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Venturella v. Dreyfuss

Court of Appeals of Illinois, First District, Third Division

June 21, 2017

GEORGE VENTURELLA, Individually, and Derivatively on Behalf of ABBEY MEDCO, LLC, Plaintiff-Appellant,
v.
DAVID A. DREYFUSS, M.D., Defendant-Appellee.

         Appeal from the Circuit Court of Cook County. No. 2014 L 006000 The Honorable Patrick J. Sherlock, Judge Presiding.

          PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the court, with opinion. Justices Lavin and Pucinski concurred in the judgment and opinion.

          OPINION

          FITZGERALD SMITH PRESIDING JUSTICE

         ¶ 1 Appellant George Venturella, individually, and derivatively on behalf of Abbey Medco, LLC, appeals from the dismissal pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2014)) of his lawsuit against appellee David A. Dreyfuss, M.D. On appeal, Venturella contends that the circuit court erred in dismissing his derivative claim under the doctrine of res judicata and the rule against claim-splitting because another court in a previous case expressly reserved the claim. Specifically, Venturella does not argue that the elements of res judicata are not met, but instead claims that his case falls into an exception to res judicata: that the circuit court expressly reserved his right to maintain the second action. For the following reasons, we affirm.

         ¶ 2 I. BACKGROUND

         ¶ 3 This action arises from a failed real estate development. Plaintiff Venturella is a real estate developer. Defendant Dreyfuss is a plastic surgeon. Together, they were co-managers and fifty-percent interest-holders of Abbey Medco, LLC, a limited liability company formed in May 2008 and registered in the State of Illinois specifically for the purpose of developing and constructing a new office complex. The parties intended to build an office complex on land that Venturella owned. Venturella and Dreyfuss both agreed to contribute funds to the project, and Dreyfuss agreed to have his surgical practice sign a lease for space in a building controlled by Venturella. The parties apparently made a series of oral and written agreements regarding the planned transactions for the project.

         ¶ 4 On January 25, 2008, Abbey Medco entered into a written contract with Abbey Woods Office Park (Woods LLC), an entity solely owned by Venturella. Under the contract, Woods LLC would build office buildings on the land and sell the land and buildings to Abbey Medco. Abbey Medco's down payment was $1, 280, 000, or $640, 000 per partner. Dreyfuss paid $300, 000 but not the remaining balance of $340, 000.[1]

         ¶ 5 Eventually, the deal fell apart and litigation ensued. One of the many issues of controversy between the parties was Dreyfuss's failure to make the rest of the $340, 000 down payment.

         ¶ 6 In 2009, Dreyfuss, Abbey Medco, and Plastic Surgery Specialists, Inc.[2] filed a lawsuit in Chancery against Venturella and Woods LLC concerning matters related to the development and construction project (the prior suit, or the 2009 case). By that suit, Dreyfuss alleged Venturella had "represented that he was a successful and sophisticated commercial real estate developer" who was looking for a partner to develop an office building in the Abbey Woods development in Frankfort, Illinois. According to Dreyfuss, he and Venturella orally agreed that (1) they would form Abbey Medco, to be owned 50/50 by Dreyfuss and Venturella, but managed by Venturella who would advise Dreyfuss of "all business developments"; (2) Venturella "would cause Abbey Medco to have all necessary and proper documentation prepared to fully protect the interest of Dreyfuss; (3) Venturella would contribute the real property and the development rights, as well as secure the permits and licenses as part of his capital contribution to Abbey Medco, and would oversee and manage the development as well as the day-to-day business of Abbey Medco; (4) Dreyfuss would move the surgical practice into an adjacent building owned by Venturella, and the surgical practice "would be charged a monthly rental price which was inflated, but that was intended to generate higher income figures for that separate project of Venturella, so that when that project was examined by Venturella's bank, the bank would promptly make all necessary loans in connection with the proposed project for Abbey Medco, " and these inflated payments would be considered as part of Dreyfuss' capital contribution; (5) the surgical practice would not build out to its desired specifications, and could cancel its lease at any time without penalty or obligation; (6) Dreyfuss would contribute $300, 000 to fund the operations of Abbey Medco to complete the development of the anticipated project, and Venturella would meet with Dreyfuss and discuss the project and Abbey Medco business in detail if the project required more funding. If they agreed, Dreyfuss would contribute up to an additional $300, 000 to Abbey Medco; and (7) the project was to be completed by September 2009.

         ¶ 7 Dreyfuss further alleged that he moved the surgical practice into Venturella's other building at great expense, and he tendered $300, 000 to Abbey Medco, but that Venturella never furnished him a receipt for the $300, 000 or other necessary documents.

         ¶ 8 The first count alleged conversion as to Venturella and Abbey Woods, the second count alleged fraud as to Venturella and Abbey Woods, the third count alleged breach of fiduciary duty as to Venturella, the fourth count alleged breach of contract as to Venturella and Abbey Woods, and the fifth count requested injunctive relief against Venturella, terminating his ownership of and participation in Abbey Woods and requiring him to return funds to Dreyfuss.

         ¶ 9 In August 2009, Abbey Woods filed a three-count counterclaim against Abbey Medco, [3] Plastic Surgery Specialists of Illinois, d/b/a Dreyfuss, and Gelman Plastic Surgery over Dreyfuss' failure to pay the $340, 000. By that counterclaim, Abbey Woods alleged (1) "breach of build to suit purchase agreement, " where Abbey Medco and Abbey Woods entered into a build to suit purchase agreement in 2008 by which Abbey Medco was to deposit $1, 280, 000 as earnest money, but breached the agreement when "Dreyfuss tendered only three $100, 000 installment payments"; (2) another "breach of build to suit purchase agreement" count, whereby Abbey Woods alleged incurred damages in the amount of $3, 313, 234 because of the above-mentioned breach; and (3) "breach of lease, " by which Abbey Woods alleged it had incurred damages in the amount of $54, 076 in unpaid rent, taxes, attorney fees, and court costs due to the breach of the lease agreement.

         ¶ 10 In the months leading up to trial, Venturella's counsel withdrew. In July 2013, the court set a trial date for October 30, 2013. A new law firm came on to represent Venturella on October 16, 2013.

         ¶ 11 Two days before the scheduled trial date, on October 28, 2013, Venturella's counsel sought leave to amend the counterclaim. Specifically, Abbey Woods and Venturella sought to withdraw two of the three counts and to include a derivative claim on behalf of Abbey Medco and against Dreyfuss individually for failure to pay the $340, 000. It stated that "Counts I and II of the Counterclaim allege damages that were sustained but which may not be recoverable, whereas a new claim for $340, 000 against Dreyfuss, while a lower amount, is owed and should be recovered." Further, "Count III, for breach of the lease agreement, contained outdated information relating to the lease between Abbey Woods and Plastic Surgery." Therefore, leave was sought to amend the counterclaim to withdraw counts I and II and update the facts contained in count III, as well as add a derivative claim. The proposed derivative claim itself acknowledged that Abbey Medco was owned by Dreyfuss and Venturella as sole owners and co-managing members, each owning a 50% share of the LLC. It described the alleged agreements of the parties, the alleged subsequent breach of the agreements by Dreyfuss, and the resulting damages. It alleged that "Abbey Medco has suffered as a result of Dreyfuss' refusal to pay his capital contribution" and that, as Medco was "now winding up, " "Venturella is entitled to a distribution of the unpaid $340, 000, net of attorneys fees."

         ¶ 12 On the day of trial, after hearing detailed arguments on the motion by both parties, the court denied the motion to amend the counterclaim. The court ruled:

"THE COURT: Having reviewed the plaintiff's counterclaim, which carries Venturella's motion for leave to amend the counterclaim and having read the original counterclaim, the motion for leave to amend is denied as well at this time. What other motions do you have?
[MR. PATTERSON, ATTORNEY FOR DEFENDANT] A. Your Honor, could I ask that this-does your Honor intend that to have res judicata effect or is it just denied at this time as a procedural matter so if I want to and it's timely I could commence a new lawsuit on it.
THE COURT: It's denied at this time.
MR. PATTERSON: At this time, but not res ...

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