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04/29/94 ESTATE MYRTIE RECTOR v. VIRGIL L. WILLIAMS

April 29, 1994

ESTATE OF MYRTIE RECTOR, PLAINTIFF-APPELLANT,
v.
VIRGIL L. WILLIAMS AND LINDA C. WILLIAMS, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. Honorable James Sullivan & Leonard Levin, Judges Presiding.

Giannis, McNamara, Rakowski

The opinion of the court was delivered by: Giannis

JUSTICE GIANNIS delivered the opinion of the court:

In 1984 Myrtie Rector, plaintiff's decedent, filed a two-count complaint in the circuit court of Cook County. The complaint sought recovery of damages from defendants Virgil and Linda Williams for the alleged breach of a written settlement agreement and for fraud in the inducement of an earlier agreement. Linda Williams failed to appear and a default judgment was entered against her. A jury subsequently found in favor of defendant Virgil Williams on both counts of plaintiff's complaint and the court entered judgment. Linda Williams subsequently appeared and had the judgment against her set aside. Linda Williams proceeded to jury trial on plaintiff's complaint. During the course of the trial, however, the court directed a verdict in her favor. Plaintiff now appeals.

Background

On July 12, 1978, Myrtie Rector filed a suit in the Superior Court of the State of California. In the suit, Rector claimed that her nephew, defendant Virgil Williams, and his wife, defendant Linda Williams, defrauded her of two pieces of property located in San Francisco. The parties have referred to the properties as the Divisadero Street and Broderick Street properties. Specifically, Rector alleged that defendants induced her to deed the properties to them by making materially false and fraudulent representations. She also alleged that the Divisidero property had been sold by the defendants and that they had retained the proceeds of the sale. She also alleged that the Broderick property had been used to secure a loan from the National Bank of Joliet and that the majority of this this debt remained outstanding.

The parties settled the California suit. On August 6, 1979, defendants and Rector signed a document entitled "General Release of All Claims." The terms of the settlement were detailed in a subsequent "Settlement Agreement" signed in connection with the release. This document, also signed by the National Bank of Joliet, stated that the Divisidero and Broderick properties had been held in trust for Rector by the defendants. The agreement provided that the defendants would deliver a note to Rector in the amount of $35,711.42 (the amount of the proceeds from the sale of the Divisadero property). The defendants also agreed to execute a deed conveying the Broderick property back to Rector and that Rector would then sell the property. Defendants agreed that they would then deliver a note to Rector in an amount equal to the amount paid to the bank to release the Broderick mortgage. Although the Settlement Agreement states that it was executed on October 17, 1979, it also indicates that it was signed simultaneously with the General Release of All Claims which is dated August 6, 1979. The parties dispute when the 1979 settlement agreement was actually executed.

On October 17, 1979, before the Broderick property had been sold, defendants filed a joint petition in the United States Bankruptcy Court. In the petition, defendants listed various debts totalling over $600,000. Defendants specifically scheduled the Divisidero debt to Rector ($35,711.42), but omitted scheduling their obligations regarding the Broderick property.

On December 19, 1979, Rector filed two adversary complaints in the bankruptcy court objecting to the discharge of the $35,711.42 note and alleging fraud with regard to the Settlement Agreement. In Adversary Complaint No. 79 A 0094, Rector stated that she was the former owner of both the Broderick and Divisadero properties; that in May of 1977 Rector signed grant deeds giving up certain rights to both properties; that these deeds were fraudulently induced; that defendants had indebted Rector's property in the amount of $145,000; that the property was currently subject to at least $118,000 worth of indebtedness; that if the grant deeds were left outstanding Rector would suffer damages in the amount of $300,000; that Rector had filed suit in California to recover the deeds; that this suit was settled in consideration for the release of liens placed upon the Broderick property and for a promissory note in the amount of $35,711.42; that defendants had not removed the liens as promised; and that defendants had delivered the promissory note knowing in advance that the debt would be discharged in bankruptcy.

In her prayer for relief in adversary complaint No. 79 A 0094, Rector asked the bankruptcy court to "determine the respective rights of the parties in and to the properties at 1730 Broderick Street and 1051-53 Divisadero Street." She also asked that the court "restore, to the greatest extent possible, the Plaintiff to her position, relating to the aforesaid properties." In the alternative, the adversary complaint sought $300,000 as compensatory damages and $300,000 as punitive damages.

On May 15, 1980, the parties entered into a second Settlement Agreement. As part of this settlement, defendants executed and delivered an installment note in the principal amount of $36,900 bearing interest at 9%. On August 5, 1980, an Agreed Settlement Order was entered in the United States Bankruptcy Court. The second Settlement Agreement is incorporated by reference in this order and the order dismisses adversary complaint 79 A 0094 "with prejudice."

On June 18, 1981, the Broderick property was sold.

In 1984, Rector filed suit, the subject of this appeal, in the circuit court of Cook County. In count I of her complaint, Rector alleged that defendants were obligated under the 1979 Settlement Agreement to execute a note on June 18, 1981, the date of sale for the Broderick property, in the amount of $109,931.81. In count II, Rector alleged that representations made in the 1979 Settlement Agreement were false and fraudulently made. Rector sought $109,931.81 in compensatory damages for defendants' failure to execute the note required by the 1979 Settlement Agreement as well as $250,000 in punitive damages.

Defendants thereafter filed a motion for involuntary dismissal under section 2-619 of the Code of Civil Procedure (see 735 ILCS 5/2-619 (West 1992).) In the motion, defendants claimed that Rector's claims were settled by the 1980 Settlement Agreement and by the 1979 "General Release of All Claims." They also argued that any obligation they had to deliver a note ...


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