Supreme Court Summaries

Opinions filed November 29, 2012


 

 

 

Center Partners, Ltd. v. Growth Head GP, LLC, 2012 IL 113107

Appellate citation: 2011 IL App (1st) 110381.

 

      JUSTICE GARMAN delivered the judgment of the court, with opinion.

      Chief Justice Kilbride and Justices Freeman, Thomas, Karmeier, Burke, and Theis concurred in the judgment and opinion.

 

      This multiparty business litigation comes from Cook County. Numerous companies are involved, and discovery has taken place, but no trial has occurred.

      Plaintiffs are minority limited partners in Urban Shopping Centers, L.P., in which defendants acquired a large majority interest by purchase in 2002. Plaintiffs filed this action in 2004, alleging that defendants owed fiduciary and contractual duties to them which were breached by virtue of defendants having established a “synthetic partnership” that was contrary to plaintiffs’ mall interests and that deprived them of sufficient corporate opportunities. Plaintiffs contended that, pursuant to the agreement under which they operated, defendants were not to compete with them in business opportunities, such as acquiring additional real estate, attracting joint venture partners to acquire properties, or developing properties. It was alleged that defendants stopped growing plaintiffs’ business through acquisitions or ground-up developments, disregarded partnership agreement terms, and stole plaintiffs’ opportunities for themselves.

      In 2010, in the course of discovery, plaintiffs filed the motion to compel production of documents that is at issue here. It sought information concerning business negotiations in 2001 and 2002 in which each defendant’s individual counsel attended negotiating sessions and discussed with nonclients legal advice concerning liability and obligations as Urban’s general partner and also concerning use of a “synthetic partnership” to avoid partnership obligations. The defendants claimed attorney-client privilege, but the plaintiffs argued that, having disclosed legal advice on these subjects with each other outside of any confidential relationship, the defendants could not later object in litigation that those subjects were privileged. Plaintiffs claimed that defendants’ attorney-client privilege had been waived.

      A motion to compel production was granted, the defendants refused to comply, and they were held in contempt. The appellate court affirmed the granting of the motion to compel.

      In this decision, the Illinois Supreme Court reversed the appellate and circuit courts and held that the attorney-client privilege had not been waived because the sought-after disclosures had occurred in an extrajudicial context and were not thereafter used by the clients to gain a tactical advantage in litigation. The court said that the doctrine which is known as the “subject-matter waiver” had not yet been shown to be applicable here.

      The cause was remanded to the circuit court for further proceedings.