Prodromos v. Howard Savings Bank

Second Division
March 3, 1998

No. 1-96-4129

JOHN PRODROMOS, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. )
)
HOWARD SAVINGS BANK, et al., ) Honorable
) Lester D. Foreman,
Defendants-Appellees. ) Judge Presiding.

JUSTICE TULLY delivered the opinion of the court:
Plaintiff, John Prodromos, brought this action in the circuit court of Cook
County against defendant, Howard Savings Bank ("Bank"), for breach of an
employment contract and for an accounting. Plaintiff also brought this action against
defendants, Althea Prodromos ("Althea"), Chadwick Prodromos ("Chadwick") and
Marilyn Prodromos ("Marilyn"), for tortious interference with an employment
contract. The bank filed a motion to dismiss the breach of contract counts of
plaintiff's six-count first amended complaint, pursuant to section 2-619(a)(7) and (9)
of the Code of Civil Procedure (735 ILCS 5/2-619(a)(7), (9) (West 1994)), stating that
the alleged employment contract failed to satisfy the Statute of Frauds (740 ILCS
80/1 (West 1994)). Althea, Chadwick and Marilyn also filed a section 2-619(a)(7) and
(9) motion to dismiss the tortious interference with the contract count of plaintiff's
first amended complaint. They alleged that because the Statute of Frauds barred
enforcement of the alleged contract, there was no contract with which to interfere.
The trial court granted both motions, noting that the employment contract was not
signed by the bank, and finding that the writings plaintiff offered were insufficient
to remove the bar of the Statute of Frauds. The trial court struck the remaining
counts of plaintiff's first amended complaint, and granted plaintiff leave to amend
those counts. Plaintiff filed a motion to reconsider and to vacate the order of
dismissal, which the trial court denied. Plaintiff now appeals the trial court's
dismissal of the breach of contract and tortious interference with the contract counts,
pursuant to Supreme Court Rules 301 and 304 (155 Ill. 2d Rules 301 and 304).
For the reasons which follow, we affirm.

FACTUAL BACKGROUND

Plaintiff alleged in his first amended complaint that he owned 40% of the
issued and outstanding voting stock of the bank, which was an Illinois financial
institution chartered pursuant to the Illinois Savings Bank Act. At the bank's 1993
annual shareholders' meeting, plaintiff, Althea, James Economos ("Economos"), Peter
S. Sotos ("Sotos"), and Louis Sotreras ("Sotreras") were elected to be the board of
directors until the 1994 annual shareholders' meeting.
On March 30, 1994, plaintiff, Sotreras and Economos were present at a regular
monthly directors' meeting. The minutes of that monthly meeting stated that it was
called pursuant to notice, and that Althea was not present. The minutes also
reflected that each director present received a copy of employment contracts for
plaintiff and Althea. Plaintiff did not take part in the discussion of the contracts, and
did not vote on them. Economos and Sotreras approved the contracts. The contract
for plaintiff was not signed by the bank. Plaintiff, Economos and Sotreras signed the
minutes of the meeting.
The 1994 annual meeting of the bank's stockholders was held later the same
day. The stockholders elected Althea, Chadwick, Marilyn, Donald Veverka, and Sotos
to be the board of directors for the following year. The minutes of the annual
stockholders' meeting did not refer to the March 30th monthly board of directors
meeting.
Plaintiff's employment was terminated without prior notice on November 15,
1994. Plaintiff alleged that he had performed all of the duties and obligations of
Chief Executive Officer that the employment contract required of him between March
30, 1994, and November 15, 1994. He did not receive the full monthly salary, as
provided in the employment contract during that time.
The board of directors held a special meeting on April 28, 1994. The minutes
of that meeting stated that the directors did not approve the minutes of the March
30th monthly directors' meeting. The minutes of the April 28th meeting also stated,
"that all purpo[r]ted actions taken [during] the March 30, 1994 meeting, including the
attempted approval of any employment contracts, *** are rejected and disavowed and
are of no force and effect." The minutes of the April 30th meeting approved the
directors' actions during the April 28th meeting.
In February 1995, the next annual shareholders' meeting was held, and Althea,
Chadwick, Marilyn and Georgia Revis were elected as directors. The minutes of the
meeting did not refer to the March 30th monthly directors' meeting.
In its motion to dismiss, the bank asserted that the three-year employment
contract that plaintiff attached to his complaint was not signed by the bank, and
therefore violated the Statute of Frauds. It also submitted that plaintiff did not
perform his job based on a reasonable reliance of the contract, and that on April 30,
1994, the new board of directors repudiated the board's actions of March 30, 1994.
Furthermore, the bank alleged that the March 30th monthly directors' meeting was
conducted in violation of the bank's bylaws and state regulatory requirements, and
that any action taken by the board at the meeting was invalid and not binding upon
the bank. The bank stated that the board's violations included: holding the meeting
at an unauthorized location; lacking the required number of five directors, and failing
to notify Althea of the meeting. In their motion to dismiss, Althea, Chadwick and
Marilyn adopted the bank's motion, asserting that the contract violated the Statute
of Frauds, and that there did not exist a valid and enforceable contract upon which
to base an action for tortious interference with a contract. The trial court granted
defendants' motions and dismissed the first three counts of plaintiff's first amended
complaint with prejudice on September 5, 1996. Plaintiff filed a motion for
reconsideration, which the trial court denied.

ISSUES PRESENTED FOR REVIEW

On appeal, plaintiff contends that the trial court erred in granting defendants'
section 2-619 motions to dismiss, and argues that: (1) the signed minutes of the
March 30, 1994, board of directors' meeting constituted a writing sufficient to remove
the bar of the Statute of Frauds; (2) plaintiff's partial performance of the contract
removed the bar of the Statute of Frauds; and (3) defendants failed to properly raise
"affirmative matters" (that the March 30th directors' meeting violated the bank's
bylaws and state regulations) within the scope of a section 2-619(a)(9) motion to
dismiss.
OPINION

Plaintiff first contends on appeal that the signed minutes of the March 30th
monthly directors' meeting constituted a writing sufficient to remove the bar of the
Statute of Frauds. Plaintiff argues that those minutes were executed by the directors
pursuant to their statutory duty and authority, and that the minutes identified the
exact employment contract involved and the parties to that contract.
We review a section 2-619(a)(7) and (9) motion to dismiss de novo, and the trial
court, after reviewing all pleadings and supporting documents in the light most
favorable to the non-moving party, should grant the motion if plaintiff can prove no
set of facts to support a cause of action. In re Chicago Flood Litigation, 176 Ill. 2d 179, 189, 680 N.E.2d 265, 270 (1997); Winternitz v. National Bank of Monmouth, 289
Ill. App. 3d 753, 755, 683 N.E.2d 492, 493 (1997). The trial court must take all well-
pleaded facts in the complaint and attached exhibits as true, and construe from them
all reasonable inferences in the plaintiff's favor. Prodromos v. Poulos, 202 Ill. App.
3d 1024, 1028, 560 N.E.2d 942, 946 (1990). The trial court must also consider
whether the defendant presented facts constituting an affirmative defense which
could defeat the plaintiff's cause of action. Prodromos, 202 Ill. App. 3d at 1028, 560 N.E.2d at 946.
The Statute of Frauds states that:
"[n]o action shall be brought *** upon any agreement that
is not to be performed within the space of one year from
the making thereof, unless the promise or agreement upon
which such action shall be brought or some memorandum
or note thereof, shall be in writing, and signed by the party
to be charged therewith, or some other person thereunto by
him lawfully authorized." 740 ILCS 80/1 (West 1994).
In order to satisfy the Statute of Frauds, there must be a writing, not necessarily on
a single piece of paper, which is signed by the party to be charged. Chapman v.
Freeport Securities Co., 174 Ill. App. 3d 847, 854, 529 N.E.2d 6, 10 (1988). The
writing must contain all essential terms of the contract, and the signed writing must
refer expressly to the other writings, or the other writings must be connected,
physically or otherwise, to show that they relate to the same contract. Dickens v.
Quincy College Corp., 245 Ill. App. 3d 1055, 1060, 615 N.E.2d 381, 384 (1993);
Chapman, 174 Ill. App. 3d at 854, 529 N.E.2d at 10. Writings sufficient to satisfy the
Statute of Frauds may include several documents, which may consist of such forms
as letters, notes, and papers. American College of Surgeons v. Lumbermens Mutual
Casualty Co., 142 Ill. App. 3d 680, 698-99, 491 N.E.2d 1179, 1191-92 (1986). Where
a party offers minutes of a meeting to satisfy the Statute of Frauds, the minutes
must be approved, because without approval, the secretary's signature is not
authorized. Chapman, 174 Ill. App. 3d at 854, 529 N.E.2d at 10.
In Chapman, the plaintiff, who was the president of Freeport Securities
Company ("Freeport"), brought an action against the defendant, Freeport, for breach
of an employment contract, and against two Freeport directors, Jack Chapman
("Jack") and Marilyn Tibbits ("Marilyn") for tortious interference with the
employment contract. Chapman, 174 Ill. App. 3d at 849, 529 N.E.2d at 7. The
plaintiff had drafted an employment contract proposal for himself, with various salary
options, to present at the annual stockholders' meeting. After the January 27, 1981,
stockholders' meeting, Freeport's directors had a meeting and elected the plaintiff as
president. The plaintiff's employment contract proposal was distributed to the
directors. No minutes of the directors' meeting were made or approved immediately
after the meeting. Richard Eckert ("Eckert"), a director, later made two drafts of an
agreement for the plaintiff's employment, which differed in their terms. Eckert also
drafted proposed minutes of the January 27th directors' meeting, which included the
essential terms of the proposed employment contract. Jack and Marilyn called a
special meeting on March 6, at which a motion to approve the proposed January 27th
directors' meeting minutes failed. The minutes of the March 6th meeting were
approved at Freeport's July 10th semiannual directors' meeting. The minutes of the
July 10th meeting stated that "the contract authorized by the Board of Directors at
the Board of Directors Meeting held in January 1981" was rejected and disavowed.
The appellate court noted that the July 10th minutes indicated that there was a
contract, but that the minutes did not refer to any document wherein the terms of the
contract could be found.
The trial court in Chapman decided that the employment contract existed, and
found for the plaintiff on his breach of contract claim. The appellate court in
Chapman, reversing the trial court in part, found that the employment contract was
barred by the Statute of Frauds. The appellate court noted that the contract was not
signed by Freeport, and that the minutes of the January 27th directors' meeting were
signed by Eckert, but not approved. Therefore, the appellate court held that the
January 27th minutes were insufficient to constitute a writing to remove the bar of
the Statute of Frauds. Chapman, 174 Ill. App. 3d at 854, 529 N.E. 2 at 10.
In the present case, we believe Chapman is controlling, and find that plaintiff's
employment contract was barred by the Statute of Frauds. Because the bank did not
sign the contract, plaintiff was required to show sufficient writings to remove the bar
of the Statute of Frauds. The minutes of the March 30th monthly directors' meeting
stated that the directors reviewed a copy of plaintiff's employment contract, and that
Economos and Sotreras approved the contract. Those minutes were insufficient to
remove the bar of the Statute of Frauds, because, like the July 10th minutes in
Chapman, they did not refer to any essential terms of the contract, or even
specifically to which contract they approved. The March 30th minutes in this case
did not indicate that the board reviewed the same proposed employment contract
upon which plaintiff based his cause of action. Those minutes stated that the
directors reviewed "employment contracts for John Prodromos and Althea
Prodromos," but the minutes did not refer to any specific compensation amounts or
time periods in the contracts. Furthermore, similar to the facts in Chapman, the
minutes of the March 30th meeting lacked the required approval. In fact, the board
of directors later rejected and disavowed any proposed employment contract for
plaintiff.
Plaintiff also submits that he tendered, and the bank accepted, his partial
performance based on the contract. Therefore, plaintiff contends, he is entitled to
compensation for the time of his performance pursuant to the terms of the contract.
In order to remove the bar of the Statute of Frauds, partial performance must
be such that it is impractical or impossible to place the parties in status quo, or to
compensate the performing party for the value of the performance, so that any refusal
to complete the engagement would constitute a fraud on the performing party.
Mariani v. the School Directors of District 40, 154 Ill. App. 3d 404, 407, 506 N.E.2d 981, 983 (1987). "Normal employment contracts *** do not involve this kind of
performance." Mariani, 154 Ill. App. 3d at 407, 506 N.E.2d at 983. To allow the
employee's time worked and compensation for part of the duration of the contract to
act as a bar to the Statute of Frauds "would make the relevant provision of the
Statute of Frauds meaningless." Mariani, 154 Ill. App. 3d at 407, 506 N.E.2d at 983.
Otherwise, any contract where the employee began working and received pay would
be protected from the Statute of Frauds. Mariani, 154 Ill. App. 3d at 407, 506 N.E.2d
at 983, citing Mapes v. Kalva Corp., 68 Ill. App. 3d 362, 368,368 N.E.2d 148, 152
(1979).
In this case, plaintiff worked as president of the bank for eight months, and
received compensation, which plaintiff alleged was less than the salary provided for
in the employment contract. Based on our review of the record, we disagree with
plaintiff, and do not find that any fraud was committed against him. As in Mariani,
the fact that plaintiff was employed as president of the bank for eight months of a
purported three-year term does not remove the bar of the Statute of Frauds.
Plaintiff's final argument is that the trial court erred in granting defendants'
section 2-619 motion to dismiss the tortious interference with the contract count. To
maintain such an action, a plaintiff must plead and prove: "(1) the existence of a valid
and enforceable contract between plaintiff and another; (2) defendant's awareness of
the contractual relationship; (3) defendant's intentional and unjustified inducement
of a breach of the contract; (4) a subsequent breach by the other, caused by
defendant's wrongful conduct; and (5) damages." Schott v. Glover, 109 Ill. App. 3d
230, 234, 440 N.E.2d 376, 378 (1982); see Chapman, 174 Ill. App. 3d at 856, 529 N.E. 2 at 11. We affirm the trial court's dismissal of that count because such a cause
of action requires the existence of a valid and enforceable contract, which we have
found did not exist in this case.
Furthermore, because we find that there was no valid enforceable employment
contract, we do not address plaintiff's argument that defendants failed to properly
raise "affirmative matters" within the scope of a section 2-619(a)(9) motion to dismiss.
In light of the foregoing, we affirm the judgment of the circuit court of Cook
County.
Affirmed.
MCNULTY, P.J., and COUSINS, J., concur.