800 South Wells Commercial, LLC v. Horwood Marcus and Berk Chartered , 2013 IL App (1st) 123660 ( 2013 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
800 South Wells Commercial, LLC v. Horwood Marcus & Berk Chartered,
2013 IL App (1st) 123660
Appellate Court 800 SOUTH WELLS COMMERCIAL, LLC, Plaintiff-Appellant, v.
Caption 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).
District & No. First District, Fourth Division
Docket No. 1-12-3660
Filed August 22, 2013
Rehearing denied September 25, 2013
Held Plaintiff’s claim against defendant law firm for aiding and abetting other
(Note: This syllabus defendants in breaching their fiduciary duties to plaintiff was properly
constitutes no part of dismissed as untimely pursuant to the two-year statute of limitations in
the opinion of the court section 13-214.3(b) of the Code of Civil Procedure, notwithstanding
but has been prepared plaintiff’s contention that section 13-214.3(b) only applied to legal
by the Reporter of malpractice claims brought by an attorney’s clients and defendant did not
Decisions for the represent plaintiff, since the plain language of section 13-214.3(b)
convenience of the contains no such limitation.
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 11-L-2895; the Hon.
Review Daniel J. Pierce, Judge, presiding.
Judgment Affirmed.
Counsel on F. Dean Armstrong, of Armstrong Law Firm, P.C., of Flossmoor, for
Appeal appellant.
Williams Montgomery & John Ltd., of Chicago (Michael C. Bruck and
Megan A. Rees, of counsel), for appellee.
Panel JUSTICE FITZGERALD SMITH delivered the judgment of the court,
with opinion.
Presiding Justice Lavin and Justice Pucinski concurred in the judgment
and opinion.
OPINION
¶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
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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.
¶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
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section 2-615 (735 ILCS 5/2-615 (West 2010)) because plaintiff failed to allege sufficient
facts to state a cause of action. Plaintiff responded that the two-year statute of limitations did
not apply to its claim because the claim did not arise from HMB’s performance of legal
services for plaintiff.
¶8 On November 9, 2012, the court granted HMB’s motion to dismiss with prejudice under
section 2-619 and denied the motion to dismiss under section 2-615. In doing so, the court
found that the two-year statute of limitations applied to plaintiff’s claim because the
allegation against HMB was based on acts it performed in the course of providing
professional legal services to Gouletas and that plaintiff failed to comply with the statute of
limitations because it did not file its complaint within two years of learning of its injury. The
court subsequently entered an order pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb.
26, 2010), finding there was no just reason to delay the enforcement or appeal of its order
dismissing plaintiff’s claim.
¶9 ANALYSIS
¶ 10 Plaintiff contends that the court erred by dismissing its claim against HMB because the
two-year statute of limitations provided in section 13-214.3(b) of the Code did not apply to
its claim. A motion to dismiss brought under section 2-619 of the Code admits the legal
sufficiency of the plaintiff’s claim but asserts an affirmative matter outside of the pleading
that defeats the claim. Czarobski v. Lata, 227 Ill. 2d 364, 369 (2008). The circuit court’s
decision to grant such a motion will be reviewed de novo. Sandholm v. Kuecker, 2012 IL
111443, ¶ 55.
¶ 11 A claim based on tort, contract, or otherwise “against an attorney arising out of an act or
omission in the performance of professional services” must be commenced within two years
from the time the party bringing the action knew or reasonably should have known of the
injury for which damages are being sought. 735 ILCS 5/13-214.3(b) (West 2010). Plaintiff
asserts that the two-year statute of limitations only applies to legal malpractice claims
brought by a client against its attorney for actions taken in the performance of professional
services for the client and that the statute does not apply in this case because plaintiff’s claim
does not arise from actions taken by HMB in the performance of any services for plaintiff.
HMB responds that the application of the statute of limitations is not restricted to legal
malpractice claims by a client against its attorney and that the statute applies regardless of
whether the claim is brought by a client of the attorney. In dismissing plaintiff’s claim, the
circuit court found that the statute applied because plaintiff’s allegations arose from acts
performed by HMB in the course of rendering legal services to Gouletas. The parties do not
dispute that plaintiff did not bring its claim against HMB within two years of learning of the
injury at issue and that if the two-year statute of limitations applies to plaintiff’s claim, then
the claim was properly dismissed as untimely.
¶ 12 A court’s primary objective in construing the meaning of a statute is to ascertain and give
effect to the intent of the legislature. Ready v. United/Goedecke Services, Inc., 232 Ill. 2d
369, 375 (2008). The most reliable indicator of legislative intent is the plain meaning of the
statutory language. Gaffney v. Board of Trustees of the Orland Fire Protection District, 2012
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IL 110012, ¶ 56. When the plain language of a statute is clear and unambiguous, a court will
not depart from that language by reading into the statute exceptions, limitations, or
conditions that conflict with the legislature’s expressed intent. MidAmerica Bank, FSB v.
Charter One Bank, FSB, 232 Ill. 2d 560, 565-66 (2009).
¶ 13 The two-year statute of limitations in section 13-214.3(b) of the Code provides that it
applies to claims “against an attorney arising out of an act or omission in the performance
of professional services.” 735 ILCS 5/13-214.3(b) (West 2010). As there is no language in
the statute restricting its application to legal malpractice claims or claims brought by an
attorney’s client, the plain language of the statute directs that the two-year limitation applies
to all claims against an attorney arising out of acts or omissions in the performance of
professional services, and not just legal malpractice claims or claims brought against an
attorney by a client. Had the legislature intended to restrict the applicability of the statute of
limitations to malpractice claims, it could have explicitly done so in the text of the statute as
it did when it prohibited the recovery of punitive damages in legal malpractice cases (735
ILCS 5/2-1115 (West 2010)), but chose not to do so in this instance.
¶ 14 Plaintiff alleged that HMB aided and abetted Gouletas and Cadden in breaching their
fiduciary duties by advising them on ways to divert the option to acquire the parking garage
from plaintiff to River City Parking and negotiating, drafting, reviewing, and preparing the
documents necessary to complete that goal. As such, plaintiff’s claim is based on the
assertion that HMB assisted Gouletas and Cadden in breaching their fiduciary duties to
plaintiff through its provision of legal services to them and the two-year statute of limitations
in section 13-214.3(b) applies to plaintiff’s claim. As plaintiff did not file its claim against
HMB within that two-year limitation, we conclude that the circuit court did not err by
dismissing the claim.
¶ 15 In reaching this conclusion, we have considered Ganci v. Blauvelt, 294 Ill. App. 3d 508,
515 (1998), in which the circuit court dismissed the plaintiff’s complaint for contribution
against the defendant, an attorney, as untimely pursuant to section 13-214.3(b) and an
appellate court in the Fourth District reversed that dismissal, holding that the statute of
limitations did not apply because the plaintiff’s claim was not an action for legal malpractice.
While the court stated that a claim arising from an attorney’s acts or omissions in the
performance of professional services is, “in common jargon, an act of malpractice,” the court
did not provide any explanation as to how it reached that determination (Ganci, 294 Ill. App.
3d at 515), and we do not find that decision to be persuasive in light of the statute’s plain
language to the contrary. Rather, we agree with the reasoning in Polsky v. BDO Seidman, 293
Ill. App. 3d 414, 424 (1997), in which a court in the Second District held that the similarly
worded two-year statute of limitations for a claim arising from an accountant’s “act or
omission in the performance of professional services” (735 ILCS 5/13-214.2(a) (West 1996))
was not limited to malpractice actions because the plain language of that statute contained
no such limitation. While the two-year statute of limitations in section 13-214.3(b)
undoubtedly applies to legal malpractice claims, its application is not restricted to those
claims by the plain language of the statute.
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¶ 16 CONCLUSION
¶ 17 Accordingly, we affirm the judgment of the circuit court of Cook County.
¶ 18 Affirmed.
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