The opinion of the court was delivered by: Judge Robert W. Gettleman
MEMORANDUM OPINION AND ORDER
Plaintiffs Robert and Sandra Weirich have brought a six count complaint against defendants Richard Wehrli and Ronald Fessler seeking an accounting under a partnership agreement and alleging violations of the Illinois Uniform Partnership Act, breach of fiduciary duty, self dealing by Fessler, and a claim for quantum merit. The defendants have moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), arguing that plaintiffs' claims are barred by the doctrine of res judicata. For the reasons discussed below, defendants' motion is granted.
Plaintiffs and defendants formed a partnership in 1994 (the "Town Road Partnership") to engage in the business of developing and selling 303 acres of real estate located on New Town Road, in North Carolina. The property was to be developed in two phases. Phase I applied to 125 of the 303 acres, and Phase II applied to the remaining 178 acres. Plaintiffs jointly owned one partnership unit and were to split equally the net profits with defendants who jointly owned the other partnership unit, until such time as contribution of capital investment amounts had been reimbursed. Thereafter, the parties were to split profits at the rate of 45% to plaintiffs and 55% to defendants.
Plaintiffs borrowed money from Merchants Bank (the "Bank") to invest in the partnership. The property did not sell as quickly as anticipated, however, and the Bank eventually brought suit against plaintiffs in the Circuit Court of Kane County, Illinois, to recover on its loan. Judgment by confession was originally entered against plaintiffs, and on December 29, 1995, confirmed by agreement the amount of $1,085,555.21. The order entering the agreed judgment provided that plaintiffs' 50% interest in the Town Road Partnership was collaterally assigned to the Bank for the purpose of collecting or enforcing the confirmed judgment. The order further provided that "all net income or proceeds of such partnership, otherwise payable to [plaintiffs], shall be paid to [the Bank]." Thus began a long and tortured history of litigation between plaintiffs, defendants, the Town Road Partnership, and the Bank, that has ultimately led to the instant lawsuit.
After plaintiffs were unable to pay the judgment, the Bank brought citation proceedings against defendants and the Town Road Partnership. On October 16, 1996, the state court ordered that defendants, or anyone acting on their behalf, "shall make no distributions from the [Town Road Partnership] to its partners [plaintiffs] of partnership income or return of capital. Any partnership distribution, after payment of normal partnership expenses, that would have gone to [plaintiffs], shall instead be paid to the [the Bank] as judgment creditor."
From that point on, the state court was involved in partnership affairs, at least with respect to the sale of the partnership real estate and distribution of income. Sometime in 2000, the Bank sought to dissolve the partnership and sell the partnership property. Both plaintiffs and defendants objected, arguing that the Bank did not have the authority to dissolve the partnership. Plaintiffs' response, however, sought an order directing defendants to account on a periodic basis for all sums received during the course of the operation of the business. Thereafter, the court entered several agreed orders regarding payout of partnership proceeds.
On February 7, 2001, plaintiffs filed a motion to "Prohibit Use of Partnership Funds and For an Accounting and Motion to Windup Partnership Affairs and to Determine the Prospective Amount of Each Share of the Partners." In that motion, plaintiffs indicated that Phase I was fully developed and 95% of the lots had been sold. At that same time, plaintiffs brought a "Motion to Sell Phase II of the Town Road Partnership Real Estate." Plaintiffs then brought an "amended motion to sell Phase II of the Town Road Partnership real estate". In both of those motions, plaintiffs sought an order directing the sale of the Phase II property for $2,550,000 pursuant to a deal arraigned by plaintiff Robert Weirich. On May 22, 2001, the parties entered into an agreed order to sell the property pursuant to the deal arranged by Robert Weirich, with the Bank's judgment, including costs, attorney's fees and interest to be paid from plaintiffs' partnership share of the proceeds.
The Phase II property was sold pursuant to the May 22, 2001, order, and on August 13, 2001, the court ordered that plaintiffs receive $200,000 and defendants receive $453,400 from partnership funds. Then, on October 5, 2001, plaintiffs brought a "Motion to Restore Partnership Funds and to Determine the Respective Amounts of Each Share of the Partners," indicating that defendants had used plaintiffs' Phase I share to pay Phase II expenses. On October 11, 2001, the court continued the matter but ordered that "there shall be no disbursements from the partnership account without order of court or agreement of all partners."
On October 31, 2001, the case was called for trial and the parties entered into an agreed order providing that the partnership immediately disburse $440,000 to defendants and $350,000 to plaintiffs. In addition, the partnership was to immediately deed lots 15 and 16 to plaintiffs and lots 14 and 18 to defendants. For purposes of partnership distribution, plaintiffs' lots were valued at $350,000 and defendants' lots at $330,000. The partnership was ordered to render a full accounting of all cash receipts and disbursements by November 14, 2001, to all counsel. The matter was continued to November 21, 2001, to set a hearing date on matters reserved, including determination of net profits of the partnership.
It is unclear what, if anything, happened on November 21, 2001, but on February 15, 2002, plaintiffs brought another amended motion to "Restore Funds to the Partnership Account," alleging an improper payment to Fessler of $150,000 and that plaintiff Robert Weirich had performed duties for the partnership for which he had not received "extra compensation." One week later plaintiffs moved for a turnover of documents, seeking copies of all the partnership bank documents, loan documents, check stubs and contracts for sewer, water, road construction and paving. On March 25, 2002, the court ordered defendants and the partnership to produce certain documents to plaintiff by April 12, 2002, and set the case for trial on the "second stage of accounting and amended motion of turnover of funds."
On May 29, 2002, the court held an evidentiary hearing on the motion for accounting and turnover, and issued a two page order on July 19, 2002, directing Fessler to restore $150,000 to the partnership account, and requiring defendants to restore $16,000 to the partnership account. The order specifically indicated that it was without prejudice to the rights of the parties to make further claims for credits, debits or other adjustments at the final division of profits.
Apparently not content with that result, plaintiff Robert Weirich filed a new action against defendant Fessler alleging tortious interference with prospective economic advantage and tortious interference with contractual relations, all arising out of Fessler's management of the Town Road Partnership. The case was consolidated with the Bank's action, and the trial court dismissed a second amended complaint with prejudice. Plaintiff appealed and the Illinois Appellate Court affirmed in an unpublished order.
Finally, on March 20, 2006, defendants were dismissed from the citation proceedings without prejudice. On July 6, 2006, the state court entered judgment in favor of the Bank against plaintiffs pursuant to the Bank's motion for summary judgment. The ordered indicated that it was final and ...