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03/28/89 Bruce Thompson, v. .

March 28, 1989





536 N.E.2d 969, 181 Ill. App. 3d 293, 129 Ill. Dec. 919 1989.IL.407

Appeal from the Circuit Court of Cook County; the Hon. Harold Siegan, Judge, presiding.


JUSTICE HARTMAN delivered the opinion of the court. EGAN, P.J., and BILANDIC, J., concur.


Plaintiff appeals from the circuit court's denial of his petition to vacate an order of dismissal and from the denial of his motion for reconsideration. The issue raised is whether the circuit court abused its discretion in denying his petition to vacate an agreed order of dismissal because it was an agreement of the parties and not a "judicial determination."

Plaintiff became the owner of one-third of the issued and outstanding stock of defendant IFA, Inc. , on December 31, 1981. Codefendants Raymond Harding and Paul Sheedy owned the remaining two-thirds of the shares in equal amounts. On March 6, 1984, plaintiff, Harding, and Sheedy entered into a written shareholder's agreement providing, inter alia, that any shareholder who resigned or was terminated was obliged to sell his shares back to the company for a price established by an agreed-to formula; further, the company was obligated to purchase those shares for the determined price. Upon full payment of the purchase price, the shares were to be delivered to the corporation.

On March 21, 1984, IFA terminated plaintiff's employment, pursuant to a resolution of Harding and Sheedy. Soon thereafter IFA undertook to repurchase his shares. Plaintiff refused to assign and deliver his stock certificates, however, and IFA, pursuant to the shareholder's agreement, cancelled plaintiff's shares.

Plaintiff, on May 6, 1985, commenced an action to compel production of IFA's books and records and for damages. On September 30, 1985, the

According to plaintiff, several months after the agreed order was entered, he discovered that IFA had been acquired by another company and that, unknown to him, Harding and Sheedy were negotiating with the Bank of Scotland to sell IFA prior to the execution of the settlement agreement. On July 16, 1987, plaintiff filed a petition under section 2-1401 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-1401) to vacate the agreed order of dismissal entered September 30, 1985. The petition, supported by an affidavit, alleged that Sheedy and Harding concealed from and failed to disclose to plaintiff the negotiations for the sale of IFA, with the intent to deceive and defraud him. Plaintiff also claimed he never would have entered into the settlement agreement if he had known about the negotiations. The affidavit was sworn to by one Lawrence Kancius, who averred: he was formerly vice-president of IFA; in that capacity, he arranged negotiations between representatives of IFA and the Bank of Scotland; prior to the settlement agreement with plaintiff, a deal had been reached whereunder 75% of the stock of IFA would be sold to the Bank of Scotland; he was sworn to secrecy and requested by Sheedy not to disclose the pendency of the sale to plaintiff under any circumstances; and the transaction with the Bank of Scotland was delayed until plaintiff's lawsuit against IFA was officially dismissed.

In response, IFA moved to strike the petition for failure to state a claim upon which relief could be granted and, alternatively, that it was not legally sufficient.

At the hearing, the circuit court addressed neither the legal sufficiency nor the merits of the petition or affidavit. Purportedly following Stanley A. Nelson & Co. v. Modular Interiors (1973), 13 Ill. App. 3d 634, 301 N.E.2d 40, the court held that the agreed order was an agreement of the parties, and not a judicial determination; therefore, the court concluded, it had no basis for reviewing or vacating the order. The court then entered an order that denied plaintiff's petition and, subsequently, his motion for reconsideration. He appeals.

Decisions involving petitions to vacate under section 2-1401 (Ill. Rev. Stat. 1985, ch. 110, par. 2-1401) will not be disturbed on review absent abuse of sound legal discretion by the circuit court. (Lubowsky v. Skokie Valley Community Hospital (1979), 79 Ill. App. 3d 909, 916, 398 N.E.2d 1037; City of Des Plaines v. Scientific Machinery Movers, Inc. (1972), 9 Ill. App. 3d 438, 443-44, 292 N.E.2d 154.) Here, plaintiff contends that the circuit court abused its discretion by declining to consider the merits of his section 2-1401 petition to vacate.

The order sought to be vacated was entitled "Agreed Order of Dismissal"; was signed by the attorneys representing all involved parties; states that the parties had entered into a settlement agreement; and dismisses the case with prejudice. The order thereby fits the description ...

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