Solar v. Weinberg

• Decision Date: 04 August 1995
• Docket Number: No. 1-93-4312,1-93-4312
• Citation: 274 Ill.App.3d 726,653 N.E.2d 1365,210 Ill.Dec. 903
• Parties: , 210 Ill.Dec. 903 Phillip SOLAR, Roberta Lewis-Solar, and Allen J. Bolnick, Plaintiffs-Appellees, v. Murray WEINBERG, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 1365

653 N.E.2d 1365

274 Ill.App.3d 726, 210 Ill.Dec. 903

Phillip SOLAR, Roberta Lewis-Solar, and Allen J. Bolnick Plaintiffs-Appellees, v. Murray WEINBERG, Defendant-Appellant.

No. 1-93-4312.

Appellate Court of Illinois, First District, Sixth Division.

Aug. 4, 1995.

David A. Novoselsky & Associates, Chicago (David A. Novoselsky, Kevin S. Besetzny, of counsel), for defendant-appellant.

Beerman, Swerdlove, Woloshin, Barezky, Becker, Genin & London, Chicago (Alvin R. Becker, Lauren Evans DeJong, of counsel), for plaintiffs-appellees.

Presiding Justice McNAMARA delivered the opinion of the court:

Defendant, Murray Weinberg, appeals from an order of the circuit court of Cook County which denied his motion to vacate and set aside a settlement agreement order entered on April 12, 1993 and directed him to pay additional interest of $575.33 on a portion of the settlement amount due plaintiffs, Phillip Solar, Roberta Lewis-Solar, and Allen Bolnick. Defendant contends that the trial court erred in refusing to grant his motion where plaintiffs materially breached the agreement by failing to deliver a quitclaim deed to him upon receipt of the full settlement amount. He also contends that the court erred in ordering him to pay plaintiffs the additional interest where nothing in the parties' agreement obligated him to do so.

The relevant facts are as follows. In July 1985, plaintiffs and defendant formed a real estate partnership for the primary purpose of purchasing, owning, operating, and selling a multi-unit apartment building in Chicago. The parties entered into a written partnership agreement and became general partners. In accordance with the agreement, defendant was to act as managing partner. The partnership purchased the subject property on July 1, 1985, for $718,000.

In April 1991, plaintiffs filed an action against defendant in the circuit court of Cook County alleging fraud and breach of fiduciary duty. Plaintiffs contended that defendant induced them to sell the partnership property by falsely telling them that the venture was not as profitable as anticipated and recommending that the property be disposed of quickly. Relying on this information, plaintiffs agreed to sell the property in May of 1986 for $900,000. Plaintiffs alleged that the named buyer of the property was actually a "straw man" working for defendant, the real purchaser in interest, and that the property was worth considerably more than defendant had let on. Plaintiffs further alleged that defendant had engaged in impermissible acts of self-dealing and defrauded them out of a certain brokerage commission in connection with the sale. Plaintiffs sought rescission of the sale as well as an accounting, damages, and other relief against defendant.

Weinberg answered the complaint denying that he had engaged in any fraudulent activity or acts of self-dealing and filed five affirmative defenses and a three-count counterclaim. Plaintiffs subsequently moved for judgment on the pleadings and moved to strike all of defendant's affirmative defenses. In June of 1992, the trial court entered an order granting plaintiffs' motion for judgment on the pleadings on the issue of liability, striking defendant's affirmative defenses on the ground that they were insufficient in law and dismissing with prejudice counts I and II of his counterclaim.

On November 4, 1992, the trial court entered a written order holding that defendant had owed plaintiffs a fiduciary duty to obtain their informed consent before causing the subject property to be sold to himself. The court found that defendant breached that duty, and plaintiffs were therefore entitled to rescind the sale and to receive an award of compensatory and punitive damages.

On February 3, 1993, the case proceeded to trial on the issue of damages. On February 4, the parties, with the assistance of the trial judge, reached a settlement agreement, the terms of which were spread of record as follows:

"MR. BECKER [Plaintiffs' attorney]: The terms of the settlement are that the defendant will pay to the plaintiffs the following sums at the following times: Within seven days from today, $70,000. Within 14 days from today, an additional, $80,000. Within 30 days from today, $350,000, which would be $500,000 within no later than 30 days from today within the same time constraints that I have just described to the Court. Those time constraints are of essence and cannot be changed except by consent of all.

Concurrent with the payment of within 30 days that--what I'm going to call the first $500,000, your Honor, the defendant will cause to be delivered to me an irrevocable, unconditional letter of credit by any state or federal bank in the State of Illinois, County of Cook--no, metropolitan area. Although we didn't negotiate that, I don't want to confine him to the bank he wants to use--in the sum of $515,000 payable no later than six months from the 30 days from today.

Concurrent with the delivery of the letter of credit and the payment of the $350,000, I will cause to be delivered to such person as [defendant's attorney] directs me to a document acceptable in form to them releasing the lis pendens on file with regard to the property which is the subject matter of this case.

In addition to that, your Honor, or in the event that the payments and letter of credit that I have described are not--the payment is not made or the letter of credit is not delivered, then at the option of the plaintiffs and only at the option of the plaintiffs, then the agreement of the parties may be canceled and the case may resume if the plaintiffs so choose.

If, however, the defendant performs as I have suggested he will perform, then we will enter an order 31 days from today dismissing this case with prejudice.

Concurrent with the delivery of the letter of credit document, the $350,000 payment, the parties will exchange mutual general releases releasing each other generally. In addition to dismissing this case with prejudice--excuse me the complaint with prejudice, there is a second amended counterclaim that will also be dismissed with prejudice.

And lastly, plaintiffs and the parents of * * * Mrs. Solar will deliver a quit claim instrument quit claiming whatever right, title and interest, if any, that they have, and they do not have any, but since it is a quit claim instrument, there's no reason not to do it with regard to the [subject] property.

I believe that recites generally--not generally, all of the agreed-upon terms and provisions that have been discussed which constitute the settlement between the parties.

MR. NOVOSELSKY [Defendant's attorney]: [S]o we're clear, the letter of credit is to secure the payment of an additional 500. Upon the payment of 500, the letter of credit would be returned and canceled, so we understand that, rather than executed, correct?

MR. BECKER: The defendant always has his option to pay me the money.

MR. NOVOSELSKY: I understand.

MR. BECKER: Yes, of course. The letter of credit is returned if payment is made, and the payment is not 500, it will be--

MR. NOVOSELSKY: 515. You're absolutely correct."

The parties then each affirmatively stated on the record their understanding and approval of the settlement terms. The terms were thereafter reduced to writing in a settlement agreement order which was executed by the parties and approved by the court. The report of proceedings documenting the terms announced in open court was incorporated by reference into the order. The trial court retained jurisdiction to enforce the order.

The $15,000 which was to be paid along with the second $500,000 installment represented liquidated interest of 6% on that installment. The $515,000 was to be payable within six months of March 4, 1993, or no later than September 4, 1993.

Defendant timely paid plaintiffs the first $500,000 and delivered to them a letter of credit in the amount of $515,000. The letter of credit was issued on April 8, 1993 by LaSalle National Bank of Chicago and was set to expire on September 7, 1993. Issuance of the funds secured by the letter of credit was contingent upon the bank receiving a signed statement indicating that "Murray Weinberg has not paid $515,000.00 to Phillip Solar, Roberta Lewis-Solar and Allen J. Bolnick as provided in the settlement agreement reached in Case No. 91 CH 03601 'Phillip Solar, Roberta Lewis-Solar and Allen Bolnick v. Murray Weinberg.' "

On August 27, 1993, defendant's attorney orally advised plaintiffs' attorney that the final payment of $515,000 would not be made independent of the letter of credit. This conversation was confirmed by plaintiffs' attorney in writing on August 30, 1993. Because September 4, 1993 was a Saturday and Monday, September 6, was a holiday, plaintiffs did not draw on the letter of credit until Tuesday, September 7. The bank paid plaintiffs $515,000 pursuant to the letter of credit on September 11.

On September 15, 1993, having not yet received the quitclaim deed from plaintiffs, defendant's attorney telephoned plaintiffs' attorney and inquired about its status. Defendant's attorney was told that the deed would not be tendered until defendant paid plaintiffs an additional amount of $575.33 representing payment of 6% interest for seven days on the $500,000 that was due on September 4 but which was not paid out until September 11. Defendant refused and on November 1, 1993 filed a motion to vacate the settlement agreement order. Defendant contended that he should be allowed to vacate and set aside the order since plaintiffs breached it by failing to tender the quitclaim deed as required by the order. Defendant argued that, when he delivered the letter of credit to plaintiffs, his payment obligations under the order were fully discharged, and plaintiffs thus had no right to an award of additional interest. Defendant sought a refund of the $1,015,000 and requested the court to recommence the trial of this matter. The...