                                  2015 IL App (1st) 132183


                                                                               FIRST DIVISION
                                                                                 March 16, 2015



Nos. 1-13-2183 & 1-14-0381
(Consolidated)

WILLIS CAPITAL LLC,                                 )      Appeal from the
                                                    )      Circuit Court of
                     Plaintiff-Appellant,           )      Cook County
                                                    )
       v.                                           )      No. 07 CH 29207
                                                    )
BELVEDERE TRADING LLC, THOMAS                       )
HUTCHINSON and OWEN O'NEILL,                        )      Honorable
                                                    )      Kathleen M. Pantle,
                     Defendants-Appellees.          )      Judge Presiding.

       JUSTICE HARRIS delivered the judgment of the court, with opinion.
       Presiding Justice Delort and Justice Cunningham concurred in the judgment and opinion.


                                            OPINION

¶1     Plaintiff, Willis Capital LLC (Willis), appeals the trial court's dismissal of its first

amended petition for relief from judgment under section 2-1401 of the Code of Civil Procedure

(Code) (735 ILCS 5/2-1401 (West 2012)).      On appeal, Willis alleges that the trial court should

have granted its section 2-1401 petition to "reopen a 2008 settlement agreement and judgment

under which it sold its ownership interest in [d]efendant Belvedere Trading LLC (Belvedere)"

because: (1) defendants fraudulently concealed information regarding the value of the business

prior to the execution of the settlement agreement; (2) the written waiver of fiduciary duties

contained in the settlement agreement is unenforceable; (3) the March 5, 2012, dismissal order

by the Chicago Board Options Exchange (CBOE) had no preclusive effect on the petition; and
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


(4) the trial court should have held an evidentiary hearing on the petition.             Willis also

challenges the trial court's award of reasonable attorney fees to defendants.      For the following

reasons, we affirm the dismissal of the section 2-1401 petition.       However, we reverse the trial

court's award of attorney fees and costs to defendants.

¶2                                         JURISDICTION

¶3      The trial court granted defendants' motion to dismiss the petition on June 7, 2013.

Willis filed a notice of appeal on July 5, 2013.         Prior to Willis filing the notice of appeal,

defendants filed a fee petition seeking fees and costs pursuant to the settlement agreement.      On

January 6, 2014, the trial court awarded defendants $172,391.75 in fees and costs.       Willis filed

a second notice of appeal from this order on January 31, 2014.       This court consolidated the two

appeals.    Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rule

304(b)(3) governing appeals from a judgment granting or denying relief on a section 2-1401

petition.   Ill. S. Ct. R. 304(b)(3) (eff. Feb. 26, 2010).

¶4                                         BACKGROUND

¶5      Willis's owner, William Carlson, founded Belvedere in 2002, investing his life savings of

$405,000 to start the company.          Defendants O'Neill and Hutchinson subsequently joined

Belvedere as partners, respectively investing $160,000 and $85,000, in initial capital.     In 2007,

Carlson experienced medical issues and O'Neill and Hutchinson took control of the company.

However, they also began to deny Willis access to Belvedere's assets, opportunities, and benefits.

¶6      In May 2007, after efforts to resolve the dispute between the parties failed, Willis filed a

request for arbitration with the CBOE pursuant to Belvedere's operating agreement.            Willis

alleged that it was "entitled to disassociate from Belvedere and have [its] membership interest


                                                  -2-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


purchased at its fair value in accordance with 805 ILCS 180/35-60."         On October 12, 2007,

Willis filed a claim in court seeking dissolution of Belvedere.      During this time, Willis asked

defendants to obtain an appraisal of Belvedere but defendants refused.             The trial court

scheduled a hearing for March 14, 2008, and entered an order compelling arbitration.

¶7     On January 31, 2008, O'Neill and Hutchinson informed Willis of their intent to call a

meeting in February to discuss Willis's request to dissolve Belvedere.         In response, Willis

demanded information related to Belvedere's day-to-day operations, but O'Neill and Hutchinson

refused to make the books and records available.       Instead, they referred Willis to Belvedere's

office manager.     Willis never received the requested materials.

¶8     Unbeknownst to Willis, prior to the February meeting O'Neill and Hutchinson engaged

Horwich, Coleman and Levin (HCL), a Chicago accounting and appraisal firm, to determine a

market value for Willis's one-third interest in Belvedere.    The retention letter stated that HCL

was being asked to provide services in connection with the Belvedere litigation.              HCL

developed statistical models to estimate the value and it presented the models to O'Neill and

Hutchinson.      Defendants asked HCL not to prepare a written report and to stop further work on

the appraisal.    O'Neill and Hutchinson did not disclose any of the information they obtained

from HCL to Willis.

¶9     At the February meeting, Willis asked for an appraisal of Belvedere but defendants

responded that an appraisal was not necessary because they did not want to sell their interests in

the company.      After a three-hour discussion, Carlson agreed to sell all of Willis's interest in

Belvedere to O'Neill and Hutchinson for $17.5 million.       According to O'Neill and Hutchinson,

this sum represented a return of Willis's approximately $4.2 million in capital account as of


                                                -3-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


December 31, 2006, plus $13.3 million, which was Willis's share of Belvedere's trading profits

for 2007.   The parties signed a one-page document.     On March 6, 2008, counsel for defendants

presented the parties with a four-page settlement agreement, which the parties signed.

¶ 10   The settlement agreement contained a section titled "Mutual General Releases." This

section provides that "Willis and Carlson *** hereby release, acquit and forever discharge each

and all of the Belvedere Parties *** of and from any and all manner of actions, claims, causes of

actions, suits, debts, dues, sums of money, contracts, agreements, promises and demands

whatsoever, in law or in equity, known or unknown, from the beginning of time through the date

of this Agreement, including but not limited to all matters arising out of or relating to the

Arbitration and the State Court Case." The section further provides that the parties "have

accepted their respective consideration as a complete compromise of controversy between the

parties involving disputed issues of law and fact, and that each party fully assumes the risk that

the facts or the law may be other than they believe."

¶ 11   The agreement also states that the parties have been advised by their attorneys and "agree

that they are not relying upon any promise, inducement, representation, statement, disclosure or

duty of disclosure of the other party in entering into this Agreement.         The parties to this

Agreement agree that they are not fiduciaries to each other with respect to the negotiation,

preparation and execution of this Agreement.     This Agreement supersedes all prior written and

verbal agreements and understandings related to the subject matter of the Agreement." The

agreement also stated that the parties shall bear their own legal fees and costs "and shall not seek

reimbursement from each other for payment *** in connection with the Arbitration, the State

Court Case, the negotiation and preparation of this Agreement or any other matter." However,


                                               -4-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


the settlement agreement provides that "[i]n an action brought by any party to enforce the terms

hereof, the prevailing party shall be entitled to recover its reasonable legal fees and expenses in

addition to any other amounts or relief provided to such prevailing party." Pursuant to the

settlement, Willis dismissed the state court case.

¶ 12     Approximately three years later, Carlson and his counsel were researching a matter

related to the case when they contacted HCL.         They discovered that Belvedere had retained

HCL in January 2008 to appraise the value of Belvedere.        Willis had no knowledge of HCL's

prior work for Belvedere until this point. Willis subsequently filed a legal malpractice action

against its counsel, claiming that they failed to obtain an appraisal of Belvedere's worth and

"thereby permitted their clients to settle without any appropriate advice and counsel as to what

was being surrendered."     Willis also filed another arbitration action against defendants with the

CBOE on May 17, 2011.         Willis alleged that at the time of the settlement, defendants were

fiduciaries of Willis and committed fraud by withholding information regarding Belvedere's

value.     Defendants filed a motion to dismiss, which the CBOE granted with prejudice on March

5, 2012.

¶ 13     On March 26, 2012, Willis filed its initial section 2-1401 petition in the trial court, and

filed an amended petition on December 20, 2012.         In December 2012, Willis retained Rona

Seams to provide an expert opinion on the value of Willis's prior interest in Belvedere based on

externally available information and without Belvedere's cooperation.            Seams relied on

Belvedere documents created between 2004 and 2008 in preparing her report, and Willis had

these documents in its possession at the time of the settlement agreement.        Seams concluded




                                                -5-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


that "Mr. Carlson's uncompensated value based on 2007 Belvedere financials is more than $49.8

million as of March 1, 2008."

¶ 14   Defendants filed a motion to dismiss pursuant to section 2-619.1 of the Code (735 ILCS

5/2-619.1 (West 2012)).     Defendants argued that the petition should be dismissed pursuant to

section 2-615 (735 ILCS 5/2-615 (West 2012)) because, among other reasons, it failed to meet

the affidavit and due diligence requirements of section 2-1401.       They argued that pursuant to

section 2-619 (735 ILCS 5/2-619 (West 2012)), the petition should be dismissed because it was

barred by the CBOE's March 5, 2012 order, section 2-1401's two-year statute of limitations, the

release contained in the settlement agreement, and Illinois Supreme Court Rule 201(b)(3) (eff.

July 1, 2014). Willis filed a motion for an evidentiary hearing which the trial court denied

without prejudice on April 4, 2013.

¶ 15   On June 7, 2013, the trial court dismissed Willis's section 2-1401 petition with prejudice.

It found that the petition failed to state a claim for rescission of the settlement agreement because

it did not allege sufficient facts to show that Willis intended to return the $17.5 million he

received in the settlement. The petition also failed to state a claim for fraudulent concealment

due to the nonreliance clause in the agreement, and the mutual release also barred Willis's fraud

and breach of fiduciary duty claims. The trial court further found that Willis failed to exercise

due diligence in the 2007 litigation because it never tried to obtain an appraisal prior to settling,

even though it was able to produce such an appraisal in the present litigation based on documents

available at the time of the settlement.   The trial court also determined that res judicata barred

the petition and that Rule 201(b)(3) protected HCL's appraisal from disclosure as consultant

work product.


                                                -6-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


¶ 16     Willis filed a notice of appeal on July 5, 2013.         Prior to Willis filing the notice of

appeal, defendants filed a fee petition seeking fees and costs pursuant to the settlement

agreement. On January 6, 2014, the trial court awarded defendants $172,391.75 in fees and

costs.   Willis filed a second notice of appeal from this order on January 31, 2014.         This court

consolidated the two appeals.

¶ 17                                          ANALYSIS

¶ 18     Willis contends that the trial court erred in dismissing his section 2-1401 petition for relief.

Section 2-1401 of the Code sets forth a comprehensive statutory procedure by which final orders

and judgments may be vacated more than 30 days after entry by the trial court. 735 ILCS

5/2-1401 (West 2012).       To obtain relief under this section, the petitioner must allege specific

facts showing (1) the existence of a meritorious defense; (2) due diligence in presenting the

defense to the trial court; and (3) due diligence in filing the section 2-1401 petition.        Smith v.

Airoom, Inc., 114 Ill. 2d 209, 220-21 (1986).         If the reviewing court finds that the petitioner

failed to exercise due diligence, it need not address whether petitioner alleged sufficient facts to

establish a meritorious defense.     Id. at 221-22.

¶ 19     Due diligence requires the petitioner to show that "he acted reasonably, and not

negligently, when he failed to initially resist the judgment."         Id. at 222.   A section 2-1401

proceeding "is not intended to give the litigant a new opportunity to do that which should have

been done in an earlier proceeding or to relieve the litigant of the consequences of [his] mistake

or negligence."    In re Marriage of Himmel, 285 Ill. App. 3d 145, 148 (1996).          To prevail on a

section 2-1401 petition based on allegations of newly discovered evidence, the petitioner must

show that the evidence was not known to him at the time of the original proceeding "and could


                                                  -7-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


not have been discovered by [him] with the exercise of reasonable diligence." In re Marriage

of Goldsmith, 2011 IL App (1st) 093448, ¶ 15.      Where the trial court dismisses a section 2-1401

petition without holding an evidentiary hearing, our standard of review is de novo.        People v.

Vincent, 226 Ill. 2d 1, 18 (2007). 1

¶ 20    Regarding the element of due diligence, the trial court found that Willis failed to exercise

due diligence in the 2007 litigation because it never tried to obtain an appraisal prior to settling,

even though it produced such an appraisal in the present litigation based on documents available

at the time of the settlement.    In support of its section 2-1401 petition, Willis retained expert

Rona Seams who formed an opinion on the value of Willis's interest in Belvedere based on

externally available information and without Belvedere's cooperation.        Relying on Belvedere

documents created between 2004 and 2008 in preparing her report, Seams concluded that "Mr.

Carlson's uncompensated value based on 2007 Belvedere financials is more than $49.8 million as

of March 1, 2008." Willis had these documents in its possession at the time of the settlement

proceedings but did not use this material to obtain its own appraisal before executing the

settlement agreement with defendants for $17.5 million. We understand Willis's feeling of

being cheated by its former partners and the assertion that it was lulled into accepting a grossly

reduced amount for its share of the Belvedere company.       However, we cannot overlook the fact

that in order to prevail on its petition, Willis must assert that the true value of the shares in

question could not have been ascertained at the time that it executed the settlement agreement to


1
 We note that there is some disagreement about whether the trial court's dismissal of a section
2-1401 petition based on a lack of due diligence is reviewed under the abuse of discretion standard
or de novo. See Rockford Financial Systems, Inc. v. Borgetti, 403 Ill. App. 3d 321 (2010); MB
Financial Bank, N.A. v. Ted & Paul, LLC, 2013 IL App (1st) 122077. Nevertheless, our
determination is the same under either standard.

                                                -8-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


sell the shares to its former partners.   Clearly, Willis is unable to meet that test.   Because of its

business experience, Willis knew, or should have known, that an appraisal of the value of the

company was necessary prior to selling its shares, given the magnitude of the transaction.

Further, Willis had reason to be suspicious of its partners, their motives and truthfulness in light

of their actively obstructive behavior in denying Willis access to important information about the

business previously.    We note also that Willis could have sought an appraisal of the business

using the very documents in its possession at the time of the settlement.            It is those same

documents that Willis later used to retrospectively determine the value of the company at the

time of settlement, and yet, Willis chose instead to put its faith in the representations of the very

partners whose questionable behavior was the catalyst for the sale and settlement.            Empathy

aside, Willis must meet the necessary legal requirements in order to prevail on its petition.

Failing to do so, we cannot extricate Willis from the natural consequences of a bad business

decision.   The trial court did not err in finding that Willis failed to exercise due diligence in the

settlement proceedings.      Section 2-1401 does not provide the petitioner relief from "the

consequences of his own mistake or negligence."        Smith, 114 Ill. 2d at 222.

¶ 21   Willis disagrees, arguing that it exercised adequate due diligence given that defendants

had exclusive control of Belvedere at the time and, therefore, Willis did not have the same ability

to discover the truth about the value of his interest in Belvedere as defendants.          Willis also

argues that defendants owed him a fiduciary duty and, as such, it justifiably relied on their

misrepresentations regarding the value of Willis's interest. As support, Willis cites to Gerill

Corp. v. Jack L. Hargrove Builders, Inc., 128 Ill. 2d 179, 195 (1989).        In Gerill, however, the

trial court "disallowed recovery for over $800,000 of the almost $1.1 million in liabilities that it


                                                 -9-
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


found Hargrove had misrepresented" because the disallowed items included costs that could have

been discovered "through reasonable and prudent diligence."        Id. at 194. The liabilities the

trial court allowed in recovery involved "matters almost exclusively within the knowledge of

Hargrove and it would have been difficult, if not impossible" for the plaintiff to discover them.

Id. at 195.   The supreme court agreed with the trial court's determination.     Id.   Here, Willis

had access to Belvedere documents that could have been used to obtain an appraisal of its

interest prior to the execution of the settlement agreement, as evidenced by Seams' report.

Gerill does not support Willis here.

¶ 22   Furthermore, Willis does not present any cases supporting its contention that if

defendants owed the petitioner a fiduciary duty, the petitioner is relieved of its duty to exercise

due diligence in a section 2-1401 petition for relief.    Even if defendants owed Willis a duty to

disclose and fraudulently concealed the appraisal obtained from HCL, Willis must have

detrimentally relied on the concealment.      Himmel, 285 Ill. App. 3d at 148. To set aside a

settlement agreement based on fraudulent concealment in a section 2-1401 petition, Willis must

show that "the misrepresentation of the assets could not reasonably have been discovered at the

time of, or prior to, the entry of the judgment."   Id.   As discussed above, Belvedere documents

available prior to the entry of the settlement agreement could have been used by Willis to obtain

its own appraisal.   The trial court did not err in dismissing Willis's section 2-1401 petition for

lack of due diligence. 2

¶ 23   Willis next contends that the trial court should have granted its motion for an evidentiary

hearing on the petition because it alleged facts showing that defendants fraudulently concealed the

2
 Due to our disposition on appeal, we need not address Willis's other contentions regarding the
merits of the trial court's dismissal of its section 2-1401 petition.

                                               - 10 -
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


existence of the HCL appraisal prior to the settlement. However, as defendants point out in their

brief, they did not answer Willis's petition on the merits but instead filed a motion to dismiss the

petition. They did not allege facts contradicting the petition's allegations that defendants withheld

the HCL appraisal from Willis. In this situation, the trial court does not abuse its discretion by not

holding an evidentiary hearing. See Ostendorf v. International Harvester Co., 89 Ill. 2d 273,

286-87 (1982).     Also, the trial court found that Willis did not exercise due diligence in

discovering the appraisal value of his interest in Belvedere prior to the settlement; in such a case, it

is not an abuse of discretion to deny a request for an evidentiary hearing. Ruiz v. Wolf, 250 Ill.

App. 3d 121, 126-27 (1993). The cases cited by Willis as support, In re Marriage of Reines, 184

Ill. App. 3d 392 (1989), Lubbers v. Norfolk & Western Ry. Co., 147 Ill. App. 3d 501 (1986), People

v. B.R. MacKay & Sons, Inc., 141 Ill. App. 3d 137 (1986), and Gatto v. Walgreen Drug Co., 61 Ill.

2d 513 (1975), do not involve a finding that the petitioner failed to exercise due diligence.

Furthermore, the record does not contain a transcript of the hearing on this motion. Without this

material, we cannot know the arguments presented at the proceedings or the reasoning of the trial

court when it made its determinations. Under these circumstances, we must presume that the trial

court acted in conformity with the law and had a sufficient basis in the record for its determination.

Foutch v. O'Bryant, 99 Ill. 2d 389, 391-92 (1984).

¶ 24    Willis also contends that the trial court erred in awarding attorney fees and costs to

defendants.   Generally, each party in a case is responsible for its own attorney fees and costs

unless there is express contractual or statutory language to the contrary.      Sandholm v. Kuecker,

2012 IL 111443, ¶ 64.      Since it is an exception to the general rule, a contract provision that

provides for payment of the other party's attorney fees is strictly construed by courts.     Chapman


                                                 - 11 -
Nos. 1-13-2183 & 1-14-0381
(Consolidated)


v. Engel, 372 Ill. App. 3d 84, 87 (2007). Therefore, a reviewing court will interpret fee-shifting

provisions "to mean nothing more–but also nothing less–than the letter of the text." Erlenbush

v. Largent, 353 Ill. App. 3d 949, 952 (2004).       Strict construction of fee-shifting provisions is

warranted because "attorney fees can be a substantial expense and are an important consideration

when entering into contracts." Negro Nest, LLC v. Mid-Northern Management, Inc., 362 Ill.

App. 3d 640, 651 (2005).       We review the trial court's interpretation of a fee-shifting provision

in a contract de novo.     Chapman, 372 Ill. App. 3d at 87.

¶ 25   Here, the settlement agreement provides that "[i]n an action brought by any party to

enforce the terms hereof, the prevailing party shall be entitled to recover its reasonable legal fees

and expenses in addition to any other amounts or relief provided to such prevailing party."

Willis filed a section 2-1401 petition to invalidate the settlement agreement, not to enforce it.

Defendants here defended the agreement in response to the petition, but the provision says

nothing about receiving fees in such circumstances.      The clear terms of the provision state that

attorney fees and expenses may be awarded to a prevailing party in "an action brought by any

party to enforce the terms" of the agreement.        Therefore, the trial court erred in awarding

attorney fees and costs to defendants pursuant to the settlement agreement.

¶ 26   For the foregoing reasons, the judgment of the circuit court is affirmed as to the dismissal

of the section 2-1401 petition.     However, we reverse the circuit court's award of attorney fees

and costs to defendants.

¶ 27   Affirmed in part and reversed in part.




                                                - 12 -
         REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT



WILLIS CAPITAL LLC,

                             Plaintiff-Appellant,

              v.

BELVEDERE TRADING LLC, THOMAS
HUTCHINSON and OWEN O'NEILL,

                             Defendants-Appellees.


                                 Nos. 1-13-2183 & 1-14-0381
                                        (Consolidated)

                                 Appellate Court of Illinois
                                 First District, First Division

                                        March 16, 2015


JUSTICE HARRIS delivered the judgment of the court, with opinion.
Presiding Justice Delort and Justice Cunningham concurred in the judgment and opinion.


                        Appeal from the Circuit Court of Cook County.

                     The Honorable Kathleen M. Pantle, Judge Presiding.


Cronin & Co., Ltd., 161 North Clark Street, Suite 2550, Chicago, IL 60601,
(Thomas C. Cronin, Daniel J. Kelley and Leland W. Hutchinson, Jr., of counsel),
for APPELLANT.

Dykema Gossett PLLC, 10 South Wacker Drive, Suite 2300, Chicago, IL
60606, (Patrick T. Stanton and Heather L. Kramer, of counsel), for APPELLEES.
