832 F. Supp. 2d 951
N.D. Ill.2011Background
- Plaintiffs sue Levy as Personal Representative of the Estate and as Trustee for the Eugene P. Heytow Trust, seeking equitable contribution and related relief arising from Emerald Casino matters.
- Emerald’s former officers/directors, including Heytow, allegedly breached the Shareholders’ Agreement and fiduciary duties, contributing to Emerald’s loss of its Illinois Gaming License.
- Bankruptcy Trustee filed an Adversary Proceeding in which Plaintiffs were defendants; Heytow was not named due to counsel conflict, and the Trustee alleged breaches by Plaintiffs.
- Plaintiffs allege Heytow shares a position and agreement with them and thus owes a proportionate share of any liability and defense costs in the Adversary Proceeding.
- In the Adversary Proceeding, board actions on August 12, 1999 and December 22, 1999 are cited as potentially violating IGB Rules and the Shareholders’ Agreement.
- After Heytow’s death, Levy substituted as defendant; the court granted leave to substitute and later denied dismissal without prejudice to renewal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs state a common law equitable contribution claim for potential Adversary Proceeding liability | Plaintiffs allege a joint financial obligation with Heytow via statute or agreement. | Shareholders’ Agreement creates only individual obligations; no joint obligation to a third party is pled. | Plaintiffs pled sufficient joint obligation to support contribution for potential liability. |
| Whether plaintiffs state a claim for equitable contribution to recover legal fees and expenses | Heytow, Estate, and Trust share a joint obligation to pay defense costs arising from the Adversary Proceeding. | No joint obligation to pay co-plaintiffs’ attorneys; Aardema does not support fee contribution here; statutory basis lacking. | Plaintiffs fail to plead a joint obligation to pay legal fees; contribution denied for fees. |
| Whether declaratory judgment relief is appropriate | Declaration that Heytow/estate/trust are liable for proportionate share of liability and fees. | Relief premised on an established equitable contribution claim; otherwise inappropriate. | Declaratory relief remains potentially warranted; court declines to dismiss this claim while other issues proceed. |
| Whether the Shareholders’ Agreement creates a joint obligation | Directors owe common and joint obligations to Emerald under the Shareholders’ Agreement. | Agreement imposes individual obligations; no joint liability to third parties is created. | Aardema-based reasoning controls; board actions may create a statutory joint obligation supporting contribution. |
Key Cases Cited
- Roe v. Estate of Farrell, 69 Ill.2d 525 (Ill.1990) (joint obligations outside insurers may support equitable contribution)
- Ruggio v. Ditkowsky, 147 Ill.App.3d 638 (Ill.App.Ct.2d Dist.1986) (co-signed obligations support contribution)
- Tembrina v. Simos, 208 Ill.App.3d 652 (Ill.App.Ct.1st Dist.1991) (joint liability in partnership/mortgage contexts supports contribution)
- Fletcher v. Marshall III, 260 Ill.App.3d 673 (Ill.App.Ct.2d Dist.1994) (co-tenant/related contexts inform contribution analysis)
- Aardema v. Fitch, 225 Ill.Dec. 898, 684 N.E.2d 884 (Ill.App.Ct.1st Dist.1997) (Act creates joint liability among directors; contribution against assentors)
- Hennepin Drainage & Levee Dist. v. W.H. Klingner, 187 Ill.App.3d 710 (Ill.App.Ct.3d Dist.1989) (contractual/fiduciary contexts can support contribution principles)
- Kinzer v. City of Chicago, 128 Ill.2d 437 (Ill.1989) (breach of fiduciary duty analyses relate to contract/agency/equity under Illinois law)