Griffith v. Wilmette Harbor Ass'n, Inc.

881 N.E.2d 512, 378 Ill. App. 3d 173
CourtAppellate Court of Illinois
DecidedDecember 17, 2007
Docket1-07-0893
StatusPublished
Cited by22 cases

This text of 881 N.E.2d 512 (Griffith v. Wilmette Harbor Ass'n, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Griffith v. Wilmette Harbor Ass'n, Inc., 881 N.E.2d 512, 378 Ill. App. 3d 173 (Ill. Ct. App. 2007).

Opinion

JUSTICE ROBERT E. GORDON

delivered the opinion of the court:

This case involves a dispute between the Wilmette Harbor Association, its directors, some of its members, its attorney, and a membership applicant. The association manages the distribution of boat slips in the Wilmette harbor for the mooring of boats or vessels. To gain membership to the association, one must apply to the association by annually submitting a signed application and a corresponding application fee.

The facts giving rise to this appeal are somewhat convoluted. The litigation involves multiple parties and multiple claims. Although the multiple claims in this suit are contained in one complaint, for ease of discussion, we will discuss the facts of this case in four sections. The first section will discuss the derivative lawsuit brought by the association member plaintiffs on behalf of the association, against itself and its directors. The second section will discuss the lawsuit brought by the association member plaintiffs against defendant Uhlenhop. The third section will discuss the class action lawsuit brought by Green-berg against the association. The fourth section will discuss the procedural history of this case.

A. The Derivative Suit

Plaintiffs James D. Griffith, Steven Cotsirilos and Robert E. Janes (association member plaintiffs) are members of the Wilmette Harbor Association (association), an Illinois not-for-profit corporation organized under the General Not For Profit Corporation Act of 1986 (805 ILCS 105/101 et seq. (West 2004)). The association operates the Wilmette harbor. The harbor is owned by the Metropolitan Sanitary District of Chicago and pursuant to a lease dated March 18, 1964, is leased to the Wilmette Park District. Defendants William Allen, R. Bruce Johnston, George W. Darrow, Larry M. Lasky, Val Smith, George Stembridge, William C. Pool, Todd Smith, Dave Schmitt, Rosalind Schmitt, Bill Tueting and John Baker (association directors) were directors of the association at all times relevant to the instant dispute.

Prior to the instant suit, Kent Heitzinger, a former association director, demanded access to the association’s books and records. After the association’s denial of his request, Heitzinger filed an action in the circuit court of Cook County seeking access to the association’s books and records. In their brief to this court, the association member plaintiffs state that the resulting litigation cost the association in excess of $500,000.

In 2001, the association directors amended the association’s bylaws to include a mandatory mediation/arbitration provision. The association’s bylaws gave the directors the right to make amendments. That same year, a clause specifically acknowledging the mandatory mediation/arbitration provision appeared for the first time on the annual membership application. The clause on the membership application, states as follows:

“I agree, in the event a Mooring Permit (‘Permit’) is issued to me by the Wilmette Harbor Association (the Association), to abide by the By-Laws of the Association and all regulations concerning the operation of Wilmette Harbor.
* * *
Notwithstanding the foregoing, I also agree to resolve any controversy, dispute or claim against the Association, its employees, officers or directors or against, between or among any of its members or former members arising from or relating to any mooring permit, mooring, membership in the Association or operation or use of Wilmette Harbor, the Association or its facilities through mediation and/or arbitration in strict accordance with Article X of the By-Laws.”

Article X of the bylaws provides, in relevant part:

“Section 1. Mandatory Mediation. Any controversy, dispute or claim against the Association, its employees, Officers or Directors or against, between or among any of its Members or former Members arising from or relating to any mooring permit, mooring, membership in the Association or operation or use of Wilmette Harbor, the Association or its facilities (hereinafter, collectively, ‘Claim’) shall be subject to mediation in an endeavor to settle the dispute in an amicable manner as a condition precedent to arbitration required hereunder in Section 2 ***.
Section 2. Mandatory Arbitration. Any Claim not resolved by mediation as set forth in Section 1 hereof (the ‘Mediation Claim’), including disputes as to the scope and meaning of this Article and the arbitrability of any Claim, shall be decided by arbitration. A claim in arbitration must be initiated within ninety (90) calendar days after termination of the Mediation Claim pursuant to Rule — 14 of the Mediation Rules.”

After the addition of the mandatory mediation/arbitration provision, association member plaintiffs made requests to examine the association’s books and records, but their requests were denied. They filed suit to gain access to the association’s books and records and were “partially successful.” They filed a second suit “to pursue issues disclosed by that discovery” but their suit was dismissed for want of prosecution. The instant suit was filed thereafter.

Count I of the complaint was directed against the association and sought declaratory relief from the arbitration/mediation provision contained in the association’s bylaws. Count I alleged that the association directors amended the bylaws of the association to include the arbitration/mediation provision in bad faith to “protect themselves from suit brought by Kent Heitzinger and others.”

Counts II, III and IV of the complaint were directed against the association and the association directors. Count II alleged waste of corporate assets; count III alleged breach of fiduciary duties; and count IV alleged civil conspiracy. Counts II and III alleged a myriad of wrongful acts committed by the association directors. The following were among the wrongful acts alleged by the complaint: (1) “implementing a scheme to provide free or discounted moorings” to favored association members on a basis other than seniority, (2) negligently overpaying for dredging, or, in the alternative, purposefully overpaying for dredging in order to receive a “kick-back” from the contractor that provided dredging services, and (3) “spending thousands of dollars defending Kent Heitzinger’s suit, when he was entitled to receipt of the information he requested.” Count IV alleged civil conspiracy for the following: (1) “implementing a scheme to provide free or discounted moorings” to members favored by the association directors, (2) overpaying for dredging, (3) awarding dredging contracts without accepting bids from multiple contractors, (4) paying “Paul Uhlenhop thousands of dollars he should not have received,” and (5) profiting from “kick-backs” for dredging contracts.

B. Suit Against Defendant Uhlenhop

Defendant Paul Uhlenhop, an attorney, is an association member and acted as the association’s legal counsel at all times relevant to the instant dispute.

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Cite This Page — Counsel Stack

Bluebook (online)
881 N.E.2d 512, 378 Ill. App. 3d 173, Counsel Stack Legal Research, https://law.counselstack.com/opinion/griffith-v-wilmette-harbor-assn-inc-illappct-2007.