Khan v. Serfecz

Second Division
December 23, 1997

No. 1-97-0927

LYNDA J. KHAN, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. )
)
JOSEPH SERFECZ ) Honorable
) Kenneth L. Gillis,
Defendant-Appellee. ) Judge Presiding.

JUSTICE RAKOWSKI delivered the opinion of the court:
Defendant, Joseph Serfecz, owned certain real estate in Elk
Grove Village (Village), upon which the Village commenced a
condemnation action. As a result of other problems involving the
property, defendant filed a federal civil rights suit (federal
suit) against the Village and others. Defendant hired plaintiff,
Lynda Khan, to prosecute the federal suit. He entered into a
contingent fee agreement with plaintiff that provided she would
receive 25% of any recovery in the federal suit. The contract
provided, however, that if defendant dismissed the federal suit,
plaintiff would not receive the contingent fee. Likewise, it
provided that if defendant settled any other suit, plaintiff was
not entitled to the contingent fee. Defendant settled the
condemnation action for $6,150,000. As part of the settlement,
defendant agreed to dismiss the federal suit. Plaintiff filed
the instant suit, contending she was entitled to a contingent
fee. Defendant filed a motion for judgment on the pleadings
pursuant to section 2-615 of the Code of Civil Procedure (735
ILCS 5/2-615 (West 1996)). The trial court granted defendant s
motion and plaintiff appeals.
The issue is whether the condemnation settlement also
constituted a settlement of the federal suit. We reverse and
remand because we find that a question of fact exists as to
whether the settlement of the condemnation action constituted a
settlement of the federal suit.
FACTS
Defendant was the owner of a shopping center in Elk Grove
Village. In 1994, as a result of problems with a tenant, Jewel
Foods, defendant filed an antitrust action against Jewel Foods
and others. The Village threatened to condemn defendant's
property if he did not drop the suit. At defendant's request,
plaintiff filed a civil rights suit in the federal district court
against the Village and various officials of the Village based on
their acts of interfering with defendant's right to seek redress
for Jewel Foods' violations. When the Village agreed not to
condemn defendant's property, he voluntarily dismissed the
federal suit. Nonetheless, in January of 1995, the Village
instituted condemnation proceedings. After eight months of
unsuccessful negotiations with the Village, defendant asked
plaintiff to refile the federal civil rights suit against the
Village. At this time, defendant signed a "retainer and
contingency contract for legal services" that provided:
"(a) Fixed Fee: $70,000.00 total. ***
(b) Contingency: Lynda J. Khan & Associates
will receive twenty-five per-cent (25%) of
amounts recovered, after deducting $70,000.00
to be returned to the client. This applies
solely to the settlement of this case;
settlement of any other litigation does not
apply to this contingency agreement.
The undersigned agrees not to make any
settlement of this case except through said
attorney and with the same distributed in
accordance herewith.
The settlement of this case and the
continued prosecution of this case is to be
determined by the undersigned. If the
undersigned decides to dismiss this case all
that will be owed to the Law Offices of Lynda
J. Khan & Associates is the amount paid by
the undersigned to the date that this
litigation is dismissed."
Plaintiff refiled the federal suit. According to plaintiff, at
all times, defendant encouraged her to proceed with the suit and
denied there was to be any settlement of it. However, in March
of 1996, the Village attorneys advised plaintiff that settlement
negotiations were underway in the condemnation action that
involved defendant's agreement to dismiss the federal suit.
On May 1, 1996, a final order was entered in the
condemnation action. The settlement was for $6,150,000. As part
of that settlement, the order provided that: (1) prior to deposit
of the compensation, defendant was to provide the Village with a
signed stipulation for dismissal of the federal suit; (2) within
24 hours of the deposit of the compensation, defendant would
dismiss the federal suit; and (3) the stipulation and dismissal
order were not to be entered prior to disbursement. Defendant
also signed a release and covenant not to sue. It provided that,
for good consideration, defendant agreed not to pursue further
litigation against the Village and various other individuals and
entities, and he further agreed to dismiss the pending federal
suit. Plaintiff received no additional attorney fees as a
result of the condemnation settlement and filed the instant suit
against defendant. In count I of her complaint, plaintiff
alleges breach of contract based on the fact that defendant
settled the federal suit as part of the condemnation proceeding
and, therefore, she avers she is entitled to 25%. In count II,
plaintiff alleges fraud based on the fact defendant
misrepresented his intent to prosecute the federal suit where he
in fact only hired her to obtain a more favorable settlement in
the condemnation proceeding. She also avers that defendant
negotiated a settlement of the federal suit without her knowledge
or involvement, contrary to the provisions of the contingency
agreement.
Plaintiff attached to her complaint, inter alia, a copy of
the contingency agreement, a copy of the order entered in the
condemnation proceeding, and a copy of the release and covenant
not to sue signed in the condemnation action. Defendant did not
file an answer to plaintiff's complaint.
ANALYSIS
A motion for judgment on the pleadings attacks the
sufficiency of plaintiff's complaint to state a cause of action.
Abrams v. Illinois College of Podiatric Medicine, 77 Ill. App. 3d
471, 475 (1979). It is usually brought after the issues are
settled by the pleadings, where the court can consider the
complaint and answer. Oak Park National Bank v. Peoples Gas
Light & Coke Co., 46 Ill. App. 2d 385, 393 (1964). When
defendant fails to file an answer, the motion is in effect a
motion pursuant to section 2-615(b) for failure to state a cause
of action. Whatever the designation of the motion, the standard
is the same: the complaint should not be dismissed unless it is
clear that plaintiff could prove no set of facts that would
entitle her to relief. Compare Davis v. Temple, 284 Ill. App. 3d
983, 989 (1996) (motion to dismiss for failure to state a cause
of action), with Abbott-Interfast Corp. v. Harkabus, 250 Ill.
App. 3d 13, 16 (1993) (motion for judgment on the pleadings).
"We must accept as true all well-pleaded facts in plaintiff's
complaint and determine whether plaintiff has set forth a cause
of action on which relief may be granted." Abbott-Interfast
Corp., 250 Ill. App. 3d at 16-17. We must also draw all fair
inferences from the pleadings in the plaintiff's favor. Foley v.
Santa Fe Pacific Corp., 267 Ill. App. 3d 555, 561 (1994). The
court is not concerned whether there is evidence to support the
allegations of the complaint. Abrams, 77 Ill. App. 3d at 475.
"Rather, the sole issue raised by the motion for judgment on the
pleadings is whether plaintiff's complaint, when read in light of
the defendant's answer [citations] raises a material question of
fact as to the existence of a cause of action." Abrams, 77 Ill.
App. 3d at 475-76. The entry of judgment on the pleadings is
proper when, after reviewing the pleadings, the issues raised
present only questions of law. Millers Mutual Insurance Ass'n v.
Graham Oil Co., 282 Ill. App. 3d 129, 134 (1996). Judgment on
the pleadings is precluded if there is a material issue of fact.
Pioneer Bank & Trust Co. v. Austin Bank, 279 Ill. App. 3d 9, 13
(1996). Because defendant did not file an answer, we can only
consider plaintiff's complaint and the exhibits attached thereto
in determining the propriety of the trial court's ruling.
Seefeldt v. Millikin National Bank, 137 Ill. App. 3d 841 (1985).
A. BREACH OF CONTRACT
Initially, we agree with the parties that the contingency
agreement is unambiguous.
Plaintiff contends, however, that even though the contract
is unambiguous, the trial court erred in granting judgment on the
pleadings because a material issue of fact exists as to whether
defendant settled the federal suit as part of the condemnation
proceeding without plaintiff's participation while she was still
representing him. She contends that defendant did not simply
dismiss the federal suit, as would be allowed under the contract,
but instead received money in exchange for dismissal that now
obligates him to compensate her. She avers that defendant
received more compensation for his property than he would have
received without her prosecution of the federal suit and it is
not logical to conclude that defendant dismissed the federal suit
for nothing. Pursuant to section 2-615, well-pled statements and
reasonable inferences must be taken as true.
As previously stated, the issue is whether defendant settled
the federal suit as part of the condemnation proceeding or
whether defendant simply dismissed the federal suit for no value.
There is no question that defendant possessed the right to
dismiss the federal suit at any time prior to judgment.
Defendant emphasizes this fact and states this is simply what he
did: he exercised his right under the contingency agreement to
dismiss the suit. This argument, however, does not address the
issue. If defendant received additional amounts in the
condemnation proceeding as consideration for dismissing the
federal suit, this may constitute a settlement of the federal
suit. Similarly, if defendant could not receive the condemnation
funds before dismissing the federal suit, this also intimates
that defendant may have settled the federal suit within the
context of the condemnation action. Thus, the mere fact that he
dismissed the federal suit does not end the analysis.
"Settle" is defined as: "to conclude (a lawsuit) by
agreement between the parties usu[ally] out of court." Webster's
Third New International Dictionary 2079 (1981). Black's Law
Dictionary defines "settlement" as the: "[a]ct or process of
adjusting or determining; an adjusting; an adjustment between
persons concerning their dealings or difficulties; an agreement
by which parties having disputed matters between them reach or
ascertain what is coming from one to the other; *** determination
by agreement ***. *** In legal parlance, implies meeting of
minds of parties to transaction or controversy." Black's Law
Dictionary 1231 (5th ed. 1979). A settlement agreement is in the
nature of a contract and contract principles apply. City of
Chicago Heights v. Crotty, 287 Ill. App. 3d 883, 885 (1997).
Thus, each party must give consideration for the other's promise.
City of Chicago Heights, 287 Ill. App. 3d at 886; Johnson v.
Hermanson, 221 Ill. App. 3d 582, 584 (1991). "Generally,
anything of detriment to one side, or benefit to the other, may
constitute sufficient consideration to support a settlement."
Wilson v. The Hoffman Group, Inc., 131 Ill. 2d 308, 321 (1989).
For the reasons that follow, we conclude that provisions in
the condemnation order and release, attached to plaintiff's
complaint, create conflicting inferences as to precisely which
cause(s) of action defendant settled. As such, a question of
fact exists as to whether defendant settled the federal suit or
simply dismissed it without consideration.
In her complaint, plaintiff alleged that settlement of the
federal suit occurred as part of the settlement of the
condemnation proceeding. The order entered in the condemnation
proceeding contains facts to support this allegation. First, it
begins by stating that the matter is before the court for
ascertainment of just compensation for fee simple title to the
property. However, the court then finds that just compensation
has been determined "based on the agreement of the parties." It
further provides that the parties have reached an agreement as
set forth "herein." The order then encompasses facts regarding
the condemnation proceeding as well as facts regarding the
federal suit. The order requires that as part of the
condemnation settlement, defendant dismiss the federal suit. The
federal suit was an action completely distinct from the
condemnation proceeding. By virtue of the fact it was referenced
and specifically dealt with in the condemnation order, a
reasonable inference could be drawn that the federal suit was
settled within the context of the condemnation settlement. The
order also contains a provision holding the Village harmless for
any claims brought by plaintiff relative to the federal suit.
Additionally, the release and covenant not to sue signed by
defendant states that for just compensation defendant would not
further pursue litigation against the Village and that he would
dismiss the pending federal suit. The release and covenant
further provides that it "arises out of a settlement of claims,"
and later states "that the aforementioned cause of actions
[federal suit and condemnation proceeding] involve disputed
claims." Thus, there are facts present that lead to the
inference that defendant settled the federal suit within the
context of the condemnation action.
Conversely, the provisions of the order also contain facts
that lead to the inference that defendant settled only the
condemnation action. Several paragraphs contain language that
the just compensation or "full compensation" is "for the taking
of fee simple." Likewise, one paragraph states: "IT IS FURTHER
ORDERED AND ADJUDGED, by agreement of the parties, that the award
of just compensation is for the fee simple title to the Subject
Property." From this language, one could reasonably infer that
defendant received compensation for the condemnation only.
Additionally, simply because defendant dismissed the federal suit
as part of the condemnation proceeding does not necessarily mean
he settled the federal suit. Similarly, simply because defendant
received more than market value for his property, if proven true,
does not necessarily equate to a settlement of the federal suit.
The Village may have been willing to give defendant additional
money, above and beyond market value, to obtain immediate
possession of the property and avoid the costs and perils of
litigation. Therefore, the Village could have had motivations
for paying over market value other than settlement of the federal
suit. Thus, facts are present to support an inference that
defendant dismissed the federal suit without compensation.
Because reasonable conflicting inferences may be drawn from
the facts, judgment on the pleadings was inappropriate.
B. FRAUD
Plaintiff also contends that a question of fact exists as to
whether defendant defrauded her. Plaintiff states, however, that
this issue was not addressed by defendant in his motion for
judgment on the pleadings nor was it addressed by the trial
court.
The motion for judgment on the pleadings does not address
the fraud count on its merits. The only reference to that count
is in defendant's prayer for relief in which he asks that the
court enter judgment on the pleadings in his favor and against
plaintiff on counts I and II of her complaint. Plaintiff's
response and memorandum in support of response do not address
fraud nor does defendant's reply. The court order granting
judgment on the pleadings does not mention fraud or the fraud
count and there is no transcript of proceedings. Apparently the
trial court determined that since defendant had an unfettered
right to dismiss at any time and for any reason, there was no
action for fraud. If the trial court was correct, we would
agree. However, we have concluded that the trial court's basis
for entering judgment was improper. Under these circumstances,
we remand to the circuit court for a determination of whether
plaintiff stated a cause of action for fraud.
CONCLUSION
For the foregoing reasons, the entry of judgment on the
pleadings was inappropriate. Accordingly, we reverse and remand
for further proceedings consistent with this opinion.
Reversed and remanded.
McNULTY, P.J., and FROSSARD, J., concur.