                                                                   FOURTH DIVISION
                                                                   January 20, 2011


No. 1-09-2440

MELISSA S. PIELET, Individually and on Behalf        )     Appeal from the
I.B.P Limited Partnership and TB Limited             )     Circuit Court of
Partnership,                                         )     Cook County.
                                                     )
                Plaintiff,                           )
                                                     )
       v.                                            )
                                                     )
DENNIS J. HIFFMAN, E. THOMAS                         )
COLLINS, JR., RICHARD E. HULINA, and                 )
DANIEL G. ANDERSON,                                  )
                                                     )
                Defendants                           )
                                                     )
(John E. Shaffer,                                    )
                                                     )
                Third-Party Defendant;               )
                                                     )
John F. Girsch, Edward Zifkin, Mark Munaretto,       )
and Mark Wheeles, Individually and Derivatively      )
on Behalf of TB Limited Partnership; and Mark        )
Munaretto and William Skrzelowski, Individually      )
and Derivatively on Behalf of I.B.P. Limited         )
Partnership,                                         )
                                                     )
                Intervening Plaintiffs-Appellants;   )     No. 01 CH 21984
                                                     )
Dennis J. Hiffman, John E. Shaffer, E. Thomas        )     Honorables
Collins, Jr., Daniel G. Anderson, and Richard E.     )     David Donnersberger (December 8,
Hulina,                                              )     2005 order) and
                                                     )     Mary K. Rochford (August 13, 2009
                Defendants-Appellees).               )     order),
                                                     )     Judges Presiding.

       JUSTICE LAVIN delivered the judgment of the court, with opinion.
       Presiding Justice Gallagher and Justice Pucinski concurred in the judgment and opinion.
1-09-2440


                                            OPINION

       This appeal stems from real estate partnerships that were formed nearly two decades ago

to develop shopping centers in two suburbs largely financed through tax increment financing

(TIF) bonds. This matter was litigated in the Chancery Division of the Circuit Court of Cook

County for more than eight years and appellants-intervenors’ cause of action was dismissed in two

separate orders entered in 2005 and 2009, both times for a lack of standing. On appeal,

appellants contend that both counts of their complaint were improperly dismissed. For the

reasons discussed at length below, we reverse and remand.

                                       I. BACKGROUND

       The partnerships in question were formed by various persons who were employed in a

Chicago real estate development firm. Appellants, intervening plaintiffs (intervenors) below,1

were limited partners in two Illinois limited partnerships: I.B.P. Limited Partnership (IBP) and TB

Limited Partnership (TB), of which Dennis J. Hiffman, John E. Shaffer, E. Thomas Collins, Jr.,

Daniel G. Anderson, and Richard E. Hulina (defendants) were the general partners in one or both

of the partnerships. Defendants were principals in HSA Commercial Real Estate, Inc. (HSA), in

the early 1990's, with intervenors then being either employees or contractors of HSA.

       The first involved partnership, IBP, was formed by defendants in January 1992 for the



       1
          The underlying litigation was initially commenced by Melissa S. Pielet, however, she
later withdrew. Another individual, Keith Bank, assumed Pielet’s role as party plaintiff for a short
time, but also withdrew. Appellants, consisting of Mark Munaretto, William Skrzelowski, John
Girsch, Edward Zifkin, and Mark Wheeles, filed a motion to intervene which was granted, and
thereby became the intervening-plaintiffs below.

                                                 2
1-09-2440


purpose of developing a shopping center in Bedford Park, Illinois. Various employees and

contractors of HSA were offered the opportunity to become limited partners of IBP in exchange

for a nominal capital contribution of $10 per 1% of ownership. Intervenors Mark Munaretto and

William Skrzelowski each became a 0.5% limited partner in this entity. The second partnership,

TB, was formed in May 1993 by Hiffman, Shaffer, Collins and Hulina, for the purposes of

acquiring and developing property in Broadview, Illinois. Again, employees and contractors were

offered the opportunity to buy into the partnership as limited partners for $10 per 1% of

ownership. In July 1993, intervenors John Girsch, Edward Zifkin, and Mark Wheeles each

became 0.5% limited partners, and Munaretto became a 0.75% limited partner.

        Simply stated, the two projects undertaken by IBP and TB involved substantial real estate

redevelopment. The general partners planned to utilize TIF bonds issued by the respective

municipalities involved in the projects. TIF bonds are financial instruments issued by

municipalities to assist in the funding of redevelopment projects in designated areas. See 65 ILCS

5/11-74.4 et seq. (West 2008). The principal and interest on TIF bonds are paid from the increase

in real estate taxes, and sales taxes in certain cases, that is anticipated to occur from a successful

redevelopment project. IBP and TB entered into separate redevelopment agreements with the

Villages of Bedford Park and Broadview, and pursuant to the agreements, each village issued

senior lien TIF bonds (Senior Bonds) to the partnerships. Bedford Park issued $10.5 million in

Senior Bonds and Broadview issued $23 million, with William Blair & Company and Dain

Bosworth acting as the respective underwriters.

        In addition to the Senior Bonds, the two villages agreed to issue TIF bonds subordinate to

                                                   3
1-09-2440


the Senior Bonds. Bedford Park issued “Developer Bonds” with a face value of $7 million and

Broadview issued “Junior Bonds” in the amount of $8 million. Because the Developer and Junior

Bonds were subordinate to the Senior Bonds, principal and interest would only be paid to the

holders in the event that the incremental tax revenues exceeded the amounts required to satisfy all

the principal and interest payments of the Senior Bonds. One of the general partners, E. Thomas

Collins, Jr., stated in a sworn affidavit and a deposition that it was discussed and understood

between the limited and general partners that the subordinate bonds would be taken by the general

partners due to the personal investments they had made in creating the projects. Intervenors, on

the other hand, deny being notified that the general partners would acquire the Junior or

Development Bonds for themselves and the partnership agreements themselves were silent on the

subject.

       In any event, the Developer Bonds were issued in June 1992 to IBP, which were then

purchased by the general partners of IBP for $550,000, netting the partners $5,500 per

percentage point of interest. The purchase was disclosed to the limited partners in a June 11,

1992, letter, which also enclosed checks payable in appropriate amounts to each partner. The

purchase price was based on a draft valuation letter by Charles Freeburg of William Blair &

Company. In a separate transaction, the Junior Bonds were issued directly to the general partners

of TB around September 1994. The issuance was treated as a distribution against their

partnership capital accounts, which were reduced by the face amount of the Junior Bonds.

       In the several years subsequent to the bond transactions, the redevelopment projects

eventually became successful, and as a result, tax revenues were generated in excess of the

                                                 4
1-09-2440


projects’ projections. Because of this, the Senior Bonds’ obligations were able to be fulfilled

(with cash distributions being made to all partners) and the Developer and Junior Bonds, in turn,

increased in value. The transactions revolving around the Developer and Junior Bonds, and other

certain events outlined below, would eventually serve as the basis of intervenors’ allegations of a

breach of fiduciary duty by defendants.

                            A. TB Partnership Events and Proceedings

       In 1999, Broadview unexpectedly refinanced the Senior and Junior Bonds. New bonds

with lower interest rates were issued, and pursuant to the redemption provision of the original

Junior Bonds, Broadview paid defendants, as general partners of TB, $9 million in order to

redeem the bonds. Up to that point, the general partners of TB were paid approximately $4.35

million in interest payments as well. In 2001, Melissa S. Pielet, individually and derivatively on

behalf of IBP and TB, filed an action against the defendants, alleging that they breached their

fiduciary duties to the partnerships by transferring the subordinated bonds to themselves for their

own benefit. The parties subsequently engaged in discovery and motion practice for over a year.

During that time, Broadview Village Center (the shopping mall owned and developed by TB) lost

two large tenants. As a result, TB’s rental income fell short of its financial obligations and an

action to foreclose was initiated against TB’s mortgage.

       To avoid foreclosure, TB developed a complex plan to recapitalize and restructure its

debts. A key component of the plan included plans to negotiate a contract with Wal-Mart where,

among other things, it would purchase from TB a vacant building in the Broadview Village Center

along with the underlying real estate. To implement the plan, however, it was determined that TB

                                                  5
1-09-2440


would require $5.5 million in cash, thus triggering a “capital call” under which the partners would

all contribute funds in proportionate share to meet the financial needs of the partnership. In this

particular agreement, the limited partners were not required to contribute, but it provided that any

partner who declined to contribute would forfeit his or her partnership interest. The capital call in

question was set to occur on September 30, 2003.

       Around the same time, the general partners proposed to settle Pielet’s action by making a

$5.5 million loan to TB themselves in place of the capital call. In December 2003, Pielet

withdrew as a plaintiff from the action she initiated and Keith Bank, another limited partner, then

filed and was granted a motion for leave to intervene as party plaintiff. Shortly thereafter,

however, intervenors averred that Mr. Bank was not representing the partnerships in their best

interests. They then sought and obtained leave to intervene in this action in February 2004.

       In March 2004, the circuit court ordered defendants to issue a notice of their proposed

settlement to all partners of TB. The notice explained that under the proposed settlement, the

capital call would be suspended and that no limited partner would forfeit an interest in TB by

failing to contribute a proportionate share. The obligation to contribute, however, would be

reinstated if the loan or settlement was terminated. Intervenors initiated proceedings objecting to

the proposed settlement and requested the circuit court to disapprove it. Fairness hearings were

conducted in May 2004 but before the circuit court could rule, defendants filed a notice

withdrawing the proposed settlement, explaining that Wal-Mart had terminated its contract and

would not be purchasing the building or real estate as anticipated, thwarting the original

refinancing strategy. The $5.5 million capital call was reinstated, and each partner was notified

                                                  6
1-09-2440


that he or she had 30 days, or until July 30, 2004, to elect whether to contribute a proportionate

share of the call pursuant to the agreement.

        On the penultimate day before the effectiveness of the capital call, intervenors filed a

motion for a temporary restraining order (TRO), seeking to prevent defendants from foreclosing

their partnership interests in the event intervenors chose not contribute to the capital call. The

motion was denied after a lengthy and spirited argument in open court and intervenors were

specifically notified by the trial court that if they did not contribute their proportionate share of

the capital call, they “would be out of business.” Intervenors declined to contribute, which

ineluctably led to a motion to dismiss the claims relating to TB, namely count II of intervenors’

amended complaint, arguing that intervenors lacked standing to pursue their claims after forfeiting

their interests. The circuit court granted the motion to dismiss in a written order on March 24,

2005. Intervenors filed a “Corrected Amended Complaint,” which defendants again moved to

dismiss due to a lack of standing. The motion was granted on December 8, 2005, in one of the

written orders from which intervenors appeal.

                            B. IBP Partnership Events and Proceedings

        The only intervenors who held interest in IBP were Skrzelowski and Munaretto. The IBP

partnership agreement provided that the partnership could repurchase the interest of any limited

partner who terminates his or her employment with the partnership or a related entity. Paragraph

17 of the IBP partnership agreement provides for a “Repurchase Option of the Partnership.” In

the event that a limited partner terminated his employment with “the Partnership or any entity in

which any Partner is affiliated,” the terminated partner “shall give written notice to the Partnership

                                                   7
1-09-2440


which shall state all details regarding such Repurchase Event.” The provision further provides

that if the terminated partner fails to give notice of repurchase, the partnership itself may give

such notice on behalf of the terminated partner “at any time thereafter.” At that point, the

partnership has the option to acquire the partnership interest of the terminated partner.

       Munaretto and Skrzelowski left HSA in 1993 and 1994, respectively, but neither

individual ever issued a repurchase notice as called for in the agreement. After another dispositive

motion failed in the trial court, on April 17, 2009, IBP issued repurchase notices to Munaretto

and Skrzelowski pursuant to the authorization in the IBP partnership agreement. Included with

the notice was a repurchase agreement providing that their interests would be purchased by IBP

according to a valuation provision within the IBP partnership agreement, which essentially

provided that the difference between a limited partner’s initial investment and the amount of cash

distributions received is the repurchase value. Although Munaretto and Skrzelowski did not

execute and return their respective agreements, the IBP partnership agreement contained a power

of attorney provision allowing the general partners to execute such a document on their behalf.

On April 30, 2009, the agreements were accordingly executed by a general partner. After

Munaretto’s and Skrezlowski’s interests were repurchased, defendants filed a motion to dismiss

their claims for lack of standing. On August 13, 2009, the circuit court granted the motion in a

written order. Intervenors now timely appeal.

                                           II. ANALYSIS

                                   A. Dismissal of Count II (TB)

       On appeal, intervenors first contend that the circuit court improperly dismissed count II of

                                                  8
1-09-2440


their amended complaint. More specifically, they argue that they sufficiently alleged individual

claims for restoration and thus count II should not have been dismissed for lack of standing.

Count II alleged a breach of fiduciary duty regarding TB, concerning the transaction of the Junior

Bonds to defendants. The circuit court’s written order stated that defendants sought to dismiss

count II because the intervenors failed to state an individual claim. Having found that the

intervenors were no longer members of the partnership involved in count II, the circuit court next

found they no longer had standing to bring claims on behalf of the partnership. The order also

noted that while plaintiffs “do now make a claim for restoration of their partnership interests, they

allege no facts of individual harm that would entitle them to such restoration.”

       Defendants’ motion to dismiss was based upon sections 2-615 and 2-619 of the Code of

Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2008)). A motion to dismiss under

section 2-615 admits all well-pleaded facts and attacks the legal sufficiency of the complaint. La

Salle National Bank v. City Suites, Inc., 325 Ill. App. 3d 780, 790 (2001). A motion to dismiss

under section 2-619, on the other hand, admits the legal sufficiency of the complaint but raises

defects, defenses, or other affirmative matters that appear on the face of the complaint or are

established by external submissions that act to defeat the claim. Krilich v. American National

Bank & Trust Co. of Chicago, 334 Ill. App. 3d 563, 569-70 (2002). We review an order granting

a motion to dismiss pursuant to section 2-615 or section 2-619 de novo. Illinois Non-Profit Risk

Management Ass’n v. Human Service Center of Southern Metro-East, 378 Ill. App. 3d 713, 719

(2008). Furthermore, when reviewing motions under either section 2-615 or 2-619, we accept all

well-pleaded facts in the complaint as true and draw all reasonable inferences from those facts in

                                                  9
1-09-2440


favor of the nonmoving party in order to determine whether a cause of action can be sustained.

Dopkeen v. Whitaker, 399 Ill. App. 3d 682, 684 (2010).

       A partnership is a contractual relationship and as such, contract law applies and a

partnership is accordingly controlled by the terms of the agreement under which it is formed.

Fisher v. Parks, 248 Ill. App. 3d 666, 674-75 (1993). If the written agreement is unambiguous,

the court must construe the parties' intent from the writing itself as a matter of law and effectuate

its plain and ordinary meaning. Buenz v. Frontline Transportation Co., 227 Ill. 2d 302, 308

(2008). However, no language in an agreement, however clear and explicit, can reduce a

partner’s fiduciary duty. See 1515 North Wells, L.P. v. 1513 North Wells, L.L.C., 392 Ill. App.

3d 863, 874 (2009). The existence of a fiduciary relationship between all partners is

well-established, and each partner is bound to exercise the utmost good faith and honesty in all

matters relating to the partnership business. Winston & Strawn v. Nosal, 279 Ill. App. 3d 231,

239-40 (1996). Illinois has held that this fiduciary duty “prohibits all forms of secret dealings and

self-preference in any [partnership] matter” (Winston & Strawn, 279 Ill. App. 3d at 239-40; see

Bakalis v. Bressler, 1 Ill. 2d 72, 79 (1953); Labovitz v. Dolan, 189 Ill. App. 3d 403, 412 (1989)),

and also “requires each partner to fully disclose partnership business to other partners” (Winston

& Strawn, 279 Ill. App. 3d at 240 (citing Borys v. Rudd, 207 Ill. App. 3d 610, 620 (1990))).

       We initially note that the circuit court ruled after intervenors’ emergency TRO motion that

the capital call issued by TB was “indeed authorized by the terms of the agreement” between the

partners. This finding is not disputed on appeal. Intervenors did not contribute their required

share of the capital call, and pursuant to the terms of TB’s partnership agreement, they forfeited

                                                 10
1-09-2440


any interest they had in the partnership. Subsequently, defendants filed a motion to dismiss for

lack of standing, which the circuit court granted.

        Superficially, dismissal would appear proper based on the rules of standing because

generally, individuals cannot maintain a derivative action against a partnership if they have no

interest in the partnership. See Caparos v. Morton, 364 Ill. App. 3d 159, 167-68 (2006); Lower

v. Lanark Mutual Fire Insurance Co., 151 Ill. App. 3d 471, 473 (1986). Intervenors, however,

point to Labovitz v. Dolan, 189 Ill. App. 3d 403 (1989), in support of their argument that their

cause of action should not have been dismissed. In Labovitz, the plaintiffs were former limited

partners in a partnership with the defendant general partner who had sole management discretion

pursuant to the underlying partnership agreement. The partnership incurred significant tax

obligations but the general partner withheld cash distributions that would have covered plaintiffs’

associated pro rata share. Plaintiffs sold their partnership interests to the general partner at a

“bargain price” due to the economic burden but subsequently filed a complaint against the general

partner for breach of fiduciary duty. The plaintiffs’ complaint was dismissed by the circuit court,

which held that the general partner’s acts were within the broad discretion granted to him by the

partnership agreement. On appeal, this court reversed and remanded, holding that a general

partner’s broad discretion in the cash distributions of the partnership does not trump, but instead

exists concurrently with, the general partner’s fiduciary duty owed to the limited partners in

dealing with them and the assets of the partnership. Labovitz, 189 Ill. App. 3d at 412. Although

Labovitz is, in a sense, factually dissimilar, we nevertheless find it to be substantively instructive.

        Here, intervenors’ complaint alleges that defendants breached their fiduciary duties by: (1)

                                                   11
1-09-2440


misappropriating the Junior Bonds; and (2) issuing a capital call that was only necessitated by

their alleged misappropriation. While we are not bound to accept the complaint’s conclusory

allegations, as noted above, we accept all well-pleaded facts in the complaint as true and will draw

all reasonable inferences from those facts in favor of the nonmoving party in order to determine

whether a cause of action can be sustained. Dopkeen, 399 Ill. App. 3d at 684. With this in mind,

a close examination of the complaint and record raises a number of concerns regarding the

defendants’ acts revolving around the transaction of the Junior Bonds. First, although Collins’

affidavit asserts that he and other general partners had somehow related to the intervenors that the

Junior Bonds would be only for the benefit of the general partners, it is telling that the TB

partnership agreement is completely silent on the issue. Second, the bond trustee for the Village

of Broadview was apparently directed to issue the Junior Bonds directly to the general partners.

This event is highly suspect given the language within the applicable redevelopment agreement

between TB and the Village of Broadview indicating that any Junior Bonds issued would be

delivered to and purchased by the “Developer,” which includes TB as a whole but not the general

partners as a discrete entity. Third, from the record and complaint it appears that at the time of

the Junior Bonds’ issuance, intervenors were unaware of the events surrounding the transaction of

the Junior Bonds. Finally, we note that in apparent consideration for the Junior Bonds, the capital

accounts of the general partners were reduced, however, the limited partners did not actually

receive any cash distributions as a result of the Junior Bond transaction. The defendants, on the

other hand, ultimately received over $13 million as a result of owning the Junior Bonds.

       Fundamentally, we find the instant case to be analogous to Labovitz, where a general

                                                 12
1-09-2440


partner’s management discretion was used in breach of a fiduciary duty and created the loss of a

limited partner’s interest through economic coercion. We reiterate that while we offer no opinion

as to the merits of the underlying case, when we take intervenors’ well-plead facts as true and

draw the reasonable inferences therefrom, the allegation remains that the general partners,

through their management discretion and authority, obfuscated the personal taking of the Junior

Bonds originally designated as partnership assets, which resulted in a financial windfall to them of

over $13 million. The partnership then experienced a shortage of funds and the general partners

imposed a financial obligation upon the intervenors, resulting in their loss of interests in TB.

Permitting intervenors’ cause of action to be dismissed, and essentially validating their loss of

interest, by pointing to management discretion and authority without consideration of the

overarching principles of partnership fiduciary duties here would miss the forest for the trees. As

Labovitz discussed in detail, “partners owe each other the duty to exercise the highest degree of

honesty, fairness and good faith in their dealings with one another and in the handling of

partnership assets,” also noting that a greater duty rests upon the general partners. Labovitz, 189

Ill. App. 3d at 408-09. The record casts defendants’ actions into doubt and to allow dismissal

under these circumstances is contrary to the principles of partnership fiduciary duty established

above, and we hold that the trial court erred in dismissing count II.

                                   B. Dismissal of Count I (IBP)

               Intervenors next contend that the circuit court improperly dismissed count I of

their amended complaint. Count I of the amended complaint related to the Developer Bonds

which were purchased by the general partners from IBP. The circuit court dismissed count I in

                                                  13
1-09-2440


2009 because intervenors Munaretto and Skrzelowski lacked standing to maintain the action after

IBP repurchased their partnership interests pursuant to the partnership agreement. Because the

circuit court dismissed the count under section 2-619 of the Code, we review this issue de novo.

Illinois Non-Profit Risk Management Ass’n, 378 Ill. App. 3d at 719. On appeal, intervenors base

their arguments for reversal on waiver, laches, and general principles of inequity. As a threshold

matter, we observe that intervenors do not dispute that the repurchase of their interests were, as a

technical matter, properly executed pursuant to the IBP partnership agreement or that their claim

is a derivative action. Intervenors’ arguments regarding the repurchase option in the IBP

partnership agreement are based upon waiver, laches, and equity.

       As a threshold matter, we must find that waiver and laches provide little help to

intervenors here. Waiver is the intentional relinquishment of a known right, and may be express

or implied. Midwest Builder Distributing, Inc. v. Lord & Essex, Inc., 383 Ill. App. 3d 645, 673

(2007). While implied waiver of a right can arise through conduct inconsistent with an intent to

enforce that right, the party seeking waiver carries the burden of “proving a clear, unequivocal,

and decisive act of its opponent manifesting an intention to waive its rights.” In re Nitz, 317 Ill.

App. 3d 119, 130 (2000). As gleaned from the record and confirmed during oral arguments

before this court, it is apparent that defendants were unaware of the repurchase option written

into their own contract until shortly before exercising it. Given that waiver requires the party to

be aware of the right, as it is an intentional relinquishment of a known right, we cannot say that

defendants here technically waived the right to exercise repurchase option clause.

       Intervenors’ argument revolving around laches suffers from a different, but equally fatal,

                                                  14
1-09-2440


legal infirmity. Generally, laches is an equitable doctrine precluding litigants from asserting a

claim when prejudice occurs as a result of a litigant's unreasonable delay in raising that claim.

Madigan v. Yballe, 397 Ill. App. 3d 481, 493 (2009). The two fundamental elements of laches

are (1) a lack of due diligence by the party asserting the claim; and (2) prejudice to the opposing

party. Gersch v. Department of Professional Regulation, 308 Ill. App. 3d 649, 661 (1999). We

have held that laches is an affirmative defense, and as such, is simply unavailable to a party that is

not a defendant. Malatesta v. Mitsubishi Aircraft International, Inc., 275 Ill. App. 3d 370, 386

(1995); see Wolfram Partnership, Ltd. v. LaSalle National Bank, 328 Ill. App. 3d 207, 225 n.10

(2001) (noting that laches may be proper to bar a defendants’ counterclaim but not to prevent

defendants’ assertion of a forfeiture of a lease agreement through default). Although count I was

dismissed based on a lack of standing through defendants’ motion, defendants have not raised any

counterclaim to which intervenors are a defendant. Accordingly, we find the doctrine of laches to

be inapplicable here.

       Intervenors lastly argue that it would be inequitable to allow defendants to exercise the

repurchase option. Given the specific circumstances of the instant case, we are persuaded that

they should prevail on this argument. Intervenors argue that a court of equity is duty-bound to

examine substance rather than the form of a transaction (Reese v. Melahn, 53 Ill. 2d 508, 513

(1973)), and the maxim that “equity considers that as done which ought to be done” (Cesena v.

Du Page County, 145 Ill. 2d 32, 38 (1991)). Along with these general principles, we reiterate

that the fiduciary duties discussed above relating to TB’s partners exist with equal strength here

among IBP’s partners as well. Furthermore, we have held that “ ‘[a] convenant of good faith and

                                                  15
1-09-2440


fair dealing is implicit in every contract as a matter of law.’ ” Horwitz v. Sonnenschein Nath and

Rosenthal, LLP, 399 Ill. App. 3d 965, 978 (2010) (quoting Franz v. Calaco Development Corp.,

352 Ill. App. 3d 1129, 1152 (2004)). A reason this convenant is implied is to protect the parties

such that no party takes advantage of another “in a way that could not have been contemplated at

the time the contract was drafted.” Gore v. Indiana Insurance Co., 376 Ill. App. 3d 282, 286

(2007). Disputes involving the exercise of good faith generally arise when one party is given

broad discretion in performing its obligations under the contract, and therefore “[t]he duty of

good faith and fair dealing is a limitation on the exercise of that discretion, requiring the party

vested with discretion to exercise it reasonably and with proper motive, not arbitrarily,

capriciously, or in a manner inconsistent with the parties' reasonable expectations.” Gore, 376 Ill.

App. 3d at 286.

        According to a sworn declaration by John E. Shaffer, the purpose in offering partnership

interests to Munaretto and Skrzelowski was to motivate them as HSA employees. Should they

somehow sever their associations with HSA, Shaffer stated that there would be no relevance in

motivating them as an HSA employee and the repurchase clause within the IBP partnership

agreement served as the vehicle to buy back their interests. An examination of the underlying

proceedings, however, indicates that the exercise of the repurchase option could have been

effected when Munaretto and Skrzelowski left HSA in the early 1990's. Despite this, defendants

participated in the subsequent litigation for more than eight years. In 2009, after having a

different dispositive motion fail before the trial court, defendants appeared to adjust their strategy.

As stated during oral arguments before us, after a careful rereading of the IBP partnership

                                                  16
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agreement, defendants decided to exercise the repurchase option and shortly thereafter filed a

motion to dismiss intervenors’ claims for a lack of standing. The motivation behind the exercise

of that right was not to buy back interests of limited partners no longer associated with HSA, but

primarily to simply remove intervenors’ standing. Doing so is an exercise of discretion that was

utilized in a manner inconsistent with the parties’ reasonable expectations. While we

acknowledge that repurchase options may legitimately serve a variety of purposes, they cannot

operate to remove a party’s standing under circumstances like those in the case sub judice.

Accordingly, count I was improperly dismissed and we reverse.

       For the foregoing reasons, we reverse the judgment of the circuit court of Cook County

and remand for further proceedings.

       Reversed and remanded.




                                                17
1-09-2440


                     REPORTER OF DECISIONS – ILLINOIS APPELLATE COURT
                                   (Front Sheet to be Attached to Each Case)
 Plea se Use
 Following
               MELISSA S. PIELET, Individually and on Behalf                   )
 Form:         I.B.P Limited Partnership and TB Limited                        )
               Partnership,                                                    )
 Complete                                                                      )
 TITLE
 of Case
                              Plaintiff,                                       )
                                                                               )
                      v.                                                       )
                                                                               )
               DENNIS J. HIFFMAN, E. THOMAS                                    )
               COLLINS, JR., RICHARD E. HULINA, and                            )
               DANIEL G. ANDERSON,                                             )
                                                                               )
                              Defendants                                       )
                                                                               )
               (John E. Shaffer,                                               )
                                                                               )
                              Third-Party Defendant;                           )
                                                                               )
               John F. Girsch, Edward Zifkin, Mark Munaretto,                  )
               and Mark Wheeles, Individually and Derivatively                 )
               on Behalf of TB Limited Partnership; and Mark                   )
               Munaretto and William Skrzelowski, Individually                 )
               and Derivatively on Behalf of I.B.P. Limited                    )
               Partnership,                                                    )
                                                                               )
                              Intervening Plaintiffs-Appellants;               )
                                                                               )
               Dennis J. Hiffman, John E. Shaffer, E. Thomas                   )
               Collins, Jr., Daniel G. Anderson, and Richard E.                )
               Hulina,                                                         )
                                                                               )
                              Defendants-Appellees).                           )




                                                     18
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 Docket No.                                             No. 1-09-2440
                                                   Appellate Court of Illinois
 COURT                                         First District, FOURTH Division

                                                        January 20, 2011
 Opinion                                            (Give month, day and year)
 Filed


 JUSTICES         JUSTICE LAVIN delivered the judgment of the court, with opinion.
                  Gallagher, P.J., and Pucinski, J., concurred.
 APPEAL                        Lower Court and Trial Judge(s) in form indicated in the margin:
 from the               The Honorables David Donnersberger and Mary K. Rochford, Judges Presiding.
 Circuit Ct. of
 Cook County.


 For                        Indicate if attorney represents APPELLANTS or APPELLEES and include
 APPELLANT                       attorneys of counsel. Indicate the word NONE if not represented.
 S,
 John Doe, of
                  Attorneys for Intervening-
 Chicago.
                  Plaintiffs/Appellants:
 For                                                   Edward T. Joyce
 APPELLEES,                                           Robert D. Carroll
 Smith and                                     Edward T. Joyce & Associates, P.C.
 Smith of                                        135 S. LaSalle St., Ste., 2200
 Chicago,                                             Chicago, IL 60603
 Joseph
 Brown, (of       Attorneys for Defendants/Appellees:
 Counsel)

 Also add
                                                       Bennett W. Lasko
 attorneys for                                      Aruna B. Subramanian
 third-party                                   DRINKER BIDDLE & REATH LLP
 appellants or                                   191 N. Wacker Dr., Suite 3700
 appellees.                                           Chicago, IL 60606
                                                         312.569-1000




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