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08/08/94 NORMAN GLASSBERG v. IRA

August 8, 1994

NORMAN GLASSBERG, PLAINTIFF-APPELLEE,
v.
IRA, TED AND LEROY WARSHAWSKY, DEFENDANTS, AND JORDAN AND LLOYD STEIN, THE 1030 BUILDING PARTNERSHIP AND AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, NOT PERSONALLY BUT AS TRUSTEE UNDER TRUST AGREEMENT DATED SEPTEMBER 10, 1985, AND KNOWN AS TRUST NO. 65480, DEFENDANTS-APPELLANTS. IRA WARSHAWSKY, TED WARSHAWSKY AND LEROY WARSHAWSKY, THIRD-PARTY PLAINTIFFS, AND THE 1030 BUILDING PARTNERSHIP, THIRD-PARTY PLAINTIFF-APPELLANT, V. WILLIAM KRITT D/B/A WILLIAM KRITT & COMPANY, THIRD-PARTY DEFENDANT-APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE JOHN HOURIHANE, JUDGE PRESIDING.

Released for Publication September 13, 1994.

Campbell, O'connor, Jr., Manning

The opinion of the court was delivered by: Campbell

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Defendants Jordan and Lloyd Stein and the American National Bank and Trust Company as trustee under a trust agreement dated September 10, 1985, known as Trust No. 65480 ("the Stein defendants") and the 1030 Building Partnership ("1030") appeal orders of the circuit court of Cook County granting judgment on the pleadings to third-party defendant William Kritt d/b/a William Kritt & Company ("Kritt"), thereby entitling Kritt to a broker's commission in a real estate transaction that formed the basis of underlying litigation involving plaintiff Norman Glassberg, defendants Ira, Ted and Leroy Warshawsky and the 1030 Building Partnership ("the Warshawsky defendants"), and the Stein defendants.

The record on appeal indicates the following facts. On October 2, 1985, Glassberg filed a complaint alleging that the Warshawskydefendants agreed to sell Glassberg an improved property located at 1030 North Avenue; a copy of said contract was attached as an exhibit to the complaint. On February 18, 1986, Glassberg filed an amended complaint that also named the Stein defendants. The amended complaint alleged that while the contract between Glassberg and the Warshawsky defendants contained a closing date of September 1, 1985, the parties orally agreed to extend the closing date to October so that Glassberg could finance the purchase with industrial revenue bonds. Glassberg alleged that the Warshawsky defendants breached the oral agreement by declaring Glassberg in default on September 7, 1985. Glassberg further alleged that the Warshawsky defendants sold the property to the Stein defendants in September 1985. Glassberg sought specific performance of the contract with the Warshawsky defendants and sought damages from the Stein defendants for tortious interference with contract.

The defendants filed their answers, denying the material allegations of the amended complaint. On March 24, 1986, the Warshawsky defendants filed a third-party complaint against Kritt, the broker that represented the Warshawsky defendants in their dealings with Glassberg. The Warshawsky defendants alleged that the Kritt's agent violated instructions by granting an extension of the closing date. The Warshawsky defendants also alleged that Kritt refused to remit earnest money held in connection with the Glassberg contract. Kritt later filed an answer denying that it had violated instructions or exceeded authority regarding the closing date.

On November 10, 1988, the trial court entered an order finding against Glassberg on the claim of tortious interference with contract, but granting Glassberg specific performance of his contract with the Warshawsky defendants. The trial court also found in favor of Kritt on the third-party complaint. The trial court further ruled that the Stein defendants were entitled to a credit from Glassberg in the amount of the fair market value of improvements to the property less the fair market value of rent. The parties then continued to dispute the amount of the Stein defendants' credit until June 1990, when the parties agreed to settle the case.

The parties attempted to effectuate a like-kind exchange, but were unsuccessful in reaching an agreement. The parties ultimately agreed that the Stein defendants would pay Glassberg 1.4 million dollars by January 2, 1991. Glassberg filed a motion to enforce the settlement agreement on January 9, 1991. The trial court entered orders on January 23, 1991, indicating that the case had been settled and that Glassberg and the Stein defendants agreed to dismissal of the case with prejudice.

On January 28, 1991, Kritt filed a petition to modify or vacate the order of dismissal. Kritt claimed that it was entitled to a broker's commission based on the trial court's November 10, 1988, order granting Glassberg specific performance of the contract. On January 30, 1991, the trial court entered an agreed order granting Kritt leave to file a petition for payment of the commission. On January 31, 1991, Kritt filed a petition for payment of the commission, requesting a Disposition of the earnest money as well as judgment against plaintiff and defendants for the amount of the commission.

Glassberg filed a response that denied that the property had been conveyed under the November 10, 1988, order. The Stein defendants filed a motion to dismiss Kritt's petition, arguing that: (1) Kritt was not a party to the action; (2) Kritt did not file its petition until after the case had been dismissed with prejudice; and (3) the petition asserted no basis for collecting from the Stein defendants. On June 12, 1991, Kritt filed an amended petition that claimed the Stein defendant were liable for the commission under an indemnity agreement between the Stein defendants and the Warshawsky defendants; the indemnification agreement was attached as an exhibit to the amended petition.

On September 4, 1991, Kritt moved for judgment on the pleadings against the Warshawsky defendants, arguing that they had not denied the allegations of the petition for payment. The Warshawsky defendants filed a response that denied they breached the real estate contract and argued that the November 10, 1988, order was a nullity. On October 30, 1991, the trial court entered judgment in favor of Kritt and against the Warshawsky defendants in the amount of $51,000, but reserved the issue of prejudgment interest and stayed execution of the judgment pending further order of the court.

On December 16, 1991, the Warshawsky defendants filed a petition for indemnification from the Stein defendants. Relying on the settlement agreement, the Stein defendants responded that if any commission was due, it should be paid from the earnest money, with the balance going to the Warshawsky defendants. The Stein defendants' response indicates that the amended settlement agreement, entered into following the Stein defendants' initial failure to pay the settlement, expressly excluded claims involving Kritt and the Disposition of the earnest money, but stated that this portion of the amended agreement was not bargained for nor expressly disclosed (though the Stein defendants also indicated that they were not impugning the motive of Glassberg's counsel, who drafted the amended agreement).

On April 7, 1992, the trial court issued a memorandum opinionand order indicating that Glassberg was entitled to the earnest money and that the Stein defendants were required to indemnify the Warshawsky defendants for the full amount of the commission due to Kritt. On April 14, 1992, Kritt filed a motion to modify the April 7, 1992, order, requesting prejudgment interest and requesting that judgment for the commission be entered directly against the Stein defendants. The Stein defendants responded that judgment was improper because they were not in privity with Kritt and because the judgment rested on the November 10, 1988, which the Stein defendants claim merged with the January 23, 1991, order by operation of law. The Stein defendants also contended that an award of prejudgment interest was not warranted by contract or statute.

On October 5, 1992, the trial court denied Kritt's request for prejudgment interest, but entered judgment in favor of Kritt and against the Stein defendants in the amount of $51,000. The Stein defendants filed a timely notice of appeal from the April 7, 1992, and ...


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