Title: Gunthorp v. Golan

State: illinois

Issuer: Illinois Supreme Court

Document:

Gunthorp v. Golan, No. 85224 (Ill. S.Ct.) 
Docket No. 85224-Agenda 34-September 1998.
Opinion filed December 3, 1998.
JUSTICE NICKELS delivered the opinion of the court:
The purchasers of a custom home filed suit against the architectural firm who 
designed the residence and the owner of that architectural firm alleging: that 
the architectural firm was under a contract with the builder of the residence; 
that the purchasers were entitled to enforce the contract as third-party 
beneficiaries; and that the defendants breached the contract by delivering 
copyright infringing plans. The circuit court of Lake County found that 
plaintiffs failed to introduce sufficient evidence to prove their cause of 
action. The appellate court affirmed on other grounds. No. 2-97-0334 
(unpublished order under Supreme Court Rule 23). We allowed the petition for 
leave to appeal pursuant to Rule 315 (166 Ill. 2d R 315). We affirm.
BACKGROUND
Plaintiffs, John and Nancy Gunthorp (Gunthorp), viewed several residences 
designed and built by Charles Page (Page), including a home called "Echoes of a 
French Countryside" (Echoes), and looked into having Page design and build a 
home for them in Winnetka. The Gunthorps met with Page on a few occasions in May 
and June of 1993. On one of those occasions, Page gave the Gunthorps a four-page 
brochure that depicts the front and side elevations of the Echoes residence and 
contains floor plans for the home. The Gunthorps determined that Page would be 
too expensive and decided not to hire him.
The Gunthorps then contacted C.E. Russell, Inc. (Russell). Russell, a 
builder, suggested the Gunthorps use the Mark T. Golan Architect, LTD (Golan 
Firm), an architectural firm with whom Russell had previously worked. After 
viewing several houses designed by the Golan Firm, the Gunthorps agreed to meet 
with Robert Gebblehoff (Gebblehoff), a draftsman employed by the Golan Firm. 
When the Gunthorps told Charles Russell of their decision, he gave the Gunthorps 
a document entitled "Architectural Timeframe and Requirements." That document 
suggests that the Gunthorps should bring several items to their first 
architectural design meeting including a wish list, a room-by-room description, 
room sizes, magazine cutouts, and photos. In November 1993, the Gunthorps met 
with Gebblehoff, bringing along lists of requirements and several photos and 
magazine clippings. The Gunthorps also gave Gebblehoff photocopies of the first 
three pages of the Echoes brochure that they had received from Page. The last 
page, which Gebblehoff did not receive, contained a picture of Page and some 
information about him, the plot plan for the house, and a list of additional 
features of the Echoes residence.
On December 23, 1993, the Gunthorps and C.E. Russell and Associates entered 
into a written "Architectural Agreement." Subsequently, the plans were completed 
and the Golan Firm was paid by Russell. On April 27, 1994, the Gunthorps entered 
into a "Construction Contract" with Russell to build the house as designed by 
the Golan Firm. Russell began construction of the home.
The foundation had been poured and first-floor framing was nearly complete on 
July 21, 1994, when Page filed a complaint in federal district court against, 
among others, the Gunthorps, Russell, and the Golan Firm. The complaint alleged 
copyright infringement and unfair competition. Specifically, the complaint 
alleged that Page authored unique architectural works that are protected by 
copyright and that the defendants named in the federal complaint infringed those 
copyrights. On July 22, 1994, the district court issued a temporary restraining 
order that effectively prohibited the defendants from constructing or continuing 
to construct the Gunthorp residence. The temporary restraining order was 
extended without a hearing on July 26, 1994. The Gunthorps entered into a 
settlement agreement with Page on August 24, 1994, as part of which the 
Gunthorps paid Page $55,500. The settlement agreement also required the 
Gunthorps to make certain changes to the front elevation of their home. The 
federal case was then dismissed against all defendants.
The Gunthorps used another architect to draw up the changes so that the 
residence was acceptable to Page. Russell agreed to continue to build the home 
if the Gunthorps agreed to sign change order 21, which contains language that 
purports to release Russell and his subcontractors. After the Gunthorps signed 
the change order, Russell proceeded with construction on the residence.
The Gunthorps filed the complaint that led to the instant appeal on August 4, 
1995. The complaint alleges that Mark T. Golan individually (Golan) and the 
Golan Firm (collectively, defendants) breached a contract between the defendants 
and Russell by delivering plans that violate the property rights of Page. 
Russell is not named in the complaint. The Gunthorps allege that the contract 
was entered into for the Gunthorps' benefit and that they are entitled to relief 
as third-party beneficiaries. As damages, the Gunthorps seek the sum that they 
paid to settle the federal lawsuit, legal fees, and other unspecified 
damages.
The defendants moved to dismiss the complaint and for summary judgment, 
urging that the Gunthorps were not third-party beneficiaries and that change 
order 21 released Golan and the Golan Firm. The circuit court denied the motions 
and after a bench trial entered judgment for defendants. The trial court found 
that the Gunthorps failed to prove their case and that the cause of action was 
barred by the Illinois Joint Tortfeasor Contribution Act (740 ILCS 100/.01 
et seq (West 1996)). We observe that the Gunthorps' cause of action 
sounds in contract, not in tort.
The appellate court affirmed on other grounds, finding that the Gunthorps 
failed to prove that they were third-party beneficiaries, that the Gunthorps 
released the Golan Firm from liability pursuant to the language of change order 
21, and that the trial court did not err in determining that the design of the 
Gunthorp residence did not infringe Page's copyright. The Gunthorps appeal and 
defendants cross-appeal for sanctions, alleging that the current appeal is 
frivolous.
DISCUSSION
We first address jurisdiction. Defendants assert that this court does not 
have jurisdiction in the present case because the United States Congress vested 
exclusive subject matter jurisdiction over copyright matters in the federal 
judiciary. 28 U.S.C. §1338 (1994). However we note that this not a "civil action 
arising under an Act of Congress relating to *** copyrights," but is an action 
in contract arising under Illinois law that incidentally contains allegations of 
delivering copyright infringing plans as a breach of that contract. In addition, 
although the trial court in the instant case made reference to the plaintiff's 
seeking indemnity in its findings, this is not an action in indemnity or 
contribution, nor do we opine as to the availability of such relief under 
federal law.
In this appeal, the Gunthorps raise the following issues: (1) whether the 
appellate court erred in deciding the third-party beneficiary issue in favor of 
the defendants; (2) whether the Gunthorps were required, under their contract 
cause of action, to prove that Page would have prevailed in the federal 
copyright infringement lawsuit; (3) whether the appellate court erred in finding 
that the Gunthorps had released the Golan Firm by the language of change order 
21; and (4) whether the appellate court applied the correct test in determining 
copyright infringement. A trial court may be affirmed on any basis that appears 
in the record without regard to whether the trial court relied upon such ground 
or whether the trial court's rational was correct. Messenger v. Edgar, 
157 Ill. 2d 162, 177 (1993). Because we find that the Gunthorps released the 
defendants, we affirm the lower courts and need not address the remaining issues 
raised by the Gunthorps.
We first note that the record is devoid of any evidence of a contract between 
Russell and Mark T. Golan individually. Accordingly we find that the Gunthorps 
have not proven a cause of action for breach of contract against Mark T. Golan 
individually.
The Gunthorps make two arguments with regard to the release. First, they 
contend that there is evidence that the language inserted in the change order 
was a deliberate contrivance to trick the Gunthorps into releasing the Golan 
Firm. Second, they contend that the Golan Firm is not a subcontractor to Russell 
and is therefore not covered by the release.
All of the change orders signed by the parties, with the exception of change 
order 21, included the following language:
Change order 21, which covered the changes required under the settlement 
agreement entered by the Gunthorps and Page, contained the following 
language:
Also in evidence is a fax cover sheet sent from Russell to Mark T. Golan 
along with a copy of change order 21 that states "[the] language inserted at the 
bottom and the acceptance thereof would suffice in court. It still doesn't stop 
them from trying, however." The Gunthorps argue that the insertion of different 
language in change order 21 coupled with the fax transmission indicates that the 
release was not fairly made. The Gunthorps cite Willis v. Reum, 64 Ill. 
App. 3d 146, 147 (1978), and Northern Trust Co. v. Brentwood North Nursing 
& Rehabilitation Center, 225 Ill. App. 3d 1039 (1992), in support of 
the proposition that a release does not prevent a court from looking into the 
circumstances to ascertain whether the release was fairly made and accurately 
reflects the intent of the parties.
However, the cases cited by the Gunthorps are not helpful in the instant 
case. The Willis court affirmed the trial court's grant of a 
motion to dismiss a personal injury claim based on the validity of a release. 
The court found that "releases of personal injury claims may be set aside where 
there is a mutual mistake of fact and the circumstances, when finally known, 
present unconscionable results." Willis, 64 Ill. App. 3d at 147. 
Despite the presence of a mutual mistake of fact by the parties entering into 
the agreement, the Willis court, reasoning that the results were not 
unconscionable, sustained the validity of the release. In Northern 
Trust, the court, in dicta, cites a portion of Gutierrez v. 
Schultz, 109 Ill. App. 3d 372, 375-76 (1982), that quotes the pertinent 
language from Willis discussed above. The Gunthorps have not asserted 
that the parties in the instant case were under a mutual mistake of fact or that 
any other defense exists against the release. Therefore we will not set aside 
the release.
This court has stated:
Change order 21 is unambiguous. It states "[C.E. Russell's] subcontractors, 
are hereby released *** from all liability *** arising out of the facts and 
circumstances which gave rise to and resulted in such changes." A subcontractor 
is "[o]ne who has entered into a contract, express or implied, for the 
performance of an act with the person who has already contracted for its 
performance." Black's Law Dictionary 1424 (6th ed. 1990). Russell contracted 
with the Gunthorps to provide architectural plans. Russell then contracted with 
the Golan Firm to perform the act of drawing the plans.
The Gunthorps next contend that the Golan Firm is not released because the 
release only covers subcontractors to the construction contract. They argue that 
the Golan Firm was a subcontractor to the architectural agreement and not to the 
construction contract. We find that the language of the release encompasses 
anyone falling into the category of Russell's subcontractors, not just those 
under the construction contract. Therefore, we find that change order 21 
effectively released the Golan Firm.
Finally, the defendants request that we impose sanctions against the 
Gunthorps under Rule 375(b) (155 Ill. 2d R. 375(b)). Under Rule 375(b) sanctions 
may be imposed if an appeal is frivolous or not taken in good faith. An appeal 
is considered frivolous if it is "not reasonably well grounded in fact and not 
warranted by existing law or a good-faith argument for the extension, 
modification, or reversal of existing law." 155 Ill. 2d R. 375(b). The 
defendants, citing State Farm Fire & Casualty Co. v. Miller Electric 
Co., 231 Ill. App. 3d 355, 360 (1992), assert that an appeal will be deemed 
frivolous if a reasonably prudent attorney would not in good faith have brought 
such an appeal. After a thorough review of the record, we find that under an 
objective standard, a reasonably prudent attorney could have brought this 
appeal. Accordingly, we decline to enter sanctions.
For the foregoing reasons, we affirm the judgment of the appellate 
court.
Appellate court judgment affirmed.