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Debra Rae Wolinsky v. Joseph L. Kadison

March 29, 2013

DEBRA RAE WOLINSKY,
PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
JOSEPH L. KADISON, STANLEY K. FEINBERG AND DENNIS A. BELL, INDIVIDUALLY AND AS THE BOARD OF DIRECTORS OF AMBASSADOR HOUSE CONDOMINIUM ASSOCIATION, DEFENDANTS-APPELLEES
AMBASSADOR HOUSE CONDOMINIUM ASSOCIATION,
DEFENDANT-APPELLEE AND CROSS-APPELLANT.



Appeal from the Circuit Court of Cook County. No. 05 L 7576 Honorable Marcia Maras and Thomas L Hogan, Judges Presiding.

The opinion of the court was delivered by: Justice Hall

JUSTICE HALL delivered the judgment of the court, with opinion.

Presiding Justice Lampkin and Justice Gordon concurred in the judgment and opinion.

OPINION

¶ 1 Following a bench trial, the circuit court of Cook County awarded the plaintiff, Debra Wolinsky, $56,992 in damages on her breach of fiduciary duty claim against the defendant, Ambassador House Condominium Association. The plaintiff appeals. On appeal, she contends that the amount of the damages award was against the manifest weight of the evidence. She further contends the circuit court committed the following errors: (1) dismissed her discrimination claim for lack of subject matter jurisdiction; (2) granted a motion to strike her jury demand; (3) granted summary judgment, eliminating her punitive damages claim; (4) denied her motion to appoint a special administrator to represent the interests of the deceased individual defendants; and (5) denied her motion to file a second amended complaint. The defendant filed a cross-appeal, contending that the circuit court erred when it granted partial summary judgment to the plaintiff on her breach of fiduciary duty claim and denied the defendant's motion for summary judgment on that claim.

¶ 2 This case has been pending for some 34 years and has generated two prior appeals. See Wolinsky v. Kadison, 114 Ill. App. 3d 527 (1983) (Wolinsky I), and Wolinsky v. Kadison, No. 1-04-0169 (2004) (unpublished order pursuant to Supreme Court Rule 23) (Wolinsky II). We deem it necessary to set forth certain background facts to place the issues raised in this appeal in perspective.

¶ 3 I. BACKGROUND

¶ 4 The plaintiff, divorced and single, had been a resident of the Ambassador House since 1976. Initially, she rented Unit 4D. In 1977, the Ambassador House was converted to condominiums. Leonard Chavin purchased Unit 4D for the plaintiff. Mr. Chavin was married to Marlene Chavin. However, the plaintiff and he had a 19-year sexual relationship, and he fathered three children with the plaintiff.

¶ 5 In August 1978, the plaintiff submitted a document to the Association's board of directors (the Board), notifying it of her intent to purchase Unit 21F, a two-bedroom unit, for $118,000.*fn1

Shortly thereafter, the Board received another offer to purchase Unit 21F from Dr. Frank Oliver, a widower. Without conducting a vote of the unit owners, required by the bylaws, the Board exercised the right of first refusal and rejected the plaintiff's offer to purchase Unit 21F. The Board purchased Unit 21F for $118,000 and then sold the unit to Dr. Oliver for $120,000.

¶ 6 In November 1978, the plaintiff purchased Unit 7B for $143,000. The unit was in a land trust with the plaintiff as the beneficiary. Both the plaintiff and Mr. Chavin signed the mortgage.

¶ 7 A. Circuit Court Proceedings and First Appeal

¶ 8 In 1979, the plaintiff filed case number 79 L 12302,*fn2 a three-count complaint for damages against the defendants, Joseph L. Kadison, Stanley K. Feinberg, David Lefkovits, Edward Targ, Dennis A. Bell, individually and as directors of the Ambassador House Condominium Association (collectively the directors); Ambassador House Condominium Association (the Association); Andra Addis; Eugene Matanky and Associates, Inc., an Illinois corporation; and Eugene Matanky and Associates Management Corporation, an Illinois corporation.*fn3

Subsequently, the plaintiff filed an amended complaint. Relevant to this appeal, count I alleged that the Association and the directors failed to comply with the bylaws in exercising the right of first refusal, depriving the plaintiff of her right to own property and preventing her from remaining a member of the Association. Count II alleged that all of the defendants violated a City of Chicago ordinance prohibiting discrimination in the purchase or lease of a condominium based on sex or marital status by exercising the right of first refusal because the plaintiff was an unmarried female and would reside in the unit with children. Count III alleged willful and wanton conduct on the part of the directors, Ms. Addis and the two Matanky corporations, based on their disregard for the bylaws and the laws of the State of Illinois.

¶ 9 In 1981, the circuit court dismissed the amended complaint for failure to state a cause of action, and the plaintiff appealed. This court determined that in count I, the plaintiff's allegation that the defendant and the individual defendants failed to secure the vote of two-thirds of the owners required by the bylaws before exercising its right of first refusal stated a cause of action for breach of fiduciary duty. This court further determined that her allegation in count II, that the directors' refusal to let her purchase Unit 21F because she was an unmarried female and would occupy the unit with children, stated a cause of action for violation of the Chicago condominium ordinance, prohibiting discrimination with regard to the purchase and lease of condominium units based on sex or marital status. Wolinsky I, 114 Ill. App. 3d at 535. Finally, this court determined that count III had stated a cause of action for willful and wanton disregard for the bylaws on the part of the individual defendants. We reversed the dismissal of the amended complaint and remanded for further proceedings, but affirmed the circuit court's dismissal of count III of the amended complaint against Ms. Addis and the two Matanky corporations.

¶ 10 B. Proceedings on Remand and Second Appeal

¶ 11 On August 5, 1988, the plaintiff filed a motion for partial summary judgment on count I as to liability only. On November 28, 1988, Circuit Court Judge Willard Lassers granted the motion as to the Association and the individual defendants but excluded the estates of Messrs. Targ and Lefkovits from the order.

¶ 12 In 2003, the circuit court dismissed the amended complaint based on laches and pursuant to its authority to control its own docket. The plaintiff appealed. This court reversed the dismissal and remanded for further proceedings. Wolinsky II, slip order at 15.

¶ 13 C.Circuit Court Proceedings After 2004 Remand

¶ 14 1. Dismissal of Individual Defendants and Motion to File Amended Complaint

¶ 15 On December 17, 2007, the attorney for the individual board member defendants filed a motion to spread of record the deaths of Messrs. Kadison, Feinberg, and Bell and to dismiss them from the plaintiff's lawsuit. The plaintiff did not object to the dismissal but requested that a special representative be appointed to protect the proceeds of the liability insurance policy that covered the individual defendants.

¶ 16 On April 18, 2008, Circuit Court Judge Marcia Maras ruled on the motion. She found that the plaintiff was aware of the deaths when the motion to dismiss the case was filed in 2003. Judge Maras struck the motion to dismiss for lack of standing but, on her own motion, she dismissed the individual defendants and denied the plaintiff's request to appoint a special representative.

¶ 17 2. The Association's Motions for Summary Judgment, to Dismiss and to Strike the Plaintiff's Jury Demand

¶ 18 On December 3, 2007, the Association filed its motion for summary judgment on both counts of the amended complaint. The Association also filed a motion pursuant to section 2-619(a)(1) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(1) (West 2006)) (the Code) to dismiss count II of the amended complaint for lack of subject matter jurisdiction. On February 5, 2008, the Association filed a motion to strike the plaintiff's jury demand.

¶ 19 On October 20, 2009, Judge Maras denied the Association's motion for summary judgment as to count I. She refused to reconsider Judge Lassers' grant of partial summary judgment to the plaintiff on liability, noting that in Wolinsky I, "the Court found no question of fact as to whether there was strict compliance with the declaration and bylaws as did Judge Lassers' in his decision of [November 28, 1988]. As a result, Judge Lassers granted partial summary judgment as to ***liability on the breach of fiduciary duty counts." Judge Maras further determined that the Association could not rely on the business judgment rule because one of the factors to consider was whether the directors complied with the bylaws and declaration. Judge Maras also found that the breach of fiduciary duty was not a tort and, therefore, a proximate cause analysis did not apply.

¶ 20 Judge Maras granted summary judgment to the Association on the plaintiff's prejudgment interest and punitive damages claims. Judge Maras also dismissed count II for lack of subject matter jurisdiction, finding that the plaintiff had failed to exhaust her administrative remedies.

¶ 21 On March 31, 2009, Judge Maras denied both parties' motions for reconsideration of her summary judgment rulings. Judge Maras granted the Association's motion to strike the plaintiff's jury demand. She denied the plaintiff's motion for leave to file an amended complaint.

¶ 22 3. Bench Trial

¶ 23 The sole issue at trial was the amount of damages the plaintiff was entitled to for the Association's breach of fiduciary duty. The parties entered into a stipulation as to the applicable mortgage rates for the two units. The plaintiff sought $86,000 based on the difference in the purchase price between Unit 21F, the unit she wished to purchase, and Unit 7B, the unit she ultimately purchased, the difference in mortgage payments, an alleged difference in the current market value of the two units and the money she had expended for improvements to Unit 7B. The plaintiff also sought $300,000 to $500,000 in additional damages for "time value" or "lost net worth."

¶ 24 At trial, Nicholas Solano, a real estate appraiser, testified as the plaintiff's expert witness. Mr. Solano calculated the present value of Unit 21F at $370,000 and Unit 7B at $355,000. Through his course work in college and his training as an appraiser, he learned to do discounted cash flow analysis and to compute the time value of money, which he calculated to be $323,000. The Association's expert witness, Dale Kleszynski, also a real estate appraiser, testified that present value of Unit 21F was $350,000 and the present value for Unit 7B was $370,000.

¶ 25 Circuit Court Judge Thomas Hogan awarded damages to the plaintiff in the amount of $56,992, based on the difference in the down payment, purchase price and additional mortgage payments required for the purchase of Unit 7B as opposed to the purchase of Unit 21F. In calculating the amount of damages, Judge Hogan found that the plaintiff had not sustained her burden of proving the current difference in value between Unit 21F and 7B or her other claimed damages. Judge Hogan also rejected Mr. Solano's net worth calculation, and therefore, he refused to award the plaintiff "her lost net worth."

¶ 26 This appeal and cross-appeal followed.

¶ 27 II. ANALYSIS

¶ 28 A. Violation of Discrimination Ordinance

(Count II of the Amended Complaint)

¶ 29 The plaintiff contends that Judge Maras erred when she granted the Association's section 2-619(a)(1) motion and dismissed count II of her amended complaint for lack of subject matter jurisdiction because the plaintiff had not exhausted her administrative remedies. The issue of subject matter jurisdiction was not raised by the parties and was not addressed by this court in the original appeal in this case. See Wolensky I, 114 Ill. App. 3d 527. However, the lack of subject matter jurisdiction cannot be waived and may be raised at anytime, even on appeal. City of Marseilles v. Radke, 287 Ill. App. 3d 757, 761 (1997).

¶ 30 1. Applicable Standards of Review

¶ 31 Review of a dismissal under section 2-619 of the Code is de novo. Westmeyer v. Flynn, 382 Ill. App. 3d 952, 954-55 (2008). Whether a circuit court has subject matter jurisdiction presents a question of law and is subject to de novo review. See Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp., 2011 IL 111611, ¶ 26. The de novo standard of review also applies to construction of a statute. R&B Kapital Development, LLC v. North Shore Community Bank & Trust Co., 358 Ill. App. 3d 912, 916 (2005).

¶ 32 2. Discussion

¶ 33 a. Subject Matter Jurisdiction

¶ 34 The issue of exhaustion of remedies presents a question of subject matter jurisdiction. NDC LLC v. Topinka, 374 Ill. App. 3d 341, 347 (2007). Where an administrative agency has exclusive jurisdiction over claims arising under an ordinance, a party must first exhaust his remedies under the ordinance before seeking relief in the circuit court. See Flynn v. Hillard, 303 Ill. App. 3d 119, 124 (1999). Absent a final agency determination, the circuit court lacks jurisdiction to consider the matter. NDC LLC, 374 Ill. App. 3d at 347.

¶ 35 In count II of her amended complaint, the plaintiff alleged a violation of the Chicago condominium ordinance which prohibits discrimination with regard to the purchase or lease of condominium units. Chicago Municipal Code, ch. 100.2, ¶ 100.2-4 (1978). She alleged that the Association exercised its right of first refusal based on her sex and her marital status, i.e. an unmarried female with two children.

¶ 36 The condominium ordinance was enacted in 1978 and provided in pertinent part as follows:

"100.2-4. No person shall be denied the right to purchase or lease a unit because of race, religion, sex, sexual preference, ...


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