Senses v. Climatemp, Inc.
Case Date: 06/25/1997
Court: 1st District Appellate
Docket No: 1-96-2680
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SADIE MARY SENESE, as Ex'x ) APPEAL FROM of the Estate of Dominic J. Senese, ) THE CIRCUIT COURT Deceased, ) COOK COUNTY. ) Plaintiff-Appellant, ) ) ) v. ) No. 89 CH 08412 ) CLIMATEMP, INC., ) JOHN W. COMFORTE, ) THE HONORABLE, THOMAS E. COMFORTE, and ) ALBERT GREEN, VICTOR COMFORTE, ) JUDGE PRESIDING. ) Defendants-Appellees. ) PRESIDING JUSTICE COUSINS delivered the opinion of the court: Plaintiff, Dominic J. Senese, brought suit against defendants Climatemp, Inc. (Climatemp), John W. Comforte, Thomas E. Comforte and Victor Comforte. Plaintiff alleged that he owned stock in Broadway Sheet Metal Works, which later became Climatemp, and agreed to sell his stock in the company but never consummated that agreement. Specifically, plaintiff alleged breach of contract and violations under the Uniform Commercial Code-Investment Securities Act (810 ILCS 5/8-101 et seq. (West 1992)) and the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1992)). In addition, plaintiff sought a constructive trust, mandamus and an accounting. Plaintiff appeals from the trial court s decision granting defendants motion to dismiss based on sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 1992)), and from earlier orders in which the trial court denied plaintiff's motion to compel production of documents and to require defendants to answer deposition questions. Plaintiff also appeals from the trial court's award of sanctions under Supreme Court Rule 137 (134 Ill. 2d R. 137). On appeal, plaintiff contends that: (1) the trial court's denial of plaintiff's discovery requests concerning the "bona fides" of the alleged stock transaction was reversible error; (2) the trial court erred in granting defendants' motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1992)) based upon standing, laches, statute of limitations and the Uniform Stock Transfer Act (Ill. Rev. Stat. 1959, ch. 32, par. 416 et. seq ); (3) the trial court's dismissal of the second amended complaint pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)) was reversible error; and (4) the trial court abused its discretion in granting defendants' motion for sanctions under Supreme Court Rule 137 (134 Ill. 2d R. 137). Defendants cross-appeal and contend that: (1) the trial court abused its discretion by granting plaintiff's motion to substitute the executrix and failing to dismiss the action for plaintiff's failure to comply with statutory time limits; (2) the trial court abused its discretion by denying the defendants' motion to strike plaintiff's answer to defendants' first set of interrogatories and dismiss plaintiff's complaint with prejudice as a sanction; and (3) the trial court abused its discretion by reducing the amount of attorney fees awarded to defendants. BACKGROUND On September 20, 1989, plaintiff, claiming shareholder status, filed a complaint for mandamus to compel production of the corporate minute books and shareholder records of Climatemp and for other relief. Plaintiff alleged that he was a stockholder of Climatemp. Climatemp, an Illinois corporation engaged in the heating and ventilating business, was originally known as Broadway Sheet Metal Works, Inc. (Broadway), and was incorporated as an Illinois corporation on May 1, 1958. The name of the corporation was changed to Climatemp, Inc., on February 2, 1960. The original incorporators and shareholders of the company were L. Anton Moody, Victor Comforte and Dominic Senese. In his first amended complaint, plaintiff alleged that, in 1960, Victor Comforte and Dominic Senese contemplated transferring their respective shares in the corporation to Expressway Terminals (Expressway) in order to obtain borrowing ability and business credibility. Anthony Sicilia, the president of Expressway, was a good friend of both Victor and Dominic. Plaintiff alleged that he, Victor and Anthony signed a letter of intent to proceed with the sale. The letter of intent provided that Expressway would pay an initial payment and then 10 equal installments, with the purchase to be completed in 10 years. The letter of intent also provided that a formal complaint relating to the purchase, with arrangements for holding the shares of stock in escrow, would be drawn up and executed no later than May 1, 1960. Plaintiff alleged that he still owned his stock in Climatemp because no formal contract or escrow agreement was ever created and that he was never paid for his stock. Defendants maintained that plaintiff was an original shareholder of the company but sold his shares in the company to Expressway. Defendants argued that plaintiff was not a shareholder of record and, therefore, had no right to inspect the corporation's books and records. Along with motions to dismiss, defendants filed an affidavit by corporate treasurer Thomas E. Comforte denying plaintiff's stock ownership. With subsequent motions, defendants presented several exhibits that purported to establish that Dominic Senese had sold his stock to Expressway on January 4, 1960. Defendants' exhibits included: the letter of intent signed by Victor Comforte, Dominic Senese and Anthony Sicilia; Dominic Senese's unsigned stock certificate number 3 for stock in Broadway that was issued to Senese on May 3, 1958, and had the word "cancelled" handwritten on its face; a corporate ledger memorializing a transfer of 50 shares from Dominic Senese to Expressway that contained three names that were crossed out; and an undated but signed assignment separate from the certificate assigning Dominic Senese's shares in Broadway to Expressway. The trial court dismissed plaintiff's amended complaint and plaintiff appealed. In Senese v. Climatemp, Inc., 222 Ill. App. 3d 302, 582 N.E.2d 1180 (1991), the appellate court reached several conclusions. The appellate court concluded, inter alia, that no exhibit established whether the parties actually completed the sale of Dominic Senese's shares in Climatemp as no exhibit demonstrated that the conditions precedent set forth in the letter of intent (i.e., to pay an initial payment of $1,000 and the balance over 10 years; to draw up a formal contract by May 1, 1960; and to have the stock held in escrow until the sale was complete) were satisfied. 222 Ill. App. 3d at 312. The appellate court therefore held that the trial court erred by relying on the exhibits in plaintiff's complaint and finding them dispositive of the issue of plaintiff's shareholder status. 222 Ill. App. 3d at 312. The appellate court also concluded that the trial court properly dismissed plaintiff's claim for a constructive trust but remanded the case so plaintiff could be allowed to amend following what the appellate court referred to as "limited discovery." 222 Ill. App. 3d at 315. The court stated in pertinent part: "Plaintiff has alleged a fraud occurred in which defendants participated, and has alleged that the corporate officers and directors breached their fiduciary duty and participated in a fraud perpetrated on plaintiff. *** ***[P]laintiff has not alleged he notified the corporation directors and officers at any time to put them on notice that Expressway Terminals, Inc., was improperly claiming shareholder rights nor has he alleged any facts to support his allegation that corporate officers and directors some how participated in his lack of stockholder status. *** ***Plaintiff alleged merely that he owned stock and Victor Comforte now contends he does not. Fraud must be proven; it cannot be presumed. [Citation.] Plaintiff has not alleged sufficient facts in support of a fraud which would merit imposition of a constructive trust but should be permitted discovery and the opportunity then to amend his complaint to correct his deficiencies." 222 Ill. App. 3d at 315-16. The appellate court also responded to defendants' argument that laches barred plaintiff's complaint. Citing People ex rel. Casey v. Health & Hospitals & Governing Comm'n, 69 Ill. 2d 108, 370 N.E.2d 499 (1977), the court concluded that plaintiff should be given an opportunity to amend his complaint to set forth a valid excuse to explain the obvious delay in pursuing his claim. The appellate court also held that the trial court erroneously barred plaintiff from engaging in discovery as to the documents presented by defendants. The appellate court stated in pertinent part: "We find the trial judge committed such an error here. Plaintiff alleged he was a stockholder and defendants denied the stock ownership. Exhibits attached to both plaintiff's amended complaint and defendants' answer included altered stock certificates, changed corporate records, strike marks over several official documents and other inconsistencies which beg for a clearer explanation. The purpose of discovery is to enable counsel to better prepare and evaluate their case. [Citation.] We believe limited discovery will cast light on unclear portions of the complaint and on the circumstances surrounding the creation of the challenged exhibits." 222 Ill. App. 3d at 320. Dominic Senese died on January 29, 1992. On March 9, 1993, the trial court granted Sadie Mary Senese's motion for substitution as plaintiff. Thereafter, following the appellate court's directive in Senese, the parties commenced discovery. A number of documents were produced. Several parties were deposed, including: Victor Comforte, defendant and chairman of Climatemp; John Comforte, defendant and president of Climatemp; Thomas Comforte, defendant and corporate secretary of Climatemp; Harold Tsukuno, Dominic Senese's personal accountant; and Thomas Roche, former corporate counsel to Climatemp and Dominic Senese's estate planning counsel. In addition, several of Dominic Senese's personal friends and his personal attorney were deposed. Of particular relevance to the issues presented were the depositions of Victor Comforte and Thomas Roche. Victor Comforte is the only surviving witness to the meetings in 1960 that allegedly resulted in the transfer of Dominic Senese's stock. In his deposition, Victor testified that, in 1959, the corporation lost business as the result of negative publicity surrounding an investigation of the corporation by the United States Department of Defense. Victor and Dominic transferred their shares of Climatemp to Expressway in order to raise an infusion of capital for the corporation. Victor also testified that, initially, he and Dominic considered selling their shares to L. Anton Moody, the president of Broadway at the time, C.R. James, an employee at Broadway at the time, and R. Konicheck, the corporation's bookkeeper at the time. However, the proposed sale was halted as it was determined that the sale of the shares to these three would not remedy the corporation's financial crisis. Thus, Victor and Dominic turned to their mutual friend, Anthony Sicilia, who, at that time, was the president of Expressway. Victor testified that both he and Dominic sold their shares in Broadway to Expressway and were paid in full in 2 |