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Moede v. Pochter

November 20, 2009


The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge


Peter Moede ("Moede") filed this action to recover what he claims as his share of the proceeds of a sale of property in which he was one of five investors. Three of the four co-investor defendants--Ronald Sandler ("Sandler"), Mitchell Miller ("Miller") and Robert Michelson ("Michelson")*fn1 -- have moved for summary judgment on Moede's two counts charging breach of the Operating Agreement ("Agreement") and violation of the Illinois Limited Liability Company Act ("Act," 805 ILCS 180/1-1 to 180/60-1).*fn2 For the following reasons, their motion is granted in part and denied in part.

Standard of Review

Every Rule 56 movant bears the burden of establishing the absence of any genuine material factual dispute (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts consider evidentiary records in the light most favorable to nonmovants and draw all reasonable inferences in their favor (Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But to avoid summary judgment a non-movant "must produce more than a scintilla of evidence to support his position" that a genuine issue of disputed fact exists (Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir. 2001)) and "must set forth specific facts that demonstrate a genuine issue of triable fact" (id.). Ultimately summary judgment is warranted only if a reasonable jury could not return a verdict for the non-movant (Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

Factual Background

This Court's August 27, 2009 memorandum opinion and order ("Opinion") has already described many of the key facts in this case. Because some new facts have come to light since the issuance of the Opinion, this opinion will detail those facts with minimal reiteration of the factual background described in the Opinion.

On April 20, 2004 Moede and Movants, along with Pochter as the sole designated manager, formed BD Venture 2 LLC ("BD"), a manager-managed limited liability company, for the purpose of holding a 50% interest in Mount Prospect Partners, LLC, a company that was to manage, develop and sell a parcel of real estate (the "Land") in Mount Prospect, Illinois (D. St. ¶¶8, 10). Gendell Busse Partners, represented by Scott Gendell ("Gendell"), owned the other 50% share in Mount Prospect Partners, LLC (G. Decl. ¶2*fn3 ).

Gendell, who was also the manager of Mount Prospect Partners, LLC, approached Pochter in January 2006 offering to buy out BD's interest in the joint venture for $200,000 (G. Decl. ¶6). Gendell alternatively offered Pochter the opportunity to buy out Gendell Busse Partners' own 50% share at the same price (id.). Pochter declined both alternatives at that time (id.). Over the next several months, however, Pochter reconsidered the matter (id. ¶7), and in late September 2006 an agreement was reached for the sale of BD's interest for $200,000 (id. ¶8).

On October 4 a draft agreement documenting the sale was sent to Pochter, who rejected it because he also wanted to be released from his guaranty of the mortgage on the Land (id.). Gendell's employees procured the necessary documentation from the bank for that purpose, and on October 19 they told Pochter that the release documents would be ready by October 23 (the next Monday) and that a check for $200,000 would be ready not later than October 24 (id. ¶¶8-10). Pochter signed the release papers and picked up the check not later than October 25 (id. ¶¶11-12).

Pochter did not inform Moede or Movants of the sale (D. St. ¶27; see M. St. ¶¶41-42). Instead he sent an email to Moede and Movants on October 24, stating only that he had received an offer to sell the Land to Gendell for $200,000 and that he recommended going forward with the sale (D. St. ¶¶25-26).*fn4 Michelson then called Gendell to confirm that he had made such an offer. Gendell responded that the deal was already done (having been agreed to some two weeks earlier) and that all that remained was for Pochter to pick up the check payable to BD (G. Decl. ¶11). Michelson called again the next day and was told Pochter had indeed picked up the check (id. ¶12).

After learning of Pochter's dissembling, Sandler called and emailed Pochter to discuss both Pochter's lie and the return of Movants' investments (S. Decl. ¶¶27-28). At some point during their interchange Pochter told Sandler that BD had $107,000 on hand and that he believed wind-up costs for BD would total $12,000 to $14,000 (D. St. ¶29). Sandler then demanded that Movants receive $29,000 each--an amount representing what he believed to be each Movant's 10% interest in BD's cash on hand following the sale.*fn5 Sandler also demanded that neither Moede nor Pochter receive any distribution until Movants had a chance to examine the books (S.Decl. Ex. G).*fn6 In response to Sandler's demand, each Movant received a check for $29,000 on or about October 27 (D. St. ¶33).

Moede was not copied on any of the emails responsive to Pochter, nor indeed did he know that the sale had been consummated (M. St. ¶¶41-44). And he was also wholly unaware of Sandler's demand to Pochter that Movants receive their distributions before any distributions were made to Moede or Pochter (see id.).

Sometime in November, after Movants had received their distributions, Miller called Moede's accountant Daryl Nirode ("Nirode"). During that conversation Miller told Nirode that the Land had been sold and that Movants had received their distributions (M. St. ¶44). Moede then directed Nirode to communicate with Pochter to arrange for Moede's distribution from the proceeds of the sale (id. ¶33 [sic -- should be M. St. ¶45, because it directly follows M. St. ¶44]).

When Nirode did so, Pochter agreed to give Moede only $100,000 at that time (id.). Pochter sent Moede a check in that amount in mid-December, but he stopped payment on the check before it could be honored. In late December Pochter sent Moede a second ...

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