Krilich v. American National Bank & Trust Co.

Case Date: 10/10/2002
Court: 2nd District Appellate
Docket No: 2-01-0921, 2-01-1235, 2-01-1439 cons.

Nos. 2--01--0921, 2--01--1235, 2--01--1439 cons.


IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT


ROBERT R. KRILICH,

               Plaintiff and
               Counterdefendant-Appellee,
v.

AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO

               Defendant-Appellant

(Bongi Development Corporation,
Defendant and Counterplaintiff-
Appellant).

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Appeal from the Circuit Court
of Du Page County.


No. 98--L--673






Honorable
Stanley C. Austin,
Judge, Presiding.

ROBERT R. KRILICH,

               Plaintiff and
               Counterdefendant-Appellee,

v.

AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,

               Defendant-Appellant

(Bongi Development Corporation,
Defendant and Counterplaintiff-
Appellant).

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Appeal from the Circuit Court
of Du Page County.



No. 98--L--673






Honorable
Kenneth Moy
Judge, Presiding.

ROBERT R. KRILICH,

               Plaintiff and
               Counterdefendant-Appellee
               and Third-Party Plaintiff-
               Appellant,

v.

AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,

               Defendant-Appellant

(Bongi Development Corporation,
Defendant and Counterplaintiff-
Appellant; Viola Lorentz, as
Adm'r of the Estate of Arthur
Lorentz, and Mary Burke, Gene
Nauert, Herbert Maier, Maurice
Frishman, John Joyce, William
Lange, and Edward M. White,
Third-Party Defendants-
Appellees).

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Appeal from the Circuit Court
of Du Page County.





No. 98--L--673













Honorable
Hollis L. Webster,
Judge, Presiding.


JUSTICE BYRNE delivered the opinion of the court:

These consolidated appeals arise from a real estate contractbetween plaintiff, Robert R. Krilich, and defendant BongiDevelopment Corporation (Bongi). Krilich filed two motions todismiss Bongi's multiple counterclaims and affirmative defenses,the trial court granted the motions, and Bongi appeals thedismissals. Krilich appeals an unrelated order in which the trialcourt dismissed his claim for indemnification against his formerjoint venturers. We affirm.

FACTS

On January 5, 1973, Krilich entered into a joint ventureagreement (the Carol Stream Joint Venture Agreement) with ArthurLorentz, Mary Burke, Gene Nauert, Herbert Maier, Maurice Frishman,John Joyce, William Lange, and Edward M. White (collectively, thejoint venturers). The purpose of the joint venture was to purchaseand develop residential real estate.

On June 29, 1988, acting on behalf of the joint venture,Krilich agreed to sell Bongi certain property in the Village ofNorth Barrington for $1,237,500. The North Barrington parcelconsisted of 15 lots of a subdivision, and the parties intended forBongi to build a single-family residence on each lot. Pursuant tothe North Barrington contract, Bongi was to pay Krilich $900,000 atclosing and pay the remaining $337,500 pursuant to a promissorynote. The contract further provides in relevant part:

"WHEREAS, [Bongi] intends to complete the zoning of theSubdivision by the Village at [Bongi's] sole cost and expenseto enable [Bongi] to construct single-family residences.

* * *

8. Conditions Precedent. [Bongi's] obligation toconsummate the Purchase of the Property shall be contingentupon fulfillment of the following conditions precedent('Conditions Precedent') hereinafter described:

a. Tests and Inspections. Within ten (10) days from thedate hereof, [Krilich] shall deliver to [Bongi] all soiltest borings, engineering studies, toxicity tests orother documentation that [Krilich] may have relating tothe Property and if complete, [Bongi] shall have twenty(20) days from the date hereof to determine theacceptability of such reports. In the event the resultsof such tests and studies disclose that the Property isnot suitable to permit the construction of improvementson the Property in accordance with [Bongi's] IntendedDevelopment, then upon written notice to [Krilich] withinsaid twenty (20) day period, [Bongi] may terminate thisAgreement. Thereafter, this Agreement shall be null andvoid and the parties shall have no further rights orliabilities hereunder. [Bongi's] failure to so notify[Krilich] in writing within said twenty (20) day periodshall be construed as meaning that [Bongi] isconclusively satisfied with the results of the testsreceived by [Bongi] from [Krilich] and waives its rightunder this paragraph to terminate this Agreement.

b. Final Approval. [Bongi's] Intended Development willrequire adoption by the Village of an ordinance approvingthe subdivision of the Subdivision into fifteen (15)lots; the final approval of [Bongi's] engineering plansfor the Subdivision, and approval by all staff membersand Village committees of a Development Plan materiallyconsistent with the Preliminary Development Plan; and[Bongi] receiving all necessary approvals and permitsfrom all units of government having jurisdiction over theProperty ***. The aforesaid approval process ishereinafter referred to as 'Final Approval.' [Bongi]shall file applications for Final Approval as soon aspracticable and will thereafter diligently and in goodfaith take the steps necessary for consideration by theVillage and other units of government having jurisdictionover the Property of a grant of such approval."

On July 15, 1988, Krilich and Bongi closed the sale and Bongiexecuted a $337,500 promissory note as planned. On or about thatdate, Krilich and Bongi modified the North Barrington contract torequire Krilich to pay one-half of the cost of soil importationsand certain other corrective measures. The parties also renewedthe first promissory note in the form of a second note.

On February 8, 1991, Krilich and Bongi executed a secondmodification of the North Barrington contract and a thirdpromissory note. The second modification voided the firstmodification, thereby eliminating Krilich's duty to pay the costsdescribed therein. The third note consolidated the principal andthe interest that Bongi owed and increased the interest rate.

On August 10, 1998, Krilich sued defendants Bongi and AmericanNational Bank and Trust Company (American) for breach of the thirdpromissory note. On January 13, 1999, Bongi filed an answer,affirmative defenses, and three counterclaims. Bongi's originalcounterclaims state causes of action for misrepresentation, fraud,and breach of contract. In each of the counterclaims, Bongialleges the following:

"In said Contract and during and after negotiations,KRILICH misrepresented the following material facts to BONGI:

(A) That on said real estate as set forth in the [NORTH]BARRINGTON CONTRACT, BONGI could construct fifteen (15)single family residences;

(B) That the real estate constituting the purchase was ofa size sufficient to create individual septic fields foreach of fifteen (15) lots and further that the content,quality, consistency and capacity of the soil wassuitable for the construction of septic fields sufficientfor the construction of fifteen (15) single familyresidences.

(C) That subdivision and other approvals from the Villageof North Barrington, the County of Lake and othergovernmental bodies would be a routine matter and couldbe completed within a period of several months afterclosing."

The counterclaims further allege that Krilich intentionallydeceived Bongi, Bongi reasonably relied upon the statements, andBongi incurred substantial damages when it could not obtain zoningapproval for the project. Bongi's pleadings also allege thatKrilich failed to pay the amounts due under the first contractmodification.

On March 30, 1999, Krilich filed a motion to dismiss themisrepresentation and fraud counterclaims under section 2--619 ofthe Code of Civil Procedure (Code) (735 ILCS 5/2--619 (West 1998)). Krilich conceded that he made the statements as alleged. However,he argued that Bongi unreasonably relied upon the statementsbecause (1) they were statements of law, (2) they were statementsof future facts, and (3) Bongi waived its contractual right tocancel the agreement upon the occurrence of the events thatallegedly caused Bongi's damages. On June 8, 1999, Judge Austingranted the motion to dismiss the misrepresentation and fraudcounterclaims.

More than a year later, Bongi filed two additional affirmativedefenses, alleging that (1) the North Barrington contract wasunenforceable because Krilich used duress and business compulsionwhile negotiating the second modification of the original agreementand (2) Bongi was entitled to a setoff against any amount thatKrilich might recover because Krilich had breached the firstcontract modification. Bongi also amended the counterclaims toinclude a second breach of contract count based on the duressallegation.

Specifically, Bongi alleges that Krilich employed duress andbusiness compulsion during the negotiations of the second contractmodification by threatening to breach the parties' Covington Covecontract, an unrelated residential real estate development contractexecuted on May 18, 1988. Pursuant to the Covington Cove contract,Krilich was to sell Bongi 153 "fully improved lots" in the Villageof Carol Stream. The agreement required Krilich to completecertain public subdivision improvements, and Bongi alleges thatKrilich coerced Carl Bongiovanni, Bongi's president, to execute thesecond modification of the North Barrington contract by delayingcompletion of the improvements and withholding a letter of creditfor the Covington Cove project. Bongi contends that Krilich knewthat Bongi owed more than $5 million on outstanding mortgage loanson the Covington Cove project and that any delays in theconstruction would threaten the project. Bongi seeks at least $5million on the duress counterclaim.

Krilich filed a motion to dismiss the two new affirmativedefenses and the new counterclaim. The motion contained anaffidavit prepared by Dennis Taheny, Krilich's former attorney, inwhich he stated that, on November 12, 1990, Taheny sent Bongiovanniand his attorney, Keith Wenk, a draft of the proposed secondmodification of the North Barrington contract.

On June 13, 2001, Judge Moy granted the motion, concludingthat Bongi had failed to state a claim of duress because (1)Bongiovanni had the benefit of counsel during the three-monthnegotiation of the second modification, (2) a mere threat to breacha contract is not economic duress, and (3) public policyconsiderations supported the dismissal of the duress allegations. Bongi timely filed a notice of appeal, and we docketed the caseunder appeal No. 2--01--0921. Bongi subsequently filed a secondproper notice of appeal of the dismissal of the misrepresentationand fraud counterclaims, and we docketed the case under appeal No.2--01--1235.

On March 26, 2001, Krilich filed a third-party complaint inwhich he alleged that the joint venture agreement required theremaining joint venturers to indemnify him for any liability hemight incur on behalf of the joint venture as a result of hislitigation against Bongi. Pursuant to section 2--619 of the Code,the joint venturers filed a motion to dismiss Krilich's third-partycomplaint for indemnification. On November 20, 2001, Judge Webstergranted the motion, concluding that the joint venturers'contractual duty to indemnify Krilich for Bongi's counterclaims wasterminated by a mutual release that the parties executed beforeBongi filed the counterclaims. Krilich timely appeals thedismissal in appeal No. 2--01--1439.

BONGI'S MISREPRESENTATION AND FRAUD COUNTERCLAIMS
(APPEAL No. 2--01--1235)

We initially address Bongi's appeal from Judge Austin's June8, 1999, order granting Krilich's section 2--619 motion to dismissBongi's original misrepresentation and fraud counterclaims. Bongiargues that Judge Austin erroneously concluded that Krilich's misrepresentations were statements of law and statements thatconcerned future matters. Bongi additionally argues that it didnot waive the issue by foregoing its right to terminate thecontract. As he did in the trial court, Krilich concedes that hemade the alleged statements, but he argues that they werestatements of law and statements of future facts. Krilich furthercontends that Bongi waived its contractual right to terminate theagreement before closing. We agree with Krilich's waiver argument.

Krilich's motion to dismiss merely cites "section 2--619" ofthe Code, but it appears that the parties and the trial courtanalyzed the issues pursuant to subsection 2--619(a)(9). Ourstandard of review of a motion to dismiss under section 2--619 ofthe Code is de novo. Neppl v. Murphy, 316 Ill. App. 3d 581, 583(2000). A section 2--619 motion to dismiss admits the legalsufficiency of the complaint and raises defects, defenses, or otheraffirmative matters that appear on the face of the complaint or areestablished by external submissions that act to defeat the claim. Neppl, 316 Ill. App. 3d at 584.

A section 2--619 proceeding permits a dismissal after thetrial court considers issues of law or easily proved issues offact. Neppl, 316 Ill. App. 3d at 585. Section 2--619(a)(9), inparticular, allows dismissal when "the claim asserted *** is barredby other affirmative matter avoiding the legal effect of ordefeating the claim." 735 ILCS 5/2--619(a)(9) (West 2000). Theterm "affirmative matter" as used in section 2--619(a)(9) has beendefined as a type of defense that either negates an alleged causeof action completely or refutes crucial conclusions of law orconclusions of material fact unsupported by allegations of specificfact contained in or inferred from the complaint. Neppl, 316 Ill.App. 3d at 585.

In ruling on a motion to dismiss under section 2--619, thetrial court may consider pleadings, depositions, and affidavits. Zedella v. Gibson, 165 Ill. 2d 181, 185 (1995). The question onappeal is " 'whether the existence of a genuine issue of materialfact should have precluded the dismissal or, absent such an issueof fact, whether dismissal is proper as a matter of law.' " Zedella, 165 Ill. 2d at 185-86, quoting Kedzie & 103rd CurrencyExchange, Inc. v. Hodge, 156 Ill. 2d 112, 116-17 (1993).

It is well settled that, to state a cause of action formisrepresentation and fraud, a party must plead and prove thefollowing elements: (1) the existence of a false statement ofmaterial fact, (2) made by a party who knows or believes it to befalse, (3) with the intent to induce another to act, (4) whichcauses action by another in reasonable reliance on the statement'struth, and (5) causes an injury to the other resulting from thereliance. Tan v. Boyke, 156 Ill. App. 3d 49, 54 (1987).

In the counterclaims, Bongi alleges that Krilichmisrepresented that (1) Bongi could construct 15 single-familyresidences on the lots, (2) each lot was sufficiently large and thesoil was adequate to support a septic field, and (3) Bongi couldeasily obtain subdivision and other zoning approvals within severalmonths of the closing. We note preliminarily that the first andthird statements are substantively similar: they both relate to theease with which Bongi could obtain zoning approval, which was theprimary obstacle to the completion of the project.

The North Barrington contract required Krilich to provideBongi with copies of all zoning ordinances and permits relating tothe property within five days of the contract. Krilich was furtherrequired to disclose within 10 days of the contract all soil testborings, engineering studies, toxicity tests and otherdocumentation.

The contract gave Bongi the right to terminate the contractwithin 10 days if Bongi alone concluded that the zoningrestrictions would unduly hinder construction. Although thecontract did not expressly provide Bongi with the right to conductindependent inspections or tests, Bongi had 20 days to review thesoil reports and determine whether the property was suitable forconstruction of the residences. Bongi argues that, because thezoning approval process did not begin until after the closing, ithad no way of knowing whether Krilich's statements were true. However, Bongi concedes that it knew the nature of the zoningrestrictions when the sale was closed. Bongi disputes theexistence of the soil test reports and insists that it was requiredto proceed to closing even if Krilich failed to deliver them.

Bongi's review of and acquiescence to the zoning ordinancesand the soil reports were conditions precedent to its duty toperform under the contract. Krilich was in no better position thanBongi, a sophisticated residential real estate developer, to assessthe potential for septic system construction and the likelihood ofprompt zoning approval. We agree with the trial court that Bongiunreasonably relied upon Krilich's overly optimistic view of bothsituations. If Bongi was uncertain whether the zoning approvalwould be forthcoming, it could have terminated the contract beforeclosing. Bongi also had the right to terminate the agreement ifKrilich failed to tender the soil reports as required. BecauseBongi proceeded to closing without objection, it waived its rightto terminate the contract. We conclude that Bongi'smisrepresentation and fraud counterclaims should be dismissed basedon the waiver, and we need not address whether the allegedmisrepresentations were statements of law or future facts.

BONGI'S DURESS ALLEGATIONS
(APPEAL No. 2--01--0921)

Bongi next appeals Judge Moy's dismissal of its amendedcounterclaim and affirmative defenses alleging that Krilich usedduress and business compulsion to secure the second modification ofthe North Barrington contract. In his motion, Krilich merely citedsection "2--619" of the Code, but the parties agree that the motionwas analyzed under subsection 2--619(a)(9). Bongi initially arguesthat a reversal is required because Krilich should have filed hismotion under section 2--615 of the Code. Bongi also contends thatissues of fact precluded the trial court from granting the motion. We disagree with both arguments and conclude that the courtcorrectly decided the motion under section 2--619(a)(9).

Our standard of review of a motion to dismiss, under eithersection 2--615 or 2--619 of the Code, is de novo. Neppl, 316 Ill.App. 3d at 583. A motion to dismiss based on section 2--615 admitsall well-pleaded facts and attacks the legal sufficiency of thecomplaint; but a motion to dismiss under section 2--619 admits thelegal sufficiency of the complaint and raises defects, defenses, orother affirmative matters that appear on the face of the complaintor are established by external submissions that act to defeat theclaim. Neppl, 316 Ill. App. 3d at 584.

If the grounds for dismissal do not appear on the face of thepleading attacked, the party seeking the dismissal must file anaffidavit in support of the motion. 735 ILCS 5/2--619(a) (West2000). If facts set forth in an affidavit supporting a motion todismiss are not contradicted by a counteraffidavit, they will betaken as true notwithstanding contrary unsupported allegations inthe complaint. Pryweller v. Cohen, 282 Ill. App. 3d 899, 907(1996).

Economic duress, also known as business compulsion, is anaffirmative defense to a contract, which releases the party signingunder duress from all contractual obligations. Herget NationalBank of Pekin v. Theede, 181 Ill. App. 3d 1053, 1057 (1989). Duress occurs where one is induced by a wrongful act or threat ofanother to make a contract under circumstances that deprive one ofthe exercise of one's own free will. Hurd v. Wildman, Harrold,Allen & Dixon, 303 Ill. App. 3d 84, 91 (1999). To establishduress, one must demonstrate that the threat has left theindividual " 'bereft of the quality of mind essential to the makingof a contract.' " Hurd, 303 Ill. App. 3d at 91, quoting Alexanderv. Standard Oil Co., 97 Ill. App. 3d 809, 815 (1981). The acts orthreats complained of must be wrongful; however, the term"wrongful" is not limited to acts that are criminal, tortious, orin violation of a contractual duty. They must extend to acts thatare also wrongful in a moral sense. Hurd, 303 Ill. App. 3d at 91.

It is well settled that, where consent to an agreement issecured merely through hard bargaining positions or financialpressures, economic duress does not exist. Hurd, 303 Ill. App. 3dat 91. "Rather, the conduct of the party obtaining the advantagemust be shown to be tainted with some degree of fraud or wrongdoingin order to have an agreement invalidated on the basis of duress."Alexander, 97 Ill. App. 3d at 815.

"Ordinarily, a threat to break a contract does not constituteduress, and to infer duress, there must be some probableconsequences of the threat for which the remedy for the breachafforded by the courts is inadequate. If there is no full andadequate remedy from the courts for the breach, the coercive effectof the threatened action may be inferred." Kaplan v. Keith, 60Ill. App. 3d 804, 807 (1978). Furthermore, a finding of duress isless likely if the party has the assistance of counsel and adequatetime to consider the proposed contractual terms. Alexander, 97Ill. App. 3d at 816.

In this case, Bongi alleges that Krilich threatened to breachthe Covington Cove contract if Bongiovanni did not execute thesecond modification of the North Barrington contract. In hissection 2--619(a)(9) motion to dismiss, Krilich included Taheny'saffidavit, which states that Wenk, Bongi's attorney, knew ofKrilich's proposal during the entire three-month negotiationperiod. Taheny did not state that Wenk was personally involved inthe negotiations, but Bongi did not allege in any pleading,deposition, or counteraffidavit that it did not consult Wenk duringthat period. Our review of the record reveals that Wenk clearlyknew of the negotiations and that Bongiovanni had the opportunityto consult him.

Bongi argues that a duress allegation may never be dismissedunder section 2--619 of the Code because a finding of duress turnson the subjective feelings of the parties. However, the appellatecourt has frequently held that a claim of duress may be disposed ofwithout an evidentiary hearing. See, e.g., Hurd, 303 Ill. App. 3dat 88 (granting motion to dismiss under sections 2--619(a)(6) and2--619(a)(9)); Alexander, 97 Ill. App. 3d at 816 (granting summaryjudgment). Contrary to Bongi's assertions, we conclude thatTaheny's affidavit is the type of affirmative matter that supportsa section 2--619(a)(9) motion to dismiss because Bongi's pleadingsdo not contradict the affidavit.

Bongi next argues that Krilich's threat to breach the contractwas coercive because Bongi would not have had a "full and adequate"judicial remedy. However, Bongi merely contends that it andBongiovanni faced "financial collapse," bankruptcy, and protractedlitigation if Krilich followed through on his threat. Weacknowledge that Bongi's damages would have been substantial, butwe disagree with Bongi that all of the consequential and incidentaldamages of Krilich's threatened breach could not have beenrecovered through judicial proceedings. Moreover, Bongi cites noauthority for its proposition that the inconvenience associatedwith an adversary's contract breach renders a judicial remedyinadequate. Because Bongiovanni enjoyed access to legal counselduring the three-month negotiation period and because Bongi had anadequate potential judicial remedy, we conclude that the trialcourt correctly dismissed the affirmative defenses and counterclaimalleging economic duress.

Our review of a dismissal under section 2--619(a)(9) of theCode is de novo (Neppl, 316 Ill. App. 3d at 583), and we may affirmthe result below on any basis that is supported by the record (Inre Application of the Cook County Treasurer, 185 Ill. 2d 428, 436(1998)). Therefore, we need not consider whether the trial courterroneously relied upon public policy considerations in reachingits decision.

KRILICH'S INDEMNIFICATION CLAIM
(APPEAL No. 2--01--1439)

Finally, we address Krilich's appeal in which he challengesJudge Webster's November 20, 2001, order dismissing Krilich'sthird-party complaint seeking indemnification from the jointventurers. The joint venture agreement provides in relevant part:

"10. In the event that any party shall be required tomake payment of an indebtedness of the Joint Venture, theothers shall indemnify him against any loss by virtue thereofin proportion to their ownership interest in the JointVenture."

Several of the joint venturers sued Krilich for an accountingof the Carol Stream joint venture, and on September 24, 1998,Krilich and all of the joint venturers filed in the circuit courta mutual release to dissolve the joint venture and settle theclaims. The mutual release provides in relevant part:

"2. The entry of the [September 24, 1998,] Order anddistribution of the sums provided therein and acceptance ofsame shall operate as a complete release by each partner ofall claims against the partnership and any other partner inconnection with the affairs of the partnership, except to theextent hereinafter set forth, and each partner by execution ofthis agreement releases and discharges each other partner andthe partnership from all claims, demands and causes of actioneither may have against the other or the partnership arisingout of any matter involving said partnership or payments madeby said partnership or funds received by said partnership orother transactions involving the partnership from theinception of the partnership to the date hereof, except as setforth hereinafter.

* * *

6. Nothing herein contained shall be deemed to affectthe rights of the partners, each against the other, tocontribution for any sums due the partnership by virtue ofpossible claims by the Village of Carol Stream and ParkwayBank in connection with financing obtained by the partnershipor Robert Krilich on behalf of the partnership. Each partnershall refund to the partnership out of sums received by himhis proportional shares of any monies necessary to meetliabilities of the partnership."

A release is a contract and, as such, is subject to thetraditional rules of contract interpretation. Doctor's AssociatesInc. v. Duree, 319 Ill. App. 3d 1032, 1045 (2001). A court mustconstrue the meaning of a contract by examining the language andmay not interpret the contract in a way contrary to the plain andobvious meaning of its terms. Unless the contract clearly definesits terms, the court must give the contractual language its commonand generally accepted meaning. Furthermore, the court must placethe meanings of words within the context of the contract as awhole. A contract is ambiguous when its terms may reasonably beinterpreted in more than one way. The mere fact that the partiesdisagree on some term, however, does not render the term ambiguous. J.M. Beals Enterprises, Inc. v. Industrial Hard Chrome, Ltd., 194Ill. App. 3d 744, 748 (1990).

Here, Bongi's counterclaims arose from joint venturetransactions occurring before the mutual release was executed. However, Bongi did not present its first counterclaims untilJanuary 13, 1999, which was nearly four months after the mutualrelease was filed in the circuit court. Krilich argues that thefinal sentence of paragraph 6 of the mutual release imposed a dutyon each joint venturer to indemnify the joint venture for any claimpresented after the release was executed, even if the eventssupporting the claim occurred before the release was executed. Wedisagree.

The plain language of paragraph 2 of the mutual releasegenerally extinguished the joint venturers' obligation to indemnifyone another for claims that "may" exist against the joint ventureand that arise out of any joint venture matter or transactionoccurring before September 24, 1998. However, paragraph 6 of therelease specifically extended the duty to indemnify for "possible"claims that might be brought by the Village of Carol Stream andParkway Bank in connection with financing obtained by Krilich orothers acting on behalf of the joint venture. The final sentenceof paragraph 6 merely defines the amount of each joint venturer'scontribution for potential sums owed to the village and ParkwayBank. The sentence does not revive the joint venturers' duty toindemnify for all claims presented after the release was executed. Such an interpretation of paragraph 6 would be inconsistent withthe broad, plain language of paragraph 2.

The dissent concludes that the joint venturers did notanticipate Bongi's claims before executing the release, andtherefore, the mutual release does not extinguish the jointventurers' duty to indemnify Krilich for those claims. Werespectfully disagree. The intention of the parties controls thescope and effect of a release, and this intent is discerned fromthe release's express language as well as the circumstancessurrounding the agreement. A release will not be construed toinclude claims that the parties did not contemplate. Doctor'sAssociates, 319 Ill. App. 3d at 1045.

While terminating the joint venture, the joint venturersexecuted the mutual release to extinguish their duties to the jointventure and to each other. The scope of the mutual release isdefined by the events, occurrences, and transactions that mightlead to a claim against the partnership. The timing of thepresentation of a particular claim is irrelevant, and the scope ofthe paragraph 6 extension of the right to indemnification isdefined by the identity of the party presenting the claim. Inrespectful disagreement with the dissent, we conclude that Krilichand the other joint venturers considered the possibility thatclaims such as Bongi's might be brought against the joint ventureafter the execution of the mutual release but nevertheless chose toextend their indemnification rights for claims brought by only theVillage of Carol Stream and Parkway Bank.

Krilich contends that the joint venturers did not intend toterminate their indemnification rights concerning any claimspresented after the execution of the release. If we were to adoptKrilich's narrow interpretation of the mutual release, the releasewould extinguish the duty to indemnify for only those claimsagainst the joint venture that had already been presented at thetime the release was executed. However, Krilich does not allegethat any third party who had done business with the joint venturehad already filed a claim to which the mutual release could beintended to apply. If no third party had filed a claim against thejoint venture at the time the mutual release was executed, therewould be little reason for the joint venturers to terminate theirduty to indemnify for those nonexistent claims.

Moreover, Krilich's interpretation undermines the purpose ofthe mutual release, namely, the dissolution of the joint ventureand the termination of the joint venturers' liability to oneanother for all claims except those that might be brought by thevillage and Parkway Bank. The release's express exclusion of thesetwo types of potential claims reveals that the joint venturersconsidered the possibility that parties with whom they hadconducted business, including Bongi, might present certain claimsafter the execution of the release. The joint venturersnevertheless limited the release's exclusion to potential claims bythe village and Parkway Bank. This shows the joint venturers'intent to terminate their indemnification rights concerning allother potential claimants, including Bongi. Therefore, we concludethat the trial court correctly dismissed Krilich's third-partycomplaint for indemnification because the mutual release terminatedthe joint venturers' duty to indemnify him for Bongi'scounterclaims.

For these reasons, the orders of the circuit court of Du PageCounty are affirmed.

Affirmed.

GROMETER, J., concurs.

JUSTICE O'MALLEY, specially concurring in part and dissentingin part:

I dissent from the part of the majority's opinion that affirmsthe trial court's judgment granting the joint venturers' motion todismiss Krilich's third-party complaint seeking indemnification. I believe that the motion to dismiss raised issues of fact that areinappropriate for summary resolution under section 2--619 of theIllinois Code of Civil Procedure (735 5/2--619 (West 2000)). Also,I believe that the majority has misapplied the standards governinginterpretation of release agreements.

The majority believes it is "plain" that the release"generally extinguished the joint venturers' obligation toindemnify one another for claims that 'may' exist against the jointventure and which arise out of any joint venture matter ortransaction occurring before September 24, 1998." Slip op. at 18-19. The obvious implication of this interpretation is that therelease does not apply to transactions of the joint ventureoccurring after September 24, 1998. The record shows, however,that September 24, 1998, was the date the joint venture wasdissolved by order of the trial court. Therefore, there could nothave been any business of the joint venture occurring afterSeptember 24, 1998. To include in the release any reference,implicit or explicit, to business of the joint venture occurringafter September 24, 1998, would have been needless because therecould be no such business. To include in the release a provisionimpliedly excluding claims related to such business would have beenabsurd because there can be no liability in the first instance forimpossible events. But this oddity is precisely what the majorityascribes to the parties. The majority fails to consider acircumstance surrounding the execution of the release thatcompletely undercuts its view that the central distinction in therelease is between business of the joint venture occurring beforeand after the execution of the release.

In my view, September 24, 1998, is a cutoff date that relatesnot to the business of the joint venture (because there could be nobusiness of the joint venture after September 24, 1998) but to thebringing of claims. The release, in my view, bars only claims(based on partnership business) brought after September 24, 1998,that were known to the parties when the release was signed.

The case law on the interpretation of releases is wellestablished:

" '[N]o form of words, no matter how all encompassing, willforeclose scrutiny of a release [citation] or prevent areviewing court from inquiring into surrounding circumstancesto ascertain whether it was fairly made and accuratelyreflected the intention of the parties.' " Carlile v. Snap-onTools, 271 Ill. App. 3d 833, 839 (1995), quoting AinsworthCorp. v. Cenco, Inc., 107 Ill. App. 3d 435, 439 (1982). Exculpatory agreements releasing parties from future liability are not favored. Stratman v. Brent, 291 Ill. App. 3d 123, 137(1997). Such agreements are strictly construed against thebenefitting party and " 'must spell out the intention of theparties with great particularity.' " Stratman, 291 Ill. App. 3d at137, quoting Scott & Fetzer Co. v. Montgomery Ward & Co., 112 Ill.2d 378, 395 (1986).

Our supreme court has provided specific guidelines for theinterpretation of general releases like the one at issue here:

"Where the releasing party was unaware of other claims,Illinois case law has restricted general releases to thespecific claims contained in the release agreement.[Citation.] However, where both parties were aware of anadditional claim at the time of signing the release, courtshave given effect to the general release language of theagreement to release that claim as well. [Citations.]" FarmCredit Bank of St. Louis v. Whitlock, 144 Ill. 2d 440, 447(1991).

A court reviewing a release "will not interpret generalitiesso as to defeat a valid claim not then in the minds of theparties." Martin v. Illinois Farmers Insurance, 318 Ill. App. 3d751, 764 (2000). "Where there are only words of general release,the courts will restrict the release to the thing or thingsintended to be released ***." Carlile, 271 Ill. App. 3d at 839. I have not concluded, as the majority asserts, that the jointventurers "did not anticipate Bongi's claims before executing therelease." Slip op. at 19. Rather, I believe, as I explain below,that what the parties intended in drafting the release was an issueof fact inappropriate for summary resolution under section 2--619.

First, however, I disagree with the majority over theapplicable legal standards. The majority concludes that therelease applies to Krilich's claim because "Krilich and the otherjoint venturers considered the possibility that claims such asBongi's might be brought against the joint venture" after therelease was executed. Slip op. at 20. However, the fact that theparties "considered the possibility that claims such as" the claimallegedly released would be brought will not by itself pull thatclaim within the sway of the release. A claim not in existencewhen a release is signed is not extinguished absent a clearexpression of intent to that effect. Chubb v. Amax Coal Co., Inc.,125 Ill. App. 3d 682, 686 (1984). "[A] general release does notapply to an unspecified claim if the releasing party is unaware ofsuch claim when executing the release." Myers v. HealthSpecialists, S.C., 225 Ill. App. 3d 68, 75 (1992); accord Whitlock,144 Ill. 2d at 448 ("[a] general release is inapplicable to unknownclaims"). Where a general release is claimed to have extinguisheda claim not specified in the release, Illinois courts determine notwhether the parties considered the possibility that a third partymight bring claims akin to the claim brought but whether thatparticular claim was in the minds of the parties when the releasewas executed. See Carlile, 271 Ill. App. 3d at 839-40 (releaseagreement signed when plaintiff terminated his dealership agreementwith defendant did not apply to fraud claim based on defendant'salleged misrepresentations about the viability of a dealershipduring negotiations because plaintiff did not contemplate fraudclaim when he signed the release but considered the unprofitabilityof the dealership to be entirely his own fault); Myers, 225 Ill.App. 3d at 75 (release agreement, which purported to releasedefendant, plaintiff's employer, from "all claims" that plaintiff"now has" or "ever had" prior to the date of the release based on"any employment contract" with defendant, constituted a mere"general release" that was inapplicable to plaintiff's claim forinsurance coverage based on incident occurring during plaintiff'semployment; the claim was "unknown but discoverable" at the timethe release was signed). We have all seen releases that arecarefully worded as to bring within their sway all present andfuture claims whether known or unknown. Even such sweepinglanguage (which, I emphasize, is not present in the release atissue) is not dispositive, for " 'no form of words, no matter howall encompassing, will foreclose scrutiny of a release' " (Carlile,271 Ill. App. 3d at 839, quoting Ainsworth, 107 Ill. App. 3d at439).

The close scrutiny of a release is especially appropriatewhere a party seeks the benefit of a release that purportedlyextinguishes liability between numerous members of a joint venture,as is the case here. Joint ventures are governed by partnershipprinciples. In re Johnson, 133 Ill. 2d 516, 526 (1989). As in apartnership, every member of a joint venture can be held liable toa third party for acts of the other joint venturers done in thecourse of the enterprise. Fentress v. Triple Mining, Inc., 261Ill. App. 3d 930, 940 (1994). A release of "all claims," as theagreement at issue purports to effect, would entail a release ofclaims for contribution and indemnification. So, for example, didWilliam Lange (who received $49,910.26 when the assets of the jointventure were distributed upon dissolution) intend to foreclose hisright to seek indemnification from Krilich (who received$736,756.48 upon dissolution) in the event some third party such asBongi chose at some time in the future to hold Lange solely liablefor some unknown claim arising from the activities of the jointventure occurring prior to September 24, 1998? The majority pointsto no surrounding circumstances that would make such an intentionrational. Krilich's receipt of substantially greater assets uponthe joint venture's dissolution than any other joint venturer is acircumstance that suggests a rational reason why Krilich mightagree to release the other joint venturers, but there is nocircumstance surrounding the agreement that suggests a rationalreason why the other joint venturers would release Krilich fromliability.

The joint venturers' motion to dismiss was brought undersection 2--619 and, in my view, raised issues that precludeddismissal under that section. A motion to dismiss pursuant tosection 2--619 should be granted if, after construing the pleadingsand the supporting documents in the light most favorable to thenonmoving party, the trial court finds that no set of facts can beproved upon which relief could be granted. Owens v. McDermott,Will & Emery, 316 Ill. App. 3d 340, 344 (2000). A section 2--619motion to dismiss affords a defendant a means of obtaining asummary disposition when the plaintiff's claim can be defeated asa matter of law or on the basis of easily proved issues of fact. McGee v. State Farm Fire & Casualty Co., 315 Ill. App. 3d 673, 680(2000). The questions on review of a dismissal under section 2--619 are whether a genuine issue of material fact exists and whetherthe defendant is entitled to a judgment as a matter of law. Nowakv. St. Rita High School, 197 Ill. 2d 381, 389 (2001). Illinoiscourts repeatedly have characterized section 2--619 motions assimilar to summary judgment motions. See Feldheim v. Sims, 326Ill. App. 3d 302, 310 (2001) (citing numerous cases reflectingsimilarity of treatment). Accordingly, because "summary judgmentis particularly inappropriate where the inferences which theparties seek to have drawn deal with questions of motive, intentand subjective feelings and reactions" (Raprager v. AllstateInsurance Co., 183 Ill. App. 3d 847, 859 (1989)), I believe thatthe trial court's dismissal of Krilich's complaint wasinappropriate because the interpretation of the release agreementinvolved questions of intent--specifically, whether the partiesknew of Bongi's claim when they executed the general release butintended nonetheless to release that claim as well.