Sixth Division October 26, 2007
No. 1-06-1895
FIDELITY NATIONAL TITLE INSURANCE ) Appeal from COMPANY OF NEW YORK, ) the Circuit Court ) of Cook County Plaintiff-Appellant, ) ) v. ) ) WESTHAVEN PROPERTIES PARTNERSHIP, an ) Illinois Partnership, EAST HAZEL CREST ) 03 CH 00382 PROPERTIES PARTNERSHIP, an Illinois Partnership, ) WHOLESALE REAL ESTATE SERVICES, INC., an ) Illinois Corporation, JACOB L. WEGLARZ, Individually ) and as Trustee of Jacob L. Weglarz 1985 Trust ) Under Agreement Dated May 1, 1985, and ) FRANK O’HARE, ) Hon. Anthony L. Young and ) Patrick McGann, Defendants-Appellees. ) Judges Presiding.
PRESIDING JUSTICE McBRIDE delivered the opinion of the court:
Plaintiff, Fidelity National Title Insurance Company of New York, appeals from an order
of the circuit court of Cook County granting summary judgment in favor of defendants,
Westhaven Properties Partnership, East Hazel Crest Properties Partnership, and Jacob Weglarz,
individually and as trustee of the Jacob L. Weglarz 1985 Trust Under Agreement Dated May 1,
1985, on counts II, III and XI of Fidelity’s third amended complaint.1 Fidelity also appeals from
an order of the circuit court granting defendants’ motion to dismiss count VIII of the third
amended complaint. For the reasons that follow, we affirm.
The primary issue in this case is whether a written notice requirement was a material
provision of a contract. Specifically, a provision in two virtually identical partnership agreements
1 Defendant Frank O’Hare was previously dismissed from this action and is not a party to this appeal. 1-06-1895
provided that any partner seeking to assign his partnership interest must give the remaining
partners written notice of his intention to do so and that the remaining partners have a right of
first refusal. The circuit court, in granting summary judgment, held that the written notice
requirement was a material provision of the partnership agreements and therefore found that an
attempted assignment of a partnership interest was invalid because written notice of that
assignment was not given.
Turning now to the facts of this case, Fidelity filed a second amended complaint against
defendants on October 22, 2003. The complaint sought relief under the following theories: unjust
enrichment (count I), declaratory judgment (counts II and III), conversion (counts IV and V),
unjust enrichment (count VI), and fraud (count VII). Defendants filed a motion to dismiss counts
I through V of the second amended complaint, and on April 12, 2004, the circuit court granted
that motion, in part, and dismissed counts II through V of the second amended complaint. On
November 12, 2004, Fidelity filed a motion to reconsider that dismissal.
Meanwhile, on November 18, 2004, Fidelity filed the third amended complaint at issue in
this case, seeking to recover its partnership interests in the East Hazel Crest Properties
Partnership (East Hazel Crest) and Westhaven Properties Partnership (Weshaven). Fidelity
alleged that it had been validly assigned interest in both partnerships and that defendants refused
to honor those assignments. Fidelity alleged the following facts as common to all counts of its
complaint.
Laurence Capriotti and Jack Hargrove jointly owned Intercounty Title Company of Illinois
(Old Intercounty), a title insurance company registered in Illinois. In 1985, Hargrove, Capriotti
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and Jacob Weglarz entered into two partnership agreements which formed the East Hazel Crest
and Westhaven partnerships. On January 2, 1986, Weglarz, Hargrove, Capriotti, Old Intercounty
and O’Hare entered into an amendment to the East Hazel Crest partnership agreement. Pursuant
to that amendment, Hargrove and Capriotti each assigned his 5% equity partnership interest in the
East Hazel Crest Properties Partnership to Intercounty Title Company of Illinois such that
Intercounty held a 10% equity partnership interest in the East Hazel Crest Properties Partnership.
Also pursuant to that amendment, Weglarz assigned his 90% equity partnership interest in the
East Hazel Crest Properties Partnership to Jacob Weglarz, as trustee of the Jacob Weglarz 1985
Trust Under Agreement Dated May 1, 1985, and to O’Hare, such that the Trust held an 85%
equity interest in the East Hazel Crest Properties Partnership and O’Hare held a 5% equity
partnership interest.
On January 2, 1986, Weglarz, Hargrove, Capriotti, Old Intercounty and O’Hare entered
into a similar amendment to the Westhaven partnership agreement. Pursuant to that amendment,
Hargrove and Capriotti each assigned his 10% equity partnership interest in the Westhaven
Properties Partnership to Intercounty such that Intercounty held a 20% equity partnership interest
in the Westhaven Properties Partnership. Also pursuant to that amendment, Weglarz assigned his
entire 80% equity partnership interest in the Westhaven Properties Partnership to Jacob Weglarz,
as trustee of the Jacob Weglarz 1985 Trust Under Agreement Dated May 1, 1985, and to O’Hare,
such that the Trust held an 75% equity interest in the Westhaven Properties Partnership and
O’Hare held a 5% equity partnership interest.
Old Intercounty issued title insurance policies in Illinois in the 1980s and 1990s. Old
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Intercounty became insolvent in 1990s due to Hargrove, Capriotti and other Old Intercounty
principals misappropriating Old Intercounty’s escrow funds. Hargrove and Capriotti invested
some of these funds into the Westhaven and East Hazel Crest partnerships.
In 1995, Capriotti, Hargrove and others formed a new title company, Intercounty Title
Company, a related underwriter, and ITI Enterprises (collectively, New Intercounty). The two
Intercounty escrow funds were run together and a large deficiency in Old Intercounty’s escrow
was transferred to New Intercounty’s escrow accounts. On March 17, 2000, Hargrove pledged
certain assets to Fidelity in exchange for its agreement to make payments on behalf of New
Intercounty or ITI to cover expected deficiencies in the escrow accounts. (Hargrove I).
On April 26, 2000, Hargrove, on behalf of Old Intercounty, assigned to Fidelity all of
Hargrove and ITI’s interest in the Westhaven and East Hazel Crest partnerships. These
assignments were made as collateral toward making Fidelity whole for payments Fidelity would
make on behalf of New Intercounty or ITI to cover deficiencies in Intercounty’s escrow account.
(Hargrove II). In Hargrove II, Hargrove and ITI represented that they either owned or could
control the ownership of the assigned partnership interests, that they were authorized to make the
assignments, and that they would cause to be executed any additional documents required to
perfect Fidelity’s interest in the collateral.
On May 23, 2000, Hargrove executed a third agreement with Fidelity in which he agreed
to take all necessary steps to “assign to Fidelity any distributions of cash or property” from the
East Hazel Crest and Westhaven partnerships (Hargrove III).
In June 2000, Old Intercounty, Fidelity and O’Hare entered into a second amendment to
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the East Hazel Crest and Westhaven partnership agreements (the East Hazel Crest and Westhaven
assignments). Pursuant to those amendments, Old Intercounty assigned to Fidelity “all of [its]
right, title and interest in any and all distributions of monies or other property due or to become
due” from the East Hazel Crest and Westhaven partnerships.
In July 2001, Capriotti approached Hargrove’s attorney, Daniel Meenan, to solicit
Hargrove’s participation in a plan to sell to Weglarz the same partnership interests which had
previously been assigned to Fidelity. Capriotti told Meenan that Weglarz was willing to pay Old
Intercounty $1 million for the partnership interests. Meenan advised Capriotti that Hargrove
would not participate in such a plan because Old Intercounty, acting through Hargrove, had
assigned those partership interests to Fidelity. On July 26, 2001, Hargrove transferred any
interest he had in Old Intercounty to Capriotti and resigned from all offices that he held with the
company.
The complaint further alleged that prior to the sale of the partnership interests to Weglarz,
Richard Skrodzki, Weglarz’s attorney, contacted Meenan regarding Hargrove’s assignment of the
partnership interests to Fidelity. During that conversation, Meenan specifically advised Skrodzki
that Old Intercounty’s interests in the East Hazel Crest and Westhaven partnerships had
previously been assigned to Fidelity and that Hargrove would therefore not participate in a sale of
those interests to Weglarz. Notwithstanding this prior knowledge, on or about August 7, 2001,
Weglarz purchased Old Intercounty’s interests in the East Hazel Crest and Westhaven
partnerships.
In its third amended complaint, Fidelity alleged that Hargrove controlled and was
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authorized to assign Old Intercounty’s partnership interests in the East Hazel Crest and
Westhaven partnerships. Fidelity also alleged that Hargrove had represented to Fidelity that all
partners had notice of Intercounty’s assignment of its partnership interests to Fidelity and that,
despite its demand, Fidelity had not received any monies or other property due from the
As relevant to this appeal, Fidelity’s third amended complaint sought relief under the
following theories: declaratory judgment (counts II and III); tortious interference with contractual
relationship (count VIII); and tortious interference with prospective business relationship (count
XI). Counts I, IV, V, VI, VII, IX and X, which are not relevant to this appeal, sought relief
under the following theories: unjust enrichment (counts I and VI); conversion (counts IV and V);
fraud (count VII); breach of contract (count IX); and specific performance (count X).
On December 27, 2004, defendants filed a motion to dismiss counts VIII, X and XI of
Fidelity’s third amended complaint. On March 4, 2005, the circuit court granted defendants’
motion, in part, and dismissed counts VIII (tortious interference with contractual relationship) and
X (specific performance). In that same order, the court granted Fidelity’s motion to reconsider, in
part, and reinstated counts II and III (declaratory judgment) of the third amended complaint.
On March 10, 2005, the parties filed cross-motions for summary judgment on counts II,
III and XI of Fidelity’s third amended complaint. Regarding counts II and III, Fidelity argued that
it was entitled to summary judgment because it had been validly assigned interests in the East
Hazel Crest and Westhaven partnerships, that it had performed all necessary conditions under the
partnership agreements for those assignments, and that Weglarz’s conduct demonstrated that he
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received adequate notice of Hargrove’s intent to assign the interests. Defendants, on the other
hand, argued that the assignments to Fidelity were invalid because Hargrove failed to give written
notice of the intent to assign those interests as required by the partnership agreements.
With regard to count XI, Fidelity argued that it had a reasonable expectation of entering a
business relationship with Old Intercounty based upon the assignment agreements and Hargrove’s
representations that Weglarz had received proper notice. Fidelity maintained that Weglarz’s
attempt to purchase the partnership interests from Intercounty with knowledge of the assignment
to Fidelity therefore constituted tortious interference. Defendants responded that because there
was no valid assignment to Fidelity of the partnership interests, Fidelity had no reasonable
expectation of receiving any value from the purported assignments.
In support of its motion for summary judgment, Fidelity attached an affidavit from
Weglarz dated January 7, 2004. In that affidavit, Weglarz stated that he did not receive written
notice that Hargrove or Old Intercounty intended to assign Old Intercounty’s partnership interests
to Fidelity and that he did not consent to such assignments. Weglarz also stated that he had no
knowledge of Fidelity’s alleged interests in the partnerships or Old Intercounty’s assignment to
Fidelity prior to August 16, 2002, when counsel for Fidelity sent him a letter alleging that Fidelity
had been assigned certain interests in the partnerships. Finally, Weglarz stated that he purchased
Old Intercounty’s interests in the partnership on August 7, 2001, in his capacity as trustee of the
Jacob Weglarz 1985 trust.
Fidelity also attached to its motion for summary judgment excerpts from the discovery
deposition of Hargrove’s attorney, Daniel Meenan. Meenan testified that he informed Weglarz’s
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attorney that the partnership interests had been assigned to Fidelity before Weglarz’s purchase of
those partnership interests. According to Meenan, Capriotti approached him in July 2001 to
solicit Hargrove’s participation in the sale to Weglarz of Old Intercounty’s 20% interest in the
Westhaven partnership. Meenan advised Capriotti that Hargrove would not participate in the sale
because Old Intercounty, acting through Hargrove, had already assigned those partnership
interests to Fidelity. Hargrove subsequently transferred his interest in Wholesale Retail Services2
to Capriotti and resigned as an officer of that corporation. Within a week of that transfer,
Meenan received a telephone call from Skrodzki inquiring about the validity of those documents.
During that conversation, Meenan explained to Skrodzki that the partnership interests had in fact
been pledged to Fidelity.
Fidelity further attached excerpts from the deposition testimony of Hargrove and Weglarz.
Hargrove testified that he spoke to Weglarz about the pledges to Fidelity at the time that the
assignments were being “put together” but before the assignments were actually made. Although
Weglarz stated that he did not want to be partners with Fidelity, Hargrove proceeded to assign
the partnership interests. Weglarz testified that he had a conversation with Hargrove concerning
assignment of the partnership interests to Fidelity, that during that conversation he indicated that
he did not wish to be partners with Fidelity, and that this conversation triggered his interest in
acquiring the partnership interests.
Fidelity also attached a letter dated June 13, 2000, from Weglarz to Hargrove, in which
2 The record shows that on August 1, 1997, Old Intercounty changed its name to Wholesale Real Estate Services, Inc.
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Weglarz acknowledged that Hargrove had recently advised him of his desire to assign Old
Intercounty’s 20% interests in the Westhaven partnership to Fidelity. Weglarz reiterated that he
had told Hargrove that he would not consent to the assignment and instead preferred to buy out
this interest pursuant to the partnership agreement. Weglarz also listed certain financial offsets he
expected to receive if he were to purchase the 20% partnership interest.
Fidelity attached excerpts from the deposition testimony of Dale Kleszynski. Kleszynski
testified that Weglarz contacted him in April or May 2000 and asked general questions about the
process of evaluating a partnership interest. Kleszynski characterized the conversation with
Weglarz as “academic” and “very general” in character. Kleszynski and Weglarz discussed the
East Hazel Crest and Westhaven properties, and Weglarz indicated there was a possibility he
would be acquiring the partnership interests. After that conversation, Klescynski asked Weglarz
for financial documents on the properties and told Weglarz that he would look at “general data”
and do a “minimal amount of work.” Weglarz told Kleszynski that they were not engaged in an
assignment and that he “just wanted some basic information.” Kleszynski testified that Weglarz
next contacted him in mid-October of 2000, and that during that conversation he “roughed out”
an estimated value of the partnership interests.
Finally, Fidelity attached a letter dated October 29, 2000, from Kleszynski to Weglarz, in
which Kleszynski provided a preliminary valuation of each property and an estimated value of
each partnership interest.
Attached to defendants’ motion for summary judgment were two documents entitled
“Notice of Exercise of Purchase Option,” dated May 25, 2001, and addressed to Intercounty Title
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Company of Illinois. Each document gives notice that the Weglarz trust elects to purchase
Intercounty’s 10% and 20% interests in the East Hazel Crest and Westhaven partnerships
pursuant to the financially distressed partner provisions of the partnership agreements. Also
attached to defendants’ motion was a bill of sale dated July 26, 2001, reflecting that Hargrove
transferred to Capriotti all of his interest in Wholesale Real Estate Services. Defendants also
attached two documents entitled “Bill of Sale and Assignment of Partnership Interest.” Each
document, entered into by the Weglarz trust, Wholesale Real Estate Services and Capriotti,
reflects that the Weglarz trust purchased Intercounty’s respective 10% and 20% interests in the
East Hazel Crest and Westhaven partnerships pursuant to the distressed partner provisions of
each partnership agreement.
Defendants also attached the following correspondence to its motion for summary
judgment. In a letter dated August 16, 2002, Fidelity’s counsel, Edwin Thomas, informed
Weglarz that Wholesale Real Estate Services (formerly Intercounty Title Insurance) had assigned
to Fidelity its respective 10% and 20% interests in the East Hazel Crest and Westhaven
partnerships, and demanded all profits owed to Fidelity pursuant to the partnership agreements.
In a letter dated August 22, 2002, Skrodzki advised Fidelity’s counsel that Weglarz had not been
aware of the purported assignment to Fidelity of Wholesale’s interests in the partnerships until
receipt of Thomas’s August 16, 2002, letter, and that Weglarz had never consented to such an
assignment. The letter also reiterated that Weglarz had purchased the partnership interests in
August, 2001.
On May 26, 2006, the circuit court granted summary judgment in favor of the Weglarz
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defendants on counts II, III and XI of Fidelity’s third amended complaint.3 With regard to counts
II and III, the court found that the partnership agreements required written notice of the intent to
assign a partnership interest, that Hargrove’s failure to provide written notice constituted a
material breach of the partnership agreements, and that the assignments to Fidelity were therefore
invalid. With regard to count XI, the court concluded that there was no basis for Fidelity’s
expectation of receiving the partnership interests because Weglarz never received written notice
from Hargrove, and that Weglarz’s actions did not constitute purposeful interference because the
partnership agreements afforded Weglarz the right to subsequently purchase the partnership
interests of a financially distressed partner. This appeal followed.
We first consider defendants’ argument that we lack jurisdiction to consider Fidelity’s
appeal. The record shows that at the time it filed its motion for summary judgment, Fidelity also
filed a motion for default judgment requesting that judgment be entered in its favor and against
Old Intercounty on count IX of the third amended complaint. Count IX asserted a breach of
contract claim against Old Intercounty. Fidelity claimed that it had entered a valid contract in
which Old Intercounty assigned to Fidelity its partnership interests in the East Hazel Crest and
Westhaven partnerships and that Old Intercounty breached that contract by refusing to recognize
Fidelity’s right to the partnership interests.
The basis for Fidelity’s motion for default judgment was that Old Intercounty had failed to
appear or file an answer or other responsive pleading in this action. On May 26, 2006, the circuit
3 Counts I and VII of Fidelity’s third amended complaint were dismissed with prejudice on May 18, 2006, and are not part of this appeal.
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court entered summary judgment in favor of defendants, and on June 1, 2006, Fidelity renewed its
motion for a default judgment against Old Intercounty. On June 14, 2006, the circuit court
entered an order declaring Old Intercounty in default for failing to appear, answer or otherwise
plead. The court, however, declined to enter judgment against Old Intercounty on the breach of
contract claim. The court also ordered Fidelty to give notice to Old Intercounty of the default
judgment instanter. Thereafter, on June 19, 2006, Fidelity filed a motion for a finding pursuant to
Supreme Court Rule 304(a) (210 Ill. 2d R. 304(a)) that there was no just reason to delay
enforcement or appeal of the orders entered on March 4, 2005 (dismissing counts VIII and X of
the third amended complaint), and May 26, 2006. Alternatively, Fidelity asked the court for the
entry of a default judgment against Old Intercounty with respect to the breach of contract claim.
The court granted Fidelity’s motion and made the requisite Rule 304(a) finding on June 27, 2006.
Fidelity filed its notice of appeal on July 5, 2006.
Defendants contend that the court’s order of May 26, 2006, granting summary judgment
in favor of defendants, was a final and appealable order and that Fidelity’s notice of appeal, filed
more than 30 days after entry of that order, was untimely and therefore failed to invoke the
jurisdiction of this court. Defendants assert that count IX of the third amended complaint was
premised on the assumption that there was a valid assignment between Old Intercounty and
Fidelity and that the court’s finding that no such valid assignment occurred was res judicata as to
Fidelity’s allegations in count IX and therefore effectively disposed of all controversies presented
by the third amended complaint. Accordingly, defendants maintain that the court’s Rule 304(a)
finding was unnecessary and improper because it effectively extended the deadline for Fidelity to
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file its notice of appeal. We disagree.
Rule 301 provides that “[e]very final judgment of a circuit court in a civil case is
appealable as of right.” 155 Ill. 2d R. 301. Rule 301, however, applies to appeals from cases in
which the final order has disposed of the entire controversy between the parties. In re Marriage
of Sproat, 357 Ill. App. 3d 880, 881 (2005); see also Shermach v. Brunory, 333 Ill. App. 3d 313,
316-17 (2002) (“A judgment is final if it determines the litigation on the merits so that, if affirmed,
the only thing remaining is to proceed with the execution of the judgment”). In this case, the
circuit court’s order granting summary judgment in favor of defendants did not dispose of the
entire controversy between the parties because it left outstanding the breach of contract claim
against Old Intercounty. Although the court subsequently declared Old Intercounty in default, it
did not enter a default judgment. An order of default is not a final judgment or an interlocutory
order appealable as of right because it does not dispose of the case and determine the rights of the
parties. Burton v. Autumn Grain Transport, Inc., 222 Ill. App. 3d 755, 756 (1991). Rather, an
order of default is simply an interlocutory order that precludes the defaulting party from making
any additional defenses to liability but in itself determines no rights or remedies. Wilson v.
Teloptic Cable Construction Co., 314 Ill. App. 3d 107, 111 (2000). It is the entry of a default
judgment, which the court did not enter in this case, that terminates the litigation and decides the
dispute. Wilson, 314 Ill. App. 3d at 111-12.
Therefore, in this case, without the entry of a judgment against Old Intercounty disposing
of count IX of the complaint, all previous orders, including the order granting summary judgment,
were interlocutory and could not be appealed without a finding by the court, pursuant to Rule
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304(a), that there was no just reason to delay appeal. 210 Ill. 2d R. 304(a). Accordingly, on June
19, 2006, Fidelity filed a motion asking the court to make the requisite Rule 304(a) finding, and
the court granted that motion on June 27, 2006. Rule 304(a) requires that plaintiff’s notice of
appeal be filed within 30 days of the entry of the required Rule 304(a) finding. 210 Ill. 2d R.
304(a). Fidelity’s notice of appeal was filed on July 5, 2006, within 30 days of the court’s Rule
304(a) finding, and was therefore timely and properly invoked the jurisdiction of this court.
According, we have jurisdiction to consider Fidelity’s appeal.
We disagree with defendants’ argument that the court’s order granting summary judgment
in favor of defendants was res judicata as to the allegations in count IX of the third amended
complaint and therefore effectively disposed of the entire controversy between the parties. For
res judicata to apply, there must be, among other things, a final judgment on the merits. Pelon v.
Wall, 262 Ill. App. 3d 131, 135 (1994). For purposes of res judicata, a judgment is not final until
the possibility of appellate review has been exhausted. Pelon, 262 Ill. App. 3d at 135. Here,
appellate review of the court’s order granting summary judgment had not been exhausted at the
time Fidelity filed its motion for a Rule 304(a) finding and, accordingly, res judicata would not
apply to count IX of Fidelity’s third amended complaint. Moreover, when an order of default is
entered, the defaulting party must be given notice to allow it to promptly vacate the order and
avoid a final judgment. Wilson, 314 Ill. App. 3d at 112-13. Therefore, in this case, even after the
order of default was entered, Old Intercounty had the opportunity to appear and move to vacate
that order. Under these circumstances, we find that Fidelity was required to motion the court for
a Rule 304(a) finding and that the court’s order granting that motion did not improperly extend
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the time for Fidelity to file its notice of appeal.
We next consider Fidelity’s argument that the circuit court erred in granting summary
judgment in favor of defendants on counts II, III and XI of the third amended complaint.
Summary judgment is appropriate if there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2004);
Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315 (2004). In determining
whether the moving party is entitled to summary judgment, the pleadings and evidentiary material
in the record must be construed strictly against the movant. Happel v. Wal-Mart Stores, Inc., 199
Ill. 2d 179, 186 (2002). The circuit court’s decision to grant or deny a motion for summary
judgment is reviewed de novo. Harrison v. Hardin County Community Unit School District No.
1, 197 Ill. 2d 466, 470-71 (2001).
Moreover, when, as in this case, the parties file cross-motions for summary judgment, they
invite the court to decide the matter as a question of law. Lexmark International, Inc. v.
Transportation Insurance Co., 327 Ill. App. 3d 128, 134 (2001). However, if a genuine issue of
material fact precluding judgment for either party exists, summary judgment should not be granted
to either party. State Farm Insurance Co. v. American Service Insurance Co., 332 Ill. App. 3d
31, 36 (2002).
Fidelity initially contends that the circuit court erred in granting summary judgment in
favor of defendants on counts II and III of the third amended complaint. In count II and III of its
third amended complaint, Fidelity alleged that pursuant to Hargrove II, Hargrove and ITI
assigned to Fidelity its respective 10% and 20% equity interests in the East Hazel Crest and
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Westhaven partnerships and that, pursuant to the East Hazel Crest and Westhaven assignments,
Old Intercounty assigned to Fidelity all of its right, title and interest in all distributions of monies
or other property from the partnerships. In both counts, Fidelity sought a declaratory judgment
that these assignments were valid and enforceable and that any interest that Weglarz purported to
obtain in the partnerships was invalid.
The East Hazel Crest and Westhaven partnership agreements contain the following
provisions which are relevant to this appeal. Paragraph 10 of the partnership agreements provides
that “[s]hould any Partner hereunder desire to sell, assign, transfer or convey his interest in the
partnership, said Partner agrees to notify the remaining Partners in writing of his intention to do
so. The remaining Partners will then have the right to purchase said partnership interest ***.”
Paragraph 10 also sets forth the procedures for exercising a partner’s right of first refusal and for
valuing the partnership interests. Section A of paragraph 10 provides that the value of the
partnership interest shall be determined by the average of values established by three appraisers,
and specifically states that “[t]he selling Partner and the non-selling Partner shall have thirty (30)
days from the date the written intention to sell is received by the non-selling Partner to appoint an
appraiser to act on his behalf. In the event that any party fails to make such appointment, then the
valuation made by the sole appraiser properly appointed shall be binding upon the parties.”
Section A further provides that such appraisers shall have 45 days from the date they are
appointed to deliver their appraisals. Section B of paragraph 10 states that “[t]he non-selling
partner shall exercise the option to purchase, in writing, within forth-five (45) days after receipt of
the written average of values set forth in the preceding subparagraph.” Section C of paragraph 10
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provides for closing within 45 days after written exercise of the option to purchase the partnership
interest.
Paragraph 18 of the partnership agreements states that “all notices required hereunder
shall be in writing and shall be sent by Certified or Registered Mail.” Paragraph 11 states that
“[a]ny transfer, assignment or other alienation of the interest of a Partner which is in violation of
the terms and conditions of Paragraph 10 of this instrument shall be considered as null and void
and of no legal effect.”
Finally, paragraph 9 of the partnership agreements provides that should any partner
become financially distressed, “the remaining partner or partners will then have an option to
purchase said partnership interest.”
In urging reversal of the summary judgment entered in favor of defendants on counts II
and III of its third amended complaint and the denial of its own motion for summary judgment,
Fidelity argues that the circuit court erred in holding, as a matter of law, that lack of written
notice rendered the assignments to Fidelity invalid. Fidelity does not dispute that Weglarz did not
receive written notice of Old Intercounty’s intent to assign its partnership interests. Rather,
Fidelity maintains that it was validly assigned the partnership interests because Weglarz received
oral notice of Old Intercounty’s intent to assign its partnership interests to Fidelity and the lack of
written notice constituted mere technical noncompliance with the partnership agreements.
Alternatively, Fidelity maintains that summary judgment in favor of defendants was improper
because a genuine issue of material fact exists as to whether Weglarz had actual notice of Old
Intercounty’s intention to assign the partnership interests.
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The primary question before us is whether the partnership agreements required strict
compliance with the written notice provisions. In general, the construction or interpretation of a
contract is a matter to be determined by the court as a question of law. Avery v. State Farm
Mutual Automobile Insurance Co., 216 Ill. 2d 100, 129 (2005). When construing the language of
a contract, our primary objective is to give effect to the intent possessed by the parties at the time
they entered the agreement. Regency Commercial Associates, LLC v. Lopax, Inc., 373 Ill. App.
3d 270, 277 (2007). The agreement is to be interpreted as a whole and, when possible, effect and
meaning must be given to every provision in the contract. “Where the terms of a contract are
clear and unambiguous, they will be given their natural and ordinary meanings.” Thakral v.
Mattran, 156 Ill. App. 3d 849, 854 (1987). In the absence of an ambiguity, the parties’ intent is
ascertained solely from the words of the contract itself, and we will not interpret a contract in a
manner that would nullify or render provisions meaningless or that is contrary to the plain and
obvious meaning of the language used. Thakral, 156 Ill. App. 3d at 854; Regency Commercial
Associates, LLC, 373 Ill. App. 3d at 277.
In this case, we conclude, as a matter of law, that the parties were required to strictly
comply with the written notice provision of the partnership agreements. That the parties intended
this requirement to be a material provision of the partnership agreements is reflected in the
language of the agreements themselves, which clearly and unambiguously requires that any
partner seeking to assign his partnership interests must provide the remaining partners with
written notice of his intention to do so. Additionally, the general notice provisions in the
partnership agreements state that “all notices required hereunder shall be in writing and shall be
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sent by Certified or Registered Mail.” Moreover, the sections of the partnership agreements
setting forth the procedures for exercising the right of first refusal make repeated reference to the
written notice requirement. For example, the agreements provide that the selling and nonselling
partners each must appoint an appraiser to value the partnership interests within 30 days “from
the date the written intention to sell is received.” The nonselling partner is required to exercise
his option to purchase “in writing,” and closing must occur within 45 days of the “written”
exercise of the option to purchase.
Additionally, other sections of the partnership agreements incorporate the same written
notice requirement. For example, paragraph 8 of the partnership agreements provides that, in the
event that the interest of any partner becomes diluted or diminished, the remaining partners have
the right to purchase that diminished interest. To exercise this option, the purchasing partner
must serve “notice in writing” of his intention to do so upon the nonpurchasing partner.
Paragraph 9 of the partnership agreements allows the partners to purchase the interest of any
financially distressed partner. To exercise this option, the purchasing partner is also required to
serve written notice of his intention to do so upon the nonpurchasing partner. We believe that
these additional sections of the partnership agreements, and their incorporation of the written
notice requirement, demonstrate that the parties contemplated and intended that any notice
required by the partnership agreements would be given in writing and could not be accomplished
orally.
It is well settled that when parties agree to and insert language into a contract, the
presumption is that it was done purposefully and the language employed is to be given effect.
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Regency Commercial Associates, LLC, 373 Ill. App. 3d at 277. In this case, the language of the
partnership agreements clearly provides for written notice. To require less would not give effect
to the parties’ intent and would place a construction upon the partnership agreements that is
contrary to the plain and obvious meaning of the language used. We therefore decline to do so.
In coming to this conclusion, we find the present case similar to Thakral. In that case, the
court strictly construed a notice provision in a real estate contract requiring the purchaser to give
“written notice” via “certified or registered mail” by a specified date to the seller if the purchaser
was unable to obtain a mortgage commitment. Thakral, 156 Ill. App. 3d at 854. In finding that
neither the oral notice provided by the buyers’ attorney to the seller’s attorney nor the written
notice mailed on the date specified in the contract but received one day later was sufficient, the
court held that service of a notice pursuant to a provision in a contract must be “in compliance
with the plain and ordinary meaning of the language used.” Thakral, 156 Ill. App. 3d at 856; cf.
Myers v. Popp Enterprises, Inc., 216 Ill. App. 3d 830, 836-37 (1991) (allowing for less than strict
compliance with a notice provision where, unlike in Thakral, there was no plain and ordinary
meaning of the notice provision in the parties’ contract). Here, too, we interpret the plain and
ordinary meaning of the terms used in the partnership agreements to require written notice and
find that the parties were required to comply with this provision to effectuate any assignment of a
We recognize the principle cited by Fidelity that the object of a notice provision in a
contract is to ensure that a party is actually informed. See Bloom Township High School v.
Illinois Commerce Comm’n, 309 Ill. App. 3d 163, 180 (1999). However, the specific facts of this
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case convince us that strict compliance with the written notice provision was required. In
addition to the parties’ clear and unambiguous language, already discussed above, the time-
sensitive nature of exercising the right of first refusal and valuing the partnership interests
supports our conclusion that the written notice requirement is a material provision of the
partnership agreements. As set forth in the partnership agreements, the entire process by which a
partner exercises his right of first refusal begins on the date that written notice is received. The
selling and nonselling partners each have 30 days “from the date the written intention to sell is
received” to appoint an appraiser to value the partnership interest. Both appraisers must then
mutually agree on a third appraiser, and the value of the partnership interests is determined by the
average of values established by the three appraisers. If, however, either party fails to appoint an
appraiser within the 30-day time limit, then the valuation made by the sole properly appointed
appraiser becomes binding upon the parties. The appraisers must deliver the average of values of
the partnership interest 45 days from the date that the last appraiser is appointed. The nonselling
partner must exercise his option to purchase, “in writing,” within 45 days after receipt of the
written average of values, and closing must take place within 45 days after written exercise of the
option to purchase. Finally, any purported acquisition of a partnership interest that does not
comply with the terms of the partnership agreements is null and void.
We believe the foregoing underscores the need to require strict compliance with the
written notice provision. The written notice requirement gives the nonselling partner a clear
declaration of the selling partner’s intent to assign his interests and avoids the ambiguous nature
of oral notice. The written notice also gives the nonselling partner a fixed time frame within
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which to appoint an appraiser and, ultimately, decide whether to purchase the partnership interest.
The ambiguous nature of oral notice creates the risk that the nonselling partner will misinterpret a
purported oral notice, fail to appoint an appraiser, and thereby lose the bargained for benefit of
purchasing the partnership interests at a fair price as determined by the value of three appointed
appraisers. The written notice requirement safeguards the partners from such risks, and it would
be imprudent for this court to strip this layer of contractual protection away from one partner
when it was agreed to by all at the partnership’s inception. Fidelity characterizes requiring written
notice as “unfair” and points out that it was not in a position to provide such notice. However,
the partnership agreements, which were available to Fidelity, clearly require written notice, and
neither Weglarz nor any other defendant in this case represented to Fidelity that written notice had
in fact been given. Accordingly, it was not defendants who placed Fidelity in its current position.
It is undisputed in this case that Weglarz did not receive written notice of Old
Intercounty’s intent to assign its partnership interests to Fidelity. In light of our holding that
written notice was a material provision of the contract, as well as paragraph 11 of the partnership
agreements, which states that any assignment that does not comply with the terms of the
partnership agreement is null and void and of no legal effect, we conclude that Old Intercounty’s
assignment of its partnership interests to Fidelity was invalid and had no legal effect. Therefore,
the circuit court did not err in granting summary judgment in favor of defendants on counts II and
III of the third amended complaint.
In reaching this conclusion, we find that the cases relied upon by Fidelity in which written
notice was purportedly excused are distinguishable from the present case and do not compel us to
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find that oral notice would have been sufficient in this case. In Bloom Township High School,
309 Ill. App. 3d at 180, the relevant agreement between the parties did not in fact require written
notice. Campbell v. Cook County Sheriff’s Merit Board, 215 Ill. App. 3d 868, 870-71 (1991),
involved a defendant’s claim that his due process rights were violated because, although he
received oral notice, he did not receive written notice of the hearing that preceded his termination.
In Rogers v. Balsley, 240 Ill. App. 3d 1005 (1993), timely written notice was sent to the seller’s
attorney instead of the seller’s home address as required by the contract, and plaintiffs were aware
of the notice sent to their attorney. Finally, in Loeff v. Meyer, 284 Ill. 114, 115-16 (1918), a real
estate contract required written notice of any construction on a parcel of property and, although
written notice was not sent, the owner was present at the property, witnessed the construction,
and permitted it to continue without objection.
Unlike the present case, in none of the cases cited by Fidelity did the court find that the
written notice requirement was a material provision of the contract with which the parties were
required to strictly comply. Moreover, the potential for prejudice in those cases from receiving
improper notice is not equivalent to that presented by the facts of this case. In none of the cases
relied upon by Fidelity did the receipt of written notice begin the time-oriented process of valuing
the partnership interests and exercising the right of first refusal. It is this process, and the
potential for prejudice resulting from the lack of written notice, that distinguishes the present case
from those cited by Fidelity and compels us to hold that the parties were required to strictly
comply with the written notice provision.
Fidelity also argues that Weglarz did not properly exercise his right of first refusal and that
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any purported transfer of the partnership interests to him was therefore invalid. The record
shows, however, that Weglarz purchased the partnership interests pursuant to the financially
distressed partner provision of the partnership agreements. Fidelity advances no argument that
Weglarz did not properly follow the procedures for purchasing the partnership interests pursuant
to that provision. A point raised on appeal that is not supported by argument is waived under
Supreme Court Rule 341(h)(7) (210 Ill. 2d R. 341(h)(7)). McCarthy v. Denkovski, 301 Ill. App.
3d 69, 74 (1998). Accordingly, Fidelity’s contention is waived.
Fidelity also argues that Weglarz’s conduct demonstrates that he received oral notice of
Old Intercounty’s intent to assign its partnership interests. Although we disagree with Fidelity on
this point, we need not consider this argument in light of our holding that the parties were
required to strictly comply with the written notice provision and that anything less than written
notice was insufficient to effectuate an assignment of the partnership interests.
We next consider Fidelity’s argument that the circuit court erred in granting summary
judgment in favor of defendants on count XI of the third amended complaint, which asserted a
claim of tortious interference with prospective business relationship. In count XI, Fidelity
asserted that it had a reasonable expectation that Old Intercounty would take all necessary steps
to effectuate the assignment of its interests in the East Hazel Crest and Westhaven partnerships to
Fidelity, that defendants were aware of Fidelity’s expectations with regards to these assignments,
and that defendants intentionally and unjustifiably interfered with this expectancy by attempting to
purchase the partnership interests from Old Intercounty.
In seeking reversal of the summary judgment entered in favor of defendants on count XI,
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Fidelity reiterates that it reasonably expected to receive a valid assignment from Old Intercounty,
that Weglarz was aware of this expectancy, and that he purposefully interfered with the
expectancy by purporting to buy the same partnership interests and by failing to distribute any
partnership income or assets to Fidelity.
To establish a cause of action for tortious interference with prospective business relations,
plaintiff must prove: (1) a reasonable expectancy of entering into a valid business relationship; (2)
defendants’ knowledge of that expectancy; (3) purposeful interference by the defendant that
prevents the plaintiff’s legitimate expectancy from ripening into a valid business relationship; and
(4) damages to the plaintiff resulting from defendants’ interference. Dowd & Dowd, Ltd. v.
Gleason, 352 Ill. App. 3d 365, 380 (2004).
When considering a claim of tortious interference with business expectancy, the focus is
on the conduct of the party interfering with the expectancy. Dowd & Dowd, Ltd. v. Gleason, 181
Ill. 2d 460, 484 (1998). To prevail on a claim, it is insufficient for plaintiff to merely show that
defendant interfered with a business expectancy. Dowd & Dowd, 181 Ill. 2d at 485. Instead,
plaintiff must show “purposeful” or “intentional” interference, which refers to some impropriety
committed by the defendant in interfering with plaintiff’s business expectancy. Romanek v.
Connelly, 324 Ill. App. 3d 393, 406 (2001); Dowd & Dowd, 181 Ill. 2d at 485; see also
Restatement (Second) of Torts §766B, Comment a, at 20 (1979) (“In order for the actor to held
liable, this Section requires that his interference be improper”). In other words, plaintiff must
show that defendant acted intentionally with the purpose of injuring the plaintiff’s expectancy.
Romanek, 324 Ill. App. 3d at 407. As this court has stated, “[t]o the extent that a party acts to
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enhance its own business interests, it has a privilege to act in a way that may harm the business
expectancy of others and that privilege is greater [] where *** no contract exists between the
plaintiff and the entity with which the business relationship is anticipated.” Curt Bullock Builders,
Inc. v. H.S.S. Development, Inc., 225 Ill. App. 3d 9, 16 (1992).
In this case, we conclude, as a matter of law, that Fidelity is unable to establish that
Weglarz acted improperly or with the intent to injure Fidelity’s business expectancy. Fidelity’s
argument to the contrary is premised on the assumption that Weglarz purchased the partnership
interests by exercising his right of first refusal. However, the record shows that Weglarz
purchased the partnership interests pursuant to the financially distressed partner provisions of the
East Hazel Crest and Westhaven partnership agreements. Those provisions provide each partner
with the option to purchase the partnership interest of any financially distressed partner. The
partnership agreements set forth the procedures for exercising that option, and Fidelity advances
no argument that Weglarz did not properly follow those procedures. Weglarz’s conduct was
therefore an entirely proper means by which to purchase the partnership interests, and there is
simply no evidence in the record to suggest that he acted improperly or with the aim of injuring
Fidelity’s expectancy. Romanek, 324 Ill. App. 3d at 406 (dismissing claim of tortious interference
with prospective business relationship where plaintiff failed to specify any action on the part of
defendant that had the purpose of thwarting plaintiff’s expected business relationship); see also
Belden Corp. v. Internorth, Inc., 90 Ill. App. 3d 547, 552 (1980) (noting that a party with a
prospective business relationship “must allow for the rights of others” and therefore has “no cause
of action against a bona fide competitor unless the circumstances indicate unfair competition”).
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Accordingly, we find that the circuit court did not err in granting summary judgment in favor of
defendants on count XI.
We finally consider Fidelity’s argument that the circuit court erred in dismissing count
VIII of its third amended complaint pursuant to section 2-615 of the Code of Civil Procedure
(735 ILCS 5/2-615 (West 2004)). Count VIII of the third amended complaint asserted a claim
against defendants for tortious interference with contractual relationship. In count VIII, Fidelity
argued that it, Hargrove and Old Intercounty had entered into a valid contract by which Old
Intercounty assigned to Fidelity its interests in the East Hazel Crest and Westhaven partnerships,
that defendants were aware of this assignment, and that, notwithstanding this knowledge,
defendants purported to assign those same partnership interests to Weglarz and thereby
intentionally and unjustifiably induced Old Intercounty to breach its contract with Fidelity.
In ruling on a section 2-615 motion to dismiss for failure to state a cause of action, the
court must accept as true all well-pleaded facts in the complaint and draw all reasonable
inferences from those facts that are favorable to the plaintiff. City of Chicago v. Beretta U.S.A.
Corp., 213 Ill. 2d 351, 364 (2004). A cause of action should be dismissed pursuant to section 2-
615 only if it is clearly apparent that no set of facts can be proven that will entitle the plaintiff to
recover. Borowiec v. Gateway 2000, Inc., 209 Ill. 2d 376, 382 (2004). Our review of a dismissal
pursuant to section 2-615 is de novo, and we may affirm upon any grounds appearing in the
record. Paul H. Schwendener Inc. v. Jupiter Electric Co., 358 Ill. App. 3d 65, 71 (2005).
We conclude that Fidelity cannot maintain an action for tortious interference with
contractual relationship. As Fidelity acknowledges, a claim for tortious interference with
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contractual relationship requires, among other things, the existence of a valid and enforceable
contract between the plaintiff and a third party. Purmal v. Robert N. Wadington & Associates,
354 Ill. App. 3d 715, 727 (2004). In light of our holding that there was no valid assignment of
the partnership interests between Fidelity and Old Intercounty, Fidelity’s claim for tortious
interference with contract cannot stand and we therefore affirm the dismissal of count VIII of the
third amended complaint.
For the reasons stated, the judgment of the circuit court of Cook County is affirmed.
Affirmed.
J. GORDON and O’MALLEY, JJ., concur.
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