Miller v. Lockport Realty Group, Inc. ( 2007 )

FIRST DIVISION
NOVEMBER 19, 2007
No. 1-06-3603
JOHN MILLER, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 03 CH 7882
)
LOCKPORT REALTY GROUP, INC., d/b/a ) Honorable
Re/Max Executive Team, ) Daniel J. Kelley,
) Judge Presiding.
Defendant-Appellee. )
JUSTICE ROBERT E. GORDON delivered the opinion of the court:
Plaintiff John Miller, a licensed attorney, appeals from an order of the circuit
court of Cook County granting summary judgment in favor of defendant Lockport Realty
Group, Inc., on count IV of plaintiff’s amended complaint, alleging tortious interference
with prospective business advantage. On appeal, plaintiff argues that the trial court erred
by (1) granting defendant summary judgment on the basis of the privilege of competition,
and (2) by considering the privilege of competition where defendant did not plead the
privilege as an affirmative defense, but raised the privilege for the first time in its motion
for summary judgment. We affirm.
BACKGROUND
Walther Kariodimedjo was a diplomat for the Republic of Indonesia assigned to
Chicago from 1993 to 1997. In 1993, Kariodimedjo purchased a home at 4030 Enfield
Avenue in Skokie, Illinois (subject property). Kariodimedjo resided there with his family
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until 1997, when he returned to Jakarta, Indonesia (known as Djakarta in 1997).
Kariodimedjo’s family remained in the home until July 1998.
Kariodimedjo leased the subject property from August 1998 to August 2002.
Plaintiff collected the rent and otherwise managed the property on behalf of
Kariodimedjo.
On August 14, 2002, plaintiff entered into an agreement with Kariodimedjo, over
the telephone, to purchase the subject property for $265,000. Plaintiff claimed that the
parties agreed that the sum of $265,000 was payable to Kariodimedjo in equal monthly
installments over 30 years. Kariodimedjo claimed that the agreement called for payment
in full with closing to take place on or before November 30, 2002.
Plaintiff moved into the property during September 2002, at the alleged request of
Kariodimedjo. Plaintiff claims that he made valuable improvements to the property at
his own expense. He claims that he replaced old carpeting with new carpeting, refinished
the wood floors in the house, painted, landscaped, cleaned the fireplace, bought a new
refrigerator for the home, and made other improvements to the subject property.
In October 2002, Kariodimedjo received $2,000 from plaintiff, which he claims to
be “the remaining part of the rental money” plaintiff was once collecting on his behalf.
Plaintiff claims that the $2,000 was earnest money toward the purchase of the subject
property.
On January 16, 2003, after signing a listing agreement with defendant,
Kariodimedjo’s wife visited the subject property with defendant’s agent, James Offord.
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Plaintiff found Kariodimedjo’s wife and Offord in the kitchen of the Skokie home.
Offord identified himself as the Kariodimedjos’ real estate agent and asked plaintiff if he
was interested in purchasing the subject property. Plaintiff’s affidavit states that Offord
quoted the listing price for the subject property at $425,000. Plaintiff answered that he
had already agreed to acquire the subject property from Kariodimedjo, but could not
produce a written agreement. Five days later, Offord, on behalf of Kariodimedjo, made a
written demand that plaintiff vacate the subject property. Plaintiff complied.
On February 2, 2003, Kariodimedjo signed a listing agreement for the sale of the
subject property with defendant. Offord’s affidavit states that he thought the subject
property was worth between $400,000 and $430,000 in the spring of 2003. On
November 29, 2004, the property sold for $385,000. Defendant received a commission
of $19,250.
Plaintiff filed suit on May 5, 2003, shortly after the listing agreement between
Kariodimedjo and defendant was signed. The single-count complaint sought specific
performance of the oral contract to purchase the subject property. Kariodimedjo moved
to dismiss the complaint on September 5, 2003. Plaintiff moved to amend the complaint
to add claims against Kariodimedjo and named Lockport as a defendant on October 2,
2003. Plaintiff was granted leave to amend on November 20, 2003, and added three
counts to his complaint. Counts I and II were directed against Kariodimedjo. Count I
sought specific performance or the oral agreement. Alternatively, count II sought
damages for breach of contract. Counts III and IV were directed against Lockport.
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Count III and IV alleged tortious interference with contract and tortious interference with
economic advantage, respectively.
Kariodimedjo moved to dismiss counts I and II of plaintiff’s amended complaint
on November 20, 2003. The motion to dismiss was premised in large part on the Frauds
Act, (740 ILCS 80/1 (West 2006)). The trial court found that the oral agreement to
purchase the property between plaintiff and Kariodimedjo was unenforceable and
dismissed counts I and II of the amended complaint with prejudice. Plaintiff appealed
the dismissal of counts I and II; however, plaintiff and Kariodimedjo reached a
settlement agreement before the appeal was considered by this court. Kariodimedjo was
thereafter dismissed from this action.
Plaintiff filed a motion for summary judgment on count IV of his complaint on
July 10, 2006. Lockport filed a motion for summary judgment as to counts III and IV on
July 12, 2006. The trial court denied plaintiff’s motion for summary judgment on count
IV of plaintiff’s amended complaint and granted defendant’s motion for summary
judgment on counts III and IV. This appeal followed.
ANALYSIS
As noted, this appeal was taken from the trial court’s grant of summary judgment
in favor of defendant and against plaintiff. “A drastic means of disposing of litigation, a
motion for summary judgment is granted only when the pleadings, depositions, and
admissions on file, together with any affidavits, construed strictly against the movant and
liberally in favor of the opponent of the motion, show that there is no genuine issue of
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material fact and that the moving party is entitled to a judgment as a matter of law.”
Hanley v. City of Chicago, 343 Ill. App. 3d 49, 53 (2003). We conduct a de novo review
on appeals from summary judgment rulings. Hanley, 343 Ill. App. 3d at 53.
Count IV of plaintiff’s amended complaint alleged the tort of intentional
interference with prospective business advantage. The tort of interference with
prospective advantage recognizes that a person’s business relationships constitute a
property interest and as such are entitled to protection from unjustified tampering by
another. Belden Corp. v. Internorth, Inc., 90 Ill. App. 3d 547, 551 (1980). The cause of
action implies a balancing of societal values: an individual has a general duty not to
interfere with the business affairs of another, but he may be privileged to interfere,
depending on his purpose and methods, when the interference takes a socially sanctioned
form, such as lawful competition. The tort of interference with prospective business
advantage differs from the sister tort of interference with contractual relations in the
following respect: “the tort of interference with contractual relations affords a greater
degree of protection to the parties to a business relationship” because “[t]he sacrosanct
contractual relation takes precedence over the conflicting rights of any presumptive
interferor, including his right to compete and his own prospective advantage.” Beldon
Corp., 90 Ill. App. 3d at 551, citing W. Prosser, Torts §129, at 945 (4th ed. 1971).
The elements of the tort of interference with prospective business advantage
include: “(1) plaintiff’s reasonable expectation of entering a valid business relationship;
(2) the defendant’s knowledge of the plaintiff’s expectancy; (3) purposeful or intentional
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interference by the defendant that prevents the plaintiff’s legitimate expectancy from
ripening into a valid business relationship; and (4) damages to the plaintiff resulting from
such interference.” Soderlund Brothers, Inc. v. Carrier Corp., 278 Ill. App. 3d 606, 615
(1995).
On appeal, defendant argues that plaintiff failed to satisfy the first element of the
tort of interference with prospective business advantage because plaintiff’s claim is
premised on an unenforceable oral contract for the sale of real property which is barred
by the Frauds Act, (740 ILCS 80/1 (West 2006)). Additionally, defendant argues that
plaintiff cannot satisfy the first element of the tort of intentional interference with
prospective business advantage based on the law-of-the-case doctrine since it was
judicially determined that the agreement between plaintiff and Kariodimedjo was
unenforceable. Defendant’s arguments in this respect are unpersuasive.
We first address defendant’s contentions under the law-of-the-case doctrine.
“[T]he law of the case doctrine provides that ‘where an issue has been litigated and
decided, a court’s unreversed decision on that question of law or fact settles that question
“for all subsequent stages of the suit.” ’ ” Alwin v. Village of Wheeling, 371 Ill. App. 3d
898, 911 (2007), quoting Pekin Insurance Co. v. Pulte Home Corp., 344 Ill. App. 3d 64,
69 (2003), quoting Norton v. City of Chicago, 293 Ill. App. 3d 620, 624 (1997).
“ ‘The purpose of the doctrine is to protect settled
expectations of the parties, ensure uniformity of decisions,
maintain consistency during the course of a single case,
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effectuate proper administration of justice, and bring
litigation to an end. [Citation.] An additional concern
addressed by the law of the case doctrine is the
maintenance of the prestige of the courts, for the reason
that if an appellate court issues contrary opinions on the
same issue in the same case, its prestige is undercut.’ ”
Alwin, 371 Ill. App. 3d at 911, quoting Emerson Electric
Co. v. Aetna Casualty & Surety Co., 352 Ill. App. 3d 399,
417 (2004).
As noted, the trial court entered summary judgment in favor of Kariodimedjo on
counts I and II of plaintiff’s amended complaint, based on its determination that the
agreement between plaintiff and Kariodimedjo was unenforceable. Plaintiff appealed
from that order; however plaintiff and Kariodimedjo settled prior to any consideration of
the issue by this court. Kariodimedjo was subsequently dismissed from the instant
action. As is evident here, the law-of-the-case doctrine does not operate in the case at
bar, as there was no determination of the issue of whether the contract between plaintiff
and Kariodimedjo was enforceable by a reviewing court. People v. Rodriguez, 313 Ill.
App. 3d 877 (2000), which is cited by defendant for its argument that the law-of-the-case
doctrine applies in this case, acknowledges the necessary element of a prior appellate
decision for application of that doctrine to occur.
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Furthermore, defendant’s argument that plaintiff fails to satisfy the first element
of the tort of interference with prospective business advantage because plaintiff’s claim is
premised on an oral contract for the sale of real property, which is barred by the Frauds
Act, is inapposite. Defendant’s argument would be more suited if plaintiff’s cause of
action was based on the tort of interference with contractual relations, as the first element
of that cause of action requires the “ ‘existence of a valid and enforceable contract
between the plaintiff and another *** .’ ” [Citations.] HPI Health Care Services, Inc. v.
Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-55 (1989). However, as noted, the tort of
interference with prospective business advantage does not require a defendant to interfere
with plaintiff’s contractual relations, but only that defendant interfere with plaintiff’s
reasonable expectation of entering into a valid business relationship. Beldon Corp., 90
Ill. App. 3d at 551.
Defendant then argues that summary judgment was proper based on the privilege
of competition. Plaintiff argues in the first place that defendant waived its right to claim
the privilege of competition because defendant did not raise that privilege as an
affirmative defense, and argues that the trial court erred by considering the privilege
when it was raised for the first time in defendant’s motion for summary judgment.
Plaintiff then argues that the privilege of competition does not apply in this case because
defendant is not a bona fide competitor of plaintiff.
“Generally, in order to avoid surprise to the opposite party, an affirmative defense
must be set out completely in a party’s answer to a complaint and failure to do so results
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in waiver of the defense.” Hanley, 343 Ill. App. 3d at 53-54, citing 735 ILCS 5/2-613(d)
(West 2006). However, “[w]hen, as in this case, the existence of a privilege in favor of
the defendant is apparent on the face of a claim for tortious interference with prospective
[business] advantage, it is the plaintiff’s burden to plead and prove that the defendant’s
conduct was unjustified or malicious.” Storm & Associates, Ltd. v. Cuculich, 298 Ill.
App. 3d 1040, 1052 (1998). Furthermore, a review of plaintiff’s amended complaint
demonstrates that plaintiff was not surprised by defendant’s assertion of the privilege of
competition, as plaintiff attempted to plead around the privilege by alleging that “[t]he
actions of Defendant were performed without justification based on the legitimate
interests of [Defendant], and were performed maliciously, ” which actions, as will be
explained shortly, would not be covered by the privilege of competition. Accordingly,
the trial court did not err by considering the privilege of competition despite defendant’s
assertion of that privilege for the first time in its motion for summary judgment.
We now consider the application of the privilege in this case. Section 767 of the
Restatement (Second) of Torts defines the factors to be considered in determining
whether interference is improper as follows:
“In determining whether an actor’s conduct in intentionally interfering with a
contract or a prospective contractual relation of another is improper or not, consideration
is given to the following factors:
(a) the nature of the nature of the actor’s conduct,
(b) the actor’s motive,
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(c) the interests of the other with which the actor’s conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the
contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to the interference and
(g) the relations between the parties.” Restatement (Second) of torts
§767 (1979).
Section 768 of the Restatement (Second) of Torts develops the last factor
providing:
“(1) One who intentionally causes a third person not to enter into a prospective
contractual relation with another *** does not interfere improperly with the other’s
relation if
(a) the relation concerns a matter involved in the competition between the actor
and the other and
(b) the actor does not employ wrongful means and
(c) his action does not create or continue an unlawful restraint of trade and
(d) his purpose is at least in part to advance his interest in competing with the
other.” Restatement (Second) of Torts §768 (1979).
Considering the foregoing factors, it is apparent that defendant’s actions fall
within the privilege of competition, as defendant lawfully competed with plaintiff over
the subject property in an open real estate market. “The privilege to engage in business
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and to compete allows one to divert business from one’s competitors generally as well as
from one’s particular competitors provided one’s intent is, at least in part, to further one’s
business and is not solely motivated by spite or ill will.” Soderlund Brothers, Inc., 278
Ill. App. 3d at 615. A review of the record reveals that after plaintiff’s relationship with
Kariodimedjo soured, Kariodimedjo sought the help of a broker to effectuate the sale of
the subject property. Defendant’s motive in listing the subject property and later
effectuating a sale of the subject property was motivated by its desire to acquire a
commission for its efforts. Nothing in the record suggests that defendant’s motives were
out of spite or ill will for plaintiff.
Plaintiff then contends that even if defendant’s actions were privileged, Offord’s
statement to the Kariodemedjos that the subject property was worth over $400,000
constituted unprivileged competition because Offord’s gross overstatement of the value
of the property was fraudulent and was intended to deter Kariodimedjo from
consummating transfer of the subject property to plaintiff. “Acts of competition, which
are never privileged include fraud, deceit, intimidation, or deliberate disparagement.”
Soderlund Brothers, Inc. v. Carrier Corp., 278 Ill. App. 3d 606, 616 (1995); see also
generally Restatement (Second) of Torts §767, Comment (B), at 28-29 (1979) (the
determination of whether an act is improper is determined in each case; physical
violence, fraudulent misrepresentation and threats of illegal conduct are ordinarily
wrongful means). “A representation is fraudulent when, to the knowledge or belief of its
utterer, it is false in the sense in which it is intended to be understood by the recipient.”
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Soderlund Brothers, Inc., 278 Ill. App. 3d at 619. “There is no liability for interference
with a prospective [business] relation on the part of one who merely gives truthful
information to another.” Soderlund Brothers, Inc., 278 Ill. App. 3d at 620. Furthermore,
“[m]atters of fact are distinguishable from expressions of opinion, and the latter cannot
form the basis of an action of fraud.” Soderlund Brothers, Inc., 278 Ill. App. 3d at 620.
This court cannot say that Offord’s statement to Kariodimedjo that the subject
property was worth more than $400,000 was fraudulent. Firstly, Offord’s statement only
constituted an opinion as to the worth of the subject property. By virtue of his
employment as a real estate broker, Offord was required to express his opinion as to the
worth of his client’s property; here, Kariodimedjo. Letsos v. Century 21-New West
Realty, 285 Ill. App. 3d 1056, 1067 (1996) (a broker owes a duty to disclose all material
terms of a transaction to his principal). Secondly, this court cannot say that Offord
grossly overstated the value of the subject property, as his opinion was based on
comparables in the area surrounding the subject property. After reviewing a list of the
comparables Offord based his opinion on, contained in the record of this case, it seems
Offord’s valuation was not impermissible. Offord expressly relied on the sale of a home
located at 4050 Enfield Avenue. That property sold for $370,000 in August of 2002.
Offord states in his affidavit that his opinion was that the Kariodemedjos’ home should
sell for between $400,000 and $430,000, because their home was larger than 4050
Enfield Avenue and had the extra amenity of a finished basement. Furthermore,
plaintiff’s argument that Offord’s valuation was a gross overstatement of the value of the
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property is belied by the fact that the property actually sold for $385,000 a year and a
half later.
Despite the foregoing, plaintiff argues that defendant’s conduct in this case was
not privileged because defendant was not a bona fide competitor of plaintiff. Plaintiff
appears to argue that defendant owed him a duty of good faith to not interfere with his
prospective business advantage because a broker did not represent plaintiff. For this
proposition, plaintiff cites to cases that assert the general duties a broker owes to his
principal. However, plaintiff has not cited to a single authority that supports plaintiff’s
argument that a broker owes a duty of good faith to an unrelated third party, and indeed,
this court’s own research reveals none. Accordingly, plaintiff’s argument must fail.
CONCLUSION
For the foregoing reasons, we affirm the judgment of the circuit court of Cook
County.
Affirmed.
CAHILL, P.J., and GARCIA, J., concur.
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