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12/01/89 George Dangeles Et Al., v. William Muhlenfeld Et Al.

December 1, 1989

GEORGE DANGELES ET AL., PLAINTIFFS-APPELLANTS

v.

WILLIAM MUHLENFELD ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

548 N.E.2d 45, 191 Ill. App. 3d 791, 138 Ill. Dec. 815 1989.IL.1860

Appeal from the Circuit Court of Du Page County; the Hon. Anthony M. Peccarelli, Judge, presiding.

APPELLATE Judges:

JUSTICE REINHARD delivered the opinion of the court. UNVERZAGT, P.J., and McLAREN, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE REINHARD

Plaintiffs, George Dangeles and First American Mortgage Company (First American), filed a six-count complaint in the circuit court of Du Page County against defendants William Muhlenfeld, Nancy Gaskin, Lisa Carpenter, and Centennial Mortgage Company (Centennial) alleging misconduct by the individual defendants in the establishment and operation of Centennial, a business competing with First American, and seeking recovery under various theories. Plaintiffs appeal the dismissal of counts asserting claims for breach of fiduciary duty and tortious interference with prospective economic advantage, and the entry of summary judgment in favor of defendants on their count for breach of contract and on portions of their count for tortious interference with contractual relations.

Plaintiffs filed their six-count first amended complaint on November 26, 1986. The pertinent allegations are as follows. Plaintiffs alleged that First American was in the business of mortgage brokering and lending and that from its formation until the middle part of 1985, Muhlenfeld and Dangeles each owned 50% of its stock. During that period of time, Muhlenfeld was president and chief operating officer of First American in charge of its day-to-day operations. In April 1985, Muhlenfeld and Dangeles executed a written agreement for the sale of Muhlenfeld's stock to Dangeles. The agreement contained the following covenant:

"In the event MUHLENFELD leaves the employ of [First American], he agrees that he will not employ any of the employees away from [First American]."

In July 1985, Muhlenfeld resigned from his position with First American and thereafter established and operated Centennial.

Count I of the first amended complaint alleged that Muhlenfeld violated the covenant above by hiring First American employees Nancy Gaskin and Lisa Carpenter. Count II sought rescission of the sale of Muhlenfeld's stock, alleging that in connection with the sale Muhlenfeld misrepresented the value of First American's assets and made other misrepresentations. In count III, plaintiffs advanced a claim for breach of fiduciary duty. Count IV advanced a claim for tortious interference with contractual relationships. Plaintiffs alleged that First American had contractual relationships with Horizon Federal Savings and Loan Association (Horizon) and Citicorp Savings and Loan (Citicorp), which funded loans originated by First American. Plaintiffs further alleged that First American had contractual relationships with numerous salespeople. Plaintiffs alleged that defendants falsely advised Citicorp, Horizon, and the salespeople that First American was without proper business management and was in financial difficulties, and as a result, First American "lost the services" of certain lending institutions and "lost the benefit of the employment of certain employees." Count V asserted a claim for tortious interference with prospective economic advantage based on the same communications alleged in count IV. Count VI, like count II, sought rescission of the sale of stock, based on misrepresentations as to the value of First American assets.

On January 9, 1987, defendants filed a motion to dismiss the first amended complaint pursuant to section 2-615 (Ill. Rev. Stat. 1987, ch. 110, par. 2-615) for failure to state a cause of action. By order dated March 5, 1987, the circuit court dismissed counts III, V, and VI, granting plaintiffs leave to amend these counts. Plaintiffs elected not to file amendments, and defendants filed answers to the remaining counts. Subsequently, defendants moved for summary judgment on the remaining counts.

On August 3, 1988, the circuit court granted defendants' summary judgment motion with respect to count I and to count IV, except for First American's alleged business relationships with Horizon and two employees. The court denied the motion with respect to count II.

Thereafter, plaintiffs moved for voluntary dismissal of count II and the remainder of count IV. The circuit court granted this motion and in an order dated January 27, 1989, set forth the previous dismissal order of March 5, 1987, the summary judgment order of August 3, 1988, and found no just reason to delay enforcement or appeal of those orders.

Plaintiffs initially contend that the circuit court erred in dismissing count III of its first amended complaint which advanced a claim based on breach of fiduciary duty. Plaintiffs contend that count III properly stated a cause of action as pleaded. Defendants respond that the allegations pertaining to breach of fiduciary duty are all defective. With respect to certain alleged wrongful conduct, defendants contend that there is no allegation that the acts occurred during the duration of Muhlenfeld's fiduciary duty to First American to support a cause of action. Defendants also contend that other allegations were not pleaded with sufficient specificity to survive a motion to dismiss.

We agree with defendants that none of the allegations in question were, as pleaded, sufficient to support a cause of action. Accordingly, we conclude the trial court properly dismissed count III.

On review of the dismissal of a complaint for failure to state a cause of action, the reviewing court must determine the legal sufficiency of the complaint. (Kirk v. Michael Reese Hospital & Medical Center (1987), 117 Ill. 2d 507, 516, 513 N.E.2d 387.) While pleadings are to be liberally construed, that does not lessen the obligation of the plaintiff to set out facts necessary for recovery under the theory asserted in the complaint. (Kirk, 117 Ill. 2d at 516, 513 N.E.2d at 391.) A pleader is required to set out the ultimate facts that support his cause of action. (Estate of Johnson v. Condell Memorial Hospital (1988), 119 Ill. 2d 496, 509, 520 N.E.2d 37.) A complaint is insufficient if it states mere Conclusions, whether of law or fact. (Wolcowicz v. Intercraft Industries Corp. (1985), 133 Ill. App. 3d 157, 160, 478 N.E.2d 1039.) ...


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