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FIFTH DIVISION
MAY 28, 2004

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Defendants, Judith Terra, Paul Tucker and Alan K. Simpson⁽¹⁾, are three former directors ofthe Terra Foundation for the Arts (The Foundation), a non-for-profit corporation that operates anart museum in Chicago. The defendant Directors appeal from a court-ordered settlement thatterminated the litigation by plaintiffs, Dean Buntrock and Ronald Gidwitz, two other directors ofThe Foundation, and by the plaintiff-intervenor the office of the Illinois Attorney General. Onappeal, the defendant Directors contend that the trial court improperly approved the settlementwithout an independent inquiry into whether or not the settlement was fair, adequate, reasonableand in the best interests of The Foundation, whether or not plaintiffs were likely to succeed on themerits, and whether there were conflicts of interests as a result of the intervention of the AttorneyGeneral.

The Foundation filed a response brief as a defendant-appellee in the suit by the plaintiff-intervenor the Attorney General of Illinois, and the Attorney General filed a separate brief inresponse to the brief of the defendant Directors. For the following reasons, we affirm thejudgment of the trial court.

BACKGROUND

Daniel Terra was a wealthy industrialist, diplomat and philanthropist, an avid collector ofmodern American art, a financier for the Republican Party, and the first ambassador-at-large forcultural affairs under President Reagan. In 1978, Terra, along with his wife, Adeline E. Terra,established the Terra Museum of American Art as an Illinois not-for-profit corporation "organizedexclusively for charitable, educational , literary or scientific purposes," specifically includingestablishing and operating "a museum." Terra opened a museum in Evanston in 1980. At itsinception, the Foundation had three directors, including Terra and his son James Terra. Theoriginal gift and subsequent gifts to the Foundation by Terra approximate $450 million.

Adeline Terra died in 1982. Terra eventually acquired adjoining parcels of land on NorthMichigan Avenue in Chicago for the purpose of expanding his museum.

In 1986, at the age of 75, Terra married Judith Banks (Judith Terra) of Washington, D.C. After his marriage, Terra continued to maintain his longtime residence in Kenilworth, Illinois, andalso kept a second residence with Judith in Washington, D.C. That same year, Terra began takingsteps toward the opening of a museum of American Art in Giverny, France (the Giverny Center),adjacent to the well-known museum devoted to the works of Claude Monet. Terra contributedthe French property he acquired to the Foundation.

The Foundation relocated the Terra Museum to the new building located at 664-666North Michigan Avenue in 1987, exhibiting a collection that included works by noted Americanartists John Singleton Copley, Winslow Homer and James Whistler.

In 1992, in anticipation of the opening of the Giverny Center, The Foundation's name waslegally changed from "The Terra Museum of American Art," to "The Terra Foundation for theArts." The stated purpose for the name change was "to accommodate the project in France andto clearly define that there will be two museums under the umbrella of the Foundation." Following the opening of the Giverny Center, the Foundation's articles of incorporation wereamended to state its purposes including operating "museums and schools, both in the UnitedStates and abroad." The Foundation's by-laws were similarly modified.

On June 28, 1996, at the age of 85, Terra died suddenly following a massive stroke. Inthe spring of 2000, after the settlement of Terra's estate, the Foundation Board appointed aStrategic Planning Committee to consider a co-operative relationship with a major arts institution. The Foundation received proposals of cooperation from the Art Institute of Chicago, theCorcoran Gallery of Art and the National Gallery of Art, both located in Washington, D.C., andthe Museum of Fine Arts in Boston. At a Board meeting in August 2000, Foundation BoardMember Dr. Paul Hays Tucker circulated a memorandum to the Board, at that time consisting of11 members, advocating the closing of the Chicago museum and the relocation of its collection toWashington, D.C., for exhibition in collaboration with the National Gallery of Art. DirectorMargaret Daley,⁽²⁾ said that she did not recall any discussion of "abandoning" Chicago. DirectorBuntrock⁽³⁾ commented that moving the Foundation had not been previously discussed by theBoard. Dr. Tucker responded that the Strategic Planning Committee would recommend thisoption to the Board, and that the Board should make a definite decision the following month.

The Board scheduled a formal discussion of the alternatives raised by the StrategicPlanning Committee for its annual Board meeting, to take place at the Foundation's museum inGiverny, France, on September 26, 2000.

On September 22, 2000, prior to the annual Board meeting, Directors Buntrock andGidwitz⁽⁴⁾ filed an action in the circuit court of Cook County, against the three Director defendantsand Naftali Michaeli,⁽⁵⁾ alleging mismanagement of the Terra Museum after Terra's death andseeking an injunction to prevent the Board from convening an unscheduled meeting to alter thecomposition of the Board and to prevent any decision to close the museum or transfer its artcollection to another institution. Plaintiffs alleged that although a Board meeting was scheduledfor September 26, 2000, the defendant Directors unlawfully scheduled a pre-Board meeting forSeptember 24, 2000, with the intention to remove Buntrock from the Board as a result of hisopposition to the closing of the Chicago museum. Plaintiffs alleged that the defendant Directorswould have the votes necessary to remove Buntrock at the unlawful meeting on September 24,2000, but not at the regular Board meeting on September 26, 2000.

The complaint further alleged that defendants had committed various breaches of theirfiduciary duties to the Foundation, including a "conscious effort" to "cause the failure of TerraMuseum in Chicago to justify closing Terra Museum," including orchestrating replacements ofFoundation Board members and "stacking Terra Foundation's Board" with loyalists to JudithTerra; moving the Foundation's Chicago-based art collection to Washington, D.C. contrary to thedonative intention of Daniel Terra; holding illegal executive committee meetings in violation ofthe by-laws; consulting and taking advice from defendant Michaeli, despite the fact that Michaeliis not an officer, director or employee of the Foundation; making significant expenditures on artwithout obtaining input or approval from the Board; and wastefully incurring excessive legal fees.

On September 25, 2000, the Attorney General moved to intervene as an additionalplaintiff, pursuant to the Charitable Trust Act (760 ILCS 55/16(b) (West 2002)), filing itscomplaint against the three Director defendants and the Foundation. James Terra was laterpermitted to intervene as a plaintiff, both personally, as Terra's heir, and as executor of Terra'sestate, seeking to prevent the transfer of the Foundation's art collection to another city.

The trial court granted the plaintiffs' motion for a temporary restraining order, allowed theAttorney General to intervene as a plaintiff, authorized expedited discovery, and set the matter forfurther hearing in two weeks. The interlocutory injunction was continued throughout the courseof the litigation through subsequent orders.

On February 5, 2001, at the suggestion of the three defendant Directors, the trial courtordered the parties to pursue mediation, appointed a mediator from among candidates proposedby the defendant Directors, and stayed the proceedings. The defendant Directors explained theirdesire to pursue mediation in order to obtain releases of the individual claims filed against them,which, if sustained, would prevent them from being reimbursed for legal fees under theFoundation's by-laws. Before agreeing to mediation, the Assistant Attorney General (AAG) forthe Charitable Trust Division stated his opposition to any settlement under which the Foundation'sart collection would be moved away from the Chicago area.

During the course of mediation, when it appeared that no settlement could be reached andthe stay would be lifted, the AAG drafted an amended complaint adding Director Dr. TheodoreStebbins as an additional defendant and alleging that Stebbins breached his fiduciary duties to theFoundation in connection with potential purchases of artworks. At the same time, the AttorneyGeneral received information that Dr. Stephanie Marshall, another Board member, was involvedin another charity which was engaged in a serious violation of the law. The Attorney Generalinitiated an informal inquiry into the matter, and promptly determined that the information wasinaccurate. The Attorney General treated the matter as closed.

After more than four months of mediation, the Foundation and the Attorney Generalreached a tentative agreement to settle the case. However, shortly before the meeting scheduledfor the Board to vote on whether, and on what terms, the Foundation should agree to asettlement, the defendant Directors filed an action in federal court seeking to enjoin theFoundation from pursuing the settlement. The federal court dismissed the case. The defendantDirectors immediately filed a motion in the trial court to enjoin any action by the Board thatwould permit the Foundation to implement the settlement. The trial court denied this motion.

On June 29, 2001, eight of the Board's 11 members, including two of the three defendantDirectors, attended a board meeting, either in person or by telephone. The conversation wasrecorded and transcribed. The meeting included a lengthy discussion about the AttorneyGeneral's actions relating to Stebbins and Marshall, each of whom then stated that their voteswere motivated by the best interests of the Foundation, and not encouraged by any actions of theAttorney General. Following a lengthy discussion of the terms of the settlement, the Board votedsix-to-two in favor of a resolution that the Foundation enter into the settlement. Defendantdirectors Judith Terra and Dr. Tucker voted against the resolution. Defendant Simpson did notparticipate in the meeting, either in person or by telephone.

The Foundation filed a motion for court approval of the settlement, and the trial court seta briefing schedule and a hearing date for the motion. The defendant Directors filed objections,accompanied by voluminous attachments, contending that the settlement contravened DanielTerra's donative intent and the Foundation's charitable purposes, and that the Attorney General'sactions relating to Dr. Stebbins and Dr. Marshall invalidated their votes in favor of the settlementand, as a result, the Foundation's approval of the settlement. The Foundation, the AttorneyGeneral and the plaintiff Directors filed separate responses to these objections, and the defendantdirectors filed a reply in support of their opposition to approval of the settlement. The defendantDirectors also filed a motion for leave to take discovery in support of their objections, andseparately moved for leave to file counterclaims.

Among the materials submitted by the defendant Directors along with their filed objectionswas a 1990 memorandum from Daniel Terra to the Board in which he: (1) described theFoundation's ongoing operating deficits, as well as similar deficits in the other two majormuseums of American art; (2) expressed his concerns about the "viability" of "the whole conceptof a Museum of American Art"; and (3) listed various options for the Foundation to address thisproblem over the long term, including, as a last resort, no longer operating a museum. Thesematerials also included evidence that in the last months of his life, Terra explored the possibility ofopening a museum in Washington, D.C.

On July 24, 2001, a hearing commenced on the Foundation's motion for approval of thesettlement. The trial court approved the settlement with one minor change regarding what theparties agreed to say about the settlement. The court specifically found that the settlement was a"just and appropriate conclusion" to the litigation; that it did not place significant restrictions onthe Foundation's ability "to conduct its mission of providing education and art throughout theworld"; and that the "very, very contested and * * * tortuous history" of the litigation, in which"there has been a contest [on] virtually every issue that has been raised," the Board, which thecourt described and not having been "functional * * * for almost a year now * * * will be able tomake decisions * * * [a]nd the business of art will be able to go ahead, as opposed to the businessof litigation."

The trial court further found that it reviewed the transcript and listened to the audio tapeof the Board's meeting regarding the Settlement and found no basis to conclude that Marshall and Stebbins were "intimidated" by the Attorney General. The trial court found that under the IllinoisNot For Profit Act, Marshall and Stebbins were not "interested Board members," but insteadcould properly participate in the Foundation's decision to enter into the settlement. The trial courtheld that there was nothing in the defendant Director's papers that warranted a contraryconclusion or justified discovery for the purposes of investigating their conduct. Prior to issuingits ruling entering the settlement, the trial court denied the defendant Directors' motion for leaveto take discovery, stating: "There is nothing here in anything I have received * * * that makes mebelieve that discovery is necessary or anything further is necessary to investigate in this case." The trial court further denied the defendant Directors' motion to file counterclaims. The trialcourt noted that petitions for attorney fees remained, "which the Consent Decree requires me toadjudicate." The trial court entered the consent judgment and order on July 26, 2001.

On August 6, 2001, the first petition for attorney fees was filed. On August 22, 2001, thedefendant Directors filed their notice of appeal seeking immediate review of provisions of theconsent order not relating to attorney fees.

OPINION

Plaintiff-intervenor the Illinois Attorney General and defendant the Terra Foundation forthe Arts (The Foundation), have raised the issue of this court's jurisdiction to hear this appeal. The Attorney General and the Foundation argue that the defendant Directors' appeal is premature,as the trial court expressly reserved for later determination the amount of attorney fees to be paidby the Foundation and did not enter a 304(a) finding authorizing immediate appeal of the consentorder.

Supreme Court Rule 301 provides for a right of appeal from a "final judgment." 188 Ill.2d R.301. To perfect such an appeal, a party must, under Supreme Court Rule 303, file a noticeof appeal during the 30-day period following the entry of such a judgment, or if a party files atimely post-trial motion directed against the judgment, following the disposition of that motion. John G. Phillips & Associates v. Brown, 197 Ill. 2d 337, 340-41, 757 N.E. 2d 875, 877-78(2001). A notice of appeal filed either before or after that period is ineffective. Marsh v.Evangelical Covenant Church of Hinsdale, 138 Ill. 2d 458, 468-69, 563 N.E.2d 459 (1990)(premature notice of appeal); Archer Daniels Midland Co. v. Barth, 103 Ill. 2d 536, 538, 470N.E.2d 290, 292 (1984) (late notice of appeal).

The Attorney General and the Foundation argue that the consent order is not final andappealable because it disposes of less than all of the claims in the case. In support, the AttorneyGeneral and the Foundation argue that a "claim" within the meaning of Rules 301 and 304includes a right to recover attorney fees from another party, regardless of the asserted basis forthe right, citing inter alia, John G. Phillips, 197 Ill. 2d at 340-41. Thus, a notice of appealresolving other matters in the case is premature where the order leaves unresolved an issueregarding a claimed entitlement to, or the amount of, attorney fees recoverable from anotherparty. Cannon v. William Chevrolet/Geo, Inc., 341 Ill. App. 3d 674, 679-80, 794 N.E.2d 843,848 (2003)(holding that where the court retained jurisdiction to hear the claim for fees any otherjudgment entered before decision on that claim "was nonfinal and nonappealable" absent a 304(a)finding).

The defendant Directors replied that jurisdiction is proper, citing the consent order asfollows:

"12. Reasonable attorneys' fees incurred by the Foundation'sDirectors in connection with this lawsuit, as determined bythe Court, shall be paid by the Foundation.

13. These actions are hereby dismissed with prejudice,without any admission of wrongdoing or liability onthe part of the Foundation or any of its Directors,each of whom specifically denies any wrongdoing orliability. The Court retains jurisdiction over theactions and the parties solely for purposes of enforcing the terms of this Consent Judgment and Orderand for such further orders and directions as may benecessary or appropriate for the construction andeffectuation of this Consent Judgment and Order."

The transcript of proceedings, disclose the following statement of the trial court:

"Once this document is signed, this case will be over. All claimsthat the plaintiffs have brought will be dismissed with prejudice. And this litigation will be done.

"Mr. Cummins', there comes a time that all litigation has tobe ended. And this litigation is going to be ended tomorrow in thisCourt with the signing of these orders.

And the only thing that is going to remain is the Petitionsfor Attorney's fees, which the consent decree requires me toadjudicate. And if I am wrong I am sure that the Appellate Courtwill tell me I am wrong and I will see you all back here."

In denying the defendant Directors' request to certify their question on the filing of acounterclaim, the trial court further stated:

"Well, once I sign that [the consent order], I don't have tocertify anything. You have got a final order and you can go up tothe Appellate Court tomorrow."

We note that none of the pleadings before the trial court contained a "claim" for attorneyfees in the action, because the disputing parties did not have any claim to fees against each otherby statute. Any entitlement to attorney fees was provided for in the agreement giving rise to theconsent order.

In addition, the applications for attorney fees filed in this case do not satisfy the elementsof a "claim" for purposes of Rules 301 and 304(a). In Mars v. Priester, 205 Ill. App. 3d 1060,1064, 563 N.E.2d 977, 980 (1990), this court determined that a claim for attorney fees is definedas a "claim" within the meaning of the applicable Supreme Court rules, when it is "a matterinvolved in the action; it is a possible right of the plaintiff and a possible liability of thedefendants." Here, attorney fees were not involved in the litigation.

The record on appeal clearly shows that the trial court intended that the "ConsentJudgment and Order" be final and appealable and reserved the right to determine the amount ofattorney fees to be paid by the Foundation as incidental to the consent judgment. As the right toattorney fees in this litigation does not derive from statute, the determination of attorney fees doesnot constitute a "claim" for purposes of this appeal, and our jurisdiction is proper.

Next, The Foundation raises the issue of the defendant Directors' standing to bring thisappeal. The Foundation contends that the defendant Directors participated in the litigation both asmembers of the Board of Directors of the Foundation and as individual defendants. TheFoundation initially argues that the individual defendants cannot establish standing because it isthe Foundation, not the individual defendants, that is the party to the settlement with the plaintiffs. The Foundation argues that as individual defendants, the defendant Directors have notdemonstrated that as co-defendants, their legal rights were adversely affected by the settlement,and, in fact, as a result of the settlement, the claims against the defendant Directors weredismissed and the defendant Directors become beneficiaries of an express agreement of theFoundation to pay all Board Members' reasonable attorney fees.

The Foundation further argues that the defendants lack standing to bring this appeal asDirectors of the Foundation because they were not parties to the action their capacity as directors,but as individuals. The Foundation argues that the interests of the corporation as a party arerepresented by the decisions of the entire Board of Directors under the Foundation's articles ofincorporation, by-laws and applicable law, and that the three defendant Directors cannot show anybasis for non-party standing.

Only parties to a lawsuit, or those that properly become parties, may appeal an adversejudgment. Marino v. Ortiz, 484 U.S. 301, 304, 98 L. Ed.2d 629, 108 S. Ct. 586 (1988). To havestanding to bring an appeal, a nonparty must have a "direct, immediate, and substantial interest inthe subject matter, which would be prejudiced by the judgment or benefitted by its reversal." Success National Bank v. Specialist Eye Care Center, S.C., 304 Ill. App. 3d 74, 710 N.E.2d 482,484 (1999). The Foundation argues that the defendant Directors do not allege any invasion oftheir individual legal rights nor an injured pecuniary interest resulting from the consent judgment,nor does any case or controversy exist as to them.

The record shows that when the Buntrock and Gidwitz brought their action against thedefendant Directors, they identified the defendant Directors in their capacities as Directors of theFoundation, therefore the Foundation recognizes that the defendant Directors have standing in thelawsuit. The cases cited by the Foundation in support of its position against standing involvecircumstances when non-parties, who were never joined in an action, and who never successfullyintervened in the action, sought to appeal a judgment. Such is not the case here.

The Foundation has not shown how the defendant Directors do not have standing toappeal from a judgment entered in an action instituted against them, both in their individualcapacity, and as Directors of the Foundation. We therefore proceed to the merits of the appeal ofthe defendant Directors.

The defendant Directors contend that the trial court improperly approved the settlement ofa derivative action without an independent inquiry into whether or not the settlement was fair,adequate, reasonable and in the best interests of the corporation, whether or not plaintiffs werelikely to succeed on the merits, and whether there were conflicts of interests as a result of theintervention of the Attorney General.

An appellate court will not review a consent order because an order entered by consent isno more than a court's recording of an agreement reached by the parties in settlement of a disputeand is not a judicial determination of their rights. People ex rel. Fahner v. Colorado City LotOwners and Taxpayers Ass'n, 106 Ill. 2d 1, 8, 476 N.E.2d 409, 412 (1985). An order cannot bereviewed on appeal unless the trial court was required to make a judicial determination. RaoElec. Equipment Co. v. Macdonald Engineering Co., 124 Ill. App. 2d 158, 173, 260 N.E.2d 294,301 (1970).

The defendant Directors argue that the suit filed by plaintiffs is derivative because italleged no injury distinct from the alleged injury to the Foundation. Defendants cite no authorityin support of their proposition.

The Foundation responds that the underlying complaints are not derivative lawsuits. Plaintiffs Buntrock and Gidwitz brought their action under the Illinois General Not for ProfitCorporation Act (Not for Profit Act) (805 ILCS 105/103.15(a)), which creates a right of actionto enjoin ultra vires actions by a not-for-profit corporation. The statute provides in pertinent partas follows:

"