Opinion
1-21-0101
09-29-2021
DANIEL J. DAMASCHKE, Individually and on behalf of of Illinois Hospitality Partners, LLC, an Illinois Corporation, Plaintiff-Appellant-Cross-Appellee, v. DONNA J. MICK, and Illinois Hospitality Partners, LLC, an Illinois Corporation, Defendants-Appellees-Cross-Appellants.
This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of Cook County. 2000-CH-005549 Honorable Caroline Kate Moreland, Judge Presiding.
JUSTICE McBRIDE delivered the judgment of the court. Presiding Justice Gordon and Justice Burke concurred in the judgment.
ORDER
McBRIDE JUSTICE
¶ 1 Held: Circuit court abused its discretion when it did not perform any analysis before granting defendant's motion to dismiss plaintiffs complaint on grounds that there was another action pending between the same parties for the same cause. Defendant's cross-appeal that forum non conveniens was an alternative basis was dismissed for failure to follow mandatory appellate rules.
¶ 2 Daniel J. Damaschke's complaint against his business partner, Donna J. Mick, in which he alleged she would not help manage and fund their company, Illinois Hospitality Partners, LLC, (IHP) or agree to sever their relationship, was dismissed by the circuit court of Cook County pursuant to section 2-619(a)(3) of the Code of Civil Procedure (735 ILCS 2-619(a)(3) (West 2020)) (Code), because "there was an existing case [in Madison County, Illinois] between these parties relating to the same issues when this case was filed." Damaschke argues that by denying Mick's alternative argument of forum non conveniens, the court acknowledged that Damaschke's suit has a legitimate and substantial connection to Cook County, which enhanced Mick's burden to show facts justifying dismissal under section 2-619(a) (3), and that Mick failed to meet this burden of proof. 735 ILCS 5/2-619(a) (3) (West 2020). Mick responds that dismissal was warranted because the Madison County pleading and two affidavits she tendered were clear and convincing proof that both suits concern the same parties and the same issue of Damaschke's mismanagement of IHP. On cross-appeal, Mick contends that the court should not have rejected her forum non conveniens argument.
¶ 3 The dismissal order was entered on January 4, 2021. In the trial court, Damaschke filed a notice of appeal 28 days later, on February 1, 2021, and Mick filed a notice of cross-appeal two days after that on February 3, 2021. Accordingly, we have jurisdiction over the appeal and cross-appeal. See Ill . S.Ct. R. 301 (eff. Feb. 1, 1994); Ill. S.Ct. R. 303 (eff. Jan. 1, 2015).
¶ 4 For the sake of expediency, we first address Mick's cross-appeal. Mick states that Damaschke's lawsuit should have been transferred to Madison County under the doctrine of. forum non conveniens. Mick does not support this statement with any argument. Instead, she declares that her subsequent reply brief will be "her principal brief for her cross-appeal" and that, to the extent an argument is expected in her initial brief, she "adopts and incorporates the contents" of that later-filed brief. She not only prevents Damaschke from responding to her argument, she forfeits her argument. "[U]nder our supreme court rules, both appellees and appellants forfeit any points not argued in their initial briefs. See Ill. S.Ct. Rs. 341(h)(7) ('Points not argued [by appellant in the opening brief] are waived and shall not be raised in the reply brief, in oral argument, or on petition for rehearing.'); 341(i) (requiring that appellee briefs comply with Rule 341(h)(7)) (eff. Feb. 6, 2013). See also People ex rel. Illinois Department of Labor v. E.R.H. Enterprises, Inc., 2013 IL 115106, ¶ 56, 4 N.E.3d 1 ('Failure to comply with [Rule 341's] requirements results in forfeiture.')." Amalgamated Transit Union v. Illinois Labor Relations Board, 2017 IL App (1st) 160999, ¶ 59, 87 N.E.3d 315.
¶ 5 Because Mick's cross-appeal is limited to this single issue and she has failed to present any argument for our consideration in her initial brief, we dismiss her cross-appeal. McCann v. Dart, 2015 IL App (1st) 141291, ¶ 20, 30 N.E.3d 468 (although there is seldom need to dismiss an appeal for failure to comply with supreme court rules, an appellate court has the discretion to enter the dismissal); Ill. S.Ct. R. 375 (eff. Feb. 1, 1994) (willful failure to comply with appellate rules may result in a range of sanctions which include dismissal and a fine).
¶ 6 In order to address Damaschke's appeal, we briefly set out the relevant facts. Damaschke alleged the following in the eight-page, four-count complaint that he filed individually and on behalf of IHP against Mick and IHP on August 25, 2020. Damaschke and Mick are 50/50 partners who each contributed $60,000 to form IHP in 2019. IHP is in the business of operating five video gaming parlors in Illinois through five respective subsidiary corporations. None of the six limited liability companies has an operating agreement. The principal office of IHP and its five subsidiaries is located in Summit, Cook County, Illinois. The registered agent of IHP and its five subsidiaries is located in Bridgeview, Cook County, Illinois. Four of the gaming parlors are located in Cook County and the other one is located to the north, in Winnebago County, Illinois. Damaschke resides in Bridgeview, Cook County, Illinois. Mick resides to the south, in Edwardsville, Madison County, Illinois. IHP's subsidiaries have not generated sufficient revenue to cover their expenses since 2019, Mick has not cooperated with Damaschke's requests to manage and fund the business, and the partners have been unsuccessful in negotiating an end to their business relationship. Since 2019, Damaschke has lent in excess of $100,000 to the subsidiaries to meet business expenses and to avoid defaulting on lease payments which he alone personally guaranteed. Consequently, Damaschke agreed "to sell the assets of four of the IHP Subsidiaries for a cash payment." (Damaschke did not disclose details about the asset sale, such as which four subsidiaries it concerned, the buyer's name, or the sales price.) Damaschke further alleged that Mick refuses to cooperate with the sale of assets for the benefit of IHP's members. In Count I of his complaint, Damaschke seeks a declaratory judgment that Mick must cooperate as necessary to effectuate the asset sale. In Count II, Damaschke claims Mick's conduct is in breach of her fiduciary duties, entitling him to compensatory and punitive damages. In Count III, Damaschke seeks dissociation of Mick from IHP pursuant to the judicial authority granted by the Limited Liability Company Act. See 805 ILCS 180/35-45(6) (West 2020) (setting out three grounds for a member's expulsion by judicial determination). In the alternative, in Count IV, Damaschke seeks judicial dissolution of IHP and equitable winding up of its affairs. .See 805 ILCS 180/35-1 (A)(4)(c) (West 2020).
¶ 7 The Madison County complaint that was filed on June 12, 2020 is 85 pages long, and 15 of the 17 counts are brought by Mick's husband, Jeff Mick, suing individually or derivatively on behalf of Lacey's Place, LLC (Lacey's Place). Lacey's Place is Jeff Mick's 25/75 partnership as of 2013 with Jeffery Lynn Rehberger, who is referred to as "Senior." Senior is related to Jeffrey Joseph Rehberger, who is referred to as "Junior." We outline the lengthy complaint only to the extent necessary to dispose of the appeal and cross-appeal.
¶ 8 Lacey's Place operates or operated 38 licensed video gaming terminal establishments in Addison, Beecher, Belvidere, Berwyn, Bradley, Champaign, Channahon, Clinton, Crestwood, Crete, Decatur, Dekalb, Dolton, Georgetown, Hanover Park, Harvey, Hickory Hills, Justice, Kankakee, Lake Zurich, Lynwood, Markham, Matteson, McHenry, Midlothian, Minooka, Monee, North Riverside, Plano, River Grove, Romeoville, South Elgin, Stone Park, and Westville, Illinois. Lacey's Place allows video gaming on its premises through a "terminal operator," which, on information and belief, is Junior's limited liability company, Lucky Lincoln Gaming. Both of the Micks and both of the Rehbergers reside in Madison County. Senior is the registered agent for Lacey's Place.
¶ 9 In 2019, the Illinois Gaming Board denied license applications for Lacey's Place locations in Belvidere, Clinton, River Grove, DeKalb, and Crestwood. On information and belief, in order to circumvent the license denial, Senior gave the Crestwood and River Grove locations to Damaschke; and Damaschke paid or gave part of his company, Damaschke International, Inc. (Damaschke International) to Senior. On information and belief, Junior, who was named in disciplinary actions by the board in 2018 and 2019, "was integral to the existence of such deal."
¶ 10 Jeff Mick claims that he and/or Lacey's Place were harmed by the license denials, and by Senior's other improper acts, which, to name a few, include allocating the partnership's "tax advantages" only to himself and failing to account for borrowed funds and other assets. Most of Jeff Mick's 15 individual and derivative claims are directed at Senior and sound in breach of the operating agreement for Lacey's Place, breach of fiduciary duty, conversion, fraud, and so forth. Some of Jeff Mick's other claims are directed at Junior, one is directed at Junior and Senior, and one is directed at Senior, Junior, and Damaschke. Jeff Mick seeks primarily compensatory and punitive damages and to gain control of Lacey's Place, as well as other forms of relief.
¶ 11 Two of the seventeen counts that are pending in Madison County are Donna Mick's claims against Damaschke concerning IHP, which she alleges is their 50/50 partnership. Mick alleges that Damaschke let Junior (unsuccessfully) negotiate an IHP operating agreement with her in October 2019 "in violation of VGA and IGB rules" and that he also engaged in "self-dealing" and had "impermissible business relations" with Senior and Junior in the sale or exchange of Lacey's Place assets. In Count XV, Mick, in her individual capacity, claims Damaschke's conduct was or is in breach of his fiduciary duties to her and IHP, entitling her (but not IHP) to compensatory and punitive damages, an accounting, and the right to purchase his interest in IHP as permitted "under 805 ILCS 180/1 et seq. [(West 2020)]." In Count XVII, Mick, in her representative capacity for IHP, seeks the same relief pursuant to the same statute; and also dissociation of Damaschke from IHP "injunctive relief, appointment of a trustee, and forced sale [of his interest in IHP]," pursuant to the judicial authority granted by section 180/35-46 of the Limited Liability Company Act. 805 ILCS 180/35-45(6) (West 2020).
¶ 12 In Cook County, Mick filed a motion to transfer Damaschke's complaint to Madison County on the grounds of forum non conveniens, or, in the alternative, to dismiss the complaint pursuant to section 2-619(a)(3) of the Code, which provides for dismissal when "there is another action pending between the same parties for the same cause." 735 ILCS 5/2-619(a) (3) (West 2020). Damaschke filed a brief in opposition, but could not contrast the pleadings for the circuit court because he had not been served with the Madison County complaint and Mick did not attach the pleading to her motion. Mick did tender her Madison County complaint with her reply brief. The reply was the last document the circuit court considered before ruling without benefit of oral argument. In a single-spaced, one-page document, the circuit court stated:
"I. FORUM NON [CONVENIENS]
Defendant first argues that forum non [conveniens] should apply because she resides in Madison County. The Court rejects this first argument because Defendant admits in her own motion that the businesses at issue in this case are all located in Cook County. See paragraph 11 of the motion.
II.MOTION TO DISMISS
Next, Defendant moves to dismiss the case pursuant to 735 ILCS 5/2-619(a) (3). Section 2-619(a)(3) allows for dismissal when 'there is another action pending between the same parties for the same cause.' Here Defendant has filed a case between herself and Plaintiff in Madison County, Illinois on June 12, 2020. Plaintiff filed their complaint in Cook County on August 25, 2020, more than two months later. Because there was an existing case between these parties relating to the same issues when this case was filed[, ] the Court will dismiss this matter.
III. CONCLUSION
This matter is dismissed pursuant to 735 ILCS 5/2-619(a) (3)."
The circuit court incorrectly stated the facts. Damaschke alleged that four of IHP's locations are in Cook County and that one is in Winnebago County; and Mick admitted in paragraph 11 of her motion "that IHP primarily conducts business in or near Cook County." Emphases added.
¶ 13 The parties have fully briefed Damaschke's appeal, but we need not address their arguments as to whether Mick met her burden of proof under section 2-619 (a) (3), because the record does not indicate that the circuit court considered the relevant facts before entering the dismissal pursuant to that section of the code of civil procedure.
¶ 14 Mick's argument about section 2-619(a)(3) was subject to the circuit court's discretion. A.E. Staley Manufacturing Co. v. Swift & Co., 84 Ill.2d 245, 253, 419 N.E.2d 23 (1980) (addressing the statute now codified as section 2-619(a)(3)). "In reviewing discretionary rulings by the trial court, an appeals court must look to the criteria on which the trial court should rely to determine if the trial court abused its discretion." Paul v. Gerald Adelman & Associates, Ltd., 223 Ill.2d 85, 99, 858 N.E.2d 1 (2006) (internal quotation marks omitted).
¶ 15 The court's written statements about section 2-619(a) (3) are not the analysis dictated by precedent and indicate that the court simply deemed the earlier filing of Jeff Mick and Mick's "existing" complaint to be determinative. Section 2-619(a)(3) does not mandate an automatic dismissal when there is another action pending in which the plaintiff and defendant are parties. Staley, 84 Ill.2d at 252. "[M]ultiple actions in different jurisdictions, but arising out of the same operative facts, may be maintained where the circuit court, in a sound exercise of its discretion, determines that both actions should proceed." Staley, 84 Ill.2d at 253. "That one action is filed prior to the other [is not] determinative." Staley, 84 Ill.2d at 252. "No mention is made in [the statute] of the respective filing times of the actions, and it is therefore apparent that the statute does not attribute any significance to [filing times]." Staley, 84 Ill.2d at 252. The factors which a court would typically weigh in its analysis of a section 2-619(a) (3) argument are "(1) comity; (2) the prevention of multiplicity, vexation, and harassment; (3) the likelihood of obtaining complete relief in a foreign jurisdiction: and (4) the res judicata effect of a foreign jurisdiction in a local forum." Combined Insurance Co. v. Certain Underwriters at Lloyd's London, 356 Ill.App.3d 749, 754, 826 N.E.2d 1089 (2005) (referring to these as the Kellerman factors, from Kellerman v. MCI Telecommunications Corp., 112 Ill.2d 428, 447-48, 493 N.E.2d 1045 (1986)); Whittmanhart, Inc. v. CA, Inc., 402 Ill.App.3d 848, 853, 932 N.E.2d 520 (2010). We do not conclude that every factor is relevant in this matter concerning suits filed in two different counties in Illinois. See Combined Insurance, 356 Ill.App.3d at (courts should but not must consider the Kellerman factors, and "not all four Kellerman factors necessarily apply to each section 2-619(a) (3) dismissal"). Nevertheless, the circuit court did not address any of these factors. When a court makes a discretionary decision without reference to a relevant statute or the factors set out in precedent, it appears to have made an arbitrary decision. Chesler v. People, 309 Ill.App.3d 145, 153, 722 N.E.2d 668 (1999) (where the court's decision was not based on statutory factors or precedent, it appeared to have been arbitrary). Arbitrary decisions are an abuse of discretion. Chesler, 309 Ill.App.3d at 153. Furthermore, the circuit court in Staley made the erroneous presumption that the respective filing times of the two actions was determinative, and the circuit court presiding over Damaschke's action appears to have repeated this error, stating, "Because there was an existing case between these parties relating to the same issues when this case was filed[, ] the Court will dismiss this matter." Staley, 84 Ill.2d at 253. ("The circuit court here felt that it had no discretion in this matter and therefore failed to conduct an appropriate analysis of the situation.") Employing the wrong legal standard is an abuse of discretion. Zavell & Associates, Inc. v. CCA Industries, Inc., 257 Ill.App.3d 319, 322, 628 N.E.2d 1050 (1993); Shulte v. Flowers, 2013 IL App (4th) 120132, ¶ 23, 983 N.E.2d 1124 (it is an abuse of discretion to apply the wrong legal standard or use the wrong legal criteria). And finally, as the moving party, Mick bore the burden of demonstrating by clear and convincing evidence that the two actions involved not only the "same parties" but also the "same cause" within the meaning of section 2-619(a)(3). Whittmanhart, 402 Ill.App.3d at 853. Nevertheless, Mick failed to attach a copy of her Madison County pleading to her motion, and she undoubtedly knew that Damaschke could not effectively respond to her motion because he had not been served with the Madison County complaint. Even so, the circuit court entered the dismissal order without ordering a sur-reply or scheduling a hearing. This is an additional aspect indicating that the circuit court's ruling was arbitrary. Accordingly, we find that the dismissal pursuant to section 2-619(a) (3) was an abuse of discretion.
¶ 16 For these reasons, we reverse the dismissal order and remand with directions to the circuit court to reconsider Mick's motion as to section 2-619(a) (3). 735 ILCS 5/2-619(a) (3) (West 2020).
¶ 17 Appeal reversed and remanded with directions; cross-appeal dismissed.