Court Opinion

ID: 3146380
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:15:28.310118+00
Date Added: 2024-06-11T11:55:12.027451
License: Public Domain

SIXTH DIVISION
                                               March 10, 2006

No. 1-05-0496

MICHAEL F. ROTI,                          )    Appeal from the
                                          )    Circuit Court of
          Plaintiff-Appellant,            )    Cook County
                                          )
     v.                                   )
                                     )
SAMUEL J. ROTI,                           )    Honorable
                                          )    Paddy H. McNamara,
          Defendant-Appellee.             )    Judge Presiding

     PRESIDING JUSTICE McNULTY delivered the opinion of the

court:

     Michael Roti sued his cousin Samuel Roti for breach of

contract and on a theory of promissory estoppel.   The trial court

dismissed the complaint, holding that the Frauds Act (740 ILCS

80/2 (West 1996)) barred the claim because Michael sought an

interest in lands without a signed contract to support the claim.

 In a proposed amended complaint Michael pled that he sought only

a percentage of the profit Samuel earned from sale of land.      In

the alternative, Michael sought relief in quantum meruit.       The

trial court disallowed the amendment.

     We agree with the trial court that the Frauds Act barred the

original complaint.   Michael's judicial admissions in the initial

complaint defeat the contract and estoppel claims in the amended

complaint.   Michael also failed to plead facts that could support

a finding that Samuel paid Michael less than the reasonable value

of his services, so the proposed amendment did not state a claim

in quantum meruit.    Therefore we affirm the trial court's
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judgment.

                              BACKGROUND

     Michael and Samuel worked together in the real estate

business for several years without a written contract.      Michael

took a regular salary from the business for most of those years.

 After they stopped working together in 2001, Samuel paid Michael

an additional $247,561.

     Michael filed this lawsuit in September 2004.     He alleged:

            "In the fall of 1996, Samuel approached Michael

     about joining him in the real estate business.     Samuel

     promised Michael equivalent pay plus 10% of Samuel's

     interest in the current real estate and all future real

     estate ventures if Michael would come to work with him.

     ***

            *** Over the next four years, Michael performed

     substantial legal, accounting, tax and management

     services for Samuel personally, as well as for each of

     the real estate properties and other potential projects

     and business opportunities.

                                 * * *

            ***   Michael was forced from the business *** in

     the fall of 2001.

            ***   Michael and Samuel then had discussions

     regarding the value of Michael's 10% interest in the

     real estate. ***

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            ***

            ***    Samuel told Michael that his 10% interest was

     worth only $247,561 and prepared a writing setting

     forth how he calculated this amount.      A copy of that

     writing is attached as Ex. A.

                                     * * *

            ***    Michael *** fully performed all of his

     obligations under the agreement prior to being forced

     from the business.

                                     * * *

            ***    Michael detrimentally relied on Samuel's

     promise in devoting his time and efforts to this

     relationship to come and work with Samuel."

     Exhibit A to the complaint had no heading.      We set out its

content in full:

            "W/R

     3,731,205          Net Monies

        59,901          Reproration

    3,791,108

    - 350,000           Bills

    3,441,108

    1,998,496           Downpayment 1.3 mil. + 10% interest

    1,442,612

                        10%

       144,[261].00

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            W T

     5,000,000          Value

     2,856,953          Mor[t]gage

    2,143,047

      236,912           R.E. Taxes

    1,906,135

      230,596           Downpayment 150,000 + 10% interest

    1,675,539

       50,000           C[los]ing Cost 1%

    1,625,539

                        10%

      162,554.00

            Boca

    5,000,000           Value

    4,500,000           mor[t]gage

      500,000

       50,000           Closing Cost 1%

      450,000

            10%

       45,000.00

    W/R            +144,261

    W T            +162,554

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     Boca         + 45,000

                  +351,815.00                +351,815.00

     Overpay MR              -289,140

     paiD Back MR            +55,556

                             -233.584        -233,584

     SR total pay            -1,533,300

     4 x 60,000.00 per yr. -240,000
            SR over pay       1,293,300

                  10%

                                129,330      +129,330

                                        MR   +247,561"

     Samuel moved to dismiss the complaint under section 2-

619(a)(7) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(7)

(West 2004)).     The court granted the motion, finding that Michael
pled an unenforceable oral contract for the transfer of an

interest in land.

     Michael sought leave to file an amended complaint.    In the

proposed amendment he alleged:

     "Samuel promised Michael that, if Michael would leave

     his practice and join Samuel in business, that he and

     Michael would take equivalent pay from the income of

     the business and share the profits of the real estate

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        developments that their venture would engage in, Samuel

        taking 90% of the net profits and Michael taking 10% of

        the net profits."

He again sought to recover for breach of contract and on a theory

of promissory estoppel.       He added counts for equitable estoppel,

partnership accounting and quantum meruit.       The trial court

denied leave to amend and made the dismissal of the complaint

final and appealable.       Michael filed this timely appeal.

                                 ANALYSIS

                                     I

        We review de novo the decision to dismiss the complaint.

Carroll v. Paddock, 199 Ill. 2d 16, 22 (2002).       When the trial

court dismisses the complaint under section 2-619, "the question

on appeal is whether there is a genuine issue of material fact

and whether defendant is entitled to judgment as a matter of

law."     Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 494

(1994).

        The Frauds Act provides:

             "No action shall be brought to charge any person

        upon any contract for the sale of lands, tenements or

        hereditaments or any interest in or concerning them,

        for a longer term than one year, unless such contract

        or some memorandum or note thereof shall be in writing,

        and signed by the party to be charged therewith, or

        some other person thereunto by him lawfully authorized

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     in writing, signed by such party."     740 ILCS 80/2 (West

     1996).

     In the complaint Michael alleged that Samuel promised him

"10% of Samuel's interest in the current real estate and all

future real estate ventures."   The agreement alleged in the

original complaint does not involve payment of a brokerage

commission.   Compare Real Estate Buyer's Agents, Inc. v. Foster,

234 Ill. App. 3d 257, 259 (1992).     The agreement appears akin to

the written option contracts at issue in Hartbarger v. SCA
Services, Inc., 200 Ill. App. 3d 1000, 1009-10 (1990).     We agree

with the trial court's conclusion that Michael seeks to enforce

an agreement for the transfer of an interest in real estate

within the meaning of the Frauds Act.    See Goldstein v. Nathan,

158 Ill. 641, 647-48 (1895).

     Michael claims that Exhibit A appended to his complaint

comports with the requirements of the Frauds Act.    The statute

requires that the writing bear the signature of the party against

whom the court enforces the contract.    740 ILCS 80/2 (West 1996).

 Marks of many different sorts may qualify as signatures, as long

as the mark "manifests that the instrument has been executed or

adopted by the party to be charged by it"    Just Pants v. Wagner,
247 Ill. App. 3d 166, 173 (1993).     We agree with the reasoning of

a California court that distinguished signatures from uses of a

name for identification:

     "[S]ubscription does not require that the signature

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     appear at the end of the instrument, nor that it be

     handwritten. The name of the party will satisfy the

     statutory requirement if it were intended as a

     signature, i.e., as an authentication, but not if it

     appears for some other purpose, as for mere

     identification." (Emphases omitted.)    Rader Co. v.

     Stone, 178 Cal. App. 3d 10, 23, 223 Cal. Rptr. 806, 812

     (1986).

     In Vess Beverages, Inc. v. Paddington Corp., 941 F.2d 651
(8th Cir. 1991), the plaintiff's officers met with the

defendant's officers to discuss a proposal for sale of one of the

defendant's subsidiaries to the plaintiff.   One of the

defendant's officers took notes at the meeting and included his

own initials in the notes.   The plaintiff claimed that the

parties agreed to the sale of the subsidiary, and it argued that

the notes sufficed to meet the requirements of the statute of

frauds.   The appellate court held:

     "[T]he signer must sign with intent to indicate that

     the document is his. *** [I]nitials written as part of

     an attendance list do not qualify even as

     authentication of the writing. *** [T]o hold for [the

     plaintiff] would mean that in future one who took notes

     at a meeting would risk a lawsuit for breach of

     contract if he or she happened to include an attendance

     list at the top. We do not believe the Statute of

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     Frauds permits such a result.

            [The plaintiff] argues that the mere fact that the

     notes are in [the officer's] handwriting counts as a

     signature. [The plaintiff] cites no case or treatise

     that supports this proposition, nor have we been able

     to find any through independent research.    *** If [the

     officer] had initialed them with intent to identify the

     notes as his or *** with intent to approve the terms of

     the agreement, the agreement would be enforceable.

     Since he did not, we have no choice but to hold the

     agreement unenforceable."     Vess, 941 F.2d at 655.
     Here, Michael contends that Samuel signed Exhibit A by

writing:

     "SR total pay         -1,533,300

     4 x 60,000.00 per yr. -240,000

            SR over pay     1,293,300"

We disagree.    The use of SR in this exhibit at most identifies

the numbers on the same line.    The exhibit cannot support a

finding that by writing "SR" on the exhibit, Samuel intended to

execute or adopt the document as his own.    Thus, Michael

proffered no signed document evidencing the alleged contract for

transfer of an interest in land.

     Michael argues that the Frauds Act does not bar his

complaint because he performed his duties under the contract.

The United States Court of Appeals for the Seventh Circuit

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explained the performance exception to the statute of frauds:

     "Unilateral performance is pretty solid evidence that

     there really was a contract--for why else would the

     party have performed unilaterally?   *** [I]f a party

     performs first there is some basis for inferring that

     he had a contract. *** The partial-performance

     exception to the statute of frauds is often explained

     (and its boundaries fixed accordingly) as necessary to

     protect the reliance of the performing party, so that

     if he can be made whole by restitution the oral

     contract will not be enforced."   Monetti, S.P.A. v.
     Anchor Hocking Corp., 931 F.2d 1178, 1183-84 (7th Cir.

     1991).

Illinois courts have concluded that employment contracts usually

do not qualify for the performance exception to the Frauds Act:

     "Before a contract is taken out of the statute of

     frauds, partial performance must be of such a character

     that it is impossible or impractical to place the

     parties in status quo or restore or compensate the

     party performing for what he has parted with or the

     value of his performance ***.   Normal employment

     contracts, such as the one here, do not involve this

     kind of performance. To allow the fact that an employee

     worked and was paid for part of the duration of the

     contract to act as such a bar would make the relevant

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        provision of the Statute of Frauds meaningless. Any

        contract where the employee had started work and

        received a paycheck would be protected from the

        application of the statute."     Mariani v. School

        Directors of District 40, 154 Ill. App. 3d 404, 407

        (1987).

See also Prodromos v. Howard Savings Bank, 295 Ill. App. 3d 470,

476 (1998).

     Michael relies on three cases as authority for applying the

performance exception to the employment contract alleged in this

case.    In the first, Payne v. Mill Race Inn, 152 Ill. App. 3d
269, 278 (1987), the court noted that the performance exception

to the Frauds Act did not apply to employment contracts and

distinguished the oral contract for sale of the plaintiff's

business from employment contracts.

        The second case, Noesges v. Servicemaster Co., 233 Ill. App.
3d 158 (1992), involved an oral contract for the plaintiff to

develop one specific computer software package in exchange for a

salary plus $200 for each software package the defendant sold.

After the plaintiff developed the software in less than a year,

the defendant refused to pay the plaintiff the agreed sums.      The

appellate court noted that the Frauds Act did not apply both

because the plaintiff completed his obligations in less than a

year, and because the plaintiff fully performed his limited

obligations.      The contract for the development of a single

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specified product appears very unlike Michael's alleged

employment contract for many varied services for an indefinite

period.

     In the third case Michael cites, Reiss v. El Bauer Chevrolet

Co., 96 Ill. App. 2d 266 (1968), the defendant orally promised to

pay an annual bonus, based on sales for the year, to each

salesman who worked to the end of the fiscal year.   The plaintiff

stopped working for the defendant following the end of the fiscal

year in 1966, and the defendant refused to pay the plaintiff his

annual bonus.   The defendant, who interposed the Frauds Act as a

defense to the plaintiff's suit for the bonus, argued that the

plaintiff could not fully perform his duties as a salesman within

one year.   The trial court rejected the defense.   The appellate

court affirmed, and it stated as a general principle: "The

Statute of Frauds is no defense to an executed contract of

employment ***."   Reiss, 96 Ill. App. 2d at 269.
     The result in Reiss appears correct, because the plaintiff

could fully perform the obligations that entitled him to the

annual bonus within one year.   However, the general principle

stated in Reiss seems irreconcilable with more recent cases,
including Mariani, Prodromos and Payne.   That case law supports

the trial court's decision to dismiss the claim for breach of the

alleged employment contract.

     In the complaint Michael seeks added compensation, in the

form of an interest in real estate, for the work he performed for

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Samuel.   Since Michael admitted that Samuel paid him more than

$400,000 for his work, we see no grounds for inferring that he

must have had an oral contract for yet more compensation.    See

Monetti, 931 F.2d at 1183-84.   Michael's performance of his

duties as an employee does not present adequate grounds in these

circumstances for finding an exception to the Frauds Act.    We

affirm the dismissal of the breach of contract count from the

initial complaint.

     The count for promissory estoppel also fails.   "[I]n order

to trump the Statute of Frauds, a party must invoke the doctrine

of equitable estoppel, which differs from promissory estoppel in

that the party asserting it must additionally allege words or

conduct amounting to a misrepresentation or concealment of

material facts."   Cohn v. Checker Motors Corp., 233 Ill. App. 3d
839, 845 (1992).   Because Michael has not alleged that Samuel

misrepresented or concealed material facts to induce Michael to

work for him, the court properly dismissed the count based on

promissory estoppel.

                                II

     Next, Michael argues that the court erred by disallowing his

proposed amended complaint.   We will not reverse a decision on a

motion for leave to amend a complaint unless the trial court has

abused its discretion.   Loyola Academy v. S & S Roof Maintenance,
Inc., 146 Ill. 2d 263, 273-74 (1992).   To determine the issue, we

must consider:

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     "(1) whether the proposed amendment would cure the

     defective pleading; (2) whether other parties would

     sustain prejudice or surprise by virtue of the proposed

     amendment; (3) whether the proposed amendment is

     timely; and (4) whether previous opportunities to amend

     the pleading could be identified."     Loyola, 146 Ill. 2d

     at 273.

     In the proposed amendment Michael sought to change the terms

of the alleged contract.     According to the original complaint,

Samuel promised to give Michael "10% of Samuel's interest in the

current real estate and all future real estate ventures."      In the

proposed amendment Michael alleged instead that Samuel promised

"he and Michael would *** share the profits of the real estate

developments that their venture would engage in, Samuel taking

90% of the net profits and Michael taking 10% of the net

profits."

     The trial court did not address the issue of whether the

Frauds Act would bar recovery on the promise alleged in the

amended complaint.    At the hearing on the motion for leave to

amend, the trial court explained the denial of the motion:

            "THE COURT:   ***

            What you did say [in the initial complaint] was

     that it was an agreement for an interest in land ***.

     Are you going to change your theory as to what it is?

            [Plaintiff's counsel]:   No, your Honor, I don't

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     think I am.

            THE COURT:   In the [proposed amended] complaint

     you say it is a partnership agreement instead of a sale

     of land.

                                 * * *

            [Plaintiff's counsel]:    I don't think I am

     changing it, your Honor, I really don't.

            THE COURT:   Well I do.   I think you are stuck with

     what I did."

The trial court effectively treated the allegations of the

original complaint as judicial admissions that Michael could not

contradict in later pleadings.

     Our supreme court explained the doctrine of judicial

admission:

            "Judicial admissions are defined as deliberate,

     clear, unequivocal statements by a party about a

     concrete fact within that party's knowledge.

     [Citation.]    Where made, a judicial admission may not

     be contradicted in a motion for summary judgment

     [citation] or at trial [citation].      The purpose of the

     rule is to remove the temptation to commit perjury."

     In re Estate of Rennick, 181 Ill. 2d 395, 406-07
     (1998).

Generally, "[a]llegations contained in a complaint are judicial

admissions and are conclusive against the pleader."        Calloway v.

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Allstate Insurance Co., 138 Ill. App. 3d 545, 549 (1985); see

Baker v. Daniel S. Berger, Ltd., 323 Ill. App. 3d 956, 963

(2001).

     The terms of Michael's oral agreement with Samuel must fall

within Michael's knowledge, and he unequivocally alleged the

concrete fact that Samuel agreed to give him an interest in real

estate in exchange for his agreement to work with Samuel.    The

trial court properly held that Michael in his complaint

judicially admitted that he sought to enforce a contract for

transfer of an interest in real estate.   In light of the judicial

admissions, the Frauds Act defeats the counts for breach of

contract and promissory estoppel in the proposed amended

complaint.   The new count based on equitable estoppel also fails

to state a viable claim because Michael still does not allege

that Samuel fraudulently induced him to enter the contract.     See

Cohn, 233 Ill. App. 3d at 845.
     Michael also added counts for partnership accounting and for

quantum meruit.   He argues that the Frauds Act does not apply to

joint ventures because "[a] written agreement is not required to

form a joint venture and the existence of a joint venture may be

inferred from a variety of facts and circumstances."   Russell v.
Klein, 33 Ill. App. 3d 1005, 1007 (1975).   While parties may

orally contract to form a joint venture, "the statute [of frauds]

is applicable to the joint venture agreement if the partners

agree to share the proceeds of a sale of land that is owned by

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one partner alone."    B & B Land Acquisition, Inc. v. Mandell, 305
Ill. App. 3d 1068, 1073 (1999).    The Frauds Act renders

unenforceable the alleged oral joint venture agreement for Samuel

to give Michael an interest in his real estate.     See Goldstein,
158 Ill. at 647-48.    Accordingly, the count for partnership

accounting in the proposed amended complaint fails to state a

viable claim.

     Courts that have found oral employment contracts

unenforceable have pointed to quantum meruit as the proper

remedy.   E.g., Fischer v. First Chicago Capital Markets, Inc.,
195 F.3d 279, 284 (7th Cir. 1999).      To state a cause of action

for quantum meruit, a plaintiff must allege facts that show "the

performance of services by the party, the conferral of the

benefit of those services on the party from whom recovery is

sought, and the unjustness of the latter party's retention of the

benefit in the absence of any compensation."     First National Bank

of Springfield v. Malpractice Research, Inc., 179 Ill. 2d 353,

365 (1997).     A court deciding whether a proposed complaint states

a cause of action should "accept[] as true all well-pleaded facts

and all reasonable inferences that can be drawn therefrom."

Palmer v. Chicago Park District, 277 Ill. App. 3d 282, 284
(1995).   However, the court need not accept conclusions

unsupported by specific factual allegations.      Classic Hotels,

Ltd. v. Lewis, 259 Ill. App. 3d 55, 60 (1994).

     Michael alleged that he performed legal and accounting

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services for Samuel from 1996 until 2001.    He also admitted that

Samuel paid him more than $400,000 for those services.    In the

count for quantum meruit, Michael alleged:

            "Michael provided valuable services from which

     Samuel profited greatly.

            *** Michael has not received the reasonable value

     of his services.

            *** It would be unjust to allow Samuel to retain

     the value of Michael's services without paying the

     reasonable value of those services."

     Michael relies solely on his conclusory allegations for his

cause of action.    We find no specific factual allegations in the

proposed amended complaint that could support the conclusion that

Samuel paid less than the reasonable value of Michael's services.

 Thus, the proposed amended complaint fails to state a cause of

action in quantum meruit.    Because Michael failed to present an

amended complaint that stated any viable cause of action, the

trial court did not abuse its discretion by denying Michael leave

to amend his complaint.    See Kittay v. Allstate Insurance Co., 78
Ill. App. 3d 335, 339 (1979).

                                 III

     The Frauds Act bars Michael from recovering for breach of

the alleged oral contract for the conveyance of an interest in

real estate.   Michael received substantial compensation for the

services he performed, so his performance does not support an

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inference that he must have had an oral contract for more

compensation.    Moreover, the performance doctrine does not apply

to remove this contract for indefinite employment from the

operation of the Frauds Act.   The bare allegation of reliance on

an oral promise does not overcome the strictures of the Frauds

Act, so the court correctly dismissed the count for promissory

estoppel.

     Judicial admissions in the original complaint defeated most

counts of the proposed amended complaint.   The proposed amendment

failed to state facts that could support an inference that the

reasonable value of Michael's services exceeded the amounts

Samuel paid for those services.   Because the proposed amendment

failed to state a claim based on quantum meruit, the trial court

did not abuse its discretion by denying leave to amend.

Accordingly, we affirm the dismissal of the complaint and the

denial of the motion for leave to amend.

     Affirmed.

     TULLY and O'MALLEY, JJ., concur.

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