Paul H. Schwendener v. Jupiter Elec. Co.
Decision Date | 11 May 2005 |
Docket Number | No. 1-04-2361.,1-04-2361. |
Citation | 829 N.E.2d 818 |
Parties | PAUL H. SCHWENDENER, INC., an Illinois corporation, Plaintiff-Appellant, v. JUPITER ELECTRIC COMPANY, INC., an Illinois corporation; Thomas M. Gibson; Rami Nassib; Banco Popular, Illinois, an Illinois corporation; and Alexander S. Knopfler, Defendants-Appellees (Jupiter Technical Services Corporation, an Illinois corporation; and First Bank of Schaumburg, an Illinois banking corporation, Defendants). |
Court | Illinois Supreme Court |
Seyfarth Shaw LLP, Chicago (Roger L. Price, Mark L. Johnson, Scott J. Smith and Molly M. Joyce, of counsel), for Appellant.
Sonnenschein Nath & Rosenthal LLP, Chicago (Thomas K. McQueen, Pia N. Thompson & Elena B. Gobeyn, of counsel), for Knopfler.
Foley & Lardner LLP, Chicago (David B. Goroff, Christopher J. Werner & Thomas K. Anderson, of counsel), for Banco Popular.
Figliulo & Silverman, P.C., Chicago (Jeff D. Harris & Michael T. Graham, of counsel), for Certain Defendants-Appellees.
The plaintiff, Paul H. Schwendener, Inc. (Schwendener), filed the instant action against Jupiter Electric Company, Inc. (Jupiter), its officers, an accountant to whom Jupiter's assets were assigned, and two of Jupiter's creditors after Jupiter failed to perform on two construction contracts. During the course of litigation, the trial court entered several orders dismissing various counts of Schwendener's first, third, and fourth amended complaints pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 1998)), granting summary judgment on count VI of its fifth amended complaint, and denying Schwendener leave to file certain counts of the fifth amended complaint. It is from these orders that Schwendener now appeals and, for the reasons which follow, we dismiss the appeal in part, affirm in part, reverse in part, and remand this cause to the circuit court for further proceedings.
The following facts are taken from the allegations contained in Schwendener's first, third, and fourth amended complaints which we accept as true for purposes of examining the circuit court's orders dismissing Schwendener's claims pursuant to section 2-615 of the Code (Miner v. Gillette Co., 87 Ill.2d 7, 19, 56 Ill.Dec. 886, 428 N.E.2d 478 (1981)). Further, as there is no dispute regarding these facts, they have also been accepted as true for purposes of our analysis regarding the trial court's grant of summary judgment.
Schwendener was hired as the general contractor for the construction of a new enlisted mens bachelor quarters at the naval training center in Great Lakes, Illinois (BEQ project) and a new public library in Woodridge, Illinois (library project). Schwendener subcontracted the necessary electrical work on both projects to Jupiter. At the time, Thomas M. Gibson was the president and sole shareholder of Jupiter, and Rami Nassib served as its vice-president and general manager. Near the end of 1996, after work on the projects had begun, Jupiter was experiencing financial difficulties and was heavily in debt. Jupiter's creditors included American Midwest Bank & Trust (American), its primary lender and a secured creditor, and the First Bank of Schaumburg (FBS) which had purchased a participation in the loans made by American to Jupiter. After consulting with a financial analyst, Jupiter met with certain of its creditors and decided that the best course of action was to enter into an assignment for the benefit of its creditors. Additionally, Jupiter ceased working on the BEQ and library projects on November 27, 1996, and December 23, 1996, respectively.
On December 23, 1996, Jupiter entered into a "Trust Agreement and Assignment for the Benefit of Creditors" (assignment agreement) under which all of Jupiter's assets were assigned to Alexander Knopfler, a certified public accountant. Contemporaneously with the execution of the assignment agreement, Knopfler entered into an "Agreement for the Purchase and Sale of Assets" (purchase agreement) with 61875 Corporation, a newly formed corporation. Nassib was the sole shareholder and president of 61875 Corporation. Pursuant to the purchase agreement, Knopfler sold all of Jupiter's assets relating to its residential and technical services divisions and certain assets relating to its commercial division to 61875 Corporation for $3,738,500. The purchase agreement provided that, in the event Knopfler could locate a higher bidder at an auction within 21 days, 61875 Corporation would reconvey the assets to Knopfler. After notice of the assignment and purchase agreements was given to certain of Jupiter's creditors, an auction for the sale of Jupiter's assets was advertised to the general public. The auction took place and, having yielded no higher bidders, the sale of Jupiter's assets to 61875 Corporation became final on January 21, 1997. Two days later, 61875 Corporation amended its articles of incorporation, changing its name to Jupiter Technical Services Corporation.
In 1998, Schwendener filed the instant action against Jupiter, its officers, Knopfler, and its secured creditors (collectively referred to as "the defendants"). Schwendener amended its complaint numerous times during the proceedings. According to the general allegations common to all of the amended complaints, by the end of 1996, Jupiter, Gibson, and Integrated Technologies (Integrated), another company owned by Gibson, had incurred a total indebtedness to American in the sum of $4,158,294. Schwendener alleged that the defendants developed a scheme to repay the debt owed to American and at the same time "shed" certain of Jupiter's other creditors. It claimed that the defendants colluded to restructure Jupiter by assigning its assets to Knopfler, who then immediately transferred title of selected assets and valuable contracts to 61875 Corporation, a corporation which was created to effectuate the purpose of the scheme.
Schwendener claimed that, in furtherance of this scheme, American and FBS entered into a financing agreement with Gibson which provided that: American would loan an additional $250,000 to Jupiter; FBS would loan 61875 Corporation $3,738,500 which would be used to purchase Jupiter's assets from Knopfler, and an additional $400,000 on the date on which the sale of Jupiter's assets became final; and Gibson would "collateralize" part of the loan made by FBS with a certificate of deposit in the amount of $1,069,206. According to the complaints, Gibson also agreed to pay American $469,794 which, when combined with the payment of $3,738,500 to American from the sale of Jupiter's assets, retired the indebtedness of Gibson, Jupiter, and Integrated to American. The agreement also provided that 61875 Corporation would pay FBS all amounts received in connection with a project that Jupiter had been working on for the Chicago Transit Authority (CTA). Schwendener alleged that, along with the transfer of Jupiter's assets, certain of the defendants agreed that Jupiter would "walk off" the BEQ and library projects because they determined that those contracts were unprofitable.
According to Schwendener, the scheme to restructure Jupiter resulted in: a satisfaction of the debt owed to American; FBS having outstanding loans in the amount of $3,738,500 and $400,000 owed by 61875 Corporation, whose assets were now "otherwise unencumbered"; FBS receiving partial security from Gibson for its loan to 61875 Corporation and the proceeds from Jupiter's CTA project which was to be carried on by 61875 Corporation; and American purchasing a participation in the loans made by FBS to 61875 Corporation in the amount of $1,938,294 "or roughly half of what was originally owed to American by Gibson and Jupiter." Based on these allegations, Schwendener's amended complaints purported to assert various actions against the defendants, including a claim of fraud against Jupiter and its officers, breach of contract against Jupiter, "successor liability" against 61875 corporation, breach of fiduciary duty against Knopfler, and numerous other commercial tort claims against Knopfler, Jupiter's officers, and the secured creditors.
Schwendener has appealed from portions of the circuit court's orders entered on March 11, 1999, March 13, 2000, February 23, 2001, December 19, 2003, and July 14, 2004. By order of July 14, 2004, the circuit court found that there was no just reason to delay enforcement or appeal from these orders. Schwendener asserts that our jurisdiction in this matter is pursuant to Supreme Court Rule 304(a) (Rule 304(a)) (155 Ill.2d R. 304(a)). We commence our analysis with Schwendener's appeal from the orders entered on March 11, 1999, March 13, 2000, and February 23 2001, which dismissed various counts of its first, third, and fourth amended complaints pursuant to section 2-615 of the Code.
A motion brought pursuant to section 2-615 of the Code attacks the legal sufficiency of a complaint based on defects apparent on the face of the pleading. Vitro v. Mihelcic, 209 Ill.2d 76, 81, 282 Ill.Dec. 335, 806 N.E.2d 632 (2004). In ruling on a section 2-615 motion attacking a complaint, a court must accept as true all well-pled facts in the complaint and draw all reasonable inferences therefrom in favor of the plaintiff. Vitro, 209 Ill.2d at 81, 282 Ill.Dec. 335, 806 N.E.2d 632; Hanna v. City of Chicago, 331 Ill.App.3d 295, 303, 264 Ill.Dec. 609, 771 N.E.2d 13 (2002). A cause of action should be dismissed pursuant to a section 2-615 motion only if it is clearly apparent that no set of facts can be proven which will entitle the plaintiff to recover. Borowiec v. Gateway 2000, Inc., 209 Ill.2d 376, 382, 283 Ill.Dec. 669, 808 N.E.2d 957 (2004). Our review of a dismissal under section 2-615 is de novo, and we may affirm upon any grounds for which a factual basis exists in the record. Colmar,...
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...owe fiduciary duties only to the corporation itself and its shareholders. Paul H. Schwendener, Inc. v. Jupiter Elec. Co., 358 Ill.App.3d 65, 75, 293 Ill.Dec. 893, 829 N.E.2d 818, 828 (1st Dist.2005) (citing Brown v. Tenney, 125 Ill.2d 348, 360, 126 Ill.Dec. 545, 532 N.E.2d 230, 235 (1988));......
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