Village Realty, Inc. v. Carlino

2021 IL App (1st) 201284-U

• Court: Appellate Court of Illinois
• Decided: October 8, 2021
• Docket: 1-20-1284
• Status: Unpublished

Opinion

2021 IL App (1st) 201284-U No. 1-20-1284 Order filed October 8, 2021 Sixth Division

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ VILLAGE REALTY, INC., an Illinois Corporation, f/k/a ) Appeal from the Carlino Enterprises, Inc., ) Circuit Court of ) Cook County. Plaintiff-Appellant, ) ) Nos. 17 CH 16907 v. ) 17 CH 16908 ) 17 CH 16949 RICHARD CARLINO, KAREN CARLINO, DANIEL ) 17 CH 16969 CARLINO, and REALTYONE AND ASSOCIATES, ) 17 CH 16970 LLC, ) ) Honorable Defendants-Appellees. ) Raymond W. Mitchell, ) Judge, Presiding.

JUSTICE ODEN JOHNSON delivered the judgment of the court. Presiding Justice Daniel Pierce and Justice Mary Mikva concurred in the judgment.

ORDER

¶1 Held: We affirmed the circuit court’s grant of partial summary judgment in favor of defendants where the parties’ stock purchase agreement allowed for the performance of obligations after the closing date and, thus, defendants were entitled to receive the releases conditioned on the performance of their obligations. No. 1-20-1284

¶2 Plaintiff Village Realty, Inc. (Village Realty) f/k/a Carlino Enterprises, Inc. appeals an

order of the circuit court of Cook County which granted partial summary judgment in favor of

defendants Richard Carlino (Richard), Karen Carlino (Karen), Daniel Carlino (Daniel) and

Realtyone and Associates (Realtyone) (collectively defendants). On appeal, Village Realty

contends that the circuit court erred in: (1) granting partial summary judgment in favor of

defendants, (2) concluding that it waived defendants’ obligation to timely meet obligations

pursuant to the parties’ stock purchase agreement, and (3) ordering that releases be delivered to

defendants. For the following reasons, we affirm.

¶3 According to the record, Village Realty filed an amended complaint on May 31, 2019, in

consolidated cases 17 CH 16907, 17 CH 16908, 17 CH 16949, 17 CH 16969, and 17 CH 16970.

In its amended complaint, Village Realty sought damages from defendants that arose from the

transfer of company assets to Richard and Karen and the conversion of real estate listing

agreements and commissions that it was entitled to receive. Village Realty sought compensatory

and punitive damages under the theories of conversion, breach of fiduciary duty, unjust

enrichment, aiding and abetting, conspiracy, and interference with economic advantage. Village

Realty also sought a declaratory judgment that defendants were not entitled to certain releases

provided for in the parties’ stock purchase agreement (purchase agreement).

¶4 Briefly stated, Village Realty is an Illinois corporation licensed to do business as real estate

broker that was once owned by Richard and Karen as Carlino Enterprises, Inc. (CE) and is now

owned by Michael Glenn (Glenn). Richard and Karen are both licensed real estate agents; Richard

is also a real estate broker. Daniel, their son, is also a licensed real estate agent who was previously

-2- No. 1-20-1284

affiliated with CE and is now affiliated with Realtyone, which Village Realty believed that he

owned.

¶5 On February 3, 2017, seven creditors of CE filed an involuntary bankruptcy petition against

CE in the United States Bankruptcy Court for the Northern District of Illinois. When the

bankruptcy case was commenced, Karen was the sole shareholder, director and president of CE

and Richard was the managing broker. On May 11, 2017, Karen agreed to sell her shares of CE to

Glenn, pursuant to the terms of the purchase agreement. On June 30, 2017, the parties closed the

sale of CE. As of the closing date, Karen and Richard resigned from CE and Glen became the sole

owner, officer, director and managing broker. No funds or bank deposits were remitted to Glen at

the closing. Several days after the closing, Karen and Richard transferred funds into a new escrow

account from CE’s previous escrow account, purportedly in an amount equal to the amount of

escrow deposits CE had received from its clients. There were no other transfers to Glenn or Village

Realty of any other funds or bank deposits owned by CE after the closing date. It is undisputed

that Richard and Karen failed to complete all of their required obligations under the purchase

agreement, namely, their tax obligations.

¶6 The declaratory judgment action for specific performance regarding the delivery of releases

as required by the purchase agreement was originally filed on December 21, 2017, by Glenn

against Richard and Karen under case number 17 CH 16907. In that case, the parties filed cross

motions for summary judgment. Glenn’s motion for summary judgment sought, in part,

declarations that Richard and Karen did not timely fulfill all of their obligations under the purchase

agreement and as such, they were not entitled to receive the seller parties’ releases from the

escrowee. Richard and Karen’s summary judgment motion sought, in part, a declaration that once

-3- No. 1-20-1284

they fulfilled their tax obligations as set forth in the purchase agreement, they would be entitled to

delivery of the seller parties’ releases from the escrowee.

¶7 In connection with those summary judgment motions, the parties entered into and filed

with the court a stipulation of facts on January 11, 2019, in which they agreed that both parties had

certain obligations under the purchase agreement that should have been completed as of the closing

date of June 30, 2017, and that Richard and Karen had not fulfilled all of their obligations as sellers.

Specifically, Richard and Karen did not file CE’s outstanding tax returns for 2011 through 2016,

file a final subchapter S tax or information return as of June 30, 2017, or terminate CE’s subchapter

S tax election.

¶8 At the closing, the parties’ respective counsels orally agreed that Richard and Karen would

have until October 1, 2017, to file CE’s tax returns and pay all taxes due as required under section

C-2 of the purchase agreement, and to terminate CE’s subchapter S election and file any required

tax return or informational return. Richard and Karen did not comply with the terms of the oral

agreement, nor had they complied by the date of the entry of the stipulated facts.

¶9 Section F-1 of the purchase agreement provided for mutual releases and transfer of shares

upon execution of the purchase agreement. Specifically, Richard and Karen would deposit the

following documents with the escrowee: (1) resignation documents, (2) transfer documents

evidencing the assignment, (3) sellers’ release of buyer indemnified parties, (4) company release

of sellers from all claims against sellers other than claims arising from breach of the purchase

agreement, (5) a release from South Suburban Investment Group, LLC (SSIG) releasing CE from

all claims, (6) a release from CE to SSIG, (7) a release from Daniel to CE, and (8) share transfer

-4- No. 1-20-1284

documents. Upon execution of the purchase agreement, Richard and Karen deposited all required

releases with the escrowee. These releases are the subject of this appeal.

¶ 10 Section F-2 of the purchase agreement required Glenn to deposit with the escrowee (1) a

release of the sellers against all claims except breach of the purchase agreement and (2) a release

from Trisons Holdings, LLC releasing sellers from all claims. Glenn deposited the required

releases with the escrowee when the purchase agreement was executed.

¶ 11 Section F-3 of the purchase agreement provided that on the closing date, the escrowee

would deliver the documents deposited with him by the parties. Delivery of documents to the

parties was contingent on their fulfillment of all of their respective obligations under the purchase

agreement. On the closing date, Glenn received all of the documents held for him in escrow, while

Richard and Karen did not receive any escrowed documents.

¶ 12 The parties did not execute any amendments or modifications to the purchase agreement

as required by Section U of the purchase agreement in order to change its terms. Further, section

V of the purchase agreement stated that it was the entire agreement between the parties.

¶ 13 On May 17, 2019, the circuit court granted Glenn’s summary judgment motion for specific

performance (17 CH 16907) and denied Richard and Karen’s summary judgment motion, in a

written memorandum order. The circuit court however, struck both parties’ requests for

declaratory relief on the basis that plaintiff’s one-count, specific performance complaint did not

seek a declaratory judgment, nor did it seek any determination regarding defendants’ releases. The

court ordered Richard and Karen to perform all outstanding tax obligations under section C of the

purchase agreement, provide an accounting of the escrow account, produce all required bank

-5- No. 1-20-1284

statements for company bank accounts and produce all organizational documents or an affidavit

of completeness asserting that all documents were produced. 1

¶ 14 Village Realty alleged in the consolidated action that because Richard and Karen failed to

timely fulfil their obligations under the purchase agreement, they were not entitled to the releases.

Village Realty sought a declaration that Richard and Karen were not entitled to the releases, nor

would they be entitled to receive them even after they specifically performed their obligations

under the purchase agreement as ordered by the circuit court in the summary judgment order.

¶ 15 In addition to filing an answer, defendants sought a declaratory judgment. Defendants

stated that there was an actual controversy between the parties under the purchase agreement

because Glenn and the escrowee claimed that defendants were not entitled to the releases because

they did not perform their obligations in a timely manner, while defendants claimed that once their

obligations were performed, they were entitled to the releases. Defendants sought a declaration

that once they fulfilled their obligations under the purchase agreement, they would be entitled to

delivery of the releases from escrow.

¶ 16 On July 30, 2019, Village Realty filed a motion for partial summary judgment on count IX

of the amended complaint, declaratory relief with regard to delivery of releases. Specifically,

Village Realty sought a declaration that defendants were not entitled to the releases because they

failed to timely comply with their obligations under the purchase agreement. In response,

defendants argued that Village Realty waived strict compliance with the timing of their

performance by proceeding with the transaction. On December 30, 2019, the circuit court entered

1 The judgment order was modified on May 30, 2019, to provide that defendants would perform their obligations on or before July 12, 2019.

-6- No. 1-20-1284

a written memorandum order denying Village Realty’s motion for partial summary judgment

based on waiver. The court also noted that Glenn had pursued his remedy for Richard and Karen’s

noncompliance- he brought a suit for specific performance- and judgment was entered in his favor.

¶ 17 On February 27, 2020, defendants filed a motion for summary judgment on its

counterclaim for declaratory judgment, alleging that they completed all of their obligations under

the purchase agreement and were thus entitled to receive the releases.

¶ 18 On May 13, 2020, the circuit court entered a written memorandum order that defendants

were entitled to delivery of the escrowed documents based on Glenn’s waiver that was previously

determined by court order on December 30, 2019, and further that defendants fully complied with

its obligations under the purchase agreement. The court granted defendants’ motion for partial

summary judgment and ordered Village Realty to deliver the releases to defendants.

¶ 19 Subsequently, Village Realty moved to voluntarily dismissed counts I, II and III of its

amended complaint pursuant to a settlement agreement on October 27, 2020. An agreed order was

entered that: (1) granted Village Realty’s motion to voluntarily dismiss counts I, II and III; (2)

found that the two prior interlocutory orders (a) denying Village Realty’s motion for partial

summary judgment on count IX on December 30, 2019, and (b) granting defendants’ motion for

partial summary judgment on May 13, 2020, were final and appealable under Supreme Court Rule

304(a) (effective Mar. 16, 2016); and (3) if the interlocutory summary judgment orders were

reversed on appeal, plaintiff would be entitled to reinstate counts I, II, and III of the amended

complaint, and any payments defendants would have paid pursuant to the settlement agreement

would be credited against any subsequent judgment in Village Realty’s favor. The order was

-7- No. 1-20-1284

amended on November 4, 2020, to add that the case was dismissed in its entirety. Village Realty’s

timely notice of appeal was filed on November 25, 2020.

¶ 20 On appeal, Village Realty contends that the circuit court erred by: (1) granting defendants’

motion for partial summary judgment, (2) declaring that Glenn waived the timely performance of

obligations due by defendants under the purchase agreement, and (3) ordering that the release

documents held with the escrowee be delivered to defendants. Village Realty argues that there is

no factual dispute; Richard and Karen failed to fulfil their obligations under the purchase

agreement by the closing date of June 30, 2017, nor did they do so by the oral agreement date of

October 1, 2017. Although the tax obligations were ultimately completed, they were not completed

timely, and accordingly, defendants are not entitled to the releases. Village Realty contends that

the circuit court misconstrued the parties’ arrangement; the oral agreement was made at the

closing, thus Richard and Karen’s obligations under the purchase agreement were extended to

October 1, 2017, which was 90 days after the closing. Thus, there was no waiver in proceeding

with the closing.

¶ 21 Summary judgment is appropriate where the pleadings, depositions, admissions, and

affidavits on file, when taken together in the light most favorable to the nonmovant, show that

there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of

law. 735 ILCS 5/2-1005(c) (West 2018); Fremont Casualty Insurance Co. v. Ace-Chicago Great

Dane Corp., 317 Ill. App. 3d 67, 73 (2000). Our review of the trial court’s ruling on a motion for

summary judgment is de novo. Fremont Casualty, 317 Ill. App. 3d at 73.

¶ 22 The single issue in this case is whether defendants were entitled to receive the releases that

were held in escrow when they failed to timely complete their obligations under the purchase

-8- No. 1-20-1284

agreement. In order to determine whether defendants were properly entitled to the releases

pursuant to the purchase agreement, we must first determine the rights of the parties under the

purchase agreement.

¶ 23 In construing a contract, a court seeks to ascertain the intent of the parties. Rothner v.

Mermelstein, 219 Ill. App. 3d 502, 508 (1991). Courts presume that a written agreement speaks

the intent of the signing parties (id.) and their intentions must be determined from the language

used (W.W. Vincent and Co. v. First Colony Life Insurance Co., 351 Ill. App. 3d 752, 757 (2004)).

Where the question involves one of contract construction, a court of review may ascertain the

meaning of contract provisions from the instrument itself as a matter of law, absent an ambiguity

in the contract. Magnuson v. Schaider, 183 Ill. App. 3d 344, 357 (1989). A contract is ambiguous

if it is subject to more than one reasonable interpretation. Bunge Corp. v. Northern Trust Co., 252

Ill. App. 3d 485, 493 (1993). The existence of an ambiguity in a contract must be determined as a

question of law by the court, and if the terms of an alleged contract are ambiguous or are capable

of more than one interpretation, parol evidence is admissible to ascertain the parties’ intent. Id.

However, a document is not ambiguous merely because the parties fail to agree upon its meaning.

Id. In determining the intent of an unambiguous instrument, the court must consider the entire

document giving words their plain and ordinary meaning. Id.

¶ 24 In this case, Village Realty does not argue that the stock purchase agreement is ambiguous;

rather, it argues that defendants failed to strictly comply with its terms by failing to timely comply

with their tax obligations related to CE in order to receive the releases. We disagree with that

interpretation.

-9- No. 1-20-1284

¶ 25 It is clear from our examination of the purchase agreement that the parties intended for all

obligations to be completed as of the closing date, which was June 30, 2017. In support of this

conclusion, we look to the specific language contained in the purchase agreement in section F-3

related to the releases:

“On the Closing Date, the Escrowee will deliver the documents deposited with him

by Sellers and Buyer as follows: (a) Provided Sellers have timely fulfilled all of Sellers’

obligations, the Escrowee will deliver the following documents to Sellers * * *.”

¶ 26 The purchase agreement did not define “timely” and did not provide a remedy for default

for obligations performed beyond the closing date. Further, it contained a provision that the written

agreement was the entire agreement between the parties (section V). Additionally, the agreement

provided that it could only be amended in writing (section U).

¶ 27 We do not find the language of the purchase agreement to be ambiguous or vague. That

said, Village Realty’s contention that the parties orally agreed at the closing to amend the purchase

agreement and extend Richard and Karen’s obligations for performance until October 1, 2017, is

rejected as it was in direct contradiction with the terms of the agreement with respect to

amendments. Thus, we find that any such oral agreement was invalid, and the plain language of

the contract applied. As such, the parties were required to perform their obligations by the closing

date, or June 30, 2017.

¶ 28 However, that does not end our inquiry. Section P of the purchase agreement provided that:

“On and after the Closing, upon the reasonable request of Buyer, Sellers shall do

all such further acts and execute, acknowledge and deliver all such further instruments and

documents as may be necessary or desirable to convey and transfer to, and vest in, Buyer,

- 10 - No. 1-20-1284

and to protect Buyer’s right, title, and interest in and to the Shares, and, without

unreasonable expense to Seller, as may otherwise be appropriate to carry out the

transactions provided for in this Agreement.”

¶ 29 As noted, section F-3 required that the escrow agent tender the releases to the sellers at the

closing, provided that their obligations were timely completed. Additionally, section P provided

that sellers could tender documents after the closing for conveyance and protection of the buyer’s

rights or to “carry out the transactions provided for in this Agreement.” (Emphasis added).

Therefore, we conclude that the sellers were allowed to perform transactions provided for by the

purchase agreement after the closing date to carry out the transactions provided for in the

agreement without penalty. Here, it is undisputed that defendants complied with all of their

obligations under the purchase agreement, albeit after the closing date, which was permissible

under the plain language of section P. A reviewing court can affirm the circuit court’s judgment

based on any ground supported by the record. Bank of America, N.A. v. Luca, 2013 IL App (3d)

120601, ¶ 14. Accordingly, we find that the circuit court properly granted partial summary

judgment in favor of defendants and properly ordered that the escrow agent tender the releases to

defendants.

¶ 30 For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.

¶ 31 Affirmed.

- 11 -