Trossman v. Philipsborn, 1-04-0588.
| Decision Date | 08 June 2007 |
| Docket Number | No. 1-04-0588.,1-04-0588. |
| Citation | 869 N.E.2d 1147 |
| Parties | Don C. TROSSMAN, Plaintiff and Counterdefendant-Appellee, v. Thomas D. PHILIPSBORN, Andrew I. Philipsborn, Daniel C. Bartok and John J. Lynch, Defendants and Counterplaintiffs-Appellants (Oak Park Partners, Ltd., and Burnham Investors, Ltd., The Philipsborn Company, Philipsborn Development Corp., and Clarion Development Limited Partnership, Defendants). |
| Court | United States Appellate Court of Illinois |
Kenneth L. Gillis, Leon Zelechowski, Chicago, for Appellants.
Tabet DiVito & Rothstein, LLC, Chicago (Gino L. DiVito, Karina DeHayes, Michael Grant, of counsel), for Appellee.
Plaintiff Don C. Trossman originally commenced this action in the chancery division seeking to compel profit distributions due to him from defendants Oak Park Partners, Ltd. (Oak Park Partners), and Burnham Investors, Ltd. (Burnham Investors), in both of which he was a limited partner. Defendants Thomas D. Philipsborn and John J. Lynch filed a counterclaim for pro rata contribution or, in the alternative, a declaration of continuing obligation, to contribute to payments they, through their company, The Philipsborn Company (TPC), made on a guaranty to LaSalle National Bank (LaSalle), pursuant to which Trossman was a co-guarantor.1 Subsequently, Andrew I. Philipsborn and Daniel C. Bartok were joined as defendants-counterplaintiffs.2 The circuit court granted the Philipsborns and Lynch's (hereinafter, collectively, counterplaintiffs') motion for partial summary judgment on the issue of Trossman's liability for contribution to the payments to LaSalle. Subsequently, pursuant to a fee-shifting provision of the indemnity and contribution agreement between the parties, the circuit court awarded Trossman $447,805,72 in attorney fees and costs he incurred in defending the counterclaim. Only counterplaintiffs' counterclaim for contribution and the award of attorney fees and costs in connection therewith are at issue on appeal. For the reasons that follow, we affirm in part and remand in part.
In their counterclaim, counterplaintiffs alleged the following. Counterplaintiffs and Trossman entered into an agreement with LaSalle to jointly and severally guarantee the obligations of the Wysteria Limited Partnership (Wysteria), in which Trossman was a limited partner. Contemporaneously with entering into the guaranty agreement, Trossman and counterplaintiffs entered into an indemnity and contribution agreement which obligated Trossman to contribute a pro rata share to payments on the LaSalle guaranty. It was further alleged that LaSalle demanded payment from the guarantors, and counterplaintiffs made payments to LaSalle in satisfaction of the guaranty. Trossman had not made any payments to LaSalle. Counterplaintiffs sought damages and attorney fees in connection with Trossman's alleged breach of the indemnity and contribution agreement. In the alternative, counterplaintiffs sought a declaration that, under the indemnity and contribution agreement, Trossman was under a continuing obligation to contribute his pro rata share to payments under the guaranty and, further, that counterplaintiffs were entitled to attorney fees incurred in enforcing the indemnity and contribution agreement. As noted in greater detail below, in their subsequent motion for summary judgment counterplaintiffs would assert that Trossman owed contribution with respect to the payments TPC made to LaSalle beginning in February of 1995.
In his affidavit,3 Trossman gave the following background of Wysteria. Wysteria was organized in 1990 for the purpose of acquisition and development of a residential townhome complex in Olympia Fields, Illinois. Wysteria was to construct and sell 88 completed townhomes. The limited partnership agreement executed on November 20, 1990, a copy of which is included in the record on appeal, provided, in pertinent part:
"No limited partner shall be liable for any debts of the Partnership or any of its obligations except to the extent of his commitments to the Partnership capital and his share of undistributed profits."
In 1991, Trossman became a limited (0.99%) partner in Wysteria by investing $14,250. In 1994, Trossman made another contribution of $2,500. In addition to Trossman, Wysteria's limited partners included the Philipsborns, Lynch, Bartok and approximately 15 other investors. Wysteria's general partners were TPC's wholly owned subsidiary, Philipsborn Development Corporation (PDC), and Bartok's company, Clarion Development.
The guaranty agreement further provided:
"Guarantors hereby expressly waive:
* * * notice of any default under any of the * * * Loan Instruments * * * or notice of the taking of any action or the exercise of any remedy by Lender under the Loan Instruments;
* * * Presentment, demand, notice of dishonor, protest and notice of protest, notice of any and all defaults and all other notices whatsoever * * *."
Lastly, the guaranty agreement provided:
"[M]odification of the economic terms of either or both of the Notes, or the replacement or substitution of either of them, shall not be permitted by Lender without prior written notice thereof to Guarantors."
"Event of Default" was defined, in pertinent part, in the Wysteria loan agreement, which was entered into on January 25, 1991, and is part of the record on appeal, as follows:
Neither the agreement nor the loan notes provided how a default might be cured. The agreement did, however, provide, in pertinent part, that, upon the occurrence of a default, "Lender's obligation to make any further disbursements of the Loans shall terminate," and Lender may, among other things, "[d]eclare all of Borrower's Liabilities to be immediately due and payable." Similar definitions and provisions were used in other instruments governing the Wysteria loan.
Trossman further admitted in his affidavit that, contemporaneously with entering into the guaranty agreement, he and counterplaintiffs entered into an indemnity and contribution agreement, which provided, in pertinent part, that in the event the guaranty is triggered, "Trossman shall be liable for 10.9% of the cost of the [Wysteria] Obligations." The indemnity and contribution agreement further provided:
"To the extent Clarion and Bartok, Lynch, A. Philipsborn, T. Philipsborn or Trossman contributes in excess of its respective Share of Obligations (`Excess Contributor') such Excess Contributor may recover the excess which it has paid from each other party on a pro rata basis to the extent such other party has not contributed its entire Share of Obligations."
Additionally, the indemnity and contribution agreement provided:
The agreement further provided examples of how such pro rata contributions should be computed in the event LaSalle collected payment from some of the guarantors pursuant to the guaranty. Additionally, the agreement provided:
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Reid v. Wolf (In re Wolf)
... ... law.” 568 B.R. at 663. But this is not so certain ... See Trossman v. Philipsborn , 373 Ill.App.3d 1020, ... 1050, 869 N.E.2d 1147, 1171 (2007) (citing but not ... ...
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Gierum v. Glick (In re Glick)
... ... and Forsythe represent a "broad-based and explicit rejection of reverse piercing." Trossman v. Philipsborn , 373 Ill.App.3d 1020, 1053, 312 Ill.Dec. 156, 869 N.E.2d 1147, 1174 (1st Dist ... ...
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N. Neville Reid v. Wolf (In re Wolf)
... ... law.” 568 B.R. at 663. But this is not so certain ... See Trossman v. Philipsborn , 373 Ill.App.3d 1020, ... 1050, 869 N.E.2d 1147, 1171 (2007) (citing but not ... ...
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Reid v. Wolf (In re Wolf), s. 18 C 07952
... ... at 663. But this is not so certain. See Trossman v. Philipsborn , 373 Ill. App. 3d 1020, 1050, 869 N.E.2d 1147, 1171, 312 Ill.Dec. 156 (2007) ... ...