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08/08/95 DREMCO v. SOUTH CHAPEL HILL GARDENS

August 8, 1995

DREMCO, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,
v.
SOUTH CHAPEL HILL GARDENS, INC., AN ILLINOIS CORPORATION, DEFENDANT, AND HARTZ CONSTRUCTION COMPANY, AN ILLINOIS CORPORATION, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Lester D. Foreman, Judge Presiding.

Petition for Leave to Appeal Denied December 6, 1995.

The Honorable Justice Hartman delivered the opinion of the court: Scariano, P.j., and DiVITO, J., concur.

The opinion of the court was delivered by: Hartman

JUSTICE HARTMAN delivered the opinion of the court:

This suit arose when Hartz Construction Company (Hartz) purchased 13.8 acres of land for itself near a parcel that it was developing jointly with Dremco, Inc. (Dremco). Dremco appeals from the circuit court's order granting summary judgment in favor of Hartz on Dremco's claim for breach of fiduciary duty and its request for imposition of a constructive trust, questioning whether the court misapplied the corporate opportunity doctrine.

In 1986, Dremco and Hartz entered into a joint venture agreement, known as the Laramie Square IV Joint Venture (Square IV venture), for the purpose of acquiring and developing a 33 acre plot of land located at the northwest corner of 122nd Street and Laramie Avenue in Alsip, Illinois (Laramie property). The Square IV venture was specifically limited to the Laramie property and would terminate upon "the completion of construction of the buildings on the property and the sale of all the property, unless sooner terminated by agreement of the parties."

In late 1988, Dremco sought to purchase approximately 40 acres of undeveloped land, located less than one mile from the Laramie property, from South Chapel Hill Gardens, Inc. (SCI), a cemetery operator. Dremco approached Hartz to determine if it was interested in this property, and they agreed to purchase and develop it as an additional tract of land under the Square IV venture. Paragraph 7.1(g) of the Purchase and Sale Agreement (Purchase Agreement) for the 40 acres provides that if the purchaser elects to annex the property to the village of Oak Lawn, SCI would join the petition and seek annexation of the remainder of its cemetery property located north of and contiguous to the 40 acres. Paragraph 7.1(g) does not grant anyone an option to purchase SCI's remaining cemetery property.

Subsequently, a number of disagreements arose between the parties in connection with the Square IV venture, resulting in several lawsuits. In May 1992, Dremco and Hartz signed a letter of intent to resolve their differences and executed a settlement agreement in August 1992, dividing the jointly held properties so that the parties could go their separate ways. Pursuant to the settlement agreement, Hartz would build and complete the sale of the remaining single family lots and the sale of all model homes at the Laramie property for a $10,000 fee for each lot and home; the balance of the proceeds of each sale would be shared equally. The parties divided the 40 acres in half, with Dremco acquiring title to the western 20 acres and Hartz gaining title to the eastern 20 acres.

On August 31, 1992, Hartz purchased a 13.8 acre parcel of land from SCI that was part of the remaining cemetery property located immediately north of the 40 acres purchased by the Square IV venture in 1988. On September 23, Dremco filed a complaint for specific performance, declaratory judgment, and an injunction and subsequently sought imposition of a constructive trust, claiming that Hartz breached its fiduciary duty by usurping a corporate opportunity.

After completing discovery, Hartz moved for summary judgment, contending that the Square IV venture did not prohibit it from purchasing and developing the 13.8 acres and that the Square IV venture was in the process of dissolution at the time Hartz agreed to purchase the 13.8 acres. Dremco responded with a cross-motion for summary judgment, alleging that the Purchase Agreement's reference in paragraph 7.1(g) to the cemetery property north of the 40 acres made the 13.8 acre parcel a joint venture opportunity. Dremco also posited that Hartz discovered the opportunity only through the expenditure of joint venture funds. The circuit court granted Hartz's motion for summary judgment, stating that it had "read everything that you have submitted" and finding that paragraph 7.1(g) of the Purchase Agreement unambiguously refers "solely to an obligation on the part of the cemetery relative to their property." The court concluded:

"It is in my opinion an unreasonable extension of the doctrine being contended for by Dremco to suggest that because there is reference in 7.1(G) to the cemetery property, the property being retained by the seller, that that suggests that that property or any portion of it was a contemplated opportunity or an opportunity that devolved upon the joint venture. Having found that this is an unambiguous paragraph and that the contract is unambiguous, I cannot rely upon the interpretations or suggestions as to meaning by the parties here. Accordingly I find that Hartz, the defendant, has not violated any opportunity here."

Dremco timely filed this appeal.

I

Dremco identifies error in the grant of summary judgment for Hartz because the circuit court limited its analysis of the breach of fiduciary duty/corporate opportunity claim to the four corners of the Purchase Agreement. Relying upon Graham v. Mimms (1982), 111 Ill. App. 3d 751, 444 N.E.2d 549, 67 Ill. Dec. 313, and Labovitz v. Dolan (1989), 189 Ill. App. 3d 403, 545 N.E.2d 304, 136 Ill. Dec. 780, appeal denied (1990), 129 Ill. 2d 564, Dremco asserts the court was required to examine extrinsic evidence ...


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