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June 25, 1997



As Corrected July 1, 1997. Released for Publication August 5, 1997.

Presiding Justice Cousins delivered the opinion of the court. Gordon and Leavitt, JJ., concur.

The opinion of the court was delivered by: Cousins

PRESIDING JUSTICE COUSINS delivered the opinion of the court:

Plaintiff, Dominic J. Senese, brought suit against defendants Climatemp, Inc. (Climatemp), John W. Comforte, Thomas E. Comforte and Victor Comforte. Plaintiff alleged that he owned stock in Broadway Sheet Metal Works, which later became Climatemp, and agreed to sell his stock in the company but never consummated that agreement. Specifically, plaintiff alleged breach of contract and violations under the Uniform Commercial Code-Investment Securities Act (810 ILCS 5/8-101 et seq. (West 1992)) and the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1992)). In addition, plaintiff sought a constructive trust, mandamus and an accounting.

Plaintiff appeals from the trial court's decision granting defendants' motion to dismiss based on sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 1992)), and from earlier orders in which the trial court denied plaintiff's motion to compel production of documents and to require defendants to answer deposition questions. Plaintiff also appeals from the trial court's award of sanctions under Supreme Court Rule 137 (134 Ill. 2d R. 137).

On appeal, plaintiff contends that: (1) the trial court's denial of plaintiff's discovery requests concerning the "bona fides " of the alleged stock transaction was reversible error; (2) the trial court erred in granting defendants' motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1992)) based upon standing, laches, statute of limitations and the Uniform Stock Transfer Act (Ill. Rev. Stat. 1959, ch. 32, par. 416 et seq.); (3) the trial court's dismissal of the second amended complaint pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)) was reversible error; and (4) the trial court abused its discretion in granting defendants' motion for sanctions under Supreme Court Rule 137 (134 Ill. 2d R. 137).

Defendants cross-appeal and contend that: (1) the trial court abused its discretion by granting plaintiff's motion to substitute the executrix and failing to dismiss the action for plaintiff's failure to comply with statutory time limits; (2) the trial court abused its discretion by denying the defendants' motion to strike plaintiff's answer to defendants' first set of interrogatories and dismiss plaintiff's complaint with prejudice as a sanction; and (3) the trial court abused its discretion by reducing the amount of attorney fees awarded to defendants.


On September 20, 1989, plaintiff, claiming shareholder status, filed a complaint for mandamus to compel production of the corporate minute books and shareholder records of Climatemp and for other relief. Plaintiff alleged that he was a stockholder of Climatemp.

Climatemp, an Illinois corporation engaged in the heating and ventilating business, was originally known as Broadway Sheet Metal Works, Inc. (Broadway), and was incorporated as an Illinois corporation on May 1, 1958. The name of the corporation was changed to Climatemp, Inc., on February 2, 1960. The original incorporators and shareholders of the company were L. Anton Moody, Victor Comforte and Dominic Senese.

In his first amended complaint, plaintiff alleged that, in 1960, Victor Comforte and Dominic Senese contemplated transferring their respective shares in the corporation to Expressway Terminals (Expressway) in order to obtain borrowing ability and business credibility. Anthony Sicilia, the president of Expressway, was a good friend of both Victor and Dominic. Plaintiff alleged that he, Victor and Anthony signed a letter of intent to proceed with the sale. The letter of intent provided that Expressway would pay an initial payment and then 10 equal installments, with the purchase to be completed in 10 years. The letter of intent also provided that a formal complaint relating to the purchase, with arrangements for holding the shares of stock in escrow, would be drawn up and executed no later than May 1, 1960. Plaintiff alleged that he still owned his stock in Climatemp because no formal contract or escrow agreement was ever created and that he was never paid for his stock.

Defendants maintained that plaintiff was an original shareholder of the company but sold his shares in the company to Expressway. Defendants argued that plaintiff was not a shareholder of record and, therefore, had no right to inspect the corporation's books and records. Along with motions to dismiss, defendants filed an affidavit by corporate treasurer Thomas E. Comforte denying plaintiff's stock ownership. With subsequent motions, defendants presented several exhibits that purported to establish that Dominic Senese had sold his stock to Expressway on January 4, 1960. Defendants' exhibits included: the letter of intent signed by Victor Comforte, Dominic Senese and Anthony Sicilia; Dominic Senese's unsigned stock certificate number 3 for stock in Broadway that was issued to Senese on May 3, 1958, and had the word "cancelled" handwritten on its face; a corporate ledger memorializing a transfer of 50 shares from Dominic Senese to Expressway that contained three names that were crossed out; and an undated but signed assignment separate from the certificate assigning Dominic Senese's shares in Broadway to Expressway. The trial court dismissed plaintiff's amended complaint and plaintiff appealed.

In Senese v. Climatemp, Inc., 222 Ill. App. 3d 302, 582 N.E.2d 1180, 164 Ill. Dec. 236 (1991), the appellate court reached several conclusions. The appellate court concluded, inter alia, that no exhibit established whether the parties actually completed the sale of Dominic Senese's shares in Climatemp as no exhibit demonstrated that the conditions precedent set forth in the letter of intent (i.e., to pay an initial payment of $1,000 and the balance over 10 years; to draw up a formal contract by May 1, 1960; and to have the stock held in escrow until the sale was complete) were satisfied. 222 Ill. App. 3d at 312. The appellate court therefore held that the trial court erred by relying on the exhibits in plaintiff's complaint and finding them dispositive of the issue of plaintiff's shareholder status. 222 Ill. App. 3d at 312.

The appellate court also concluded that the trial court properly dismissed plaintiff's claim for a constructive trust but remanded the case so plaintiff could be allowed to amend following what the appellate court referred to as "limited discovery." 222 Ill. App. 3d at 315. The court stated in pertinent part:

"Plaintiff has alleged a fraud occurred in which defendants participated, and has alleged that the corporate officers and directors breached their fiduciary duty and participated in a fraud perpetrated on plaintiff. ***

***Plaintiff has not alleged he notified the corporation directors and officers at any time to put them on notice that Expressway Terminals, Inc., was improperly claiming shareholder rights nor has he alleged any facts to support his allegation that corporate officers and directors some how participated in his lack of stockholder status. ***

***Plaintiff alleged merely that he owned stock and Victor Comforte now contends he does not. Fraud must be proven; it cannot be presumed. [Citation.] Plaintiff has not alleged sufficient facts in support of a fraud which would merit imposition of a constructive trust but should be permitted discovery and the opportunity ...

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