Tsai v. Karlik , 2022 IL App (1st) 200845-U ( 2022 )

2022 IL App (1st) 200845-USECOND DIVISION
June 21, 2022
No. 1-20-0845
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent
except in the limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
SANDY TSAI, STEALTH PROPERTIES, LLC, a limited ) Appeal from the
liability company, JOHN DONGAS, CASTLE REALTY ) Circuit Court of
INVESTMENTS, LLC, and BLUE ISLAND GD ) Cook County.
INVESTMENTS, individually and derivatively on behalf
)
of 15th Street Blue Island, LLC, )
)
Plaintiffs-Appellees, )
)
v. ) No. 12 CH 28187
)
JERRY KARLIK, KEITH GILES, JORDAN KARLIK )
KARGIL BLUE ISLAND, LLC, a limited liability )
company, and SPIROS PICOULAS, ) Honorable
) Anna H. Demacopoulos,
Defendants- Appellants. ) Judge Presiding.
______________________________________________________________________________
JUSTICE HOWSE delivered the judgment of the court.
Presiding Justice Fitzgerald Smith and Justice Lavin concurred in the judgment.
ORDER
¶1 Held: The judgment of the circuit court of Cook County is affirmed; the trial court had
equitable authority to assess attorney fees against defendants individually in plaintiffs’
shareholder derivative lawsuit; the court’s broad equitable powers under the common
fund doctrine permit the imposition of attorney fees against the losing party in a
derivative shareholders suit regardless of a contract or statute.
¶2 Plaintiffs, Sandy Tsai, Stealth Properties, LLC, John Dongas, Castle Realty Investments,
LLC, Blue Island GD Investments, and 15th Street Blue Island, LLC (15BI), individually and
derivatively on behalf of 15BI, filed a nine-count complaint against defendants, Jerry Karlik,
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Keith Giles, Jordan Karlik, Kargil Blue Island, LLC, a limited liability company (KBI), and
Spiros Picoulas, seeking damages for defendants’ conduct in the operation of 15BI. The circuit
court of Cook County conducted a bench trial and entered judgment generally in favor of
plaintiffs and against defendants. The trial court awarded plaintiffs compensatory damages but
denied plaintiffs’ request for punitive damages. The parties cross-appealed in appellate case
numbers 1-18-2200 and 1-18-2201, which we consolidated. See Tsai v. Karlik, 2021 IL App
(1st) 182200-U. We affirmed the trial court’s judgment that the defendants engaged in self-
dealing and breached their fiduciary duties. We affirmed in part and reversed the trial court in
part on certain compensatory damages. Tsai, 2021 IL App (1st) 182200-U, ¶ 123. Meanwhile,
the trial court had bifurcated the issue of attorney fees from the original judgment and conducted
a hearing on attorney fees while the appeal was pending. In that hearing the trial court ruled that
the conduct of defendants was fraudulent and oppressive and granted plaintiffs’ petition for
attorney fees against the individual defendants. For the following reasons, we affirm the trial
court’s judgment awarding attorney fees in favor of plaintiffs and against defendants
individually.
¶3 BACKGROUND
¶4 We state only that information necessary to an understanding of our resolution of the
issues in this appeal. This appeal concerns only whether the trial court was authorized to assess
attorney fees against the individual defendants in the absence of a contract or statutory provision.
For a fuller discussion of the litigation underlying this appeal reference can be made to our order
Tsai v. Karlik, 2021 IL App (1st) 182200-U. Some of what is stated here is taken directly from
that order.
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¶5 The trial court based its attorney fee award, in part, on equitable principles and the
egregiousness of defendants’ conduct. In this appeal defendants do not contest the amount of the
attorney fees, they only contest whether the court was authorized to assess fees against the
individual defendants. Therefore, we will briefly discuss defendants’ acts and the context in
which they were committed.
¶6 Plaintiffs are members of 15BI. 15BI is an Illinois limited liability company formed for
the purpose of a property development at 15th Street and Blue Island Avenue in Chicago (the
Property). Defendants are members and managers, or agents of Kargil Blue Island, LLC (KBI).
KBI is a “Class B” member of 15BI and serves as a manager-member of 15BI. Karlik and Giles
also owned and controlled Kargil Development Partners (KDP).
¶7 In 2006 KDP entered into a contract to purchase the Property, which was undeveloped,
for $3.72 million. Karlik and Giles formed 15BI in 2006 to own and develop the Property.
Thereafter, plaintiffs made financial contributions totaling approximately $3.7 million to become
members of 15BI. Plaintiffs received 47% interest in 15BI as “Class A Members.” KBI made no
capital contribution but received a 53% interest in 15BI as a “Class B Member” and was named
manager of the company. Although the parties’ operating agreement stated the manager is not
entitled to compensation for services performed for 15BI, Karlik claimed that KBI was
compensated with the 53.75% ownership interest in 15BI for serving as 15BI’s manager.
¶8 In the first appeal, we affirmed the trial court’s finding that defendants engaged in a
series of transactions that constituted a breach of fiduciary duty and self-dealing. The trial court
found that defendants “breached their duty of loyalty to the Class A members [of 15BI].”
¶9 The trial court characterized defendants’ accounting practices as “deceitful” and noted in
particular the absence of records for the alleged allocation of payroll, taxes, and insurance among
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various projects for 2008 through 2011 and that “Giles testified that in 2009, 15BI spent $75,000
for ‘overhead’ and $58,731 for ‘payroll and admin,’ despite the fact there was no marketing
agent, no real estate agent, no construction company, and no entity other than employees of F&G
hired in 2009.”
¶ 10 The trial court awarded plaintiffs $1.6 million compensatory damages. While the parties
were appealing the judgment, the parties addressed the bifurcated issue of attorney fees.
Plaintiffs filed a petition for attorney fees “as provided for in the Illinois Limited Liability
Company Act [(LLC Act)], 805 ILCS 180/40-15 et seq. [West 2018.]” The petition asserted that
plaintiffs’ derivative complaint included counts for an injunction, statutory expulsion, breach of
fiduciary duties, and civil conspiracy; that plaintiffs’ “derivative action was successful” and
plaintiffs received a judgment; and, as a result, the court can award plaintiffs reasonable attorney
fees pursuant to the LLC Act. Plaintiffs’ asserted “an award of attorneys’ [sic] fees and expenses
is warranted given Defendants’ intentional and purposeful acts,” given defendants’ “tactics after
the litigation was filed,” and “to balance the equities in this matter.” The petition notes that
although plaintiffs secured a $1.6 million judgment in restitution, “unless attorneys’ [sic] fees
and expenses are also awarded to Plaintiffs, the Company will not receive the vast majority of
the restitution because it will have already been paid in litigation costs to obtain this outcome.”
The petition states: “In short, Plaintiffs and the Company should not be punished because
Defendants refused to repay admittedly misappropriated funds and instead chose to engage in
protracted litigation.” The petition sought attorney fees “[p]ursuant to the Illinois Limited
Liability Company Act” and “any other relief this Court deems just and proper.”
¶ 11 On September 20, 2019, the trial court issued a lengthy written judgment on plaintiffs’
petition for attorney fees. The vast majority of the trial court’s written judgment is dedicated to
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reciting the court’s findings of fact as to defendants’ conduct related to 15BI, including findings
concerning: (1) the purchase of other real estate with 15BI money, (2) payments to architects and
attorneys, (3) loans to employees of other entities and others, (4) payments to other entities, (5)
the sale of interest in the company, (6) defendants’ accounting practices, and (7) employment
and payment to a defendant’s son. However, those findings of fact are not of particular concern
to this appeal; so we will not repeat them here. This appeal primarily concerns only whether the
trial court was authorized to award attorney fees in favor of plaintiffs against defendants
individually. The question of whether under the facts of the case the court should have made an
award for attorney fees or the amount of the fees is not raised by defendants-appellants and,
therefore, we will consider it forfeited.
¶ 12 On the question of whether the trial court could award attorney fees against defendants
individually, the trial court’s written judgment makes findings of law. Initially, the court noted
that plaintiffs included a prayer for relief for attorney fees with the counts in the complaint for
breach of fiduciary duty and civil conspiracy and that the “prayer for relief does not specify
attorneys’ [sic] fees as a result of certain statutory fees or as equitable relief.” The court found
that defendants’ “intentional wrongdoing, oppressive conduct, fraud, and multiple breaches of
fiduciary duty justify an assessment for Plaintiffs’ attorneys’ [sic] fees and costs against
Defendants personally.” (Emphasis in original.) The court construed the petition as a request for
a judgment “in addition” (emphasis in original) to the September 2018 judgment against
defendants.
¶ 13 The trial court’s written judgment listed “45 distinct actions by Defendants that are
fraudulent and/or oppressive.” As it pertains to this appeal, the judgment addressed “the ability to
recover attorneys’ [sic] fees in a derivative action lawsuit, the common fund doctrine and its
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exception for attorneys’ [sic] fees related to parties’ fraudulent or oppressive actions,” the “use
of the American Rule and fee-shifting versus fee-sharing statutes under the Illinois Limited
Liability Company Act, *** other states’ interpretations of fee-sharing versus fee-shifting
statutes, and *** this Court’s equitable powers to allow for attorneys’ [sic] fees.” In this case, the
court found defendants’ conduct was “well within the bounds of ‘fraudulent and oppressive acts’
and their deliberate and corrupt actions go far beyond those parameters.
¶ 14 Regarding an alleged “exception [to the common fund doctrine] for attorneys’ [sic] fees
related to parties’ fraudulent or oppressive actions,” the trial court found that “[t]he Illinois
Appellate Court expressly held that attorneys’ [sic] fees and costs can be assessed against the
defendants in a derivative action where the court finds the defendants’ conduct to be either
fraudulent or oppressive.” The court relied on the decisions in Ross v. 311 North Central Avenue
Building Corp, 130 Ill. App. 2d 336, 351 (1970), and Lasday v. Weiner, 273 Ill. App. 3d 461,
465 (1995). The court found that the Ross court held that the individual defendants in that case
could be required to pay all or part of the attorney fees “ ‘according to equitable rules and
principles.’ “ The Ross court had found that the defendants’ conduct was “fraudulent and
oppressive.” The trial court recognized the common fund doctrine as an exception to the
American Rule that each party pays its own attorney fees but found, relying on Lasday, 273 Ill.
App. at 465 and Lee v. City of Chicago, 31 Ill. 2d 252 (1964), that the court “may direct payment
to be made either from the common fund being protected by the suit or from the defendants
individually.”
¶ 15 The trial court rejected defendants’ argument that under the LLC Act an award of
attorney fees must come from the common fund and cannot be made against them individually.
The court examined section 40-15 of the LLC Act, including sister states’ treatment of similar
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statutory language, and determined that section 40-15 “should be treated as a fee-shifting statute
to create an equitable outcome.” The court ruled that its equitable powers allow for an order
against defendants’ individually for attorney fees due to defendants’ fraudulent and oppressive
conduct. The court also found that regardless of its construction of section 40-15, the court
bifurcated proceedings on plaintiffs’ fee petition from the judgment in favor of plaintiffs on
plaintiffs’ complaint and, therefore, the court was permitted to enter a judgment on the fee
petition independently of the judgment in favor of plaintiffs; i.e., not against the common fund
but against defendants individually.
¶ 16 The trial court entered a written judgment setting the matter for an evidentiary hearing on
the reasonableness of the attorney fees in this case (which is not an issue in this appeal) or
ordering defendants to pay approximately $1.2 million in plaintiffs’ attorney fees if no
evidentiary hearing is requested.
¶ 17 This appeal followed.
¶ 18 ANALYSIS
¶ 19 Illinois follows the American Rule with regard to attorney fees and costs. Under the
American Rule, “absent statutory authority or a contractual agreement, each party must bear its
own attorney fees and costs.” Uncle Tom’s, Inc. v. Lynn Plaza, LLC, 2021 IL App (1st) 200205,
¶ 72. Two questions are involved in a trial court’s decision to award the prevailing party attorney
fees: first, whether the court has authority to grant attorney fees and second whether to award
fees in a particular case. See Forest Preserve District of Cook County v. Continental Community
Bank & Trust Co., 2017 IL App (1st) 170680, ¶ 32. “[W]hether the court has authority to grant
attorney fees is a question of law we review de novo, whereas a court’s decision to as to whether
to award authorized fees is reviewed for an abuse of discretion.” Id. (citing Spencer v. Di Cola,
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2014 IL App (1st) 121585, ¶ 34). We will find an abuse of discretion where no reasonable person
could take the view adopted by the trial court. Id.¶ 20 The issue in this this case is whether the trial court had the authority to award attorney
fees in favor of plaintiffs and against defendants individually in plaintiffs’ shareholder derivative
lawsuit; therefore, we review the question of whether the court is authorized to assess attorney
fees against the individual defendants in this case de novo. Id. In a shareholder derivative lawsuit
such as this one any award of attorney fees is usually made under the common fund doctrine. See
DeFontaine v. Passalino, 222 Ill. App. 3d 1018, 1033-34 (1991). “The common fund doctrine
provides that if a plaintiff in a shareholders’ derivative action is successful and the benefit goes
to the corporation, the plaintiff is entitled to recover his necessary expenses and disbursements,
including attorney fees” from the common fund. Caulfield v. Packer Group, Inc., 2016 IL App
(1st) 151558, ¶ 69 (citing De Fontaine, 222 Ill. App. 3d at 1033–34).
¶ 21 In DeFontaine, this court recognized that attorney fees and costs in such a situation may
be awarded in the discretion of the court according to equitable rules and principles, and
generally they must come from the fund.” Id. (citing Ross v. 311 North Central Avenue Building
Corp., 130 Ill. App. 2d 336, 351 (1970)). In the absence of a statute, the common fund doctrine
represents an equitable concept that constitutes an exception to the American Rule. DeFontaine,
222 Ill. App. 3d at 1034. The LLC Act codifies the common fund doctrine. Section 40-15 of the
LLC Act reads as follows:
“If a derivative action is successful, in whole or in part, or if anything is
received by the plaintiff as a result of a judgment, compromise, or settlement of
an action or claim, the court may award the plaintiff reasonable expenses,
including reasonable attorney’s fees, and shall direct the plaintiff to remit to the
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limited liability company the remainder of those proceeds received by the
plaintiff.” 805 ILCS 180/40-15 (West 2018).
¶ 22 Nonetheless, in Ross this court found that “under the equitable rules and principles in that
case, [the individual] defendants could properly be required to pay all or part of plaintiff’s costs
and fees. Ross, 130 Ill. App. 2d at 351. In Ross, the trial court found that a loan from the
corporation involved in the litigation to another corporation owned and controlled by the
defendants was a fraud upon the plaintiffs’ corporation and was oppressive. Ross, 130 Ill. App.
2d at 341-42. The trial court ordered the defendants to reimburse the plaintiffs for plaintiffs’
attorney fees, costs, and expenses. Id. at 342. On appeal, the Ross court found the evidence
amply sustained the trial court’s findings of fraudulent and oppressive acts by the defendants. Id.
at 343. The defendants argued that the award of attorney fees and costs was improper under the
American Rule and that the Illinois Business Corporation Act did not provide for the allowance
of attorney fees. See Ross, 130 Ill. App. 2d at 349. The plaintiffs responded the award of attorney
fees and costs was proper under the common fund doctrine. See id. at 350.
¶ 23 The Ross court found that “attorney’s fees and costs, in a matter such as this, may be
awarded in the discretion of the court according to equitable rules and principles, and generally
they must come from the fund being protected by the suit.” Ross, 130 Ill. App. 2d at 351. The
Ross court went on to hold that in that case, “the individual defendants, ‘according to equitable
rules and principles,’ could be properly required to pay either all or part of the costs and
solicitor’s fees. [Citation.]” Ross, 130 Ill. App. 2d at 351 (quoting Lee v. Retirement Board of
Policemen’s Annuity and Benefit Fund of the City of Chicago, 31 Ill. 2d 252, 256 (1964)). Lee
does not address the common fund doctrine or attorney fees in shareholder derivative suits. Lee
stands at most for the proposition that when an award of attorney fees is in the discretion of the
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trial court that discretion is to be exercised according to equitable rules and principles. See Lee,
31 Ill. 2d at 256.
¶ 24 The decision in Ross has thus been relied upon as authority for the proposition that where
the defendants’ conduct in a shareholder derivative suit is fraudulent or oppressive the trial court
may order the individual defendants to pay the plaintiffs’ attorney fees rather than entering a
judgment ordering the payment of attorney fees from the common fund. See Lasday, 273 Ill.
App. 3d at 465 (“The court must exercise its discretion according to equitable rules and
principles and may direct payment to be made either from the common fund being protected by
the suit or from the defendants individually.”). But see Hallmark Personnel, Inc. v. Pickens-Kane
Moving & Storage Co., 82 Ill. App. 3d 18, 24 (1980) (finding that “the fees were awarded in
Ross under an established exception to the general rule;” i.e., the common fund doctrine). This
court acknowledged in DeFontaine that it has “questioned the validity of Ross” without deciding
whether its holding is proper. See id. (citing Mid-West National Bank v. Metcoff, 23 Ill. App. 3d
607 (1974) (the court “noted the conflict in Illinois as to whether there were any equitable
principles upon which attorney fees may be awarded in the absence of statute or contract.
Finding Mid–West distinguishable from Ross, the conflict was not decided by the court.”)). In
this appeal, defendants contend our supreme court settled the question in Chapman & Associates,
Ltd. v. Kitzman, 193 Ill. 2d 560 (2000).
¶ 25 In Chapman, our supreme court found that:
“The common fund doctrine does not authorize a party to shift fees to an
adversary, but rather authorizes the spread of fees among those who benefitted
from the litigation. The doctrine permits a party who creates, preserves, or
increases the value of a fund in which others have an ownership interest to be
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reimbursed from that fund for litigation expenses incurred, including counsel fees.
[Citation.] The litigant or lawyer who recovers a common fund for the benefit of
others is entitled to a reasonable attorney fee from the fund as a whole.
[Citations.] If the costs of litigation are not spread to the beneficiaries of the fund,
they will be unjustly enriched by the attorney’s efforts. [Citation.]” Chapman &
Assoc., 193 Ill. 2d at 572–73.
¶ 26 The first issue in Chapman was what state’s law applied to determine whether the
common fund doctrine can be used to obtain attorney fees in a wrongful death action. Second,
the court had to decide whether, depending on the applicable law, the complaint for fees was
legally sufficient. See id. at 567. The court found that if Illinois law applied, the complaint stated
a cause of action pursuant to the common fund doctrine. Id. at 568. After deciding that Illinois
law applied our supreme court turned to a discussion of the common fund doctrine in Illinois. Id.
at 572. The court stated the general rule of the common fund doctrine quoted above, then
addressed the defendants’ arguments in turn. See id. at 573-78. None of the defendants’
arguments concerned whether equity ever permitted the court to award attorney fees in favor of
the prevailing party in a shareholder derivative, or any other, lawsuit against the defendant
individually. See id. (The defendants argued (1) the common fund doctrine only applies to class
action and subrogation cases; (2) there had to exist a segregated fund under court control, and (3)
the common fund doctrine can never apply in a wrongful death action. Chapman & Assoc., 193
Ill. 2d at 573-78.) Thus, our supreme court did not discuss at length the question of whether the
common fund doctrine can ever authorize a party to shift fees to an adversary (such as in the case
of fraudulent and oppressive conduct) or rather, whether the doctrine only permits a party who
creates a fund to be reimbursed from that fund. See id.- 11 -
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¶ 27 Nonetheless, in its discussion our supreme court did cite Saltiel v. Olsen, 85 Ill. 2d 484,
489 (1981), as “explaining that attorney fees are not charged against an adversary in fund cases.”
Chapman & Assoc., 193 Ill. 2d at 576. In Saltiel, the primary argument against awarding fees in
favor of the prevailing party was that to do so would violate the sovereign immunity of the State.
Saltiel, 85 Ill. 2d at 488. Our supreme court then found that it has “held in a number of cases that
a successful plaintiff may recover attorney fees from other persons to the extent that as an
incident to the litigation a fund was created from which the fees could be drawn.” Saltiel, 85 Ill.
2d at 489. Our supreme court expressly held that the common fund doctrine is not an exception
to the American Rule. See id. at 489 (citing Ritter v. Ritter, 381 Ill. 549 (1943) (Ritter formally
adopted the American Rule in Illinois.)). Instead, the court found:
“In these cases a plaintiff’s attorney fees and expenses are not charged
against the adversary because the latter lost the case. On the contrary they are
charged against a person or an entity that is benefited by the fund which was
created or preserved by the plaintiff’s success ***.” Saltiel, 85 Ill. 2d at 489.
The court held the government may be the “beneficiary thus charged.” Id.
¶ 28 The Saltiel court found that it was “clear that in the present case no objection to the
allowance of attorney fees could be sustained if the governmental entity entitled to the fund were
other than the State of Illinois.” Saltiel, 85 Ill. 2d at 491. Its subsequent discussion focused on the
fact the party against which fees would be charged was the State. See id. at 489-93. Saltiel does
not specifically address whether the common fund doctrine can ever authorize a party to shift
fees to an adversary (such as in the case of fraudulent and oppressive conduct) or rather, whether
the doctrine only permits a party who creates a fund to be reimbursed from that fund. Thus,
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Saltiel’s holding that in a common fund doctrine case fees are not charged against the prevailing
party’s adversary may be limited to its facts wherein the adversary was the State.
¶ 29 Based on the foregoing, we hold this court cannot say Chapman overruled Ross.1
Therefore, the answer to the key question in this case, whether individual defendants could be
ordered to pay plaintiffs’ attorney fees, remains controlled, in this district, by this court’s
decision in Ross. Moreover, we find it instructive that the decisional law, including Chapman &
Assoc., makes clear that the common fund doctrine is an equitable principle. See Chapman &
Assoc., 193 Ill. 2d at 569-75. In Chapman, our supreme court found that “[t]he basic policy
underlying the common fund doctrine is the prevention of unjust enrichment.” Id. at 569. The
court noted that unjust enrichment is an equitable theory. Id. at 571. “Whether the doctrine
applies in a particular case is not determined by a label, but rather by a proper understanding of
the doctrine and its limitations.” Id. at 573. The court described the doctrine and its limitations
and follows:
“The common fund doctrine does not authorize a party to shift fees to an
adversary, but rather authorizes the spread of fees among those who benefitted
from the litigation. The doctrine permits a party who creates, preserves, or
1
Although in no way relied upon by this court, we are aware that the case reporting agencies label
the decisions from this court as “overruled” by subsequent caselaw and whether our previous decisions
have been “called into question,” including when concomitant courts have declined to follow a decision.
We would be remiss to fail to note that the case reporting agency on which this court relies does not list
Ross as “overruled” or even “called into question.” The worst “negative treatment” Ross has received by
subsequent caselaw is that another court declined to follow its holding and it has been distinguished from
two other cases. See
https://1.next.westlaw.com/RelatedInformation/I6b837729d94c11d983e7e9deff98dc6f/kcCitingReference
s.html?docSource=142c771950144631ad612c622c34c60d&pageNumber=1&facetGuid=hae8871a039bfd
1fa16ef28ee2f3549b9&ppcid=2fbd4585ff704c86beae81426167b451&transitionType=ListViewType&co
ntextData=(sc.UserEnteredCitation) (visited May 2, 2022).
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increases the value of a fund in which others have an ownership interest to be
reimbursed from that fund for litigation expenses incurred, including counsel fees.
[Citation.] The litigant or lawyer who recovers a common fund for the benefit of
others is entitled to a reasonable attorney fee from the fund as a whole.
[Citations.] If the costs of litigation are not spread to the beneficiaries of the fund,
they will be unjustly enriched by the attorney’s efforts. [Citation.]” Chapman &
Assoc., 193 Ill. 2d at 572-73.
However, our supreme court also found that “ ‘ the absence of *** the creation of a fund ***
hardly touch[es] the power of equity in doing justice as between a party and the beneficiaries of
his litigation,’ [citation].” Id. at 575 (quoting Sprague v. Ticonic National Bank, 307 U.S. 161,
167 (1939)).
¶ 30 Finally, we must recall that “[a] court of equity is a court of conscience, and will exercise
its extraordinary powers only to enforce the requirements of conscience.” American University v.
Wood, 294 Ill. 186, 195 (1920). “In fashioning a remedy, courts have broad discretion to grant
the relief that equity requires. [Citation.]” (Internal quotation marks omitted.) GX Chicago, LLC
v. Galaxy Environmental, Inc., 2015 IL App (1st) 133624, ¶ 72 (quoting Westcon/Dillingham
Microtunneling v. Walsh Construction Co. of Illinois, 319 Ill. App. 3d 870, 878 (2001)).
Additionally, “courts may consider the relative benefits and hardships to the parties in crafting an
appropriate remedy. [Citation.]” Westcon/Dillingham Microtunneling, 319 Ill. App. 3d at 878.
“Relevant considerations include both what is fair and what is workable. [Citation.]” GX
Chicago, LLC, 2015 IL App (1st) 133624, ¶ 72 (quoting Westcon/Dillingham Microtunneling,
319 Ill. App. 3d at 878.
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¶ 31 In Ross, this court recognized that “attorney’s [sic] fees and costs, in a matter such as
this, may be awarded in the discretion of the court *** and generally they must come from the
fund being protected by the suit.” Ross, 130 Ill. App. 2d at 351. However, this court also
recognized that such award must be made “according to equitable rules and principles” and that
in the case before it, “the individual defendants, ‘according to equitable rules and principles,’
could be properly required to pay either all or part of the costs and solicitor’s fees. [Citation.]”
Id. (quoting Lee, 31 Ill. 2d at 252). Ross does not authorize the court to award fees against an
unsuccessful litigant because they lost the case. See Saltiel, 85 Ill. 2d at 489. We find Ross to
stand for the proposition that under the common fund doctrine the court should look first to the
fund created by the plaintiffs’ efforts but that equity may demand that fees under the common
fund doctrine be awarded against the individual defendants. Nothing in Ross abrogates the
general rule that attorney fees “must come from the fund being protected by the suit.” See Ross,
130 Ill. App. 2d at 351. Rather, Ross merely embraces the philosophy our supreme court would
express in Chapman that a proper application of the common fund doctrine necessitates a
“proper understanding of the doctrine and its limitations.” Chapman & Assoc. 193 Ill. 2d at 573.
The doctrine is one that is based in equity. If equity—and its “broad discretion” to grant the relief
it “requires” (see supra, ¶ 36)—demands that reimbursement to avoid unjust enrichment not
come from the fund created, we find no reason to deny equity’s demand. See id. at 569-75.
¶ 32 We hold that the trial court was authorized to assess attorney fees against individual
defendants as an exception to the American Rule. In light of this holding, we have no need to
address defendants’ argument the trial court erroneously concluded that section 40-15 of the
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LLC Act authorizes fee shifting. 2 The trial court’s judgment is proper under the equitable
common fund doctrine, and this court will affirm a trial court’s judgment on any basis presented
by the record. The facts supporting the trial court’s judgment against defendants individually are
ample in this case but, regardless, defendants make no persuasive argument that if the trial court
had the power to award fees against defendants individually (which, sitting in equity, it did), the
award was nonetheless an abuse of discretion. United Equitable Insurance Co. v. Thomas, 2021
IL App (1st) 201122, ¶¶ 78, 86 (points not argued are forfeited; reviewing court may affirm on
any grounds called for by the record).
¶ 33 CONCLUSION
¶ 34 For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
¶ 35 Affirmed.
2
We note, however, the plain language of section 40-15 is consistent with our interpretation of
Ross in light of Chapman because the statute does not expressly contain a limitation that the attorney fees
be awarded only from the judgment attained by the plaintiff; at most the language requires that if fees are
awarded from that judgment the plaintiff must remit the remainder of the judgment to the fund. See 805
ILCS 180/40-15 (West 2018); Elam v. Municipal Officers Electoral Board for Village of Riverdale, 2021
IL 127080, ¶ 14 (“our primary goal of statutory construction, to which all other rules are subordinate, is to
ascertain and give effect to the intention of the legislature. [Citation.] The best indication of that intent is
the statutory language, which, when clear and unambiguous, must be construed as written, without
reading into it exceptions, conditions, or limitations that the legislature did not express.”).
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