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Gunthorp v. Golan, No. 85224 (Ill. S.Ct.)

Docket No. 85224-Agenda 34-September 1998.

JOHN GUNTHORP et al., Appellants, v. MARK T. GOLAN et al., Appellees.

Opinion filed December 3, 1998.

JUSTICE NICKELS delivered the opinion of the court:

The purchasers of a custom home filed suit against the architectural firm who designed the residence and the owner of that architectural firm alleging: that the architectural firm was under a contract with the builder of the residence; that the purchasers were entitled to enforce the contract as third-party beneficiaries; and that the defendants breached the contract by delivering copyright infringing plans. The circuit court of Lake County found that plaintiffs failed to introduce sufficient evidence to prove their cause of action. The appellate court affirmed on other grounds. No. 2-97-0334 (unpublished order under Supreme Court Rule 23). We allowed the petition for leave to appeal pursuant to Rule 315 (166 Ill. 2d R 315). We affirm.

BACKGROUND

Plaintiffs, John and Nancy Gunthorp (Gunthorp), viewed several residences designed and built by Charles Page (Page), including a home called "Echoes of a French Countryside" (Echoes), and looked into having Page design and build a home for them in Winnetka. The Gunthorps met with Page on a few occasions in May and June of 1993. On one of those occasions, Page gave the Gunthorps a four-page brochure that depicts the front and side elevations of the Echoes residence and contains floor plans for the home. The Gunthorps determined that Page would be too expensive and decided not to hire him.

The Gunthorps then contacted C.E. Russell, Inc. (Russell). Russell, a builder, suggested the Gunthorps use the Mark T. Golan Architect, LTD (Golan Firm), an architectural firm with whom Russell had previously worked. After viewing several houses designed by the Golan Firm, the Gunthorps agreed to meet with Robert Gebblehoff (Gebblehoff), a draftsman employed by the Golan Firm. When the Gunthorps told Charles Russell of their decision, he gave the Gunthorps a document entitled "Architectural Timeframe and Requirements." That document suggests that the Gunthorps should bring several items to their first architectural design meeting including a wish list, a room-by-room description, room sizes, magazine cutouts, and photos. In November 1993, the Gunthorps met with Gebblehoff, bringing along lists of requirements and several photos and magazine clippings. The Gunthorps also gave Gebblehoff photocopies of the first three pages of the Echoes brochure that they had received from Page. The last page, which Gebblehoff did not receive, contained a picture of Page and some information about him, the plot plan for the house, and a list of additional features of the Echoes residence.

On December 23, 1993, the Gunthorps and C.E. Russell and Associates entered into a written "Architectural Agreement." Subsequently, the plans were completed and the Golan Firm was paid by Russell. On April 27, 1994, the Gunthorps entered into a "Construction Contract" with Russell to build the house as designed by the Golan Firm. Russell began construction of the home.

The foundation had been poured and first-floor framing was nearly complete on July 21, 1994, when Page filed a complaint in federal district court against, among others, the Gunthorps, Russell, and the Golan Firm. The complaint alleged copyright infringement and unfair competition. Specifically, the complaint alleged that Page authored unique architectural works that are protected by copyright and that the defendants named in the federal complaint infringed those copyrights. On July 22, 1994, the district court issued a temporary restraining order that effectively prohibited the defendants from constructing or continuing to construct the Gunthorp residence. The temporary restraining order was extended without a hearing on July 26, 1994. The Gunthorps entered into a settlement agreement with Page on August 24, 1994, as part of which the Gunthorps paid Page $55,500. The settlement agreement also required the Gunthorps to make certain changes to the front elevation of their home. The federal case was then dismissed against all defendants.

The Gunthorps used another architect to draw up the changes so that the residence was acceptable to Page. Russell agreed to continue to build the home if the Gunthorps agreed to sign change order 21, which contains language that purports to release Russell and his subcontractors. After the Gunthorps signed the change order, Russell proceeded with construction on the residence.

The Gunthorps filed the complaint that led to the instant appeal on August 4, 1995. The complaint alleges that Mark T. Golan individually (Golan) and the Golan Firm (collectively, defendants) breached a contract between the defendants and Russell by delivering plans that violate the property rights of Page. Russell is not named in the complaint. The Gunthorps allege that the contract was entered into for the Gunthorps' benefit and that they are entitled to relief as third-party beneficiaries. As damages, the Gunthorps seek the sum that they paid to settle the federal lawsuit, legal fees, and other unspecified damages.

The defendants moved to dismiss the complaint and for summary judgment, urging that the Gunthorps were not third-party beneficiaries and that change order 21 released Golan and the Golan Firm. The circuit court denied the motions and after a bench trial entered judgment for defendants. The trial court found that the Gunthorps failed to prove their case and that the cause of action was barred by the Illinois Joint Tortfeasor Contribution Act (740 ILCS 100/.01 et seq (West 1996)). We observe that the Gunthorps' cause of action sounds in contract, not in tort.

The appellate court affirmed on other grounds, finding that the Gunthorps failed to prove that they were third-party beneficiaries, that the Gunthorps released the Golan Firm from liability pursuant to the language of change order 21, and that the trial court did not err in determining that the design of the Gunthorp residence did not infringe Page's copyright. The Gunthorps appeal and defendants cross-appeal for sanctions, alleging that the current appeal is frivolous.

DISCUSSION

We first address jurisdiction. Defendants assert that this court does not have jurisdiction in the present case because the United States Congress vested exclusive subject matter jurisdiction over copyright matters in the federal judiciary. 28 U.S.C.