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Iseberg v. Gross

September 20, 2007

MITCHELL M. ISEBERG, INDIV. AND AS AN OFFICER AND DIRECTOR OF THE LEIKAM FARM DEVELOPMENT CORPORATION, ET AL., APPELLANTS,
v.
SHELDON GROSS, INDIV. AND AS AN OFFICER, DIRECTOR, PARTNER, AGENT, AND/OR JOINT ADVENTURER OF THE VERNONSHIRE AUTO LAUNDRY GROUP, INC., ET AL., APPELLEES.



The opinion of the court was delivered by: Justice Burke

Published opinion

Chief Justice Thomas and Justices Fitzgerald, Kilbride, Garman, and Karmeier concurred in the judgment and opinion.

Justice Freeman took no part in the decision.

OPINION

In this interlocutory appeal, plaintiffs, Mitchell Iseberg (Iseberg) and his wife, Carol, seek reversal of the order dismissing with prejudice count I of their third amended complaint, brought against defendants, Sheldon Gross (Gross) and Henry Frank (Frank). In count I, plaintiffs alleged that Gross and Frank were negligent because they failed to warn Iseberg that a former mutual business partner, Edward Slavin (Slavin), had made threats against Iseberg's life. Slavin later acted on his threats and shot Iseberg, rendering him a paraplegic.

The trial court dismissed the claim pursuant to section 2--615 of the Code of Civil Procedure (735 ILCS 5/2--615 (West 2002)), finding that plaintiffs failed to state a cause of action because, under the facts alleged, Gross and Frank owed no duty to warn Iseberg or to protect him from the criminal conduct of Slavin. A divided appellate court affirmed the dismissal. 366 Ill. App. 3d 857.

For reasons that follow, we affirm the judgment of the appellate court.

BACKGROUND

The facts of this case are taken from plaintiffs' complaint and the documents attached thereto. They are not materially in dispute.

In 1995, Slavin and Gross formed the Vernonshire Auto Laundry Group, Inc. (VAL), an Illinois corporation created for the purpose of developing Slavin's idea of building a car wash in the Vernon Hills-Lincolnshire area. Thereafter, Gross contacted Iseberg, an attorney and real estate broker, who Gross had learned was in the process of purchasing land in the Vernon Hills area (the Leikam Farm property). Iseberg planned to purchase the Leikam Farm property and develop it into a strip mall. To that end, Iseberg had joined with Frank to form the Leikam Farm Development Corporation (LFD).

In October 1996, VAL and LFD entered into a partnership agreement, with each contributing funds toward the purchase of the Leikam Farm property. Title to the property was then placed in a land trust, with VAL and LFD each having 50% beneficial ownership in the trust. The partnership agreement included a provision that VAL could purchase LFD's interest in the trust if the partnership was not terminated by April 15, 1997.

On April 14, 1997, VAL tendered an offer to purchase LFD's beneficial interest in the trust. LFD refused to sell. Previously LFD, without VAL's knowledge, had assigned its 50% beneficial interest in the land trust to Frank and executed a promissory note in the amount of $352,000 in Frank's favor. VAL filed suit against LFD to enforce its rights under the partnership agreement. This legal suit was settled in September 1997 when the parties entered into a "Settlement and Joint Venture Agreement."*fn1

Pursuant to the agreement, Frank, VAL, Gross and Slavin, wanted "to eliminate all Iseberg involvement with respect to the Property." Therefore, the settlement provided for the termination of the VALLFD partnership and the creation of the Leikam Farm Joint Venture (Venture), which had as its sole purpose the sale of the Leikam Farm property. The settlement agreement specifically provided that Iseberg was not to be a party to the Venture, that LFD's and Iseberg's interests, if any, in the property and the land trust were terminated, and that Iseberg shall "[d]eliver all business, financial and accounting records relating to the [Leikam Farm] Property to the Venture and shall cease and desist from having any involvement with the Property, its development or its future transactions unless as requested in writing by the Venture, and then at Iseberg's discretion other than as an attorney for a third party."*fn2

Despite the Venture's efforts, the Property was not sold by December 31, 1998, when monthly interest payments on the mortgage note for the property came due. Slavin, having already invested all of his savings in the project, was unable to meet his share of the monthly interest obligation. As a result, in February 1999, Slavin was forced to surrender his interest in the property, losing his entire investment.

Plaintiffs alleged that Slavin's financial demise caused him to become mentally unbalanced and that Slavin focused his anger on Iseberg, whom he blamed for his financial situation. According to statements Gross gave to the Lake County police,*fn3 Slavin spoke to Gross on several occasions between the fall of 1998 and the early months of 1999 about wanting to harm Iseberg. In the beginning, Slavin talked about punching Iseberg in the face with brass knuckles. But as time passed and Slavin became more agitated, he talked about wanting to find a "hit man" and, later, he outlined a plan for killing Iseberg himself and then committing suicide. Slavin told Gross that, once the suicide exemption clause in his life insurance policy was no longer in effect, he would go to Iseberg's home, ring the doorbell, shoot Iseberg, and then kill himself so his family could collect his insurance. On at least one occasion, Slavin spoke about a plan that included killing Frank as well. Slavin also told Gross that he had purchased a gun and asked whether the caliber was large enough to kill someone.

Gross contacted Slavin's brother, Earl, to express his concerns about Slavin's threats. Gross suggested, more than once, that Earl obtain psychiatric help for his brother. Earl always demurred, assuring Gross that Slavin would never act on his threats. Gross told Frank about the threats, but neither Gross nor Frank told Iseberg.

According to Gross' statements to the police, after Slavin surrendered his interest in the Leikam Farm property in February 1999, Gross had almost no contact with Slavin. Gross said he spoke to Slavin on only three occasions over the next 11 months. Although Slavin voiced no more threats against Iseberg during this time, on one occasion Slavin asked Gross if he knew Iseberg's new address. Gross said he told Slavin he did not know the address and would not give it to him if he did.

On January 24, 2000, Slavin rang the doorbell at Iseberg's residence. When Iseberg answered the door, Slavin shot him four times. Iseberg was not killed, but was rendered a paraplegic.

In October 2001, Mitchell and Carol Iseberg filed a complaint, which was later amended to include claims against Gross and Frank.

The third amended complaint, which is at issue here, sought recovery from Gross and Frank for negligence (count I), negligent performance of a voluntary undertaking (count II), breach of fiduciary duty (counts III and IV), ...


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