Appeal from the Circuit Court of Cook County. Honorable Irwin Cohen, Judge Presiding.
Rehearing Denied March 18, 1994. Released for Publication April 19, 1994.
The opinion of the court was delivered by: Theis
JUSTICE THEIS delivered the opinion of the court:
Basil Pyshos originally filed this action against Heart-Land Development Company ("Heart-Land") in 1982 to recover an earnest money deposit. On June 9, 1987, the parties agreed to the entry of a judgment against Heart-Land in the amount of $20,000 plus costs. The plaintiff then initiated supplementary proceedings and subsequently filed a petition for turnover and to pierce the corporate veil. After a hearing, the trial Judge granted the plaintiff's motion for summary judgment and pierced the corporate veil, entering ajudgment against the supplementary defendants Koloms and McLinden, the shareholders and directors of Heart-Land. The defendants appeal from the lower court's decision to grant the plaintiff's motion for summary judgment. We conclude that the allegations which must be raised to support a petition to pierce the corporate veil do not fall within the limited scope of the inquiry in supplementary proceedings. For that reason, we now reverse the decision of the trial court to grant summary judgment on the issue of piercing the corporate veil and remand this case for further proceedings consistent with this opinion.
A review of the record in this case reveals that Heart-Land was an Illinois corporation whose purpose was to acquire real estate and build small apartment buildings which would be sold to the public. At the time at which it stopped doing business, the sole shareholders and directors of Heart-Land were Harvey Koloms and William McLinden. From an affidavit made part of the record, it appears that Heart-Land had acquired two parcels of land and intended to construct 32 apartment buildings on this land. It was asserted that the first eight apartment buildings sold quickly; however, after these sales, interest rates began to rise and Heart-Land had difficulty securing additional buyers.
The plaintiff, Basil Pyshos, was one of the individuals who entered into purchase agreements with Heart-Land. When he could not obtain financing in accordance with the terms of the agreements, he attempted to void the contracts and to secure a return of the $20,000 which he had deposited as earnest money. Apparently, Heart-Land never returned the money to the plaintiff.
The plaintiff commenced these proceedings in 1982 by filing a two-count complaint. That complaint named numerous parties as defendants, including Heart-Land, Koloms and McLinden. In count I of the complaint, it was alleged that Pyshos had entered into the Richton Trail Purchase Agreement with Heart-Land for the purchase of Lot 11 in Richton Trail Apartments. In count II of the complaint, it was alleged that Pyshos had entered into a purchase agreement with Heart-Land for the purchase of Lot 24 in Richton Trail Apartments. (The complaint asserted that, by agreement of the parties, this was subsequently changed to the purchase of Lot 12.)
The complaint further alleged that Pyshos had given to Heart-Land a $10,000 cashier's check to be used as an earnest money deposit for the purchase of Lot 11. To secure the purchase of Lot 24 (later changed to Lot 12), Pyshos had given to Heart-Land a total of $10,000 which was, again, to be used as an earnest money deposit.
The purchase agreements, both of which were attached to the complaint, were dated May 14, 1978. Each of the purchase agreements indicated that enforcement of the contracts was contingent upon the plaintiff securing financing with the following terms: Within 30 days, the plaintiff was to secure a firm commitment for a mortgage in the amount of $140,400 with interest not to exceed 9 1/2% for a term of 29 years, or any other terms which the plaintiff accepted. If the plaintiff could not secure financing within that 30-day period and so notified the seller of the property, Heart-Land, the purchase agreement provided that the contract would become void and the earnest money would be returned to the plaintiff. The purchase agreement also provided that the seller, upon receiving such notice, had an additional 30 days within which it could attempt to secure the financing on behalf of the plaintiff and the contract would then remain in effect.
The complaint asserted that the plaintiff had not been able to secure such a loan and that the plaintiff had informed Heart-Land of this several times. It was further alleged that the plaintiff had asked Koloms, McLinden and Heart-Land to secure the necessary financing themselves. On several occasions, the complaint alleged, the plaintiff had elected to declare the purchase agreement void because of the inability of any of the parties to secure the necessary financing and had demanded the return of his earnest money deposits. The complaint sought actual and punitive damages.
The plaintiff then sought leave to file an amended complaint and subsequently filed an amended complaint which named Koloms, McLinden and Heart-Land, as well as other parties, as defendants and alleged much of the same factual background as the original complaint. The amended complaint was stricken and dismissed. The plaintiff then filed a second-amended complaint. As to Koloms, McLinden and Heart-Land, this complaint was also stricken and dismissed.
The plaintiff then filed a third-amended complaint. The trial court dismissed all of the defendants named in the complaint except Heart-Land and entered an order that the plaintiff had leave to file an amended ...