2020 IL App (2d) 190432-U No. 2-19-0432 Order filed April 20, 2020
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT ______________________________________________________________________________
GRAND-WAUKEGAN, LLC, ) Appeal from the Circuit Court LEWIS PRODUCE MARKET, INC., ) of Lake County. LEWIS PRODUCE MARKET #2, INC., ) PAUL SVIGOS, JOHN SVIGOS, and ) MICHAEL SVIGOS, ) ) Plaintiffs-Appellees, ) ) v. ) No. 16-MR-809 ) GMAK INVESTMENTS, LLC, ) VIVIAN MAKRIS, individually, ) VIVIAN MAKRIS as Trustee of ) The George X. Makris ) Revocable Trust, and ) ESTATE OF GEORGE MAKRIS, ) Honorable ) Mitchell L. Hoffman, Defendants-Appellants. ) Judge, Presiding. ______________________________________________________________________________
JUSTICE JORGENSEN delivered the judgment of the court. Justice Hutchinson concurred in the judgment. Justice McLaren concurred in part and dissented in part.
ORDER
¶1 Held: The trial court did not err in its declaratory-judgment and motion-in-limine rulings. Affirmed. 2020 IL App (2d) 190432-U
¶2 George X. Makris was a member in Grand-Waukegan, LLC. Prior to his death, Makris
transferred his interest in Grand-Waukegan to GMAK Investments, LLC. In addition, he allegedly
borrowed a total outstanding loan of $625,738.57from one of Grand-Waukegan’s tenants (in which
Makris and John Svigos held interests).
¶3 On appeal, defendants, GMAK Investments, LLC, Vivian Makris, both individually and as
Trustee of the George X. Makris Revocable Trust, and the Estate of George Makris, challenge two
rulings that the trial court issued below in favor of plaintiffs, Grand-Waukegan, LLC, Lewis
Produce Market, Inc., Lewis Produce Market #2, Inc., Paul Svigos, John Svigos, and Michael
Svigos. The first is the trial court’s declaratory-judgment ruling that Makris transferred only an
economic interest, not membership rights, to GMAK. The second is the court’s ruling in limine
that, by challenging the authenticity of Makris’s signature on the alleged loan documents,
defendants waived the protections of the Dead-Man’s Act (735 ILCS 5/8-201 (West 2014). For
the following reasons, we affirm.
¶4 I. BACKGROUND
¶5 In July 2002, brothers John, Michael, and Paul Svigos joined Makris in forming Grand-
Waukegan, LLC. Grand-Waukegan is a member-managed limited liability company, and its
primary business is to own and manage real property. At its inception, Makris owned 50% of the
Grand-Waukegan, with the three brothers each owning 1/3 of the remaining 50% interest. Grand-
Waukegan’s operating agreement contains six provisions that the parties deem particularly
relevant to this appeal.
¶6 First, the agreement defines “Interest” as “the ownership interest of a Member in the
Company.”
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¶7 Second, the agreement defines “Member” as “each Person signing this Agreement and any
Person who subsequently is admitted as a member of the Company.”
¶8 Third, the agreement defines “Membership Rights” as “all of the rights of a Member in the
Company, including a Member’s: (i) Interest; (ii) right to inspect the Company’s books and
records; (iii) right to participate in the management of and vote on matters coming before the
Company; and (iv) unless this Agreement or the Articles of Organization provide to the contrary,
right to act as an agent of the Company.”
¶9 Fourth, the agreement defines an “interest holder” as “any Person who holds an Interest,
whether as a Member or as an unadmitted assignee of a Member.”
¶ 10 Fifth, the agreement defines a “permitted transferee” as “a Member’s spouse, his or her
parent(s) or child(ren), grandchild(ren), great grandchild(ren), or their spouses, his or her
sibling(s), or a trust established for their benefit or to a self-declaration of trust established for the
benefit of the Member, or any entity of which the Member and one or more Permitted Tranferees
owns the entire present interest.”
¶ 11 Sixth, section VI of the agreement addresses transfers of interests and withdrawals of
members. It provides that no member may transfer “all or any portion of his, her[,] or its interest
without the affirmative vote” of other members, but “[a]ny Member may, without the consent of
the other Members, transfer part or all of his, her[,] or its Interest to a Permitted Transferee.”
¶ 12 In early 2014, Makris’s death was impending. On March 20, 2014, GMAK Investments,
LLC, was formed, with Makris as the sole manager. On May 29, 2014, one day prior to Makris’s
death, his wife, Vivian, as his attorney-in-fact, executed an assignment, providing:
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“I, George Makris (a/k/a George X. Makris), hereby assign and transfer unto
GMAK Investments, LLC, an Illinois Limited Liability Company, all of my membership
interests in Grand-Waukegan, LLC, an Illinois Limited Liability Company.”
¶ 13 After Makris died, a dispute arose between Vivian and the Svigos brothers. Vivian claimed
that GMAK, a “permitted transferee” under Grand-Waukegan’s operating agreement, was a
member of Grand-Waukegan with full rights to participate in and manage the company’s affairs.
Vivian demanded, as a member of Grand-Waukegan, access to the company’s books and records.
The brothers disagreed, asserting that, while GMAK held a distributional interest, it did not acquire
membership rights.
¶ 14 On May 2, 2016, plaintiffs filed a complaint for declaratory judgment, seeking the court’s
declaration that GMAK is an interest holder in Grand-Waukegan, but not a member. They alleged
in count I that, in order to be admitted as a member, GMAK would need the unanimous consent
of the three remaining members. Ultimately, defendants moved for summary judgment on count
I, and plaintiffs moved for judgment on the pleadings. On March 27, 2018, after oral argument,
the court found that the language of the operating agreement was not ambiguous and that plaintiffs
were correct that, based on the agreement and the Illinois Limited Liability Company Act (LLC
Act) (805 ILCS 180/15-5 (West 2014)), GMAK was entitled to a distributional interest, but not
membership rights. As such, it denied defendants’ summary-judgment motion, and granted
plaintiffs judgment on the pleadings.
¶ 15 Separately, in count II of their complaint, plaintiffs asked the court to declare that a
promissory note and pledge agreement signed by Makris were valid and enforceable contracts.
Plaintiffs alleged that, after Makris died, his estate was informed of its obligations under the
promissory note. In response, defendants denied the validity of the note, alleging that Makris did
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not execute the documents. Plaintiffs moved for summary judgment on count II; defendants
presented the court with affidavits, including one from Vivian, wherein she attested that she was
familiar with Makris’s signature, having seen it “hundreds of times,” and that the signatures
appearing on the relevant documents were not his. Relying on Vivian’s deposition testimony,
wherein she testified that the signatures were not her husband’s but, rather, were those of forgers,
defendants asserted that Makris “did not execute” the purported promissory note or pledge
agreement. The court denied plaintiffs’ summary-judgment motion.
¶ 16 The issue proceeded to a bench trial. However, prior to trial, defendants moved in limine
to bar certain testimony pursuant to the Dead-Man’s Act. Specifically, defendants argued that
plaintiffs should not be allowed to introduce testimony concerning events that took place in
Makris’s presence, including that he signed the loan documents in front of interested parties. In
response, plaintiffs argued that defendants had waived the protections of the statute when Vivian
attested at summary judgment and testified in her deposition that Makris did not sign the
documents. The trial court denied the motion in limine, agreeing that defendants waived protection
from the Dead-Man’s Act.
¶ 17 At trial on count II, defendants moved for a directed finding and for reconsideration of the
court’s in-limine ruling. After a hearing, the court denied defendants’ motion for directed finding
and for reconsideration. Further, it found that the promissory note and pledge agreements were
signed by Makris and were valid and enforceable.
¶ 18 Defendants appeal the court’s granting of plaintiffs’ motion for judgment on the pleadings
on count I, and its denial of defendants’ motion in limine concerning count II.
¶ 19 II. ANALYSIS
¶ 20 A. Operating Agreement
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¶ 21 Defendants argue first that the court erred in granting plaintiffs judgment on the pleadings
on count I. Specifically, they argue that the operating agreement allows a member to transfer his
or her membership interest without the consent of the other members if the transfer is to a permitted
transferee. According to defendants, because the agreement defines “interest” as the member’s
ownership interest, the agreement explicitly “allows a member to transfer his ownership rights
including rights incident to membership—not just the right to receive distributions—to permitted
transferees without the consent of other members.” Defendants disagree with the court’s
interpretation that interest means only one aspect of membership rights, arguing instead that the
ownership interest of a member encapsulates both distributional interest and membership rights.
Defendants query, “[w]hat, then, does it mean for the Operating Agreement to authorize the
transfer of ‘all’ of the ‘member’s ownership interest in the company’ if not to make the Permitted
Transferee a member?” Defendants assert that, to assign GMAK only an economic interest would
relegate it to “unadmitted-assignee” status, when the terms “unadmitted assignee” and “permitted
transferee” are used separately in the agreement and must, therefore, mean different things.
Defendants allege that the court erroneously inserted the word “distributional” in front of
“interest,” where “distributional interest” is a term of art used in the LLC Act and, had the drafters
of the agreement intended the interest transferred to be only distributional, they would have used
the term. Further, defendants argue that the court mistakenly relied on the agreement’s definition
of “membership rights,” because that term does not again appear anywhere in the remainder of the
agreement and should not, accordingly, trump the express language allowing a member’s interest
to be transferred to a permitted transferee. Finally, defendants contend that, because the operating
agreement is clear, there is no need to resort to the LLC Act. As such, they contend that the court
erroneously concluded that “[t]he operating agreement does not reference a method for transfer of
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membership rights; therefore, the LLC Act governs.” To the contrary, defendants argue, the
agreement does reference a method for transferring membership rights, i.e., a member can transfer
his or her ownership interest to a permitted transferee without approval of the other members. If
we find that the contract is ambiguous, defendants argue, then we should consider certain
submitted extrinsic evidence.
¶ 22 We review de novo the trial court’s order granting judgment on the pleadings. See, e.g.,
Area Erectors, Inc. v. Travelers Property Casualty Company of America, 2012 IL App (1st) 11764,
¶ 19. In addition, we note that the court’s judgment was based on its interpretation of an operating
agreement. Operating agreements are enforced according to general contract principles and,
therefore, we interpret the agreement de novo. See, e.g., In re Marriage of Schlichting, 2014 IL
App (2d) 140158, ¶ 63; Carr v. Gateway, Inc., 241 Ill. 2d 15, 20 (2011).
¶ 23 We agree with the trial court and plaintiffs that the operating agreement’s plain and
unambiguous language permitting a member to transfer, without approval, an ownership interest
to a permitted transferee does not include assignment of membership status. The LLC Act provides
that members of a limited liability company may enter into an operating agreement to regulate the
company’s affairs and govern its relations. 805 ILCS 180/15-5 (West 2014). The operating
agreement is enforceable under contract principles, but, if there are gaps in the agreement, the LLC
Act governs. Id. The LLC Act defines a “member” as:
“[a] person who becomes a member of the limited liability company upon
formation of the company or in the manner and at the time provided in the operating
agreement or, if the operating agreement does not so provide, in the manner and at the
time provided in this Act.” (Emphasis added.) 805 ILCS 180/1-5 (West 2014).
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The manner provided by the LLC Act requires consent of all members. 805 ILCS 180/10-1 (West
2014).
¶ 24 The question here, therefore, is whether the operating agreement provides a process for
admitting new members. If so, the agreement must be followed. If not, the LLC Act’s manner
controls. For the following reasons, we agree with the trial court that the operating agreement’s
provisions concerning assigning or transferring an interest do not constitute a process for admitting
new members.
¶ 25 First, although the agreement defines a “member” as a person signing the agreement or any
person who is subsequently “admitted as a member,” there is no express section discussing the
addition of new members.
¶ 26 Second, we disagree with defendants’ argument that the agreement’s allowance of a
transfer, without permission, of an ownership interest to a permitted transferee equates to allowing
a transfer of membership status. As noted, the agreement defines “membership rights” as
including multiple rights, of which an “interest” is only one. Despite defendants’ assertion, our
consideration of the agreement’s definition of “membership rights,” even if that term does not
again appear in the agreement, does not act to “trump” the language allowing a member’s interest
to be transferred to a permitted transferee. Rather, the definition provides context to interpreting
the agreement as a whole, and a court must consider the contract as a whole, not isolated
provisions. See, e.g., Gallagher v. Lenart, 226 Ill. 2d 208, 233 (2007).
¶ 27 Third, and again, when the agreement is read as a whole, an “interest holder” is clearly not
necessarily a member, as the agreement often references “interest holders” as separate and distinct
from members. Indeed, the very definition of “interest holder” makes the distinction: “any Person
who holds an interest, whether as a Member or as an unadmitted assignee of a Member.”
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(Emphasis added.) We also note the agreement’s definition of “percentage,” which means, “as to
a Member, the percentage [i.e., the initial capital contribution] set forth after the Member’s name
on Exhibit ‘A,’ of each member *** and as to an Interest Holder who is not a Member, the
Percentage of the Member whose Interest has been acquired by such Interest Holder, to the extent
the Interest Holder has succeeded to that Member’s Interest.” (Emphasis added.) 1 In other words,
the agreement contemplates that one may acquire a percentage of the interest initially held by the
founding members and be an “interest holder who is not a member.” A member is always an
interest holder, but an interest holder is not necessarily a member.
¶ 28 Section VI of the agreement then generally specifies two ways one might become an
interest holder, one requiring the consent of the members and the other not:
“Except as otherwise expressly provided in the Agreement, no Member may
transfer all or any portion of his, her[,] or its Interest without the affirmative vote of the
Members holding at least a sixty-six (66%) percent Interest. Any transfer or attempted
1 Other examples include, in section 4.1, “At the discretion of the Members, cash flow for
each taxable year of the Company shall be distributed to the Interest Holders in proportion to their
percentages after the end of the taxable year.” In section 4.4.4, “The Members are hereby
authorized *** to amend this Article IV ***; provided, however, that no amendment shall
materially affect distributions to an Interest Holder without the Interest Holder’s prior written
consent.” In section 8.4, the agreement provides that, at the end of each taxable year, the members
must provide each member a complete accounting of the company’s affairs, while the members
must provide each interest holder the tax information necessary for preparing the interest holders’
income tax returns.
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transfer by any Member in violation of this Section 6 shall be null and void and of no effect
whatever. Any Member may, without the consent of the other Members, transfer, part or
all of his, her or its Interest to a permitted transferee. Each Member hereby acknowledges
the reasonableness of the restrictions imposed by this Agreement in view of the Company’s
purposes and the relationship of the Members.”
¶ 29 As such, we conclude that none of the agreement’s provisions reflect that GMAK is entitled
to all rights of membership (which include the right to inspect the company’s books and records;
to participate in its management and vote on matters; and to act as an agent of the company),
simply because Makris could assign 100% of his ownership “interest,” i.e., his entire percentage
of capital contributions, to GMAK without approval of the other members. With respect to
defendants’ query as to why the agreement would authorize the transfer of “all” of the member’s
ownership interest in the company if not to make the permitted transferee a member, we respond
that the agreement also allows the transfer of “all” of the member’s ownership interest in the
company to an “unadmitted” assignee, upon member consent. Accordingly, if one may receive
“all” of an “interest” but remain “unadmitted” as a member, the transfer provisions do not concern
membership. They concern methods for acquiring an economic interest. We further disagree with
defendants’ assertion that relegating a permitted transferee to unadmitted-assignee status renders
the use of those separate terms nonsensical: both categories of transferees are unadmitted
assignees, but one (permitted transferees) requires no consent by members to obtain the interest,
while the other (unadmitted assignees generally) does require consent.
¶ 30 Accordingly, we agree with the trial court that the agreement is not ambiguous. The
agreement does not bestow membership rights merely upon transfer of an interest, does not
otherwise provide a process for admitting new members under the facts presented here, and we do
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not agree with the dissent that section 6.4.4. operates under these facts. As such, the LLC Act
controls and provides that new members may be admitted upon consent of all other members. 805
ILCS 180/30-10(a) (West 2014). As that did not occur here, the court did not err in declaring that
GMAK does not hold membership status.”
¶ 31 B. Dead-Man’s Act
¶ 32 Defendants argue next that the court erred in denying their motion in limine to bar certain
testimony as being improper under the Dead-Man’s Act. The Dead-Man’s Act provides, in
general, that, in a trial in which any party sues or defends as the representative of a deceased
person, no adverse party or person directly interested in the action shall be allowed to testify to
any conversation with the deceased or to any event which took place in the presence of the
deceased person. See 735 ILCS 5/8-201 (West 2014). The purpose is to bar only evidence that
the deceased could have refuted and to equalize the parties’ positions. State Farm Mutual
Automobile Insurance Company v. Plough, 2017 IL App (2d) 160307, ¶ 5. An exception, however,
exists when a person testifies on the representative’s behalf to any conversation with the deceased
or to any “event” that took place in the presence of the deceased. 735 ILCS 5/8-201(a) (West
2014). In that case, any adverse party or interested person may testify concerning the same
conversation or event. Id.
¶ 33 Here, defendants contend that the court erred in allowing testimony and/or evidence from
plaintiffs that they allegedly witnessed Makris sign the promissory note and related documents.
Defendants contend that the Dead-Man’s Act barred that testimony and that the court erred in
finding that protection waived. Specifically, they argue that Vivian offered only circumstantial
evidence that Makris did not sign the documents, as opposed to testimony of an event that took
place in Makris’s presence. They note that Vivian’s testimony included: (1) “those are not my
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husband’s signatures,” and (2) the signatures represented forgery, probably committed, in her
opinion, by a business associate named Tom Fourkas. According to defendants, the testimony did
not concern a conversation that Vivian had with Makris, nor an event that occurred in front of him,
and, therefore, the court erred in finding circumstantial evidence, i.e., her independent knowledge
of Makris’s signature, to constitute a waiver of the Dead-Man’s Act’s protections. Finally,
defendants assert that, at issue is what is considered “an event” in the context of the Dead-Man’s
Act, and, here, they disagree that Makris allegedly signing the promissory note was an “event.”
“Plaintiffs are attempting to broaden the definition of ‘an event’ to include any circumstances that
might suggest [Makris] did (or did not) sign. [Vivian] simply opined that he did not sign and that
the signature does not appear to be that of [Makris] her late husband.” For the following reasons,
we disagree.
¶ 34 The trial court here denied defendants’ motion in limine to exclude certain testimony as
precluded by the Dead-Man’s Act. We review evidentiary rulings for abuse of discretion, but
interpretations of statutes de novo. See Gunn v. Sobucki, 216 Ill. 2d 602, 609 (2005).
¶ 35 We do not disagree that plaintiffs’ proffered testimony that Makris signed the documents
in front of them would likely ordinarily be barred by the Dead-Man’s Act; however, we disagree
that the court abused its discretion in admitting it, given that Vivian’s testimony waived the
statute’s protections. Specifically, we agree with the court that the “event” at issue concerned
whether Makris signed the note. We disagree with defendants’ position to the contrary and their
assertion that Vivian’s testimony was merely circumstantial and did not directly speak to that issue.
Indeed, Vivian’s testimony that it was not Makris’s signature was akin to asserting that he did not
sign it. Further, her testimony that someone else signed it was akin to asserting that Makris did
not sign it. Any differences are merely semantic. In Gunn, our supreme court agreed with the
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proposition that, for purposes of the Dead-Man’s Act, testimony that one did not do a certain act
is equivalent to testimony that he or she did the act. See Gunn, 216 Ill. 3d at 610. There, the issue
concerned whether payment was or was not made, and the court agreed that, since a decedent was
unable to testify about whether a payment was made, the adverse party should also be unable to
testify as to the payment. Id. at 611. Here, however, it is the decedent’s representative who put
the event, or lack thereof, at issue, and the Act therefore allows the adverse party to respond. 735
ILCS 5/8-201(a) (West 2014). Further, even if Vivian’s testimony constituted circumstantial
evidence of whether the signature was authentic, circumstantial evidence can still support a waiver
of the Act. See, e.g., Hoem v. Zia, 159 Ill. 2d 193, 201-02 (1994) (the wife’s introduction of a
doctor to testify to his interpretation of the treating doctor’s notes regarding the decedent-
husband’s office visit sufficient to waive the Act and to permit the treating doctor to testify to what
the decedent told him during his office visit).
¶ 36 The objective of the Dead-Man’s Act is fairness. See, e.g., Balma v. Henry, 404 Ill. App.
3d 233, 238 (2010). Fairness includes not putting the living at a disadvantage. Id. (“[t]he Dead-
Man’s Act is intended to remove the temptation of a survivor to testify to matters that cannot be
rebutted because of the death of the only other party to the conversation or witness to the event,
but it is not intended to disadvantage the living”). The Act attempts to protect the decedent’s
estate from claims it cannot rebut; however, the exception prevents the trier of fact from being
presented with only one side of the story, should the estate open the door to a conversation or event
that occurred in the decedent’s presence. See e.g., Brown, Udell & Pomerantz, Ltd. v. Ryan, 369
Ill. App. 3d 821, 826 (2006); Haist v. Wu, 235 Ill. App. 3d 799, 818 (1992). Here, defendants
sought to claim that Makris did not sign the documents, but wished to bar testimony from plaintiffs
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that, in fact, he did. Consequently, we conclude that the court did not err in interpreting the statute,
nor did it abuse its discretion in admitting the evidence.
¶ 37 III. CONCLUSION
¶ 38 For the reasons stated, the judgment of the circuit court of Lake County is affirmed.
¶ 39 Affirmed.
¶ 40 Justice McLaren, concurring in part and dissenting in part.
¶ 41 I agree with the majority as to defendants’ waiver of the Dead Man’s Act and the lack of
error in admitting evidence that plaintiffs allegedly witnessed Makris sign the promissory note and
related documents. However, I respectfully dissent from the majority’s analysis regarding
judgment on the pleadings. Not only does the majority ask the wrong question, it incorrectly
answers its misidentified question, asserting a counterfactual conditional as its basis for its
incorrect answer. In refuting this incorrect answer to the wrong question, I will show why the
majority also incorrectly answers the right question.
¶ 42 First, the question. The majority states that the question at issue here is whether the
operating agreement provides a process for admitting new members. Supra ¶ 24. This is not the
correct question; the correct question is whether the operating agreement allows a member to
transfer all of his membership interest to a permitted transferee without the consent of the other
members. Defendants were not seeking to be admitted as new members; they sought to exercise
the full rights of a member, rights that were transferred when Makris transferred all of his
membership interests to GMAK.
¶ 43 Second, the answer. The majority concludes that “the operating agreement’s provisions
concerning assigning or transferring an interest do not constitute a process for admitting new
members.” (Emphasis in the original.) Id. This is also incorrect. Section VI of the agreement,
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“TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS,” deals with various
options to purchase and rights of first refusal in the event that a member attempts to transfer all or
any portion of his interest. Specifically, section 6.4.4 provides:
“In the event of an Option [to purchase] which arises as a result of (A) the desire of
a transferring member to transfer his, her or its Interest to a Person other than a Permitted
Transferee, (B) the Person to whom a prior transfer was made is no longer a Permitted
Transferee, or (C) which arises as the result of an Involuntary Transfer, the business of the
Company shall continue on the terms and conditions of this Agreement, upon the
affirmative vote of at [sic] Members holding at least sixty-six (66%) percent Interest within
ninety (90) days after such event to continue such business with new Members, otherwise
such event shall be deemed a Liquidating Event.” (Emphasis added.)
Thus, if a member’s interest is to be transferred to someone other than a Permitted Transferee, the
other members must vote on the question of whether to continue the business with new members.
Contrary to the majority, this is a process to admit new members.
¶ 44 Within this incorrect answer to the incorrect question, we find the correct answer to the
correct question. As we see in subsection 6.4.4 of the operating agreement, if a Member’s interest
has been transferred to a Permitted Transferee, and that Transferee is no longer considered a
Permitted Transferee, the other members must vote to continue the business with that Transferee
as a new member or liquidate the corporation. The transfer of interest to the Permitted Transferee
required no vote. When the Transferee becomes non-permitted, no new interest is transferred to
this Transferee; it is his status as non-permitted versus permitted that has changed and required a
vote to allow him in as a new Member. His interest remains unchanged. Logically, the prior
transfer of interest to him when he was a Permitted Transferee was a transfer of the prior Member’s
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entire interest, including his status as a Member. Otherwise, why would the other Members be
required to now vote to accept him as a new Member when nothing other than his status changed?
If he was not a Member when he was a Permitted Transferee, why must he be a Member as a non-
permitted transferee or cause the liquidation of the corporation?
¶ 45 Further, if this were not so, what is the value of the Permitted Transferee status? A non-
permitted Transferee at least gets the opportunity to be admitted as a Member by a vote of the
current Members when a Member attempts to transfer all of his interest. According to the majority,
a Permitted Transferee may acquire all of a Member’s interest without the consent of the other
Members, but this transfer cannot include the Member’s status as Member, and there is no
provision in the operating agreement for a vote. The agreement clearly allows a Member to
transfer his entire interest, including his status as a Member, to a Permitted Transferee.
¶ 46 The majority declines to address this analysis other than to say that it does not agree that
section 6.4.4. “operates under these facts.” Supra ¶ 30. Under what facts does the majority find
that section 6.4.4 does operate? It will not say. It simply ignores a section that specifically deals
with members voting to continue the business with a new member and asserts that “the operating
agreement’s provisions concerning assigning or transferring an interest do not constitute a process
for admitting new members” (supra ¶ 24) such that the LLC Act controls.
¶ 47 A court must construe the meaning of a contract by looking at the words used and cannot
interpret the contract in a way that is contrary to the plain and obvious meaning of those words.
U.S.G. Interiors, Inc. v. Commercial and Architectural Products, Inc., 241 Ill. App. 3d 944, 948
(1993). While acknowledging that the enforcement of the operating agreement at issue here is
governed by general contract principles (supra ¶ 22), the majority here and the trial court below
impermissibly overlook the plain language of the agreement and look to the LLC Act to fill in
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“gaps” in the agreement. There is no gap to fill here. The alleged “gap” is nothing more than a
counterfactual conditional, an artificial construct that the majority uses to reach its desired
conclusion. A counterfactual conditional is a conditional statement that indicates what the case
would be if its antecedent were true (although it is not true). People v. Nitz, 2011 IL App (2d)
100031 ¶ 26, n. 2 (McLaren, J., specially concurring.). 2 The majority’s willful ignorance of section
6.4.4, however, does not make the “gap” a reality. The majority and the trial court have essentially
interpreted the agreement as if there were no agreement and have imposed, sua sponte, the
requirements of the Act upon this transfer. If the intent of the parties was to execute an agreement
consistent with the Act, section 6.4.4 would not have been in the agreement. The agreement was
unambiguous and plainly established that GMAK was entitled to full membership rights. The trial
court erred in granting judgment on the pleadings to plaintiffs and should have granted summary
judgment for defendants. Therefore, I dissent.
2 “A counterfactual conditional (abbreviated CF), is a conditional with a false if-clause. The term ‘counterfactual conditional’ was coined by Nelson Goodman in 1947, extending Roderick Chisholm's (1946) notion of a ‘contrary-to-fact conditional.’ The study of counterfactual speculation has increasingly engaged the interest of scholars in a wide range of domains such as philosophy, human geography, psychology, cognitive psychology, history, political science, economics, social psychology, law, organizational theory, marketing, and epidemiology.” https://en.wikipedia.org/wiki/Counterfactual_conditional (last visited April 16, 2020).
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