Partnership v. Testa Produce

• Decision Date: 31 March 2008
• Docket Number: No. 1-07-0738.,1-07-0738.
• Parties: 23-25 BUILDING PARTNERSHIP, an Illinois Partnership, Plaintiff-Appellee/Cross-Appellant, v. TESTA PRODUCE, INC., an Illinois Corporation, and PETER W. TESTA, an Individual, Defendants-Appellants/Cross-Appellees.
• Court: United States Appellate Court of Illinois

886 N.E.2d 1156

23-25 BUILDING PARTNERSHIP, an Illinois Partnership, Plaintiff-Appellee/Cross-Appellant, v. TESTA PRODUCE, INC., an Illinois Corporation, and PETER W. TESTA, an Individual, Defendants-Appellants/Cross-Appellees.

No. 1-07-0738.

Appellate Court of Illinois, First District, First Division.

March 31, 2008.

James E. Mahoney, Griffith & Jacobson, LLC, of Chicago, for Plaintiff-Appellee/Cross-Appellant.

Ronald L. Sandack and John N. Rooks, Gaido & Fintzen, of Chicago, for Defendants-Appellants/Cross-Appellees.

Justice WOLFSON delivered the opinion of the court:

The parties in this case owned units in the South Water Market area in Chicago. An outside buyer agreed to purchase the entire subdivision if all the unit-owners agreed to sell. The defendants agreed to pay the plaintiff $50,000 as an inducement to agree to the sale. After the sale was complete, the defendants refused to pay the $50,000, contending the plaintiff fraudulently misrepresented that it needed the money because it was "upside down" in its mortgage.

Following a bench trial, the trial court entered judgment for the plaintiff, holding the defendants could not rescind their contract because they benefited from the sale and because the parties could not be returned to their pre-contract position. The defendants appeal the trial court's judgment. The plaintiff cross-appeals the part of the trial court's order vacating the award of attorneys' fees.

We reverse the trial court's judgment for the plaintiff and affirm the court's order vacating the award of attorneys' fees.

FACTS

The South Water Market was a subdivision of real property comprising 166 units for merchants of produce and other foodstuffs. Sometime before July 2003, the City of Chicago encouraged the merchants occupying the units to relocate to a new site so the property could be redeveloped for residential use. A new facility known as the Chicago International Produce Market was established for the merchants.

The 23-25 Building Partnership (the "Partnership") rented and managed the units located at 23-25 South Water Market. The Partnership was owned by Edwin Roncone and his sons, Alan Roncone and Paul Roncone, each of whom owned a one-third interest in the partnership. From July 1993 to June or July 2003, legal title to the property was held by LaSalle Bank, NA, successor to American National Bank and Trust Company of Chicago, as Trustee, under Trust Agreement dated July 1, 1993, and known as Trust Number 117154-06 (the "Land Trust"). Edwin, Paul, and Alan Roncone were the beneficiaries of the Land Trust. In August 1994, the individual beneficiaries assigned their beneficial interest in the Land Trust to the Partnership.

Testa Produce, Inc. ("Testa Produce") is in the business of selling wholesale produce. Peter Testa is the president of Testa Produce. Before June 2003, Testa Produce owned and occupied three units in the South Water Market.

In January 2003, EDC Development Company ("EDC") agreed to purchase the bulk of units 1-166 of the South Water Market, pursuant to a Purchase and Sale Agreement (the "P & S Agreement"). The merchants were advised EDC would not buy the units unless it could buy all of the units. If any owner did not agree to sell, EDC would not purchase the property, and the other owners would lose the benefit of the P & S Agreement. Most of the owners, including Testa, quickly agreed to the terms of the agreement. Peter Testa and other unit-owners promoted the P & S Agreement among the other unit-owners. The Partnership did not initially agree to the sale.

In or around December 2002 or January 2003, Peter Testa had telephone conversations with Edwin Roncone seeking Roncone's consent to the P & S Agreement. According to Testa, Roncone told him that in the event of the sale, the Land Trust would be "upside-down," or $50,000 short, on its mortgage indebtedness. Roncone denies making these statements and alleges he told Testa he needed the additional $50,000 to pay other "obligations."

Following these conversations, Peter Testa prepared and signed a handwritten memorandum stating: "Testa Produce, Inc. agree [sic] to pay $50,000 dollars towards the sale of Units 25 & 23 So. Water Mkt at Closing of said sale." Testa personally handed the memorandum to Edwin Roncone. Roncone was not satisfied with the handwritten document and asked his attorneys to draft a document memorializing the agreement.

On February 17, 2003, Testa Produce and Peter Testa signed and delivered to the Land Trust an agreement ("Inducement Agreement") prepared by Edwin Roncone's attorneys. Roncone testified he signed the agreement and gave it to Testa. The copy of the Inducement Agreement in the record is signed by Testa but not signed by Roncone. It has a blank signature space for the Land Trust.

In the Inducement Agreement, Testa promised to pay to "the Land Trust or its order" $50,000 plus 12% interest per annum if the trust entered into the P & S Agreement and sold the subject property to EDC. The money was payable on the closing of the sale of the property.

The Inducement Agreement included a provision awarding attorneys' fees and costs to the Land Trust if Testa failed to pay the Inducement Amount at or within two days of the closing of the sale of the subject property.

On February 17, 2003, the same day Testa signed the Inducement Agreement, the Land Trust executed the P & S Agreement.

Testa alleges that in May or June 2003, before the closing of the Land Trust's units, he learned the Land Trust would receive sufficient funds at closing to pay off its mortgage debt. In other words, the Land Trust was not "upside down" in its mortgage obligations. Testa alleges he immediately informed Roncone he would not pay under the Inducement Agreement. At trial, Edwin Roncone admitted Peter Testa called him in June 2003 and accused him of lying about his mortgage indebtedness.

The closing of the sale of the Land Trust's units occurred on July 12, 2003. A June 13, 2003, letter from LaSalle Bank as trustee directs that the net proceeds from the sale of the property be paid to the Partnership.

Following the closing, the Partnership demanded payment of the $50,000. Testa refused, contending the Partnership fraudulently induced him to enter into the Inducement Agreement. The Partnership filed a breach of contract suit against Testa and Testa Produce.

The trial court entered judgment in favor of the Partnership and against the defendants, in the amount of $50,000, plus interest of $17,212.68, attorneys' fees of $27,454.25, and costs and expenses of $2,075.37, for a total of $96,742.30.

On reconsideration, the court affirmed the original judgment but vacated the award of attorneys' fees. The court held:

"Based on the evidence adduced at trial, and considering both that the Defendants benefitted from the Plaintiff's performance of its obligations under the Inducement Agreement, but that they had been fraudulently induced into entering into that Agreement, the Court, in its discretion, agrees that it would defy common sense and public policy to award attorneys' fees to the Plaintiff under the Inducement Agreement."

DECISION

Before we address the issues in this appeal, we briefly comment on the woeful inadequacy of the briefs in this case. Both parties' briefs contain large portions of argument unsupported by any relevant citations.

Supreme Court Rule 341(h)(7) requires appellants' briefs to include "[a]rgument, which shall contain the contentions of the appellant and the reasons therefor, with citation of the authorities and the pages of the record relied on." 210 Ill.2d R. 341(h)(7). "`[A] reviewing court is entitled to have the issues on appeal clearly defined with pertinent authority cited and a cohesive legal argument presented. The appellate court is not a depository in which the appellant may dump the burden of argument and research.' " In re Marriage of Auriemma, 271 Ill.App.3d 68, 72, 207 Ill.Dec. 662, 648 N.E.2d 118 (1994), quoting Thrall Car Manufacturing Co. v. Lindquist, 145 Ill. App.3d 712, 719, 99 Ill.Dec. 397, 495 N.E.2d 1132 (1986). Contentions unsupported by citation of authority fail to meet the requirements of Supreme Court Rule 341(h)(7) and may be forfeited. Elder v. Bryant, 324 Ill.App.3d 526, 533, 258 Ill. Dec. 132, 755 N.E.2d 515 (2001).

Though we do not find the issues forfeited, we caution the parties to adhere to the Supreme Court Rules or risk dismissal of their future appeals or the striking of their responsive briefs.

I. Standing

The defendants contend the Partnership lacked standing to file its lawsuit because the Partnership was not a party to the Inducement Agreement. The only parties to the agreement were the defendants and the Land Trust.

In a land trust in Illinois, the trustee's sole purpose is to take and hold title to the trust res. Smith v. First National Bank of Danville, 254 Ill.App.3d 251, 264, 191 Ill.Dec. 711, 624 N.E.2d 899 (1993). The trustee has no duties with respect to management and control of the property. The beneficiary manages and exercises all rights of ownership, with the exception of holding title to the property. Smith, 254 Ill.App.3d at 264, 191 Ill.Dec. 711, 624 N.E.2d 899. See Madden v. University Club of Evanston, 97 Ill.App.3d 330, 333, 52 Ill.Dec. 963, 422 N.E.2d 1172 (1981) (individual beneficiary of trust lacked standing in action to foreclose mortgage on subject property because he did not have legal title to the property).

The beneficiary of a land trust has standing in litigation involving his rights and liabilities with respect to management and control, use, or possession of the property pursuant to the trust agreement. Azar v. Old Willow Falls Condominium Ass'n, 228 Ill.App.3d 753, 756, 170 Ill.Dec. 694, 593 N.E.2d 583 (1992). One test for determining the beneficiary's standing is whether the trustee can protect the beneficiary's interests. Azar, 228 Ill. App.3d at 756-57, 170 Ill.Dec. 694, 593 N.E.2d...