Rezai v. Porada, 122418 ILCA1, 1-18-0457

Docket Nº:1-18-0457
Opinion Judge:PIERCE, JUSTICE
Party Name:MOHAMMAD R. REZAI, M.D.; THE ESTATE OF ARTHUR M. HEATH, M.D; JAMES YIU-TIN CHING, M.D.; ADDISON RADIOLOGY ASSOCIATES, S.C.; MORRIS RADIOLOGY ASSOCIATES, S.C.; and MIDWEST RADIOLOGY ASSOCIATES. S.C., Plaintiffs, v. JOSEPH PORADA, M.D.; PARAMOUNT CONSULTING SERVICES, INC.; and FLORENCE PORADA, individually, and as Trustee, Defendants (Mohammad R....
Judge Panel:JUSTICE PIERCE delivered the judgment of the court. Justices Griffin and Walker concurred in the judgment.
Case Date:December 24, 2018
Court:Court of Appeals of Illinois, First District
 
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2018 IL App (1st) 180457-U

MOHAMMAD R. REZAI, M.D.; THE ESTATE OF ARTHUR M. HEATH, M.D; JAMES YIU-TIN CHING, M.D.; ADDISON RADIOLOGY ASSOCIATES, S.C.; MORRIS RADIOLOGY ASSOCIATES, S.C.; and MIDWEST RADIOLOGY ASSOCIATES. S.C., Plaintiffs,

v.

JOSEPH PORADA, M.D.; PARAMOUNT CONSULTING SERVICES, INC.; and FLORENCE PORADA, individually, and as Trustee, Defendants

(Mohammad R. Rezai, M.D., Arthur M. Heath, M.D., and James Yiu-Tin Ching, M.D., Plaintiffs-Appellees; Joseph Porada, M.D., Defendant-Appellant).

No. 1-18-0457

Court of Appeals of Illinois, First District, First Division

December 24, 2018

This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of Cook County No. 16 CH 8440 The Honorable Thomas More Donnelly, Judge Presiding.

JUSTICE PIERCE delivered the judgment of the court. Justices Griffin and Walker concurred in the judgment.

ORDER

PIERCE, JUSTICE

¶ 1 Held: We affirm the circuit court's judgment in all respects. The parties' settlement agreement did not contain an exclusive remedies provision, and thus plaintiffs were not limited to seeking specific performance following defendant's breach. The circuit court did not abuse its discretion in awarding plaintiffs breach of contract damages, and the damages award was not against the manifest weight of the evidence. The circuit court did not abuse its discretion by imposing prejudgment interest on equitable grounds. We remand to the circuit court to allow plaintiffs to pursue additional attorney fees and costs as provided for in the parties' settlement agreement.

¶ 2 Plaintiffs Mohammad R. Rezai, M.D., the Estate of Arthur M. Heath, M.D. (Heath), 1 and James Yiu-Tin Ching, M.D. (along with the entities named in the caption above, none of which are parties to this appeal) sued defendant Joseph Porada2 to enforce a settlement agreement with respect to defendant's interests in four real estate entities. Following a bench trial, the circuit court entered judgment in favor of plaintiffs, granted specific performance with respect to two of the entities, and awarded plaintiffs a total of $1, 205, 640 in compensation for the other two entities. In addition to granting Rezai and Heath's request for attorney fees, the circuit court awarded plaintiffs $47, 037.40 in prejudgment interest. The trial court denied an award of costs due to lack of proof. Defendant appeals the portions of the circuit court's monetary judgment compensating plaintiffs for two of the real estate entities and awarding prejudgment interest. Plaintiffs ask that we affirm the circuit court's judgment and remand so that they may seek additional attorney fees permitted under the settlement agreement for defending this appeal. We affirm the circuit court's judgment and remand for additional proceedings.

¶ 3 BACKGROUND

¶ 4 Plaintiffs and defendant are members of a radiology practice. In 2008, plaintiffs filed two lawsuits against defendant for allegedly misappropriating over $10 million from the practice, and the actions were consolidated (2008 action). Defendant admitted to transferring the funds but denied any wrongdoing. In October 2011, the parties entered into a written settlement agreement. In paragraphs 1 and 3 of the settlement agreement, defendant agreed to make an upfront payment of over $1.6 million in cash to plaintiffs, along with nearly $700, 000 payable over five years in the form of a salary reduction. No issue is raised in this appeal regarding these provisions or payments.

¶ 5 In paragraph 2, defendant further agreed that on or before October 15, 2014, he would pay plaintiffs $1.8 million or, upon failure to make this payment, he would transfer to plaintiffs his ownership interests in four real estate investment entities (collectively, real estate entities): his 44% membership interest in KKJJ, LLC, which owned a strip mall in Antioch, Illinois; his 95% membership interest in JJPRidgelandKKJJ (Ridgeland), which held a 67% beneficial interest in a land trust that owned a strip mall in Berwyn, Illinois; his 49.9% membership interest in RFREINV, LLC, which owned vacation properties near Hayward, Wisconsin; and his 30.46% limited partnership interest in Sharon Estates Limited Partnership (Sharon Estates), which owned a partially completed residential development in Sharon, Wisconsin. Defendant "represent[ed] and warrant[ed] that his best estimate of the current valuation of his *** interest[s] in [the real estate entities] is $2, 469, 000, net of encumbrances." Defendant's valuation was "solely based on his best estimate of current [sic] value of the real estate owned by [the real estate entities] and his attendant interest in that real estate by reason of his membership interest." Furthermore, defendant agreed that "to the extent [his] obligations to transfer his interests *** require the consent or authorization of any other entity or member, [defendant] represents that he has obtained or will obtain such consent and or authorization by October 14, 2014." Defendant promised that he would "not further encumber his interest in the [real estate entities] without the consent of [plaintiffs]."

¶ 6 Paragraph 2 further provided, "[i]n the event that [defendant] fails to transfer his membership or ownership interests in [the real estate entities], [plaintiffs] may file an action, in accordance with the terms of paragraph 8 below, to obtain specific performance of [defendant's] obligation to transfer his interests[.]" Paragraph 8 provided in relevant part, "In the event that [defendant] fails to honor any of his obligations under this agreement, [plaintiffs], may file an action seeking to enforce their rights and [defendant's] obligations under this agreement including seeking specific performance of [defendant's] obligation to pledge and/or transfer his membership interests as described in paragraph 2 above, a judgment for any amounts not paid in accordance with paragraphs 1 or 3 above, compelling answers to reasonable questions posed by any forensic accountant, as described in paragraph 6 above and or seeking the turn over [sic] of any assets identified in paragraph 7 above. [Defendant] shall reimburse [plaintiffs] their reasonable attorneys' fees and costs expended in enforcing their rights herein."

¶ 7 Based on the settlement agreement, the circuit court dismissed plaintiffs' claims in the 2008 action and retained jurisdiction to enforce the settlement. Defendant did not make the $1.8 million payment to plaintiffs described in paragraph 2 of the settlement agreement by October 15, 2014. Defendant executed assignments of his interests in real estate entities, but plaintiffs refused to accept the assignments because defendant had failed to secure the necessary consents from the other members, managers, and general partners of those entities. In August 2015, plaintiffs filed a motion in the 2008 action to enforce the settlement and requested that the circuit court enter judgment in their favor for $1.8 million. On January 14, 2016, the circuit court denied plaintiffs' motion. In a written order, the circuit court found that plaintiffs were not entitled to a money judgment under the settlement agreement and were only entitled to seek specific performance. Plaintiffs did not appeal the circuit court's denial of their motion to enforce the settlement.

¶ 8 Plaintiffs initiated this action in June 2016 by filing a two-count complaint for specific performance and money damages. Count I alleged that defendant breached the settlement agreement by failing to obtain the consents necessary to transfer his interests in the real estate entities to plaintiffs and by failing to pay the real estate taxes for KKJJ's property in Antioch. Plaintiffs requested a judgment of specific performance requiring defendant to convey his interests in the real estate entities with the required consents, and...

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