Appeal from the Circuit Court of Cook County. Honorable John W. Gustafson, Judge Presiding.
Released for Publication October 9, 1997.
Presiding Justice Greiman delivered the opinion of the court. Theis, J., and Quinn, J., concur.
The opinion of the court was delivered by: Greiman
PRESIDING JUSTICE GREIMAN delivered the opinion of the court:
Ziggy Grot (plaintiff) alleges in count II of his complaint that First Bank of Schaumburg (defendant or the bank), as land trustee, breached a fiduciary duty owed to plaintiff by executing a note and mortgage encumbering the trust property pursuant to an allegedly forged letter of direction generated by plaintiff's business partner, Mark Andrzejewski (Andrzejewski).
The trial court entered summary judgment in defendant's favor, finding that, regardless of any breach, plaintiff suffered no damages cognizable at law. Plaintiff appeals, contending that issues of material fact exist that require reversal of the trial court. For the reasons that follow, we affirm.
Plaintiff's complaint alleges that on January 3, 1992, plaintiff and Andrzejewski conveyed real property commonly known as 5153 West Fullerton Avenue in Chicago (Fullerton property) to the bank as trustee under a trust agreement that required the signatures of both to direct the trustee. On May 5, 1995, Andrzejewski delivered a letter to the bank directing the bank to execute a note in the amount of $70,000 and a mortgage securing the note in favor of Gerhard Beinhauer (Beinhauer). The letter of direction bore the signatures of Andrzejewski and plaintiff. Plaintiff, however, maintains that his signature was forged by Andrzejewski. The bank executed the note and mortgage (the Beinhauer loan documents) and the mortgage was thereafter spread of record.
Count I of plaintiff's complaint stated a cause of action against Andrzejewski for fraud. Count II alleged that the bank's execution of the Beinhauer loan documents constituted a breach of its fiduciary duty and sought damages as a result of the breach.
The bank answered that it did not know whether plaintiff's signature was forged and denied that the signature did not match plaintiff's signature on file with the bank. Consequently, the bank denied that it acted negligently or breached any fiduciary duty owed plaintiff.
The deposition testimony established that plaintiff and Andrzejewski began a real estate development partnership in 1991 with their joint purchase of two vacant lots in Chicago. Achieving modest success with their initial venture, the two acquired the Fullerton property for $200,000 shortly thereafter. They financed the acquisition with $80,000 in cash and the remainder through a jointly executed promissory note secured by a mortgage granted by an unrelated financial institution. The partners then executed and delivered a warranty deed conveying title to the Fullerton property to the bank as trustee.
In 1993, they refinanced the note and mortgage with a $150,000 loan. During the next two years, plaintiff and Andrzejewski became involved in several additional projects, including the California Subdivision Project and the Alexandria Subdivision Project. Financial difficulties arising from the California Subdivision Project ultimately caused the need for additional funds.
To address their financial difficulties, plaintiff and Andrzejewski signed an application for a letter of credit, dated May 23, 1994. As security for the letter of credit, plaintiff and Andrzejewski, as president and vice-president of Property International (the name of the entity that developed the property) and individually, along with two newly acquired partners, executed a $140,000 promissory note payable to the bank.
Beinhauer held 100% beneficial interest and power of direction in the land trust that owned the Alexandria subdivision property. Following completion of the Alexandria project, and in an effort to solve the financial problems associated with the California Subdivision Project, Andrzejewski entered into an agreement with Beinhauer to borrow $70,000 of Beinhauer's profits from his sale of two of the Alexandria lots. The loan was to be secured by a promissory note, mortgage and assignment of rents in favor of Beinhauer on the Fullerton property. The bank, as trustee, was directed to execute the note and mortgage by a letter of direction signed by Andrzejewski and which allegedly bore plaintiff's forged signature. It was the act of executing these security documents that plaintiff claims was a breach of the bank's fiduciary duty owed to him as a joint beneficiary under the land trust.
The $70,000 proceeds of the loan were placed in a money market account in Property International's name. To cover their share of the existing $140,000 note, plaintiff and Andrzejewski pledged the money market account to the bank. At some point after the above events, ...