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Owens v. McDermott

August 29, 2000

PERRY B. OWENS, PLAINTIFF-APPELLANT,
V.
MCDERMOTT, WILL & EMERY, AND JON R. LIND, DEFENDANTS-APPELLEES



The opinion of the court was delivered by: Justice McBRIDE

Appeal from the Circuit Court of Cook County. Honorable Lee Preston, Judge Presiding.

The following appeal arises over the interpretation of a settlement agreement entered into by plaintiff Perry B. Owens (Owens) and Owens' former company, Utilities Inc. (Utilities). The settlement agreement was reached after a dispute arose between Owens and the senior management and directors of Utilities. Prior to his departure Owens was the chief executive officer of Utilities, a private water utility company he had formed in 1965. In 1988, Owens divorced his wife and was represented in the divorce proceedings by Jon Lind of McDermott, Will and Emery. Lind and McDermott, Will and Emery (collectively defendants) are the defendants in the instant action. As part of the divorce decree and per defendants' advice, Owens' former wife received 32,000 shares of Utilities stock, with the proviso that Owens be allowed the right of first refusal to purchase the stock should his former wife choose to sell it.

In 1996, eight years after his divorce, Owens was forced from his position as chief executive officer of Utilities by the board of directors and the remaining senior management. To avoid litigation over his departure Owens entered into a series of three agreements which outlined his separation from Utilities. Defendants represented Utilities in this matter. One of these agreements was a Voting Agreement between Owens and Utilities. It is section 4 of the Voting Agreement that is at issue in the instant appeal. Section 4 of the Voting Agreement states in pertinent part:

"Acquisition of Securities. During the Restriction Period, except (a) by way of stock dividend, stock split, reorganization, recapitalization, merger, consolidation or other like distributions made available to holders of Company Voting Securities generally or (b) as specifically permitted by the terms of this Agreement, the Separation Agreement or the Supplemental Share Agreement, the Shareholder will not acquire, or agree, offer or seek or propose to acquire, directly or indirectly, alone or in concert with any other Person, by purchase or otherwise, or exercise any attribute of beneficial ownership (as defined on the date hereof in Rule 13d-3 of the Securities and Exchange Commission under Section 13(d) of the Act) with respect to, any securities of the Company, or direct or indirect rights or options to acquire (through purchase, exchange, conversion or otherwise) any securities of the Company or any of the assets or businesses of the Company. The Shareholder acknowledges and agrees that any securities of the Company acquired by the Shareholder after the date hereof in accordance with this Section 4 will be subject to this Agreement and to the Proxy."

The agreement was executed on December 23, 1996. In April 1997, Owens assigned his right of first refusal to his nephew. Later that year, Owens' former wife sought to sell her shares of Utilities and spoke with defendants about this matter. Defendants, acting on behalf of Utilities, arranged for the removal of the stock restriction appearing on the stock certificates which were originally placed on all of his ex-wife's shares at the time of the divorce. These stocks were then sold to someone other than Owens. After learning of the sale of the stock, Owens rescinded the assignment of his right of first refusal to his nephew.

In October 1997, Owens filed a complaint against defendants alleging that they breached their fiduciary duty to him as a former client and tortiously interfered with his right of first refusal to purchase his former wife's stock when they facilitated the removal of the restrictive stock legend from the stock certificates. In addition to these two counts, Owens original complaint contained one count of slander against his former wife. The defendants filed a motion to dismiss Owens' complaint pursuant to 735 ILCS 5/2-619(a) (West 1996) and Owens' former wife filed a motion to dismiss under section 2-615. 735 ILCS 5/2-615 (West 1996). On May 13, 1998, defendants' motion to dismiss was granted with respect to counts one and two. Owens' ex-wife's count was also dismissed and is not the subject of this appeal. Owens subsequently filed an amended complaint. Thereafter, the trial court dismissed the amended complaint finding that once Owens entered into the Voting Agreement with Utilities, Owens could no longer exercise his right of first refusal.

On appeal, Owens raises three claims. First, Owens claims that the Voting Agreement unambiguously gives him the right to purchase his former wife's shares of stock. Second, Owens alternatively asserts that the Voting Agreement is ambiguous and thus raised issues of genuine material fact that precluded dismissal of counts I and II of his complaint. Third, Owens contends that the claim for breach of fiduciary duty can survive independently of the trial court's determination that Owens' right of first refusal ceased to exist after the signing of the Voting Agreement.

A motion to dismiss under 735 ILCS 5/2-619 (West 1996) "allow[s] for a threshold disposition of questions of law and easily proven issues of fact." Jo Lou Mio v. Alberto-Culver Company, 306 Ill. App. 3d 822, 824, 715 N.E.2d 309 (1999). Under section 2-619 a motion to dismiss should be granted if after construing the pleadings and supporting documents in the light most favorable to the nonmoving party, the trial court finds that no set of facts can be proved upon which relief could be granted. Jo Lou Mio, 306 Ill. App. 3d at 825. This process does not require the trial court to weigh facts or determine credibility and as a result, this court does not defer to the trial court's judgment. Jo Lou Mio, 306 Ill. App. 3d at 825. Therefore, upon review we consider whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal was proper as a matter of law. Jo Lou Mio, 306 Ill. App. 3d at 825. Like motions to dismiss under 735 ILCS 5/2-615 (West 1996), we review motions to dismiss under 2-619 de novo. Lykowski v. Bergman, 299 Ill. App. 3d 157, 164, 700 N.E.2d 1064 (1998).

Although Owens characterizes the first issue as whether he waived his right of first refusal to purchase his former wife's stock, we believe the question is whether the Voting Agreement constituted a contract that once entered into, barred Owens from acquiring any stock in Utilities during the 10-year limitation period set out in that agreement. In construing the provisions of a contract the court's primary objective is to give effect to the intent of the parties at the time the contract was made. Pennsylvania Life Insurance Company v. Pavlick, 265 Ill. App. 3d 526, 529, 637 N.E.2d 1160 (1994). Such intentions are to be ascertained from the language of the contract. Omnitrus Merging Corporation v. Illinois Tool Works, Inc., 256 Ill. App. 3d 31, 34, 628 N.E.2d 1165 (1993). If the language in the contract is clear and unambiguous, the judge must determine the intention of the parties "'solely from the plain language of the contract' and may not consider extrinsic evidence outside the 'four corners' of the document itself." Omnitrus, 256 Ill. App. 3d at 34. See Meyer v. Miglin, Inc., 273 Ill. App. 3d 882, 888, 652 N.E.2d 1233 (1995) (stating "[i]f the contract terms are unambiguous, the parties' intent must be ascertained exclusively from the express language of the contract, as a matter of law"). Moreover, " '[c]lear and unambiguous contract terms must be given their ordinary and natural meaning' and contracts must be interpreted 'as a whole giving meaning and effect to each provision thereof.' " Omnitrus, 256 Ill. App. 3d at 34 quoting Srivastava v. Russell's Barbecue Inc., 168 Ill. App. 3d 726, 730, 523 N.E.2d 30 (1988).

Owens argues that the failure of Utilities to address his right of first refusal in the Voting Agreement demonstrated that:

"neither [plaintiff] nor Utilities, Inc. intended to compromise, abrogate or limit any existing contractual right to acquire Utilities Inc. stock that [plaintiff] owned but only intended to preclude [plaintiff] in the future from entering into new contracts or agreements to acquire stock in which he had no then existing interest or rights."

We disagree and find that this is exactly what section 4 of this agreement sought to do. Specifically, section 4 states in pertinent part that:

"the Shareholder will not acquire, or agree, offer or seek or propose to acquire, directly or indirectly, alone or in concert with any other Person, by purchase or otherwise, or exercise any attribute of beneficial ownership *** with respect to, any securities of the Company, or direct or indirect rights or options to acquire *** any securities of the Company or any of the assets or businesses of the Company."

The language of this section is clear and unambiguous in stating that Owens is absolutely prohibited from acquiring any securities of any kind with respect to Utilities per his assent to this agreement. Despite the plain language of this agreement Owens contends that the foregoing language does not prohibit the acquisition of his former wife's shares. This assertion is based, in part, upon certain correspondence between Owens and defendants. In one particular letter, defendant Jon Lind wrote to Owens and explained that due to his entrance into the Voting Agreement, Utilities was no longer obligated to honor the restrictive stock legend placed on the shares of Owens' former wife after his divorce. Lind accompanied his letter with a pre-drafted waiver for Owens' signature. The waiver stated that Owens relinquished his right of first refusal to purchase his former wife's shares of Utilities originally granted to him by his divorce decree. Lind also explained that although Utilities was removing the restrictive stock legends, such action did not necessarily vitiate his former wife's responsibility to offer Owens a right of first refusal to repurchase her shares. Lind followed this letter with another one approximately one week later, reaffirming that Utilities did not need to honor the restrictive stock legends placed on the shares of Owens' former wife. Once again however, Lind wrote separately about the obligation of Owens' former wife to offer Owens a right of first refusal and about Utilities' removal of the restrictive stock legends from these shares. ...


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