Toushin v. First Merit Bank
189 N.E.3d 1012
Ill. App. Ct.2021Background
- Plaintiffs Steven Toushin, Festival Theater Corp., and Images of the World, Ltd. sued defendants Angelo and Gina Ruggiero (and First Merit Bank) over two Chicago land-trust properties (1349 and 1365 N. Wells). Toushin alleges he paid for and was the true beneficial owner but transferred interests on attorney Angelo Ruggiero’s advice; Angelo and Gina later claimed 100% ownership.
- In the 1970s–1990s transfers occurred by assignments of beneficial interests; plaintiffs claim Angelo (as Toushin’s attorney) counseled transfers to protect assets, then concealed a scheme that left Gina and Angelo fully benefiting while plaintiffs paid mortgages, taxes, and improvements.
- Plaintiffs first sought declaratory relief; an earlier appeal (Toushin I) held Toushin’s declaratory-ownership claim time-barred. On remand plaintiffs amended to assert unjust enrichment and fraud-based claims and sought restitution and equitable relief instead of an ownership declaration.
- After a bench trial the court found Angelo breached his fiduciary duty and engaged in constructive fraud, found Gina not credible and unjustly enriched, and awarded plaintiffs roughly $6.46 million (half the properties’ values plus restitution for mortgage payments and improvements).
- Defendants appealed, arguing the judgment conflicted with the law of the case, was barred by res judicata/limitations/claim-splitting, the leases insulated defendants, trial and evidentiary errors occurred, and that damages constituted double recovery; plaintiffs cross-appealed a single ownership finding for Festival.
- The Appellate Court affirmed: the law-of-the-case did not bar the fraud/unjust-enrichment claims; fraudulent concealment tolled limitations; the leases were sham/fraudulent and unenforceable; the damage award and liability findings were upheld.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the prior appellate decision (Toushin I) precluded plaintiffs’ later unjust-enrichment/fraud claims under law of the case | Plaintiffs: Toushin I disposed only of his declaratory ownership claim; fraud/unjust-enrichment claims were not decided and may proceed | Defendants: Toushin I’s ruling on ownership/time-bar should bind the trial court and bar relief | Held: Law of the case did not bar fraud/unjust-enrichment claims because the earlier opinion addressed a different specific issue (declaratory ownership/time bar) |
| Whether plaintiffs’ claims were barred by res judicata, claim-splitting, or statutes of limitation/repose | Plaintiffs: Claims are timely under fraudulent concealment (fiduciary misrepresentation concealed cause of action) and involve continuing wrong; supplemental pleadings were in same proceeding | Defendants: Prior orders and other proceedings bar re-litigation; statutory limitations and repose should foreclose claims | Held: Res judicata/claim-splitting inapplicable (no final judgment ended litigation); fraudulent concealment tolled limitations until 2013 when plaintiffs discovered the fraud |
| Whether unjust enrichment/restitution is barred by written leases or equitable defenses (unclean hands, statute of frauds) | Plaintiffs: Leases were sham ruses by Angelo; unjust enrichment flows from defendants’ fraud and retention of benefits | Defendants: Leases govern tenant/landlord obligations; plaintiffs voluntarily paid under leases; unclean hands/statute of frauds bar relief | Held: Leases found fraudulent and unenforceable as against public policy; unclean-hands inapplicable (plaintiffs’ misconduct was not directed at defendants); statute of frauds forfeited by failure to plead |
| Damages, double recovery, and liability of non-fraudulent recipient (Gina) / counterclaims | Plaintiffs: Seek restitution measured by defendants’ gain (half property value plus mortgage payments) and equitable relief; Festival/Images entitled to mortgage-payment restitution | Defendants: Award double counts property-value plus mortgage payments; Gina unaware/innocent so cannot be liable; counterclaims for waste/lease breach should succeed | Held: No double recovery—restitution measures both defendants’ gain (half property value) and disgorgement of mortgage payments paid by plaintiffs; Gina’s retention of benefit unjust even if innocent; counterclaims fail (leases fraudulent; no waste shown) |
Key Cases Cited
- Bilut v. Northwestern University, 296 Ill. App. 3d 42 (1998) (explaining law-of-the-case limits and when prior appellate rulings bind later proceedings)
- Clemons v. Mechanical Devices Co., 202 Ill. 2d 344 (2002) (standard of de novo review for whether trial court followed appellate mandate)
- Rein v. David A. Noyes & Co., 172 Ill. 2d 325 (1996) (res judicata bars matters decided or that could have been offered to sustain/defeat claims)
- In re Estate of Funk, 221 Ill. 2d 30 (2006) (denial of summary judgment ordinarily not appealable; errors merge into final judgment)
- HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill. 2d 145 (1989) (unjust enrichment is remediable where improper conduct such as fraud causes enrichment)
- Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248 (2004) (restitution as measure of defendant’s gain in unjust enrichment claims)
- DeLuna v. Burciaga, 223 Ill. 2d 49 (2006) (attorney-client relationship imposes fiduciary duties; potential for abuse justifies heightened scrutiny)
- Resolution Trust Corp. v. Ruggiero, 977 F.2d 309 (7th Cir. 1992) (district/ circuit court findings cited for conduct suggesting fraudulent transfers to spouse)