Court of Appeals of Illinois, First District, Third Division
from the Circuit Court of Cook County No. 11 L 2895 The
Honorable Margaret A. Brennan, Judge Presiding.
JUSTICE FITZGERALD SMITH delivered the judgment of the court,
with opinion. Justices Howse and Lavin concurred in the
judgment and opinion.
FITZGERALD SMITH JUSTICE.
1 Upon the filing of the parties' cross-motions for
summary judgment, the trial court granted defendant-appellee
John Cadden's motion for summary judgment and denied
plaintiff-appellant 800 South Wells Commercial LLC's
motion for summary judgment. Plaintiff appeals, contending
that the trial court erred in granting summary judgment for
defendant where the evidence raised a question of fact as to
whether defendant owed fiduciary duties to plaintiff and a
question of fact as to whether he breached these duties.
Plaintiff asks that we reverse the trial court's order
and remand the cause for trial on the merits. For the
following reasons, we affirm.
3 This cause has already been before our court, in some
related form, several times. Its history, which now spans
over a decade, is lengthy and, in many respects, complex. For
purposes of the instant matter, we present only those facts
that are most relevant to our determination herein.
4 In 1997, River City Complex (Complex) was an area that
consisted of an apartment complex, a commercial space, a
surface parking lot, a parking garage, and a marina. A
development corporation owned by Nicholas Gouletas, known as
American Invesco Development Corporation (Invesco),
purchased the Complex in April 1997.
5 Plaintiff, a manager-managed Illinois limited liability
company, was formed in early 2001. Its members consisted of
Gouletas and a Michigan company known as River City
Investors, LLC (RCI). Pursuant to its operating agreement
(Operating Agreement), plaintiff was formed specifically in
order to obtain a leasehold interest in the Complex's
commercial space and parking garage now held by Invesco. The
Operating Agreement stated:
"The purpose of the Company is to acquire the Property
and to lease, improve, sell the Property, and to engage in
any and all activities related or incidental thereto."
Operating Agreement defined "the Property" as
"a leasehold interest in that portion of the property
located at 800 South Wells Street, Chicago, Illinois,
generally consisting of approximately 240, 000 square feet of
net rentable commercial space and approximately 130 indoor
parking spaces in the building located on the Property."
Operating Agreement named Gouletas as plaintiff's
managing member with the "the sole and exclusive right
to manage plaintiff" and permitted him, as manager, to
appoint officers to assist in plaintiff's operations.
Section 5.9 of the Operating Agreement, entitled
"Officers, " stated:
"The Managing Member shall elect officers
("Officers") to carry out the policies and
objectives of the Managing Member. Subject to the policies
and objectives prescribed by the Managing Member, the
Officers shall establish operating procedures for, and
administer and direct, the day to day operations of the
Company. The powers of the Officers may be broadened or
limited from time to time in the discretion of the Managing
Member and each Officer shall, at a minimum, be empowered to
carry out (and shall carry out) any activity expressly
authorized in a written resolution of the Managing Member.
*** Each Officer shall serve until removed by the Managing
Member. The Managing Member may remove any Officer at any
time for any reason. *** No Officer shall receive any
compensation for such Officer's services to the
the Operating Agreement dictated that plaintiff, as a
"shall engage in no other business until such time as
[any mortgages] *** have been repaid in full, at which time
the purpose of the Company shall be expanded to include the
acquisition(s) of additional properties, and to lease, sell,
or improve the additional properties, and any and all
activities related or incidental thereto."
6 On March 1, 2001, Gouletas, as plaintiff's manager and
member, and RCI, as its only other member, unanimously issued
a certificate of managing member authority (Certificate) on
behalf of plaintiff. In it, Gouletas appointed defendant to
be plaintiff's vice president "in accordance with
the provisions of Section 5.9 of the Operating
Agreement." This Certificate also authorized plaintiff
to acquire the leasehold interest in the commercial space and
the parking garage, as had been described in its Operating
Agreement, pursuant to a leasehold purchase and sale by
assignment agreement. Originally, the lease included rights
to the marina. However, the lease was amended to separate out
the marina and remove it from the deal, and the Certificate
ordered and directed defendant to approve the amendment to
the lease and proceed with the deal on plaintiff's
behalf. Accordingly, at the closing, plaintiff received a
leasehold interest in only the commercial space and the
parking garage, pursuant to the amended lease and as had been
described in its Operating Agreement and authorized in the
7 With respect to the commercial space and the parking
garage, these were encumbered by a first mortgage plaintiff
secured from Parkway Bank and Trust Company and a second
mortgage it secured from CIB Bank. Eventually, the second
mortgage was purchased by D.A.N. Joint Venture III, L.P.
(DJV). By the end of 2005, plaintiff was in default on both
8 WRT-Marc RC, LLC (WRT) became interested in purchasing the
commercial space (but not necessarily the parking garage)
from plaintiff. It sought to purchase the first mortgage from
Parkway Bank and foreclose upon the commercial space and
parking garage. At this time, although plaintiff was the
lessee of the commercial space and parking garage, another
entity owned by Gouletas, 800 South Wells Phase I, LLC, also
known as River City Commercial (RCC), was their fee simple
owner and lessor. Thus, WRT sought both plaintiff's and
RCC's consent to a foreclosure, so that WRT could obtain
a fee simple interest in these two assets.
9 Defendant, while still vice president of plaintiff, had
also by this time become vice president of RCC. During
negotiations with WRT, an agreement arose that neither
plaintiff nor RCC would contest the foreclosure of the
commercial space and parking garage provided that WRT grant
an option to acquire the parking garage from WRT at WRT's
cost. Defendant consulted with plaintiff's counsel about
the potential for this option agreement.
10 Thereafter, WRT prepared a document with respect to the
option agreement, known as Px1. In this document, WRT wrote
"[WRT] will grant the borrower (or another group) the
option to buy the indoor 133 parking spaces for the amount of
our outstanding loan balance above $10, 000, 000. The
borrower will have 30 days after the completion of the
foreclosure & pay-off of the new condominium loan in #4
to exercise the option to purchase the 133 in-door parking
never signed nor dated by WRT, nor anyone else, and never
specified what entities were involved in the potential option
agreement, other than "the borrower (or another
11 Eventually, WRT and defendant, in his capacity as
RCC's vice president, executed a written and signed
option agreement whereby RCC was granted the option to
acquire the parking garage. RCC then assigned its rights
under this option agreement to another entity, River City
Parking, LLC (River City Parking). In April 2006, WRT, which
had by this time purchased the first mortgage on the
commercial space and the parking garage, filed suit to
foreclose on that mortgage. Plaintiff did not contest the
foreclosure, and a foreclosure judgment was entered in favor
of WRT in October 2006. WRT went on to purchase the parking
garage and commercial space at a foreclosure sale.
12 In November 2006, DJV, which held the second mortgage,
took control of plaintiff's voting rights. It removed
Gouletas as plaintiff's manager, and defendant's role
as plaintiff's vice president ended.
13 Plaintiff filed a complaint against Gouletas, RCC,
Invesco, River City Parking, its own attorneys, and
defendant, asserting various counts. With respect to
defendant,  plaintiff alleged he breached fiduciary
duties he owed to plaintiff as its vice president.
Specifically, plaintiff alleged that defendant diverted a
corporate opportunity when he failed to obtain the option to
acquire the parking garage for plaintiff (which WRT
eventually granted to RCC), improperly transferred an asset
when he allowed the transfer of the marina out of the initial
deal in which plaintiff obtained the commercial space and
parking garage without receiving valuable consideration for
it, and improperly allocated expenses.
14 As litigation progressed, plaintiff's counsel, against
whom plaintiff asserted claims of aiding and abetting
Gouletas and defendant in allegedly breaching their fiduciary
duties with respect to the option to acquire the parking
garage, filed a motion to dismiss the counts against them.
The trial court granted counsel's motion, and we affirmed
counsel's dismissal from the suit on appeal. See 800
South Wells Commercial, LLC v. Horwood Marcus & Berk
Chartered, 2013 IL App (1st) 123660.
15 Similarly, River City Parking, who had acquired the
parking garage via the written option with WRT and against
whom plaintiff also asserted claims of aiding and abetting
Gouletas and defendant's alleged breach of fiduciary
duties, likewise filed a motion to dismiss the count against
it. The trial court granted its motion. It held that Px1,
which plaintiff insisted was an agreement between it and WRT
for the option, was not such an agreement but, rather, only a
"document" embodying "a term sheet that
indicates further discussion is necessary, not a final
offer." Additionally, and specifically highlighting that
document's express language that WRT will grant the
option to "the borrower (or another group), " the
court further held that, even were it a firm agreement (which
it was not), the document never granted plaintiff the sole
option to purchase. Plaintiff did not appeal this holding of
the trial court. See 800 South Wells Commercial, LLC v.
Gouletas, No. 11-L-2895 (Cir. Ct. Cook County, July 11,
16 Following all this, defendant filed a motion for summary
judgment. He stated that, as a matter of law, he did
not owe plaintiff any fiduciary duties and that, even if he
did, he had not breached them. In support of his argument, he
referenced several portions of plaintiff's Operating
Agreement, the Certificate, affidavits, and depositions.
Plaintiff filed a cross- motion for summary judgment stating
that, as a matter of law, ...