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Lombard v. Elmore

OPINION FILED JULY 5, 1985.

GEORGE E. LOMBARD ET AL., PLAINTIFFS-APPELLEES AND COUNTERDEFENDANTS-APPELLANTS,

v.

ELBERT F. ELMORE, DEFENDANT-APPELLANT AND COUNTERPLAINTIFF-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Robert G. Mackey, Judge, presiding.

JUSTICE PINCHAM DELIVERED THE OPINION OF THE COURT:

Defendant, Elbert F. Elmore, appeals from a $40,000 summary judgment entered in favor of plaintiffs, George E. Lombard and Michael A. Lombard. Defendant also appeals from the trial court's order which dismissed count I of his counterclaim. Plaintiffs appeal from a $46,750 jury verdict and judgment against them on defendant Elbert F. Elmore's counterclaim. The facts out of which the controversies arose follow.

On October 1, 1973, George E. Lombard, Michael A. Lombard, Elbert F. Elmore, Vincent Page and Gerald Heinz (who are not parties to this action), executed a partnership agreement, PEL-79. By the terms of this partnership agreement, the partners were to operate a motel and banquet facility in Burbank, known as Cez'ars Inn. While the partnership agreement, PEL-79, was in full force, George E. Lombard and Michael A. Lombard also owned the Lombard Construction Company. The Lombard Construction Company contracted with the partnership, PEL-79, to renovate the partnership's newly acquired motel, Cez'ars Inn.

In December 1974, the plaintiffs and the defendant executed an agreement wherein plaintiffs assigned their interest in the partnership agreement, PEL-79, to the defendant. Under the terms of this agreement each plaintiff received a $20,000 promissory note from the defendant. The agreement further provided that each plaintiff would be indemnified and held harmless for any liabilities arising out of the operation of PEL-79. The agreement also provided that PEL-79 was to pay the Lombard Construction Company an outstanding balance of approximately $34,000 for work performed and in progress on the motel.

Plaintiffs filed this action against the defendant and alleged that defendant was liable on the two promissory notes. Defendant answered that plaintiffs, as owners of the Lombard Construction Company, failed to perform their agreement to renovate the motel and that defendant was therefore entitled to a set-off against plaintiffs on the promissory notes. Defendant also filed a three-count counterclaim. Count I of the counterclaim alleged that the counterdefendants (Lombards) deliberately understated the partnership liability when negotiating the partnership agreement, PEL-79, i.e., the Lombards represented the partnership liability to be $41,848.16, when in fact, defendant asserted, the true partnership liability was $116,699.61. Defendant also asserted in his counterclaim that he paid the difference of these amounts and that the Lombards, counterdefendants, were liable to him for this difference.

Count II of the counterclaim asserted that pursuant to the terms of the partnership agreement, PEL-79 was to pay the Lombard Construction Company an outstanding balance of $34,000 for the renovation of the motel, that the $34,000 balance was also a deliberate misrepresentation, that the correct amount due was $48,116.88, that Elmore paid the correct amount in full and that the Lombards were liable to Elmore for that amount.

Count III of the counterclaim alleged that under the terms of the partnership agreement, PEL-79, the Lombards, via the Lombard Construction Company, were to renovate the motel Cez'ars Inn, that the Lombards failed to do so, that Elmore was compelled to have the renovation done at a cost of $59,584.26, and that the Lombards were liable to Elmore for that amount.

The Lombards filed a motion to dismiss Elmore's counterclaim on the ground that under the terms of the assignment agreement between the Lombards and Elmore, the Lombards were indemnified against the claims of the counterclaim. The trial court granted the Lombards' motion to dismiss count I, but denied their motion to dismiss counts II and III of the counterclaim.

The trial court granted the Lombards' motion for summary judgment in their cause of action on the promissory notes against Elmore in the amount of $40,000. Counts II and III of Elmore's counterclaim were tried by jury, which found for Elmore in the amount of $46,750, on which judgment was entered. On December 14, 1982, the trial court also entered judgment on the jury's verdict of $46,750 in favor of Elmore nunc pro tunc as of December 6, 1982, and ordered that "all matters are stayed until further order of court." On January 20, 1983, the court allowed Elmore's motion to amend count III of his counterclaim to conform to the proof, but denied Elmore's motion to vacate the summary judgment entered in favor of the Lombards.

Elmore contends that the trial court erred in granting the Lombards' motion for summary judgment on the two promissory notes for the reason that material facts raised by Elmore's pleadings and affidavit controverted the Lombards' claim on the notes. The Lombards' motion and supporting affidavit for summary judgment asserted that they were holders of the notes, that Elmore was the maker and that Elmore had failed to make payment on the notes when due.

• 1 A motion for summary judgment may be granted when the pleadings, depositions and affidavits reveal that there is no genuine factual dispute or controversy and that the movant is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1981, ch. 110, par. 2-1005(c); Kroll v. Sugar Supply Corp. (1983), 116 Ill. App.3d 969, 975, 452 N.E.2d 649; Marquette National Bank v. Heritage Pullman Bank & Trust Co. (1982), 109 Ill. App.3d 532, 534-35, 440 N.E.2d 1033.) When ruling on a summary judgment motion, the trial court is duty bound to consider the entire record. (Fryison v. McGee (1982), 106 Ill. App.3d 537, 539, 436 N.E.2d 12; Spancrete of Illinois, Inc. v. Brickman (1979), 69 Ill. App.3d 571, 576, 388 N.E.2d 47.) In determining whether a genuine factual dispute or controversy exists which would preclude granting summary judgment, the trial court is to consider the facts presented in a light most favorable to the non-movant and to accept the reasonable inferences therefrom. Mount Prospect State Bank v. Forestry Recycling Sawmill (1980), 93 Ill. App.3d 448, 459, 417 N.E.2d 621; Van C. Argiris & Co. v. Anwest Building Corp. (1980), 91 Ill. App.3d 836, 841, 414 N.E.2d 1256.

• 2 Our view of the record in this case convinces us that the trial court erred in granting summary judgment in favor of the plaintiffs. A genuine factual dispute existed. Plaintiffs' motion and supporting affidavit asserted that plaintiffs were holders of the promissory notes and that the defendant failed to make payment when the notes became due. Defendant's answer and affirmative defense alleged that defendant was entitled to a setoff against the promissory notes and that the defendant was further entitled to recoupment of monies expended by defendant as a result of the plaintiffs' breach of the assignment agreement. Defendant asserted that plaintiffs failed to complete the renovation of Cez'ars Inn and as a consequence defendant expended $50,000 to $60,000 to complete the renovation.

The defendant also filed a counterclaim which alleged that plaintiffs breached the assignment agreement by failing to complete renovation of the motel, that the promissory notes were executed as a part of the assignment agreement, and that the plaintiffs understated the amount of money owed the Lombard Construction Company for renovation work on the motel. Defendant charged further that he was compelled to pay the Lombard Construction Company an amount of money in excess of that amount stated in the agreement. (It should be here noted that the jury found in favor of the defendant on this counterclaim.)

In further opposition to plaintiffs' motion for summary judgment on the two promissory notes, defendant additionally submitted to the trial court affidavits and copies of the before-mentioned agreements and various correspondence between plaintiffs and defendant. Our view of the pleadings, affidavits and supporting documents compels the conclusion that there were genuine controverted and disputed facts, of which defendant may have had a valid defense to plaintiffs' cause of action on the promissory notes. Whether defendant was entitled to a setoff against plaintiffs on the notes, whether plaintiffs had understated the amount due the Lombard Construction Company, whether plaintiffs had breached the agreement to repair the motel and the amount expended by defendant to make such repairs, were factual controversies to be resolved by a jury. Accordingly, the trial court erred in granting plaintiffs' motion for summary judgment. Lyons v. Lyons (1972), 6 Ill. App.3d 692, 694, 286 N.E.2d 124; Bogdan v. Ausema (1962), 33 Ill. App.2d 294, 301, 179 N.E.2d 401.

• 3 Moreover, the trial court erred when it denied the defendant's request to file a supplemental affidavit in further opposition to plaintiffs' motion for summary judgment. The trial court's denial of the defendant's request to file his supplemental affidavit contravenes section 2-1005(c) of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2-1005(c)), which provides that a party may file counteraffidavits prior to or at the time of hearing of the motion for summary judgment. The record shows that the trial court refused to allow defendant to file the supplemental affidavit because defendant failed to give notice to plaintiffs of his intent to file the supplemental affidavit. This reason for denying defendant's request to file his supplemental affidavit was legally untenable.

The trial court's reasons as set forth in its opinion and order does not support the award of summary judgment. The order and opinion fail to address the documentary evidence which the court had a duty to review in ruling on the motion for summary judgment. (Crist v. Debron Corp. (1981), 96 Ill. App.3d 668, 672, 421 N.E.2d 997; Rubin v. City National Bank & Trust Co. (1980), 81 Ill. App.3d 1020, 1022, 402 N.E.2d 281.) Instead, the court focused on the oral representations of defendant's counsel at the motion hearing. The court also relied on disputed accounting procedures and contract interpretations which reveal that genuine issues of material fact existed on those issues, which properly should have been decided by a jury. For these reasons, the trial court's award of summary judgment in the amount of $40,000 in favor of plaintiffs and against defendant must be reversed.

Defendant next contends that the trial court abused its discretion when it denied his motion to reconsider and vacate the summary judgment. Because we reverse the trial court's order of ...


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