Matthews v. City of Peoria

2022 IL App (4th) 220060-U

• Court: Appellate Court of Illinois
• Decided: September 27, 2022
• Docket: 4-22-0060
• Status: Unpublished

Opinion

NOTICE This Order was filed under FILED 2022 IL App (4th) 220060-U September 27, 2022 Supreme Court Rule 23 and is Carla Bender not precedent except in the NO. 4-22-0060 4th District Appellate limited circumstances allowed Court, IL under Rule 23(e)(1). IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

GARY E. MATTHEWS and MONTE J. BRANNAN, ) Appeal from the Plaintiffs-Appellants, ) Circuit Court of v. ) Peoria County THE CITY OF PEORIA and MAYOR JAMES ) No. 19L49 ARDIS, Individually and as Mayor of the City of ) Peoria, ) Honorable ) David A. Brown, Defendants-Appellees. ) Judge Presiding.

JUSTICE CAVANAGH delivered the judgment of the court. Justices DeArmond and Harris concurred in the judgment.

ORDER ¶1 Held: Because the circuit court’s dismissal of some counts of the amended complaint with prejudice and its dismissal of the remaining counts without prejudice did not dispose of the rights of the parties upon a definite and separate part of the controversy, the circuit court’s finding of no just reason to delay enforcement or appeal (see Ill. S. Ct. R. 304(a) (Mar. 8, 2016)) was ineffectual, and the appellate court lacks jurisdiction.

¶2 In the circuit court of Peoria County, plaintiffs, Gary E. Matthews and Monte J.

Brannon, sued defendants, the city of Peoria, Illinois (city), and its mayor, James Ardis, for breach

of contract and for tortious interference with contracts and business expectancies. According to

the amended complaint, Matthews sued “individually” and also “as a representative of” EM

Properties, Ltd., an Illinois S corporation wholly owned by him. Pursuant to sections 2-615, 2-619,

and 2-619.1 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619, 2-619.1 (West 2020)),

plaintiffs moved to dismiss the amended complaint. The court dismissed the contract counts on the ground of a lack of standing, but because it was unclear to the court that this defect was

incurable, the court gave plaintiffs permission to replead those counts. The tort counts, however,

the court found, were barred by a statute of limitations (745 ILCS 10/8-101(b) (West 2020)), so

the court dismissed those counts with prejudice. On plaintiffs’ motion, the court made a finding

pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016)) that there was no just reason

to delay enforcement or appeal. Having allowed the deadline for repleading the contract counts to

expire and without having obtained a dismissal of the case, plaintiffs appeal the dismissal of the

tort counts, relying on the Rule 304(a) finding. We dismiss their appeal for lack of jurisdiction.

¶3 I. BACKGROUND

¶4 From 2007 to 2010, according to the amended complaint, plaintiffs entered into

negotiations with the city to redevelop Pere Marquette Hotel and adjacent properties on Main

Street. In June 2019, EM Properties, Ltd., and the city entered into a redevelopment agreement,

under which the city was to provide a grant to help fund the construction.

¶5 Count I of the amended complaint alleges that the city breached the redevelopment

agreement by “unilaterally terminating” it, thereby coercing plaintiffs to accede to an amended

redevelopment agreement, the terms of which were more onerous to plaintiffs. (It appears, from

the amended redevelopment agreement, which is attached to the amended complaint as exhibit D,

that this agreement was between the city and three business entities, i.e., EM Properties, Ltd.; Pere

Marquette Hotel, LLC; and Pere Marquette TIF, LLC—not, strictly speaking, between the city and

plaintiffs.) The city repeated this coercive strategy over and over again, according to count I, using

threats of cancellation to wring further concessions from plaintiffs and creditors. Count I alleges

that, by these threats to back out of the redevelopment project, the city breached its contractual

-2- promises to cooperate in good faith with plaintiffs and not to unreasonably withhold consent to

project-related proposals.

¶6 Count I accuses the city of further violating its contractual promises of good-faith

cooperation by sabotaging plaintiffs’ efforts to obtain refinancing for the project. Deutsche Bank

made a refinancing offer but withdrew the offer when the city, unlike other creditors, refused to

“waive one penny of the maximum possible recovery that it could obtain.” Subsequently,

according to count I, YAM Capital, LLC (YAM), made a refinancing offer but likewise withdrew

it after members of the city council publicly disparaged plaintiffs and expressed dissatisfaction

with YAM’s offer (though voted to approve it).

¶7 By its troublemaking, obstructionism, and inflexibility, count I alleges, the city

forced the hotel into foreclosure and bankruptcy (and forced plaintiffs, as guarantors, into

bankruptcy, too). Then, according to count I, Ardis and members of the city council ruined the

bankruptcy auction of the hotel by publicly accusing plaintiffs of fraud and malfeasance. The only

bidder at the auction was the senior lender, INDURE. Other potential bidders shied away, to the

detriment of all the stakeholders, including the city.

¶8 Count II alleges that, by the coercive threats of cancellation and the denigration of

plaintiffs and the redevelopment project—in short, by the conduct described in count I—the city

breached its implied contractual duty of good faith and fair dealing (not merely its express

contractual duty, as count I alleged).

¶9 Count III alleges that, through their threats to terminate the redevelopment

agreement, their refusal to negotiate with Deutsche Bank, and their bad-mouthing of plaintiffs and

the YAM offer, Ardis and the city tortiously interfered with plaintiffs’ contractual relations with

other creditors.

-3- ¶ 10 Count IV alleges that the same conduct by Ardis and the city tortiously interfered

with business expectancies on which plaintiffs’ fortunes depended, namely, refinancing of the

project by Deutsche Bank and YAM.

¶ 11 On November 29, 2021, on defendants’ motion, the circuit court dismissed the

contract counts, counts I and II, pursuant to section 2-615 (735 ILCS 5/2-615 (West 2020)). The

ground for dismissal was plaintiffs’ lack of standing. The dismissal order explained:

“Plaintiffs, or either of them, are not a contracting party with any of the Defendants.

No viable theory of third-party beneficiary has been presented to satisfy the

standing requirement for a breach of contract. *** Plaintiffs, as individuals, cannot

pursue causes of action in this court in a representative capacity. The court rejects

any notion that Plaintiff Matthews and EM Properties, Ltd.[,] are somehow one and

the same.”

Although plaintiffs had proposed “no viable theory,” the court could not “rule out the possibility

of some theory upon which these Plaintiffs might be able to pursue a claim.” Therefore, the court

specified that the dismissal of counts I and II was without prejudice, giving plaintiffs 28 days to

replead those counts—a deadline the court subsequently extended, on plaintiffs’ motion, to

January 10, 2022.

¶ 12 However, the circuit court dismissed the remaining two counts of the amended

complaint—counts III and IV, the tort counts—with prejudice, finding them to be barred by the

one-year period of limitation in section 8-101(b) of the Local Governmental and Governmental

Employees Tort Immunity Act (745 ILCS 10/8-101(b) (West 2020)). The court reasoned as

follows:

-4- “The cause of action alleged in Counts III and IV relate [sic] to the failed attempts

to refinance. *** The loss or damage alleged was the loss of the benefits of the

respective refinancings. Those losses or damages of the failed refinancings were

readily known to and actually experienced by Plaintiffs (or those entities which

were actually negotiating the refinancings) at the time the lender or financer backed

out—not sometime later when the property was sold in foreclosure. As such, the

court finds the claims for tortious interference should have been brought within one

(1) year of the date the lenders gave notice that they were no longer interested in

doing the refinancing. Deutsche Bank cancelled its refinancing proposal on

1/3/2017. YAM cancelled its on 2/10/2018. Plaintiffs filed the complaint in this

case on 3/7/2019. As such, the complaint is not timely.”

¶ 13 On plaintiffs’ motion, the circuit court made a finding pursuant to Illinois Supreme

Court Rule 304(a) (eff. Mar. 8, 2016). “Pursuant to Illinois Supreme Court Rule 304(a),” the court

found, “there is no just reason to delay the appeal or enforcement of the Court’s Order entered on

November 26, 2021, granting Defendants’ Motion to Dismiss Amended Complaint filed on

September 18, 2019, dismissing with prejudice of [sic] Counts III and IV of the Amended

Complaint.”

¶ 14 On January 21, 2022, without repleading counts I and II and without the entry of

an order striking the case, plaintiffs filed their notice of appeal. The notice of appeal challenges

only the dismissal of counts III and IV.

¶ 15 II. ANALYSIS

¶ 16 In their brief, under the heading of “Appellate Jurisdiction,” plaintiffs represent,

“This Court has jurisdiction by virtue of the trial court granting a Rule 304(a) [(Ill. S. Ct. R. 304(a)

-5- (eff. Mar. 8, 2016)] finding on December 23, 2021.” But the jurisdictional question is not so

simple. The first sentence of Rule 304(a) provides, “If multiple parties or multiple claims for relief

are involved in an action, an appeal may be taken from a final judgment as to one or more but

fewer than all of the parties or claims only if the trial court has made an express written finding

that there is no just reason for delaying either enforcement or appeal or both.” (Emphasis added.)

Id. Although a Rule 304(a) finding makes a final order appealable, the finding does not make a

nonfinal order appealable. Blumenthal v. Brewer, 2016 IL 118781, ¶ 24. “If the order is in fact

nonfinal, inclusion of the special finding in the trial court’s order cannot confer appellate

jurisdiction.” Id.

¶ 17 An order is final if “it disposes of the rights of the parties, either upon the entire

controversy or upon some definite and separate part thereof.” Id. ¶ 25. The dismissal order of

November 26, 2021, which was the subject of the Rule 304(a) finding, did not dispose of the rights

of the parties upon the entire controversy. See id. According to the order, the dismissal of counts

I and II of the amended complaint was without prejudice. The circuit court gave plaintiffs

permission to replead those counts by January 10, 2022.

¶ 18 Defendants observe that plaintiffs never repleaded counts I and II and that the

deadline for repleading those counts has expired. Even so, the expiration of the repleading deadline

did not transform the explicitly nonprejudicial dismissal of counts I and II into a final disposition.

See Smith v. Central Illinois Regional Airport, 207 Ill. 2d 578, 587 (2003); Jackson v. Victory

Memorial Hospital, 387 Ill. App. 3d 342, 351-52 (2008). The court never struck the case. The

court never changed the dismissal of counts I and II from a dismissal without prejudice into a

dismissal with prejudice. See Smith, 207 Ill. 2d at 587. The court was free to give plaintiffs even

more time, beyond January 10, 2022, to replead counts I and II. See id. at 588; Jackson, 387 Ill.

-6- App. 3d at 352. Therefore, we are unconvinced when defendants assert—without citation of

authority—that, upon the expiration of the repleading deadline, “the case before the Trial Court

was over” and that, consequently, this appeal is from “a final judgment pursuant to Illinois

Supreme Court Rule 303 [(Ill. S. Ct. R. 303 (eff. July 1, 2017))].” Rather, case law is clear that the

mere passing of a repleading deadline finalizes nothing. See Smith, 207 Ill. 2d at 587; Jackson,

387 Ill. App. 3d at 351-52.

¶ 19 So, there was no order “dispos[ing] of the rights of the parties *** upon the entire

controversy”—that part of the definition of a final order is unmet. Blumenthal, 2016 IL 118781,

¶ 25. The question, then, is whether the dismissal, with prejudice, of counts III and IV “dispose[d]

of the rights of the parties *** upon some definite and separate part” of the controversy. Id.

¶ 20 Counts III and IV raised tort theories, whereas counts I and II alleged breach of

contract. Granted, the appellate court has explained, “An order disposes of a separate branch of a

controversy when the bases for recovery of the counts which are dismissed are different from those

which are left standing. [Citations.] This may occur when the grounds for recovery under the

various counts arise from different statutes or common law doctrines or when different elements

are required to recover under different theories.” (Emphasis added.) Rice v. Burnley, 230 Ill. App.

3d 987, 991 (1992). Presenting the same claim, however, in the guise of a different legal theory

does not make “the bases for recovery” different. Id. “[W]here a party states one claim in several

counts, the dismissal of fewer than all such counts is not a final judgment as to [any] of the party’s

claims as required by Supreme Court Rule 304(a).” (Emphasis in original.) Russell v. Good

Shepherd Hospital, 222 Ill. App. 3d 140, 145 (1991).

¶ 21 In Davis v. Loftus, 334 Ill. App. 3d 761, 762 (2002), for example—a case the

supreme court cited approvingly in Blumenthal, 2016 IL 118781, ¶ 27—the plaintiffs sued the

-7- defendants for legal malpractice. In some counts of their complaint, the plaintiffs characterized

their attorneys’ defective performance as a breach of contract while in other counts they

characterized it as tortious malpractice. Davis, 334 Ill. App. 3d at 762. The circuit court “struck

with prejudice counts II and V, the contract counts, as needless duplication of the malpractice

counts.” Id. at 765. Supplied with a Rule 304(a) finding by the circuit court, the plaintiffs appealed

the dismissal of counts II and V. Id. For the following reasons, the appellate court concluded that,

despite the Rule 304(a) finding, the appellate court lacked jurisdiction:

“The facts here supporting the dismissed contract claim are identical to the

facts supporting the legal malpractice claim, which awaits trial. The relief sought

in the dismissed counts is identical to the relief sought in the surviving counts. To

address an appeal from the dismissed contract count[s] on the merits, this court will

need to learn all the facts that may later come before the court on appeal from a

final judgment on the malpractice count[s]. And full compensation for the alleged

malpractice would render any decision on the contract counts moot.” Id. at 767.

¶ 22 In Blumenthal, the supreme court provided a similar rationale for concluding that,

despite a Rule 304(a) finding by the circuit court, the appellate court lacked jurisdiction. If the

counts of a complaint, the supreme court explained, “were, in effect, different iterations of the very

same claim”—“merely advanc[ing] different analytical approaches” to “the same operative facts”

(Blumenthal, 2016 IL 118781, ¶ 26)—“the dismissal of fewer than all counts [was] not a final

judgment” within the meaning of Rule 304(a) (id. ¶ 27).

¶ 23 All four counts of the amended complaint in the present case are based on the same

operative facts. The amended complaint begins with a factual background of 113 numbered

paragraphs. Then counts I, II, III, and IV each incorporate by reference those 113 paragraphs as

-8- the factual basis for theories that the city breached express provisions of its contracts (count I),

that the city and Ardis breached the implied contractual duty of good faith and fair dealing (count

II), that the city and Ardis tortiously interfered with contracts (count III), and that the city and

Ardis tortiously interfered with business expectancies (count IV). Thus, on the face of the amended

complaint, “[t]he facts here supporting the dismissed” tortious-interference counts “are identical

to the facts supporting” the breach-of-contract counts. Loftus, 334 Ill. App. 3d at 767. All four

theories of liability arise from “the same operative facts,” suggesting that the four counts are

merely “different iterations of the very same claim.” Blumenthal, 2016 IL 118781, ¶ 26.

¶ 24 The tortious interference in counts III and IV is merely an alternative way of

describing the breaches of contract in counts I and II. An element of tortious interference with a

contract or business expectancy is that the interference was “improper.” Restatement (Second) of

Torts § 766, 766A, 766B (1979). Interference is “improper” if it “is not “sanctioned by the ‘rules

of the game.’ ” Restatement (Second) of Torts § 767 cmt. j (1979). According to the amended

complaint, the rules of the game were in the contracts to which the city was a party—contractual

rules of cooperation, good faith, and fair dealing that the city and Ardis allegedly breached, thereby

tortiously alienating refinancers with which plaintiffs were poised to make deals. Thus, the

amended complaint is merely an exercise in recasting a contractual claim alternatively as a tort

claim. Counts I, II, III, and IV are basically the identical claim in different legal packaging.

¶ 25 As if to confirm the essential sameness of the claim from one count to another, all

four counts seek the same money damages: “$9.3 million for the value of the lost development

fees in the Hotel”; “$1.4 million each for the estimated value of [plaintiffs’] shares in GEM

Hospitality, LLC”; and “costs and[,] if applicable under contractual terms, their attorney fees.”

“The relief sought in” the tort counts, which were dismissed with prejudice, “is identical to the

-9- relief sought in” the contract counts, which were dismissed without prejudice. Davis, 334 Ill. App.

3d at 767.

¶ 26 Therefore, if plaintiffs successfully repleaded counts I and II and won a verdict on

those counts, “full compensation for” the breaches of contract “would render any decision on” the

tort counts “moot.” Id. Not only would this appeal turn out to have been a waste of time in that

event, but the inefficiency would be compounded if defendants then appealed from an adverse

judgment on repleaded count I or count II. We then would have to learn the long and involved

factual history of this case all over again. See id.

¶ 27 This factual history is the unifying thread upon which the four counts are strung

like different-colored beads. We conclude that the dismissal, with prejudice, of counts III and IV

of the amended complaint did not “dispose[ ] of the rights of the parties *** upon some definite

and separate part” of the controversy. Blumenthal v. Brewer, 2016 IL 118781, ¶ 25.

Notwithstanding the Rule 304(a) finding, we lack jurisdiction over this “piecemeal appeal[ ].”

(Internal quotation marks omitted.) Id. ¶ 23.

¶ 28 Because of our lack of jurisdiction, we do not reach the merits of plaintiffs’

contention that the circuit court erred by finding counts III and IV to be time-barred. To buttress

that contention, plaintiffs have moved to supplement the record in the present case with the record

from a different case, GEM Hospitality, LLC v. City of Peoria, Peoria County case No. 19-L-235.

In that other case, the defendants likewise moved to dismiss the complaint. According to plaintiffs’

motion to supplement the record, the affidavit of a bankruptcy trustee, Andrew Erikson, which

plaintiffs filed in opposition to the motion to dismiss in case No. 19-L-235, would “clarif[y] the

timeline of events in bankruptcy court which led to the sale of the Hotel Project.” The timeline is

- 10 - irrelevant, however, given our lack of jurisdiction over this appeal and our consequent lack of

authority to reach the merits. Therefore, we deny plaintiffs’ motion to supplement the record.

¶ 29 III. CONCLUSION

¶ 30 Absent a final judgment or order, we lack jurisdiction. Therefore, we dismiss this

appeal.

¶ 31 Appeal dismissed.

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