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LLC v. Marcus

Court of Appeals of Illinois, First District, Fourth Division

August 22, 2013

800 SOUTH WELLS COMMERCIAL, LLC, Plaintiff-Appellant,
v.
HORWOOD MARCUS AND BERK CHARTERED, Defendant-Appellee (Nicholas S. Gouletas; 800 South Wells Phase I, LLC, a/k/a River City Commercial; Invesco Management Company, Inc., d/b/a American Invesco; John Cadden; and River City Parking LLC, Defendants).

Held: [*]

Plaintiff’s claim against defendant law firm for aiding and abetting other defendants in breaching their fiduciary duties to plaintiff was properly dismissed as untimely pursuant to the two-year statute of limitations in section 13-214.3(b) of the Code of Civil Procedure, notwithstanding plaintiff’s contention that section 13-214.3(b) only applied to legal malpractice claims brought by an attorney’s clients and defendant did not represent plaintiff, since the plain language of section 13-214.3(b) contains no such limitation.

Appeal from the Circuit Court of Cook County, No. 11-L-2895; the Hon. Daniel J. Pierce, Judge, presiding.

F. Dean Armstrong, of Armstrong Law Firm, P.C., of Flossmoor, for appellant.

Williams Montgomery & John Ltd., of Chicago (Michael C. Bruck and Megan A. Rees, of counsel), for appellee.

Presiding Justice Lavin and Justice Pucinski concurred in the judgment and opinion.

OPINION

SMITH, JUSTICE FITZGERALD

¶ 1 Plaintiff, 800 South Wells Commercial, LLC, appeals from an order of the circuit court of Cook County granting the motion of defendant, Horwood Marcus & Berk Chartered (HMB), to dismiss with prejudice plaintiff's claim against HMB for aiding and abetting Nicholas Gouletas and John Cadden in breaching their fiduciary duties to plaintiff. On appeal, plaintiff contends that the court erred by applying the two-year statute of limitations set forth in section 13-214.3(b) of the Code of Civil Procedure (Code) (735 ILCS 5/13-214.3(b) (West 2010)) to its claim against HMB. For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 On August 31, 2012, plaintiff filed a third amended complaint against various defendants alleging, inter alia, claims of breach of fiduciary duty against Gouletas and Cadden and claims of aiding and abetting a breach of fiduciary duty against HMB, 800 South Wells Phase I, LLC (a/k/a River City Commercial), and River City Parking, LLC (River City Parking). Plaintiff asserted that Gouletas owned half the membership interests in plaintiff, was the manager of plaintiff, and dominated and controlled plaintiff's business affairs. Plaintiff also asserted that Cadden was a vice president of plaintiff and that Gouletas and Cadden owed plaintiff a fiduciary duty.

¶ 4 Plaintiff asserted that in April 1997, a corporation connected to Gouletas purchased the River City Complex at 800 South Wells Street in Chicago, which consisted of 448 apartments, 240, 000 square feet of commercial space, an underground parking garage, a surface parking lot, and a marina, and that sometime thereafter plaintiff became the owner of the long-term leasehold interests in the commercial space and the parking garage. Gouletas refinanced the leasehold interests in the parking garage and commercial space such that by late 2005, those interests were encumbered by a first mortgage from Parkway Bank & Trust Company upon which plaintiff owed $11.75 million and a second mortgage from CIB Bank upon which plaintiff owed about $10 million. The mortgage from CIB Bank was purchased by D.A.N. Joint Venture III, L.P. (DJV), and plaintiff was in default on that mortgage by the end of 2005.

¶ 5 Plaintiff also asserted that in 2005, WRT-Marc RC, LLC (WRT), became interested in purchasing the commercial space from plaintiff and planned to purchase the first mortgage from Parkway Bank & Trust then foreclose upon the commercial space and parking garage. In mid-January 2006, WRT reached an agreement with plaintiff, through Cadden, whereby plaintiff would not contest the foreclosure proceedings if WRT granted plaintiff an option to acquire the parking garage from WRT at WRT's cost. Plaintiff asserted that the net profit from the exercise of the option and subsequent sale of the parking spaces would have exceeded $3.5 million. Shortly after the agreement was reached, Gouletas and Cadden learned that the expected profits would have to be shared with plaintiff's creditors, including DJV. Cadden informed Kenneth Bosworth, a partner at HMB, of the terms of the option agreement and on January 23, 2006, Bosworth recommended that Cadden create a new entity and execute an agreement with WRT whereby the new entity would receive the option to acquire the parking spaces. On March 29, 2006, Cadden and WRT executed an option agreement whereby River City Commercial was granted the option to acquire the parking garage, and River City Commercial then assigned its rights under the option agreement to River City Parking. On April 24, 2006, WRT, which by that time had purchased the first mortgage on the parking garage and commercial space, filed suit to foreclose on that mortgage. Plaintiff did not contest the foreclosure, and a foreclosure judgment was entered in favor of WRT on October 18, 2006. On November 16, 2006, DJV took control of plaintiff's voting rights and thereafter removed Gouletas as the manager of plaintiff. On July 24, 2007, WRT purchased the parking garage and commercial space at a foreclosure sale.

¶ 6 Plaintiff alleged that Gouletas and Cadden breached their fiduciary duties by diverting the option to acquire the parking garage from plaintiff to River City Parking and that HMB aided and abetted Gouletas and Cadden in breaching their fiduciary duties by assisting them in doing so. Plaintiff asserted that HMB knew that WRT and plaintiff had reached an agreement whereby plaintiff was to receive an option to acquire the parking garage, that Gouletas and Cadden owed fiduciary duties to plaintiff, and that Gouletas and Cadden were breaching their fiduciary duties when they diverted the option to acquire the parking garage to River City Parking. Plaintiff also asserted that HMB assisted Gouletas and Cadden by advising and counseling them regarding ways to divert the option to acquire the parking garage to River City Parking and negotiating, drafting, reviewing, and preparing the documents which accomplished that goal.

ΒΆ 7 On September 28, 2012, HMB filed a combined motion to dismiss under section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2010)). HMB asserted that plaintiff's claim should be dismissed under section 2-619(a)(5) (735 ILCS 5/2-619(a)(5) (West 2010)) because it was barred by the two-year statute of limitations provided in section 13-214.3(b) (735 ILCS 5/13-214.3(b) (West 2010)) for actions "against an attorney arising out of an act or omission in the performance of professional services" and that the claim should be dismissed under section 2-615 (735 ILCS 5/2-615 (West 2010)) because plaintiff failed to allege sufficient facts to state a cause of action. Plaintiff ...


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