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Christoph v. BCA

November 17, 2008


The opinion of the court was delivered by: Judge Joan B. Gottschall


Before the court are cross-motions for partial summary judgment. The defendants, BCA, LLC ("BCA"), John F. Kennedy ("Kennedy"), and John S. Marten ("Marten"), collectively referred to as the "Defendants," have moved for summary judgment on counts I through V.*fn1 The plaintiff, Robert W. Christoph ("Christoph"), has moved for summary judgment on Counts I through IV. For the reasons stated below, both motions are denied.


For a number of years, Christoph, Kennedy and Marten participated in real estate deals together and jointly-held several pieces of investment property. Christoph's involvement became increasingly limited until, in 1998, Christoph relinquished his right to control the sale or disposition of certain jointly-held real estate investments to Kennedy and Marten. In exchange, JCJ Acquisition, LLC ("JCJ"), a company in which Christoph was the sole member and which owned a special limited partnership interest in fourteen limited partnerships, loaned Christoph $2.9 million, secured by a promissory note. BCA, a company managed by Marten and Kennedy that acted as the manager of JCJ, loaned JCJ the $2.9 million to fund the loan to Christoph. Any funds or credits that flowed out of the limited partnerships were to be set off against the amount Christoph owed on the note to reduce the balance.*fn3

The parties' agreement was memorialized, on July 28, 1998, when Christoph and BCA entered into a "Put Agreement." The Put Agreement provides, in relevant part:

Put Option.*fn4 [Christoph] is the sole owner of that certain membership interest (the "Membership Interest") in JCJ Acquisition, L.L.C., a single-member Delaware limited liability company that owns the special limited partnership interest in each of the limited partnerships (the "SPAs") set forth on Exhibit A hereto and incorporated by this reference. [BCA] hereby grants to [Christoph] the right to require [BCA] to purchase all or any part of said Membership Interest at any time on or after the occurrence of a Taxable Event (as defined elsewhere herein), by written notice delivered to [BCA]. [BCA] shall have ninety (90) days from the date of delivery of such written notice to close on the purchase of the Membership Interest with respect to which the Put Option shall have been exercised.

See Put Agreement ¶ 1, Ex. 11 to Pl.'s Local Rule 56.1 Statement (definitional footnote added). Upon Christoph's exercise of the Put Option, in exchange for his Membership Interest, he was entitled to demand a sum equal to the amount of his tax liability (subject to a cap of $839,000) and the balance owing on the promissory note after set-offs.*fn5 In exchange, Christoph agreed to satisfy the promissory note and to demand no more from the proceeds of any sale of the SPAs than the remaining loan amount and the tax reimbursement. Kennedy and Marten each signed a personal guaranty of full and prompt payment of sums owed upon Christoph's exercise of his Put Option.

In 2002, a property held by Villa Capri Associates, Ltd. ("Villa Capri"), one of the JCJ limited partnerships, was sold. On April 11, 2003, Christoph, after incurring federal tax liability relating to the Villa Capri sale, attempted to exercise his Put Option as to that property only. He received a partial payment of the $80,975.30 sought. Subsequently, all but one of the properties under the control of JCJ were sold or disposed of and Christoph incurred additional tax liabilities. Christoph again attempted to exercise his Put Option, this time in full, demanding that BCA tender a payment of $798,512.35. He has not received any payment and BCA continues to send him tax documentation purporting to reflect that Christoph is the sole member of JCJ.


In his Second Amended Complaint, Christoph brings claims for specific performance of the Put Agreement (Count I), breach of contract by BCA (Count II), breach of contract by Kennedy (Count III), breach of contract by Marten (Count IV), and constructive trust against BCA (Count V). Each claim rests on a determination that a Taxable Event occurred which entitled Christoph to exercise his Put Option. The parties dispute whether such a Taxable Event occurred and this issue of contract interpretation is the sole question presented by the cross motions for summary judgment.

A. Legal Standard

Summary judgment is appropriate when the record reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Five Points Rd. Joint Venture v. Johanns, 542 F.3d 1121, 1124 (7th Cir. 2008). It is not appropriate if a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When considering a motion for summary judgment, the court must view the facts and any inferences to be drawn from them in the light most favorable to the non-moving party. See Wis. Cent., Ltd. v. Shannon, 539 F.3d 751, 756 (7th Cir. 2008). "On cross-motions for summary judgment, [a court] construe[s] all facts and inferences therefrom in favor of the party against whom the motion under consideration was made." Five Points Rd. Joint Venture, 542 F.3d at 1124.

In seeking a grant of summary judgment, the moving party must identify "those portions of 'the pleadings, depositions, answers to the interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. In response, the non-moving party cannot rest on the pleadings, but must designate specific material facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S. at 324. "Summary judgment is appropriately entered 'against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party ...

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