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January 18, 1994


Appeal from the Circuit Court of Cook County. Honorable John Hourihane, Judge Presiding.

Rehearing Denied March 2, 1994. Released for Publication April 19, 1994.


The opinion of the court was delivered by: Hartman

JUSTICE HARTMAN delivered the opinion of the court:

Plaintiff, Gus Stathis, brought this action to recover damages from defendants, Geldermann, Inc. and Geldermann Securities Inc. (GSI) (collectively Geldermann), for the conversion of his property and conspiracy to usurp a corporate opportunity. The circuit court granted Geldermann's motion for summary judgment from which plaintiff appeals. The issues raised are whether summary judgment was properly entered for Geldermann on the conversion and conspiracy charges in consideration of the deposition testimony, documents, and answers to interrogatories presented. The following facts were derived from deposition testimony and documentary evidence.

Plaintiff, his son, James Stathis, and James' business partner, John Martorello, formed Star Clearing, an Illinois general partnership. The partnership was to engage in the business of providing clearing services and floor brokerage in connection with the purchase and sale of equity stock options on the Chicago Board of Options Exchange (CBOE). Two corporate partners, Star Clearing, Inc. and Scorpio, Inc. were established to be mechanisms through which the Star Clearing partnership was to be funded. Plaintiff's capital loans and contributions totaling $1,090,000 to Star Clearing and the entities which controlled Star Clearing comprised the entire capital investment of the partnership. Plaintiff was also an officer, director, and the controlling shareholder of both partner corporations, owning the voting preferred stock. James and Martorello personally guaranteed repayment of the loans plaintiff made to fund Star Clearing and both appointed plaintiff as their proxies with respect to their voting stock in Star Clearing, Inc. and Scorpio, Inc.

James was designated as the manager and supervised the day-to-day management of the options clearing business for Star Clearing, subject to the vote of the voting partners. His duties and limitations of power were prescribed by the partnership agreement. Specifically, the manager was denied power or authority to do the following things without prior unanimous vote of the voting partners: dispose of the partnership's good will, perform any act which would make it impossible to carry on the ordinary business of the partnership, confess a judgment against the partnership, materially affect the business or assets of the partnership, and authorize any action the result of which would be to (1) merge, consolidate, agree to merge, or agree to consolidate the partnership into or with any other business entity; (2) liquidate, reorganize, or recapitalize the partnership oradopt any plan to do so; (3) make or cause the partnership to become a party to any contract or commitment outside of the ordinary course of business; (4) sell, agree to sell, or otherwise dispose of all or substantially all the assets of the partnership; and (5) otherwise materially affect the business or assets of the partnership.

Kevin Mack, president of Geldermann, Inc., testified that Geldermann was looking for potential acquisitions of clearing houses to clear trades on the CBOE. Mack, unsuccessful in spearheading a drive to acquire several clearing house companies, directed Dennis Zarr, a Geldermann vice president, to search for a CBOE firm that could clear business for Geldermann. Star Clearing became the object of negotiations. Zarr met with James and told him that Geldermann had $125 million to commit for CBOE operations. James told Zarr that Star needed capital to replace plaintiff's loans and investments.

Plaintiff disapproved of the manner in which Star Clearing's business was being conducted and was concerned about his $1,090,000 investment. On being advised of Geldermann's interest in Star Clearing, plaintiff wrote a letter to James, dated April 11, 1986, authorizing negotiations with Geldermann "on behalf of my interest" for a deal which "would be beneficial to all concerned." It stated that "whatever deal you may or may not conclude, I will abide by it and I am obligated to accept." The evidence revealed that Geldermann neither had knowledge of this letter nor did it request that such a letter be written.

Plaintiff testified that the purpose of the letter was to negotiate and report back to me." He believed that the company could not be sold "without resolutions and signing away the company." He gave the letter to authorize negotiations because "I own the company," but the letter by itself "didn't sign the company over."

On July 22, 1986, after further meetings, Zarr sent a memo to Mack concerning his meeting at Star Clearing, informing Mack that the "principals" would consider a joint venture and/or buy-out. He told Mack that he would like to set up a meeting with the "Star Clearing owners" if Mack was in agreement. Zarr arranged a meeting with Salvatore Caputo, another Geldermann vice-president, Mack, Martorello, and James on August 26, 1986. Zarr testified that,

"I wanted [Mack] to meet Jim Stathis and John Martorello. It was my understanding that they had to pay their [sic] father back the money he lent them to run the company."

Zarr was told that,

"they had to pay the capital back that was lent to them by their [sic] father and that he was very, very adamant about, I mean he had to get that money out."

Zarr stated that "they were trying to get Geldermann to put capital in so that they could pay it back."

Subsequently, Mack met at dinner with Caputo, Zarr, James, and Martorello. At this meeting, James told the Geldermann people that if they wanted Star Clearing, they would have to pay enough to return to plaintiff the money that he loaned to or invested in Star Clearing plus $100,000. Mack said that this was no problem. James wanted $10 million in cash and a $10 million line of credit. Mack said that this would be no problem.

After the dinner meeting, Zarr and Caputo went to see James and Martorello. Zarr made notes during the meeting, which included the following.

"Must replace his father's capital of $980,000 before deal is signed. This is very important and non-negotiable. * * * What if deal does not work out - Star Clearing has lost [its] name and customers to Geldermann - Geldermann wins - Star Loses."

Zarr believed that thereafter "our lawyers got involved and the accountants got involved."

A letter of intent was drafted, the final draft dated November 11, 1986, which stated, in part:

"This letter outlines the basic points of our Discussion of the Star facilities and personnel to become part of Geldermann, Inc. This letter is subject to preparation of a definitive agreement and approval of the Geldermann Board of Directors and ConAgra, Inc., if necessary."

Zarr testified that Geldermann's focus was to get into the business itself rather than developing a clearing house that it would trade through. James seemed to offer the opportunity to do this faster ...

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