{ "id": 1596975, "name": "ARTRA GROUP, INC., Plaintiff-Appellant, v. SALOMON BROTHERS HOLDING COMPANY, INC., et al., Defendants (D.P. Kelly and Associates, L.P., Defendant-Appellee)", "name_abbreviation": "Artra Group, Inc. v. Salomon Bros.", "decision_date": "1997-05-30", "docket_number": "No. 2\u201496\u20140788", "first_page": "467", "last_page": "472", "citations": [ { "type": "official", "cite": "288 Ill. App. 3d 467" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "249 Ill. App. 3d 878", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5410577 ], "year": 1993, "pin_cites": [ { "page": "882" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/249/0878-01" ] }, { "cite": "13 Ill. App. 3d 699", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5346703 ], "weight": 2, "year": 1973, "pin_cites": [ { "page": "710" }, { "page": "710" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/13/0699-01" ] }, { "cite": "136 Ill. 533", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2992867 ], "weight": 2, "year": 1891, "pin_cites": [ { "page": "538" }, { "page": "538" } ], "opinion_index": 0, "case_paths": [ "/ill/136/0533-01" ] }, { "cite": "207 Ill. App. 3d 610", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2554970 ], "weight": 3, "year": 1990, "pin_cites": [ { "page": "620" }, { "page": "620" }, { "page": "620" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/207/0610-01" ] }, { "cite": "260 Ill. App. 3d 717", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2866042 ], "weight": 2, "year": 1994, "pin_cites": [ { "page": "722" }, { "page": "722" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/260/0717-01" ] }, { "cite": "76 Ill. 2d 427", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2983269 ], "year": 1979, "pin_cites": [ { "page": "437" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/76/0427-01" ] }, { "cite": "263 Ill. App. 3d 955", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5369624 ], "year": 1994, "pin_cites": [ { "page": "959" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/263/0955-01" ] }, { "cite": "224 Ill. App. 3d 325", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5252979 ], "year": 1991, "pin_cites": [ { "page": "328" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/224/0325-01" ] }, { "cite": "133 Ill. 2d 516", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3260534 ], "year": 1989, "pin_cites": [ { "page": "526" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/133/0516-01" ] }, { "cite": "261 Ill. App. 3d 1080", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5373793 ], "weight": 2, "year": 1994, "pin_cites": [ { "page": "1083" }, { "page": "1083" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/261/1080-01" ] }, { "cite": "169 Ill. 2d 110", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 909171 ], "weight": 3, "year": 1995, "pin_cites": [ { "page": "115" }, { "page": "115" }, { "page": "115" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/169/0110-01" ] } ], "analysis": { "cardinality": 631, "char_count": 11479, "ocr_confidence": 0.772, "pagerank": { "raw": 4.339701094470699e-08, "percentile": 0.2728315434606419 }, "sha256": "17a899b2b852fda82b5a2df07117cf3e2abd4c8280c97e063d216951a6546a97", "simhash": "1:9db4751715430480", "word_count": 1831 }, "last_updated": "2023-07-14T15:57:07.793358+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "ARTRA GROUP, INC., Plaintiff-Appellant, v. SALOMON BROTHERS HOLDING COMPANY, INC., et al., Defendants (D.P. Kelly and Associates, L.P., Defendant-Appellee)." ], "opinions": [ { "text": "JUSTICE McLAREN\ndelivered the opinion of the court:\nThe plaintiff, ARTRA Group, Inc., appeals the dismissal of its claim alleging that the defendant, D.P. Kelly and Associates (DPK), breached its fiduciary duty to the plaintiff. The parties were involved in an alleged joint venture for the purpose of performing a leveraged buyout of Envirodyne Industries, Inc. (Envirodyne), along with the other named defendants. However, DPK is the only defendant that is a party to this appeal. We affirm.\nThe following facts are taken from the pleadings. In 1988 the plaintiff owned interests in several companies, including Envirodyne, a publicly traded food packaging and supplies company. The plaintiff held 4.86 million, approximately 26%, of the shares in Envirodyne. In 1988, Envirodyne had annual sales in excess of $480 million and a pretax profit of $75,137,000. The plaintiff retained Salomon Brothers, Inc. (Salomon), to act as its agent and advise and represent the plaintiff either in acquiring complete ownership of Envirodyne or liquidating its interest in the company.\nEarly in 1989, the plaintiff identified the defendant as a potential partner in a leveraged buyout of Envirodyne. The plaintiff believed the defendant provided management expertise necessary for a successful leveraged buyout. The defendant and Salomon decided to pursue the acquisition of Envirodyne through a cash tender offer of its outstanding stock. Salomon proposed the creation of an entity to purchase all of Envirodyne\u2019s stock in a leveraged buyout. Salomon formed the Emerald Acquisition Corporation (Emerald), of which it was the sole shareholder. Emerald, through its subsidiary \"Emerald Sub One,\u201d would buy the outstanding stock in a tender offer.\nIn early 1989, Salomon, the defendant, and the plaintiff negotiated the details of how Emerald would buy the plaintiff\u2019s Envirodyne stock. The plaintiff alleged that the defendant and Salomon orally agreed to prepare cash-flow projections and perform \"due diligence.\u201d The plaintiff also alleged that, several weeks later, Salomon informed the plaintiff that the cash-flow projections and \"due diligence\u201d had been properly performed. The plaintiff alleged that the defendant performed these acts unreasonably and improperly. The defendant acknowledged that it performed \"due diligence\u201d and prepared cash-flow projections along with Salomon, but maintains that it performed these tasks properly and only for its own benefit. Further, the defendant alleged that it neither had a fiduciary duty of care nor breached the duty, if it existed.\nOn March 19, 1989, the plaintiff, the defendant, and Salomon entered into a series of agreements to proceed with the Envirodyne transaction. The parties agreed that Emerald would purchase 2,955,000 shares of Envirodyne stock from the plaintiff; and the plaintiff would receive $75 million in cash, which would be used to purchase $20.9 million of Emerald subordinated debt and 27.5% of Emerald common stock. After completion of the transactions, Emerald became the parent company of Envirodyne, with Salomon as an approximately 62.5% shareholder, the defendant as a 10% shareholder, and the plaintiff as a 27.5% shareholder.\nIn January 1993, Envirodyne filed for chapter 11 bankruptcy protection in federal court. As a result of the bankruptcy and reorganization plan, the Emerald subordinated debt and common stock the plaintiff received in exchange for its Envirodyne stock became worthless, and the plaintiff lost approximately $136.2 million.\nOn March 10, 1995, the plaintiff filed its third amended complaint against the defendant and Salomon. Count V alleged that the plaintiff and the defendant were joint venturers. It further alleged that, as joint venturers, the defendant owed the plaintiff a fiduciary duty of care to the plaintiff and that the defendant breached its duty. Judge Michael Galasso granted the defendant\u2019s motion to dismiss count V of the plaintiff\u2019s third amended complaint with prejudice pursuant to section 2 \u2014 615 of the Code of Civil Procedure (735 ILCS 5/2 \u2014 615 (West 1994)). The trial court granted the plaintiff leave to file an amended complaint which did not allege a breach of fiduciary duty. On July 19, 1995, the plaintiff filed a fourth amended complaint. Count V realleged a breach of fiduciary duty, count VI alleged breach of contract, and count VII alleged promissory estoppel. On June 4, 1996, Judge Hollis Webster granted the defendant\u2019s motion for summary judgment on counts VI and VII and held that all prior orders were final and appealable. On July 2, 1996, the plaintiff filed a notice of appeal.\nThe plaintiff appeals only the trial court\u2019s decision to grant the defendant\u2019s motion to dismiss count V of the plaintiff\u2019s third amended complaint for breach of fiduciary duty against the defendant. The defendant argues that it owed no duty to the plaintiff because they were not joint venturers. The defendant further argues that, even if they are joint venturers, the plaintiff failed to allege sufficient facts to establish that the defendant breached a duty owed to the plaintiff.\nThe standard guiding our review of the trial court\u2019s decision to grant the defendant\u2019s section 2 \u2014 615 motions (735 ILCS 5/2 \u2014 615 (West 1994)) is clear. Section 2 \u2014 615 of the Code of Civil Procedure provides for dismissal based on defects in the pleadings in that the complaint is \"substantially insufficient in law.\u201d 735 ILCS 5/2 \u2014 615(a) (West 1994). On review of a section 2 \u2014 615 dismissal, we must determine whether the allegations of the complaint, when interpreted in a light most favorable to the plaintiff, sufficiently set forth a cause of action on which relief may be granted. Mt. Zion State Bank & Trust v. Consolidated Communications, Inc., 169 Ill. 2d 110, 115 (1995); T&S Signs, Inc. v. Village of Wadsworth, 261 Ill. App. 3d 1080, 1083 (1994). A trial court may not grant a section 2 \u2014 615 motion \"unless it clearly appears that no set of facts could ever be proved that would entitle the plaintiff to recover.\u201d Mt. Zion State Bank, 169 Ill. 2d at 115. In ruling on the motion, the trial court may only consider facts that are apparent from the pleadings, matters of which the court may take judicial notice, and judicial admissions contained in the record. Mt. Zion State Bank, 169 Ill. 2d at 115.\nIt is well settled that partnership law governs joint ventures. In re Johnson, 133 Ill. 2d 516, 526 (1989); Japczyk v. Gust K. Newberg Construction Co., 224 Ill. App. 3d 325, 328 (1991). Partners owe a fiduciary duty to each other. McSweeney v. Buti, 263 Ill. App. 3d 955, 959 (1994). Thus, joint venturers owe a fiduciary duty to each other. Burtell v. First Charter Service Corp., 76 Ill. 2d 427, 437 (1979); Newton v. Aitken, 260 Ill. App. 3d 717, 722 (1994). The duties of a fiduciary are those of loyalty, good faith (Newton, 260 Ill. App. 3d at 722), and honesty (Borys v. Rudd, 207 Ill. App. 3d 610, 620 (1990)). However, a partner may not be held liable to another partner for the loss of property unless the loss was caused by a partner\u2019s \"willful disregard of duty.\u201d Snell v. DeLand, 136 Ill. 533, 538 (1891). Thus, \"partnership losses occasioned by a partner\u2019s poor judgment or mistakes of judgment will be borne by the partnership so long as the decision does not involve fraud, illegality, or conflict of interest.\u201d Borys, 207 Ill. App. 3d at 620.\nIn the instant case, the plaintiff alleged in count V of its third amended complaint:\n\"[The defendant] breached its [fiduciary] duty of due care to [the plaintiff] by making unreasonably optimistic future cash flow projections and failing to properly conduct due diligence of Envirodyne.\u201d\nMore specifically, the plaintiff alleged:\n\"Salomon and [the defendant] also did not disclose that their projections of Envirodyne\u2019s future financial condition made a number of significant assumptions about Envirodyne\u2019s future prospects which were unreasonably optimistic. These included assumptions that: (1) the sales revenues of Envirodyne\u2019s subsidiary Viskase would increase annually at rates that were unreasonably high given the market share already held by Viskase; (2) Envirodyne\u2019s subsidiary Clearshield would not be subject to fluctuations in raw material prices; (3) Envirodyne\u2019s corporate overhead would not increase significantly; (4) Envirodyne could achieve significant savings in the cost of goods sold; (5) Envirodyne\u2019s capital expenditures could be reduced; (6) Envirodyne\u2019s research and development expenditures could be reduced; and (7) Envirodyne\u2019s working capital could be increased by delaying payment of payables and accelerating the collection of receivables.\u201d\nTaken in a light most favorable to the plaintiff, the allegations fail to establish that the defendant\u2019s actions amount to anything more than poor business judgment. Without more, an exercise of poor business judgment does not constitute a breach of a fiduciary duty. Borys, 207 Ill. App. 3d at 620. The plaintiff does not allege facts that would establish that the defendant knowingly misrepresented Envirodyne\u2019s financial condition, engaged in illegal activity, or purposefully benefitted at the expense of the joint venture. Thus, the plaintiff has failed to \"sufficiently set forth a cause of action on which relief may be granted.\u201d T&S Signs, 261 Ill. App. 3d at 1083. Accordingly, the trial court properly dismissed count V of the plaintiff\u2019s third amended complaint. See 735 ILCS 5/2 \u2014 615 (West 1994).\nThe plaintiff cites Marcus v. Green, 13 Ill. App. 3d 699, 710 (1973), for the proposition that it was merely required to allege that the defendant was culpably negligent. However, this proposition is not controlling in this case. The plaintiff fails to cite to. an Illinois case that defines this term, and we have not uncovered an Illinois case that defines this term. Further, Marcus' citation to Snell v. DeLand for the proposition is erroneous. Marcus, 13 Ill. App. 3d at 710. Snell does not contain the term \"culpable negligence.\u201d Instead, Snell states that a partner \"can only be held for a loss of property when such loss occurs from a willful disregard of duty.\u201d Snell, 136 Ill. at 538. We acknowledge that Marcus cites to two treatises for the proposition, however; treatises, unsupported by case law, are not binding on this court. Because the first district is the only district to hold that a partner may be liable to another partner for \"culpable negligence\u201d and the holding conflicts with our supreme court\u2019s decision in Snell, we are not bound by Marcus. Jachim v. Townsley, 249 Ill. App. 3d 878, 882 (1993).\nWe also note that, because we have decided that the plaintiff failed to establish that the defendant breached its fiduciary duty, we need not address whether the parties were, in fact, joint venturers.\nThe judgment of the circuit court of Du Page County is affirmed.\nAffirmed.\nGEIGER, P.J., and INGLIS, J., concur.", "type": "majority", "author": "JUSTICE McLAREN" } ], "attorneys": [ "Richard M. Bendix, Jr., Bret A. Rappaport, and Todd L. Padnos, all of Schwartz, Cooper, Greenberger & Krauss, Chartered, of Chicago, and Roger L. W\u00e1ldman and Philippe Zimmerman, both of Moses & Singer, of New York, New York, for appellant.", "Philip S. Beck and Rhett R. Dennerline, both of Bartlit, Beck, Herman, Palenchar & Scott, of Chicago, for appellee." ], "corrections": "", "head_matter": "ARTRA GROUP, INC., Plaintiff-Appellant, v. SALOMON BROTHERS HOLDING COMPANY, INC., et al., Defendants (D.P. Kelly and Associates, L.P., Defendant-Appellee).\nSecond District\nNo. 2\u201496\u20140788\nOpinion filed May 30, 1997.\nRichard M. Bendix, Jr., Bret A. Rappaport, and Todd L. Padnos, all of Schwartz, Cooper, Greenberger & Krauss, Chartered, of Chicago, and Roger L. W\u00e1ldman and Philippe Zimmerman, both of Moses & Singer, of New York, New York, for appellant.\nPhilip S. Beck and Rhett R. Dennerline, both of Bartlit, Beck, Herman, Palenchar & Scott, of Chicago, for appellee." }, "file_name": "0467-01", "first_page_order": 487, "last_page_order": 492 }