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Greenberg v. Goodman

OPINION FILED AUGUST 22, 1977.

IRVING M. GREENBERG, PLAINTIFF-APPELLEE,

v.

SEYMOUR GOODMAN ET AL., DEFENDANTS. — (SEYMOUR GOODMAN ET AL., DEFENDANTS-APPELLANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding.

MR. JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiff, Irving M. Greenberg, sued Seymour Goodman, Jordan H. Kaiser, Walter Kaiser, Mildred W. Goldberg, as Executor of the Will of William Goldberg, deceased, and in her own person, Home Builders of America, Inc., Sayre, Krako & Company and Michigan Avenue National Bank for specific performance of an agreement for the purchase of an interest in a limited partnership and for other relief. Seymour Goodman, Jordan H. Kaiser, Walter Kaiser, Home Builders of America, Inc. and Michigan Avenue National Bank (hereinafter defendants) answered plaintiff's complaint, alleged affirmative defenses and counterclaimed against plaintiff. *fn1 Plaintiff's motion for summary judgment was granted and defendants appeal, arguing that there is a genuine material issue of fact which precluded the entry of summary judgment and that the agreement was ambiguous.

Seymour Goodman, Jordan H. Kaiser, Walter Kaiser, William Goldberg and H.S. Kaiser Company formed a limited partnership on December 1, 1967, to hold the beneficial interest in certain realty held in trust and to develop that realty as a low income housing project. Subsequently, Home Builders of America, Inc., and Mildred W. Goldberg were substituted as limited partners for H.S. Kaiser Company and William Goldberg, respectively. The partnership agreement provided that Seymour Goodman and Jordan H. Kaiser were the "Principal Partners" or general partners solely responsible for the development of the project. It also provided that "all decisions shall be by concurring vote of the Principal Partners and owners representing not less than 60% of the beneficial interest of the trust." The remaining partners were "silent" partners.

Plaintiff and Seymour Goodman, Jordan H. Kaiser, Walter Kaiser, William Goldberg and Home Builders (Sellers) entered into an agreement for the sale of a 95% interest in the partnership on July 15, 1969. Plaintiff was made a substituted limited partner effective January 1, 1969, by amended partnership certificate executed by the general partners on August 6, 1969. Plaintiff was entitled to his distributive share of the partnership's items of loss and deduction pursuant to sections 702(a)(8) and (9) of the Internal Revenue Code for the period January 1, 1969, through the completion date. Sellers were to receive a total of $256,500 for the interest transferred. Plaintiff gave Sellers his check for $120,000 and his note for $136,500 and assigned his 95% interest in the partnership as security. The check, endorsed by Sellers, and the note were placed in escrow with the Michigan Avenue National Bank. Subsequent payments by plaintiff were also deposited under the terms of the escrow agreement. The remaining 5% interest in the partnership was to be purchased by plaintiff for $13,500 upon the completion date. The housing project was to be completed on or before April 30, 1970, and approved by the Federal Housing Administration (FHA). All of the funds deposited in escrow were to be disbursed upon completion, unless plaintiff or his attorneys notified the escrow holder not to disburse the funds. Between the completion date and the date of the FHA's approval of the transfer of the remaining partnership interest, plaintiff was to have all power, duty and authority of the general partners and Sellers would be limited partners. If Sellers failed to complete the housing project on time or for the failure of Sellers to perform other duties, plaintiff had the right, upon delivery of notice in writing to Sellers, to reconvey all interest in the partnership, the trust and the project. Sellers would return to plaintiff his note and all sums paid. Sellers were to indemnify plaintiff for any liability or expense in connection with the partnership, trust and project.

The project was not completed by April 30, 1970. Plaintiff gave Sellers notice of his intent to resell all of his interest in the partnership on May 19, 1970. On July 13, 1970, a supplemental agreement was executed which, inter alia, extended the completion date to December 31, 1970, and declared that plaintiff's previous notice of intent to resell was of no effect. The project was not completed by December 31, 1970, and plaintiff notified Sellers of his intent to resell on January 11, 1971. Sellers offered plaintiff a full refund of all deposits in escrow, cancellation of his note and interest on his note from the date of deposit. Plaintiff refused this offer, claiming not only a return of all considerations, but also that he was entitled to all of the benefits that a 95% interest holder in the partnership would be entitled to under the Federal income tax law.

On July 20, 1971, plaintiff filed a complaint for specific performance of his agreement. He alleged that the agreement provided for a completion date for the project, but that the project had not been completed on time. Pursuant to the agreement, plaintiff was entitled to resell his interest in the partnership after notifying Sellers. Plaintiff was ready, willing and able to resell his interest in the partnership, gave Sellers notice of his intent to resell and had tendered delivery to Sellers. Sellers refused to deliver the funds plaintiff had paid and to execute and deliver instruments to indemnify plaintiff.

In their answer, defendants admitted that there was an agreement, but denied that plaintiff had gained a then present interest in the partnership. Defendants alleged that the agreement was an agreement to purchase and that plaintiff had only assigned a future interest in the partnership to secure his promise to pay defendants. Defendants admitted that the project was not completed by December 31, 1970, but alleged that they were not at fault because completion was delayed by labor disputes and by plaintiff's interference, because of his control of a 95% interest in the partnership, with the management of the project. Defendants also counterclaimed against plaintiff, alleging that he had no present interest in the project, had diminished the value of the project and had wrongfully appropriated a tax loss of the partnership.

Plaintiff answered the counterclaim, alleging that he had a limited partner's interest in the partnership from the date of the agreement, had paid for his interest in the partnership and had not interfered with the management of the project and that the failure to complete the project was defendants' fault.

Plaintiff's motion for summary judgment was supported by plaintiff's affidavit and by defendants' answers to certain interrogatories. Defendants resisted the motion on the grounds that material issues of fact existed and that the agreement was ambiguous.

Plaintiff's motion for summary judgment was granted and judgment was entered against defendants on their counterclaim.

Defendants argue that plaintiff caused the failure to complete the housing project on time. They assert that a review of the record reveals that there is a genuine material issue of fact about plaintiff's participation in and interference with the management of the project. Defendants replied to one of plaintiff's interrogatories stating:

"The plaintiff, on numerous and diverse occasions exerted affirmative influence upon the general partners management decisions by continually inquiring about and attempting to influence decisions relative to the income tax situation and the progress of the project and making conflicting demands upon the managing general partners. During the period of construction, Seymour Goodman, one of the general partners, received in excess of a dozen such demands, which demands were initiated by calls from the plaintiff. During the same period of time Jordan Kaiser another general partner received at least three dozen telephone calls from plaintiff regarding the same subject matter and the conversations included completion problems, tax problems, labor problems and related matters. In addition during these conferences plaintiff said he wished to remain out of the partnership and then would change his position, give advice and say he contemplated consumating [sic] the parties agreement."

Additionally, defendants' affidavits resisting plaintiff's motion for summary judgment stated that plaintiff "attempted to influence" decisions regarding the project. They contend that these statements demonstrate that there is a material issue of fact concerning plaintiff's active involvement in the management of the project and consequent fault for the failure to complete the project.

Plaintiff argues that the original partnership agreement provided that "the entire management, control and operation of this project shall be under the sole responsibility, direction and authority" of the principal partners. The principal partners, Seymour Goodman and Jordan H. Kaiser, not plaintiff, were the only persons responsible for the management of the project. Plaintiff contends he made 48 telephone calls to the principal partners but that those calls were made over a period of 16 months. He argues that any prudent person who had paid $120,000 and had promised to pay an additional $136,000 would make inquiries about the project in which he had invested. Indeed, plaintiff argues that he had a right to inquire about the project. He contends that defendants' statements do not raise an issue of fact about his involvement in the project's management or about his responsibility for the failure to complete the project.

• 1 Our review of the record indicates that the trial court was correct in determining that there was no genuine material issue of fact concerning plaintiff's fault for the failure of the timely completion of the project. The agreement clearly makes the general partners, Seymour Goodman and Jordan H. Kaiser, solely responsible for the project. We disagree with defendants' argument that their affidavits in opposition to the motion for summary judgment stating that "plaintiff specifically attempted to influence the decisions" created an issue of material fact. The statement, like their contention that plaintiff's phone calls were the cause of delay, is a mere conclusion. No facts showing either how plaintiff "specifically attempted to influence the decisions" or how his phone calls delayed the project are stated in support. Conclusions, unsupported by facts admissible in evidence, do not create a genuine material issue of fact. Tau Delta Phi, Tau Eta Chapter, Building Association v. Gutierrez (1967), 89 Ill. App.2d 25, 232 N.E.2d 205.

Defendants also contend that the agreement was ambiguous both as to the kind of interest plaintiff had in the partnership and as to the time of the acquisition of that interest. They argue that if plaintiff did acquire an interest in the partnership on July 15, 1969, the day the agreement was executed, then it is unclear what kind of interest plaintiff did acquire. Plaintiff, according to his own contentions, received a 95% interest in the partnership on July 15, 1969. Defendants contend that if ...


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