author: JUSTICE WOODWARD

text:
    INSTITUTIONAL EQUIPMENT AND INTERIORS, INC., Plaintiff-Appellant, v. MURIEL GRACE HUGHES, Ex’r of the Estate of Norman J. Diebolt, Defendant-Appellee.
    Second District
    No. 2 — 90—0004
    Opinion filed October 25, 1990.

      John M. Touhy and Anthony Hong, both of Mayer, Brown & Platt, of Chicago (Michele Odorizzi, of counsel), for appellant.
    William J. McGrath, of McGrath, Harty & McGrath, of Wheaton, and Hughes & Hughes, P.C., of Grosse Pointe, Michigan (John J. Hughes, of counsel), for appellee.
   JUSTICE WOODWARD

delivered the opinion of the court:

Plaintiff, Institutional Equipment & Interiors, Inc., appeals from a judgment in which the circuit court found that, on August 20, 1984, the fair value of stock in plaintiff’s corporation held by the estate of Norman J. Diebolt (Muriel G. Hughes, executor), was $430 per share. On appeal, plaintiff argues that the trial court’s determination of the stock’s per share value was erroneous.

Plaintiff was incorporated in Illinois in 1965. Its primary business is designing, installing, and decorating restaurant and cafeteria interiors. Plaintiff also fabricates stainless steel fixtures and supplies small wares required for the operation of restaurants and cafeterias.

Plaintiff had three founding shareholders: Norman Diebolt (Diebolt) (1,400 shares), Ben Freed (Freed) (1,400 shares), and Harry Shiffer (Shiffer) (700 shares). Each paid $10 per share and lent the corporation substantial funds, which were carried for a number of years. Diebolt was the president and principal executive officer until his death in 1984. Freed was chairman of the board, and Shiffer was the executive vice-president.

From the outset, plaintiff’s largest single customer was Piccadilly Cafeterias, Inc. (Piccadilly), the owner and operator of a chain of cafeterias (93 units as of June 30, 1984), located in the southern United States. Piccadilly hired plaintiff to design and install the interiors of most of the new cafeterias it opened after 1965. The Piccadilly business accounted for approximately 60% of plaintiff’s sales during the period from 1976 through 1984. Contracts with Piccadilly were always made on a project-by-project basis; plaintiff never had a contractual right to expect any particular level of sales from Piccadilly. When plaintiff was formed, Piccadilly purchased 50% of its stock (3,500 shares) for $35,000. Piccadilly did not participate in the management of the company, leaving that task entirely in the hands of the three individual shareholders.

In 1980, Diebolt, who was the driving force behind the company, was 84, Freed was 70, and Shiffer was 77. With no obvious successors to either Diebolt or Freed, the shareholders discussed the possibility of selling the company. Nothing had come of these discussions by 1981, when Shiffer died. At that point, plaintiff’s stock had a book value of $194.56 per share. The Shiffer estate was unable to find an outside purchaser for the stock. In 1982, Shiffer’s 700 shares were sold to Diebolt for $21,000 or $30 per share. Diebolt then sold half of Shiffer’s stock to Freed, making both of them 25% owners of the corporation.

Despite continuing efforts to sell the company, no offers had been made by the time Diebolt died on March 12, 1984. After Diebolt’s death, efforts to find a buyer intensified. Although Piccadilly was an obvious candidate, it stated that it was not interested in buying the remaining stock but would prefer to find a third-party purchaser.

In May 1984, Jason C. Becker & Associates (Becker) offered to purchase all of plaintiff’s assets and “certain liabilities” for $3 million. The offer contemplated that at least $700,000 and up to $1 million of the purchase price would be paid over the course of five years. In addition, Becker sought a contractual commitment from Piccadilly to purchase a minimum of $5.4 million in goods and services from plaintiff each year for the next five years. Becker based the $5.4 million figure on plaintiff’s sales to Piccadilly in 1983, which was the highest level of purchases from plaintiff in Piccadilly’s history.

After strenuous argument with Piccadilly, the Diebolt estate (Estate) eventually agreed to accept the Becker offer; but in June 1984, Piccadilly broke off negotiations with Becker. Thereafter, Piccadilly changed its position on buying the company and made an offer to Ben Freed and the Estate for their 50% share. The offering price was based on plaintiff’s unaudited book value, which was then $342.85 per share. Freed accepted Piccadilly’s offer. The Estate did not.

After acquiring Freed’s 25% interest, and being unable to agree on a price with the Estate, Piccadilly decided to merge out the Estate, as the remaining minority shareholder. In the merger, a wholly owned Piccadilly subsidiary, Piccadilly Acquisition, Inc. (a Louisiana corporation), was merged into plaintiff. As a result, plaintiff, which was the surviving corporation, became a wholly owned subsidiary of Piccadilly. Following statutorily prescribed procedures found in the Illinois Business Corporation Act of 1983 (Act) (Ill. Rev. Stat. 1985, ch. 32, par. 1.01 et seq.), Piccadilly sent a notice of proposed merger to the Estate, again offering $342.86 per share. The Estate again declined the offer, and, pursuant to the procedure set forth for dissenting shareholders in the Act, voted its shares in opposition to the merger. After consummation of the merger on August 23, 1984, Muriel Hughes, as executor of the Estate, served a “Written Demand for Payment of Shares” on plaintiff.

Under section 11.70(c) of the Act (Ill. Rev. Stat. 1985, ch. 32, par. 11.70(c)), plaintiff, as the surviving corporation, was required to set a value for the shares that were held by the dissenting shareholder. Based upon the advice of counsel, Piccadilly’s chief financial officer, Jimmy Bennett, computed a weighted average based on three valuation methods — book value, earnings or investment value and adjusted book value — and determined the fair value of the stock to be $304 per share. After it received notice of plaintiff’s valuation, the Estate served a notice of a shareholder’s dissent, estimating the value of its stock to be $771.43 per share. As permitted by the statute, the Estate agreed to exchange its stock for the price offered by plaintiff, subject to later resolution through an appraisal proceeding. In October 1984, plaintiff paid $532,000 for the Estate’s stock.

On April 19, 1985, plaintiff petitioned for a hearing to determine the “fair value” of the shares held by the Estate. On July 14, 1987, the trial court signed an agreed order appointing an independent appraiser, Richard Newman of James P. Richter & Company, “to receive evidence and recommend decision on the question of fair value,” as provided in section 11.70(f) of the Act. Ill. Rev. Stat. 1985, ch. 32, par. 11.70(f).

In order to arrive at an opinion with respect to the fair value of the Estate’s stock, Mr. Newman reviewed plaintiff’s audited financial statements and other information for the years 1974 through 1983 and for the first six months of 1984. He also conducted a number of depositions, questioning plaintiff’s auditors, Ben Freed, plaintiff’s current management, Piccadilly personnel, and the Estate’s attorney at the time of the negotiations with Becker, described above. In addition, Mr. Newman retained two other firms to determine the fair value of the real property and other fixed assets owned by plaintiff.

In his written report, Mr. Newman began with the proposition that fair value means fair-market value, that is, “the price at which a willing buyer and a willing seller agree, neither being under any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts.” With this basis, Mr. Newman examined plaintiff’s investment or earnings value, its adjusted book value, and its market value as reflected in various actual or proposed transactions.

Mr. Newman concluded that a purchaser of the Estate’s stock would base the price it was willing to pay primarily on the company’s past income-earning ability. In calculating a price for plaintiff’s stock based on the company’s historical earnings, Mr. Newman used what he described as “[t]he conventional approach” of “comparing] the closely-held entity [plaintiff with selected publicly-held companies in similar lines of business.” These comparable companies were used to derive an appropriate price/earnings multiple for plaintiff. That multiple was then applied to plaintiff’s average earnings for the five-year period from 1980 through 1984 to arrive at a price as of the August 20, 1984, valuation date of $319.49 per share.

After arriving at an earnings value, Mr. Newman applied a 20% “illiquidity discount” to reach a final fair value of $256 per share. Mr. Newman explained that such a discount is necessary to account for the lack of a readily available market for closely held shares and “is often calculated in terms of the cost, as well as the price discount, that would be incurred in selling the shares by means of a registered public offering through an investment banking firm.”

Mr. Newman also considered plaintiff’s “adjusted book value.” Based on its audited financial statements, plaintiff’s unadjusted book value as of the date of the merger was $321.50 per share. Mr. Newman calculated plaintiff’s “adjusted book value” by adding the appreciation in the fair-market value of plaintiff’s real property and other fixed assets to the extent that that appreciation was not reflected in the values carried on the company’s books. Mr. Newman did not attempt to determine whether the other assets reflected on plaintiff’s books were being carried at fair-market value, nor did he attempt to calculate plaintiff’s liquidation value. Mr. Newman specifically rejected liquidation value as a basis for evaluation because there was no plan to liquidate the company, and, as a minority shareholder, a hypothetical purchaser of the Estate’s stock would not have the ability to force plaintiff to sell its assets. Though Mr. Newman took plaintiff’s strong balance sheet into account in selecting a price-earnings multiplier, he did not use adjusted book value in arriving at his opinion with respect to fair value.

Finally, Mr. Newman also considered the two previous purchases of plaintiff’s stock (Diebolt’s purchase of Shiffer’s stock for $30 per share and Piccadilly’s purchase of Freed’s stock for $342.86) and the Becker offer in reaching his opinion with respect to value. The Shiffer sale was disregarded except as evidence of the difficulty of selling the stock. The 1984 Becker offer was also rejected as a “valid indicator of fair value,” because part of the $3 million purchase price was to be deferred (thus, decreasing the value of the offer below $3 million), and the terms of the offer required a long-term contract from Piccadilly assuring Becker a minimum level of purchases.

At the trial, the court took testimony from Mr. Newman as the court’s own witness. Plaintiff, which agreed with the court-appointed appraiser’s evaluation, did not put on any expert witnesses with respect to valuation. The Estate, unsatisfied with Mr. Newman’s evaluation, presented its own expert, John Jakucyk of the firm of Duff & Phelps, Inc.

Like the court-appointed appraiser, Mr. Jakucyk considered earnings or investment value to be the best method of determining the fair value of the Estate’s stock. Mr. Jakucyk also used essentially the same methodology that Mr. Newman had used, as well as the same publicly traded companies selected by Mr. Newman as the basis for comparison. Unlike Mr. Newman, however, who chose a five-year period (1980-84) as the basis for comparison, Mr. Jakucyk used only three years (1982-84). Because plaintiff had lost money in 1981, the use of only three years gave plaintiff a much larger average earnings value, which translated to an estimated price as of August 20, 1984, of approximately $418 per share.

Unlike Mr. Newman, who had applied a discount to the earnings value of plaintiff’s stock as a result of its illiquidity, Mr. Jakucyk testified that he believed a 30% premium was appropriate because the sale of the Estate’s stock gave Piccadilly 100% control over plaintiff. When this premium was applied, Mr. Jakucyk’s valuation rose to $538 per share.

After hearing the experts and other evidence, the trial court issued its opinion on October 10, 1989. In that opinion, the court rejected both experts’ use of a “willing buyer/willing seller” test for plaintiff’s stock, on the ground that there was no market at all for the stock. The court found that there were other “indicia of value” that enabled it to ignore the “artificial” fair-market value method chosen by the experts. The court cited Freed’s sale to Piccadilly based on unadjusted book value and the Becker offer of $3 million (or approximately $428 per share) for the entire company in 1984. Because Piccadilly had bought Freed’s stock based on unadjusted book value and would, the court found, have been willing to accept Becker’s offer for the whole company if it had been for the full $3 million (which the court described as its “real book value”), the court held that Piccadilly and plaintiff could not now contend that the fair value was less than the book value. Accordingly, the trial court adopted the August 1984 adjusted book value of $430 as the fair value of plaintiff’s stock held by the Estate and entered judgment in favor of defendant in the amount of $220,500.

In its order, the trial court specifically rejected the Estate’s argument that it was entitled to a control premium of 30%. It also rejected the court-appointed appraiser’s opinion that there ought to be an illiquidity discount of 20%. Finally, the court noted that it had considered other conventional evaluation methods apart from book value, but had rejected them “because on this record we see no need to rely on artificial indicia of value.”

Plaintiff filed a timely motion for reconsideration, arguing that the court’s rejection of the methodology adopted by both experts and its adoption of adjusted book value as the sole indicator of fair value was in error. The trial court denied the motion without opinion, and this appeal followed.

On appeal, plaintiff contends that the trial court erred in refusing to use a fair-market value test; that the court below erred in relying solely on the stock’s adjusted book value to determine its value; and that the trial court erred in refusing to apply a minority discount or a discount for illiquidity.

Plaintiff relies primarily on our supreme court’s decision in Ahlenius v. Bunn & Humphreys, Inc. (1934), 358 Ill. 155. The Ahlenius court reversed the appellate court, which had relied solely on the company’s book value in setting a value on the stock different from that set by the trial court. Plaintiff contends that the Ahlenius opinion makes it clear that a court in an appraisal proceeding may not rely solely on book value, as it maintains the trial court did here. This rejection of book value, asserts plaintiff, is based on two reasons. First, stock in the ongoing company must be evaluated on a going concern basis — book value, at best, measures only the company’s liquidation value. Second, because book values do not necessarily reflect the fair-market value of the company’s assets, book value is usually a highly unreliable approximation of the company’s liquidation value.

Defendant argues that Ahlenius does not support reversal. Defendant points out that Ahlenius emphasizes that “precise rules for determining the value, whatever the descriptive term used, cannot be laid down.” (358 Ill. at 168.) Defendant also cites the language in Ahlenius which states that the trial court must exercise its judgment upon consideration of every relevant evidential fact and circumstance entering into the value of corporate stock. (358 Ill. at 168.) Moreover, defendant contends that Ahlenius is not on point, as it deals with the valuation of a publicly traded stock, not a closely held corporation as is the case here.

In Stewart v. D.J. Stewart & Co. (1976), 37 Ill. App. 3d 848, this court dealt with the issue of stock valuation demanded in a dissenting minority stockholder’s suit. The Stewart court opined that the “[valuation of an interest in a close corporation is ‘not an exact science, but involves many subjective and complex determinations.’ ” (37 Ill. App. 3d at 855, quoting O’Neill, Oppression of Minority Shareholders (Callaghan 1975).) The Stewart court also stated:

“Defendants rely largely on Ahlenius v. Bunn & Humphreys, Inc., 358 Ill. 155 (1934), as setting forth factors of earning capacity, including dividends, investment value of stock, the selling price of stocks of like character, the records and prospects of a corporation, and goodwill, in determining fair value. They contend that these standards were followed by defendants’ experts but not by plaintiffs’ expert Triebel whose valuation wrongly placed the greatest emphasis on book value. Defendants also suggest that most authorities do not rely on book value but rather consider three basic factors in valuing the stock of dissenting stockholders to a merger: market value, net asset value and earning value (also referred to as investment value). [Citations.]
The Illinois Supreme Court in Ahlenius does not, however, set forth absolute standards for valuing dissenting stockholders’ stock upon a merger as defendants suggest. The discussion of the various standards which may apply is preceded by the specific warning by the court that ‘Precise rules for determining the value *** cannot be laid down,’ and that ‘A situation is presented which calls for the exercise of judgment upon consideration of every relevant evidential fact and circumstance entering into the value of the corporate property and reflecting itself in the worth of the corporate stock.’ [Citation.] We do not conclude that Ahlenius absolutely precludes any consideration of book value. The court states, in effect, that ‘mere’ book value should not govern when it does not correspond to the fair value of the shares. [Citation.] It should also be noted that the court was speaking of the book value of a company about to go out of business and which had sustained losses for 3x/2 prior years. And although the transaction was essentially a sale of assets the trial court considered only the book value which included the very suspect item of $100,000 for good will.
The propriety of taking book value into consideration as one factor to be weighed has been recognized in the authorities.” (Emphasis added.) 37 Ill. App. 3d at 854-55.

It is clear that there is no one way to value the stock in a dissenting minority stockholders’ suit. Moreover, book value is a factor to be considered in setting a value on stock. Thus, we find that Ahlenius does not require that we reverse the trial court’s judgment.

Here, the trial court was faced with a contradictory and confusing array of figures, opinions, and estimates. Experts, Newman and Jakucyk, agreed that the stocks’ adjusted book value was $430 per share. The parties do not dispute this figure. However, Mr. Newman opined that the proper valuation of the stock, based primarily on his price to earnings assessment and a 20% illiquidity discount was $256 per share. The trial court was justified in rejecting Mr. Newman’s figure, as it was significantly less than the price of $342.86 per share originally offered by plaintiff for the Die-bolt shares.

Further, the trial court properly refused to use the fair-market-value approach in this determination of per-share value. Fair-market value is based on the price that would be agreed upon in an arm’s-length transaction between a willing buyer and a willing seller on the open market, neither under a compulsion to act, and both parties possessed of all relevant facts. The trial court correctly held that the fair-market-value method did not apply in a situation where a dissenting minority shareholder in a closely held corporation was being bought out by a majority stockholder.

Moreover, Mr. Newman’s inclusion of the illiquidity discount, which lowered the price per share from $319.49 to $256 was counterbalanced by Mr. Jakucyk’s determination that a 30% premium should be added to the stock price, because the stock purchase gave Piccadilly 100% control over plaintiff. Under this evidence, the trial court did not err in refusing to apply said discount.

Also, the fact that the court below rejected various measures of stock valuation does not mean that the court did not take them into account, as plaintiff argues. Indeed, in its order, the court stated:

“The foregoing discussion of the facts does not mean that the court has ignored other conventional methods such as price earnings ratios, comparable market prices, cash flow, and dividend history. They have been considered and rejected, because on this record we see no need to rely on artificial indicia of valuation.” (Emphasis added.)

It is apparent that the court, after considering all the evidence, viewed the $430-per-share amount (adjusted book value) as the most equitable figure, falling as it did roughly midway between the two appraisals.

Under this record, the decision as to the respective weights given to the various valuation factors was particularly a matter for the trial court. (Stewart, 37 Ill. App. 3d at 856.) Here, the court was presented with sufficient information upon which to base its decision. It weighed the testimony of the court-appointed appraiser against defendant’s appraiser, as well as reviewing extensive documentation and exhibits as to the stock’s worth. The trial court’s valuation of the subject stock reflected a careful assessment of all the evidence presented, and its conclusion is not against the manifest weight of the evidence. Taxy v. Worden (1989), 181 Ill. App. 3d 97.

Accordingly, the judgment of the circuit court is affirmed.

Affirmed.

REINHARD and DUNN, JJ., concur.


source: Caselaw Access Project

author: JUSTICE GOLDENHERSH JUSTICE RARICK,

license: Public Domain

text:
    BRUCE R. WISSORE, Plaintiff-Appellant, v. THOMAS W. ALVEY, JR., et al., Defendants-Appellees.
    Fifth District
    No. 5 — 89—0554
    Opinion filed September 17, 1990.
    Rehearing denied November 9, 1990.

      RARICK, J., dissenting.

      Daniel R. Devereaux and Edward F. Brennan, both of St. Louis, Missouri, for appellant.
    James B. Wham and Jennifer W. Price, both of Wham & Wham Attorneys, of Centraba, for appellees.
   JUSTICE GOLDENHERSH

delivered the opinion of the court:

Plaintiff, Bruce R. Wissore, appeals the dismissal with prejudice of his second amended complaint alleging legal malpractice against defendants, Thomas W. Alvey, Jr., Edward Bott, and Thompson and Mitchell, attorneys at law. The second amended complaint was dismissed with prejudice by order of the circuit court of St. Clair County dated March 9, 1989. In this cause, plaintiff raises the sole issue whether the trial court erred in dismissing plaintiff’s second amended complaint with prejudice for failure to state a cause of action. We reverse and remand.

The events giving rise to this appeal occurred in a separate lawsuit in which Bruce R. Wissore, plaintiff herein, was named as the defendant. We, therefore, borrow liberally from the facts set out in Jenner v. Wissore (1988), 164 Ill. App. 3d 259, 517 N.E.2d 1220, and supplement with additional facts relevant only herein.

On October 29, 1985, Elizabeth Jenner, a member of the Board of Trustees of Belleville Area College (BAC), filed suit against plaintiff as chancellor of BAC to enjoin allegedly unlawful use of college property and funds to support a tax increase proposition for BAC scheduled to appear on the November 1985 election ballot. A group of volunteers who supported the tax increase formed an association known as the Committee for Quality Education and Economic Development (the committee). Although the committee was not officially affiliated with BAC, its activities were endorsed and controlled by various administrators associated with BAC, including plaintiff. The BAC Board of Trustees (the board) shared the committee’s goal of securing passage of the tax increase proposition. To help effectuate passage, the BAC board hired an organization by the name of Public Response to assist the board in directing a campaign for passage of the tax increase. Thereafter, the board discussed and approved the use of college funds to disseminate to the public factual information relating to the proposition, although the board did not approve of using such funds for “persuasive” purposes.

By statute, the board had the power to grant temporary use of college buildings, classrooms, and assembly halls to outside civic, social, educational, and literary groups when such facilities were not being used by the college. (Ill. Rev. Stat. 1985, ch. 122, par. 103— 43.) The board delegated its authority to the college administration. Pursuant to this authority, the administration allowed the committee to hold a meeting in the college’s theater and to use a vacant room for a telephone bank. The committee was charged a rental fee of $20 for the vacant room, which was nearly twice the normal charge. Double rent was charged to avoid the appearance of favoritism or impropriety.

The committee hired Public Response to run the phone bank. The committee either paid for or was reimbursed for all charges. Two market research assistants were employed by the college, but performed virtually all of their work for the committee. The committee did pay the workers a $6-per-hour wage, but did not pay for office space at the college used by the workers. Additionally, literature prepared and distributed by the committee was printed at the college. The committee would reimburse the college for that portion of the material which was persuasive, but not for those portions which were factual in nature. The determination between what was factual and what was persuasive was made by the college in consultation with counsel.

In her petition, Jenner alleged, among other things, that plaintiff “has directed and is directing that school funds and school resources be used to support the tax increase in violation of the Illinois Election Code (Ill. Rev. Stat. 1983, ch. 46, sec. 103).” Jenner prayed for issuance of a temporary restraining order and for preliminary and permanent injunctive relief to halt plaintiff’s allegedly unlawful use of “public funds and property” and to require him to order the committee and Public Response to stop using BAC property to aid in the campaign for the tax increase. A hearing on Jenner’s request for a temporary restraining order and a preliminary injunction was scheduled on October 30, 1985. At that time, plaintiff was represented by attorneys Thomas W. Alvey, Jr., and Edward Bott, from the law firm of Thompson and Mitchell, defendants herein. Plaintiff consented to the entry of an order which provided:

“Defendant is Ordered not to use Public Funds or Public Facilities to urge voters to support the tax increase for the Belleville Area College as is prohibited by the Election Code, Ch. 46, §103.
Defendant, while not agreeing that public funds have been used to support the tax increase, does agree not to make available to the Committee for Quality Education and Economic Development or any other group supporting the tax referendum, college funds, property, personnel or facilities and further agrees that all such uses, if ongoing, shall be immediately terminated.”

Five days later, Jenner filed a petition for a “rule to show cause” why plaintiff should not be held in contempt for violating the October 30 order. The basis for this petition was that (1) the phone bank at BAC had not been shut down “immediately,” but rather was allowed to continue in operation until the end of the day on October 30, and (2) a meeting, at which plaintiff was in attendance, previously scheduled by the committee in connection with the tax increase campaign, was held at the BAC theater on the afternoon of October 30, after entry of the order.

Jenner’s petition was granted, and the court ordered plaintiff to appear on November 5 to show cause why he should not be held in contempt. On that date, plaintiff filed a “special and limited appearance contesting jurisdiction” and a motion to dismiss. The trial court found that it did have jurisdiction to proceed and denied the motion to dismiss. It then conducted an evidentiary hearing at which plaintiff alone testified. After the hearing, the court appointed attorney Robert Becker to serve as special master to review the expenditures made by BAC and the committee on the tax increase campaign.

Becker conducted his investigation without objection and prepared a report, which he filed on April 16, 1986. In his findings, Becker reported:

“[A]s to the use of the phone banks for nine to nine-and-one-half hours after the Court Order, it appears that Dr. Wissore told Public Response to cease their use and Public Response was then contacted by Alvey who informed it that the phones were to be non-operational by the end of the day.”

Becker further reported that plaintiff did not contact defendant Alvey about the propriety of the meeting held on October 30, 1985, between the committee and Public Response. Becker also investigated the borrowing of money by the committee to support the tax referendum. With respect to this, Becker reported:

“After a meeting with Wissore, on July 17, 1985, Vice-Chancellor Hines arranged a loan with Dennis E. Bielke, President of General Bank, on behalf of the Committee for Economic Development and Quality Education for $25,000.00. Wissore, Hines, Eskridge, Clark and Tallant agreed to co-sign said Demand Note. Bielke noted that repayment would come from their individual payroll contributions to the Committee totaling $930.78 a month over the next 32 months. Mr. Bielke noted: ‘These contributions reflect pay raises for additional responsibilities that the individuals have taken on at the college.’ *** Hines denies saying this, but indicated that Bielke must have misunderstood him. Hines said he was referring to all payroll contributions being made by teachers out of their salaries or from extra jobs held.
Tallant, Eskridge and Clark all say they co-signed but were told by Hines that contributions to the Committee for Economic Development and Quality Education would be sufficient so that they would never have to pay back the loan. Wissore and Hines say they knew that there was a strong possibility that the money would have to be repaid.
The $25,000.00 Demand Note originally dated July 17, 1985 was executed on August 17, 1985. On September 19, 1985, a new note was drawn for $33,392.16 representing the need by the Committee for Economic Development and Quality Education for an additional $10,000.00 as decided by Wissore.
On February 7, 1986, the Committee for Economic Development and Quality Education repaid the second Demand Note in full. Said Note had a balance due of $29,845.82. The Committee for Economic Development and Quality Education was able to do so after receiving a check from Wissore in the amount of $27,870.00 which was deposited in the Committee for Economic Development and Quality Education’s account on February 7, 1986. *** Dr. Wissore had also contributed another $5,000.00 to the Committee for Economic Development and Quality Education on January 30, 1986. He states his purpose for these contributions was for the benefit of the college and for his career so that this matter could be put behind him. For the last two months, the Committee for Economic Development and Quality Education showed a balance in the account of $10.18.”

On April 21, 1986, after receiving and approving Becker’s report, the circuit court of St. Clair County entered final judgment finding plaintiff to be in contempt and ordered him to pay a $500 fine to the county for conduct which, in the court’s words, tended “to impede, embarrass, and obstruct the Court in its administration of justice and tended to bring the administration of justice into disrepute.” The judgment also ordered plaintiff to pay $955 to the college, “representing the reasonable value of College facilities and service not heretofore repaid by [Wissore] or the *** Committee.”

Wissore appealed the contempt order to this court. In Jenner v. Wissore (1988), 164 Ill. App. 3d 259, 517 N.E.2d 1220, we vacated the contempt finding on the basis that the plaintiff, Jenner, had no standing to sue, either as a board member or as an individual, and, therefore, the circuit court lacked subject matter jurisdiction.

On October 8, 1987, plaintiff filed a three-count complaint against his attorneys, defendants Alvey, Bott, and Thompson and Mitchell, claiming malpractice in the representation of plaintiff in the Jenner case. On June 1, 1988, this complaint was dismissed on motion of defendants. Plaintiff filed an amended complaint which was also dismissed. Plaintiff then filed his second amended complaint on January 5, 1989, in which he alleged that defendants herein breached their duty of loyalty to plaintiff in that they:

“(a) Undertook to defend plaintiff when they had a direct and irreconcilable conflict of interest in that Elizabeth Jenner, who undertook the action against which plaintiff was forced to defend, was an employer of Thomas Alvey in matters directly related to those complained of by Elizabeth Jenner;
(b) Undertook to defend plaintiff when defendant, Thomas Alvey, was in fact, the party responsible for the conduct which was an alleged violation of the consent order;
(c) Undertook to defend plaintiff and continued such representation while retaining his position as an employee of the Board of Trustees of which Elizabeth Jenner was a member; and conducted and was paid by Belleville Area College for at least seven (7) conferences with Elizabeth Jenner during the period covered by the court actions of Elizabeth Jenner;
(d) Undertook to defend plaintiff while retaining his position as an employee of the Board of Trustees of which Elizabeth Jenner was a member when he knew, had reasons to know, or should have known that the interests of plaintiff and those of defendant’s employer, Belleville Area College, were in irreconcilable conflict;
(e) Advised plaintiff to enter into a consent order without fully and adequately explaining its content and import;
(f) Advised plaintiff that the consent order did not go into effect until the day after its entry when in fact, it stated that it was effective immediately;
(g) Advised the manager of the phone bank that operations of the phone bank could continue throughout the day of October 30, 1985, the day on which the consent order was entered;
(h) Failed to advise the court that had there been a violation of the consent order with respect to activities which occurred on the day the order was entered, that such violation was directed and authorized by the defendant and was defendant’s responsibility, not that of plaintiff;
(i) Failed to advise plaintiff, the court, or Belleville Area College in a timely fashion that on November 5, 1985, the day of the contempt hearing, he was fully aware of the fact that he owed conflicting duties to Elizabeth Jenner and plaintiff, and to Belleville Area College and plaintiff; and that defendant’s duties to both Elizabeth Jenner and Belleville Area College were, in the opinion of the defendant, more important than defendant’s duties to plaintiff;
(j) Balanced the separate interests of plaintiff and the committee for economic Development and Quality Education by advising that plaintiff’s legal liabilities would be diminished if plaintiff would personally repay the loan of the Committee for Economic Development and Quality Education.”

Plaintiff further alleged that as a direct and proximate result 'of one or more of the foregoing negligent acts, he sustained damages in the form of the contempt of court citation, the repaying of the loan of the committee, and further irreparable damage to his reputation and standing in the community. Plaintiff claimed he sustained actual damages in the amount of $32,870. The trial court entered an order dismissing the second amended complaint with prejudice, finding that as a matter of law, plaintiff failed to state a cause of action. Plaintiff appeals, arguing that his second amended complaint stated a valid cause of action for legal malpractice upon which relief could be granted.

It is generally recognized that a section 2 — 615 motion to dismiss (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615) attacks only the sufficiency of the complaint and should be decided only upon the allegations set forth therein. (Johnson v. Nationwide Business Forms, Inc. (1976), 41 Ill. App. 3d 128, 359 N.E.2d 171.) The motion should be granted only if it is clear that the plaintiff can prove no set of facts under the pleading which would entitle him to relief. (Alper Services, Inc. v. Wilson (1980), 85 Ill. App. 3d 908, 407 N.E.2d 677.) In considering the question whether plaintiff’s complaint did or did not state a cause of action, we must be aware of plaintiff’s theory as to why defendant is guilty of malpractice. The essence of plaintiff’s theory is that defendants owed a duty of undivided loyalty to him which defendants breached by providing legal advice and counsel to Elizabeth Jenner on at least seven occasions during the period of defendants’ representation of plaintiff, for which defendants were compensated by the Board of Trustees at BAC. This advice was given at the sole request of Jenner without preapproval of the board and was for the sole and personal use of Jenner in her litigation against plaintiff. Plaintiff further alleges that a conflict existed because of defendants’ representation of the Committee for Economic Development and Quality Education, a committee formed to aid in the passage of the tax referendum.

In order to state a cause of action for legal malpractice, a plaintiff must allege facts demonstrating: (a) the existence of an attorney/client relationship; (b) a duty arising from that relationship; (c) a breach of that duty on the part of defendant/counsel; (d) proximate cause; and (e) damages. (B.T. Explorations, Inc. v. Stanley (1989), 187 Ill. App. 3d 23, 25, 542 N.E.2d 1292, 1294.) In the instant case, there is no question but that plaintiff sufficiently satisfied the first and second elements for stating a malpractice claim by alleging an attorney/client relationship between the parties and a duty of undivided loyalty owed by defendants to plaintiff. As to the third element, plaintiff alleged defendants breached their duty by committing the following acts or omissions:

“(a) Undertook to defend plaintiff when they had a direct and irreconcilable conflict of interest in that Elizabeth Jenner, who undertook the action against which plaintiff was forced to defend, was an employer of Thomas Alvey in matters directly related to those complained of by Elizabeth Jenner;
(b) Undertook to defend plaintiff when defendant, Thomas Alvey, was in fact, the party responsible for the conduct which was an alleged violation of the consent order;
(c) Undertook to defend plaintiff and continued such representation while retaining his position as an employee of the Board of Trustees of which Elizabeth Jenner was a member; and conducted and was paid by Belleville Area College for at least seven (7) conferences with Elizabeth Jenner during the period covered by the court actions of Elizabeth Jenner;
(d) Undertook to defend plaintiff while retaining his position as an employee of the Board of Trustees of which Elizabeth Jenner was a member when he knew, had reasons to know, or should have known that the interests of plaintiff and those of defendant’s employer, Belleville Area College, were in irreconcilable conflict;
(e) Advised plaintiff to enter into a consent order without fully and adequately explaining its content and import;
(f) Advised plaintiff that the consent order did not go into effect until the day after its entry when in fact, it stated that it was effective immediately;
(g) Advised the manager of the phone bank that operations of the phone bank could continue throughout the day of October 30, 1985, the day on which the consent order was entered;
(h) Failed to advise the court that had there been a violation of the consent order with respect to activities which occurred on the day the order was entered, that such violation was directed and authorized by the defendant and was defendant’s responsibility, not that of plaintiff;
(i) Failed to advise plaintiff, the court, or Belleville Area College in a timely fashion that on November 5, 1985, the day of the contempt hearing, he was fully aware of the fact that he owed conflicting duties to Elizabeth Jenner and plaintiff, and to Belleville Area College and plaintiff; and that defendant’s duties to both Elizabeth Jenner and Belleville Area College were, in the opinion of the defendant, more important than defendant’s duties to plaintiff;
(j) Balanced the separate interests of plaintiff and the committee for economic Development and Quality Education by advising that plaintiff’s legal liabilities would be diminished if plaintiff would personally repay the loan of the Committee for Economic Development and Quality Education.”

In considering a motion to dismiss, the trial court must accept as true all facts well pleaded as well as reasonable inferences which can be drawn from those facts. (Schnidt v. Henehan (1986), 140 Ill. App. 3d 798, 803, 489 N.E.2d 415, 418.) We believe that the allegations set forth above are sufficient to state a cause of action for legal malpractice in that they raise a question as to whether a conflict of interest existed by defendants’ representation of plaintiff while at the same time advising Jenner and BAC.

The test established to determine whether a conflict of interest exists has been set forth in People v. Hope (1981), 96 Ill. App. 3d 180, 420 N.E.2d 1171, and is applicable here:

“Generally stated, an actual conflict of interest exists when counsel, without the knowledge and consent of the defendant, ‘is in a duplicitous position where his full talents — as a vigorous advocate having the single aim of acquittal by all means fair and honorable — are hobbled or fettered or restrained by commitments to others.’ People v. Stoval (1968), 40 Ill. 2d 109, 112.” (96 Ill. App. 3d at 184-85, 420 N.E.2d at 1174.)

Hope further states, quoting People v. Vriner (1978), 74 Ill. 2d 329, 342, 385 N.E.2d 671, 676:

“ ‘[A] positive basis must be found for concluding that an actual conflict of interest existed’; the fact that a defendant ‘through hindsight, conceived notions that the representation adversely affected’ his interest is insufficient.” (Hope, 96 Ill. App. 3d at 185, 420 N.E.2d at 1174.)

We find that plaintiff’s complaint meets the Hope test for alleging a positive basis for concluding that a conflict existed. Defendants contend that because there is no allegation in the complaint that defendants undertook to represent Elizabeth Jenner individually, there can be no conflict of interest. We disagree. While Jenner was represented by her own attorney, we believe that if it can be proven that “advice and counsel” were given to Jenner by defendants in her suit against plaintiff, that such acts would be unreasonable and would constitute a conflict of interest. Such a conflict of interest would be a violation of defendants’ duty of loyalty to plaintiff for which a malpractice action would be appropriate.

Plaintiff also sufficiently alleged proximate cause in his second amended complaint by stating that as a result of one or more of defendants’ negligent acts (1) plaintiff was issued a contempt citation, (2) plaintiff was wrongly advised to pay off the loan for $32,870, and (3) plaintiff suffered irreparable damage to his reputation and standing in the community. We also find that plaintiff sufficiently alleged damages in the amount of $32,870 to overcome defendants’ motion to dismiss. While we agree with defendants that damages may be difficult to prove in this case because plaintiff voluntarily undertook this obligation before the Jenner case began, the issue of damages is not before us at this time. We are obliged only to determine whether plaintiff’s complaint alleges a causal connection between defendants’ alleged negligent acts and damages to state a cause of action sufficient to overcome defendants’ motion to dismiss. We believe that the multiple representation pleaded by plaintiff, coupled with advice to plaintiff to pay off a loan for which he was not the only guarantor, sufficiently states a cause of action.

Defendants contend that malpractice cannot exist unless counsel’s negligence has resulted in the loss of the underlying cause of action. (See Claire Associates v. Pontikes (1986), 151 Ill. App. 3d 260, 502 N.E.2d 1108; Land v. Greenwood (1985), 133 Ill. App. 3d 537, 478 N.E.2d 1203.) Therefore, since the contempt order was ultimately vacated by this court, defendants' representation of plaintiff resulted in no damage. We disagree. At least one of our sister courts has recognized that there may be instances in which the outcome of the underlying suit should not be determinative of the malpractice claim. In Cook v. Gould (1982), 109 Ill. App. 3d 311, 440 N.E.2d 448, a malpractice action against an attorney for failure to file suit within the statute of limitations, the plaintiff argued that the burden of proof should have been shifted to the defendant to show that the underlying cause of action was not meritorious. The plaintiff further urged the court to modify the rule that a plaintiff must prove that his underlying claim would have been successful but for the negligence of his attorney. The plaintiff urged the court to require the negligent attorney to show that the underlying action was not meritorious and would not have been successful even if the suit had been filed within the statute of limitations. While the Cook court declined to change the general law at that time, it noted, “we can conceive of situations where the attorney, because of equitable considerations, might be estopped to deny the validity of the underlying lawsuit.” (109 Ill. App. 3d at 314, 440 N.E.2d at 450.) We find the instant facts present such a situation.

While we ultimately reversed the contempt citation issued by the trial court (see Jenner v. Wissore (1988), 164 Ill. App. 3d 259, 517 N.E.2d 1220), plaintiff has alleged facts sufficient to show that he was damaged by defendants’ representation of him in that suit. Specifically, plaintiff claims he was ill-advisedly told to pay off the $32,870 bank note because of defendants’ representation of BAC and advice given to Jenner. Plaintiff further claims damage to his reputation and standing in the community caused by some 70-odd news stories that were printed as a result of the contempt citation. Defendants reply that since plaintiff failed to attach these articles or to plead that such news stories were derogatory, there is no basis for liability. Defendants further contend that they have no duty to control the media. As previously stated, the trial court must accept as true all well-pleaded facts and reasonable inferences which can be drawn from those facts. (Schnidt v. Henehan (1986), 140 Ill. App. 3d at 803, 489 N.E.2d at 418.) We believe the reasonable inference is that these news stories were derogatory. If plaintiff can prove that defendants’ representation of him constituted malpractice, then plaintiff has likewise alleged sufficient damages. Under these circumstances equitable considerations determine that the malpractice suit should be allowed to proceed even though the contempt citation was ultimately reversed.

For the foregoing reasons, the order of the circuit court of St. Clair County is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

LEWIS, P.J., concurs.

JUSTICE RARICK,

dissenting:

Because I do not believe that Wissore has alleged sufficient facts which would constitute damages as a result of the defendants’ conduct, I do not agree with the majority and respectfully dissent. As the majority points out, one of the elements of a legal malpractice claim is damages. In the present case Wissore alleged that he was damaged in one or more of the following ways: He was issued a contempt citation; he was wrongly advised to pay off the $32,870 loan; and he suffered irreparable damage to his reputation.

Addressing the contempt citation first, the defendants’ argument that Wissore suffered no damage because the citation was vacated is correct in my view. In Claire Associates v. Pontikes (1986), 151 Ill. App. 3d 116, 502 N.E.2d 1186, the court stated that “no malpractice exists unless counsel’s negligence has resulted in the loss of an underlying cause of action or the loss of a meritorious defense.” (Claire, 151 Ill. App. 3d at 122, 502 N.E.2d at 1190.) Clearly, Wissore lost no cause of action. It is the loss of a “meritorious defense,” specifically the failure to defend on the basis that Wissore did not perform the act which was the subject matter of the contempt hearing, which he alleges to be the cause of his damages. Yet as he was ultimately victorious on appeal, the loss of this defense, assuming that it was meritorious or was lost as a result of the defendants’ negligence, could not have caused Wissore any harm. The majority relies on Cook v. Gould (1982), 109 Ill. App. 3d 311, 440 N.E.2d 448. In Cook, the plaintiff argued that in malpractice cases based on the defendant attorney’s failure to file the cause of action within the applicable statute of limitations, the burden of proof should be shifted to the attorney to show that the underlying action was not meritorious and would not have been successful. As the majority points out, the court in Cook declined to change the law, but stated in dicta that it could conceive of situations where the attorney, because of equitable considerations, might be estopped to deny the validity of the underlying lawsuit, and that such estoppel would shift the burden of proof to the defendant attorney and require him to present some evidence of the lack of merit of the underlying action. The majority then goes on to state, without explanation, that the facts in the present case present such a situation. I do not agree. First, I see no reason why the defendants should be estopped from denying the merit of the defenses allegedly abandoned, and so am not persuaded that the burden of proof should be shifted to them. Second, even if it were the defendants’ burden to prove the lost defense was meritless, and, more importantly, even if the lost defense had merit, Wissore still has suffered no damage because he prevailed on appeal. Cook is simply inapplicable to the present situation. Because the contempt citation was vacated, Wissore could not have been damaged thereby.

Wissore’s next contention of damage is the repayment of the loan. Again, I find no facts alleged which could establish that he was damaged by repayment of the loan. As a co-guarantor, he was legally obligated to pay the note and, because his liability was joint and several, he was liable for the entire amount. He is in no way precluded from seeking contribution from his co-guarantors. No action of the defendants either caused him to assume any obligation that he did not have nor abandon any right that he had. His legal position with respect to the note and his co-guarantors is unchanged and, again, there are no facts alleged which could establish that Wissore was damaged by repayment of the note.

Wissore’s final allegation of damage is that his reputation and standing in the community were harmed as a result of the press coverage resulting from the contempt citation. He seems to be arguing that had the defendants raised the defense in question (that Wissore did not perform the acts which were the subject matter of the contempt hearing), the court would not have entered the contempt citation and so there would have been no press coverage. Once again, because the contempt citation was vacated on appeal, I find no facts alleged which, if proven, would demonstrate that Wis-sore was damaged. In any event, mere failure to prevent the contempt citation from being entered in the first instance cannot be grounds for legal malpractice (Schnidt v. Henehan (1986), 140 Ill. App. 3d 798, 489 N.E.2d 415, 420) unless it resulted from the defendant’s failure to exercise the requisite degree of care and skill. Wissore’s complaint alleges no facts which, if proven, would demonstrate that but for the failure to raise the defense, the contempt citation would not have been entered. Wissore failed to allege facts which would demonstrate that the defendants’ failure to raise the defense in question was anything more than a matter of trial tactics. The rule in Illinois is that “attorney[s are] not liable *** for errors in judgment, but only for failing to exercise a reasonable degree of care and skill, notwithstanding *** an unfavorable result.” Goldstein v. Lustig (1987), 154 Ill. App. 3d 595, 600, 507 N.E.2d 164, 168-69.


author: JUSTICE HOWERTON

text:
    OPPORTUNITY CENTER OF SOUTHEASTERN ILLINOIS, INC., et al., Plaintiffs-Appellees, v. E. ALLEN BERNARDI, Director, Department of Labor, et al., Defendants-Appellants.
    Fifth District
    No. 5 — 89—0657
    Opinion filed October 16, 1990.

      Neil F. Hartigan, Attorney General, of Springfield (Robert J. Ruiz, Solicitor General, and William H. London and Jerald S. Post, Assistant Attorneys General, of Chicago, of counsel), for appellants.
    Jeffrey E. Fleming, of Olney, for appellee Opportunity Center of Southeastern Illinois, Inc.
   JUSTICE HOWERTON

delivered the opinion of the court:

Plaintiffs, Opportunity Center of Southeastern Illinois, Inc. (the Center), and Rose Contracting and Engineering, Inc., filed a complaint for declaratory judgment to determine whether the Opportunity Center is a “public body” under the Prevailing Wage Act (Ill. Rev. Stat. 1987, ch. 48, par. 39s — 1 et seq.).

Opportunity Center is a private, not-for-profit corporation whose purpose is to provide social, educational and rehabilitation programs for handicapped and developmental^ disabled adults. The Center contracted with Rose Contracting and Engineering, Inc., to provide remodeling services on the Center’s building.

Defendants are the Department of Labor (the Department) and E. Allen Bernardi, the Director.

The Department had issued subpoenas to both the Opportunity Center and Rose Contracting, requesting both to produce time cards, books, payroll records, checkbook stubs, and other documents. The subpoenas indicated that the Department of Labor was investigating whether plaintiff was paying wages by the prevailing rate of hourly wages on the remodeling project, pursuant to the Prevailing Wage Act (Act) (Ill. Rev. Stat. 1987, ch. 48, par. 39s — 1 et seq.).

Plaintiffs, Opportunity Center and Rose Contracting, filed motions to quash the subpoenas together with a complaint for declaratory judgment.

The circuit court of Richland County held that the Opportunity Center was not a “public body” within the meaning of the Prevailing Wage Act and, therefore, was not subject to the Act’s provisions. After considering the Department of Labor’s motion for reconsideration, the circuit court also held: (1) that the Opportunity Center was not authorized by law either to construct public works or to enter into any contract for the construction of public works; and (2) that the construction involved in this cause was not a “public work” under the Act.

The Department of Labor appeals both orders.

The Prevailing Wage Act’s declaration of policy states:

“It is the policy of the State of Illinois that a wage of no less than the general prevailing hourly rate as paid for work of a similar character in the locality in which the work is performed, shall be paid to all laborers, workers and mechanics employed by or on behalf of any and all public bodies engaged in public works.” Ill. Rev. Stat. 1987, ch. 48, par. 39s — 1.

Although the Opportunity Center admits it received one-half of its funds from the public, it nevertheless argues that the Center is not a public body because it is not “authorized by law to construct public works.”

The Department of Labor argues that the Center is a public body because it is supported in part by public funds, i.e., contracts, local tax monies and grants. The Department relies on People ex rel. Bernardi v. Illini Community Hospital (1987), 163 Ill. App. 3d 987, 516 N.E.2d 1320, wherein the court held that a not-for-profit, nonsectarian hospital, which received public tax money, was a public institution and public body for purposes of the Prevailing Wage Act. In its reasoning, the court focused on the phrase “or any institution supported in whole or in part by public funds.” Ill. Rev. Stat. 1985, ch. 48, par. 39s — 2.

In Illini, the hospital contracted to have a canopy constructed over its emergency room entrance. The contract did not call for workers to be paid the prevailing wage. The Department brought an action for declaratory and injunctive relief to enforce the Prevailing Wage Act, and argued that since the hospital received public funds, i.e., tax money, by definition it was a public body under the Prevailing Wage Act. The hospital argued that the statute was ambiguous and should be interpreted as applying only to taxing bodies, and that the percentage of tax money received was small when compared to its overall budget. Most significantly, the hospital also argued that the Act should not apply because only private funds were used to construct the canopy, and therefore, the project was not a public work.

The Illini court ruled that the language of the statute was clear and unambiguous: by definition a public body is one supported in whole or part by public funds. The heart of Illini is that an institution need not be wholly supported by public funds to be within the scope of the Prevailing Wage Act and even though the hospital may not be a “public” hospital for purposes of other statutes, this did not control the definition of public body under the Prevailing Wage Act.

The court in Illini noted that the purpose of the Prevailing Wage Act is to ensure that workers receive a decent wage, and that this, in turn, is advantageous to the public because it encourages the efficient and expeditious completion of public works. Hence, the court concluded that the purpose of the Prevailing Wage Act best would be served by requiring the hospital to pay the prevailing wage. Illini, 163 Ill. App. 3d at 990, 516 N.E.2d at 1321.

We turn, now, to the issue at hand — whether the not-for-profit Opportunity Center is a public body under the Prevailing Wage Act.

The Act defines “public body”:

“ ‘Public body’ means the State or any officer, board or commission of the State or any political subdivision or department thereof, or any institution supported in whole or in part by public funds, authorized by law to construct public works or to enter into any contract for the construction of public works, and includes every county, city," town, village, township, school district, irrigation, utility, reclamation improvement or other district and every other political subdivision, district or municipality of the state whether such political subdivision, municipality or district operates under a special charter or not.” (Emphasis added.) Ill. Rev. Stat. 1987, ch. 48, par. 39s — 2.

Courts, when interpreting a statute, must determine and give effect to the legislative intent in enacting the statute. (Maloney v. Bower (1986), 113 Ill. 2d 473, 498 N.E.2d 1101.) In determining the legislative intent, courts must consider the language of the statute and the purposes sought to be achieved. (Stewart v. Industrial Comm’n (1987), 115 Ill. 2d 337, 504 N.E.2d 84.) Courts should first look to the language of the statute because it is the best indication of legislative intent. Where the language is unambiguous, a court must enforce the law as enacted. (County of Du Page v. Graham, Anderson, Probst & White, Inc. (1985), 109 Ill. 2d 143, 485 N.E.2d 1076.) Courts avoid interpretations which render portions of statutory language meaningless or superfluous. Harris v. Manor Healthcare Corp. (1986), 111 Ill. 2d 350, 489 N.E.2d 1374; Ekco, Inc. v. Edgar (1985), 135 Ill. App. 3d 557, 482 N.E.2d 130.

The Opportunity Center is supported by contracts with the State; it received over one-half of its revenue through contracts with the Illinois Department of Health and Developmental Disabilities and its predecessor, the Department of Mental Health. The Center also is publicly supported by local tax monies, $90,000 for fiscal years 1985 and 1986; and it received funding through grants issued by the Illinois Department of Rehabilitation Services.

According to the parties’ stipulation of facts, the Center received from the Department of Mental Health over 50% of its receipts in each year from July 1, 1973, through June 30, 1987.

Under the plain meaning of the statute, the fact that the Center is a “private” institution does not prevent it from being a “public body” under the terms of the Prevailing Wage Act. The definition states: “any institution supported in whole or in part by public funds.” Ill. Rev. Stat. 1987, ch. 48, par. 39a — 2.

The Center is a public body because it is an institution which is supported in whole or in part by public funds under the teaching of Illini.

Nevertheless, the Center maintains that it is not “authorized by law to construct a public work,” and that Illini did not address this part of the definition of a “public body.”

If the Center is not authorized by law to construct a public work, can it be a public body?

The Act states that a “public body” is “any institution supported in whole or in part by public funds, authorized by law to construct public works or to enter into any contract for the construction of public works.” (Emphasis added.) Ill. Rev. Stat. 1987, ch. 48, par. 39s — 2.

Since the Act defines a “public body” in part using the term “public works,” we must first determine what is a “public work.”

The Act defines “public works”:

“ ‘Public works’ means all fixed works constructed for public use by any public body, other than work done directly by any public utility company, whether or not done under public supervision or direction, or paid for wholly or in part out of public funds. ‘Public works’ as defined herein includes all projects financed in whole or in part with bonds issued under the Industrial Project Revenue Bond Act[,] *** the Industrial Building Revenue Bond Act[,] *** the Illinois Development Finance Authority Act[,] *** or the Build Illinois Bond Act *** and all projects financed in whole or in part with loans or other funds made available pursuant to The Build Illinois Act *'**.” (Emphasis added.) Ill. Rev. Stat. 1989, ch. 48, par. 39s — 2.

A “public work” has two elements: (1) it is a “fixed work”; and (2) is for a “public use.”

First, then, in this case, we must determine if the Center’s remodeling project is a fixed work. Plaintiff’s complaint stated that the remodeling was to be done on improvements situated on real estate at a certain location. The Act does not define “fixed work.” However, we believe that real estate is a “fixed work” within the meaning of the Act, and real estate was what was involved in this construction project.

Secondly, we must determine if the project was constructed for “public use.” The Act does not define “public use.”

We believe that “public use,” however, does not turn on whether the institution is publicly or privately owned. Nor do we believe that “public use” turns on whether the greater portion of those who use the facility are paying for their use from their own private funds. Because the Act does not define “public use,” and because the Act has a specific purpose, we instead believe that the term “public use” must be determined so that the broad purpose of the Act is not thwarted.

If the Act is read as the Center urges, so that the words “authorized by law to construct public works” are words of limitation, then the purpose of the Act would be thwarted. If those words are words of limitation, then unless an institution, public or private, was specifically and expressly granted the authority by the legislature to construct a public work, prevailing wages would not have to be paid even though public money was being spent, thereby thwarting the broad purpose of the Act. We hold, therefore, that the words “authorized by law to construct public works” are not words of limitation.

The purpose of the Prevailing Wage Act is to ensure that workers receive a decent wage; hence, the question of whether the Center is for “public” or “private” use must be determined by asking whether the institutions are supported in whole or in part with public money. By resolving the issue in this way, the broad purpose of the Act best is served. Therefore, we hold that when public money is spent on a “fixed work” that is being constructed by a public body, the Prevailing Wage Act applies.

According to the parties’ stipulation of facts, the Center contracts with the Department of Mental Health and other governmental agencies to provide services to handicapped and developmental^ disabled adults and is supported, in part, by public money. We further find that the Center is a public body because it receives one-half of its money from public funds and can contract for the construction of public works. Therefore, the Prevailing Wage Act covers this project.

We, therefore, reverse the circuit court and remand for further proceedings.

Reversed and remanded.

LEWIS, P.J., and WELCH, J., concur.


author: JUSTICE RARICK

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. ANTHONY NEWBOLDS, Defendant-Appellant.
    Fifth District
    No. 5 — 88—0575
    Opinion filed October 16, 1990.
    Daniel M. Kirwan and Michelle A. Zalisko, both of State Appellate Defender’s Office, of Mt. Vernon, for appellant.
    Charles Garnati, State’s Attorney, of Marion (Kenneth R. Boyle, Stephen E. Norris, and Raymond E Buckley, Jr., all of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE RARICK

delivered the opinion of the court:

Defendant, Anthony Newbolds, was charged with aggravated battery and unlawful use of weapons by a felon in connection with an incident that occurred on January 1, 1988. After a jury trial in the circuit court of Williamson County, defendant was acquitted of the aggravated battery charge but found guilty of the weapons offense and sentenced to nine years' imprisonment. Defendant appeals his conviction and sentence. We reverse and remand.

On the evening of December 31, 1987, defendant and his live-in girlfriend, Cheryl Miller Branson, went out to dinner. They became involved in an argument, and Cheryl asked to be dropped off at a nearby bar. Several hours later Cheryl walked home by herself. Defendant accused Cheryl of cheating on him, and the two again began to argue. At this point, the evidence of what happened next varies greatly depending upon which of the three versions Cheryl related to the authorities one chooses to follow. The end result of the couple’s argument was that Cheryl was shot in the mouth with a .22 caliber handgun. Defendant drove Cheryl to the hospital, whereupon Cheryl related her first version of the incident. She informed medical personnel and police that defendant had beaten her and then shot her with a gun. She signed a complaint while at the hospital stating the same. Defendant’s version of the incident as related by one of the nurses at the hospital was that he and Cheryl had been walking along the street when she was suddenly shot. On January 4, defendant was charged with aggravated battery. Cheryl subsequently was released from the hospital on January 5 and gave a taped statement to the police on January 11. In this statement, Cheryl retracted her earlier statement that defendant had beaten her but did allege he backhanded her across the face in the course of their argument. She further stated she eventually refused to argue any more, prompting defendant to decide to leave. As he was preparing to go, he picked up a gun. In attempting to keep defendant from leaving the house with the gun, Cheryl grabbed for the gun. A struggle ensued in which she was accidentally shot by defendant. On January 12, the following day after the taped interview, defendant was charged with unlawful use of weapons by a felon. Subsequently, on April 11, 1988, Cheryl provided a written statement to the State’s Attorney completely exonerating defendant. In this statement, Cheryl claimed she was the one who originally had possession of the gun. She had been given the gun to protect herself on her walk home alone that morning by an unnamed friend and had pulled the gun out of her purse to scare defendant after he started arguing with her. When defendant reached for the gun to take it away from her, the gun accidentally went off. Cheryl further claimed her finger was on the trigger when the gun discharged. Cheryl also stated she lied in the taped interview to keep herself and her unnamed friend out of trouble. At trial it was revealed Cheryl and defendant were engaged to be married, and Cheryl had visited defendant as often as possible at the county jail from the time she was released from the hospital to the time of trial. Defendant chose not to testify.

Defendant raises three arguments on appeal. Because the first issue is dispositive of the case, we need only address that point. Defendant asserts there was evidence at trial he acted out of necessity, and because an unlawful use of weapons charge does not preclude the possibility of a necessity defense, his attorney’s failure to tender to the jury an instruction defining the defense deprived him of a fair trial.

In general, a defendant is entitled to have the jury instructed on the defense of necessity when evidence, sufficient to raise a reasonable doubt as to guilt, has been introduced that the accused, without blame in occasioning or developing the situation, reasonably believed his conduct, which would otherwise be an offense, was necessary to avoid a public or private injury greater than the injury which might reasonably have resulted from his own conduct. (See People v. James (1989), 180 Ill. App. 3d 461, 464-65, 535 N.E.2d 1147, 1150; People v. Govan (1988), 169 Ill. App. 3d 329, 336, 523 N.E.2d 581, 585.) Here, there was some evidence presented through Cheryl’s third version of the incident that defendant may indeed have acted out of necessity to prevent immediate and substantial bodily harm to himself when he reached for the gun. Because the jury was not instructed on the defense of necessity, it cannot be said the jury knew that touching a gun to protect oneself does not constitute possession, whether actual or constructive, within the intendment of unlawful use of weapons by a felon. This is especially true in light of the jury’s acquittal of defendant on the aggravated battery charge; clearly the jury chose not to believe Cheryl’s initial statement to the police.

Fundamental fairness requires that certain basic jury instructions essential to a fair determination of a case be given. (See People v. Pegram (1988), 124 Ill. 2d 166, 173, 529 N.E.2d 506, 509; People v. Ogunsola (1981), 87 Ill. 2d 216, 222-23, 429 N.E.2d 861, 864-65.) Because defense counsel did not tender such an essential instruction on the defense of necessity, defendant was deprived of effective assistance of trial counsel. And, because this omission so prejudiced the defense, defendant was also deprived of a fair trial. (Pegram, 124 Ill. 2d at 174, 529 N.E.2d at 509.) We cannot say in this instance but for counsel’s error the result of the proceeding in all reasonable probability would have been the same. (See Strickland v. Washington (1984), 466 U.S. 668, 694, 80 L. Ed. 2d 674, 698, 104 S. Ct. 2052, 2068; People v. Albanese (1984), 104 Ill. 2d 504, 525, 473 N.E.2d 1246, 1255.) We therefore must reverse defendant’s conviction and remand the cause for a new trial.

For the aforementioned reasons, we reverse the judgment of the circuit court of Williamson County and remand this cause for a new trial.

Reversed and remanded.

CHAPMAN and GOLDENHERSH, JJ., concur.


text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. FRANCIS CLIFFORD JAMES KITE, Defendant-Appellant.
    Fifth District
    No. 5 — 88—0785
    Opinion filed October 17, 1990.

      Daniel M. Kirwan and Larry R. Wells, both of State Appellate Defender’s Office, of Mt. Vernon, for appellant.
    H. Wesley Wilkins, State’s Attorney, of Jonesboro (Kenneth R. Boyle, Stephen E. Norris, and Debra Buchman, all of State’s Attorneys Appellate Prosecutor’s Office, of counsel), for the People.
   JUSTICE RARICK

delivered the opinion of the court:

Defendant, Francis Clifford James Kite, was charged by information in the circuit court of Union County with one count of murder and two counts of armed violence. After a trial by jury, he was found guilty on all counts and sentenced to a 40-year term of imprisonment on the murder conviction and a 30-year term of imprisonment on each armed violence conviction.

Carol Riehl, Kite’s neighbor, testified that Kite and the victim, Ronald Bunton, came to her house around 11 p.m. on April 24, 1987. Both had been drinking. At one point, Bunton suggested hiring a prostitute for Riehl’s roommate. Riehl became angry and in turn Kite became angry and told Bunton that he could introduce him to people who “would rather cut his throat than look at him.” Kite and Bunton left around 1:30 a.m. Riehl’s roommate, Charles Hughes, corroborated her testimony.

State Police officer Greg Geitman testified that he spoke with Kite on April 27, 1987, and Kite told him he dropped Bunton off at the car wash where he worked at around midnight on April 24, 1987. Rhonda Lane, who worked at the car wash, testified that Bunton did not report for work that night.

Charlene Beaty, Bunton’s mother, testified that Bunton had left home early in the evening on April 24 to go to the car wash and pick up his check. He was then going to go visit Kite and Paula Henke. Around 11:30 p.m. the car wash called and told her that Bunton had not reported to work. Henke told Beaty that Kite and Bunton had been at her house but left in order for Bunton to go to work. Beaty also spoke with Kite several days later and he told her that he dropped Bunton off at the car wash where he worked. On the morning of April 27, 1987, Kite spoke with Beaty and she told him to “stay away from me from now on.” Kite replied that he did not kill Bunton. This was before Bunton’s body, which had been found the evening before, was identified.

On July 16, 1987, police officers searched the home of Kite’s foster parents with their permission and found a .22 caliber pistol in the attic. Donald Gunnell, a ballistics expert, testified that at least one of the bullet fragments removed from Bunton’s body came from this gun. Fred Allen, Kite’s foster father, testified that Kite had been at the house on April 25, 1987. Flora Allen, Kite’s foster mother, testified that Kite and Paula Henke were at the house on April 25, 1987, and that she heard someone go up to the attic but did not know whom.

Thomas Samples testified that he was in jail in April of 1987 and that several days after being arrested Kite admitted killing Bunton. Rodney Thurmon had a cell next to Kite’s in the Menard correctional facility where Kite was serving a sentence on an unrelated conviction. According to Thurmon, who was incarcerated on another charge, Kite admitted killing Bunton because Bunton had been dating his girlfriend. Kite also told him there was another person present when Bunton was killed.

During closing argument, the prosecutor made numerous comments which Kite now argues were prejudicial and which deprived him of a fair trial:

“[Tjhere has been no explanation by anyone that this man did not do it, and we would submit to you that everything you have heard from that chair indicates that he, in fact, was involved and killed Ronnie Bunton when he was only twenty-one years old and sent his soul out into eternity forever and ever and ever ***.
* * *
I would submit to you that he is the one that placed that handgun there. There is no evidence whatsoever that anyone besides Jimmy Kite placed that gun there in that attic of his foster parents.
* * *
Mr. Kite got up, shoved Mr. Bunton and said, T am going to introduce you to some people that will cut your throat.’ I suggest that that shows you the character of Defendant Jimmy Kite.
* * *
Then Mr. Kite came back in to get a picture of Carol Riehl’s sister because of the fact that she has a problem -with her boyfriend, and Mr. Kite made the statement at that time that he was going to mess with her boyfriend. That too shows the character of this man.
* * *
Again, we tried to find something that would say that this man didn’t commit this murder, but it wasn’t there.
* * *
It is your job to find [the defendant] guilty on all counts.”

Additionally, the prosecutor characterized Kite’s defense as a “shell game.”

Kite argues that he was prejudiced and denied a fair trial as a result of the remarks made by the prosecutor during his closing argument. We need not address the merits of Kite’s argument, however, as his failure to object during trial and to include the issue in a post-trial motion waives this issue. People v. Collins (1985), 106 Ill. 2d 237, 478 N.E.2d 267. See also People v. Enoch (1988), 122 Ill. 2d 176, 522 N.E.2d 1124; People v. Friesland (1985), 109 Ill. 2d 369, 488 N.E.2d 261.

Kite acknowledges his failure to preserve the issue, but argues that the remarks were so improper as to constitute plain error. Under the plain error exception to the waiver rule, a reviewing court may consider plain errors or defects which affect substantial rights. (People v. Gacho (1988), 122 Ill. 2d 221, 522 N.E.2d 1146; 107 Ill. 2d R. 615(a).) The purpose of the rule is to correct grave injustices which may have been done to the defendant, and may be invoked where the evidence is closely balanced or the error is of such magnitude as to deny the defendant a fair trial. (People v. Carlson (1980), 79 Ill. 2d 564, 404 N.E.2d 233.) The plain error rule is not a general savings clause, however, preserving for review all errors affecting substantial rights whether or not they are brought to the attention of the trial court. (People v. Pickett (1973), 54 Ill. 2d 280, 296 N.E.2d 856.) It is a narrow and limited exception to the general waiver rule which is to be invoked only when the error alleged is so substantial that it deprived the defendant of a fair trial. (People v. Szabo (1986), 113 Ill. 2d 83, 497 N.E.2d 795, citing People v. Pasterino (1982), 91 Ill. 2d 178, 435 N.E.2d 1144.) “Before plain error can be considered as a means of circumventing the general waiver rule, it must be plainly apparent from the record that an error affecting substantial rights was committed.” (People v. Precup (1978), 73 Ill. 2d 7, 17, 382 N.E.2d 227, 231.) While improper comments by a prosecutor have been found to be so prejudicial as to warrant the application of the plain error doctrine (People v. Slaughter (1980), 84 Ill. App. 3d 88, 404 N.E.2d 1058; People v. Young (1975), 33 Ill. App. 3d 443, 337 N.E.2d 40), we find that the errors alleged here, either singularly or cumulatively, are insufficient to justify the invocation of the rule.

The evidence against Kite cannot be called close. Bunton was last seen with Kite. Although Kite testified that he left Bunton at the car wash at around 11:30 p.m. on April 24, both Carol Riehl and Charles Hughes testified that Kite and Bunton did not leave Riehl’s house until around 1:30 a.m. on April 25. The gun used to kill Bunton was found in the attic of Kite’s foster parents where Kite stored some of his clothes. Finally, two fellow inmates testified that Kite admitted to them that he killed Bunton. Improper comments by the prosecutor will warrant reversal where it cannot be said that the comments did not contribute to the defendant’s conviction. (People v. Sullivan (1978), 72 Ill. 2d 36, 377 N.E.2d 17; People v. Weathers (1975), 62 Ill. 2d 114, 338 N.E.2d 880.) Given the weight of the evidence against Kite, we conclude that the prosecutor’s comments did not contribute to his conviction.

Kite also argues that should we find the plain error doctrine inapplicable, we should find the failure to properly preserve the errors to be ineffective assistance of counsel. Ineffective assistance of counsel exists where counsel’s performance falls below an objective standard of reasonableness and that but for counsel’s unprofessional errors, there is a substantial likelihood that the outcome of the proceeding would have been different. (Strickland v. Washington (1984), 466 U.S. 668, 80 L. Ed. 2d 674, 104 S. Ct. 2052; People v. Albanese (1984), 104 Ill. 2d 504, 473 N.E.2d 1246.) Having determined that any potential prejudice to Kite was harmless in light of the evidence against him, we could not consistently find that Kite was prejudiced by counsel’s failure to object and so the second prong of the Strickland!Albanese test is not met.

Kite next argues that his armed violence convictions must be vacated because he cannot properly be convicted of armed violence and the predicate felony. The State concedes this issue but maintains that remanding the case for a new sentencing hearing is unnecessary. We agree. Kite’s 40-year sentence on the murder conviction is well within the range provided for that offense (Ill. Rev. Stat. 1987, ch. 38, par. 1005 — 8—l(a)(lXa)), separate sentences were imposed for each count, and there is no indication in the record that the trial court improperly considered the vacated armed violence convictions. (People v. Craddock (1987), 163 Ill. App. 3d 1039, 516 N.E.2d 1357; People v. Hope (1986), 142 Ill. App. 3d 171, 491 N.E.2d 785; People v. Nix (1985), 133 Ill. App. 3d 1054, 479 N.E.2d 1147; People v. McGee (1984), 121 Ill. App. 3d 1086, 460 N.E.2d 843.) We therefore vacate Kite’s armed violence convictions, but decline to remand for resentencing.

For the foregoing reasons, the judgment of the circuit court of Union County is affirmed in part and vacated in part.

Affirmed in part; vacated in part.

HOWERTON and GOLDENHERSH, JJ., concur.