Bandringa, 20 Ill. 2d 167, 174, 170 N.E.2d 116 (Ill. 1960). In addition, the counter-defendants maintain that Childers defrauded them in connection with the Pine Street transaction, and that Charles' action in refusing payment on the mortgage was his effort to mitigate damages in the face of fraud. Both of these arguments, however, rely upon the allegations of the complaint, rather than the counterclaim, and are factually disputed by Childers. Because we are limited to the face of the counterclaim in considering the present motion, see Refco, Inc. v. Troika Inv. Ltd., 702 F. Supp. 684, 685 n.2 (N.D. Ill. 1988), the Terrells' first two arguments are inapposite, at least at this juncture.
Counter-defendants next assert that the partnership agreement resulted in an automatic forfeiture of any partner's interest if that partner failed to make the required payment on three occasions. The Terrells point to the allegation that various partners were not able to make all of their payments when due in the late 1980s, and assert that the partnership therefore dissolved by operation of law, terminating any fiduciary obligations between partners. See 805 ILCS 205/31(d) (partnership dissolves as a matter of law by the expulsion of any partner). However, the counterclaim merely states that "certain of the investors encountered financial difficulties which resulted in their not being able to make all of their payments when due." Countercl. P 7. Reading this allegation in the light most favorable to the counter-plaintiff, it is possible that no single investor failed to make more than two payments. Under these facts, there would be no forfeiture of partnership interest and no automatic dissolution of the partnership,
and therefore no termination of fiduciary duties. Accordingly, the Terrells are not entitled to dismissal on this ground.
Finally, the Terrells assert that the partnership agreement includes a "confession of judgment" clause, which provides a means by which delinquent payments may be collected from a partner. However, the clause does not state that it provides an exclusive remedy for failure to make payments, and the Terrells cite no authority for the proposition that such a clause preempts other causes of action, including a claim for breach of fiduciary duty. In short, because we find the Terrells' arguments unconvincing, we deny their motion to dismiss Count I of the amended counterclaim.
B. Motion to Strike
Defendants have moved to strike six paragraphs of the amended complaint. The first five relate to how JoAnn Childers reported her income and expenses on her income tax returns. While defendants acknowledge that the income may be relevant to plaintiffs' action (and have therefore not moved to strike the paragraphs which allege receipt of that income), they assert that the additional allegations regarding her reporting of that income are irrelevant. We disagree. The allegations at issue relate not only to JoAnn Childers' receipt of the income, but also to her accountants' knowledge of Childers' participation in the alleged scheme to defraud the Terrells. Because the accountants are also defendants in the present action, we conclude that the allegations are relevant to their knowledge of and participation in the alleged wrongdoing.
Defendants also maintain, however, that these allegations are prejudicial because they suggest that defendants engaged in incorrect reporting or income tax evasion. While we are not convinced that the paragraphs import such a suggestion, we are confident that a limiting instruction will eliminate any danger of prejudice. See Fed. R. Evid. 105. Accordingly, defendants motion to strike paragraphs 75(a), 75(b), 100(g), 100(h), and 104 is denied.
Finally, defendants move to strike paragraph 165B, which states:
On November 24, 1992, the United States District Court for the Northern District of Illinois found that Keith Hernandez, a first baseman for various major league teams, alleged a triable claim for fraud against Jack Childers and TSI as a result of an investment recommendation in 1980.
Defendants maintain that this allegation is both irrelevant and prejudicial. We agree. Plaintiffs maintain that the allegation supports their assertion that defendant were engaged in an ongoing scheme to defraud TSI clients. However, all the paragraph supports is a finding that another TSI client was able to file a lawsuit which survived a motion to dismiss. Absent a ruling for Hernandez on the merits (or proof of the merits of Hernandez' claim in the present lawsuit), the Hernandez action is of limited relevance. Furthermore, it is highly prejudicial, in that it might suggest to a jury that defendants actually perpetrated a fraud against Hernandez. Given these considerations, we agree with defendants that paragraph 165B is improper, and therefore grant their motion to strike that paragraph. See Simmons v. John F. Kennedy Med. Ctr., 727 F. Supp. 440, 441 (N.D. Ill. 1989) (irrelevant and prejudicial allegations may be stricken).
C. Motion for Collateral Estoppel
Finally, plaintiffs move for a finding of collateral estoppel against TSI and John Childers. They seek to introduce at trial the findings of the United States District Court from the Middle District of Florida in Jones v. John Childers and Talent Services, Inc., 1992 U.S. Dist. LEXIS 19430, No. 88-85-Civ-T-22C, and to prevent Childers and TSI from relitigating these findings.
In Jones, the court concluded, after a bench trial, that the defendants had defrauded their client, a professional football player, in connection with certain investments.
Plaintiffs assert that these findings support their claim that defendants John Childers and TSI engaged in a pattern of racketeering activity, an element of their federal RICO claim, and are therefore entitled to preclusive effect. As the Second Circuit stated in Metromedia Co. v. Fugazy, 983 F.2d 350 (2nd Cir. 1992):
The doctrine of collateral estoppel, or issue preclusion, bars a party from relitigating in a second proceeding an issue of fact or law that was litigated and actually decided in a prior proceeding, if that party had a full and fair opportunity to litigate the issue in the prior proceeding and the decision of the issue was necessary to support a valid and final judgment on the merits.