Roderick Development Inv. Co., Inc. v. Community Bank of Edgewater

• Citation: 218 Ill.Dec. 297,282 Ill.App.3d 1052,668 N.E.2d 1129
• Decision Date: 26 July 1996
• Docket Number: No. 1-95-0770,1-95-0770
• Parties: , 218 Ill.Dec. 297 RODERICK DEVELOPMENT INVESTMENT COMPANY, INC., Plaintiff-Appellant, v. COMMUNITY BANK OF EDGEWATER, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 1129

668 N.E.2d 1129

282 Ill.App.3d 1052, 218 Ill.Dec. 297

RODERICK DEVELOPMENT INVESTMENT COMPANY, INC., Plaintiff-Appellant, v. COMMUNITY BANK OF EDGEWATER, Defendant-Appellee.

No. 1-95-0770.

Appellate Court of Illinois First District, Sixth Division.

July 26, 1996.

Law Offices of George Segenreich, Chicago, IL (George Segenreich and Lisa Thaviu, of counsel), for Appellant.

Aronberg, Goldgehn, Davis & Garmisa, Chicago, IL (Nathan H. Lichtestein, David

H. Sachs and William J. Serritella, Jr., of counsel), for Appellee.

Justice EGAN delivered the opinion of the court:

In 1991, the plaintiff, Roderick Development Investment Co., Inc., filed a second-amended complaint against the Community Bank of Edgewater (the Bank); Gertrude Shiner Matanky (Gertrude Matanky), individually and as trustee of the Eugene Matanky Insurance Trust (Trust); and Mark Frighetto. This complaint included a conversion count against the Bank and Frighetto, a Bank officer, to recover funds that the Bank refused to distribute to the plaintiff.

Pursuant to the defendants' motions to dismiss and strike the complaint, the judge dismissed the complaint with prejudice and denied the plaintiff's request to file a third-amended complaint. The propriety of the dismissal of the conversion count against the Bank and Frighetto is the only issue on appeal, and the Bank is the only defendant who is a party to this appeal.

In the complaint, the plaintiff alleged the following. On February 29, 1972, Daniel Dragash entered into an agreement with Eugene Matanky to purchase five percent of the Estes-Paulina Joint Venture (Joint Venture), which was a partnership engaged in the development and operation of an apartment building. Eugene Matanky owned 50% of the Joint Venture and sold Dragash 10% of his interest. Jack Langworthy owned the other 50% of the Joint Venture.

Eugene Matanky's agreement with Dragash, which was attached to the complaint, stated that Eugene Matanky was a partner in the Joint Venture. By buying a portion of Eugene Matanky's interest in the Joint Venture, Dragash did not become a partner in the Joint Venture, and "his investment [was] subject to [Eugene] Matanky's rights, duties and obligations under the Partnership Agreement."

On July 30, 1974, Eugene Matanky conveyed his interest in the Joint Venture to the Trust, of which Gertrude Matanky was the trustee. On September 25, 1983, Langworthy and the Trust entered into an agreement to sell the Estes-Paulina apartment building to Joel I. Barnett, Inc. (Barnett or the Purchaser). In exchange for the building, Langworthy and the Trust accepted a note or notes from Barnett, under which they would receive periodic payments of principal and interest.

On December 21, 1983, Dragash assigned his share in the Joint Venture to the plaintiff. Apparently, after Eugene Matanky transferred his interest in the Joint Venture to the Trust, Dragash's interest in the Joint Venture was also transformed into an interest in the Trust because, in the assignment to Roderick, Dragash assigned his interest in the Trust rather than an interest in the Joint Venture. Gertrude Matanky's signature on a copy of this assignment, which the plaintiff attached to its complaint, shows that the Trust received a copy of the assignment.

Eugene Matanky's estate and the Trust became indebted to the Bank, and, on August 1, 1984, the Bank entered into an agreement under which it accepted an assignment of proceeds from the apartment building purchase agreement in partial satisfaction of this debt. According to this agreement, which the plaintiff also attached to its complaint, the Trust had assigned 10% of its beneficial interest to Dragash, who had assigned his interest to the plaintiff. The 1984 agreement further provided that, to satisfy their indebtedness to the Bank, the estate and the Trust had agreed to offer the Bank their 50% interest in the purchase agreement, "subject to the interest of Roderick," and the Bank had agreed to accept this 50% interest, "subject to the interest of Roderick." The 1984 agreement further provided that "both parties however, acknowledge the beneficial rights of Roderick to the Real Estate."

According to the 1984 agreement, the Trust and the estate were to direct the Purchaser to make all monthly payments under the purchase agreement to the Bank, and "[f]rom said payments," the Bank was to

"make the principal and interest payment on the [installment note], make necessary and appropriate tax and/or insurance escrow deposits required in conjunction with the existing first mortgage or the [installment note] and distribute the balance 50% to Langworthy ('Langworthy Net Payment'), 5% to Roderick and 45% to [the Bank]."

The plaintiff further alleged that, between August 1, 1984, and August 1991, the Bank accepted monthly payments from the Purchaser, and pursuant to the 1984 agreement, paid 50% to Langworthy, paid 5% to Roderick and kept the remaining 45% to satisfy the debt.

Shortly before September 30, 1991, Frighetto told Dragash that the Purchaser would be making a final payment under the purchase agreement and that the plaintiff would receive approximately $30,000, its share of these proceeds. Frighetto spoke with Dragash, who at this time was acting as the plaintiff's agent, to arrange for the wire transfer of funds the Bank owed the plaintiff. Frighetto told Dragash that it was unnecessary for the plaintiff to take any action to receive these funds. On September 24, the Purchaser paid the balance under the purchase agreement to the Bank.

On September 30, the Bank sent the plaintiff a letter in which it informed the plaintiff that it would not distribute any portion of the final payment to the plaintiff. The plaintiff attached this letter to its complaint. In the letter, the Bank explained that, on June 15, 1989, the Trust had assigned all of its interest in the proceeds from the purchase agreement to the Bank. Consequently, all funds that had been available to distribute to the beneficiaries of the Trust would be used by the Bank to reduce the debt the Trust and the estate owed.

The 1989 agreement, which was not attached to the complaint but is in the record states: "The Trust does hereby agree that all proceeds paid to it by [the Purchaser], in excess of $225,724.77 will be paid to [the Bank] to reduce the outstanding indebtedness on the Loan, if it has not already been paid in full." This agreement does not mention the plaintiff's interest in the Trust.

Based on these facts, the plaintiff alleged in count I of its complaint, entitled "Conversion," that any indebtedness of the Trust and the estate was pursuant to an agreement to which it was not a party; it was, however, a third-party beneficiary of the 1984 agreement between the Trust and the Bank, and the Bank breached this agreement by refusing to distribute the purchase agreement proceeds to the plaintiff.

In addition, the

"BANK did knowingly, wrongfully, and illegally assume unauthorized and wrongful control, dominion, and ownership over funds to which Plaintiff had an absolute, unconditional, and immediate right of possession."

The plaintiff made numerous demands to the Bank for its share of the final payment under the purchase agreement, but the Bank refused to remit this share to it. The plaintiff alleged that, by refusing to pay this share to the plaintiff, the Bank converted over $30,000 of its property. It asked for a judgment against the Bank and Frighetto under this count. It asked the judge to order the Bank to account for the funds it received as a result of the final payment and to award the plaintiff five percent of this amount, plus interest.

Count II of the complaint was against the Bank and Frighetto and was based on detrimental reliance. Count III was an unjust enrichment claim against the Bank. Count IV was a breach of fiduciary duty claim against Gertrude Matanky and the Trust. Count V was an unjust enrichment count against Gertrude Matanky and the Trust.

Before the plaintiff filed its second-amended complaint, the Bank, Frighetto and Gertrude Matanky had successfully moved to dismiss the plaintiff's earlier complaints against them. These complaints included claims against the Bank and Frighetto based on conversion, the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1992)), breach of fiduciary duty and breach of the duty of good faith and fair dealing.

After the plaintiff filed its second-amended complaint, the Bank and Frighetto moved to dismiss it under section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)). Gertrude Matanky moved to strike the complaint pursuant to sections 2- 615 and 2-606 (735 ILCS 5/2-606, 5/2-615 (West 1992)).

Pursuant to these motions, the judge dismissed the plaintiff's complaint with prejudice. During the hearing on the motion, the plaintiff's counsel informed the judge that there was no pending breach of contract claim based on an allegation that the plaintiff was a third-party beneficiary of the contract between the Bank and the Trust. The judge stated that the plaintiff had failed to state a claim for conversion because the money allegedly converted was not an identifiable fund, and there was no clear right to the money. The judge also denied the plaintiff's motion to reconsider his dismissal of the conversion count against the Bank and refused to allow the plaintiff to file the third-amended complaint it attached to this motion. The plaintiff's arguments on appeal concern only the dismissal of its conversion claim against the Bank.

The only issue raised by a motion to dismiss is whether the facts alleged in the complaint, taken as true, set forth a sufficient cause of action. Scott Wetzel Services v. Regard, 271 Ill.App.3d 478, 208 Ill.Dec. 98, 648 N.E.2d 1020 (1995). When ruling on a motion to dismiss, courts take all well-pleaded facts as true and construe all reasonable inferences...