{ "id": 1172355, "name": "JOSEPH W. KEATING, Plaintiff-Appellant, v. ESTATE OF ROBERT GOLDING et al., Defendants-Appellees", "name_abbreviation": "Keating v. Estate of Golding", "decision_date": "1996-02-09", "docket_number": "No. 1-94-0272", "first_page": "953", "last_page": "959", "citations": [ { "type": "official", "cite": "277 Ill. App. 3d 953" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "650 N.E.2d 657", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "272 Ill. App. 3d 551", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 252414 ], "pin_cites": [ { "page": "553-54" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/272/0551-01" ] }, { "cite": "633 N.E.2d 627", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "158 Ill. 2d 240", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 780293 ], "pin_cites": [ { "page": "252-53" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/158/0240-01" ] }, { "cite": "555 N.E.2d 93", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1994, "opinion_index": 0 }, { "cite": "197 Ill. App. 3d 672", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2482045 ], "year": 1994, "pin_cites": [ { "page": "679" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/197/0672-01" ] }, { "cite": "613 N.E.2d 702", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "155 Ill. 2d 223", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4809706 ], "weight": 2, "pin_cites": [ { "page": "230" }, { "page": "230" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/155/0223-01" ] }, { "cite": "457 N.E.2d 9", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "98 Ill. 2d 382", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3121957 ], "pin_cites": [ { "page": "387" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/98/0382-01" ] }, { "cite": "620 N.E.2d 469", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "251 Ill. App. 3d 256", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2960689 ], "pin_cites": [ { "page": "261" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/251/0256-01" ] }, { "cite": "611 N.E.2d 1167", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "243 Ill. App. 3d 662", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5110832 ], "weight": 3, "pin_cites": [ { "page": "664" }, { "page": "667" }, { "page": "667" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/243/0662-01" ] }, { "cite": "634 N.E.2d 306", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "261 Ill. App. 3d 1080", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5373793 ], "pin_cites": [ { "page": "1083" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/261/1080-01" ] }, { "cite": "618 N.E.2d 1013", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1994, "opinion_index": 0 }, { "cite": "248 Ill. App. 3d 1000", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2945227 ], "year": 1994, "pin_cites": [ { "page": "1004" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/248/1000-01" ] }, { "cite": "24 C.F.R. \u00a7 200.219", "category": "laws:admin_compilation", "reporter": "C.F.R.", "weight": 3, "pin_cites": [ { "page": "(a)(2)(i)" }, { "page": "(a)(2)(vi)" }, { "page": "(a)(3)" } ], "opinion_index": 0 }, { "cite": "24 C.F.R. \u00a7 200.215", "category": "laws:admin_compilation", "reporter": "C.F.R.", "weight": 2, "year": 1995, "pin_cites": [ { "page": "(e)(1)" }, { "page": "(e)(2)" } ], "opinion_index": 0 }, { "cite": "24 C.F.R. \u00a7\u00a7 200.210", "category": "laws:admin_compilation", "reporter": "C.F.R.", "opinion_index": 0 } ], "analysis": { "cardinality": 752, "char_count": 14888, "ocr_confidence": 0.768, "pagerank": { "raw": 7.900437859833792e-08, "percentile": 0.46063090936961965 }, "sha256": "66653537965ef76c318d7e06b9b810056187e91a101f5b8e69886c85b741d2f9", "simhash": "1:6098d5ecf88ba4f3", "word_count": 2398 }, "last_updated": "2023-07-14T16:03:41.906832+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "JOSEPH W. KEATING, Plaintiff-Appellant, v. ESTATE OF ROBERT GOLDING et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE EGAN\ndelivered the opinion of the court:\nThe plaintiff, Joseph W. Keating, is a real estate developer. He claims that in 1974 he entered into an oral partnership with the defendants, Louis Allocco, Joseph Marrin and Robert Golding (since deceased and at the time an attorney with the defendant Winston & Strawn), for the purpose of developing a parcel of land in Lake Villa, Illinois, now known as \"Deep Lake Hermitage.\u201d In 1984, he filed a five-count complaint, which contained as its primary claim his allegation that Golding, Allocco and Marrin breached their fiduciary duties under the agreement after they excluded him from participation in the syndication of Deep Lake Hermitage and by failing to reimburse him for money he had spent to acquire options on the land on which Deep Lake Hermitage is situated. The complaint also alleged fraud in the inducement against Golding, Allocco and Marrin; sought specific performance of the partnership agreement; sought a constructive trust over any proceeds from the sale of Deep Lake Hermitage; and charged Golding and Winston & Strawn with legal malpractice. The trial judge dismissed the entire complaint pursuant to the defendants\u2019 motion under section 2 \u2014 615 of the Code of Civil Procedure (735 ILCS 5/2 \u2014 615 (West 1992)), ruling that the partnership agreement was unenforceable in that its cor\u00e9 purpose was to conceal the plaintiff\u2019s participation in the development of Deep Lake Hermitage in violation of disclosure regulations of the United States Department of Housing and Urban Development (HUD).\nThe plaintiff\u2019s third amended complaint alleges that the development of Deep Lake Hermitage was to be financed through the Illinois Housing Development Authority (IHDA) and the .Federal Housing Authority (FHA). Under r\u00e9gulations issued by HUD, in order to obtain such financing for any development project, all \"principals\u201d must obtain a formal approval from HUD, referred to in the industry as \"2530 clearance,\u201d after filing a certificate detailing their prior participation in projects financed by FHA loans. (24 C.F.R. \u00a7\u00a7 200.210, 200.217(a)(1), 200.218 (1995).) A principal is \"[a]n individual *** proposing to participate, or participating, in a project as sponsor, owner, prime contractor, Turnkey Developer, [or] management agent.\u201d (24 C.F.R. \u00a7 200.215(e)(1) (1995).) If the principal is a corporation, \"each stockholder having a 10 percent or more interest\u201d is also a principal. (24 C.F.R. \u00a7 200.215(e)(2) (1995).) The purpose of the 2530 clearance process is to enable HUD to ensure that loans it insured would be paid by the principals. Thus, principals were required to certify that they had not defaulted on prior loans or other HUD obligations (24 C.F.R. \u00a7 200.219(a)(2)(i) through (a)(2)(iv) (1995)), had not been convicted of felonies (section 200.219(a)(2)(v)) and, germane to this litigation, \"not been suspended, debarred, or otherwise restricted *** from doing business with [any] Department or Agency\u201d of the federal government (24 C.F.R. \u00a7 200.219(a)(2)(vi) (1995)). Each principal must also certify that he has disclosed all other principals. 24 C.F.R. \u00a7\u00a7 200.219(a)(3), 200.219(b) (1995).\nThe plaintiffs complaint alleges that sometime in 1974, his attorney, Golding, recommended that he inspect the Deep Lake Hermitage land. The plaintiff learned that the land was for sale and available for development. At the time, however, the plaintiff was under a disability such that he could not obtain 2530 clearance and hence could not participate as a principal in IHDA- and FHA-financed projects. Golding suggested that the plaintiff meet with him and Allocco to discuss the formation of a partnership to develop Deep Lake Hermitage. The two defendants knew that the plaintiff lacked 2530 clearance; however, the plaintiff was the only one of the three who possessed the expertise and the equity funds to develop Deep Lake Hermitage.\nThe plaintiff alleged that the defendants met with him to suggest methods \"of structuring the development of the Property so that Plaintiff could eventually participate,\u201d despite his lack of clearance. According to the complaint, the three men \"agreed that a partnership would be formed [among them] and with the inclusion of an additional partner, Marrin. Said partnership would take those steps necessary to develop this Property.\u201d The complaint further stated that when the plaintiff received his 2530 clearance, \"Plaintiff was to obtain reimbursement from Golding, Marrin, and Allocco for any disbursements he made on this Property on behalf of the partnership, as well as a third of the syndication proceeds for his work as the developer.\u201d The remaining syndication proceeds would benefit AIMCO, a corporation to be formed by Golding, Allocco, and Mar-rin.\nIn 1975, the individual defendants incorporated and became shareholders in AIMCO. When the plaintiff received his 2530 clearance, he was to become a 25% shareholder in AIMCO. The plaintiff alleged that, in the belief that he would obtain 2530 clearance and in reliance on the foregoing agreements as well as \"on Golding\u2019s representations that Plaintiff\u2019s interests as a shareholder in AIMCO and as a partner for Golding, Allocco and Marrin were being properly documented and that these entities were the best way to legally structure the transaction,\u201d he began the development of the property. The plaintiff spent $57,000 to obtain options on the property. He also hired architects and engineers; met with local officials about zoning; and \"provided and coordinated other services.\u201d\nIn further reliance on the alleged partnership agreement, the plaintiff assigned his option to purchase the property to AIMCO. Because the plaintiff had not yet received his 2530 clearance, the partners decided that AIMCO would apply to FHA and IHDA for financing. The plaintiff alleges that he did not try to conceal his involvement in the project from HUD. Although the complaint does not allege a specific date when the applications for financing were filed, the plaintiff continued to seek 2530 clearance, and by June 30, 1978, at the latest, HUD was aware of his participation in Deep Lake Hermitage. The plaintiff did not receive his 2530 clearance until August 1980. Subsequently, the plaintiff demanded of Golding, Al-locco and Marrin that they honor the partnership agreement by reimbursing him for his expenditures and permitting him to participate in Deep Lake Hermitage as an AIMCO shareholder and to receive his share of the syndication proceeds. They refused.\nPlaintiff further alleged that Golding, Allocco and Marrin placed the property in trust with the defendant La Salle National Bank. Later, Golding, Allocco and Marrin conveyed the beneficial interest of the trust to the defendant Deep Lake Shores Associates (Deep Lake), a limited partnership formed by Golding, Allocco and Marrin, but expanded to include other individuals not named in this lawsuit. Finally, on or about October 31, 1984, Deep Lake sold 99.8% of its interest in Deep Lake Hermitage to National Partnership Investments Associates, III (NPIA), a California limited partnership which is not a party to this litigation. The proceeds of the sale were distributed to the partners of Deep Lake. As part of the sale agreement, AIMCO and the defendant A&M Sunrise Construction Company (yet another Allocco and Marrin concern) indemnified NPIA against any liability resulting from claims by the plaintiff.\nIn granting judgment on the pleadings, the trial judge ruled that (1) the plaintiff\u2019s \"activities [and] performance in preparation of the development of Deep Lake property were that of a principal\u201d; (2) the plaintiff and the individual defendants entered the partnership for the purpose of enabling the plaintiff to participate in the development of Deep Lake Hermitage as an undisclosed principal in violation of 24 C.F.R. section 200.218; and (3) the plaintiff knew that the partnership contemplated an illegal purpose. As a result, the alleged agreement was unenforceable. The plaintiff contends that he has alleged facts that, if proved, establish that he believed the partnership agreement was legal and, therefore, enforceable.\nThis court reviews de novo the dismissal of a complaint, examining whether there exists any set of facts which, if proved, supports a cause of action under Illinois law. (Mitchell v. Skubiak (1993), 248 Ill. App. 3d 1000, 1004, 618 N.E.2d 1013.) All well-pleaded allegations of fact are assumed to be true and all reasonable inferences must be drawn in a light most favorable to the plaintiff. T&S Signs, Inc. v. Village of Wadsworth (1994), 261 Ill. App. 3d 1080, 1083, 634 N.E.2d 306.\nThe trial judge dismissed the plaintiff\u2019s complaint because he concluded that it alleged a contract which had as its purpose an illegal act: the intentional avoidance of HUD\u2019s requirement that all principals in a development be disclosed. Under Illinois law, a court will refuse to enforce a contract only when the purpose of the contract violates the law. (Mani Electrical Contractors v. Kioutas (1993), 243 Ill. App. 3d 662, 664, 611 N.E.2d 1167.) Indeed, that a contract, in its performance, violates some law does not render it unenforceable. (Mani, 243 Ill. App. 3d at 667.) In all cases when a contract is asserted to be unenforceable, the court inquires whether the contract \"necessarily contemplated an illegal bargain, not whether an otherwise legal contract is performed in a manner which involves a violation of the law.\u201d (Mani, 243 Ill. App. 3d at 667; Midwest Environmental Consulting & Remediation Services, Inc. v. Peoples Bank (1993), 251 Ill. App. 3d 256, 261, 620 N.E.2d 469.) Whether the contract is unenforceable against the plaintiff because it necessarily contemplated an illegal bargain we need not decide because we find that the complaint should not have been dismissed for another reason.\nInitially, we must address Deep Lake\u2019s contention that we should affirm the judgment in its favor on a ground not relied upon by the trial judge: that the plaintiff\u2019s claim for the imposition of a constructive trust was legally insufficient for a variety of reasons. The plaintiff concedes much of Deep Lake\u2019s argument as it relates to the sufficiency, as stated in the third amended complaint, of his claim to a constructive trust, yet we agree with his contention that we should not affirm on this ground.\nAlthough this court may affirm the trial judge\u2019s dismissal of the complaint on any ground in the record, even one not relied upon by the judge below {Material Service Corp. v. Department of Revenue (1983), 98 Ill. 2d 382, 387, 457 N.E.2d 9), the supreme court has warned against so doing when it would have the effect of affirming on the basis of a correctable pleading defect. Thus, we should not deprive litigants of the opportunity to make an argument on an issue, particularly when that issue was not addressed in the trial court. (Geaslen v. Berkson, Gorov & Levin, Ltd. (1993), 155 Ill. 2d 223, 230, 613 N.E.2d 702.) The proceedings below focused exclusively on the enforceability of the agreement allegedly entered into by the plaintiff and the individual defendants. Our review of the record reveals that the sufficiency of the plaintiff\u2019s claim to a constructive trust was not addressed. Thus, the plaintiff never had reason to amend that portion of his complaint to state an alternative theory of recovery, if there is one, against Deep Lake. Certainly, had the issue arisen below, the trial court would have granted leave to the plaintiff to amend his complaint. (Geaslen, 155 Ill. 2d at 230.) Particularly in light of our decision that the trial judge should have denied the defendants\u2019 motion for judgment, we will not cut off the plaintiff\u2019s right to do so on remand.\nThe defendants urge us to uphold the dismissal, focusing on the plaintiff\u2019s allegations that (1) he knew he was ineligible to receive a 2530 clearance; (2) without that clearance he could not apply for IHDA and FHA financing; (3) he possessed the sole expertise and equity funds to develop Deep Lake Hermitage; (4) AIMCO was formed to apply for financing; and (5) he took steps to develop the project. The defendants posit that the only reasonable inference to be drawn from the complaint is that the plaintiff, and consequently, we note, his attorney Golding and the other partners as well, intended to evade the HUD regulations by hiding the plaintiff\u2019s participation. Under the defendants\u2019 interpretation of the law, they would retain the benefits of the illegal enterprise, but the plaintiff would not.\nHowever, the defendants\u2019 analysis, as well as the trial judge\u2019s ruling, omits reference to an allegation of the complaint crucial to the decision as to whether it can withstand a motion under section 2 \u2014 615: that the plaintiff began to develop Deep Lake Hermitage on Golding\u2019s representations that he had structured the transaction in a legal manner. Clients may generally rely on the advice of counsel. (Sutton v. Mytich (1990), 197 Ill. App. 3d 672, 679, 555 N.E.2d 93. See Jackson Jordan, Inc. v. Leydig, Voit & Mayer (1994), 158 Ill. 2d 240, 252-53, 633 N.E.2d 627 (recognizing that clients hire lawyers for the purpose of relying on their advice).) Although the evidence may eventually bear out the defendants\u2019 position, a ruling on a motion for judgment under section 2 \u2014 615 does not reach beyond the face of the pleading. (Carter v. New Trier East High School (1995), 272 Ill. App. 3d 551, 553-54, 650 N.E.2d 657.) Here, the complaint alleges the plaintiff\u2019s belief in the legality of the partnership. That allegation must be taken as true. Because a party must enter into an agreement with an illegal bargain as his purpose for us to refuse to enforce it, the plaintiff need have alleged no more than he did to survive a section 2 \u2014 615 motion premised upon the enforceability of the partnership. Based solely on the allegations in the complaint before us, we cannot conclude that the plaintiff knew the partnership was illegal. For this reason, the judge should have denied the motion for judgment on the pleadings; the judgment is reversed, and the cause is remanded for further proceedings.\nReversed and remanded.\nZWICK, P.J., and RAKOWSKI, J\u201e concur.\nThe defendants have filed an answer denying the allegation of the complaint that there was any agreement between them and the plaintiff.", "type": "majority", "author": "JUSTICE EGAN" } ], "attorneys": [ "Michael W. Rathsack, of Chicago (Arthur S. Gold and Michael W. Rath-sack, of counsel), for appellant.", "Butler, Rubin, Saltarelli & Boyd, of Chicago, for appellees Winston & Strawn and Estate of Robert Golding.", "Donald A. Tarkington and Jennifer Friedes, both of Novack & Macey, of Chicago, for appellee Deep Lake Shores Associates." ], "corrections": "", "head_matter": "JOSEPH W. KEATING, Plaintiff-Appellant, v. ESTATE OF ROBERT GOLDING et al., Defendants-Appellees.\nFirst District (6th Division)\nNo. 1\u201494\u20140272\nOpinion filed February 9, 1996.\nMichael W. Rathsack, of Chicago (Arthur S. Gold and Michael W. Rath-sack, of counsel), for appellant.\nButler, Rubin, Saltarelli & Boyd, of Chicago, for appellees Winston & Strawn and Estate of Robert Golding.\nDonald A. Tarkington and Jennifer Friedes, both of Novack & Macey, of Chicago, for appellee Deep Lake Shores Associates." }, "file_name": "0953-01", "first_page_order": 971, "last_page_order": 977 }