Zanayed v. Mufarreh

2026 IL App (1st) 240744-U
Appellate Court of Illinois·Decided May 14, 2026·No. 1-24-0744·Unpublished

Opinion

2026 IL App (1st) 240744-U No. 1-24-0744

Order filed May 14, 2026

Fourth 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

AKRAM ZANAYED, INDIVIDUALLY AND ) DERIVATIVELY ON BEHALF OF PROTÉGÉ ) INVESTMENTS INCORPORATED, AN ILLINOIS ) CORPORATION, )

)

Plaintiff-Appellee, )

) Appeal from the

v. ) Circuit Court of ) Cook County.

MICHAEL P. MUFARREH, INDIVIDUALLY, BAMCO ) CONSTRUCTION, LLC, AN ILLINOIS LIMITED ) No. 20 CH 05869 LIABILITY COMPANY, AND PROTÉGÉ ) INVESTMENTS, INCORPORATED, AN ILLINOIS ) Honorable CORPORATION AS A NOMINAL DEFENDANT, ) Caroline Kate Moreland, ) Judge Presiding.

Defendants. )

)

(Michael P. Mufarreh )

)

Appellant.) )

JUSTICE LYLE delivered the judgment of the court.

Justice Mikva concurred in the judgment.

Justice Mitchell dissented, with opinion.

ORDER

¶1 Held: We affirm the judgment of the trial court over defendant’s contention that the court erred in enforcing the settlement agreement and in awarding plaintiff attorney fees.

¶2 This appeal arises following the trial court’s entry of an order granting a second motion to enforce a settlement agreement between plaintiff, Akram Zanayed, individually and derivatively on behalf of Protégé Investments Incorporated (Protégé), and defendant, Michael Mufarreh. Mr. Zanayed and Mr. Mufarreh owned and operated a corporation that managed rental properties. Mr. Zanayed filed suit against Mr. Mufarreh alleging that he was improperly funneling funds from their jointly owned corporation to a company owned by Mr. Mufarreh. The parties eventually settled and the trial court dismissed the action without prejudice.

¶3 Mr. Zanayed subsequently filed a motion in the trial court to enforce the settlement agreement. Mr. Mufarreh contended that the trial court lacked jurisdiction to enforce the settlement agreement. The court found that it had jurisdiction to enforce the settlement agreement, found that Mr. Mufarreh was in breach, and ordered that Mr. Zanayed did not have to send payments to Mr. Mufarreh pursuant to the agreement until Mr. Mufarreh fulfilled his obligation to transfer real property. This court affirmed the trial court’s order on appeal over Mr. Mufarreh’s contention that the trial court lacked jurisdiction to enforce the settlement agreement. Zanayed v. Mufarreh, 2024 IL App (1st) 230331-U.

¶4 While that appeal was pending, Mr. Zanayed filed in the trial court a second motion to enforce the settlement agreement. The trial court again granted the motion, ordering Mr. Mufarreh to transfer the real property so that Mr. Zanayed could use the proceeds from the sale of the property to fulfill his obligation under the settlement agreement to make payments to Mr. Mufarreh. The court ordered that after Mr. Mufarreh transferred the real property, Mr. Zanayed and Protégé were required to sell or refinance the real property and deposit the proceeds into a title

indemnity account to insure the title company against a judgment lien on the property. The court also awarded Mr. Zanayed attorney fees as the “prevailing party” pursuant the settlement agreement. Mr. Mufarreh now appeals, contending that the trial court erred in requiring him to transfer the real property before receiving payments under the settlement agreement and erred in requiring him to establish an escrow account to secure the judgment lien against the real property. He also asserts that the court erred in awarding Mr. Zanayed attorney fees. For the reasons that follow, we affirm the judgment of the trial court.

¶5 I. BACKGROUND

¶6 In order to properly address the arguments raised on appeal, it is necessary to set forth the circumstances giving rise to the first appeal in this matter. On September 15, 2020, Mr. Zanayed filed a complaint for injunctive and other relief, naming, among others, Mr. Mufarreh as a defendant. According to the complaint, Protégé owned and managed rental properties in the Chicago area. The management of Protégé was controlled by Mr. Zanayed, Mr. Mufarreh, and Khalil Barbari. Mr. Mufarreh was also a member of BAMCO Construction, LLC (BAMCO), a Chicago-based construction company. Mr. Mufarreh contracted BAMCO to make repairs to certain Protégé properties. Mr. Zanayed alleged that, at Mr. Mufarreh’s direction, BAMCO overcharged Protégé for the repairs and Mr. Mufarreh facilitated Protégé’s payments to BAMCO.

¶7 Mr. Zanayed further alleged that after Mr. Mufarreh was removed as an officer of Protégé, he began ‘looting’ Protégé’s bank accounts and locked the other officers out of Protégé’s management software. Mr. Zanayed raised claims of violations of the Illinois Business Corporation Act of 1983, conversion, breach of fiduciary duty, and unjust enrichment.

¶8 On June 3, 2022, the parties entered into a settlement agreement. The settlement agreement provided that it was entered by and among Mr. Barbari, Mr. Mufarreh, Joseph Ortinau, Mr.

Zanayed, Protégé, BAMCO, and numerous other parties who are not parties to this lawsuit. The settlement agreement resolved disputes among the parties in four separate lawsuits and one arbitration proceeding. The agreement provided for payments among the parties, including payments from Mr. Zanayed to Mr. Mufarreh and Mr. Ortinau, and required Mr. Mufarreh and Mr. Ortinau to divest themselves of their interest in Protégé and resign from their positions. The agreement also required Mr. Mufarreh to transfer his interest in certain real property to Mr. Zanayed and Protégé (the Burr Ridge Properties). Paragraph 2 of the settlement agreement, which is titled “Settlement Payments,” is redacted from the record filed on appeal.

¶9 Mr. Zanayed filed his first motion to enforce the settlement agreement on December 1, 2022. Mr. Zanayed alleged that under the terms of the settlement agreement, he was required to make certain payments to Mr. Mufarreh and Mr. Ortinau. Mr. Zanayed represented that he had made all the required payments to date. He maintained, however, that Mr. Mufarreh and Mr. Ortinau had failed to transfer the Burr Ridge Properties as required.

¶ 10 Mr. Zanayed learned that in September 2022, CFIT Holdings Corporation (CFIT) obtained a judgment against Mr. Mufarreh and Mr. Zanayed arising out of claims pertaining to the “Gym Entities.” The Gym Entities are defined in the settlement agreement as a group of gyms in the Chicago area that were owned by the parties. Mr. Zanayed maintained that pursuant to paragraph 13 of the settlement agreement, Mr. Mufarreh and Mr. Ortinau were required to indemnify and defend Mr. Zanayed from claims arising from the Gym Entities. Paragraph 13 of the settlement agreement is titled “Indemnification.” As relevant here, paragraph 13(c) provides:

“From and after the Effective Date, Mufarreh, Ortinau and the Gym Entities shall indemnify and defend Zanayed from and against any and all claims, demands, costs, fees, damages, penalties, suits, arbitrations or other actions that arise out of or are related to the

operation of the Gym Entities, including, without limitation, all debts owed by the Gym Entities and guarantees executed by Zanayed on behalf of Mufarreh or the Gym Entities, all claims for attorneys’ liens, fees and costs brought by attorneys hired by Mufarreh, Ortinau and the Gym Entities, and all claims arising out of the dissolution of the Voting Trust referenced in paragraph 14 of this Agreement, whenever they arose.”

Paragraph 13(e) provides:

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