1-00-0162									  fFourtOURTH DIVISION

											  aAugusUGUST 30, 2001

LID ASSOCIATES; STANLEY BRESLER; 2707-09 PETERSON BUILDING	)

PARTNERSHIP; JANE E. BENSON; EDWARD F. BRENNAN, JR.; 		)

GERSHOM R. COHN REVOCABLE TRUST; MILTON DILLER AS TRUSTEE 	)

OF THE MILTON DILLER REVOCABLE TRUST; LARRY ENSSLIN; 		) Appeal from the 

JACK M.FAZIO; SYLVIA FEDERMAN AND RUTH F. SILVERSTONE AS 	) Circuit Court of

CO-EXECUTORS OF THE ESTATE OF HYMAN L. FEDERMAN; STUART H. 	) Cook County.

GLICKEN; ELLEN B. HENRIKSON; HI-CHICAGO TRUST; ALAN HOLLEB; )

GORDON HOLLEB; PAUL D. HOLLEB; INVESTMENT RESEARCH 		)

ASSOCIATES LTD.; JOEL A. KAPLAN, MD; CAROLYN J. KOREIN; 	)

SANDOR KOREIN; JOEL A. KUNIN; L & S INVESTMENTS; MADHIC; 	)

RICHARD E. MARCUS; BARBARA MOELIS; MRL ASSOCIATES; ROBERT B.)

PILDES, MD; JAMES V. PROESEL; HERBERT N. ROSEN, DDS; 		)

HOWARD ROSS; ROSLYN SALTSBERG; IRVING AND HILDA SOLOMON;	)

JOE A. WALTERS; JOANNE WOITESHEK REVOCABLE TRUST; GILBERT 	)

BLECHMAN MARITAL TRUST B AS SUCCESSOR TO GILBERT BLECHMAN 	)

REVOCABLE TRUST; DANIEL M. PIERCE; ALBERT A. ROBIN; BEA 	)

RITCH TRUST; THE HOLDING CO.; AARDVARK TRUST; KORVISION 	)

INVESTORS PARTNERSHIP; SUFFOLK INVESTORS PARTNERSHIP; GOOD	)

NEWS BOYS; HAMPSHIRE LIMITED PARTNERSHIP; KORVESTORS 		)

LIMITED PARTNERSHIP; PARK LIMITED PARTNERSHIP; SOUTH 		)

LIMITED PARTNERSHIP; SYLVESTORS LIMITED PARTNERSHIP, LAFITE )

TRUST; RUDOLPH P. REGEZ; MARTIN S. KATZ; NORMAN K. JACOBSON;)

REX CARR; HAROLD M. DANZIG; EVERETT AVENUE ASSOCIATES;	)

ROBERT E. GOLDBERG; L.I. CABLE VENTURE; L.I.C. II VENTURE; 	)

ANTHONY FLAKUS; BRUCE H. JOHNSON; JAMES B. LEAHY; CLAIB LEE )

COOK, JR.; JAMM ASSOCIATES; ASSOCIATED CAPITAL CORPORATION; )

URBAN COMMUNICATIONS; S-C PARTNERSHIP; IRIS TRUST; LEONARD 	)

SCHILLER; PHILIP J. SCHILLER; PRAHA TRUST; KROMERIZ TRUST;	)

GOTTWALDOV TRUST; SATURNIA TRUST; ANNA TRUST; HYMAN TRUST; 	)

ALBERT MORRIS TRUST; LUBA TRUST; JERUSALEM TRUST; TEL AVIV 	)

TRUST; ISRAEL TRUST; RHOANN TRUST; MARTHE TRUST; MAREL 	)

TRUST; CARRIE TRUST; TIMOTHY TRUST; LYNNE TRUST; EILEEN 	)

TRUST AND KEVIN TRUST individually and derivatively on 	)

behalf of CABLEVISION OF CHICAGO, CABLEVISION OF ILLINOIS, 	)

CHICAGO CABLEVISION INVESTMENTS, and CABLEVISION 		)

HEADQUARTERS INVESTMENTS,						)

										)

	Plaintiffs-Appellees and Cross-Appellants,		)

										)

			v.							) Honorable

										) Lee Preston,

CHARLES F. DOLAN and CABLEVISION SYSTEMS SERVICES 		) Judge Presiding.

CORPORATION,								)	

										)

	Defendants-Appellants and Cross-Appellees.		)

	PRESIDING JUSTICE HARTMAN delivered the opinion of the court:	

	Plaintiffs, limited partner investors in Cablevision of Chicago

(Partnership), brought an action individually and derivatively on behalf of the

Partnership against defendants, general partners Charles F. Dolan and Cablevision Systems Services Corporation (CSSC), for breach of fiduciary duty involving three

financing transactions.  Plaintiffs claim the transactions unfairly benefitted

the general partners, to the detriment of the limited partners.1  A jury found the issues for plaintiffs. 

	The issues presented on appeal include whether the circuit court erred (1)

in allowing certain evidence as to plaintiffs' theory of breach of fiduciary

duty; (2) in refusing to submit a defendants' statute of limitations instruction;

(3) in refusing a separate verdict form to determine the liability of each

defendant; and (4) whether individual verdicts for plaintiffs' claims should not

have been submitted to the jury.

	The issues presented on cross-appeal include whether the circuit court

erred (1) by allowing Partnership indemnification of defendants' attorneys' fees

and costs; (2) by denying forfeiture damages; (3) by not submitting the issue of

punitive damages to the jury; and (4) by submitting a certain statute of

limitations jury instruction.

	Dolan, a cable industry pioneer, established the Partnership in 1979 for

the purpose of bringing cable television to the Chicago area after a successful

cable television venture in Long Island, New York.  Bank loans to then-novel

cable television companies were considered risky because the companies had few

assets to pledge as collateral, needed long-term loans and had cash flow

problems.  Banks granting such loans in 1979 demanded restrictive loan covenants

that required the borrowing cable company to maintain certain financial

performance levels or face default.  

	Dolan formed three Illinois limited partnerships to raise capital for the Partnership.  Prior to investing in the three limited partnerships, each

plaintiff received a private offering memorandum, which included a copy of the

Partnership Agreement and explained that there were substantial risks in

investing in start-up cable companies in the early 1980s.  Dolan testified that

the Partnership Agreements for the Partnership and three limited partnerships

were identical, except for monetary terms.  Each plaintiff was required to

certify that he or she had a substantial net worth, was sophisticated in business

and financial affairs and had received the offering memorandum containing a copy

of the Partnership Agreement.

	Section 8.1(a) of the Partnership Agreement gave Dolan, as a general

partner, authority to manage the partnership and enter into transactions in

furtherance of the Partnership's business.  Section 8.2(d) specifically

authorized Dolan, as managing general partner, "to borrow or lend money upon any

terms and conditions, including the subordination of such loans; *** guarantee

indebtedness or obligations of others; provided, however, that [Dolan] determine

in good faith that any such transaction is in furtherance of a Partnership

purpose."  Further, the Partnership Agreement in section 8.2(h) allowed Dolan,

as managing general partner, "to engage in any kind of activity and to perform

and carry out contracts of any kind necessary to, or in connection with, or

incidental to the accomplishment of the purposes of the Partnership, as may be

lawfully carried on or performed by a limited partnership under the laws of the

State of Illinois ***." 

	The Partnership Agreement also specifically contemplated potential

conflicts of interest in authorizing transactions with Dolan's affiliate companies.2 

	During 1979, Dolan created the first limited partnership, Cablevision of

Illinois (COI), using proceeds totaling $16,978,000 from the sale of COI

partnership units to provide the initial financing for the Partnership. 

	On December 17, 1980, Dolan and William Bell, chief financial officer of

the Partnership, successfully negotiated a loan with a group of banks led by

Continental Illinois National Bank and Trust Company of Chicago (collectively

Continental Bank) for $42 million at a prime plus 11⁄2% interest rate, which was

fully secured by Partnership assets.  The loan agreement included numerous

covenants and restrictions requiring the Partnership to meet certain standards

for cash flow, number of subscribers and that Dolan remain personally involved

in Partnership management.  Failure to comply with these restrictions would give

Continental Bank the right to terminate the loan. 

	The Partnership faced operational difficulties early on and intense

competition to obtain multiple cable franchises, which significantly raised the

cost of the local government franchising process.  These circumstances resulted

in geographically scattered franchises, and increasing construction and

technology costs.  In addition, the Partnership faced cash flow shortages.

	The Partnership's difficulties in obtaining cable franchises and meeting

its revenue projections eventuated in its failure to satisfy Continental Bank's

restrictions and it defaulted on its loan agreement.  Dolan successfully

persuaded Continental Bank in September of 1981 to extend the loan term and ease

certain restrictions, however, in return for Dolan's agreement to guarantee

personally up to $2 million of the bank loan.

	In November 1981, Dolan formed the second limited partnership, Chicago

Cablevision Investments (CCI), to raise an additional $12,616,831 million in

capital by selling CCI limited partnership interests.  The CCI Private Offering

Memorandum disclosed the Partnership's then-existing financial problems and bank

restrictions.3 

	The Partnership continued to struggle in 1982, but avoided another default

when Dolan again persuaded Continental Bank to relax restrictions on the loan

agreement.  In return, Dolan was required to guarantee part of the debt

personally until the Partnership could raise additional capital to reduce that

debt.

	Financial difficulties continued, and Dolan created a third partnership in 1983, Cablevision Headquarters Investments (CHI),  which generated $8.125 million

in additional capital through the sale of limited partnership interests.  The CHI

private offering memorandum disclosed that the Partnership had experienced

difficulty in meeting certain covenants in the loan agreement since its inception

and that Dolan personally had guaranteed repayment of a specific amount of debt,

allowing Continental Bank to waive defaults.  The new capital raised through the

CHI offering and a new business plan for the Partnership temporarily kept the

Partnership out of default. 

	The Partnership's financial woes increased dramatically in late 1984; it

had used most of the $42 million available under its bank loan and again

defaulted on the loan agreement.  Continental Bank sought to dispose of the

financing agreement and demanded that the Partnership pursue alternative long-

term solutions to its financing problems.  In compliance with this demand, on

January 30, 1985, the Partnership called upon the limited partners of CCI to loan

$37,500 for each Partnership unit owned to the Partnership at an 18% interest

rate, in return for convertible debentures, as authorized by the Articles of

Limited Partnership establishing CCI.4  Dolan previously delayed the request for the loans because of the high interest rate and the requirement that this

interest be paid on a current basis.  The Partnership raised $2.4 million through

the 1985 loans from the limited partners, who then received current payments of

18% interest.5    

	Dolan contemplated selling the Partnership in 1985, but believed he would

not be able to obtain a sale price that would allow the investors to recover

their initial investment.  By the end of that year, when the Partnership carried

more than $50 million in outstanding debt, it could not have been sold for more

than $55 million, which would have caused plaintiffs to lose virtually their

entire investments. 

	Repeated efforts to obtain new financing for the Partnership continued;

however, the only feasible replacement bank financing was the First Canadian

Bank, Bank of Montreal (Bank of Montreal), which offered a loan of $32 million,

$10 million less than needed to pay off the debt to Continental Bank.  The Bank

of Montreal established four prerequisites with which the Partnership had to

comply in order to receive replacement bank financing: (1) the Partnership was

prohibited from paying any management fees during the time Dolan was required to

continue managing the Partnership; (2) the Partnership had to raise $10 million

to make up the difference between the $42 million Continental Bank loan and the

$32 million offered by the Bank of Montreal; (3) the Partnership was required to

pay off an outstanding $5.1 million account payable to Home Box Office (HBO), one

of the Partnership's principal programming suppliers; and (4) any loans used to

satisfy these prerequisites had to be unsecured, subordinated to the Bank of

Montreal debt, with no acceleration rights nor rights to receive current payments

of principal or interest. 

	To satisfy these prerequisites and keep the Partnership afloat, Dolan

turned to his affiliates for financing, which came about in three specific

transactions, and are at the heart of plaintiffs' case.

	The first challenged transaction arose from a 1980 management agreement

(management fees transaction) in which the Partnership received various management services from Dolan and his management company, Cablevision Systems

Company (Management Company).  In return for these services, the Partnership was

obligated to pay the Management Company each month 3.5% of its gross monthly

revenues as compensation for Dolan's personal management of the Partnership.  All

investors were informed about the Management Agreement prior to their having

invested in the Partnership.

	In December 1983, Continental Bank's prohibition against the current

payment of management fees was memorialized in an amended credit agreement and

was considered by the Partnership and its bankers to be permanently in place for

the duration of the loan.  Because the prohibition was considered permanent, the

Partnership and the Management Company entered into an agreement dated December

31, 1983, through Dolan, whereby the Management Company agreed to the indefinite

deferral of monthly fees, and the Partnership agreed to accrue interest,

compounded monthly, on unpaid fees at the composite borrowing rate of Dolan's

public company, Cablevision Systems Corporation (CSC).  When Dolan sold

partnership interests in CCI in 1981 and CHI in 1983, he did not mention this

interest on the accrued fees; accruing interest for management fees, however, was

listed in the 1985 and 1986 "Notes to Financial Statements" that the limited

partners received, which disclosed that interest was being charged on deferred

management fees and the amount of interest charged for that year.  In 1986, the

interest rate changed to prime plus 2% for simplicity of calculation purposes.

	The management fees transaction freed for the Partnership funds that

otherwise would have been required to pay management fees, enabling the

Partnership to comply with the bank requirement that Dolan continue to provide

management services without current pay.  Bell and Patrick Cleary, a senior loan

officer specializing in cable television company loans for the Continental Bank loan group, testified at trial that the Partnership could not have obtained a

more favorable management services arrangement from an unaffiliated party;

rather, the interest rate charged for this transaction was at a rate more

favorable to the Partnership than it could have received for equivalent, outside

financing.  Bell also checked with independent parties for other interest rate

terms, but he did not consult with parties outside the Cablevision sphere of

companies. 

	In 1985, each limited partner received an information memorandum, noting

that interest was being charged on the deferred management fees and, from 1985

through 1995, each investor was advised through annual financial statements that

interest was being charged on deferred management fees, as well as the amount of

interest charged each year. 

	The second challenged transaction involved a loan from Dolan's public

company, CSC (CSC Loan), to the Partnership for $10 million to make up the

shortfall between the $42 million owed to Continental Bank and the $32 million

the Bank of Montreal was willing to refinance.  Dolan previously secured a

Partnership loan from CSC for approximately $9 million through 1985 to bring the

Partnership into compliance with the financial restrictions in its loan agreement

with Continental Bank.  This balance and the additional $10 million were

reflected in a single, unsecured note with a fixed interest rate of 14%,

compounded quarterly, for the term of the loan and, as required by the Bank of

Montreal, gave CSC no acceleration rights and no right to receive current

payments of principal or interest.6

	In setting the Partnership interest rate at 14%, Dolan testified that the

interest rate was below market rates from the time they were arranged until the

time they were retired and still satisfied the Bank of Montreal's demands that

any loans be subordinated to their debt, with no acceleration rights, no security

and no current payments of principal or interest.  Bell testified that before

fixing the interest rate at 14%, CSC, which was much larger and more creditworthy

than the Partnership, had to pay 191⁄2% on a subordinated debt requiring current

interest payments.  Cleary testified that in 1985, deeply subordinated debt

commanded at least 20% interest and, that in 1988, when the Partnership's

financial condition had improved, available subordinated debt still required

current interest payments and an interest rate exceeding 20 percent.  Gradually,

the Bank of Montreal increased the Partnership's borrowing capacity to $60

million in 1989.  This increased borrowing capacity allowed the Partnership to

pay CSC $20 million in 1989, of which CSC credited $7,350,000 to principal and

$12,649,420 to interest.

	In March 1986, a Dolan memorandum informed each limited partner that, as

a prerequisite of the Bank of Montreal refinancing agreement, CSC loaned the

Partnership $10 million on terms fully subordinated to the bank loan.  A May 1986

memorandum to the limited partners advised that CSC had advanced the necessary

funds to the Partnership at an interest rate of 14%, and that the loans were

fully subordinated to the bank debt.  Starting with the fiscal year 1986, the

"Notes to the Financial Statements" disclosed the CSC Loan, the amount of

principal owed, the amount of interest accrued, the amount of cumulative unpaid interest, the interest rate and the fact that the obligations were subordinated

to the bank debt.  As payments were made on this and other affiliate loans in

1989 and 1993-1995, the "Notes to the Financial Statements" disclosed those

payments.

	The CSC Loan balance was paid after the 1995 sale of the Partnership.  In

total, CSC collected the $19,664,999 it loaned to the Partnership plus

$28,217,823 in interest.  CSC received $13,610,235 over the amount it paid to

borrow the money it loaned to the Partnership.

	The third contested transaction, known as the HBO Loan, involves the CSSC

affiliate loan Dolan arranged in late 1985 to satisfy the third prerequisite of

the Bank of Montreal Loan, that the HBO account be paid off.  CSSC guaranteed the

Partnership's $5,093,302 account payable to HBO with a five-year note, but paid

no interest for four years; the fifth year paid interest at prime.  The

Partnership gave CSSC an unsecured, subordinated note for approximately

$5,100,000 at an interest rate of 14%, compounded quarterly, with CSSC having no

acceleration rights and no right to receive current payments of principal or

interest.  Bell and Cleary both testified that no better terms were available to

the Partnership from unaffiliated sources.  According to Bell, the HBO Loan was

well below market interest rates throughout the life of the loan.  HBO's loan was

extended to a sixth year at prime and then was refinanced with another lender for

16 months at 13% interest.

	In March 1986, each limited partner was sent a memorandum explaining that

a Dolan affiliate would loan the Partnership $5 million to pay off a debt

mentioned as intending "to satisfy this stipulated condition precedent,"

evidently referring to the HBO Loan.  Starting with fiscal year 1986, the "Notes

to the Financial Statements" disclosed the $5 million loan, the amount of principal owed, the amount of interest accrued, the cumulative amount of unpaid

accrued interest, the interest rate and the fact that the obligations were

subordinated to bank debt. 

	In 1987, CSSC became the corporate general partner of the Partnership. 

CSSC was repaid the $5,093,302 it advanced to the Partnership, plus $8,476,798

in interest.  Because CSSC paid $1,477,949 in interest to an unaffiliated third

party to loan the money to the Partnership and received $8,476,798 in interest

from its loan to the Partnership, CSSC's profit was $6,998,848.  

	Neither the contracts nor the contract terms Dolan signed with his

affiliates were sent to the limited partners. The Bank of Montreal refinancing

and the supporting cash infusions from the Dolan affiliates permitted the

Partnership to remain in business and gradually recover from its initial

financial troubles.    

	The Partnership was sold in 1995 for $168.5 million.  The Bank of Montreal

loan was repaid; $12.3 million in principal and $15.6 million in accrued interest

due on the CSC loan were repaid; and final management fee payments due to the

Management Company were paid in the amount of $11,561,205 in fees and $8,374,047

in interest.  After all Partnership debts were paid, sufficient proceeds were

paid to the limited partners amounting to their initial investment of

$37,719,831, plus a small profit.  Dolan received $51,091,310 in excess of the

costs incurred by the general partners or their affiliates in keeping the

Partnership sufficiently viable from 1979 to 1995. 

	Plaintiffs filed this action on November 29, 1995.  The jury returned a

verdict for plaintiffs in the amount of $18,372,894 for actual damages.  The 

court added $6,493,895 in equitable, prejudgment interest, for a total judgment

of $24,866,789.  Defendants' motions for entry of judgment as a matter of law or, in the alternative, for a new trial, were denied.

	Defendants appeal and plaintiffs cross-appeal, as first noted.

	I

	Defendants contend first that they were denied a fair trial because the

circuit court erroneously admitted certain evidence presented by plaintiffs which

was prejudicial to them and without support in the law.

	A

	Defendants insist that plaintiffs' expert witness testimony was improper

because they testified as to the appropriate standard of conduct in a fiduciary

duty case, which is a question of law.  Defendants assert that the experts'

testimony was highly prejudicial, misleading and confused the jury as to the

proper legal standard to be applied.  Defendants maintain that because the proper

standard of fiduciary conduct is a legal question, it is the function of the

judge to instruct the jury as to the applicable principles of law, rather than

being interpreted by an expert.   Defendants rely upon McCormick v. McCormick, 180 Ill. App. 3d 184, 205, 536 N.E.2d 419 (1988) (McCormick), where the court held testimony properly excluded where the expert purported to testify as to the

"applicable standard of care of a trustee," but merely applied the facts to the

language in the Illinois Trust and Trustee's Act, formulating the opinion that

the trustees were "imprudent in the performance of their duties."  An expert

witness, however, is not competent to give testimony amounting to statutory

interpretation.  Christou v. Arlington Park-Washington Park Race Tracks Corp., 104 Ill. App. 3d 257, 261, 432 N.E.2d 920 (1982).  Nor may an expert witness

testify with respect to legal conclusions.  Coyne v. Robert H. Anderson & Associates, Inc., 215 Ill. App. 3d 104, 112, 574 N.E.2d 863 (1991); McCormick, 180 Ill. App. 3d at 205.7

	Here, over defendants' objections, plaintiffs' expert, Robert Weitzman, a

real estate and trust lawyer involved in real estate general and limited

partnerships, testified to the custom and practice of a general partner in

financing loans for partnerships with which he had personal experience as a

general partner and his knowledge of what general partners do in like

circumstances.  Plaintiffs' witness commented further and identified a legal

standard for fiduciary duty, stating, "I think that in every fiduciary relationship of general to limited partner, the general is charged with the fact

of having to act reasonable [sic] and fair [sic] with his limited partners at all times." (Emphasis added.)  Additionally, the witness expressed an opinion as to

the ultimate issue of whether Dolan breached his fiduciary duty, stating, "I

think in this transaction his [affiliate loan] cost floated down, and [the

interest rate to] the limiteds'[sic] stayed right where they started.  That's not fair."  (Emphasis added.)  

	Weitzman having based his opinions on his interpretation of case law,

exceeded his role as an expert, which was error.  Another fiduciary expert

testified for plaintiff, Charles Strobeck, involved in general and limited

partnerships in the real estate business, whose testimony was substantially the

same as that given by Weitzman.  

	Plaintiffs' fiduciary experts' opinions differed from the circuit court's

instructions to the jury, which stated that, under Illinois law, "partners are

free to vary many aspects of their relationship" as long as they do not "destroy

its fiduciary character" and "where a partnership agreement exists and the

agreement specifically sets forth what the fiduciary is required to do or not to

do with respect to a matter, the terms of the partnership agreement should be

considered" in determining whether the fiduciary breached his duty.  Weitzman and

Strobeck advocated a standard of fiduciary conduct that disregarded the

Partnership Agreement by requiring that a general partner loan money to the

partnership at his own or his affiliates' cost of bank borrowing, regardless of

what the Partnership Agreement states.  No Illinois authority is cited or found

which supports such an obligation.  Plaintiffs emphasized this "expert" testimony

throughout the trial, including opening statements and closing argument. 

Plaintiffs offered no other proof that the transactions were unfair. 

	Accordingly, the circuit court abused its discretion in allowing this

testimony of plaintiffs' expert witnesses, the prejudicial effect of which

requires that the jury verdict be set aside and defendants be granted a new

trial.  See Parker v. Illinois Masonic Warren Barr Pavilion, 299 Ill. App. 3d 495, 504-05, 701 N.E.2d 190 (1998).  

	B

	Defendants next assert that the circuit court erred in denying their motion

in limine to preclude plaintiffs from presenting evidence of the cost of capital for each of Dolan's affiliates for the three disputed transactions.  They contend

this evidence seriously prejudiced defendants because it permitted the jury to

conclude that Dolan breached his fiduciary duty by arranging financing at a

higher interest rate than the borrowing rate of his affiliates.  According to defendants, the jury's assessment of the fairness of interest rates should be

determined by the creditworthiness of the borrower (the Partnership), not the

lender (the affiliates).  The greater risk of default by the borrower permits a

higher interest rate to be charged by the lender.  Here, the Dolan affiliates

made unsecured, deeply subordinated, hazardous loans to a borrower with a track

record of chronically being on the verge of default, and being in default - loans

with no current payments of interest or security.

	Nothing in the Partnership Agreement, nor in the law, required Dolan to

seek out loan financing under similar circumstances; the record shows that loan

financing was necessitated by many economic factors.  Nor were defendants

specifically required to consult with plaintiffs before entering into any of the

challenged transactions under Section 8.5 of the Partnership Agreement, as

previously noted.  Although the supreme court in Bakalis v. Bressler, 1 Ill. 2d 72, 78-79, 115 N.E.2d 323 (1953), held that in a fiduciary relationship existing between partners, all forms of secret dealing and preference of self in matters

relating to and connected with the partnership are prohibited, here, the Partnership Agreement authorized defendants' actions and, in any event,

defendants informed plaintiffs of the challenged transactions after they were

entered into.  This information came by way of the annual financial disclosure

statements distributed to each limited partner.  A professor of accounting and

general partner in a financial analysis and evaluation firm, Mark Zmijewski,

testified for defendants, without contradiction, that these disclosures were

fair, adequate and met recognized accounting standards.  

	Plaintiffs' partnership experts conceded that a 2% to 5% "premium" over and

above the cost of capital may be earned appropriately by a managing partner by

virtue of his having arranged loans through his affiliates; however, those percentages are not reflected in the jury's verdict.  Rather, the jury appears

to have based its awards upon the testimony of plaintiffs' accountant, Mark J.

Hosfield, a partner with Arthur Andersen, who predicated damages on the

difference between the amount of interest paid by the Partnership to the Dolan

affiliates and the amount of interest paid by the affiliates for their loans, the

so-called "straight pass-through" theory.  Hosfield computed the damages

calculations by utilizing evidence of cost of capital, the affiliates' cost of

making the loans.  The evidence reveals that the Partnership's ability to secure

loans from unaffiliated sources was exhausted, forcing Dolan to secure funding

from himself and his affiliates.  The loans that were secured could not have been

on terms less favorable to the Partnership from unaffiliated third parties, as

prescribed by section 8.5(c) (quoted in footnote 1), and the cost of capital

became irrelevant.  The inclusion of this evidence was prejudicial and erroneous. 

	The verdicts on the HBO Loan, CSC Loan and management fees transaction

reveal that the jury was influenced by Dolan's failure to require his affiliates

to loan the Partnership money at the lower rate at which the financially sound

affiliates could themselves borrow money.  Plaintiffs' cost of capital evidence

permitted the jury to consider this unauthorized theory of liability and damages

to defendant's prejudice. 

	Upon retrial, the jury should not be permitted to weigh evidence of

"straight through" cost of capital to the general partners and their affiliates

as the appropriate measure of damages.

	C

	Defendants urge that all three challenged affiliate transactions were fair

under the objective standard of fairness established by Illinois law and

incorporated into the Partnership Agreement under section 8.5(c).  Defendants rely on Shlensky v. South Parkway Building Corp., 19 Ill. 2d 268, 283, 166 N.E.2d 793 (1960) (Shlensky), which pinpointed factors to be considered in assessing the fairness of transactions, including:  (1) whether the corporation received full

value in all the commodities purchased; (2) the corporation's need for the

property; (3) its ability to finance the purchase; (4) whether the transaction

was at market price, or below, or constituted a better bargain than the

corporation otherwise could have obtained in dealings with others; (5) whether

there was a detriment to the corporation as a result of the transaction; (6)

whether there was a possibility of corporate gain siphoned off by the directors

directly or through corporations they controlled; and (7) whether there was full

disclosure.  Defendants argue, and the circuit court agreed, that had not Dolan and Dolan's affiliates entered into the three transactions, considering the

Partnership's dire financial straits, the Partnership would have folded and the

limited partners would have lost not only any possible profits from their

investments, but their investments themselves.

	The Partnership Agreement gave Dolan express authorization to enter into

transactions with his affiliates in section 8.5.  Section 8.2(h) gave Dolan

authority to allow the Partnership to accrue interest on management fees and

affiliate transactions in furtherance of Partnership purposes.  The provisions

of section 8.5(c) also supported these transactions.  Section 10.1 expressly

allows interest to be paid to any partner for loans made by the partner to the

Partnership, above and beyond his capital account.  Defendants' witnesses, Bell,

Cleary and O'Leary testified that the terms of the agreements were fair and would

not have been available from unrelated third party lenders. 

	First, analyzing whether the transaction was at the market price or below,

or constituted a better bargain than the Partnership could have obtained otherwise, the testimony of Bell, Cleary and O'Leary, as financial experts, was

that the transactions with Dolan's affiliates were fair.  Further, the

transactions were required to comply with the Bank of Montreal's firm

prerequisites of subordination, no security, no acceleration clauses and no

current payments of principal or interest.  Significantly, plaintiffs offered no

countervailing evidence of outside lending offers to compare with the affiliates'

rates.  Plaintiffs' accounting expert, Hosfield, gave no opinion as to the

reasonableness or fairness of the interest rates charged in the three

transactions.  The only evidence even remotely addressing this issue was the

testimony of Weitzman and Strobeck, with respect to the allegedly permissible 2%

to 5% premium on the interest charges available to defendants.  Second, whatever

detriment may be said to have resulted to the Partnership from the transactions,

clearly, they ultimately saved the Partnership.  Third, there was no evidence

that any Partnership gain was siphoned off by defendants from interests they

controlled.  Finally, defendants disclosed the loans in the Partnership's annual

financial statement to each limited partner, the amount of principal owed, the

amount of interest accrued, the amount of unpaid cumulative unpaid interest, the

interest rate and that the obligations were subordinated to the bank debts.8

	Under Illinois law, a general partner will not be deemed in breach of his

fiduciary duties where he has complied with an express authorization in the

partnership agreement.  Adler v. William Blair & Co., 271 Ill. App. 3d 117, 131- 32, 648 N.E.2d 226 (1995).  Plaintiffs here challenged the fairness of the interest rates; however, Dolan had express authority under the Partnership

Agreement to enter into such transactions.  Evidence of fairness was adduced through the testimony of Dolan, Bell, Cleary, O'Leary and the terms of the

Continental and Montreal Bank loans.  Although only a modicum of countervailing

evidence was presented by plaintiffs, in the form of plaintiffs' partnership

experts' assertion that a premium amounting to 2% or 5% was a permissible level

of profit, a jury question of fairness was thereby created, requiring a new

trial.

	D

	Defendants next assert that plaintiffs failed to prove any legally

cognizable damages proximately caused by the Partnership having entered into the

three challenged transactions because the Partnership benefitted greatly from

Dolan's actions in arranging for the affiliate loans that permitted the

Partnership to survive and to continue its operations.  Accordingly, defendants

deem themselves entitled to judgment as a matter of law.  Kennan v. Checker Taxi Co., 250 Ill. App. 3d 155, 159-60, 620 N.E.2d 1208 (1993).

	The determination of damages is the function of the jury as a question of

fact (Snover v. McGraw, 172 Ill. 2d 438, 447, 667 N.E.2d 1310 (1996) (Snover)) and it is within their province to weigh conflicting evidence.  Ross v. Aryan International, Inc., 219 Ill. App. 3d 634, 647, 580 N.E.2d 937 (1991); Piper v. Moran's Enterprises, 121 Ill. App. 3d 644, 653, 459 N.E.2d 1382 (1984).  A jury's award of damages is entitled to substantial deference.  Snover, 172 Ill. 2d at 447.  A reviewing court will not upset a jury's award of damages "unless a proven

element of damages was ignored, the verdict resulted from passion or prejudice,

or the award bears no reasonable relationship to the loss suffered."  Gill v. Foster, 157 Ill. 2d 304, 315, 626 N.E.2d 190 (1993).

	Defendants agreed that the jury instructions requiring  plaintiffs to prove

damages calculated as "the difference between the amounts of money Plaintiffs would have received had there been no breach of duty and the amount of money

actually received," were proper.  Defendants claim, however, that plaintiffs

failed to prove any damages were proximately caused by any conduct by or breach

of defendants.  At trial, plaintiffs used numerous charts to explain evidence of

damages.  During opening statements, defense counsel agreed that the numbers in

plaintiffs' charts were correct and Dolan's testimony corroborated the figures. 

Nevertheless, the law requires that, within a fair degree of probability, the

evidence must establish a basis for the assessment of damages.  Schatz v. Abbott Laboratories, Inc., 51 Ill. 2d 143, 148, 281 N.E.2d 323 (1972).

	Here, the record shows evidence of the amount of interest Dolan's

affiliates charged as a result of the three challenged transactions, and evidence

of changing market interest rates over the lives of the loans.  Although Dolan

agreed to the accuracy of the arithmetic, he did not agree that the varying

interest rates proximately caused cognizable legal damages to plaintiffs. 

	Nevertheless, the evidence adduced through plaintiffs' partnership experts

as to the reasonableness of a 2% to 5% premium available to Dolan and his

affiliates stands as some evidence of damage when compared to the interest

actually charged them.  Plaintiffs' assertion, without citation to authority,

that Dolan and his affiliates should have extended to them the use of below-

market-rate funds that were otherwise unavailable to the Partnership without

charge, is without basis in the law.  

	Plaintiffs' evidence as to damages proximately caused by the three

challenged Dolan affiliate loans does not support the sums awarded to them by the

jury.  The damage award must be vacated and the cause remanded for a new trial

as to this issue.

	II

	Defendants next argue that plaintiffs' counsel deliberately prejudiced

defendants by telling the jury during closing arguments that Dolan was a

"billionaire," in direct violation of a court order barring reference to Dolan's

wealth.  Because this issue may re-emerge on retrial, it will be considered here. 

	During closing argument, referring to the management fees transaction,

plaintiffs' counsel quoted Dolan's testimony that the management fees were just

like salary, and stated, "[i]t isn't like salary.  Dolan's a billionaire.  He

doesn't need salary."  Defense counsel promptly objected to these statements,

which the circuit court sustained.

	Defendants rely on Lorenz v. Siano, 248 Ill. App. 3d 946, 953, 618 N.E.2d 666 (1993) and Fopay v. Noveroske, 31 Ill. App. 3d 182, 199, 334 N.E.2d 79 (1975) (Fopay) for the proposition that evidence of the financial condition of the parties is irrelevant and highly prejudicial on the subjects of liability and

compensatory damages.9  The challenged characterization by plaintiffs' counsel was impermissible and prejudicial.  

	Plaintiffs' counsel's statements also violated an order in limine barring statements involving Dolan's wealth, which can be a ground for a new trial.  Rutledge v. St. Anne's Hospital, 230 Ill. App. 3d 786, 794-95, 595 N.E.2d 1165 (1992); Cancio v. White, 297 Ill. App. 3d 422, 434, 697 N.E.2d 749 (1998).  Improper comments at closing argument do not constitute reversible error unless

substantial prejudice is shown.  Tierney v. Community Memorial General Hospital, 268 Ill. App. 3d 1050, 1061, 645 N.E.2d 284 (1994). A reviewing court will not

grant a new trial unless the argument clearly was improper, prejudicial and

denied defendant a fair trial when that trial is viewed in its entirety.  Stennis v. Rekkas, 233 Ill. App. 3d 813, 829-30, 599 N.E.2d 1059 (1992).

	Dolan testified that as a condition of keeping the Continental Bank loan,

he had to guarantee personally up to $2 million.  A $2 million guarantee does not

support an inference that the guarantor is a billionaire; nor does the return on

investments.  Additionally, the return on investments in other entities does not

permit such speculation.  

	For these reasons, plaintiffs' counsel's comments as to Dolan's

"billionaireship" were prejudicial and should not be repeated upon retrial of

this case.

	III

	Defendants next assert that the circuit court erred by refusing defendants'

statute of limitations instruction and substituting its own instruction for that

issue.10  The court refused this instruction on the basis that most of the payments for the management fees transaction and loan agreements took place

within five years from the date plaintiffs' action was filed.  The court further

stated the statute did not begin to run "by virtue of the fact that there may

have been an agreement entered into to defer payment and to charge interest or

an agreement entered into that a given - for a loan to be given at a given rate

of interest until payment is made.  I do not believe that there were any damages

suffered by the Plaintiffs prior to the payment of funds."

	Each party is entitled to have the jury clearly and fairly instructed upon

each theory supported by evidence.  Seitz v. Vogler, 289 Ill. App. 3d 1029, 1044, 682 N.E.2d 766 (1997) (Seitz).  A reviewing court will not disturb the circuit court's determination of instructions unless the court clearly abused its

discretion.   Seitz, 289 Ill. App. 3d at 1044.  In determining the propriety of the tendered instructions, the test is whether the jury was fairly, fully and

comprehensively informed about the relevant principles, considering the

instructions in their entirety.  Leonardi v. Loyola University, 168 Ill. 2d 83, 100, 658 N.E.2d 450 (1995).

	Defendants rely on DeSantis v. Brauvin Realty Partners, Inc., 248 Ill. App. 3d 930, 935-38, 618 N.E.2d 548 (1993) (DeSantis) in urging that the limitations period begins to run when plaintiff discovered or reasonably should have

discovered facts sufficient to put him on notice of the fiduciary breach.  In

DeSantis, the court held that a five-year cause of action for fraudulent misrepresentation accrued on the date on which plaintiff could have asserted that

the partnership defrauded him and sought recission of contract as a remedy.  248

Ill. App. 3d at 937-38.  The court ruled that the date plaintiff suffered actual

injury was irrelevant.  DeSantis, 248 Ill. App. 3d at 936.  The DeSantis court, quoting Kaiser v. Olson, 105 Ill. App. 3d 1008, 1014, 435 N.E.2d 113 (1981), stated, "'[o]ne is not permitted to lie back and speculate as to whether

avoidance or affirmance of a contract will ultimately prove more profitable.'" 

248 Ill. App. 3d at 938.  Defendants further rely on Armstrong v. Guigler, 174 Ill. 2d 281, 294, 673 N.E.2d 290 (1996), which holds that in an action for breach of fiduciary duty, the statute of limitations is five years.  

	Plaintiffs respond that defendants breached their fiduciary duty by not

disclosing material facts of the three disputed transactions and any failure on

their part to use even ordinary diligence to discover undisclosed facts is

excused; therefore, any statute of limitations does not run until plaintiffs have

actual knowledge of the facts upon which their claims are based. Plaintiffs cite

no authority in support of their theory that the statute of limitations should

begin to run only after the money was taken.11

	There was evidence that plaintiffs could have brought a breach of fiduciary duty claim seeking declaratory or injunctive relief more than five years before

they actually brought suit and before any payments actually were made.  Battaglia v. Battaglia, 231 Ill. App. 3d 607, 616, 596 N.E.2d 712 (1992).  Plaintiffs' claim for breach of fiduciary duty here is based on how defendants established the interest rates, not the accrual of money based on those rates.  The annual

financial statements did in fact disclose that the Partnership had borrowed funds

from Dolan affiliates.  The financial statements also disclosed that interest was

being charged on deferred management fees, the amount of interest charged on

those fees, the amount of principal owed on the affiliate loans, the amount of

interest accrued, the amount of cumulative unpaid interest, the interest rates for the loans and that the three obligations were subordinated to the bank debt.

Professor Zmijewski testified that these disclosures were fair, adequate and met

recognized accounting standards.  The private offering memoranda for Dolan's

sublimited partnerships, COI, CCI and CHI, all stated, "AN INVESTMENT IN THE

PARTNERSHIP IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK OF LOSS."  See DeSantis, 248 Ill. App. 3d at 931.  The memoranda also had sections discussing the details of why investing in cable television is highly speculative. 

	In Lagen v. Balcor Co., 274 Ill. App. 3d 11, 17, 653 N.E.3d 968 (1995) (Lagen), plaintiffs alleged defendants' failure to disclose material facts fraudulently induced plaintiffs to become limited partners in various real estate

enterprises.  Analyzing the limited partnership's private placement memorandum,

the court stated, "'[s]ilence in a business transaction does not amount to

fraud.'"  Lagen, 274 Ill. App. 3d at 17, quoting Heider v. Leewards Creative Crafts, Inc., 245 Ill. App. 3d 258, 269, 613 N.E.2d 805 (1993) (Heider).  Only when a party's silence is "'accompanied by deceptive conduct or suppression of

material facts resulting in an active deception does the party have a duty to

speak.'"  Lagen, 274 Ill. App. 3d at 17, quoting Heider, 245 Ill. App. 3d at 269.

	Nothing in the record demonstrates that defendants participated in active

deception of the limited partners.  Private offering memoranda were proposed only

to persons with sophistication in business and financial affairs.  From the

information revealed to plaintiffs, they reasonably could have discovered

defendants' alleged breach from the "Notes to Financial Statements," starting as

early as 1985, which disclosed that the Partnership had an agreement with CSSC

to provide management services.  The statement also noted that interest was being

accrued on the unpaid balance of management fees at prime plus two percent. 

Plaintiffs filed their breach of fiduciary claim on November 29, 1995.  Therefore, the circuit court should have allowed a statute of limitations

instruction for the HBO Loan and management fees transaction, and must do so on

retrial.

	The circuit court did allow a statute of limitations jury instruction for

the CSC Loan.  Defendants argue that they are entitled to judgment for the CSC

Loan because the jury verdict found that plaintiffs' claim accrued more than five

years before they filed suit. The statute of limitations begins to run when a

reasonable person possesses sufficient information to be put on inquiry to

determine whether a cause of action exists.  Knox College v. Celotex Corp., 88 Ill. 2d 407, 415-16, 430 N.E.2d 976 (1981).  Similar to the management fees

transaction and HBO Loan, plaintiffs possessed sufficient information to be put

on inquiry starting in 1986, where the "Notes to Financial Statements" noted the

CSC Loan for $10 million and the 14% interest rate converted to a $19,665,061

note bearing interest at 14% per annum.  Plaintiffs filed their cause of action

on November 29, 1995.  

	As noted, the jury in the instant case specifically found that prior to

November 29, 1990, plaintiffs had "actual knowledge sufficient to put them on

notice that they may have suffered injury" with respect to the CSC Loan.  The

circuit court should have barred plaintiffs from recovery for the CSC Loan; it

was error not to have done so.  See Benton v. Vonnahmen, 288 Ill. App. 3d 199, 205-06, 679 N.E.2d 1270 (1997). 

	Accordingly, that portion of the jury verdict relating to damages by virtue

of interest charged by Dolan on deferred management fees and interest rates for

the HBO Loan he negotiated are vacated, the judgment is reversed and the cause

remanded for a new trial as to when plaintiffs should have inquired and taken

appropriate action.  The verdict concerning the CSC Loan must be vacated and the judgment is reversed without remandment.

	IV

	Defendants next maintain that the circuit court erred in submitting a

verdict form without distinguishing between defendants Dolan and CSSC.  The

verdict form asked whether defendants breached their fiduciary duty to plaintiffs

by causing Cablevision of Chicago to pay interest on management fees, the HBO

Loan and the CSC Loan.  Defendants submitted a verdict form listing verdicts for

Dolan and CSSC separately.  Plaintiffs do not dispute that Dolan and CSSC are

separate legal entities, but rely on Farnsworth v. Lamb, 6 Ill. App. 3d 785, 790- 91, 286 N.E.2d 74 (1972), arguing that each defendant was not entitled to a

separate determination of liability because they acted jointly to cause

plaintiffs' injuries.  In Farnsworth, however, defendants were found to have obtained an improper payment jointly and divided the money between them.  6 Ill. App. 3d at 790-91.  There is no record evidence that CSSC and Dolan acted in

concert as the basis of a breach of fiduciary duty, particularly since CSSC

became a general partner of Cablevision of Chicago only after the three

transactions already had been arranged.  The jury should have been permitted to

make a separate determination of liability as to each defendant.  See Wright v. Royse, 43 Ill. App. 2d 267, 282, 193 N.E.2d 340 (1963); Curtis v. Kaderbek, 321 Ill. App. 471, 475, 53 N.E.2d 277 (1944). 

	Upon retrial of the case, separate verdict forms as to each defendant

should be submitted to the jury.

	V

	Defendants last contend that they are entitled to judgment on the

individual plaintiff claims because there is no evidence that any plaintiff

suffered a distinct personal injury.  Plaintiffs assert both individual and derivative claims based on the same alleged injury: that the amount of money they

received after the sale of the Partnership in 1995 was reduced because defendants

caused the Partnership to pay Dolan and his affiliates unauthorized or excessive

interest on the three challenged transactions.  Defendants claim that any such

injury resulting from the Partnership's payment of interest was an injury to the

Partnership, which affected all limited partners derivatively and in common. 

Plaintiffs concede that any money defendants improperly took from the limited

partners who are not named in this lawsuit must be returned to the partnerships

through the derivative actions, but argue the named plaintiffs are entitled to

proceed directly.

	Limited partners are in positions analogous to shareholders and cannot

pursue individual actions for damages to their interests in a limited

partnership.  Northern Trust Co. v. VIII South Michigan Associates, 276 Ill. App. 3d 355, 363, 657 N.E.2d 1095 (1995) (VIII South Michigan).  Shareholders of a corporation who are injured by a diminution in the value of their shares cannot

proceed individually to assert the corporate claim, but must proceed by means of

a derivative suit.  VIII South Michigan, 276 Ill. App. 3d at 363.  Plaintiffs maintain they did not bring a cause of action because the value of their

interests in the Partnership diminished, but because the general partners

diverted much of the proceeds from the sale of the assets of the Partnership to

themselves through their affiliates.

	In Frank v. Hadesman and Frank, Inc., 83 F.3d 158, 160 (7th Cir. 1996) (Frank), the court looked to Illinois law to decide whether plaintiff shareholder's claim properly was asserted as a derivative action in a diversity

jurisdiction determination and found that "when investors have been injured in common, they must continue to act through their collective - the corporation."12  In the case sub judice, plaintiffs could prevail only by showing a breach of fiduciary duty to the Partnership.  Therefore, plaintiffs were required to bring

their claims in a derivative action, entitling defendants to judgment as a matter

of law with regard to plaintiffs' individual claims.  

	The verdicts favoring individual plaintiffs are set aside and the judgment

is reversed in this aspect of the case.  Upon remandment, the circuit court is

directed to permit amendments to existing pleadings so as to reflect the

foregoing conclusions.

	VI

	On cross-appeal, plaintiffs initially assert that the circuit court erred

in allowing defendants indemnification with respect to attorneys' fees and costs. 

Defendants maintain that the Partnership Agreement specifically provided for

indemnification for attorneys' fees.13

	Interpretation of the Partnership Agreement requires de novo review.  Ford v. Dovenmuehle Mortgage, Inc., 273 Ill. App. 3d 240, 244, 651 N.E.2d 751 (1995) (interpreting a written contract).  Plaintiffs argue that section 8.9 should not

apply in this case because the jury found Dolan was not acting in furtherance of

the Partnership's interests; rather, he was acting to benefit himself at the

expense of the limited partners and the Partnership.  Plaintiffs rely on Wright v. City of Danville, 174 Ill. 2d 391, 408-09, 675 N.E.2d 110 (1996) (Wright), in asserting that parties who are found guilty of self-dealing are not entitled to

indemnification.  In Wright, the court determined that plaintiffs were not entitled to indemnification where they were not serving a public purpose or

acting pursuant to authority within the scope of their employment in committing

criminal official misconduct (174 Ill. 2d at 409); however, the court there was interpreting a statute allowing for the indemnification of local public

employees, which is not applicable to the instant case.  See 174 Ill. 2d at 401.

	Contracts of indemnity against one's own negligence have been found valid

and enforceable.  Burlington Northern Railroad Co. v. Pawnee Motor Service, Inc., 171 Ill. App. 3d 1043, 1045, 525 N.E.2d 910 (1988).  An indemnification agreement

is like any other contract; a court must give effect to the intention of the

parties as determined from the language of the agreement, where no ambiguity

exists.  Fort Dearborn Cartage Co. v. Rooks Transfer Co., 136 Ill. App. 3d 371, 375, 483 N.E.2d 618 (1985).

	The plain language of the Partnership Agreement in this case unequivocally

would have covered defendants' liability arising from any breach of fiduciary

duty.  Therefore, the circuit court correctly held that defendants were entitled to reimbursement.

	VII

	Plaintiffs next contend the circuit court erred by not allowing forfeiture

damages after the verdict.  The court found that Dolan's conduct was not so egregious that forfeiture damages were warranted.

	The appropriate remedy for breach of a fiduciary duty to a principal is

within the equitable discretion of the court.  In re Marriage of Pagano, 154 Ill. 2d 174, 190, 607 N.E.2d 1242 (1992).  As a matter of public policy, a willful and

deliberate breach of a fiduciary duty requires complete forfeiture of all

compensation during the period of the breach.  ABC Trans National Transport, Inc. v. Aeronautics Forwarders, Inc., 90 Ill. App. 3d 817, 838, 413 N.E.2d 1299 (1980).  In Dolezal v. Plastic and Reconstructive Surgery, S.C., 266 Ill. App. 3d 1070, 1086, 640 N.E.2d 1359 (1994), the court declined to award defendant the

compensation it paid to plaintiff during the period of his breach of fiduciary

duty because the compensation to be gained was de minimus.

	In the instant case, the breach, if any, was not shown to have been willful and deliberate.  Defendants entered into the three challenged transactions in

order to comply with prerequisites for bank loans.  There is no evidence that

Dolan sought loans for the Partnership in order to profit on the interest rates. 

In fact, if Dolan had not entered into these transactions, the Partnership would

not have survived, and plaintiffs would have lost their entire investments. 

Accordingly, the circuit court's decision to deny forfeiture damages must be

affirmed.

	VIII

	Plaintiffs next claim that they were entitled to a trial on punitive

damages because there was substantial evidence that defendants willfully and

knowingly breached their fiduciary duties.  The decision to submit the issue of

punitive damages to the jury is a matter reserved to the circuit court and its

decision will not be reversed absent an abuse of discretion.  Levy, 268 Ill. App. 3d at 378-79.  The purpose of punitive damages is not to provide compensation to

plaintiffs, but to punish defendant and for deterrence; therefore, punitive

damages can be awarded only for conduct that is outrageous either because

defendant's acts are done with evil motive or a reckless indifference to others'

rights.  Loitz v. Remington Arms Co., 138 Ill. 2d 404, 415-16, 563 N.E.2d 397 (1990).

	The record here indicates that defendants did not enter into the three

disputed transactions based on evil motive or reckless indifference to the

limited partners' rights.  Defendants' actions were not secret and did not amount

to punitiveactionable misconduct.  Further, plaintiffs rely only on the multi-million

dollar verdict as proof that defendants acted willfully, but present no other

evidence of conduct amenable to a punitive damages award. 

	The circuit court did not abuse its discretion in deciding not to submit

a punitive damages issue to the jury.

	IX

	Plaintiffs lastly assert that because material information was not

disclosed to them, the circuit court erred in submitting to the jury the statute

of limitations instruction on the CSC Loan.  This issue has been addressed

previously under Point III of the opinion, concluding that plaintiffs' cause of action on this loan was time-barred from recovery by virtue of the statute of

limitations.

	For the reasons set forth above, the judgment is affirmed in part, reversed in part, and in part reversed and remanded for a new trial.

	Affirmed in part, reversed in part, and reversed and remanded in part, with

instructions.

	HOFFMAN and SOUTH, JJ., concur.

Footnote 6 from original:

Defendants proposed this jury instruction.  Further, Defendants submitted

fiduciary duty jury instructions to the circuit court which stated:

"[W]here a partnership agreement exists, and the

agreement specifically sets forth what the fiduciary is

required to do or not do with respect to a matter, the

terms of the partnership agreement should be considered

by you in determining whether Defendants met their

fiduciary duty of exercising good faith, honesty and

fairness in dealing with Plaintiffs and the funds of

Cablevision of Chicago."  (10C. 2263)

Parked material from pages 17-19:

Second, defendants assert that admission of evidence of the Dolan Affiliate

lenders' "cost of capital"14 seriously prejudiced defendants because it encouraged the jury to conclude that Dolan breached his fiduciary duty by

arranging financing for the Partnership at an interest rate higher than his

affiliates could themselves borrow from a bank.  Defendants aver cost of capital

is irrelevant in the instant case where there is no basis in the Partnership

Agreement or Illinois law that the fairness of the three challenged transactions

should be judged against the borrowing rate of another company making the loan. 

Third, defendants maintain that the evidence at trial established the affiliate

loans to the Partnership were fair and authorized.  Fourth, defendants claim

plaintiffs failed to prove any damages caused by the three challenged

transactions because plaintiffs actually benefitted from the transactions, which

permitted the Partnership to keep operating.  Finally, defendants argue that

plaintiffs' counsel prejudiced the jury by stating in closing argument that Dolan

was a "billionaire" in direct violation of a court order barring reference to

Dolan's wealth.

	Plaintiffs contend that their expert witnesses were permitted to testify

because they have unique knowledge not within the jury's knowledge, and

therefore, the experts merely explained what a general partner's custom and

practice is in a situation where the partnership needs funding and a partner

enters into a loan or management services agreement on behalf of the partnership. 

Plaintiffs assert that admission of defendants' cost of capital was proper and

highly relevant to the instant case.  Without admitting evidence for the cost of capital, according to plaintiffs, the jury would not be able to measure damages

for breach15 because in all the disputed transactions, defendants set the terms for their own compensation.  Next, plaintiffs maintain that defendants failed to

prove the affiliate loans were fair and authorized.  Although the general

provisions of the Partnership Agreement authorized Dolan to enter into loan

agreements, in using his discretion to set the terms, plaintiffs contend he

violated his fiduciary obligations.  Plaintiffs next aver that they suffered

actual damages where Dolan overcharged the limited partners for the financing of

the three disputed transactions.  Defendants did not offer any calculations that

would have shown a different damages figure than those plaintiffs presented and

plaintiffs evidence of damages was properly admitted into evidence without

objection.  Finally, plaintiffs argue that the contested statements made during

closing arguments were not prejudicial and even if the statement was improper,

any possible prejudice was cured when the court promptly sustained defendants'

objections.

	In reviewing the circuit court's denial of defendants' motion for judgment

notwithstanding the verdict, or in the alternative a new trial, two separate

standards of review are applicable.  "Judgment notwithstanding the verdict should

not be entered unless the evidence, when viewed in the light most favorable to

the opponent, so overwhelmingly favors the movant that no contrary verdict based

on that evidence could ever stand."  Holton v. Memorial Hospital, 176 Ill. 2d 95, 109, 679 N.E.2d 1202 (1997).  Judgment notwithstanding the verdict is not

appropriate if "reasonable minds might differ as to inferences or conclusions to be drawn from the facts presented."  Pasquale v. Speed Products Engineering, 166 Ill. 2d 337, 351, 654 N.E.2d 1365 (1995).  The reviewing court should not usurp

the function of the jury and substitute its judgment on questions of fact fairly

submitted, tried and determined from the evidence which did not greatly

preponderate either way.  Maple v. Gustafson, 151 Ill. 2d 445, 452-53, 603 N.E.2d 508 (1992) (Maple).  The standard of review of decisions on motions for judgments notwithstanding the verdict on plaintiffs' breach of fiduciary duty claims and

on the individual limited partner claims is de novo.  McClure v. Owens Corning Fiberglas Corp., 188 Ill. 2d 102, 132, 720 N.E.2d 242 (1999).  

	A circuit court, by contrast, will order a new trial if, after weighing the

evidence, the court determines that the verdict is contrary to the manifest

weight of the evidence.  Maple, 151 Ill. 2d at 454.  "A verdict is against the manifest weight of the evidence where the opposite conclusion is clearly evident

or where the findings of the jury are unreasonable, arbitrary and not based upon

any of the evidence."  Maple, 151 Ill. 2d at 454.  Therefore, a reviewing court will not reverse a circuit court's decision with respect to a motion for a new

trial unless it finds that the circuit court abused its discretion.  Maple, 151 Ill. 2d at 455.

	For a review of evidentiary errors, the circuit court's denial of a motion

for a new trial will not be reversed absent an abuse of discretion.  Arroyo v. Chicago Transit Authority, 268 Ill. App. 3d  317, 325, 643 N.E.2d 1322 (1994).  

	The decision to give or deny a jury instruction is within the circuit

court's discretion and a new trial should only be granted if a party's right to

a fair trial has been seriously prejudiced.  Thompson v. Abbott Laboratories, 193 Ill. App. 3d 188, 200, 549 N.E.2d 1295 (1990) (Thompson).  The standard for determining whether a circuit court abused its discretion in giving or refusing

a jury instruction is whether, assessing in totality, the instructions fully,

fairly and comprehensively informed the jury of the relevant legal principles. 

Thompson, 193 Ill. App. 3d at 193. 

Footnote 10 from original:

Illinois statutes point to the Fiduciary Obligations Act to determine fiduciary

duties for partners in partnerships, however, the Act does not define "fiduciary

duty."  760 ILCS 65/1 et seq. (West 1998).  According to the Act, "fiduciary" includes a trustee under any trust, expressed, implied, resulting or constructive

executor, administrator, guardian, conservator, curator, receiver, trustee in

bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a

corporation, public or private, public officer, or any other person acting in a

fiduciary capacity for any person, trust or estate.  760 ILCS 65/1(1) (West

1998).  Further, "[a] thing is done 'in good faith' within the meaning of this

Act, when it is in fact done honestly, whether it be done negligently or not." 

760 ILCS 65/1(2) (West 1998).  Illinois statutes only define "fiduciary duty" in

the context of care for pension funds. The Illinois Pension Code states that "[a]

fiduciary with respect to a retirement system or pension fund established under

this code shall discharge his or her duties * * * (b) [w]ith the care, skill,

prudence and diligence under the circumstances then prevailing that a prudent man

acting in a like capacity and familiar with such matters would use in the conduct

of an enterprise of a like character with like aims."  40 ILCS 5/109(b) (West

1998).  

	The supreme court in Couri v. Couri, 95 Ill. 2d 91, 98, 447 N.E.2d 334 (1983), stated that a fiduciary relationship encompasses the duty of exercising

good faith, honesty and fairness in all dealings and transactions relating to the

partnership.  "[I]n any fiduciary relationship, the burden of proof shifts to the

fiduciary to show by clear and convincing evidence that a transaction is

equitable and just."  Labovitz v. Dolan, 189 Ill. App. 3d 403, 413, 545 N.E.2d 304 (1989) (Labovitz), quoting Bandringa v. Bandringa, 20 Ill. 2d 167, 170 N.E.2d 116 (1960) (Bandringa).  "Where there is a question of breach of a fiduciary duty of a managing partner, all doubts will be resolved against him, and the managing

partner has the burden of proving his innocence."  Saballus v. Timke, 122 Ill.  App. 3d 109, 117-18, 460 N.E.2d 755 (1983); Bakalis v. Bressler, 1 Ill. 2d 72, 78, 115 N.E.2d 323 (1953). 

Parked material from page 23:

It may be prejudicial error to allow an expert witness to testify regarding what

legal research shows with respect to a key legal term in a case if the jury might

look to the expert witness for legal guidance on the matter rather than the

court.  Harbor Insurance Co. v. Continental Bank Corp., 922 F.2d 357, 366 (7th Cir. 1990) (applying Illinois law).  

Parked material from pages 25-26:

	A motion in limine is a motion in advance of trial in which a party seeks a ruling on the admissibility of evidence.  Beasley v. Huffman Manufacturing Co., 97 Ill. App. 3d 1, 5, 422 N.E.2d 241 (1981) (Beasley).  The purpose of the motion is to promote a trial free of prejudicial material and to avoid highlighting the

evidence to the jury through objection.  Beasley, 97 Ill. App. 3d at 5.  The ruling remains subject to reconsideration by the court throughout the trial. 

Beasley, 97 Ill. App. 3d at 4.  It is within the circuit court's discretion to grant or deny the motion.  Ficken v. Alton & Southern Ry. Co., 291 Ill. App. 3d 635, 642, 685 N.E.2d 1 (1996) (Ficken).  Whether granted or denied, a motion in limine does not preserve issues for review.  Chubb/Home Insurance Cos. v. Outboard Marine Co., 238 Ill. App. 3d 558, 567-68, 606 N.E.2d 423 (1992).  If the court denies the motion, the movant must object to the evidence when it is

offered at trial.  Pyskaty v. Oyama, 266 Ill. App. 3d 801, 819, 641 N.E.2d 552 (1994).  An issue not objected to at trial is waived on appeal.  Ficken, 291 Ill. App. 3d at 644.  In the instant case, defendants objected to testimony regarding

the fairness of assessing cost of capital for Dolan affiliates that borrowed

money to the Partnership.

	The admission of evidence is within the circuit court's discretion and the

court's ruling will not be reversed absent an abuse of that discretion.  Gill v. Foster, 157 Ill. 2d 304, 312-13, 626 N.E.2d 190 (1993) (Gill).  According to the supreme court in People v. Monroe, 66 Ill. 2d 317, 321-22, 362 N.E.2d 295 (1977), which adopted Rule 401 of the Federal Rules of Evidence, "[r]elevant evidence

means evidence having any tendency to make the existence of any fact that is of

consequence to the determination of the action more or less probable than it

would be without the evidence."  Fed. R. Evid. 401.  Defendants claim evidence of the affiliate lenders' cost of capital had no bearing on the issue of whether

the three challenged transactions were fair to the limited partners.

	"[I]n a fiduciary relationship the burden falls upon the dominant party to

establish the fairness of any transaction with or on behalf of the party

dominated, whereby the dominant party gains some value or advantage."  Bandringa, 20 Ill. 2d at 174.  In this case, Dolan, as the managing partner of the

Partnership, was the dominant party who gained financial advantage by entering

into transactions with his own affiliates.  See Bakalis v. Bressler, 1 Ill. 2d 72, 78, 115 N.E.2d 323 (1953) (Bakalis); Meinhard v. Salmon, 249 N.Y. 458, 462, 164 N.E. 545 (1928) (Salmon).  For a managing partner, according to Chief Judge Benjamin N. Cardozo, "the rule of undivided loyalty is relentless and supreme,"

and "[e]quity refuses to confine within the bounds of classified transactions its

precept of a loyalty that is undivided and unselfish."  Salmon, 249 N.Y. at 467- 68.  Further, "[i]f conflicting inferences are possible as to abuse or

opportunity, the trier of fact must make the choice between them."  Salmon, 249 N.Y. at 467.

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Plaintiffs claim that defendants' argument presupposes that plaintiffs were

informed of what defendants were accruing and why.  Also, a party seeking

injunctive relief must establish that it has a clear right which ought to be

protected; that it is likely to succeed on the merits; that there is no adequate

remedy available at law; and that irreparable harm will occur if an injunction

is not granted.  American National Bank & Trust Co. v. Chicago Title & Trust Co., 134 Ill. App. 3d 772, 776, 481 N.E.2d 71 (1985).  Plaintiffs contend they could

not seek this relief where the action they might have brought would have been

subject to dismissal because the accrual of interest rates was not a clear right which ought to be protected.

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	"The form of verdicts is a matter within the sound discretion of the

circuit court."  Gausselin v. Commonwealth Edison Co., 260 Ill. App. 3d 1068, 1077, 631 N.E.2d 1246 (1994).  The law regarding separate verdict is provided in

section 2-1201(c) of the Code of Civil Procedure:

"If there are several counts in a complaint,

counterclaim or third-party complaint based on different

claims upon which separate recoveries might be had, the

court shall, on the motion of any party, direct the jury

to find a separate verdict upon each claim."

735 ILCS 5/2-1201(c) (West 1998).

The joint committee comments to this subsection of the statute explain that:

"Separate verdicts are appropriate only when recovery on

different demands is sought in the same complaint. 

Therefore, the words 'upon which separate recoveries

might be had' have been added, making clear that the

provision authorizing separate verdicts applies only to separate causes of action based upon separate transactions."  Ill. Ann. Stat., ch. 110, par. 2- 1201(c), Joint Committee Comments, at 4 (Smith-Hurd

1983).  (Emphasis added.)

	The instant case was tried under one theory for breach of fiduciary duty

based on three separate transactions.  Therefore, a single verdict form was

appropriate.  Accordingly, the circuit court did not abuse its discretion.

At trial, Robert Weitzman, plaintiffs' expert witness for partnerships, testified

to custom and practice for a fiduciary general partner entering into loans and

charging management fees on behalf of a partnership.  Although section 8.5(c) of

the Partnership Agreement granted Dolan general authority to enter into loans on

behalf of the partnership without receiving consent of the limited partners

first, Weitzman testified that in every fiduciary relationship of general partner

to limited partner, the general has to act reasonably and fairly toward his

limiteds at all times.  In the instant transaction Dolan's cost floated down, and

the limiteds' costs stayed where they started, which was not fair.

	The circuit court tendered jury instructions for elements of a breach of

fiduciary claim that stated:

	"First, the existence of a fiduciary duty must be

proven.  I instruct you that Defendants owe Cablevision

of Chicago a fiduciary duty by virtue of the partnership

agreement.

	Second, there must be a breach of fiduciary duty. 

I instruct you that Defendants have the burden of

proving by clear and convincing evidence that they met

their fiduciary obligation with regard to each of the

three challenged transactions by exercising good faith,

honesty and fairness in dealing with Cablevision of

Chicago and its funds.

	Third, there must be damages proximately caused by

any breach you may find.  I instruct you that Plaintiffs

have the burden of proving that any damages they

suffered from any breach you may find were proximately caused by that breach." 

In Adler, the plaintiff investors brought suit against the general partners for breach of fiduciary duty.  The court held that the private placement memorandum

had discussed possible conflicts of interest arising out of management fees and

had warned that tax changes could affect desirability of investments.  Plaintiffs

premised their breach of fiduciary duty claim on defendants' failure to abandon

the primary purpose of the partnership in the face of tax law changes.  The court

ruled that defendants had no duty to do so.  Adler, 271 Ill. App. 3d at 132.  

189 Ill. App. 3d at 412.  The gravamen of plaintiffs' complaint in Labovitz was that the general partner, the same defendant in the instant case (Dolan), refused

unreasonably to distribute cash and thereby forced plaintiffs to continually dip

into their own resources in order to pay heavy tax charges on large earnings in

a calculated effort to force them to sell their interests to an entity which

defendant owned and controlled at a price well below at least the book value of

those interests.  The court held that although the articles of partnership

clearly gave the defendant discretion to distribute cash as he deemed

appropriate, that discretion was encumbered by the supreme fiduciary duty of

fairness, honesty, good faith and loyalty to the limited partners.  Labovitz, 189 Ill. App. 3d at 416.  "Language in an agreement such as 'sole discretion' does

not metamorphose the [partnership agreement] into an unrestricted license to

engage in self-dealing at the expense of those to whom the managing partner owes

such a duty."  Labovitz, 189 Ill. App. 3d at 416-17.  

Defendants cite to two cases where they specifically misstate the law.  First

defendants cite generally to Swavely v. Freeway Ford Truck Sales, Inc., 298 Ill. App. 3d 969, 977-78, 700 N.E.2d 181 (1998) (Swavely) to state their proposition that indemnification provisions which expressly exempt indemnification for gross

negligence and willful misconduct will not be held unenforceable as against

public policy unless a specific statute or legal authority prohibits such

indemnification.  Swavely involved an action by a wife of a deceased employee to recover sums allegedly owed under the employee's wage compensation agreement, not an indemnification agreement.  Further, defendants rely on Kelley v. Astor Investors, Inc., 106 Ill. 2d 505, 478 N.E.2d 1346 (1985) (Kelley) to propose that the Supreme Court of Illinois has expressly held that a party may contract to protect itself from liability for breach of fiduciary duty.  Kelley does not support this proposition.  The document at issue in Kelley was an exculpatory clause in a declaration of condominium, not an indemnification agreement.

	In Levy, the court held an award of punitive damages in an action by a shareholder against corporate directors for breach of fiduciary duty and

usurpation of corporate opportunity was not an abuse of discretion where the

directors engaged in a secret stock purchase agreement, intentionally depleted

large amounts of corporate assets for the benefit of a new corporate entity and

performed duties for the new entity while on the payroll of the corporation.  268

Ill. App. 3d at 379-81.  In Lurz v. Panek, 172 Ill. App. 3d 915, 923, 527 N.E.2d 663 (1988) the court held that an attorney's fraud, breach of fiduciary duty and

conversion stemming from misconduct surrounding the disbursement of a judgment

draft obtained in favor of his client in an underlying personal injury suit

warranted an award of punitive damages.

	Defendants cite a second case, Labovitz v. Dolan, 189 Ill. App. 3d 403, 412, 545 N.E.2d 304 (1989), in stating that Illinois law plainly permits a

general partner and his limited partners to define their fiduciary relationship

by contract, provided that they do not destroy its fiduciary character. Dolan's broad discretion in the instant case, he nevertheless owed his limited partners

a fiduciary duty, encompassing the duty of exercising good faith, honesty and

fairness in his dealings with them and the funds of the partnership.  Labovitz, 189 Ill. App. 3d at 412.  Defendants' fiduciary duty exists concurrently with the

obligations set forth in the Partnership Agreement, whether or not expressed

therein.  Labovitz, 189 Ill. App. 3d at 412.  Defendants claimed plaintiffs failed to introduce any evidence to rebut defendants' evidence that no unrelated

third party would have refinanced the three challenged loans at a lower interest

rate with deep subordination, no security, no acceleration rights, and no current

payments of principal or interest.  Once the fiduciary exercises his discretion

and enters into a contract which benefits him, the fiduciary has the burden of

proving by clear and convincing evidence that the contract was fair.  Bandringa, 20 Ill. 2d at 170.  

	The circuit court is given broad discretion on evidentiary questions such

as the admission of expert testimony.  Ferentchak v. Village of Frankfort, 121 Ill. App. 3d 599, 609, 459 N.E.2d 1085 (1984), rev'd on other grounds, 105 Ill. 2d 474, 475 N.E.2d 822 (1985).  The permissive use of expert testimony is favored

in any case where the testimony would assist the jury in its understanding of the

facts.  People v. Jordan, 103 Ill. 2d 192, 208, 469 N.E.2d 569 (1984).  

Weitzman also repeatedly injected his opinions on the proper legal standard of

fiduciary duty during cross-examination.  When asked about section 8.5 of the

Partnership Agreement, Weitzman testified:

"Q. And there's nothing in 8.5, is there, which requires

the consent of the limited partners before the general

partner enters into such transactions, is that correct?

A. There is nothing in the partnership agreement that

provides that, but his fiduciary obligation is still there."  (Emphasis added.)

When Weitzman was examined on his opinions regarding disclosure of information

to the limited partners, he testified:

"Q. So, then, if your - if it was to turn out that the

limited partners do, in fact, read the financial

statements, then that would undermine your opinion to

some extent?

A. I don't believe so in this case, I believe that my

opinion is being generated by the obligations of the fiduciary to his passive partners ***."  (Emphasis added.)

The crux of their contention was based on the fact that defendants did not seek

outside advice to determine if better rates existed than those offered by the

Dolan affiliates.