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Claire Associates v. Pontikes

OPINION FILED DECEMBER 30, 1986.

CLAIRE ASSOCIATES, PLAINTIFFS-APPELLANTS,

v.

GEORGE C. PONTIKES ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Myron T. Gomberg, Judge, presiding.

JUSTICE SCARIANO DELIVERED THE OPINION OF THE COURT:

The instant case is a legal malpractice action, brought by John Livaditis on behalf of Claire Associates, a limited partnership for which he was the general partner (hereinafter referred to collectively as appellants), against a number of attorneys (George Pontikes, Stanton Schuman, and Robert Drake, all of the firm of Foss, Schuman & Drake, hereinafter referred to as appellees), who had represented the partnership in certain legal matters prior to the initiation of this litigation. In particular, appellees had represented appellants in a breach of contract action filed in Federal court, in which suit the defendant was Northwestern Mutual Life Insurance Company (hereinafter Northwestern). In the contract action, it was alleged that Northwestern had agreed to provide financing for the construction of a shopping center complex and then wrongfully defaulted on that obligation. The district court ultimately dismissed the contract action with prejudice.

In the malpractice action, appellants asserted that it was the negligent representation provided by appellees which resulted in the dismissal. The circuit court dismissed the malpractice complaint under the authority of section 2-615 of the Code of Civil Procedure (Ill. Rev. Stat. 1985. ch. 110, par. 2-615), finding that the malpractice complaint lacked the factual specificity required to state a cause of action. Because we conclude that the underlying Federal contract claim, as pleaded by appellants, would not entitle appellants to any recovery, we are constrained to uphold the circuit court's determination that the complaint did not state an actionable claim of malpractice.

BACKGROUND

Essential to an understanding of the case, and of our resolution of the issues raised on appeal, is an identification of the various parties of the contract claim and to the malpractice suit, the composition of those parties, and their activities. We therefore detail them herein.

Claire Associates was a limited partnership, comprised of John Livaditis and J.G.O. Corporation as general partners, and Sheldon Lavin, James G. O'Donnell, Kathleen Sawyer, Marshall Rasof, Bernard Harlan, and Jerome Brault as class A limited partners (although the partnership agreement provided for a set of class B partners, no such interests were ever sold). The partnership agreement was executed in January 1975 and was twice amended by its members.

On June 24, 1975, a second partnership, also operating under the name Claire Associates, was organized. The sole general partner of this second partnership was Livaditis, and initially, the only limited partner was David Husman. Husman was later replaced as limited partner by Mundelein Associates (also a limited partnership). Mundelein was in turn composed of Donald Benjamin, Joseph Kahn, Richard Eichman, Gerald Sobel, Alex Pruzen, Lawrence Aronson, Carl Gershenfeld, Irving Drucker, Raymond Portugal, David Husman, Kathleen Husman, Irving Husman, Jim Martin, Joseph Aarons, and Rosman Adjustment Service. For the sake of simplicity, we shall refer to the first partnership described in the preceding paragraph as Claire I and the second partnership as Claire II.

In an application dated July 18, 1975, and signed by Livaditis, "Claire Associates, an Illinois Limited Partnership" applied to Northwestern for mortgage financing in the amount of $4,650,000, a sum required to build a shopping center in Mundelein. The application listed Livaditis and J.G.O. Corporation as general partners in Claire Associates, the proposed borrowing entity. Clearly, based on the application, it was Claire I which sought financing from Northwestern.

On August 1, 1975, Northwestern conditionally approved the application and issued a loan commitment to Claire Associates as the borrower. Notable among the conditions imposed by Northwestern was the following clause:

"this commitment is subject to the accuracy as of the date hereof of all information, data, representations, exhibits, and other materials submitted in connection with the application. This commitment is issued on the condition that, at the time of completing the loan, there will have been since the date of this commitment, no substantial changes in the assets, liabilities or condition, financial or otherwise, of the Borrower or any guarantor except changes arising from transactions in the ordinary course of business, none of which changes has been materially adverse."

As noted, the application specifically indicated that both Livaditis and J.G.O. Corporation were general partners in the partnership. Although the parties have not cited it, we note the "call clause" of the loan commitment, which provided:

"The loan may be declared due and payable if the Property or any part thereof securing the loan is sold or if any change in the existing proportionate ownership is permitted without the written consent of Lender.

For the purpose of this provision, `Existing Proportionate Ownership' is defined as the relationship between or among the present general partners." *fn1

That Claire I was the borrowing entity is manifest from these provisions, which note more than one general partner, label any change in their ownership relationship as a significant event, and which specifically incorporate ...


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