2025 IL App (1st) 231181-U No. 1-23-1181 Order filed March 5, 2025 Third Division
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ ROBERT BOSCO, ) Appeal from the ) Circuit Court of Plaintiff and Counterdefendant-Appellee and ) Cook County. Cross-Appellant, ) ) v. ) No. 14 CH 9330 ) JOSEPH BOSCO, and LOMBARD AUTO EXCHANGE, ) INC., ) ) Defendants and Counterplaintiffs, ) ) Honorable (Joseph Bosco, Defendant and Counterplaintiff-Appellant ) Eve M. Reilly, and Cross-Appellee). ) Judge, presiding.
PRESIDING JUSTICE LAMPKIN delivered the judgment of the court. Justices Reyes and Martin concurred in the judgment.
ORDER
¶1 Held: After a bench trial, the trial court’s conclusion that the parties failed to prove their claims of breach of fiduciary duty, shareholder oppression, breach of contract, and unjust enrichment or quantum meruit was not against the manifest weight of the evidence. Furthermore, the trial court’s application of the business judgment rule No. 1-23-1181
was not error because it is neither an affirmative defense nor a special defense that must be pled by a party.
¶2 This litigation involves two brothers who sued each other based on disputes that arose
during their co-ownership of their used car business. The trial court, after a bench trial, found that
neither party proved any of their claims. Accordingly, the trial court entered judgment in favor of
defendants Joseph Bosco and Lombard Auto Exchange, Inc. (Lombard Auto) on plaintiff Robert
Bosco’s claims, and in favor of Robert on Joseph and Lombard Auto’s claims.
¶3 On appeal, Joseph argues that the trial court’s denial of his claims of breach of fiduciary
duties, shareholder oppression, breach of contract, and quantum meruit was against the manifest
weight of the evidence.
¶4 In his cross-appeal, Robert argues that the trial court erred as a matter of law by considering
the unpled defense of bad business judgment, and the trial court’s denial of his breach of fiduciary
duty claim was against the manifest weight of the evidence.
¶5 For the reasons that follow, we affirm the judgment of the circuit court. 1
¶6 I. BACKGROUND
¶7 In 1992, brothers Robert and Joseph Bosco incorporated Lombard Auto, a used car
business that purchased vehicles for resale. Robert and Joseph each owned 50% of Lombard Auto.
Robert was its president, and Joseph was its vice president, secretary and treasurer. Robert and
Joseph’s relationship was contentious. They met numerous times with Lombard Auto’s
accountants about the possibility of Joseph purchasing Robert’s interest in Lombard Auto, but they
never reached an agreement.
1 In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018), this appeal has been resolved without oral argument upon the entry of a separate written order.
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¶8 In June 2014, Robert sued Joseph and Lombard Auto, and thereafter Joseph and Lombard
Auto filed a counterclaim against Robert. Lombard Auto was voluntarily dissolved in 2015.
¶9 In his 2020 second amended complaint, Robert alleged claims for (1) an accounting, (2)
breach of fiduciary duty, (3) unjust enrichment, and (4) shareholder oppression. Thereafter, Joseph
and Lombard Auto alleged in their second amended counterclaim claims for (1) breach of fiduciary
duties, (2) shareholder oppression, (3) breach of contract, and (4) unjust enrichment.
¶ 10 At the bench trial in 2021, the evidence showed that Lombard Auto sold retail vehicles to
customers and wholesale vehicles to other dealerships or at auction. Lombard Auto was located
on property that Robert and Joseph jointly owned in their individual capacities. Lombard Auto
paid $2500 each to Robert and Joseph for rent per month. Both Robert and Joseph purchased
vehicles for Lombard Auto. However, Joseph focused on retail operations, managed the property,
and handled Lombard Auto’s relationships with finance companies and banks, whereas Robert
handled the wholesale operation, commissions to salespeople, and other related administrative
tasks. The wholesale operation involved less overhead, time, and staff than the retail operation.
The approximate average profit for Lombard Auto for a wholesale sale was $350 to $380, whereas
the average profit for a retail sale was $1450.
¶ 11 Aside from the purchase and sale of used vehicles, which each brother could undertake
independently, major decisions involving Lombard Auto’s business in an amount of $50,000 or
more had to be agreed upon by Robert and Joseph. Although Joseph handled Lombard Auto’s
QuickBooks account, both Robert and Joseph had access to that account. Lombard Auto’s
documents from QuickBooks, statements for Robert’s and Joseph’s Lombard Auto credit cards,
and tax records were admitted into evidence.
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¶ 12 Robert and Joseph orally agreed that personal expenditures were acceptable in the
operation of Lombard Auto’s business, and they testified that they intended on reconciling such
expenses. Their wives also had Lombard Auto credit cards, which they used for personal expenses.
No accounting or reimbursement ever took place for personal credit card expenses during the
pendency of Lombard Auto’s business.
¶ 13 Neither Robert nor Joseph had any set hours that they were supposed to work at Lombard
Auto. It was their common practice to come and go as they pleased with no governing documents
to state otherwise. They each spent about 30% to 70% of their work hours away from Lombard
Auto. There was no evidence showing any requirement for either Robert or Joseph to purchase a
certain number of vehicles per year. In approximately 2005, Robert and Joseph started having
disagreements about whether to expand their business, whether the business needed more space,
and how to best operate.
¶ 14 Joseph and Robert Sacco, Lombard Auto’s manager, testified credibly that approximately
60 vehicles fit in Lombard Auto’s lot, but Lombard Auto often had more than 100 vehicles. When
Lombard Auto lost its access to store its vehicles for free at the restaurant parking lot next door,
Lombard Auto needed somewhere near to park its vehicles. Robert did nothing about this problem
and left it to Joseph to solve. To remedy this issue, Joesph, in June 2009, used his own funds to
buy a warehouse about one-half mile from Lombard Auto. Lombard Auto began using the
warehouse in 2009 for storage and in 2013 for detailing. The trial court found that the warehouse
made Lombard Auto’s operations easier, and Lombard Auto benefitted from the warehouse use
for years. Moreover, Lombard Auto’s tax returns indicated that Lombard Auto’s profits went up
in 2010 and 2011.
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¶ 15 Although Robert did not agree to participate in the warehouse purchase, he did not object
to it. Robert testified that he learned Joseph had bought the warehouse after the fact from Sacco.
When Lombard Auto began using the warehouse to store vehicles in 2009, Robert did not object
until he sent Joseph an email in September 2014 stating that he refused to permit Lombard Auto’s
use or rental of the warehouse. Joseph, however, did not discontinue Lombard Auto’s use of his
warehouse. The trial court found that Robert was aware that Lombard Auto was using the
warehouse and went along with it. He also knew Joseph was improving the warehouse space for
Lombard Auto’s use and even helped carry materials into the warehouse for its renovation. No
lease was ever drafted or signed for Lombard Auto’s rental or use of Joseph’s warehouse. In total,
Joseph spent from 2009 to 2015 at least $100,916.88 of Lombard Auto’s money on expenses for
his warehouse, including construction and rehabbing. Robert never agreed to those expenditures,
and Joseph never repaid that money to Lombard Auto or Robert.
¶ 16 As part of his wholesale work, Robert sold several vehicles to Dave’s Auto Body, which
failed to pay Lombard Auto. Robert had a prior relationship with Dave’s Auto Body and had not
had prior problems with that company. When Robert learned that Dave’s Auto Body was having
trouble, he told Joseph that he would take care of it. Robert testified that he did what he could to
recover the money for the vehicles, but Dave’s Auto Body went out of business and Lombard Auto
lost money on three vehicles. Although Joseph testified that Robert gave him a guarantee that he
would pay for the loss Lombard Auto sustained due to the closure of Dave’s Auto Body, the trial
court found Robert’s testimony on this issue more credible than Joseph’s.
¶ 17 In 2011, accountant Frank Costabile recommended to Robert and Joseph that, due to their
differences in running the business, they should consider operating separately under the Lombard
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Auto umbrella at the Lombard Auto location, and open separate bank accounts under Lombard
Auto’s name. Accordingly, in January 2012, Robert opened a new, separate Lombard Auto bank
account to buy and sell vehicles, drawing upon his personal line of credit. All the profits generated
by Robert’s use of that separate account were deposited into Lombard Auto’s master checking
account when those profits were generated, and the funds in the account belonged to Lombard
Auto. Robert did not keep or retain any of that money or comingle it with his own funds. When
Joseph learned about the separate account, he told Robert that he was not willing to share Lombard
Auto with him as a separate entity because their agreement was to be partners and it would be
impossible to share Lombard Auto’s employees and space. At a meeting in August 2012, Robert
accounted to Joseph for every transaction and dollar spent from that separate account.
¶ 18 Lombard Auto had in place a line of credit that it regularly used to purchase vehicles. The
line of credit provided $400,000 to Lombard Auto and was guaranteed by Robert and Joseph
personally. Lombard Auto had to reapply for the line of credit each year. Robert testified that
because he believed he and Joseph were going to split up soon or end their business relationship
as of the spring of 2012, Robert did not sign a renewal application for a line of credit for Lombard
Auto in May 2012. However, based upon the records and testimony, the trial court found that there
was never a shortage of cash during Lombard Auto’s business that prevented it from purchasing
vehicles. Moreover, the brothers also maintained personal lines of credit upon which they could
draw.
¶ 19 Robert and Joseph made loans to Lombard Auto through shareholder notes. The original
amount of their shareholder notes was $179,516.34 each. However, at the end of 2013, Robert’s
shareholder note balance was $79,516.34, while Joseph’s was $419,516.34. Although Joseph
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testified that they had a tacit agreement and past practice of never going below the original amount
of their shareholder notes, the trial court found that they had no written bylaws or written or oral
agreements regarding the repayment of the money they lent to Lombard Auto.
¶ 20 Robert testified that, based on his belief that he had a deal with Joseph to depart Lombard
Auto, he told Joseph in November 2012 that he would be leaving Lombard Auto at the end of the
year and therefore would be repaying himself for the loan he had made to Lombard Auto. The trial
court found that, after Robert’s repayment of his shareholder note on December 31, 2012, (1)
Lombard Auto had a cash balance of $285,000, which was above its average cash balance of
$230,000, (2) Lombard Auto’s accounts were not short of cash and Joseph admitted that Lombard
Auto had sufficient cash to purchase used vehicles at all times, and (3) the repayment resulted in
lessening Lombard Auto’s bank account for only 22 days because Robert re-lent Lombard Auto
$179,000 as of January 22, 2013.
¶ 21 Lombard Auto’s accountant Frank Costabile testified that he was surprised when he
learned that Robert had repaid himself for his shareholder note. Costabile testified that Robert and
Joseph could not both repay their shareholder notes if Lombard Auto was to continue to operate
the way it had been operating. Towards the end of Lombard Auto’s existence, the business focused
on inventory that could be moved quickly, i.e., the wholesale vehicles that were Robert’s specialty.
Thus, Joseph purchased inventory at a lower rate than Robert because Lombard Auto was
dissolving.
¶ 22 In June 2023, the trial court delivered an oral ruling. Based on the evidence presented and
the court’s credibility findings, the court ruled that none of the parties had proved any of their
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claims by a preponderance of the evidence. The court entered judgment in favor of Joseph and
Lombard Auto on Robert’s claims, and in favor of Robert on Joseph and Lombard Auto’s claims.
¶ 23 Joseph timely appealed. This court granted Robert’s unopposed motion for an extension of
time to file his cross-appeal, which he timely did thereafter.
¶ 24 II. ANALYSIS
¶ 25 A. Joseph’s Appeal
¶ 26 Joseph argues that the trial court erroneously denied his counterclaim because the manifest
weight of the evidence supported his claims against Robert for breach of fiduciary duties,
shareholder oppression, breach of contract, and quantum meruit. Joseph contends that the trial
court made minimal factual findings and failed to address or consider most of the evidence
presented in this case. Joseph also argues that the trial court applied the incorrect legal standard to
his quantum meruit claim.
¶ 27 A trial court’s ruling on a question of fact will not be disturbed unless it is against the
manifest weight of the evidence, which occurs if an opposite conclusion is clearly evident. Indeck
Energy Services, Inc. v. DePodesta, 2021 IL 125733, ¶ 56. A decision may be reversed as against
the manifest weight of the evidence when the findings appear to be unreasonable, arbitrary, or not
based on the evidence. Chicago Architectural Metals, Inc. v. Bush Construction Co., 2022 IL App
(1st) 200587, ¶¶ 48-49; Eychaner v. Gross, 202 Ill. 2d 228, 252 (2002). However, in assessing the
trial court’s application of the doctrine of quantum meruit, the reviewing court reviews the trial
court’s factual findings under the manifest weight standard and reviews the legal questions de
novo. Samour, Inc. v. Board of Election Commissioners, 224 Ill. 2d 530, 542 (2007). Under de
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novo review, this court performs the same analysis the trial court would perform with no deference
shown to the trial court’s judgment. Beauchamp v. Dart, 2022 IL App (1st) 210091, ¶ 8.
¶ 28 1. Breach of Fiduciary Duties
¶ 29 Joseph argues he proved that Robert breached his fiduciary duties to him and Lombard
Auto by intentionally acting against the interests of Lombard Auto and causing its financial
decline. Specifically, Joseph argues that, after he and Robert started unsuccessful negotiations for
a buyout of Robert’s shares in late 2012, Robert started to separate himself from Lombard Auto
by (1) making unilateral withdrawals of his shareholder note, (2) refusing to reapply for Lombard
Auto’s $400,000 line of credit, and (3) conducting the wholesale business as if he was independent
of Lombard Auto by surreptitiously opening a separate Lombard Auto account and wholesaling
more vehicles than usual. According to Joseph, Robert’s self-interested conduct was intended to
give him leverage in his disputes with Joseph and defeat Lombard Auto’s ability to continue the
business for which it was developed. Joseph states that Lombard Auto’s profits decreased 39% in
2012, 29% in 2013, and 40% in 2014.
¶ 30 To establish a claim for breach of fiduciary duty, the plaintiff must show that a fiduciary
duty exists on the part of the defendant, the defendant breached that duty, and such breach
proximately caused the injury of which the plaintiff complains. Lawlor v. North American
Corporations of Illinois, 2012 IL 112530, ¶ 69. Robert and Joseph were both 50% shareholders in
Lombard Auto. As majority shareholders in a closely held corporation, they owed a duty akin to
that of partners. See Hagshenas v. Gaylord, 199 Ill. App. 3d 60, 69 (1990). Those fiduciary duties
are a duty of loyalty, good faith, and honesty. ARTRA Group Inc. v. Salomon Brothers Holding
Co., Inc., 288 Ill. App. 3d 467, 470 (1997). However, “partnership losses occasioned by a partner’s
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poor judgment or mistake of judgment will be borne by the partnership so long as the decision
does not involve fraud, illegality, or a conflict of interest.” Borys v. Rudd, 207 Ill. App. 3d 610,
620 (1990).
¶ 31 The trial court found that Joseph’s breach of fiduciary duties claim lacked merit. Joseph
did not specifically allege illegality, fraud or a conflict of interest, and therefore, Lombard Auto
had to bear the loss of any breach. See id. Furthermore, the court found no merit to the claim that
Robert injured Lombard Auto when he withdrew his shareholder loan. Specifically, Robert and
Joseph had no written bylaws or written or oral agreement regarding the repayment of the
shareholder loans. Also, the evidence showed that when Robert repaid himself for his shareholder
note, Lombard Auto had over $285,000 in cash and hundreds of thousands of dollars in inventory.
Further, Robert redeposited the $179,000 within 22 days, so Joseph failed to show by a
preponderance of the evidence that Lombard Auto was damaged by the temporary withdrawal of
those funds.
¶ 32 Joseph challenges certain factual findings of the trial court. Specifically, Joseph argues that
he testified at trial without contradiction that on December 27, 2012, four days before Robert paid
himself, Joseph bought seven vehicles at an auction for approximately $106,000, but the checks
had not cleared at the time of the accounting. Therefore, Lombard Auto actually had only $179,000
in cash at the time of Robert’s self-payment, not $285,000. Joseph also argues that Robert’s self-
interested loan repayment was not a one-time temporary problem. Joseph complains that Robert
continuously and unilaterally used Lombard Auto’s funds to repay himself on a loan that was not
due. Joseph contends the evidence showed that Robert repeatedly brought his balance below the
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“established minimum” of $179,516.34 and repeatedly brought the balance of his note far below
the balance of Joseph’s.
¶ 33 The facts raised by Joseph on appeal do not render the trial court’s ruling against the
manifest weight of the evidence. Even if Lombard Auto had $179,000 in cash rather than $285,000
at the end of 2012, the evidence established that Robert repaid within 22 days the funds he had
withdrawn, Lombard Auto had hundreds of thousands of dollars in inventory, Joseph had his
personal line of credit available to him, and there was never a shortage of funds during Lombard
Auto’s business operations that prevented it from purchasing vehicles.
¶ 34 The trial court also found that Joseph also did not prove that Robert was running a separate
wholesale operation. Bill Bryerton was Lombard Auto’s tax accountant and prepared Lombard
Auto’s tax returns. Bryerton’s testimony established that the separate account Robert opened was
always a Lombard Auto account, and Robert put $400,000 of his own money into it and started
using the account to buy vehicles in 2012. Moreover, Robert took no funds from the separate
account personally; the money from those sales went into Lombard Auto’s master account. The
separate account generated over $70,000 in profits during the two months Robert used it.
Furthermore, Joseph was aware that Robert was using the account. The court concluded that
Joseph did not show that any damages resulted from Robert’s actions and thus did not prove a
breach of fiduciary duty claim.
¶ 35 Regarding Robert’s refusal to reapply for the $400,000 line of credit, the trial court found
that Joseph failed to show that any breach of fiduciary duty caused him to sustain any damages.
The testimony and records in evidence established that Lombard Auto always had funds to
purchase vehicles and never missed an opportunity to purchase vehicles. When Robert refused to
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sign that line of credit, Lombard Auto had a substantial cash surplus. The evidence also showed
that Lombard Auto actually had more cash and more inventory in 2013, which was over a year
after Robert had refused to sign the line of credit. Furthermore, both Robert and Joseph had
personal lines of credit to purchase vehicles for Lombard Auto in addition to the $400,000 line of
credit they shared.
¶ 36 Our review of the record supports the trial court’s factual findings and conclusion that
Joseph failed to meet his burden of proof. Joseph cannot point to any factual issue on which an
opposite conclusion is clearly evident. See Indeck Energy Services, Inc., 2021 IL 125733, ¶ 56.
We conclude that the trial court’s ruling that Joseph did not prove his breach of fiduciary duties
claim was not against the manifest weight of the evidence.
¶ 37 2. Shareholder Oppression
¶ 38 Joseph argues he proved that Robert committed shareholder oppression by (1) operating
from the separate account in 2012 and 2014, (2) withdrawing his shareholder note below the
“agreed minimum” continuously from 2012 to 2015, and (3) causing Lombard Auto to lose its line
of credit and the $400,000 purchasing power it provided from 2012 to 2015.
¶ 39 Section 12.56(a)(3) of the Business Corporation Act of 1983 (Act) (805 ILCS 5/12.56(a)(3)
(West 2020)), provides remedies to shareholders of closely held corporations where directors or
those in control of the corporation acted in a manner that is illegal, oppressive, or fraudulent with
respect to the other shareholders. The Act does not define what types of conduct are oppressive,
but this court has stated that conduct is oppressive if it is “ ‘overbearing and heavy-handed.’ ”
Hager-Freeman v. Spircoff, 229 Ill. App. 3d 262, 276-77 (1992), quoting Compton v. Paul K.
Harding Realty Co., 6 Ill. App. 3d 488, 499 (1972). Other jurisdictions have defined “oppression”
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in a statute comparable to section 12.56 of the Act as “burdensome, harsh, and wrongful conduct;
a lack of probity and fair dealing in the affairs of a company to the prejudice of some of its
members, or a visible departure from the standards of fair dealing; and a violation of fair play on
which every shareholder who entrusts his money to a company is entitled to rely.” Nakata v. Blue
Bird, Inc., 191 P.3d 900, 904 (Wash. App. 2008); Churchman v. Kehr, 836 S.W.2d 473, 482 (Mo.
Ct. Appeals 1992) (same); Baker v. Commercial Body Builders, Inc., 507 P.2d 387, 393 (Or. 1973)
(same). The deadlock provision in section 12.56(a) requires that a deadlock either cause or threaten
irreparable injury to the corporation or prevent the corporation from operating for the general
benefit of its shareholders. 805 ILCS 5/12.56(a) (West 2020).
¶ 40 The trial court rejected Joseph’s shareholder oppression claim, which was based on the
same conduct that formed the basis of his breach of fiduciary duties claim. The court found that
Joseph did not show that Robert was operating a separate business or decapitalized Lombard Auto.
Moreover, Joseph did not show that any of the alleged conduct was illegal, oppressive, or
fraudulent.
¶ 41 The manifest weight of the evidence shows that there were no written rules or bylaws for
Robert’s and Joseph’s use of Lombard Auto’s money. They both used Lombard Auto’s funds
without the other’s approval and acted in their own sphere of the business without obtaining
consent from the other. There was no departure from that custom and practice, which the brothers
had established at Lombard Auto for over 20 years. Joseph presents no facts or legal support to
justify overturning the trial court’s decision to reject his claim of shareholder oppression against
Robert.
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¶ 42 3. Breach of Contract
¶ 43 Joseph argues that he proved his breach of contract claim because the evidence showed
that the parties agreed to reimburse each other for disparate personal expenses. Joseph states the
evidence showed that both parties had Lombard Auto credit cards and access to Lombard Auto’s
bank accounts, and both spent Lombard Auto’s money on personal items with the understanding
that they would eventually reconcile the expenses and make the parties equal and whole. Joseph
argues that he performed under the agreement by attempting to reconcile personal expenditures
with Robert on numerous occasions, but to no avail. Joseph argues that Robert owes him
$39,104.04 for Robert’s personal expenses on Lombard Auto’s credit card, personal cell phone
charges, vehicle purchases or write downs for his family, and use of petty cash.
¶ 44 To recover for a breach of contract claim, a plaintiff must prove (1) the existence of a
contract, (2) plaintiff performed all contractual obligations, (3) facts constituting a breach, and (4)
damages from the breach. Storino, Ramello & Durkin v. Rackow, 2015 IL App (1st) 142961, ¶ 17.
¶ 45 The trial court ruled that there was no merit to Joseph’s claim that Robert breached a
contract by spending more on personal expenses than Joseph did and failing to reconcile the
difference. First, the court stated that Joseph did not specifically allege illegality, fraud, or a
conflict of interest and, therefore, Lombard Auto, as a closely held corporation, must bear the loss
of any poor judgment or bad business decision. See Borys, 207 Ill. App. 3d at 620. Furthermore,
the court found that both brothers had credit cards issued by Lombard Auto and used them for
personal expenses; neither of them needed the approval of the other to use Lombard Auto’s money;
and they never once paid each other or Lombard Auto for their personal expenses from 1992 to
2015. The court found that neither Robert nor Joseph testified credibly on the issue of personal
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expenses. Nevertheless, even if they had an agreement to which Robert did not comply, Joseph
failed to show that Robert spent more of Lombard Auto’s money than he did, especially given
Joseph’s $100,000 plus spending of Lombard Auto’s money on improvements to the warehouse
that he owned. Accordingly, the court concluded that Joseph did not show that he performed under
any contract.
¶ 46 Our review of the record establishes that the trial court’s rejection of Joseph’s breach of
contract claim was not against the manifest weight of the evidence.
¶ 47 4. Unjust Enrichment/Quantum Meruit
¶ 48 Joseph argues on appeal that although his claim for damages for Lombard Auto’s use of
his warehouse was labeled in his counterclaim as an unjust enrichment action, his pleading is better
categorized as an action for quantum meruit. Joseph states that he made his argument for quantum
meruit relief to the trial court before it rendered its ruling, and Robert does not contest this
statement. The trial court’s ruling, however, addressed Joseph’s claim only as an unjust enrichment
action.
¶ 49 Robert responds that it does not matter whether the court considers Joseph’s claim as one
for either unjust enrichment or quantum meruit because he failed to prove his claim under both
characterizations.
¶ 50 When analyzing whether a party is liable under a quasi-contract or quantum meruit claim,
the period to be scrutinized in determining the equity of the remedy is the period when the benefit
was conferred, rather than the time of the lawsuit. Rutledge v. Housing Authority of the City of
East St. Louis, 88 Ill. App. 3d 1064, 1068 (1980). Furthermore, where services are conferred for
business reasons, without the anticipation that reimbursement will directly result, quasi-contractual
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relief is not warranted. Id. “ ‘ “The mere fact that a person benefits another is not of itself sufficient
to require the other to make restitution therefor.” ’ ” Hayes Mechanical, Inc. v. First Industrial,
L.P., 351 Ill. App. 3d 1, 9 (2004), quoting Rutledge, 88 Ill. App. 3d at 1068, quoting Restatement
(First) of Restitution § 1, Comment c (1937).
¶ 51 To establish a claim of “unjust enrichment, a plaintiff must allege that the defendant had
unjustly retained a benefit to the plaintiff’s detriment, and that the defendant’s retention of the
benefit violates the fundamental principles of justice, equity and good conscience.” HPI
Healthcare Services, Inc. v. Mount Vernon Hospital, 131 Ill. 2d 145, 160 (1989). Unjust
enrichment is inapplicable where there is an expressed contract, either oral or written, that governs
the parties’ relationship. Gagnon v. Schickel, 2012 IL App (1st) 120645, ¶ 25.
¶ 52 The trial court ruled that Joseph’s unjust enrichment claim failed because unjust
enrichment is not a separate cause of action that, standing alone, would justify an action for
recovery and Joseph did not allege or prove that Robert engaged in fraud, duress, or undue
influence. The court also stated that unjust enrichment results from wrongdoing, and there was no
wrongdoing by Robert here. The court noted that Joseph, who handled the finances for Lombard
Auto and decided that it needed more space to park vehicles, could have requested rent for the
warehouse or drawn up a lease from 2009 to 2015 but never did. The trial court inferred that Joseph
did not ask for rent or draw up a lease because he was already obtaining money from Lombard
Auto to fix up his warehouse. The court found that no evidence showed that Robert used fraud,
undue influence, or duress to prevent Joseph from obtaining rent. The court observed that if
Lombard Auto had to pay rent for the warehouse, it would have reduced Lombard Auto’s profits
from 2009 to 2015 and thus would have reduced the amount of money that Robert and Joseph used
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for their own expenses. The court concluded that Joseph failed to prove his claim of unjust
enrichment because he, as a co-owner of Lombard Auto, also benefitted from the arrangement
whereby Lombard Auto used his warehouse, so there was no violation of the principles of equity
or justice.
¶ 53 Joseph argues that the trial court misstated the law by requiring him to show wrongdoing
by Robert to prove an unjust enrichment claim because this court has held the opposite. See
National Union Fire Insurance Co. v. DiMucci, 2015 IL App (1st) 122725, ¶ 67 (A “cause of
action based upon unjust enrichment does not require fault or illegality on the part of [the
defendant]; the essence of the cause of action is that one party is enriched and it would be unjust
for that party to retain the enrichment”) (Internal quotation marks omitted.). Furthermore, Joseph
argues that in Cleary v. Philip Morris Inc., the Seventh Circuit observed that the “Illinois Supreme
Court appears to recognize unjust enrichment as an independent cause of action.” 656 F.3d 511,
516 (7th Cir. 2011) (citing Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 258
(2004); Independent Voters of Illinois v. Illinois Commerce Comm’n, 117 Ill. 2d 90, 104-05 (1987);
HPI Health Care Services, 131 Ill. 2d at 160; and Peddinghaus v. Peddinghaus, 295 Ill. App. 3d
943, 949 (1998)).
¶ 54 Any misstatement of the law by the trial court does not render its decision against the
manifest weight of the evidence because Joseph’s unjust enrichment claim fails since the evidence
does not support that cause of action. Joseph’s unjust enrichment claim rests on the allegation that
Robert owes him rent for Lombard Auto’s use of Joseph’s warehouse. To support his action for
unjust enrichment, Joseph must show that Robert has unjustly retained a benefit to Joseph’s
detriment, and that Robert’s retention of the benefit violated the fundamental principles of justice,
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equity, and good conscience. See HPI Health Care Services, 131 Ill. 2d at 160. Our review of the
record establishes that Joseph failed to make this showing because, as the trial court correctly
found, Joseph, as a co-owner of Lombard Auto, benefited at least as much as Robert did from
Lombard Auto’s use of Joseph’s warehouse, and, more significantly, Joseph benefitted by using
over $100,000 of Lombard’s Auto’s money to rehab his warehouse. Accordingly, the trial court’s
rejection of Joseph’s unjust enrichment claim is not against the manifest weight of the evidence.
¶ 55 Furthermore, Joseph’s claim for rent payments from Robert for Lombard Auto’s use of
Joseph’s warehouse still fails when analyzed as a quantum meruit claim. To recover under
quantum meruit, a plaintiff must prove that “(1) it performed a service to the benefit of the
defendant, (2) it did not perform the service gratuitously, (3) the defendant accepted this service,
and (4) no written contract existed to prescribe payment for this service.” Jameson Real Estate,
LLC v. Ahmed, 2018 IL App (1st) 171534, ¶ 61.
¶ 56 Joseph argues equity requires that he should be compensated because Robert profited from
Lombard Auto’s use of the warehouse and Joseph established every element of a quantum meruit
claim. Specifically, he contends the evidence showed that (1) the warehouse benefitted Lombard
Auto and Robert because the business needed space to park its vehicles and Joseph purchased the
warehouse with his own funds, (2) no evidence indicated that Joseph provided the use of the
warehouse to Lombard Auto gratuitously, (3) Robert admitted that he and Joseph discussed the
warehouse before Joseph purchased it with his own money and Robert never objected to the
purchase, Robert knew Lombard Auto was using the warehouse and never objected until
September 2014, and Lombard Auto continued to use the warehouse anyway without any further
objection, and (4) there was no lease for the warehouse.
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¶ 57 Joseph’s quantum meruit argument lacks merit. First, Joseph benefitted just as much as
Robert did from Lombard Auto’s use of the warehouse because it enabled them to operate their
business more easily since it provided sufficient space for storing and detailing the vehicles.
Furthermore, the evidence indicates that Joseph provided the use of the warehouse to Lombard
Auto gratuitously because he never requested rent for the warehouse and instead used over
$100,000 of Lombard Auto’s funds to rehab the warehouse he alone owned. We conclude that the
trial court’s rejection of Joseph’s claim for rent from Robert for Lombard Auto’s use of Joseph’s
warehouse was not against the manifest weight of the evidence.
¶ 58 B. Robert’s Cross-Appeal
¶ 59 Robert limits his cross-appeal to a single issue—Joseph’s alleged breach of fiduciary duty
to Robert when Joseph used at least $100,916.88 of Lombard Auto’s funds to rehabilitate and add
improvements to his warehouse. Robert argued in the trial court that Joseph breached his fiduciary
duty by using Lombard Auto’s assets without compensating Lombard Auto. See Levy v. Markal
Sales Corp., 268 Ill. App. 3d 355, 369 (1994) (“It is well-settled that a fiduciary’s use of corporate
assets to further his own goals is a violation of his fiduciary duties.”).
¶ 60 The trial court found that Robert failed to prove this breach of fiduciary duty claim because,
inter alia, Lombard Auto was a closely held corporation, so Lombard Auto must bear the losses
occasioned by Joseph’s poor judgment or mistake of judgment since Joseph’s decision did not
involve fraud, illegality, or a conflict of interest. See Borys, 207 Ill. App. 3d at 620.
¶ 61 First, Robert argues that the trial court erred as a matter of law when it denied this claim
because the court improperly considered the defense of the business judgment rule even though
Joseph never pled it. Robert argues, pursuant to section 2-613(d) of the Code of Civil Procedure
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(Code) (735 ILCS 5/2-613(d) (West 2020)), that the business judgment rule defense is an
affirmative defense or at the very least a ground which, if not expressly stated in the answer, would
be likely to take Robert by surprise. Robert asserts that Joseph forfeited the business judgment rule
by failing to plead it as required by section 2-613(d), and the defense cannot be considered even if
the evidence suggests its existence.
¶ 62 We review de novo Robert’s contention that the trial court erred as a matter of law in
considering a defense never pled by Joseph, in violation of section 2-613(d) of the Code. See
Travelers Insurance Co. v. First National Bank of Blue Island, 250 Ill. App. 3d 641, 645 (1993).
¶ 63 “The business judgment rule is a presumption that directors of a corporation make business
decisions on an informed basis, in good faith, and with the honest belief that the course taken was
in the best interests of the corporation.” Ferris Elevator Co. v. Neffco, Inc., 285 Ill. App. 3d 350,
354 (1996). “Although the presumption can serve as a complete defense in some cases, it is not an
affirmative defense that must be asserted by a defendant.” Babbitt Municipalities, Inc. v. Health
Care Service Corp., 2016 IL App (1st) 152662, ¶ 47. “Rather, it is a rebuttable presumption that
arises as a matter of law; the burden is thus on the plaintiff to present sufficient evidence to rebut
it.” Id.; see Ferris Elevator Co., 285 Ill. App. 3d at 355 (holding “that the business judgment rule
is neither an affirmative [nor] special defense which need be plead pursuant to section 2-613 of
the [Code]”). Accordingly, Robert’s first argument fails.
¶ 64 Second, Robert argues that the trial court’s decision was against the manifest weight of the
evidence because no evidence in the record supports the trial court’s finding that Joseph’s
complained-of conduct was a bad business decision. Robert argues that the trial court disregarded
the manifest weight of the evidence, which showed that Joseph seized Lombard Auto’s funds to
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pay for construction and rehabilitation expenses for his own personal warehouse, Robert never
agreed to Joseph taking Lombard Auto’s funds to permanently improve his warehouse, and Joseph
never repaid any of that money.
¶ 65 The trial court found that Robert failed to prove this breach of fiduciary duty claim because
he did not show by a preponderance of the evidence that Joseph breached his fiduciary duty and
that those breaches proximately caused damages to Robert. In addition to finding that the business
judgment rule was applicable, the court stated that if Joseph had a conflict of interest because he
attempted to collect the maximum amount of rent from Lombard Auto for his warehouse, Lombard
Auto sustained no damage because Joseph was not successful in obtaining that rent. The court
found that Lombard Auto benefited from the warehouse arrangement because credible testimony
established that Lombard Auto needed more space to store vehicles and Robert left Joseph to
handle the problem when Lombard Auto lost its free parking at the nearby restaurant. Moreover,
manager Sacco testified credibly that when Joseph obtained the necessary space and Lombard
Auto started using it in 2009 for storage, the arrangement made Lombard Auto’s operations easier
and benefited Lombard Auto, which kept doing business and was more profitable in the two years
after the warehouse was purchased. The court concluded that the evidence did not show that Joseph
spending Lombard Auto’s money on improvements to the inside of his warehouse for Lombard
Auto’s detailing work was illegal, fraudulent, or a conflict of interest. At most, it was a bad
business decision, in which Robert was complicit.
¶ 66 Robert cannot point to any factual issue on which an opposite conclusion is clearly evident.
See Indeck Energy Services, Inc., 2021 IL 125733, ¶ 56. Accordingly, we conclude that the trial
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court’s finding that Robert did not prove his breach of fiduciary claim was not against the manifest
¶ 67 III. CONCLUSION
¶ 68 For the foregoing reasons, we affirm the judgment of the circuit court.
¶ 69 Affirmed.
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