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Goldberg v. Michael

February 07, 2002

PHILLIP GOLDBERG AND CYNTHIA MATTIA-GOLDBERG, ON BEHALF OF THEMSELVES AND THE GLENSTONE HOMEOWNERS ASSOCIATION, PLAINTIFFS-APPELLANTS,
v.
HOWARD W. MICHAEL, STANLEY R. RAZNY, JR., KURT W. LEWIS, NAPOLEAN P. TARNARIS, AND MARSHALL N. DICKLER, LTD., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County. No. 99-CH-965 Honorable John R. Goshgarian, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

Released for publication March 27, 2002.

PHILLIP GOLDBERG AND CYNTHIA MATTIA-GOLDBERG, ON BEHALF OF THEMSELVES AND THE GLENSTONE HOMEOWNERS ASSOCIATION, PLAINTIFFS-APPELLANTS,
v.
HOWARD W. MICHAEL, STANLEY R. RAZNY, JR., KURT W. LEWIS, NAPOLEAN P. TARNARIS, AND MARSHALL N. DICKLER, LTD., DEFENDANTS-APPELLEES.

Appeal from the Circuit Court of Lake County. No. 99-CH-965 Honorable John R. Goshgarian, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

PUBLISHED

 Plaintiffs, Phillip Goldberg and Cynthia Mattia-Goldberg, on behalf of themselves and the Glenstone Homeowners Association (Association), appeal from the trial court's judgment granting the motions to dismiss of defendants, Howard W. Michael, Stanley R. Razny, Jr., Kurt W. Lewis, Napolean P. Tarnaris, and Marshall N. Dickler, Ltd. (Dickler). We affirm.

The Association consists of several homeowners in Long Grove, including plaintiffs, Phillip Goldberg and Cynthia Mattia-Goldberg. Michael served on the Association's board from July 1997 through November 1998; Lewis served from October 1996 through December 1997 and was vice president of the board from May 1997 through December 1997; Razny served from October 1996 through November 1998 and was president of the board from May 1997 through December 1997; Tarnaris served on the board from May 1997 through November 1998 and was alleged to have been "de facto" counsel for the Association; Dickler served as attorney for the Association from October 1996 through December 1997.

In July 1996, a parcel of real estate within Glenstone (the Murphy Lot) fell behind in assessment payments, and the board instructed Dickler to file a lien and to commence a foreclosure action against the owner. The Association filed a complaint to foreclose lien on January 23, 1997, which was verified by plaintiff Phillip Goldberg as treasurer of the board. The affidavit in support of the judgment was signed by Goldberg on April 17, 1997. Dickler sent to Goldberg monthly descriptive bills that informed Goldberg of the status of the suit. On November 14, 1997, at the public auction of the Murphy Lot, some or all of the individual defendants bid on the Murphy Lot. Michael was the highest bidder and obtained title to the Murphy Lot. Goldberg received a descriptive bill on November 18, 1997, four days after the auction, informing him of the sale.

After the foreclosure sale, Goldberg, allegedly on behalf of the Association, commenced an investigation into Michael's purchase of the Murphy Lot and the roles of Lewis, Tarnaris, Razny, and Dickler in the purchase. On January 26, 1998, the board issued a corporate resolution alleging that Lewis, Michael, Razny, and Tarnaris usurped the Association's corporate opportunity, breached their fiduciary duties to the Association, and committed fraud by failing to inform the Association of the foreclosure action and by planning to obtain the Murphy Lot for themselves. On October 18, 1998, the board authorized outside counsel to conduct all appropriate negotiations with those against whom the board might have causes of action and to determine if any such causes of action could be resolved without recourse to litigation.

On March 31, 1999, the Association executed settlement offers with Tarnaris and Lewis, releasing them from liability regarding any of the events, actions, and omissions relating to the sale of the Murphy Lot. The record does not contain a settlement agreement between the Association and Razny or Michael. However, the affidavit of Frank Mondane, director, secretary, and treasurer of the Association, states that the board decided not to pursue litigation and settled its claims against Lewis, Tarnaris, Michael, and Razny.

In 1998, Dickler filed an action against the Association to collect amounts due to the firm by the Association (case No. 98--AR--1228). In May 1999, the Association released any and all claims it had or may have had against Dickler, and the parties entered into an executed settlement agreement.

Thereafter, on September 3, 1999, plaintiffs filed the present action. Plaintiffs' amended complaint raises against defendants allegations of (1) breach of fiduciary duty, (2) unjust enrichment, and (3) constructive fraud, and it requests the imposition of a constructive trust, a permanent injunction, and money damages. Plaintiffs allege that each defendant failed to fully inform the board of the foreclosure action as it progressed and of his plan to obtain the Murphy Lot for himself. Plaintiffs claim that defendants' actions deprived the Association of the opportunity to decide for itself whether and how much to bid at the public auction for the Murphy Lot. Plaintiffs further allege that defendants engaged in subterfuge and took actions to undermine the board of directors after their scheme was uncovered rather than enter into good-faith negotiations with the Association in its attempt to settle this matter.

Michael, Razny, Lewis, and Tarnaris filed motions to dismiss the complaint pursuant to sections 2--615, 2--619, and 2--619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2--615, 2--619, 2--619.1 (West 1998)). Dickler filed a motion to dismiss pursuant to section 2-- 619(a)(2), ...


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