author: PRESIDING JUSTICE SCARIANO

text:
    BLACKMAN KALLICK BARTELSTEIN, a Partnership, et al., Plaintiffs-Appellants, v. SAMUEL M. SORKIN et al., Defendants-Appellees.
    First District (2nd Division)
    No. 1—89—2651
    Opinion filed May 21, 1991.

      Michael L. Shakman, Barry A. Miller, and Edward W. Feldman, all of Miller, Shakman, Hamilton & Kurtzon, of Chicago, for appellants.
    Ellen G. Robinson, C. Philip Curley, and Alan F. Curley, all of Kahn, Robinson, Curley & Clayton, of Chicago, for appellees.
   PRESIDING JUSTICE SCARIANO

delivered the opinion of the court:

Plaintiffs, Blackman Kallick Bartelstein and Blackman Kallick and Company, Ltd. (BKB), appeal from (1) the circuit court’s denial of injunctive relief which they sought against defendants; (2) the court’s refusal to impose a constructive trust upon an asset acquired by defendant Samuel M. Sorkin (Sorkin) in connection with an alleged breach of his fiduciary duty; and (3) an order dismissing defendant DiPietro from the case.

The following evidence was adduced at the hearing on BKB’s motion for a preliminary injunction. Although its promotional materials describe it as an accounting firm, BKB’s witnesses testified that it also makes investments and advises clients of potential investment opportunities. In 1984, BKB hired Sorkin as an accountant, specializing in taxation. While the record is not clear how often it occurred, BKB did, during the period of Sorkin’s employment with the firm, present its clients with investment opportunities, and BKB itself, on at least one occasion, invested as a firm in a limited partnership. In its complaint, BKB alleged that it had a “regular practice” of “considering” investments as a firm; but while BKB’s managing partner, Harvey Kallick, testified that the firm had “considered” six investments over the last 10 years, three other partners testified that there was no such practice. BKB admitted in its answers to interrogatories that it had never told Sorkin about this alleged “regular practice.” Two partners, including Kallick, admitted to having made investments for themselves after having learned about them from clients without first offering them to the firm.

BKB’s “Administrative Manual,” which it distributed to its employees, including Sorkin, stated:

“We expect you to devote your best efforts to the firm’s work; therefore, do not undertake outside work. Exceptions to this requirement need advance approval of the Managing Partner.”

BKB also required employees to make entries on a form provided by the firm entitled “Management By Objectives” (MBO); the form included one column headed “Push Acquisitions for Clients.” Sorkin never indicated anything as to “Push Acquisitions for Clients” on his MBO forms, and although he met almost every month with his superior to review the forms, it seems never to have been an issue between employer and employee.

In September 1986, Larry Ginsburg, an auditor in the employ of BKB, asked Sorkin for tax advice concerning the proposed sale of a company that did business under the name of “Grendel’s Rapid Oil Change” (Grendel’s). Ginsburg testified that Grendel’s was his own client and that he did not bill the accounting work he did for that enterprise through BKB.

Sorkin testified that before he agreed to help Ginsburg on the Grendel’s transaction, Ginsburg told him that Kallick knew about and approved of Ginsburg’s outside practice. In his testimony, Ginsburg denied that he had said that Kallick approved of the outside practice, but admitted that he told Sorkin that Grendel’s was too small a client for BKB to handle. The testimony also disclosed that BKB had a practice of referring clients to other accounting firms if they could not afford to pay its standard rates; however, Sorkin testified that he was not aware of any policy that a $375,000 transaction, the amount involved in the Grendel’s deal, was too small for BKB to handle. Sorkin ultimately billed Grendel’s $950, which is more than BKB had billed some clients he had brought into the firm.

In September of 1986, when Sorkin learned from Ginsburg that the impending sale of Grendel’s had fallen through, Ginsburg invited Sorkin to invest in Grendel’s with him. They agreed to purchase it and formed defendant G & S Rapid Oil Change, Inc., and defendant G & S Real Estate Co., a partnership (collectively G & S). The sale of the business and real estate closed on October 31, 1986. Sorkin left BKB in December of 1986. In February 1988, Ginsburg sold his share in G & S to defendant James DiPietro, and a year later, Ginsburg disclosed the Grendel’s deal to Kallick.

BKB filed its complaint in three counts on March 30, 1989. Count I sought declarations that, as an agent and employee of BKB, Sorkin breached his fiduciary duties of loyalty and fair dealing by working secretly for Grendel’s, failing to advise BKB of the Grendel’s investment opportunity, and investing for himself in Grendel’s. BKB further requested a ruling holding it to be the equitable owner of a one-half interest in G & S. Count II prayed for an injunction preventing distribution of G & S’ income or assets, the imposition of a constructive trust requiring Sorkin to turn over to BKB his share of G & S, and an accounting of Sorkin’s profits from G & S. Count III sought an accounting under the disloyal servant doctrine to recover from Sorkin all salary he earned while he was allegedly disloyal to BKB.

The trial court granted BKB’s motion for a temporary restraining order on March 31, 1989. During the hearing on the motion for a preliminary injunction, DiPietro moved under section 2 — 1110 of the Civil Practice Law (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1110) for judgment in his favor, arguing that he was an innocent third party and should not be held accountable for Sorkin’s and Ginsburg’s alleged misconduct. The court granted DiPietro’s motion.

On June 29, 1989, in a memorandum opinion handed down from the bench, the trial judge denied BKB’s motion for a preliminary injunction, holding that BKB did not show irreparable harm or that it did not have an adequate remedy at law, and that Sorkin was under no fiduciary duty to report business opportunities to BKB. The court found that there was notably absent in the administrative manual any requirement that employees bring investment opportunities to BKB’s attention, nor did any other document corroborate BKB’s asserted practice of considering opportunities presented by clients; thus, “BKB did not engage in a regular practice of considering business investments for themselves, but did so, if at all, on an informal and infrequent basis ***, not governed by any firm policy, [and] not communicated to its non-partner employees.” Finally, as to BKB’s alleged practice of seeking out business opportunities in order to present them to its clients, the court stated only that it “is not a basis for imposing a constructive trust on Sorkin.”

On July 13, 1989, the trial judge dissolved the TRO. On July 28, 1989, defendants filed an interlocutory appeal, requesting

“that the appellate court order the circuit court to decide defendants-appellants’ motions to dissolve nunc pro tunc [the TRO] to June 29, 1989, prior to the pronouncement and Memorandum of Opinion denying the preliminary injunction, as had been requested by defendants-appellants, to preserve defendants-appellants’ right to petition the circuit court for damages pursuant to Illinois Code of Civil Procedure section 11—110, for wrongful issuance of the temporary restraining order.”

The circuit court entered an order on August 3, 1989, denying defendants’ request for a finding of wrongful issuance; granting DiPietro’s section 2 — 1110 motion for a finding at the close of BKB’s case in chief; and denying plaintiffs’ motion for a preliminary injunction.

On August 11, 1989, BKB filed an “interlocutory cross-appeal and appeal” from:

“(1) The Order of August 3, 1989 denying Plaintiffs’-Cross-Appellants’ motion for preliminary injunctive relief and granting the section 2 — 1110 oral motion of Defendant-Appellant James DiPietro for a directed finding at the close of plaintiff’s case;
(2) The Order of July 13, 1989 dissolving the Temporary Restraining Order previously entered in this case on March 31, 1989;
(3) The Memorandum of Opinion of June 29, 1989 ***.”

On September 6, 1989, defendants moved to voluntarily dismiss their own appeal, and the trial court granted the motion on September 11, 1989. On September 12, 1989, judgment was entered against BKB and in favor of the defendants on count I “with respect to Sorkin’s purported breach of fiduciary duty by purchasing Grendel’s” and in favor of defendants with respect to count II. Also on September 12, 1989, defendants filed a motion to dismiss BKB’s interlocutory appeal, alleging that this court lacked jurisdiction because BKB filed the record late under Rule 307. (134 Ill. 2d R. 307(a).) On September 22,1989, BKB filed another notice of appeal from:

“The Order of September 12, 1989 entering (a) Judgment in favor of Defendants on Count I of the Verified Complaint with respect to Defendant Sorkin’s alleged breach of fiduciary duty by purchasing Grendel’s Rapid Oil Change; and (b) Judgment in favor of Defendants on Count II of the Verified Complaint.”

On September 26, 1989, defendants’ motion to dismiss BKB’s appeal was taken with the case and its two appeals were later consolidated. Also on September 26, 1989, and on November 20, 1989, this court granted BKB extensions of time to file the record on appeal which resulted in its being filed by stipulation on December 20, 1989.

Defendants allege that BKB’s first appeal should be dismissed because it improperly cross-appealed from an interlocutory order. Defendants add that “BKB’s attempt to appeal from denial of the preliminary injunction and related orders in its second Notice of Appeal *** should also be dismissed because an interlocutory order appealable as of right must be appealed, if at all, pursuant to Rule 307,” and that a party’s failure to appeal an interlocutory order reviewable under Rule 307 within 30 days of its entry “renders that order the law of the case and that part of the resulting judgment res judicata.”

Defendants stated in their notice of interlocutory appeal that they were appealing “from the Memorandum of Opinion entered [s-ic] June 29, 1989, and the court’s oral pronouncement on June 29, 1989.” However, under Supreme Court Rule 307(a) (134 Ill. 2d R. 307(a)), an interlocutory appeal may be taken only “from the entry of the interlocutory order” (emphasis added) (see Granite City Lodge No. 272 v. City of Granite City (1990), 141 Ill. 2d 122), and defendants clearly did not appeal from the entry of any order. But before any issue arose over this court’s jurisdiction over their “appeal,” and after BKB had filed its “Notice of Interlocutory Cross-Appeal and Appeal,” defendants voluntarily dismissed their appeal. Therefore, as defendants acknowledge in their reply in support of their motion to dismiss BKB’s first appeal, “BKB’s Notice [of interlocutory cross-appeal and appeal] should be interpreted as a direct appeal from the only orders BKB admits it could appeal: those entered on July 13 and August 3.” (See Board of Education v. Chicago Teachers Union, Local 1 (1975), 26 Ill. App. 3d 806, 809 n.1.) Subsequently, on October 10, this court consolidated BKB’s August 11, 1989, appeal with its appeal from the September 12, 1989, order. Clearly, then, BKB’s August 11 appeal, as consolidated with its later appeal, is properly before this court. Furthermore, in light of the clear provisions of Supreme Court Rule 307(a)(1) (134 Ill. 2d R. 307(a)(1)), we fail to comprehend defendants’ confusion over the propriety of BKB’s filing of an appeal, whatever its denomination, in the wake of their own. We perceive no requirement that BKB’s had to be a separate appeal, bearing its own case number, after which it could have moved to consolidate the two appeals, as defendants suggest. Significantly, however, they advance no authority for such a proposition.

Contrary to defendants’ alternative contention, BKB’s entire August 11, 1989, appeal was timely, having been filed within 30 days of both the July 13, 1989, order dissolving the TRO and the August 3, 1989, order denying BKB a preliminary injunction and dismissing DiPietro from the case. And also contrary to Sorkin’s allegations, the 30-day period begins to run from the time the order is entered, not when the memorandum of opinion was filed. (134 Ill. 2d R. 307 (a).) Indeed, the trial judge’s memorandum of opinion ends with the command to counsel: “Draft order instanter consistent with the above opinion,” thus eliminating any thought that he was entering an order by the issuance of his memorandum, which is clearly stamped as having been merely “filed.”

Defendants’ additional claim that this court does not have jurisdiction of this cause for the reason that BKB failed to file the record within the required time is also without warrant, for they are abundantly aware that BKB was properly granted extensions of time by this court for that purpose pursuant to Supreme Court Rule 307(a). (134 Ill. 2d R. 307(a).) Consequently, defendants’ motion to dismiss which was taken with the case is denied. We also deny BKB’s request for the imposition of sanctions on defendants in light of its own confusion, demonstrated in its “Notice of Interlocutory Cross-Appeal and Appeal.”

In order to be entitled to a preliminary injunction, “a plaintiff must show (1) a clear right or interest needing protection, (2) the absence of an adequate remedy at law, (3) irreparable harm if the injunction is not granted, and (4) a reasonable likelihood of success on the merits [citations].” (Preferred Meal Systems, Inc. v. Guse (1990), 199 Ill. App. 3d 710, 718.) In denying BKB a preliminary injunction, the trial court held that it had an adequate remedy at law and that it would suffer no irreparable harm if it were not granted injunctive relief; accordingly, on motion of defendants, and without objection, the court entered judgment for defendants “on count I with respect to Sorkin’s purported breach of fiduciary duty by purchasing Grendel’s.” The court further declined “to enter judgment on that part of count I alleging the performance of accounting work for Grendel’s without compensation to BKB as well as all of the issues alleged in count III.” Finally, the court entered judgment in favor of defendants on count II as to all of the issues raised therein. Without objection, Supreme Court Rule 304(a) language was included in the judgment order with respect to the court’s holdings as to counts I and II, thus making the judgment final by agreement of the parties. On appeal, BKB does not challenge the trial court’s findings of fact, nor does it raise any issue in its briefs as to the trial court’s holdings with respect to the existence of an adequate remedy at law and the absence of irreparable harm, insofar as they relate to Sorkin’s “moonlighting.” We are therefore bound to the standard only of whether the trial court has misconstrued or misapplied the law pertinent to the issues it has decided.

BKB contends that the holding of the trial judge “squarely conflicts” with the opinion of our supreme court in Mullaney, Wells & Co. v. Savage (1980), 78 Ill. 2d 534, arguing that under the holding of that case, Sorkin must be held to have violated his fiduciary duties of fair dealing and loyalty to his employer when he learned of a valuable investment through his agency and took advantage of it for his personal gain. In Savage, “the plaintiff’s business operations included both the occasional making of investments on its own account *** and acting, for a fee, as a broker between businesses in need of funds and potential investors.” (78 Ill. 2d at 547.) Defendant Savage learned, in the course of his employment, of an opportunity to purchase a company’s stock, which he acquired without notifying his employer, the plaintiff. The appellate court held that Savage did not violate any fiduciary obligation to plaintiff because Savage’s contractual duties were limited to those transactions in which plaintiff acted as a broker, “since in the court’s view the only compensation above his base pay to which he was entitled was a share of brokerage fees. Since the [transaction at issue] did not involve a brokerage fee, it was not within the scope of his contractual duties.” 78 Ill. 2d at 547.

The supreme court found the appellate court’s analysis to be “defective” for having incorrectly construed the parties’ employment agreement as limiting Savage’s compensation to the sharing of brokerage fees; the contract called, instead, for a division between the parties of the net profits earned by plaintiff’s industrial financing division headed by Savage, and the supreme court held that the term “net profits *** could also include profits made by the plaintiff in [transactions it had engaged in] for its own account.” The supreme court found that Savage had performed some work in connection with one such transaction unrelated to the disputed one, and that Savage was not credited with any share of the profits realized by the plaintiff on that matter because Savage had not originated the deal. The supreme court went on to hold that Savage had violated his fiduciary duties by acquiring the stock without first notifying plaintiff. 78 Ill. 2d at 550.

It cannot escape notice, from a reading of Savage, that the defendant there had scienter that his employer was in the business of making investments of its own besides bringing “businesses in need of funds and potential investors” together. (Savage, 78 Ill. 2d at 547.) That both the appellate court and the supreme court so found is clear from their references to the nature of the employer’s business: “[Plaintiff's business operations included both the occasional making of investments on its own account ***, and acting, for a fee, as a broker between businesses in need of funds and potential investors ***.” (Savage, 78 Ill. 2d at 547.) As we have noted earlier, the supreme court parted company with the appellate court in the matter of interpreting the role played by the compensation paid by Mullaney, Wells to Savage, i.e., whether it was in the form of brokerage fees or net profits; and since the contract of employment called for net profits, that term was held by the higher court to include profits made by the plaintiff in transactions it entered into for its own account. Notice to Savage was further held to plainly exist in the fact that he had very early in his employment participated in his employer’s purchase of the entire outstanding stock of an enterprise through the exercise of stock options acquired from its stockholders — a transaction very similar to the one Savage had engaged in for his own account. Hence, the supreme court’s comment that “[t]he situation is in principle indistinguishable from that of a real estate broker engaged to sell property owned by his principal who, without full disclosure of all material facts, acquires an interest in the property himself.” Savage, 78 Ill. 2d at 549.

Here, the trial judge found that Sorkin was not notified in any way of BKB’s alleged practice of making investments as a firm, and held that, thus, the duty to notify BKB of an investment opportunity was not within the scope of Sorkin’s agency. Although Kallick testified that the firm “considered” investments on six occasions, several other partners of the firm testified that they were not aware of any practice of making investments as a firm. The court further found that the administrative manual of some 200 pages that BKB distributed to its employees made no mention of the firm’s alleged practice of making investments; that no other document imposed “any obligation upon its employees to bring to its attention business opportunities in which it could invest”; that BKB’s minutes indicated that in the 10-year period prior to the filing of its lawsuit, the firm acted upon only one investment opportunity, as to which there is no indication that Sorkin had any knowledge; indeed, the record is clearly to the contrary, for in BKB’s answers to interrogatories it stated that it never notified Sorkin of its asserted practice of investing on its own account. Further, the court distinguished Savage on the basis that there the defendant’s “employer was in the business of finance and investments for the benefit of third person clients and/or for the benefit of itself. BKB was in the business of providing accounting services, not in the business of making firm investments in client businesses.” (Emphasis is the court’s). We agree with the trial judge’s analysis of Savage and his conclusion that it has no applicability to the case at bar.

BKB also contends that because Sorkin would not have known about the investment opportunity in Grendel’s but for his violation of the administrative manual’s provision against doing work for nonfirm clients, he should not be able to profit from such activities. However, BKB overlooks that the trial court purposely reserved making any finding as to whether the allegations contained in BKB’s complaint were true that Sorkin “did not devote full time to BKB business”; that he did not, as he was required, “bring in Grendel as a client to the BKB firm”; and that he kept the fee he charged “for work done for Grendel which fee rightfully belonged to BKB.” The court further stated that the resolution of the question of whether these acts, if proved, were wrongful would “have to await a trial on the merits or be resolved in another forum.” Accordingly, BKB begs the question in making its “but for” argument; and since it is not the function of this court to make factual determinations, we must, per force, decline to decide this issue. Board of Education v. Chicago Teachers Union, Local 1 (1975), 26 Ill. App. 3d 806, 813.

However, even if BKB were to prove that Sorkin wrongfully moonlighted, we agree with the trial judge’s conclusion that it would not be entitled to a constructive trust. Although the imposition of such a trust for BKB’s benefit might be appropriate if Sorkin had a duty to present investment opportunities to it, as we have noted above, Sorkin plainly did not have such a duty. Therefore, it would be highly inequitable to confer trustee status upon BKB’s theory that since Sorkin was subject to a work rule that required him to refrain from moonlighting, he consequently had a duty to bring in clients to the firm, and that had he complied with this duty, BKB would have heard of the Grendel’s opportunity and would have taken advantage of it. Even if we accept such reasoning, we would be constrained to hold that the link between Sorkin’s moonlighting and his taking advantage, to BKB’s detriment, of the Grendel’s opportunity is too laden with tortuous attenuations to warrant the award of equitable relief. See Labarbera v. Labarbera (1983), 116 Ill. App. 3d 959, 966.

BKB cites Kerrigan v. Unity Savings Association (1974), 58 Ill. 2d 20, which dealt with “corporate opportunities,” as holding that the fiduciary duties of a director are similar to those of an agent. However, it cannot be gainsaid that the corporate opportunity doctrine, which involves directors, is more exacting than the fiduciary obligations of an employee; thus, Kerrigan does not apply. (See Radiac Abrasives, Inc. v. Diamond Technology, Inc. (1988), 177 Ill. App. 3d 628, 637.) In Radiac, the plaintiff, citing Vendo Co. v. Stoner (1974), 58 Ill. 2d 289, alleged that the defendants, as employees of the plaintiff, had fiduciary duties that were the same as those of officers or directors of a corporation. However, as in the case before us, “[defendants *** were neither officers nor directors, and Vendo is therefore distinguishable.” (177 Ill. App. 3d at 637.) It is to be noted also that BKB’s counsel acknowledged at the hearing before the trial court that this is not a corporate opportunity case.

Finally, BKB argues:

“Although, as shown above, Savage does not require proof of an employer’s investment history, BKB attempted to present, in the alternative, substantial evidence that when it declined opportunities to invest on its own account it would offer those opportunities (1) to its clients and/or (2) to its shareholder-principals, i.e., the ‘partners’ at BKB. The trial court allowed evidence as to the first category, but then refused to consider it in its ruling because ‘it is not a basis for imposing a constructive trust on Sorkin.’ [Citation.] The Court excluded all evidence in the second category. [Citation.] These rulings were incorrect as a matter of law because the trial court required, on the one hand, that BKB show that it had a practice of considering investment opportunities, yet the trial court refused, on the other hand, to consider much of BKB’s evidence in support of this practice.”

Defendants contend, however, as to BKB’s offering investment opportunities to its clients, that it has waived the issue because although it was pleaded in BKB’s reply, it was not mentioned at all in its complaint. However, “[a]n objection that an issue was not raised in the pleadings may be waived by the conduct at the trial of the objecting party or by introduction of evidence on the issue.” (Pioneer Trust & Savings Bank v. County of Cook (1978), 71 Ill. 2d 510, 518.) While Sorkin’s counsel argued in the trial court that the issue was not raised in the complaint, both parties addressed the matter in their opening statements, in their arguments on DiPietro’s motion to dismiss, in their closing arguments, and in the testimony of various witnesses; thus, the point is appropriately before this court.

Reverting now to the merits, BKB, as noted above, contends that even if it is held not to have had “an employer’s investment history,” the trial court improperly excluded and disregarded evidence “that when it declined opportunities to invest on its own account it would offer those opportunities (1) to its clients and/or (2) to its shareholder-principals, i.e., the ‘partners’ at BKB.” (Emphasis added.) “In hiding Grendel’s from BKB,” it adds, “Sorkin deprived BKB of this valuable opportunity to establish good will [with its clients], earn fees relating to the acquisition, and generate a stream of income.” Therefore, it concludes, since “Sorkin was unjustly enriched by his deception of BKB, a constructive trust is necessary to remedy this unjust enrichment.” Yet, it is clear that the offering to the clients and the partners is stated by BKB itself to derive from and to be dependent upon BKB’s declining the opportunity in the first place. BKB’s argument, then, is obviously but another way of saying that Sorkin had a duty to notify BKB of investment opportunities for its own account. Moreover, BKB fails to recognize that Sorkin did not owe any duty to the shareholder-principals as individuals; any duty he owed would be due only to the partnership/corporation. (See Mears v. Crocker First National Bank (1950), 97 Cal. App. 2d 482, 218 P.2d 91.) Consequently, we affirm the trial court’s holding as to this matter as well.

The parties appear to be in agreement that if a constructive trust for BKB’s benefit is inappropriate, DiPietro is not liable to BKB. BKB states, “DiPietro’s liability flows from Sorkin’s liability as a matter of law. Once it is established that Sorkin breached his fiduciary duty to BKB, it follows that DiPietro is liable to BKB as well.” This is BKB’s sole argument as to its entitlement to a constructive trust upon DiPietro’s share in G & S. Sorkin states that “if Sorkin is not liable to BKB, DiPietro is not liable either, and BKB does not contend otherwise.” Therefore, because the trial court properly held that BKB is not entitled to a constructive trust upon Sorkin’s share of Grendel’s, summary judgment in favor of DiPietro was also proper.

Accordingly, this case is affirmed and remanded to the circuit court for further proceedings consistent with the views expressed in this opinion.

Affirmed.

BILANDIC and DiVITO, JJ., concur.

       Justice Bilandic participated in hearing oral argument in this case and in the decision-making process before he left the appellate court.


source: Caselaw Access Project

author: JUSTICE DiVITO

license: Public Domain

text:
    BRIAN PELLING, Plaintiff-Appellant, v. ILLINOIS RACING BOARD et al., Defendants-Appellees.
    First District (2nd Division)
    No. 1—90—0172
    Opinion filed May 21, 1991.

      Patrick A. Tuite, Ltd., of Chicago (Patrick A. Tuite and John L. Hines, Jr., of counsel), for appellant.
    Neil E Hartigan, Attorney General, of Springfield (Robert J. Ruiz, Solicitor General, and John A. Morrissey, Assistant Attorney General, both of Chicago, of counsel), for appellees.
   JUSTICE DiVITO

delivered the opinion of the court:

Plaintiff Brian Felling appeals from the judgment of the circuit court of Cook County, pursuant to administrative review, upholding the rulings of the Illinois Racing Board (Board). Plaintiff contends that the circuit court erred in the following rulings: (1) that the decision of the Board was not against the manifest weight of the evidence; (2) that the penalty imposed by the Board was not arbitrary, capricious, or otherwise excessive; (3) that plaintiff’s due process rights were not violated by the hearing officer’s failure to present any findings to the Board; (4) that the Board properly employed a preponderance standard of proof; and (5) that the Board properly imposed a longer suspension upon plaintiff’s activities than that recommended by the racing stewards.

Plaintiff was licensed to train, drive, and own race horses in Illinois. On November 6, 1987, he drove Valunga N, a horse he owned and trained, in the tenth race at Maywood Park Harness Racing Track. The race was a trifecta. Plaintiff finished seventh out of nine drivers. Afterwards, the stewards questioned several drivers regarding technical infractions that occurred during the race.

Plaintiff received no inquiry from the stewards concerning his performance on the evening of the race. In fact, plaintiff raced the next day. He was not questioned about the race until November 14, 1987, eight days later, and was not formally charged and suspended until December 17, 1987. During their investigation, the stewards discovered that, on the night of the race, plaintiff and Dennis Nardoni had dinner, and that just before the race, Nardoni had been seen in the paddock, a restricted area. The stewards charged plaintiff with several violations of the Board rules, including that he had conspired to affect the outcome of the race. The stewards suspended plaintiff’s license to drive, train, and own horses for the remainder of 1987 and recommended that no future licenses be granted for five years, through the end of 1992.

Plaintiff appealed the steward’s ruling to the Board, which conducted a four-day de novo hearing before a hearing officer. In the meantime, plaintiff obtained a stay of the steward’s ruling from the circuit court until the Board rendered its decision.

At the hearing, the stewards cited three reasons supporting their claim that plaintiff was guilty of a bad drive. First, when the gate flipped, plaintiff allegedly failed to “close the hole” between him and the driver in front. That is, he did not gain ground where the stewards felt that he could and should have done so. Second, just before the quarter mile pole on the back stretch for the first time, plaintiff pulled off the rail in front of drivers David Magee and Dale Hiteman, who were approaching plaintiff on the outside. Third, at the third turn, the stewards asserted that plaintiff intentionally drove up on Ron Marsh, whose horse was tiring, so that plaintiff would have to restrain his own horse.

On June 13, 1988, after reviewing the entire record, the Board found plaintiff guilty of violating Illinois Racing Board Rule 18.5 and exonerated him of all other alleged violations. The pertinent portion of Rule 18.5 provides as follows:

“Rule 18.5 Unsatisfactory Driving
Every heat in a race must be contested by every horse in the race and every horse must be driven to the finish. If the judges believe that a horse is being driven, or has been driven with the design to prevent his winning a heat or dash which he was evidently able to win, or is being raced in an inconsistent manner, or to perpetrate or to aid a fraud, they shall consider it a violation and the driver, and anyone in concert with him, to so affect the outcome of the race or races, may be fined, suspended or expelled.”

The Board suspended plaintiff’s license to drive, train, and own horses through and including 1993 and excluded him from the premises of all racetracks under the jurisdiction of the Illinois Racing Board for the same time period.

Plaintiff filed a complaint for administrative review in the circuit court. On October 6, 1989, after briefs were filed and oral arguments were heard, the circuit court affirmed the Board’s order with one qualification. Pursuant to the doctrine of North Carolina v. Pearce (1969), 395 U.S. 711, 23 L. Ed. 2d 656, 89 S. Ct. 2072, it limited plaintiff’s suspension to December 1992, as recommended by the stewards. On December 20, 1989, pursuant to the Board’s motion to reconsider, the circuit court entered an order nunc pro tunc affirming the Board's ruling without exception. This appeal followed.

I

Plaintiff initially contends that the circuit court erred in holding that the decision of the Board was not against the manifest weight of the evidence.

Findings and conclusions of an administrative agency on questions of fact are to be considered prima facie true and correct. (Ill. Rev. Stat. 1989, ch. 110, par. 3—110; Graham v. Illinois Racing Board (1986), 145 Ill. App. 3d 383, 495 N.E.2d 1013; Feliciano v. Illi nois Racing Board (1982), 110 Ill. App. 3d 997, 443 N.E.2d 261.) Accordingly, a reviewing court is limited to determining whether the findings are contrary to the manifest weight of the evidence. Graham, 145 Ill. App. 3d at 389, citing Strickland v. Department of Registration & Education (1978), 60 Ill. App. 3d 1, 376 N.E.2d 255.

The record in the instant case contains a videotape of the race which was viewed by the Board numerous times. As noted by Commissioner Ray Garrison, “the best evidence is the film itself.” Garrison also referred to the Board’s expertise in judging racing films. Each Board member was knowledgeable in the area of racing practices and procedures. Ill. Rev. Stat. 1989, ch. 8, par. 37—4.

In addition, the Board considered testimony from the race stewards. Each steward testified to his years of experience in judging thousands of races. Each stated that, in his opinion, plaintiff intentionally drove an unsatisfactory race. Considering the training and knowledge of the Board and its careful study of the videotape and testimony, great deference should be given to its findings.

Plaintiff’s reliance on Viera v. Illinois Racing Board (1978), 65 Ill. App. 3d 94, 382 N.E.2d 462, is misplaced. In that case, the Board suspended the plaintiff for exercising unreasonable professional judgment in a race; the trial court reversed the Board’s ruling, and the appellate court affirmed. In Viera, however, there was significantly more evidence in opposition to the Board’s finding than in the instant case. For the same reason, Pletcher v. Illinois Racing Board (1978), 57 Ill. App. 3d 73, 372 N.E.2d 1075, is also unpersuasive.

Here, the record discloses no basis for reversing the circuit court’s conclusion that the findings of the Board were not contrary to the manifest weight of the evidence.

II

Plaintiff next complains that the penalty imposed by the Board was arbitrary, capricious, and otherwise excessive. A reviewing court may overturn an agency’s sanctions which are overly harsh in light of mitigating circumstances. (Edwards v. Illinois Racing Board (1989), 187 Ill. App. 3d 287, 543 N.E.2d 172; Feliciano v. Illinois Racing Board (1982), 110 Ill. App. 3d 997, 443 N.E.2d 261.) The test is not whether the reviewing court would have imposed a lesser sanction if it were making the decision in the first instance, but whether, in view of the circumstances, the agency acted unreasonably or arbitrarily. Edwards, 187 Ill. App. 3d at 293, citing Sutton v. Civil Service Comm’n (1982), 91 Ill. 2d 404, 411, 438 N.E.2d 147; Graham, 145 Ill. App. 3d at 389-90; Feliciano, 110 Ill. App. 3d at 1005.

In the instant case, we find that the Board’s imposition of a six-year suspension was not unduly excessive. Plaintiff cites a number of cases in support of his position, none of which are of precedential value, as they are unpublished orders pursuant to Illinois Supreme Court Rule 23. (107 Ill. 2d R. 23.) Also, in De Silva v. Hartack (1990), 201 Ill. App. 3d 387, 559 N.E.2d 51, this court affirmed a 30-day suspension for a jockey who violated Illinois Racing Board Rule 234. The violation in De Silva, however, cannot be compared to the one at bar, as it did not involve intentional conduct.

Here, defendants correctly point out that plaintiff’s lengthy suspension was justified because his conduct was intentional rather than careless and because of the prior violations in his racing record. The record reflects that plaintiff has had prior disciplinary problems and that his license had been suspended in Australia. There is no basis for concluding that the sanction imposed upon plaintiff was arbitrary, capricious, or excessive.

III

Plaintiff’s next contention is that his due process rights were violated when the Board rendered its opinion without benefit of findings of fact made by the hearing officer. He contends that testimony was taken before the hearing officer, but that no findings or recommendations were made, thus leaving the Board to render its opinion on the basis of its reading of the record alone. Defendants argue that plaintiff’s assertions are unsupported by law.

Where testimony before an administrative agency is preserved for review in the record, specific findings of fact are not necessary for judicial review. (Mahonie v. Edgar (1985), 131 Ill. App. 3d 175, 476 N.E.2d 474.) Due process requirements are met if the decision-making board considers the evidence contained in the report of proceedings before the hearing officer and bases its ruling thereon. Starkey v. Civil Service Comm’n (1983), 97 Ill. 2d 91, 454 N.E.2d 265.

The requirements of due process were met in the instant case. The Board was able to review the transcript of hearing proceedings, the exhibits admitted into evidence, the closing arguments of counsel, and the videotape. Thus, the circuit court did not err in holding that plaintiff’s due process rights were not violated by the hearing officer’s failure to present specific findings to the Board.

IV

Plaintiff next argues that the Board should have employed a clear and convincing standard of proof rather than a preponderance standard. Defendants maintain that the Board properly employed the preponderance standard and that the circuit court was correct in affirming on this ground.

The Illinois Supreme Court held in Board of Education v. State Board of Education (1986), 113 Ill. 2d 173, 497 N.E.2d 984, that, in determining what standard of proof should apply in administrative proceedings, a reviewing court must balance the private interest affected by the proceeding, the risk of error created by the chosen procedure, and the countervailing governmental interests supporting the use of the challenged procedure. (Board of Education v. State Board of Education, 113 Ill. 2d at 190-91.) The court there held that the preponderance standard was applicable in proceedings to dismiss a tenured teacher.

Plaintiff’s argument that a greater standard of proof is required was considered and rejected in Feliciano v. Illinois Racing Board. There, the court held that when weighing private interests against governmental interests, the standard of proof should become more stringent as the private interest intensifies. The court there found that although suspension of plaintiff’s racing license would result in some economic loss to him, that interest was outweighed by the public interest in preserving the integrity and honesty of the horse racing industry. Feliciano, 110 Ill. App. 3d at 1002.

The cogent reasoning of Feliciano is directly applicable to the instant case. The State’s interest in maintaining the integrity of the racing industry was clearly established and outweighed plaintiff’s pecuniary loss. Moreover, the loss of public confidence in the fairness of wagering on horse racing would cause greater harm to a wider variety of interests than the potential loss to plaintiff.

Plaintiff urges application of Wilkey v. Illinois Racing Board (1978), 65 Ill. App. 3d 534, 381 N.E.2d 1380, where a clear and convincing standard of proof was applied because the conduct charged, administering drugs to horses prior to their races, constituted a class 4 felony. As noted in Board of Education of St. Charles Community Unit School District No. 303 v. Adelman (1981), 97 Ill. App. 3d 530, 423 N.E.2d 254, Wilkey appears to stand alone in Illinois as precedent supporting a clear and convincing standard in cases such as this. (97 Ill. App. 3d at 533.) Both Adelman and Feliciano declined to follow Wilkey, and so do we. The circuit court did not err in holding that the Board correctly applied a preponderance standard.

V

Plaintiff’s final contention is that the circuit court erred in holding that the Board properly imposed a lengthier suspension upon plaintiff than that recommended by the stewards. Specifically, plaintiff argues that the longer suspension is barred by the doctrine of North Carolina v. Pearce (1969), 395 U.S. 711, 23 L. Ed. 2d 656, 89 S. Ct. 2072. Defendants contend, and we agree, that Pearce is inapplicable to this case.

In Pearce, the United States Supreme Court limited the right of the sentencing judge to impose upon a defendant a greater sentence on retrial. The Court explained that this limitation would restrict the judge from penalizing a defendant for exercising his right to a new trial.

The instant case, however, does not involve a retrial. “ 'The de novo hearing is a new adversary proceeding which is neither dependent upon, nor limited by, the proceedings below.’” (Ray v. Illinois Racing Board (1983), 113 Ill. App. 3d 510, 515, 447 N.E.2d 886, quoting Local Liquor Control Comm’n v. Illinois Liquor Control Comm’n (1978), 59 Ill. App. 3d 1, 5, 374 N.E.2d 1298.) Thus, although the stewards recommended a five-year suspension, the Board was not bound by that recommendation. The circuit court, therefore, properly entered the nunc pro tunc order upholding the Board’s six-year suspension and holding that Pearce was inapplicable.

Plaintiff’s reliance on Blackledge v. Perry (1974), 417 U.S. 21, 40 L. Ed. 2d 628, 94 S. Ct. 2098, is also misplaced. Blackledge involved a defendant who was sentenced for a misdemeanor conviction and appealed. Pursuant to the filing of his notice of appeal, he was entitled to a trial de novo, and was charged with a felony. The United States Supreme Court held that one who is convicted of an offense is entitled to a trial de novo without fear that the State will substitute a more serious charge for the original one. Because there was no “retrial” here — because the license suspension by the stewards was not a final disciplinary action but only an interim action pending a hearing by the Board — Blackledge is inapposite.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

SCARIANO, P.J., and HARTMAN, J., concur.

       Trifecta wagering requires picking horses finishing first, second, and third in exact order. The trifecta results for the tenth race were 7, 6, 1, that is, the 7 horse won, the 6 horse placed second, and the 1 horse placed third.


author: JUSTICE LaPORTA

text:
      In re ESTATE OF CHARLES EVERETT WILLIS, Deceased (Bertha L. Willis, Appellant, v. Linda Rowser et al., Petitioners-Appellees).
    First District (6th Division)
    No. 1—89—2536
    Opinion filed May 24, 1991.

      P. Scott Neville, Jr., of Chicago, for appellant.
    Henry E. Szachowicz, Jr., of Morton Grove, for appellees Linda Rowser and Lisa Brown.
    Levin & Rosen, Ltd., of Skokie (Earl Weiss, of counsel), for appellee Lanna Harris.
   JUSTICE LaPORTA

delivered the opinion of the court:

In a probate proceeding of a decedent’s estate in which the widow on April 26, 1985, was declared to be the sole heir, petitions were filed on August 6, 1985, and on April 14, 1987, by three adults, Lanna Harris, Linda Rowser and Lisa Brown, who purported to be children of the decedent. They sought amendment of the order of heirship to declare them to be the children and heirs of the decedent. On May 17, 1989, following an evidentiary hearing, the trial court amended the order of heirship to declare the widow and three adult daughters as decedent’s lawful heirs. The widow’s motion for rehearing was denied and she appealed.

On appeal, the widow contends initially that the trial court had no subject matter jurisdiction to amend the order declaring heirship because both the parentage hearing to identify who was the father to the three women, and entry of the subsequent order, occurred after the statute of limitations had expired for a paternity action.

The widow also contends the amended order declaring heirship is void because evidence of Lanna Harris’ illegitimacy was testified to by her mother and Illinois courts prohibit mothers from illegitimizing their children. Finally, the widow contends the amended order declaring heirship is void because Otis Harris, Lanna Harris’ presumed father, was not served with a summons as required by section 9.1(a) of the Illinois Parentage Act of 1984 (Ill. Rev. Stat. 1989, ch. 40, par. 2509.1(a)).

The facts of the case are not in dispute. Charles Everett Willis died on April 16, 1985. On April 25 his widow, Bertha Willis, filed a petition for letters of administration and an affidavit of heirship in the probate court. Based on her testimony at the hearing on proof of heirship, the probate court declared Bertha Willis the only heir, appointed her administrator of his estate and issued letters of office to her.

On August 6, 1985, Lanna Harris filed a petition alleging that she was the acknowledged child of Charles Willis and that she should have properly been listed as an heir to his estate. She asked.the court to amend its order and declare her an heir. Bertha Willis filed an answer denying Lanna Harris’ heirship and then filed both a motion for summary judgment and a motion to dismiss Harris’ petition based on statute of limitations grounds. The trial court denied both motions and on March 10, 1987, denied a subsequent motion to reconsider. Harris’ petition was subsequently heard on March 28,1989.

On April 14, 1987, two sisters, Linda Rowser and Lisa Brown, filed a petition alleging they were Charles Willis’ acknowledged children. They asked the court to grant them leave to file an amended affidavit of heirship to establish them as Willis’ heirs. The trial court denied Bertha Willis’ motion to dismiss the petition.

On March 28, 1989, and five days subsequent, the trial court heard testimony and arguments on the petitions of the three women. The parties stipulated that Linda Rowser was the child involved in a support and annulment proceeding in 1957 between Charles Willis and Elsa Scott, Linda Rowser’s mother.

On May 12, 1989, the trial court granted the two petitions and on May 17 amended the order declaring heirship to include not only Bertha Willis but also Lanna Harris, Linda Rowser and Lisa Brown.

Bertha Willis appealed, contending initially that the trial court erred by not determining the three women’s parentage under the Illinois Parentage Act of 1984 before applying the Probate Act of 1975 (Ill. Rev. Stat. 1985, ch. 110½, par. 1—1 et seq.) to determine heir-ship. Willis contends that if the court had done so, it would have determined that the three women failed to file their parentage claims within two years of reaching the age of majority as required by the Parentage Act.

Willis cites two cases for the proposition that parentage must be determined before heirship. (In re Person & Estate of Newsome (1988), 173 Ill. App. 3d 376, 382, 527 N.E.2d 524; LeHew v. Mellyn (1985), 131 Ill. App. 3d 314, 316, 575 N.E.2d 913.) In Person, the court, citing LeHew, held that in child custody proceedings, where the identity of the natural father has not been determined, and one claiming to be the father is before the court, the court’s first duty is to address the issue of paternity. (Person, 173 Ill. App. 3d at 382.) In LeHew, the trial court was asked to decide visitation and parentage of a minor child. On appeal, the court found the trial court improperly dismissed petitioner’s motion for determination of parentage and held that the identity of the child’s natural father should be determined at the outset of such a proceeding. LeHew, 131 Ill. App. 3d at 316.

Willis contends that since the two-year statute of limitations in the Paternity Act was declared unconstitutional in Jude v. Morrissey (1983), 117 Ill. App. 3d 782, 454 N.E.2d 24, the trial court should have applied the statute of limitations in the Code of Civil Procedure to require the three women to file suit as a declaratory judgment action within two years after they reached the age of 18. (Ill. Rev. Stat. 1983, ch. 110, par. 13—211.) All three women were in their 30s when they filed their petitions here. Bertha Willis argues that since the three women failed to file within the statute of limitations period, the trial court lost subject matter jurisdiction over their parentage action and therefore was barred from declaring the three women heirs to Charles Willis.

Bertha Willis argues that this two-year statute of limitations would apply even if this court were to follow the current law in the Illinois Parentage Act of 1984 because both petitions were filed with the probate court after the Illinois Parentage Act of 1984 went into effect. The Illinois Parentage Act of 1984 states that: “An action brought by or on behalf of a child shall be barred if brought later than 2 years after the child reaches the age of majority ***.” Ill. Rev. Stat. 1989, ch. 40, par. 2508(a).

Bertha Willis contends that to permit the three women to file claims though all three are past their 20th birthday would only serve to encourage fraudulent and stale claims. The purpose of a statute of limitations is to require the prosecution of a right of action within a reasonable time period to prevent the loss or impairment of available evidence and to discourage delay in the bringing of claims. Tom Olesker’s Exciting World of Fashion, Inc. v. Dun & Bradstreet, Inc. (1975), 61 Ill. 2d 129, 334 N.E.2d 160.

Bertha Willis argues that it is also unfair to the estate and its administrator to have to defend a paternity action after the putative father Charles Willis has died. Bertha Willis cites Toms v. Lohrentz (1962), 37 Ill. App. 2d 414, 418, 185 N.E.2d 708, which held that a paternity act cannot be brought against a dead man, “nor can liability in any event be imposed under the statute on his estate in the absence of an adjudication of paternity during the lifetime of the father.” Bertha Willis cites Reed v. Campbell (1986), 476 U.S. 852, 855, 90 L. Ed. 2d 858, 863, 106 S. Ct. 2234, 2237, which held that the State’s interest in the orderly disposition of an estate may justify imposing special requirements on an illegitimate child who asserts a right to inherit and that such a circumstance justifies the enforcement of generally applicable limitations on the time and the manner in which claims may be asserted.

Petitioners distinguish Person and LeHew, stating that Person involved custody of a minor and LeHew involved a father seeking parental rights over a child. This case involves heirship. Petitioners contend it is the Probate Act of 1975 which governs this case, not the Illinois Parentage Act of 1984. They argue that therefore the statute of limitations in the Parentage Act is inapplicable.

Petitioners contend the Illinois Parentage Act of 1984 specifically addresses this potential conflict by exempting an heirship claim when it states: “This Act does not affect the time within which any rights under the Probate Act of 1975 *** may be asserted beyond the time provided by law relating to distribution and closing of decedent’s estates or to the determination of heirship, or otherwise.” Ill. Rev. Stat. 1985, ch. 40, par. 2508(c).

The Probate Act of 1975 states that: “If a decedent has acknowledged paternity of an illegitimate person or if during his lifetime or after his death a decedent has been adjudged to be the father of an illegitimate person, that person is heir of his father ***. If during his lifetime the decedent was adjudged to be the father of an illegitimate person by a court of competent jurisdiction, an authenticated copy of the judgment is sufficient proof of the paternity; but in all other cases paternity must be proved by clear and convincing evidence.” Ill. Rev. Stat. 1989, ch. 110½, par. 2—2.

Petitioners cite In re Estate of Cody (1980), 92 Ill. App. 3d 208, 415 N.E.2d 1131, where the court considered whether Clifford Cody was proved by clear and convincing evidence to be the son of the deceased and whether the Probate Act of 1975, which permits adjudication of paternity of an illegitimate after the death of a father, denies equal protection or due process of law to collateral heirs. (Cody, 92 Ill. App. 3d at 209.) The Cody court affirmed the trial court’s rulings in favor of the petitioner on both grounds, holding that the paternity determination was a proper finding and was not contrary to the manifest weight of the evidence (Cody, 92 Ill. App. 3d at 213) and that the Probate Act of 1975 does not violate due process or equal protection rights when it permits a paternity finding after the father’s death. Cody, 92 Ill. App. 3d at 213.

In addition, Lanna Harris argues that to require each illegitimate child to go through a paternity proceeding, even if the child is acknowledged by a father, would foster needless litigation. Harris argues further that the purpose of a statute of limitations is to prevent stale claims (Tom Olesker’s Exciting World of Fashion, Inc., 61 Ill. 2d 129, 334 N.E.2d 160) and her claim cannot be stale since her cause of action under the Probate Act of 1975 did not accrue until after Charles Willis’ death.

Lanna Harris argues that the purpose of the Parentage Act of 1984 is to provide an avenue to determine the identity of the father, provide support for the child and prevent the child from becoming a public charge. In re Petition of Sullivan (1985), 134 Ill. App. 3d 455, 459-60, 480 N.E.2d 1283.

We find that Cody governs our decision and that Bertha Willis has misread Person and LeHew. We do not believe the two cases mandate a paternity action before a court can consider heirship. Nothing in the plain language of either statute supports that conclusion. The statute of limitations section in the Illinois Paternity Act of 1984 specifically states that it does not apply to the right to determine heirship under the Probate Act of 1975. Ill. Rev. Stat. 1985, ch. 40, par. 2508(c).

In addition, the Probate Act of 1975 permits the trial court to determine heirship for illegitimates by two means: through acknowledgment by the father during his lifetime or through adjudication determining parentage under the Parentage Act. If the determination is not made by a court of law, the evidence relied on must be clear and convincing. Ill. Rev. Stat. 1989, ch. 110½, par. 2—2.

We find the trial court had subject matter jurisdiction to determine whether the petitioners provided clear and convincing proof that Charles Willis acknowledged the three petitioners as his daughters.

With regard to Linda Rowser and Lisa Brown, we find the evidence presented established that Charles Willis acknowledged both Linda Rowser and Lisa Brown as his daughters. The evidence relied on by the trial court included photographs of Linda, Lisa, their mother and Charles Willis all together, birth certificates naming Charles Willis as the father of both children, a Metropolitan Life Insurance policy identifying Linda as the mother of his grandchild and an IRA account naming Linda and Lisa as his daughters and as beneficiaries. The court also considered a card Charles Willis signed “granddad” which was sent to Lisa’s daughter and the fact that the two petitioners were named as daughters in Charles Willis’ obituary without any objection by Bertha Willis.

With regard to Linda Rowser alone, Bertha Willis contends that a court had already determined Linda Rowser was not Charles Willis’ daughter. Bertha Willis bases this on the fact that the marriage of Rowser’s mother to Charles Willis was annulled by the court on May 28, 1957, two days after Rowser was born. The annulment states that Rowser’s mother, at the time of her marriage to Charles Willis, was pregnant by another man. Bertha Willis contends that when the trial judge granted the annulment, he determined “that someone other than Charles Everett Willis was her father.” We disagree with this contention. Linda Rowser was never a party to the annulment proceeding involving her mother and Charles Willis. No guardian ad litem was appointed to protect her interests. We find that the issue of Linda Rowser’s paternity was never adjudicated.

We hold that the trial court properly found that Linda Rowser and Lisa Brown were the acknowledged children of Charles Willis, and we therefore affirm the trial court’s order amending heirship to include them as his heirs.

As a separate issue, Bertha Willis contends that the amended order declaring heirship should be reversed with regard to Lanna Harris because Otis Harris, Lanna Harris’ presumed father, was not served with a summons as required by section 9.1(a) of the Illinois Parentage Act.

Section 9.1(a) of the Illinois Parentage Act of 1984 provides: “In any action brought under Section 6 or 7 of this Act where the man signing the petition for an order establishing the existence of the parent and child relationship by consent or the man alleged to be the father in a complaint is different from a man who is presumed to be father of the child under Section 5, a notice shall be served on the presumed father in the same manner as summonses are served in other civil proceedings ***.” Ill. Rev. Stat. 1989, ch. 40, par. 2509.1(a).

We find the language of the statute is clear with regard to when notice must be given. The statute states that notice is required when an action is brought under section 5, 6 or 7. That is not the case here. This is a probate action to establish heirship for purposes of inheritance and not a paternity action to establish support from a living father or his custody rights as to a minor child.

We also note that nothing in the record indicates that Otis Harris objected to the divorce decree which omitted Lanna Harris’ name. Otis Harris did not appear in court at the divorce hearing or probate hearing and the record does not disclose that he has claimed his rights were violated. An error harmful to another who has not appealed cannot be charged as error by a party not affected by the error. In re Akers (1974), 17 Ill. App. 3d 624, 626, 307 N.E.2d 630, 631.

Finally, Bertha Willis contends that the amended order declaring heirship should be void because evidence of Lanna Harris’ illegitimacy was testified to by her mother and Illinois courts prohibit mothers from illegitimizing their children.

Trial court evidence proved Lanna Harris’ mother was married to Otis Harris at the time Lanna was born. A child is presumed to have been fathered by the man to whom his mother is married but that presumption can be rebutted by clear and convincing proof. (In re Ozment (1978), 61 Ill. App. 3d 1044, 1047, 378 N.E.2d 409.) What constitutes such proof depends on the particular circumstances of each case. Ozment, 61 Ill. App. 3d at 1047.

Bertha Willis contends that Lanna Harris failed to rebut the presumption that Otis Harris is Lanna Harris’ father because a mother’s testimony alone cannot be used to illegitimize her child. (People ex rel. Gonzalez v. Monroe (1963), 43 Ill. App. 2d 1, 8, 192 N.E.2d 691.) Though Bertha Willis’ brief states that she is not asking the appellate court to decide whether Charles Willis was the natural father of any of the three petitioners, we recognize that this court must make such a determination to address the issues raised in this appeal. We are asked to determine whether the trial court’s amended order of heir-ship should be voided.

Lanna Harris argues that testimony and exhibits admitted as evidence included more than Hagar Harris’ testimony and in its totality the evidence is sufficient to rebut the presumption that Otis Harris is her father. Hagar Harris testified that Charles Willis was Lanna’s father and testified that she had no contact with her husband during the time period she conceived Lanna Harris because her husband was in prison. If a husband had no access to his wife during the time of conception, the presumption that the husband is the natural father may be rebutted. Ozment, 61 Ill. App. 3d at 1048.

Relatives and friends testified to the father-daughter relationship of Charles Willis and Lanna Harris. Life insurance policies signed by-Charles Willis were submitted into evidence and listed Lanna Harris as Charles Willis’ daughter. The trial court considered other evidence, including photographs of the two together, Lanna Harris’ birth certificate in which the father’s name was omitted, the obituary on Charles Willis in which was named Lanna Harris as a daughter and the fact that Lanna Harris paid half the funeral costs for Charles Willis’ burial. The court noted that the testimony was somewhat controverted as to the origin of the information for the obituary, but added that “this notice was present at the funeral during whatever services there were and that no one, specifically Bertha Willis, [raised] any questions or objections to it.” The court considered two Metropolitan Life Insurance policies, one where Willis identified Lanna Harris as his daughter and another where Willis identified Lanna Harris as the mother of his grandchild. In addition, Hagar and Otis Harris’ divorce decree, entered into when Lanna Harris was still a minor, provided for child support for three children but did not mention Lanna.

The trial court is in the best position to weigh this evidence and consider the credibility of witnesses. (Cody, 92 Ill. App. 3d at 213.) The trial court’s finding was not against the manifest weight of the evidence, which established that while alive Charles Willis acknowledged Lanna Harris, Linda Rowser and Lisa Brown as his daughters. We affirm the trial court’s amended order declaring heirship to include Lanna Harris, Linda Rowser and Lisa Brown as heirs of the decedent.

Judgment affirmed.

RAKOWSKI, P.J., and McNAMARA, J., concur.


author: PRESIDING JUSTICE RAKOWSKI

text:
    TOBI ENGINEERING, INC., Plaintiff-Appellant, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant-Appellee.
    First District (6th Division)
    No. 1—90—2313
    Opinion filed May 24, 1991.

      Cooney & Conway, of Chicago (James E. Ocasek, of counsel), for appellant.
    Lanigan & Sadewater, of Chicago (Brent Sadewater, of counsel), for appellee.
   PRESIDING JUSTICE RAKOWSKI

delivered the opinion of the court:

Plaintiff-appellant Tobi Engineering Co. (Tobi) appeals the entry of summary judgment in favor of defendant-appellee Nationwide Mutual Insurance Co. (Nationwide). Tobi brought the action against Nationwide asserting that Nationwide wrongfully refused to defend Tobi in an action brought in Louisiana. The trial court held that the Louisiana action was not one which Nationwide was obligated to defend, and that assuming that the Louisiana claim was initially one within the coverage, defense of the action was excluded by the policy. We affirm.

Nationwide issued a general liability policy of insurance to Tobi in March of 1986. Tobi was engaged in the business of manufacturing rubber goods, including bearing pads used in bridge construction, and supplied bearing pads for a project in Louisiana. The contractor to that project, Afeo Steel, Inc. (Afeo), filed a lawsuit against Tobi in the Federal district court in Louisiana.

Nationwide, in refusing to defend the Afeo lawsuit, wrote to Tobi, stating that exclusions P and M(l) of the policy applied to the claim. Counsel for Tobi disputed this conclusion in correspondence to Nationwide. Nationwide wrote to Tobi again, stating that it had reviewed the claim and that its conclusion remained the same. After Tobi sued, however, Nationwide pleaded the affirmative defense that the claim was not included in coverage of the policy in the first instance.

The Afeo complaint contained the following allegations. Defendant Tobi was in the business of manufacturing Durameter pads used in the construction of highways. Tobi and Afeo entered into a contract for the purchase and delivery in Louisiana of pads to be used in the construction of a Louisiana project. The pads which Tobi delivered were defective, however, and Afeo would not have contracted to purchase the pads had it known that they were defective, which rendered them useless. Tobi breached its contract with Afeo, Afeo alleged, by failing to timely deliver nondefective pads to Afeo. Due to the delivery of defective pads and the subsequent delay in procuring a substitute, Afeo became liable for delay damages to the State of Louisiana. Afeo asserted that it was entitled to a return of the purchase price, reimbursement of delay damages, and damage to Afco’s business reputation in the amount of $300,000. Finally, the complaint alleged that Tobi was a manufacturer in bad faith and thus Afeo was entitled to attorney fees.

The insurance policy provided that coverage existed for bodily injury (which Tobi does not argue applies) and property damage (which Tobi argues does apply). The policy states with respect to property damage coverage: “The company will pay on behalf of insured all sums which the insured shall become legally obligated to pay because of *** property damage to which this insurance applies, caused by an occurrence.” The policy states:

“ ‘property damage’ means (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.”

An “occurrence,” according to the policy, “means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”

Exclusion M(l) of the policy provides that insurance does not apply to:

“loss of use of tangible property which has not been physically injured or destroyed resulting from (1) a delay in or lack of performance by or on behalf of the insured of any contract or agreement.”

The other provisions of the policy which are relevant to this appeal include exclusion P, which provides that the insurance does not apply to “damage claimed for the withdrawal, inspection, repair, replacement or loss of use of the named insured’s product or any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein.” The personal injury and advertising injury section of the policy provides coverage for acts of defamation, unfair competition, infringement of copyright and other, similar types of activity in connection with advertising activities. The completed operations provision applies to bodily injury or property damage occurring after operations have been completed and where such bodily injury or property damage arises out of operations or reliance upon a representation or warranty.

The first issue we address is whether Nationwide waived any policy defense except the application of the two exclusions. Tobi contends that Nationwide waived its right to raise any policy defense except exclusion provisions M and P. This is because Nationwide wrote Tobi a letter indicating that coverage would be denied due to these exclusionary provisions, and, after Tobi’s counsel wrote to Nationwide arguing that the exclusionary provisions did not apply, Nationwide wrote Tobi again, indicating that it had reviewed the matter and that its position remained unchanged. Tobi argues that the letters are “two specific, affirmative acts evidencing no intent to rely on any other defenses.”

In support of its waiver argument, Tobi cites two cases. In Krutsinger v. Illinois Casualty Co. (1957), 10 Ill. 2d 518, 141 N.E.2d 16, the court held that where an insurer wishes to assert nonliability under a policy, it must so notify the insured without delay so as to protect the insurer from inability to save itself from loss and damages. (Krutsinger, 10 Ill. 2d at 526.) In Krutsinger, there had been an initial indication from the insurer that the defense would be undertaken, and it was not until many months after the claim was filed that the insurer asserted nonliability. Here, conversely, Nationwide promptly notified Tobi of its intent not to defend.

Tobi also cites the case of Cowan v. Insurance Co. of North America (1974), 22 Ill. App. 3d 883, 318 N.E.2d 315, for the proposition that “[i]f a letter regarding potential policy defense is sent to an insured it must be strictly interpreted and construed most strongly against the insurer.” Cowan did not involve a refusal to defend, but rather a reservation of rights where the court observed “bare notice of a reservation of rights is insufficient unless it makes specific reference to the policy defense which may ultimately be asserted and to the potential conflict of interest.” (Cowan, 22 Ill. App. 3d at 896.) The purpose of this rule is to help the insured decide if the insured wishes to retain private counsel. (Cowan, 22 Ill. App. 3d at 896-97.) Here, Nationwide was prompt in informing Tobi that it would not defend the action and that Tobi would need to retain private counsel. Waiver is defined as “a voluntary relinquishment of a known right, claim or privilege.” (Vaughn v. Speaker (1988), 126 Ill. 2d 150, 161, 533 N.E.2d 885.) As Nationwide points out, an insurer is not required to assert all of its defenses to liability in a letter to its insured. (See Tibbs v. Great Central Insurance Co. (1978), 57 Ill. App. 3d 866, 868, 373 N.E.2d 492.) Tobi has cited no persuasive authority for the proposition that Nationwide is restricted to its exclusionary defenses because it initially informed Tobi that it intended to rely on them and did not reveal to Tobi an intent to rely on the defense of no coverage. We therefore hold that Nationwide did not waive its right to assert the defense that the policy did not provide coverage for the Louisiana claim.

Next, we address whether Nationwide justifiably refused to defend Tobi in the Louisiana claim. In the case of United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. (1989), 193 Ill. App. 3d 1087, 1092, 550 N.E.2d 1032, the court discussed the framework within which we are to analyze whether Nationwide had a duty to defend this case:

“The allegations in the underlying complaint in the context of relevant policy provisions determine whether an insurer owes a duty to defend an action brought against the insured. [Citation.] If the complaint alleges facts potentially within the coverage of the policy, the duty to defend has been established. [Citation.] ‘At the duty to defend stage *** the court [cannot] adjudicate disputed facts. That is the genesis of the rule that the court must look only to the complaint to see if the allegations show that the insured’s conduct is potentially within coverage.’ [Citation.]”

Doubt as to potential coverage is to be resolved in favor of the insured. Wilkin Insulation, 193 Ill. App. 3d at 1092, citing La Rotunda v. Royal Globe Insurance Co. (1980), 87 Ill. App. 3d 446, 451.

The Illinois Supreme Court has likewise enunciated the touchstone for determination of whether Nationwide had a duty to defend. In Conway v. Country Casualty Insurance Co. (1982), 92 Ill. 2d 388, 393, 442 N.E.2d 245, the court stated:

“In this jurisdiction an insurer’s duty to defend an action against its insured is determined by the allegations of the complaint. [Citations.] An insurer may not justifiably refuse to defend an action against its insured unless it is clear from the face of the complaint that the allegations fail to state facts which bring the policy within, or potentially within, the policy’s coverage. [Citations.]”

At the outset, we note that Tobi has not argued that the provisions of the policy are ambiguous.

In this case, as indicated, the Louisiana complaint alleged that Tobi breached its contract with Afeo by “failing to timely deliver non-defective pads to Afeo.” Afeo pleaded four distinct types of damages it was entitled to as a result of Tobi’s alleged breach, namely: a return of the purchase price, reimbursement of delay damages Afeo owed the State of Louisiana, damage to Afco’s business reputation and that Tobi was a manufacturer in bad faith and thus Afeo was entitled to attorney fees. As the trial court indicated, the damages Afeo requested were “intangible” and “purely economic.” Tobi contends that the Afeo complaint is so lacking in specificity that the allegation of the defective pads “gives rise to many possibilities of recovery under the policy.” To the contrary, while the complaint is a simple three-page document, it is clearly one for breach of contract and the only damages sought are truly intangible and economic.

In arguing that the underlying claim potentially subjected it to liability for property damage under the policy, Tobi relies on a number of cases wherein courts have held that the incorporation of a defective product into tangible property can constitute “property damage” as defined in similar policies. (See Marathon Plastics, Inc. v. International Insurance Co. (1987), 161 Ill. App. 3d 452, 514 N.E.2d 479; Elco Industries, Inc. v. Liberty Mutual Insurance Co. (1980), 90 Ill. App. 3d 1106, 414 N.E.2d 41; Pittway Corp. v. American Motorists Insurance Co. (1977), 56 Ill. App. 3d 338, 370 N.E.2d 1271.) What these cases have in common with each other is that diminution in value to the product to which the insured’s product was incorporated had taken place. The facts of these cases reveal instances where the finished products had to be ripped apart or where the defect in the incorporated product caused a failure of the finished product to work properly.

Here, on the other hand, the Afeo complaint does not allege or seek to recover any damages for diminution of value of the finished product (the bridge); incorporation of Tobi’s product, moreover, is neither expressly alleged nor implied in the Afeo complaint. What the Afeo complaint does allege is that Tobi delivered defective pads, and did not deliver nondefective pads on time, which caused a delay in the project for which Afeo became liable. Thus, Tobi’s authorities are not persuasive. Further, even if it could be considered possible that incorporation did occur, given that damage to property is not the gist of the Afeo action and that diminution in value is not alleged, coverage would not result. (See CMO Graphics, Inc. v. CNA Insurance (1983), 115 Ill. App. 3d 491, 450 N.E.2d 860; Ludwig Candy Co. v. Iowa National Mutual Insurance Co. (1979), 78 Ill. App. 3d 306, 396 N.E.2d 1329 (cases which denied coverage even though insured’s product was incorporated into other product because the claims in underlying complaints involved only economic losses).) Nor does the holding in Wilkin Insulation, upon which Tobi places emphasis, compel a different result. That court relied on the case of Board of Education v. A,C & S, Inc. (1988), 131 Ill. 2d 428, 546 N.E.2d 580, in holding that the incorporation of asbestos into a building resulted in physical injury or property damage to the building. The gravamen of the Wilkin Insulation holding was that asbestos-related cost of repair and replacement is more than merely economic damage. Thus, Tobi’s claim does not fit into the first prong of the property damage provision.

Tobi argues that the claim potentially fits into the second prong of the property damage provision — loss of use of tangible property caused by an occurrence. Tobi did not present an argument on this issue below. It is clear, however, that the delivery of defective pads and failure to timely deliver nondefective pads would not be an “occurrence” as defined by the policy. The claim reveals no suggestion of an accident, exposure to elements or like situation resulting in bodily injury or property damage. (See Hamilton Die Cast, Inc. v. United States Fidelity & Guaranty Co. (7th Cir. 1975), 508 F.2d 417, 420.) The Afeo complaint reveals no suggestion of property damage or bodily injury, neither expected nor intended by Tobi. See Wilkin Insulation, 193 Ill. App. 3d at 1097; Elco Industries, Inc. v. Liberty Mutual Insurance Co. (1977), 46 Ill. App. 3d 936, 938, 361 N.E.2d 589.

In short, a review of the Afeo complaint makes it clear that the allegations fail to reveal facts which bring, or potentially bring, the case within the policy’s property damage coverage.

Tobi also argues that the claim potentially fits into the advertising injury provision of the policy. That provision addresses itself to “injury arising out of an offense committed during the policy period occurring in the course of the named insured’s advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title or slogan.” The Afeo complaint is a simple breach of contract action which does not implicate the types of actions under the advertising injury provision, and the trial court was correct to hold that Nationwide had no duty to defend based on this provision. We reject Tobi’s implied argument that a duty to defend may be imposed where the type of damages alleged (here, damage to business reputation) is similar to the types of damages sometimes requested in the types of claims within the purview of the advertising injury section, where there is a total absence of facts to indicate that such a cause of action is being alleged.

Likewise, the trial court correctly held that coverage could not be based on the completed operations hazard provision of the policy. This is because this provision does not apply in the absence of bodily injury or property damage, neither of which has been alleged in the underlying complaint. We therefore hold that the trial court was correct in holding that Nationwide had no duty to defend the Afeo claim and in granting Nationwide’s motion for summary judgment.

Although not necessary to the disposition of the appeal, we will briefly comment on the alternate ground of Nationwide’s motion for summary judgment. While it is axiomatic that in the absence of coverage exclusionary provisions are not relevant, the trial court found that, even assuming coverage or waiver, exclusion M(l) would excuse Nationwide from defending. As indicated, exclusion M(l) provides that the insurance does not apply to loss of use of tangible property which has not been physically injured or destroyed and results from a delay in or lack of performance by or on behalf of the named insured of any contract or agreement. The Afeo complaint alleged loss of use in that the contract was breached, thus causing delay in the project. There appears to be a symmetrical relationship between this exclusion and whether the underlying claim is one for property damage (see Wilkin Insulation, 193 Ill. App. 3d at 1100 (where the court observed that the exclusion will fail to the extent that property damaged is alleged)). Given the absence of an allegation of property damage in the complaint, the M(l) exclusion is applicable. The tangible property was not physically injured or destroyed and the claim arose out of a delay or lack of performance by the insured of a contract. Thus, the trial court’s alternate basis for granting summary judgment was proper as well.

Accordingly, the judgment of the circuit court affirmed.

Affirmed.

McNAMARA and EGAN, JJ., concur.