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People Ex Rel. Scott v. College Hills Corp.





Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of McLean County, the Hon. James A. Knecht, Judge, presiding.


Rehearing denied May 27, 1982.

On November 8, 1977, the Attorney General filed this civil penalty action in the circuit court of McLean County pursuant to section 7(4) of the Illinois Antitrust Act (Ill. Rev. Stat. 1975, ch. 38, par. 60-7(4)). The complaint charged defendants with various violations of the Act, including price fixing, tying arrangements, and unreasonable restraints of trade in the home-building and the building-material industry in the Bloomington-Normal area.

The named defendants in the complaint were four corporations: College Hills Corporation, Empire Development Company, Lumberlane, Inc., and Complex Development Company; one partnership: Washington East Partnership; and four individuals: Vernon P. Prenzler, Phillip E. Baumgart, Richard H. Hundman, and Carl F. Schwulst. On January 30, 1978, an order was entered in the circuit court dismissing defendant Complex Development Company on the ground that the company had dissolved or merged with defendant College Hills Corporation. All of the four individual defendants are identified as the chief operating officers and directors of defendant College Hills Corporation. Defendants Prenzler, Baumgart, Hundman and Schwulst are also alleged to be the chief operating officers and directors of defendant Empire Development Company, as well as partners in defendant Washington East Partnership. Lumberlane, Inc., is not made a defendant in count I of the complaint but is charged as a defendant in count II. Defendants Prenzler, Baumgart, Hundman, and Schwulst are identified as officers and directors of Lumberlane, Inc.: Vernon Prenzler, president; Phillip Baumgart, vice-president; Richard Hundman, treasurer; Carl Schwulst, secretary.

On August 15, 1978, after a number of motions on the pleadings, an order was entered in the circuit court compelling the plaintiff to file a bill of particulars. The bill was filed on August 24, 1978. The defendants subsequently filed motions to dismiss. On August 7, 1979, the circuit court struck the complaint with leave to amend within 21 days. The first amended complaint was filed August 28, 1979. The defendants named in the amended complaint are identical to those named in the first complaint, with the exception of Complex Development Company, which had been deleted.

Count I of the amended complaint alleges that the four individual defendants combined through various joint ventures to fix the price of real estate lots in the Bloomington-Normal area. Count II alleges that certain of the defendants' business practices unreasonably restrained trade in the sale of lots and building materials. Count III alleges that the defendants unlawfully conditioned the sale of residential lots upon the purchase of building materials. On March 25, 1980, an order was entered dismissing the amended complaint with prejudice.

The appellate court reversed the dismissal of counts I and II, indicating that both counts stated a cause of action with sufficient specificity. The appellate court affirmed the dismissal of count III for failure to plead that the tying arrangements alleged had a requisite substantial effect upon commerce. 92 Ill. App.3d 651.

We granted leave to appeal. The defendants seek reversal of the appellate court's decision which determined that the pleading of counts I and II was sufficient. The People did not appeal the dismissal of count III to this court. The defendants, however, contend that the appellate court dismissed count III for the wrong reasons and have requested us to review the grounds for dismissal of count III.

The pleadings of any complaint must conform to section 42(2) of the Civil Practice Act, which states:

"No pleading is bad in substance which contains such information as reasonably informs the opposite party of the nature of the claim or defense which he is called upon to meet." (Ill. Rev. Stat. 1977, ch. 110, par. 42(2).)

Pleadings are not intended to create obstacles of a technical nature to prevent reaching the merits of a case at trial. Their purpose is to facilitate the resolution of real and substantial controversies. (People ex rel. Fahner v. Carriage Way West, Inc. (1981), 88 Ill.2d 300, 307-08.) In determining whether the complaint is adequate, pleadings are liberally construed. The aim is to see substantial justice done between the parties. (Ill. Rev. Stat. 1977, ch. 110, par. 33(3); First National Bank v. City of Aurora (1978), 71 Ill.2d 1; Stenwall v. Bergstrom (1947), 398 Ill. 377.) To see if a cause of action has been stated the whole complaint must be considered, rather than taking a myopic view of a disconnected part. Stenwall v. Bergstrom (1947), 398 Ill. 377.

While notice pleading prevails under the Federal rules (Conley v. Gibson (1957), 355 U.S. 41, 2 L.Ed.2d 80, 78 S.Ct. 99), a civil complaint in Illinois is required to plead the ultimate facts which give rise to the cause of action (Board of Education v. Kankakee Federation of Teachers Local No. 886 (1970), 46 Ill.2d 439, 446-47, cert. denied (1971), 403 U.S. 904, 29 L.Ed.2d 679, 91 S.Ct. 2203; Levinson v. Home Bank & Trust Co. (1929), 337 Ill. 241, 244).

We are concerned here only with the specificity of the allegations. The allegations are sufficiently specific if they reasonably inform the defendants by factually setting forth the elements necessary to state a cause of action. Fanning v. LeMay (1967), 38 Ill.2d 209, 211.

Conspiracies by their very nature do not permit plaintiffs to allege all the details of the defendants' conduct. Such actions are often purposefully shrouded in mystery. This is particularly true in reviewing antitrust conspiracies. The litigation is complex, the issues are often subtle, and the alleged actions carefully camouflaged.

While we recognize the distinction between factual pleading necessary in our own courts> and the notice pleading requirements of Federal courts>, Federal precedent is both relevant and helpful in determining the adequacy of antitrust allegations. (See People v. Crawford Distributing Co. (1972), 53 Ill.2d 332, 346; People ex rel. Fahner v. Carriage Way West, Inc. (1981), 88 Ill.2d 300, 309; Ill. Rev. Stat. 1977, ch. 38, par. 60-11.) Conspiracies often have to be proved from inferences drawn from circumstantial evidence. (United States v. Parke, Davis & Co. (1960), 362 U.S. 29, 44, 4 L.Ed.2d 505, 515, 80 S.Ct. 503, 511.) In upholding the government's complaint in Brett v. First Federal Savings & Loan Association (5th Cir. 1972), 461 F.2d 1155, 1158, the Court of Appeals for the Fifth Circuit said:

"Although plaintiffs may be unable to allege specific facts proving actual acts of agreement or conspiracy, the pleadings are sufficient if they set forth facts from which an inference of an unlawful agreement can be drawn. Actual agreements are seldom capable of proof by direct testimony and thus circumstantial evidence may be allowed to establish an alleged conspiracy. [Citations.] Plaintiffs cannot be required to plead with specificity the very facts which can only be proven by circumstantial evidence."

The exact role of a particular defendant cannot always be spelled out in the complaint. In denying a motion to dismiss and a motion for a bill of particulars the district court in United States v. Johns-Manville (N.D. Ill. 1941), 67 F. Supp. 291, 293, observed:

"[I]t must be remembered that the existence of a combination to restrain trade such as charged here can seldom be proved by the evidence of witnesses to the effect that the parties have entered into a specific, oral or written agreement for that purpose. The proof usually consists of evidence of circumstances from which that conclusion follows."

Defendants' contention that the criminal antitrust indictment that was the subject of People v. Crawford Distributing Co. (1972), 53 Ill.2d 332, requires a lesser standard of pleading than section 42(2) of the Civil Practice Act was disposed of in People ex rel. Fahner v. Carriage Way West, Inc. (1981), 88 Ill.2d 300, 311. The indictment in Crawford alleged that the conspirators held periodic meetings to plan and carry out a conspiracy to increase and fix the price of beer sold at wholesale by defendant distributors to retailers located in Macon County. (53 Ill.2d 332, 347.) In Carriage Way West we held the terms of the civil antitrust complaint at issue there to be sufficient. We said:

"If an indictment of this type satisfies the more rigid procedural requirements of a criminal prosecution, a complaint similarly worded should satisfy the requirements of the Civil Practice Act." 88 Ill.2d 300, 311.

Count I

Count I charges the defendants with price fixing in violation of section 3(1)(a) of the Illinois Antitrust ...

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