limited Liability Act (LLC Act) to Musa and Ahmed by, inter alia, "refusing [Musa and Ahmed] their rights to unanimous participation and consent on business decisions and making decisions unilaterally and *** for his own profit to the detriment of [Musa and Ahmed]" and "seeking to exclude them from ownership and participation in Sufwan." Count II sought damages and punitive damages from Saeed. Count II of the initial complaint is for an accounting, and Count IV is titled as a Shareholders' Derivative Action. The derivative action in the initial complaint alleges Saeed was an officer and/or director of Sufwan and while acting in those capacities Saeed committed certain acts that "have been detrimental to the financial and other health of the corporation" including, but not limited to, conducting Sufwan business in a manner disallowed by law, failing in his duties to Musa and Ahmed, and otherwise acting in a manner detrimental to the corporation.

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¶ 7 On June 17, 2019, Musa, Ahmed, and Salaam filed a motion to dissolve Salaam and liquidate its assets. The motion to dissolve argues that the fact Musa and Ahmed do not want Saeed to operate the property due to the several allegations against Saeed illustrates "the fact that the parties clearly cannot agree in any manner to continue operating the business." The motion to dissolve notes that under the LLC Act, the court may dissolve the business where "it is not otherwise reasonably practicable to carry on the company's business in conformity with the articles of organization and the operating agreement." The motion asserts that it was clear that "the members cannot reasonably carry on the business when the members are in deadlock."

¶ 8 On November 7, 2019, Saeed, individually and on behalf of Salaam, filed a one-count counterclaim for breach of fiduciary duties (count I) ("counterclaim"). The counter claim alleges Musa, Ahmed, and Saeed are the sole members of Salaam, that Salaam is member-managed, and each member owns an equal one-third share of the LLC and are parties to the LLC's operating agreement. The Operating Agreement "requires the unanimous consent of the members on all operating decisions, including leasing" the property that is the subject of this case. The counterclaim alleges Musa and Ahmed breached their fiduciary duties to Saeed and Salaam by, including but not limited to, refusing to lease the subject property and failing to pay their share of the LLC's financial obligations.

¶ 9 Specifically the counterclaim alleges that in February 2014 Saeed leased a portion of the subject property, Unit 2, to MK Fast Food and Martha A. Barerra. Musa and Ahmed allegedly encouraged the lessee "to breach its lease to drive down the value of the LLC as part of an effort to acquire Saeed's membership interest in the LLC for a reduced price." The counterclaim alleges that in response to Saeed signing a second lease with Sufwan, which operated the laundromat on the largest portion of the subject property and in which Saeed owned an interest,

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Musa and Ahmed sued to evict Sufwan "to drive down the value of the LLC as part of an effort to acquire Saeed's membership interest in the LLC for a reduced price." The counterclaim also alleges that in October 2016 Saeed leased Unit 2 of the subject property to Lancaster Drive, Inc. and Muath Ibrahim Abu Ghose ("Lancaster"), after one year Musa advised Lancaster the lease was invalid and advised Lancaster to stop paying rent, which it did, and in the face of Saeed's filing a suit against Lancaster for unpaid rent, Musa and Ahmed executed a document terminating Lancaster's lease "for essentially no consideration." Saeed similarly alleged Musa and Ahmed did this to drive down the value of the LLC and obtain Saeed's interest. Finally, the counterclaim alleges that by November 2017, Musa and Ahmed had caused all of the lessees of the subject property to vacate the property, sealed the property leaving it inaccessible to Saeed, and for over five years refused to pay the LLC's financial obligations, which required Saeed "to cover with his personal funds the LLC's debt service and other ordinary operating expenses." Saeed alleged Musa and Ahmed's conduct breached their fiduciary duties and that Saeed had been damaged as a result. The counterclaim sought damages and punitive damages.

¶ 10 The case proceeded to a bench trial on Musa and Ahmed's initial complaint and motion to dissolve and liquidate Salaam and Saeed's counterclaim. On September 1, 2021, the trial court issued an extensive written opinion and order.

¶ 11 As it pertains to this appeal, the trial court made the following findings of fact: Although Musa, Ahmed, and Saeed agreed to be equal partners with equal financial obligations when Salaam purchased the subject property, Musa made a financial contribution to the purchase that was greater than Ahmed's, and Saeed's contribution was greater than Ahmed's. On June 3, 2020, Musa caused Salaam to execute a promissory note to him to repay Musa in equal installments

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over the course of one year. The promissory note was for $75,000 but Musa's excess financial contribution had been only $50,000.

¶ 12 In July 2020 Musa asked Salaam to take out a loan so that he could be repaid immediately. In October...

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