Opinion
No. 1-16-2610
09-01-2017
In re ESTATE OF MICHAEL SCHIESSLE, Deceased, (MICHAEL PELFRESNE, DONALD PELFRESNE, and CHARLES PELFRESNE, Plaintiffs-Appellants, v. ROBERT J. WELCENBACH, Personal Representative of the Estate of Barbara Schiessle, as Successor Trustee of Trusts H1020B, H1020C and H1020D, and as Trustee of the Cirila C. Emotin Trust; CIRILA C. EMOTIN, Individually, as Trustee of the B.A. Schiessle Trust, as Successor Trustee of the Consolidated Properties Trust, and as Executor of the Estate of Michael Schiessle; JAMES JUNIOR HARRISON, Individually; and BRADFORD FILMANOWICZ, Successor Trustee of Trust H1020A, Defendants, (Cirila C. Emotin, Individually, as Trustee of the B.A. Schiessle Trust, as Successor Trustee of the Consolidated Properties Trust, and as Executor of the Estate of Michael Schiessle, Defendant-Appellee)).
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1). Appeal from the Circuit Court of Cook County Nos. 12 P 06179 12 CH 41018 (Cons.) Honorable James G. Riley, Judge, Presiding. PRESIDING JUSTICE HOFFMAN delivered the judgment of the court.
Justices Rochford and Delort concurred in the judgment.
ORDER
¶ 1 Held: The circuit court erred in enforcing the parties' purported settlement agreement where the parties never satisfied the condition precedent that they reduce their agreement to writing and where the parties did not have a meeting of the minds on all material terms. ¶ 2 The plaintiffs, Michael Pelfresne, Donald Pelfresne, and Charles Pelfresne (collectively referred to as the "Pelfresnes"), appeal from the circuit court's order enforcing and modifying a written settlement agreement they purportedly entered into with the defendant, Cirila C. Emotin (Emotin). On appeal, the Pelfresnes argue that the court erred in modifying the terms of the settlement agreement without the consent of both parties. For the reasons that follow, we reverse and remand. ¶ 3 Historically, this matter commenced with the death of Eleanor Schiessle (Eleanor), on December 7, 1984. Through her will, Eleanor provided for the establishment of four trusts: H1020A (Trust A), H1020B (Trust B), H1020C (Trust C), and H1020D (Trust D). Trust A was created for the benefit of Eleanor's son, Michael Schiessle (Michael), and was to be funded with one-half of Eleanor's residual estate. The remaining half of Eleanor's residual estate was to be divided equally between Trusts B, C, and D, which were established for the benefit of her three grandchildren, the Pelfresnes. Eleanor's will authorized Michael to remove the trustees of Trusts A, B, C, and D "at any time and appoint another bank or trust company or an individual (including himself) as successor trustee." ¶ 4 On October 11, 2012, Michael died. Through his will, Michael provided for the establishment of two trusts, the B.A. Schiessle Trust and the Cirila C. Emotin Trust. The two trusts were to be funded by splitting Michael's gross residual assets. The B.A. Schiessle Trust was created for the benefit of his wife, Barbara Schiessle (Barbara), while the Cirila C. Emotin Trust was established for the benefit of his longtime girlfriend, Emotin. The record also reveals that, on Michael's death, Emotin became the successor trustee and sole beneficiary of the Consolidated Properties Trust, dated February 28, 2012, the corpus of which contained 13 properties. ¶ 5 On November 9, 2012, the Pelfresnes initiated this litigation by filing claims against Michael's estate (case No. 12 P 06179) and a complaint for injunctive and other relief against, inter alia, Barbara and Emotin (case No. 12 CH 41018). In their third amended complaint, the Pelfresnes alleged that, during his lifetime, Michael named himself as successor trustee of Trust A and named Barbara as successor trustee of Trusts B, C, and D. They alleged that a number of improper and unexplained transactions occurred, which reduced the value of Trusts B, C, and D—e.g., borrowing money, selling commercial and residential real estate, and transferring assets. The Pelfresnes asserted various causes of action, including fraud, breach of fiduciary duties, civil conspiracy, unjust enrichment, conversion of trust assets, and also sought an accounting and the removal of Barbara as trustee of Trusts B, C, and D. The Pelfresnes sought to recover, inter alia, more than $4 million from Michael's estate (MS Claim) and title to various commercial and residential properties. ¶ 6 On April 3, 2015, the circuit court entered an order scheduling a settlement conference for April 8, 2015. Following the settlement conference, the parties agreed to conduct subsequent settlement conferences and the court entered an order setting the matter for a second settlement conference to be held on April 16, 2015. Although the record does not contain a transcript of the proceedings from either of those dates, the parties agree that the settlement conference took place as scheduled. The parties reconvened on May 18, 2015, entered settlement negotiations, and purportedly reached a settlement agreement. ¶ 7 On June 5, 2015, the circuit court entered a written order stating that the parties had "agreed in principle to settle this matter" and that the terms of their agreement were attached thereto in a document entitled, "Principle Settlement Terms." Relevant here, the order also stated:
"(2) Finalization of the settlement shall be subject to the Pelfresnes and Emotin preparing and executing a written settlement agreement embodying all of the settlement terms and conditions by June 19, 2015, the terms of which shall control the precise nature of the transfers and title holders.The Principle Settlement Terms is 2¼ pages in length and contains 20 numbered paragraphs. It provides, in relevant part, that the parties agree to "execute mutual releases," which would resolve all claims between the Pelfresnes and Emotin, but would not resolve the Pelfresnes' claims "against Barbara or Michael." The Principle Settlement Terms also stated that Emotin would "receive all of the properties listed as Consolidated Trust Properties ***, except for the three Michigan properties *** and the Wally's property." The parties also agreed that the "805 Property *** will be marketed and sold" with Emotin receiving 45%, and the Pelfresnes 55%, of the net proceeds of that sale. Moreover, paragraph 11 of the Principle Settlement Terms stated that: "As a condition to this agreement being effective the parties need to agree on a mechanism for managing, marketing and selling the 805 Property and for managing and paying the 805 [Property] expenses." And, paragraph 20 reiterated the parties' understanding that they "will prepare and execute a written settlement agreement ('Settlement Agreement') that shall include all of the above referenced terms, terms normally included in such agreements and all terms reasonably necessary to effectuate the above referenced agreements and intentions of the parties." ¶ 8 The record reveals that the parties never executed a formal written settlement agreement by June 19, 2015, and, as a consequence, the matter was continued for "status on the finalization and execution of the written settlement agreement." ¶ 9 On September 30, 2015, Emotin filed a motion to enforce settlement. Although the record does not contain a copy of Emotin's motion to enforce, the Pelfresnes' response indicates that the parties could not agree on the terms of the written settlement agreement or the property management agreement, both of which the Pelfresnes asserted were conditions precedent to there being a settlement. On October 6, 2015, the circuit court entered a written order stating that Emotin had withdrawn her motion to enforce settlement. ¶ 10 On January 4, 2016, the parties appeared at a status hearing and advised the circuit court that a written settlement agreement had not been executed as they could not agree on three "small" items. Those items included: Emotin's refusal to represent or warrant that the lease on "Wally's Property" was current; her desire that sections 9.1 and 9.2 of the settlement agreement mirror each other; and her request that an attorney fee provision be included in the settlement agreement. Following a brief discussion of the "small changes," counsel for Emotin indicated that he could obtain Emotin's signature and return to court the following day with an executed settlement agreement. ¶ 11 Once again, a written settlement agreement was never finalized or signed by any of the parties. Having reached an impasse, the Pelfresnes filed a "Motion to Enforce Settlement," on May 18, 2016. In that motion, the Pelfresnes alleged that, at the January 4, 2016, status hearing, Emotin informed the circuit court that an agreement had been reached and presented a motion to enforce the settlement agreement and property management agreement. According to the Pelfresnes, the court instructed Emotin to make three changes to the settlement agreement and to submit a proposed order requiring the parties to sign the revised agreement. They alleged, however, that Emotin made additional changes to the settlement agreement that were not discussed in open court and were not agreed to by the Pelfresnes. The Pelfresnes requested that the court enter an order directing the parties to sign the settlement agreement and property management agreement, which they attached to their motion as Exhibits B and C. ¶ 12 Emotin filed a "response in opposition to the Pelfresnes' motion to enforce" and a "cross-motion to approve and enforce settlement." Emotin acknowledged that the parties had reached an agreement to settle all claims on June 5, 2015, and that the "parties were required to prepare and execute a written settlement agreement ***." She denied, however, that the parties executed a written settlement agreement on January 4, 2016, noting that the parties could not agree on the terms to be included therein. Emotin also explained that, following the January 4, 2016, hearing, the Pelfresnes continued to negotiate the terms of the written settlement agreement and she attached an email exchange from April 5 and 19, 2016, in support of her contention. Regarding the written settlement agreement attached to the Pelfresnes' motion to enforce, Emotin asserted that it was "riddled with *** errors," contained "incurable defects," and that some of its provisions were not permitted by law or the Principle Settlement Terms. Emotin attached a draft of her own settlement agreement, which she claimed was consistent with the Principle Settlement Terms, and requested that the court approve and enforce her version of the settlement agreement. ¶ 13 The circuit court held a hearing on the parties' cross-motions to enforce on June 13, 2016. During that hearing, the court reviewed the transcript of the January 4, 2016, hearing and observed that Emotin never presented a motion to enforce and never represented that the parties had reached an agreement on the written settlement. The court then examined the settlement agreement attached to Emotin's cross-motion to enforce and questioned whether she was "going back and redoing the settlement" and also remarked that it "sounds *** like you've worked out a whole new settlement agreement." After comparing Emotin's draft with the draft prepared by the Pelfresnes, the court concluded that the Pelfresnes' draft was consistent with the Principle Settlement Terms. The circuit court entered an order enforcing the written settlement agreement and property management agreement attached to the Pelfresnes' motion and directing Emotin to sign the written agreements. The court's order further provided that the settlement agreement "shall be modified to provide for Quitclaim Deeds to the Michigan Properties" and modified to provide that the Pelfresnes' claim against the estate of Michael will be "presented as opposed to allowed[.]" ¶ 14 On August 1, 2016, the Pelfresnes filed a "Motion for Rule to Show Cause" why Emotin should not be held in contempt for refusing to comply with the circuit court's order of June 13, 2016, directing her to sign the settlement agreement. The Pelfresnes claimed that they modified the settlement agreement pursuant to the court's order of June 13, 2016, and that Emotin had failed to sign the agreement as the court ordered her to do. ¶ 15 On August 2, 2016, the circuit court heard arguments on the Pelfresnes' motion for a rule to show cause. The transcript of the proceedings from that date reveals that Emotin's counsel presented a revised settlement agreement to the court, which he asserted reflected the changes the court made during the June 13, 2016, hearing. More specifically, Emotin explained that the language in section 10 of the settlement agreement, governing the dismissal of claims, was not broadened to provide that all claims between the parties, pled and unpled, were to be dismissed with prejudice. She also noted that section 8 of the settlement agreement was not modified to provide that the Pelfresnes shall "present the MS Claim." The court reviewed Emotin's redraft and noted that it did not "see any major problem." Nevertheless, the court asked the parties "to look at the two [draft settlement agreements] *** [and] make up [their] mind." The court denied the Pelfresnes' motion for a rule to show cause, denied Emotin's request to "approve" her version of the settlement agreement, and continued the matter to August 8, 2016. ¶ 16 On August 8, 2016, the parties informed the circuit court that they could not come to an agreement on the language to be included in the dismissal-of-claims provision or the MS-Claim provision. Following arguments, the court ultimately agreed with the language contained in Emotin's redraft and entered an order stating that it "approves the version of the settlement agreement as presented to the court on 8/2 and 8/8/16 providing that the Pelfresnes shall present the MS Claims (section 8) and that all claims, pled and unpled, between settling parties are to be dismissed with prejudice (section 10)." ¶ 17 On August 31, 2016, the Pelfresnes filed a motion to reconsider. They maintained that the Principle Settlement Terms "specifically provided that the Pelfresnes were preserving their claims against Michael Schiessle, Barbara Schiessle, and any trusts established for their benefit ***." They argued the circuit court's modification requires them to dismiss any claims they may have against Michael and Barbara since Emotin serves as executor of Michael's estate and as trustee of the B.A. Schiessle trust. The Pelfresnes requested that the court change the language in section 10 back to the way it appeared on June 13, 2016. ¶ 18 On September 15, 2016, the circuit court denied the Pelfresnes' motion to reconsider. The court did, however, modify section 10 to include the following additional language:
(3) This matter is entered and continued for further status on the finalization and execution of the written agreement on June 22, 2015."
" 'The scope of the dismissal herein shall not include the Pelfrenses' claims against the estate of Michael Schiessle, Barbara Schiessle and/or the [B.A. Schiessle Trust].' "On September 30, 2016, the Pelfresnes filed a timely notice of appeal pursuant to Supreme Court Rule 307(a)(1) (eff. Jan. 1, 2016). ¶ 19 On appeal, the Pelfresnes argue that the circuit court's order modifying section 10 of the written settlement agreement must be reversed because it was entered contrary to the parties' oral agreement, the terms of which were memorialized in the court's order of June 5, 2015, and the document entitled, "the Principle Settlement Terms." Before reaching this issue, however, we must first address whether the written settlement agreement enforced by the circuit court on June 13, 2016, and August 8, 2016, constitutes a valid contract. ¶ 20 A settlement agreement is in the nature of a contract and as such, its construction and enforcement are governed by the principles of contract law. K4 Enterprises, Inc. v. Grater, Inc., 394 Ill. App. 3d 307, 313 (2009). For a valid contract to be formed, an " 'offer must be so definite as to its material terms or require such definite terms in the acceptance that the promises and performances to be rendered by each party are reasonably certain.' [Citations.]" Academy Chicago Publishers v. Cheever, 144 Ill. 2d 24, 29 (1991). A contract is sufficiently definite and certain if a court is enabled, from the terms and provisions thereof, to determine what the parties agreed to do. Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill. 2d 306, 314 (1987). Further, "[a]n enforceable contract must include a meeting of the minds or mutual assent as to the terms of the contract." Academy Chicago Publishers, 144 Ill. 2d at 30. "Although some terms of a contract may be missing or left to be agreed upon, the parties' failure to agree upon an essential term of a contract indicates that the mutual assent required to make a contract is lacking and, thus, there is no enforceable contract." Rose v. Mavrakis, 343 Ill. App. 3d 1086, 1091 (2003). ¶ 21 In the instant case, the record demonstrates that the parties were engaged in lengthy settlement negotiations in a complex, multi-million-dollar probate dispute. Although the parties may have reached an agreement on some terms of the settlement, they could not agree on the terms to be included in the written settlement agreement, nor could they agree on a "mechanism for managing, marketing and selling the 805 Property." Although the parties continued to negotiate and exchanged numerous drafts of the written settlement agreement, they reached an impasse and eventually asked the circuit court to decide whose draft most accurately reflected the parties' oral agreement. A comparison of the two drafts submitted to the circuit court illustrates the extent of the parties' disagreement. In particular, the parties did not agree on: the distribution of net sale proceeds from the 805 Property; the scope of the dismissal of claims; whether the MS Claim against Michael's estate should be "presented" or "allowed"; whether an attorneys fee provision should be included; whether the parties should execute warranty or quitclaim deeds; and whether Emotin's grandchildren should be compensated for "releasing" their purported life-estate interest in the Wally's Property. Clearly, without an agreement on how to distribute trust assets or an agreement as to which claims would be dismissed against Emotin, the parties could not have a workable agreement that would settle the litigation. Even the circuit court remarked that it appeared as if Emotin "had worked out a whole new settlement agreement" and questioned whether she was "redoing the settlement." Since a meeting of the minds between the parties occurs when there has been assent to all essential terms and conditions, the parties here did not have a meeting of the minds. See Quinlan v. Stouffe, 355 Ill. App. 3d 830, 839 (2005); La Salle National Bank v. International Ltd., 129 Ill. App. 2d 381, 394 (1970). We conclude, therefore, that the written settlement "agreement" is not a valid contract and the circuit court erred in granting the Pelfresnes' and Emotin's motions to enforce of June 13, 2016, and August 8, 2016, respectively. ¶ 22 Even if the written settlement "agreements" of June 13, 2016, and August 8, 2016, are unenforceable, that still leaves the question of whether the parties' oral agreement of June 5, 2015, can serve as an independent basis of contracting. We find that it does not. ¶ 23 In the absence of a formal, written contract, the formation of a contract turns on the intent of the parties. In Chicago Investment Corp. v. Dolins, 107 Ill. 2d 120, 126-27 (1985), the Illinois Supreme Court explained:
"The fact that parties contemplate that a formal agreement will eventually be executed does not necessarily render prior agreements mere negotiations, where it is clear that the ultimate contract will be substantially based upon the same terms as the previous document. [Citation.] If the parties *** intended that the *** document be contractually binding, that intention would not be defeated by the mere recitation in the writing that a more formal agreement was yet to be drawn. However, parties may specifically provide that negotiations are not binding until a formal agreement is in fact executed. [Citation.] If the parties construe the execution of a formal agreement as a condition precedent, then no contract arises unless and until that formal agreement is executed." See also Ceres Illinois, Inc. v. Illinois Scrap Processing, Inc., 114 Ill. 2d 133, 143-44 (1986).¶ 24 The question of whether the oral agreement of June 5, 2013, is itself a contract depends upon the parties' intent. Magnus v. Lutheran General Health Care System, 235 Ill. App. 3d 173, 181 (1992). At least initially, the intent of the parties to form a contract presents a question of law for the court to decide. Quake Construction, Inc. v. American Airlines, Inc., 141 Ill. 2d 281, 288 (1990). In Quake, our supreme court explained the analysis a court must undertake to determine whether a binding agreement exists between the parties.
"A circuit court must initially determine, as a question of law, whether the language of the purported contract is ambiguous as to the parties' intent. [Citation.] If no ambiguity exists in the writing, the parties' intent must be derived by the circuit court, as a matter of law, solely from the writing itself. [Citation.] If the terms of the alleged contract are ambiguous or capable of more than one interpretation, however, parol evidence is admissible to ascertain the parties' intent. [Citation.] If the language of an alleged contract is ambiguous regarding the parties' intent, the interpretation of the language is a question of fact which a circuit court cannot properly determine on a motion to dismiss. [Citation.]" Id. at 288-89.In this case, we look to the Principle Settlement Terms and the circuit court's written order of June 5, 2015, both of which memorialized the parties' oral agreement, to determine whether it supports the formation of a contract. ¶ 25 In cases where courts have found that a communication was not binding, the communication contained specific language conditioning the agreement upon a future execution of a formal agreement. For example, in Magnus, 235 Ill. App. 3d at 180, a letter of intent stated that "[e]ach party's obligations hereunder are subject to and contingent upon the execution of the Purchase Agreement." (Emphasis added.) The court held that this language "was unambiguous, indicating as a matter of law that no contract came into existence until the subsequent document was executed." Id. at 181. Likewise, in Interway, Inc. v. Alagna, 85 Ill. App. 3d 1094, 1096 (1980), the court held that a letter of intent was not a binding agreement because it contained the following wording: "[o]ur purchase is subject to a definitive Purchase and Sale Contract to be executed by the parties." (Emphasis added.) The court reasoned that the term "subject to" showed, as a matter of law, that the parties did not intend for the letter of intent to be binding. Id. at 1099-1100. ¶ 26 Similarly here, the parties' oral agreement, as memorialized in the circuit court's written order of June 5, 2015, contains explicit language stating that the parties' obligations are "subject to" the execution of a subsequent, formal, written agreement. The written order plainly states:
"(2) Finalization of the settlement shall be subject to the Pelfresnes and Emotin preparing and executing a written settlement agreement embodying all of the settlement terms and conditions by June 19, 2015, the terms of which shall control the precise nature of the transfers and title holders." (Emphasis added.)Likewise, paragraph 20 of the Principle Settlement Terms provides that:
"20. The parties will prepare and execute a written settlement agreement ("Settlement Agreement") that shall include all of the above referenced terms, terms normally included in such agreements and all terms reasonably necessary to effectuate the above referenced agreements and intentions of the parties."In our view, this language is incapable of being understood in more senses than one. It plainly and clearly demonstrates that the parties intended that the execution of a formal, written settlement agreement was a condition precedent to the formation of a contract. To hold otherwise would render these provisions meaningless. See Thompson v. Gordon, 241 Ill. 2d 428, 442 (2011) ("A court will not interpret a contract in a manner that would nullify or render provisions meaningless, or in a way that is contrary to the plain and obvious meaning of the language used."). Because the reduction of an agreement to writing and its formal execution was objectively intended by the parties as a condition precedent to its completion, there was no contract until then. See Ceres Illinois, Inc., 114 Ill. 2d at 143. Since a written settlement agreement was never executed in this case, the parties' oral settlement agreement, as memorialized in the circuit court's order of June 5, 2015, and the Principle Settlement Terms, is not a binding contract. ¶ 27 Accordingly, we find that the circuit court erred in finding that the parties entered into a binding and enforceable settlement agreement. Having found that an enforceable contract does not exist, we need not address the Pelfresnes' argument that the circuit court erred in modifying the terms of the settlement agreement. ¶ 28 For the reasons stated, we reverse the circuit court's orders of June 13, 2016, and August 8, 2016, enforcing the written settlement agreement, and we remand the cause for further proceedings. ¶ 29 Reversed and remanded.
Under the June 13, 2016, version, section 10 stated: "The Pelfresnes, within thirty (30) days of the execution of this Agreement, agree to dismiss with prejudice Counts IX, X, XIII, XV, XVI, XVII, XVIII, XXII (as to Emotin only), XXIII, XXIV and XXV of the Third Amended Complaint for Injunctive and Other Relief." --------