Senese v. Climatemp, Inc.

• Decision Date: 11 October 1991
• Docket Number: No. 1-90-3253,1-90-3253
• Citation: 582 N.E.2d 1180,222 Ill.App.3d 302
• Parties: , 164 Ill.Dec. 236 Dominic SENESE, Plaintiff-Appellant, v. CLIMATEMP, INC., an Illinois Corporation, John W. Comforte, Thomas E. Comforte and Victor Comforte, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 1180

582 N.E.2d 1180

222 Ill.App.3d 302, 164 Ill.Dec. 236

Dominic SENESE, Plaintiff-Appellant, v. CLIMATEMP, INC., an Illinois Corporation, John W. Comforte Thomas E. Comforte and Victor Comforte Defendants-Appellees.

No. 1-90-3253.

Appellate Court of Illinois,

First District, Sixth Division.

Oct. 11, 1991.

Rehearing Denied Nov. 22, 1991.

As Modified on Denial of Rehearing Dec. 2, 1991.

Murphy & Boyle Chartered, Chicago (Robert D. Boye, Mark R. Valley and James P. Boyle, of counsel), for plaintiff-appellant.

Lillig & Thorsness, Ltd., Oak Brook (Richard J. Nogal, Amy Remington Jennings, of counsel), for defendants-appellees.

MODIFIED UPON DENIAL OF REHEARING

Justice LaPORTA delivered the opinion of the court:

Plaintiff filed suit against defendants alleging they violated the Business Corporation Act of 1983 when they denied him his right as a shareholder to inspect corporate books and records. Plaintiff sought declaratory relief, a constructive trust and mandamus. Defendants moved to dismiss plaintiff's amended complaint, contending plaintiff failed to state a cause of action on each count and that plaintiff was not a shareholder of record and therefore had no right to inspect the books and records. The trial judge granted defendants' motion. Plaintiff appealed.

Plaintiff alleges multiple errors on the part of the trial judge. Plaintiff alleges the trial court erred in determining issues of fact based upon its mistaken belief that questioned documents, attached as exhibits to the complaint, are always controlling over possible contrary allegations in the complaint. Plaintiff alleges the trial court erred in not striking defendants' "hybrid" motion which challenged both the legal insufficiency of the complaint and asserted the affirmative matters of laches and standing. Plaintiff alleges the trial court erred in finding his complaint did not state a cause of action for declaratory judgment, constructive trust and mandamus; erred in dismissing the amended complaint based upon the doctrine of laches and standing; erred in barring plaintiff's discovery requests; and erred in denying plaintiff leave to file a second amended complaint.

The facts in the case are circuitous. In September of 1989 plaintiff filed a complaint for mandamus and other relief against Climatemp, Inc., John W. Comforte and Thomas E. Comforte in an effort to compel production of corporate minute books and shareholder record books. Plaintiff alleged he was a stockholder of Climatemp, Inc. and that the Business Corporation Act of 1983 (Ill.Rev.Stat.1987, ch. 32, par. 7.75) gave him the right, upon written demand and for a proper purpose, to examine corporation books and records. Plaintiff sought review of the books as part of his estate planning. Plaintiff asked the court for a writ of mandamus, and an order on defendants to produce the corporate minute books and shareholder records for Climatemp, Inc. formerly Broadway Sheet Metal Works, Inc.

Defendants filed a motion to dismiss pursuant to Section 2-619(a)(2), (Ill.Rev.Stat.1987, ch. 110, par. 2-619(a)(2)), contending that plaintiff was not a "holder of record of shares in a corporation" as required by the Business Corporation Act of 1983 (Ill.Rev.Stat.1987, ch. 32, par. 1.80(g)) and therefore he had no right to inspect the corporation's books and records. With the motion, defendants filed an affidavit by corporate treasurer Thomas E. Comforte denying plaintiff's stock ownership.

Plaintiff filed a motion to strike Comforte's affidavit and filed a response in opposition to defendants' motion to dismiss. Plaintiff's response included a copy of the 1958 articles of incorporation for Broadway Sheet Metal Works, Inc., listing plaintiff as an incorporator and director, and a copy of the 1960 amendment to the articles, changing the name of the company to Climatemp, Inc.

Defendants then filed a reply in support of their motion to dismiss which included several exhibits purporting to establish that plaintiff had indeed sold his stock. Defendants contended plaintiff had sold his 50 shares of Broadway Sheet Metal Works, Inc. stock to Expressway Terminals Inc. on January 4, 1960. Defendants exhibits included a purported transfer of stock letter of intent, plaintiff's cancelled stock certificates although no signature appeared on the back, corporate ledgers memorializing the stock transfer and minutes of a special shareholder meeting where plaintiff resigned as a director and officer of Broadway Sheet Metal Works, Inc. The minutes referred to "L.A. Moody [an incorporator and original stockholder] and Expressway Terminals, Inc." as "all of the shareholders." Plaintiff's signed resignation was also an exhibit.

The undated letter of intent to assign stock from plaintiff to Expressway Terminals, Inc. stated that: "[f]ormal contract relating to this purchase, with arrangements for holding of shares of stock in escrow by Halfpenny & Hahn, shall be drawn up and executed not later than May 1, 1960." No evidence of the formal contract was included in any of the pleadings.

Plaintiff moved for leave to file a supplemental response, indicating that he needed time for limited discovery to address defendants' allegation that plaintiff had transferred his stock. In addition, plaintiff moved to join Victor Comforte as an additional defendant; that motion was granted.

On March 14, 1990, the trial judge granted defendants' Section 2-619 motion to dismiss and granted plaintiff leave to file an amended complaint. The court explained that plaintiff had failed to satisfy the standing requirement and therefore had no right to discovery.

The court stated: "plaintiff has failed to adequately demonstrate his standing to bring this action that is a prerequisite of what essentially is a discovery cause of action. There is no reason why plaintiff should need discovery limited or otherwise in order to reasonably set forth allegations as to why he believes he is at present a stockholder of Climatemp, Inc. In order to permit the plaintiff to set forth his version of events, demonstrate his continued status as a shareholder, if he is able to do so, this court will grant the motion to dismiss. The plaintiff will be given 28 days to file a complaint with specificity, setting forth your standing. You will have 28 days to answer or otherwise plead. Now, start with a clean slate and show me where you stand."

Plaintiff's amended complaint for declaratory judgment, constructive trust and mandamus admitted plaintiff had signed a letter of intent to assign his stock to Expressway as part of a move to give the company more borrowing power. Plaintiff denied that a formal contract was ever drawn up or signed or that he was ever paid for his shares. Plaintiff sought a declaration by the court as to the effect of the letter of intent and plaintiff's ownership interest in Climatemp, Inc. Plaintiff also sought a constructive trust and mandamus to compel production of corporate records. Attached to Senese's first amended complaint as exhibits were copies of the Articles of Incorporation for Broadway Sheet Metal Works, Inc., a 1959 annual report for Broadway Sheet Metal Works, Inc., Articles of Amendment to the Articles of Incorporation of Broadway Sheet Metal Works, Inc. changing the company name to Climatemp, Inc., an letter of intent to assign stock from Senese and Comforte to Expressway Terminals, Inc., a 50-share stock certificate in Broadway Sheet Metal Works, Inc. with Senese's name on it and the word cancel written over the top, the back of the stock certificate, an undated assignment separate from certificate which appears to bear plaintiff's signature, a 50-share stock certificate in Broadway Sheet Metal Works, Inc., with Expressway Terminals, Inc name on it and the word cancelled written over the top, a letter by Senese demanding that he be allowed to view corporate records and a letter by the corporate attorney refusing that request.

Defendants then filed a 2-615 motion to dismiss the amended complaint, alleging that (1) each count of the complaint failed to state a cause of action, (2) plaintiff had no standing to file the complaint because he was not a stockholder and (3) plaintiff was barred by laches because he had not asserted a right of stock ownership in the 30 years prior to commencing the suit. Defendants motion to stay discovery was granted on August 13, pending resolution of defendants' 2-615 motion.

On September 24, 1990, the trial judge granted defendants' 2-615 motion to dismiss. The court found: (a) the complaint was barred on its face by laches; (b) the complaint failed to adequately allege the plaintiff's standing; (c) count I failed to state a claim for declaratory judgment; (d) count II failed to state a claim for constructive trust; and (e) Count III failed to state a claim for mandamus.

Initially the September 24 order granted plaintiff leave to file a second amended complaint. The trial judge subsequently granted defendants' motion to reconsider that portion of the September 24, 1990 order and on October 16, 1990 the trial judge dismissed plaintiff's first amended complaint with prejudice. Plaintiff appealed the trial judge's orders entered in 1990 on March 14, August 13, September 24 and October 16.

On appeal we consider plaintiff's contention that the trial court erred in determining issues of fact based upon its mistaken belief that documents attached as exhibits are always controlling over contrary allegations in the complaint.

Plaintiff argues that the trial judge erred when he accepted as true the letter of intent to assign his stock, which was attached to plaintiff's first amended complaint. Plaintiff contends that the trial court mistakenly relied on the truth of the exhibits attached to the complaint as though they were attached in support of and as the basis for plaintiff's claim as alleged in the complaint in compliance with Section 2-606 of the Illinois Code of Civil...