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10/25/96 DOWD AND DOWD v. NANCY J. GLEASON

October 25, 1996

DOWD AND DOWD, LTD., PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
NANCY J. GLEASON, DOUGLAS G. SHREFFLER, AND GLEASON, MCGUIRE AND SHREFFLER, DEFENDANTS-APPELLEES AND CROSS-APPELLANTS.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. No. 91 CH 6767. Transferred to Law. THE HONORABLE KENNETH GILLIS, JUDGE PRESIDING.

Released for Publication December 10, 1996.

The Honorable Justice Cousins delivered the opinion of the court. McNULTY, P.j., and Gordon, J., concur.

The opinion of the court was delivered by: Cousins

The Honorable Justice COUSINS delivered the opinion of the court:

Defendants, Nancy J. Gleason (Gleason) and Douglas Shreffler (Shreffler) were former officers and directors of the plaintiff law firm, Dowd & Dowd. Gleason and Shreffler left the firm and started their own firm, Gleason, McGuire and Shreffler (GMS). On July 25, 1991, plaintiff filed a suit against Nancy Gleason, Douglas Shreffler and GMS for, inter alia, breach of fiduciary duties, breach of employment contract and conspiracy. Gleason and Shreffler filed a motion for summary judgment and filed a counterclaim for amounts due under a stock purchase agreement and for sanctions pursuant to Supreme Court Rule 137 (134 Ill. 2d R. 137). After transfer of the case from the chancery division to the law division, Judge Kenneth Gillis entered summary judgment in favor of Gleason and Shreffler on the stock purchase count of their counterclaim and granted in part and denied in part their motion for summary judgment against plaintiff's claims. He also denied the motion by defendants for sanctions. As to count I, breach of fiduciary duty, Judge Gillis certified a question pursuant to Supreme Court Rule 308(a) as to whether plaintiff stated a cause of action against Gleason and Shreffler. On appeal, plaintiff contends that the trial court erred by: (1) considering defendants' motion for summary judgment because a previous judge had already denied the same motion; (2) making findings of fact in granting the motion for summary judgment; (3) weighing the credibility of the witnesses; (4) dismissing GMS as a party defendant; (5) ruling that Gleason and Shreffler did not breach the terms and conditions of their employment agreements; and (5) ruling that plaintiff was obligated to repurchase the shares of stock owned by Gleason and Shreffler. On cross-appeal, defendants contend that the trial court erred by: (1) denying their motion for summary judgment against count I of plaintiff's second amended complaint; and (2) denying their Rule 137 motion for sanctions.

BACKGROUND

Dowd & Dowd is a professional legal corporation. Michael Dowd (Dowd) was the senior partner in the firm and controlled 54.1% of the corporation's stock. When Gleason and Shreffler left Dowd & Dowd on December 31, 1990, ownership of shares in the firm was: Michael Dowd, 35 shares; Nancy Gleason, 10 shares; Kenneth Gurber, 10 shares; Robert Yelton III, 10 shares; Douglas Shreffler, 7 shares. However, Dowd had asked for and received from each of the other shareholders a proxy giving him the power to vote one of that shareholder's shares. Thus, Dowd could vote 39 shares, while the other partners, combined, could vote 33.

In the late 1970s, Northbrook Excess and Surplus Insurance Company, a subsidiary of Allstate Insurance Company (Allstate), retained plaintiff for advice on insurance coverage for claims that were being made against Allstate's policyholders for injuries arising from exposure to asbestos products. After Gleason joined Dowd & Dowd in 1977, she worked on the Allstate files, and during the next 13 years, she became the primary person to whom Allstate's claim executives looked for counsel on asbestos and other environmental insurance coverage matters. By 1990, plaintiff's revenues from Allstate exceeded $6 million, which represented approximately 58% of the firm's revenues. At that time, approximately 12 of plaintiff's 25 attorneys practiced almost exclusively for Allstate.

At a Dowd & Dowd meeting on September 25, 1990, Michael Dowd announced that he was unilaterally making his son, Patrick, a partner, promoting him over Judith Gleason and another associate, Lawrence Szymanski, both of whom were senior to Patrick Dowd. Following Dowd's appointment of Patrick Dowd, Gleason, Shreffler and Judith Gleason began investigating the possibility of establishing a new, separate law firm, and by early November 1990, they decided to take preliminary steps to form their own law firm.

By December 1990, GMS had located office space, ordered furniture and equipment and initiated a banking relationship with the Harris Bank. On December 31, 1990, Gleason and Shreffler resigned from Dowd & Dowd and, with Philip McGuire and Judith Gleason, started the GMS law firm. On that day, Gleason and Shreffler went to Michael Dowd's home and informed him of their resignations as officers and directors of Dowd & Dowd.

Plaintiff filed a second amended complaint on June 10, 1993. It contained seven counts: (1) breach of fiduciary duty; (2) breach of employment contract; (3) interference with prospective advantage; (4) interference with contractual relationship with employees; (5) interference with contractual relationships with clients; (6) civil conspiracy; and (7) willful and wanton conduct. Relief sought included compensatory damages (measured by revenue generated by GMS through January 1, 1993, from clients formerly represented by Dowd & Dowd or net profits lost by Dowd & Dowd for those clients, whichever was larger), punitive damages, an accounting, a constructive trust on all revenue received by GMS for two years beginning with the entry of judgment, and recovery of bonuses and salaries paid to Gleason, Shreffler and others who had joined GMS from September through December 1990.

On July 30, 1993, defendants filed a motion for judgment on the pleadings or, alternatively, for summary judgment, pursuant to sections 2-615 and 2-1005 of the Code of Civil Procedure. 735 ILCS 5/2-615; 2-1005 (West 1992). On December 10, Judge Foreman denied in part and granted in part defendants' motion and also ordered that defendants answer the viable counts.

On February 14, 1994, defendants filed their answer, along with a jury demand, affirmative defenses and a verified counterclaim. Counts I, III and IV were directed against both Dowd & Dowd and Michael Dowd personally. Count I alleged Dowd breached his fiduciary duties to the minority shareholders of the firm, count III was for interference with prospective advantage, and count IV was for willful and wanton conduct. Count II sought damages against Dowd & Dowd for failure to repurchase plaintiffs' shares in accordance with the share purchase agreement.

On June 6, 1994, defendants once again moved for summary judgment, which the trial court denied. On December 2, 1994, Judge Foreman transferred the cause from the chancery division to the law division, and the case was assigned to Judge Kenneth Gillis. After the assignment, the parties filed cross-motions for summary judgment and defendants filed a motion for sanctions.

After a hearing on the motions on June 26, 1995, Judge Gillis entered a comprehensive judgment order: (1) granting summary judgment in favor of Gleason, McGuire and Shreffler on counts III, VI, and VII of plaintiff's second amended complaint, (2) granting summary judgment in favor of Nancy Gleason for $100,000 and Shreffler for $70,000 on count II of the counterclaim; (3) granting summary judgment in favor of Gleason and Shreffler for count II of plaintiff's second amended complaint; (4) granting plaintiff's motion for summary judgment as to liability on count II; (5) denying Gleason and Shreffler's motion for judgment as to count I, alleging breach of fiduciary duty; (6) granting Gleason and Shreffler's motion for summary judgment as to count III and denying defendants' motion as to count VII; (7) granting Gleason and Shreffler leave to withdraw count III of their counterclaim; and (8) denying defendants' motion for sanctions pursuant to Supreme Court Rule 137 (134 Ill. 2d R. 137).

Plaintiff appeals from the trial court's order, and defendants appeal the trial court's denial of their motion for sanctions and summary judgment on count I, alleging breach of fiduciary duty. As to that issue, Judge Gillis certified a question of law, pursuant to Illinois Supreme Court Rule 308(a), which is the subject of defendants' cross-appeal. This court consolidated the three appeals. We affirm in part; reverse in part and remand for further proceedings consistent with this opinion.

ANALYSIS

Initially, we note that the defendants have filed a motion to impose sanctions under Supreme Court Rule 375 (134 Ill. 2d R. 375) for violating Supreme Court Rule 341 (134 Ill. 2d R. 341) and Rule 3.3(a)(1) of the Illinois Rules of Professional Conduct (134 Ill. 2d R. 3.3(a)(1)). Defendants assert that parts of the "nature of the case" and "statement of facts" sections of plaintiff's brief are argumentative and inaccurate and should be stricken. This motion has been taken with the case. We have considered plaintiff's brief and, although we do not condone argumentative portions of plaintiff's statement of the "nature of the case" and "statement of the facts," plaintiff's violations of Supreme Court Rule 341 (134 Ill. 2d R. 341) are not flagrant and do not warrant sanctions under Supreme Court Rule 375 (134 Ill. 2d R. 375). Ryan v. Katz, 234 Ill. App. 3d 536, 536-37, 600 N.E.2d 1206, 175 Ill. Dec. 748 (1992). Accordingly, we elect to consider the merits of the case.

I

Summary judgment is properly granted when the pleadings, depositions, and affidavits show that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Miller v. Danville Elks Lodge 332, 211 Ill. App. 3d 145, 151, 569 N.E.2d 1160, 155 Ill. Dec. 549 (1991). In making this decision, the trial court may draw inferences from undisputed facts; if reasonable persons could draw divergent inferences from the undisputed facts, the issue should be decided by the trier of fact and the motion should be denied. Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263, 272, 586 N.E.2d 1211, 166 Ill. Dec. 882 (1992). On review, this court reviews the granting of summary judgment de novo -- that is, this court must determine if the trial court correctly decided that no genuine issues of material fact were present. Makowski v. City of Naperville, 249 Ill. App. 3d 110, 115, 617 N.E.2d 1251, 187 Ill. Dec. 530 (1993).

Plaintiff's first arguments on appeal concern the procedure by which the trial court decided this case. Plaintiff contends that Judge Gillis erred in considering the defendants' motions for summary judgment because Judge Foreman already had denied the same dispositive motions. Plaintiff argues that virtually all the facts and arguments relied upon by defendants in the hearing before Judge Gillis were already set forth in the briefs and memoranda considered by Judge Foreman and should not have been reconsidered. We disagree. The Illinois Supreme Court has repeatedly held that the circuit court has inherent power to modify or vacate an interlocutory order granting summary judgment any time before final judgment. Rowe v. State Bank, 125 Ill. 2d 203, 213, 531 N.E.2d 1358, 126 Ill. Dec. 519 (1988); Towns v. Yellow Cab Co., 73 Ill. 2d 113, 121, 382 N.E.2d 1217, 22 Ill. Dec. 519 (1978); Leopold v. Levin, 45 Ill. 2d 434, 446, 259 N.E.2d 250 (1970). However, the supreme court has disapproved of one judge reviewing interlocutory orders entered by another judge where there is evidence of bad faith or "judge shopping" by the party who obtains an adverse ruling. Rowe, 125 Ill. 2d at 214; see People ex rel. Phillips Petroleum Co. v. Gitchoff, 65 Ill. 2d 249, 357 N.E.2d 534, 2 Ill. Dec. 367 (1976). Here, there is no evidence of bad faith on the part of the defendants in renewing their motions for summary judgment. Nor is there evidence of "judge shopping," as the record shows that the cause was assigned to another judge in the ordinary course of judicial reassignment. Therefore, we believe that the trial court acted within the bounds of its authority in ruling on defendants' motion for summary judgment. See Rowe, 125 Ill. 2d at 214; Pack v. Santa Fe Park Enterprises, Inc., 209 Ill. App. 3d 648, 655, 568 N.E.2d 360, 154 Ill. Dec. 360 (1991).

Next, plaintiff contends that the court erred as a matter of law when it made findings of fact in granting the motions for summary judgment. In its order, the trial court found as follows:

"1. That on December 10, 1993, Judge Foreman entered an order dismissing Counts IV and V of the Second Amended Complaint as to all defendants. 2. Plaintiff has offered no credible or admissible evidence that defendants solicited the Allstate account prior to December 31, 1990. 3. That the renting of office space, buying and leasing furniture and equipment, leasing of telephones, copying equipment and the like, establishing banking relationships, the minor use of Dowd & Dowd's office space and supplies to draft letters, obtaining Federal identification numbers and the like are preparatory to setting up a law firm and, as such, under the Veco and Ellis cases, are not actionable."

As stated earlier, a trial court should grant a motion for summary judgment only when no genuine issue of material fact exists. When granting that motion, a trial court resolves only questions of law. By definition, a trial court should deny summary judgment if it must make "findings of fact." Wright v. St. John's Hospital of the Hospital Sisters of the Third Order of St. Francis, 229 Ill. App. 3d 680, 683, 593 N.E.2d 1070, 171 Ill. Dec. 250 (1992). Here, however, we do not believe that the trial court was making findings of fact when it entered the order. We believe that the court made statements which explained its reasons for ruling on the motions for summary judgment. In any event, in determining whether the record reveals disputed issues of material fact, we may rely on any grounds called for by the record and we are not bound by the trial court's reasoning. See Makowski, 249 Ill. App. 3d at 115.

Plaintiff also contends that the trial court violated the rules regarding summary judgment when it weighed the credibility of witnesses. Specifically, the plaintiff argues that the trial court erred by giving "zero weight" to the deposition testimony of Daniel Kummer, a former vice-president of Allstate, regarding changes at Dowd & Dowd and Allstate giving business to another firm as early as November 2, 1990. We agree. In granting summary judgment, the judge must not attempt to weigh the evidence. In re Estate of Hoover, 226 Ill. App. 3d 422, 427, 589 N.E.2d 899, 168 Ill. Dec. 499 (1992); Gatlin v. Ruder, 137 Ill. 2d 284, 294, 560 N.E.2d 586, 148 Ill. Dec. 188 (1990). However, this error is harmless because an appellate court reviews a trial ...


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