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Diotallevi v. Diotallevi

Court of Appeals of Illinois, Second District

December 23, 2013

DONALD DIOTALLEVI, JOSEPHINE DIOTALLEVI, RICHARD DIOTALLEVI, CAMILLE DIOTALLEVI, and RONALD DIOTALLEVI, Plaintiffs-Appellants,
v.
DENNIS DIOTALLEVI, PAMELA DIOTALLEVI, CHICAGO TITLE AND TRUST COMPANY LAND TRUST 1106876, Dated February 10, 1999, and CHICAGO TITLE AND TRUST COMPANY LAND TRUST 1106788, Dated November 15, 1998, Defendants-Appellees.

Appeal from the Circuit Court of Du Page County. No. 10-CH-4552 Honorable Bonnie M. Wheaton, Judge, Presiding.

PRESIDING JUSTICE BURKE delivered the judgment of the court, with opinion. Justices McLaren and Hutchinson concurred in the judgment and opinion.

OPINION

BURKE PRESIDING JUSTICE

¶ 1 This is a family dispute in which plaintiffs, Donald Diotallevi, Josephine Diotallevi, Richard Diotallevi, Camille Diotallevi, and Ronald Diotallevi, allege that defendants, Dennis Diotallevi and Pamela Diotallevi, failed to repay money received in the forms of loans and investments. Plaintiffs filed a second amended complaint alleging unjust enrichment, seeking a constructive trust, a resulting trust, and a declaratory judgment, and bringing shareholder derivative actions based on breach of fiduciary duty and constructive fraud. The trial court dismissed with prejudice the second amended complaint on the grounds that (1) plaintiffs failed to allege the existence and breach of a fiduciary duty owed by defendants and (2) even if defendants breached such a duty, plaintiffs' claims were untimely because defendants engaged in no concealment that would extend the five-year statute of limitations for contract actions (see 735 ILCS 5/13-205 (West 2010)). On appeal, plaintiffs argue that (1) the five-year limitations period of section 13-205 is not an "absolute bar" to their claims and (2) the second amended complaint states claims for constructive and resulting trusts, a claim for unjust enrichment, and shareholders' derivative claims. We affirm.

¶ 2 I. FACTS

¶ 3 On August 12, 2010, Donald, Richard, Camille, Ronald, and their mother, Josephine, filed a complaint against the siblings' brother, Dennis, and his now-former wife, Pamela. Plaintiffs allege that they gave defendants money in the form of loans and investments so defendants could purchase certain property to run a business and that, after defendants divorced, defendants failed to repay the money. On March 17, 2011, plaintiffs electronically filed (e-filed) an amended complaint, which was involuntarily dismissed. The trial court granted plaintiffs leave to further amend their claims.

¶ 4 On August 5, 2011, plaintiffs filed a second amended complaint, which is the subject of this appeal. Plaintiffs alleged that, in December 1995, by the will of Oldrich Mikulik, Dennis inherited a right of first refusal to purchase a parcel of land in Morris, commonly referred to as the Tree Farm. Dennis also inherited a one-half interest in a parcel in Aurora, commonly known as the Saw Mill. Defendants lacked the funds to buy the Tree Farm or to buy the other one-half interest in the Saw Mill. According to plaintiffs, starting in 1998, plaintiffs made payments to Dennis in the form of loans and capital investments to buy the Tree Farm and to acquire the remaining one-half interest in the Saw Mill. On November 15, 1998, defendants placed the titles to the Tree Farm and the Saw Mill in two land trusts. Defendants held as joint tenants the beneficial interest and power of direction of the land trusts, without recognition of plaintiffs' payments.

¶ 5 In March 2000, Dennis allegedly created an entity known as Family Tree Nursery, Inc., to operate a business on the Tree Farm and the Saw Mill. Thereafter, Dennis received all of the income and losses. For a year, the parties discussed formalizing an agreement regarding plaintiffs' funds used to acquire the Tree Farm and the Saw Mill. Plaintiffs alleged that defendants signed a document called the "Family Tree Nursery Inc. Operating Agreement" on March 3, 2001. "To avoid costly legal expenses, " Donald drafted the document, which was revised several times before defendants signed it.

¶ 6 In 2008, Donald allegedly made another cash infusion, and around that time he distributed to the parties a spreadsheet describing plaintiffs' payments to date. Donald sought to establish a "reasonable return of equity" and to "protect and return (as a minimum) the Family's original investment when the property [sic] are sold in the future."

¶ 7 In 2009, Pamela initiated a marriage dissolution proceeding against Dennis. Plaintiffs alleged that, throughout the proceedings, they expected defendants to acknowledge plaintiffs' interest in the properties. However, in an April 2010 pretrial memorandum, Pamela asserted that defendants owned 100% of the legal interest in the Tree Farm and the Saw Mill, without recognizing plaintiffs' payments. On July 6, 2010, plaintiffs petitioned to intervene in the dissolution proceeding, but the petition was denied. On July 29, 2010, the trial court entered the judgment of dissolution, finding that the purported operating agreement between plaintiffs and defendants did not encumber the Tree Farm or the Saw Mill for purposes of the marriage dissolution.

¶ 8 Plaintiffs began giving defendants money in 1998 but did not file their original complaint in this action until August 12, 2010. Pursuant to section 2-619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2012)), Pamela filed a combined motion under sections 2-615 and 2-619 to dismiss the second amended complaint. Plaintiffs argued that Pamela's pretrial memorandum in the dissolution proceeding was the first indication that defendants would not "completely honor the operating agreement and all other statements and investments to date." Plaintiffs concluded that the five-year statute of limitations did not begin to run until April 2010 and that therefore their original complaint, filed on August 12, 2010, was timely.

¶ 9 The trial court granted the motion and dismissed the second amended complaint, concluding that plaintiffs' reliance on defendants to someday provide some indicia of ownership in the properties was not reasonable where plaintiffs did not adequately allege a fiduciary duty. The court noted that plaintiffs pleaded only the parties' familial relationship to establish a fiduciary duty. The court also stated that, even if there were a fiduciary duty and a breach of that duty, the claims would turn on the timing of such a breach. As the matters at issue were of public record, there could be no finding of concealment that would extend the five-year statute of limitations that applied to the claims. 735 ILCS 5/13-205, 13-215 (West 2010). Plaintiffs e-filed their notice of appeal in the circuit court on December 19, 2011, which was within 30 days of the final order.

ΒΆ 10 II. ...


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