Quick Takes on Illinois Supreme Court Opinions Issued Thursday, July 29, 2021

Our panel of leading appellate attorneys reviews the three Illinois Supreme Court opinions handed down Thursday, July 29. In Beaman v. Freesmeyer, the Court found that the plaintiff presented sufficient evidence to create a genuine issue of material fact on the commence-and-continue element of his malicious prosecution claim. In Indeck Energy Services v. DePodesta, the Illinois Supreme Court defined what constitutes an injury in the context of claims for usurpation of a corporate opportunity, breach of fiduciary duty, and breach of contract. In People v. Dorsey, the Court rejected the defendant’s claim that his sentence violates the proportionate penalties clause of the Illinois Constitution, finding that the claim was forfeited and barred by the doctrine of res judicata.

Beaman v. Freesmeyer, 2021 IL 125617

By Joanne R. Driscoll, Forde & O’Meara LLP

After serving more than 13 years in prison, the plaintiff’s murder conviction was overturned because the State failed to disclose material exculpatory evidence. The State elected not to retry him. Beaman then brought a civil action against former detectives of the Normal Police Department, asserting claims of malicious prosecution, intentional infliction of emotional distress, and conspiracy. He also brought claims against the Town of Normal under theories of respondeat superior and indemnification. 

In the civil action, the circuit court granted summary judgment to the defendants, and the appellate court affirmed on the “commencement or continuation” element of the malicious prosecution claim, failing to address the other grounds for judgment. The supreme court reversed and remanded to the appellate court for review of whether the defendants’ conduct proximately caused the commencement or continuance of the original criminal proceeding by determining whether defendants played a significant role in Beaman’s prosecution.

The appellate court again affirmed summary judgment to the defendants. In a 4-2 opinion written by Justice Neville (with Justice Garman joining in Justice Michael Burke’s dissent and Justice Theis taking no part), the majority reversed and remanded to the circuit court to resolve genuine issues of material fact as to Beaman’s malicious prosecution claim upon which his other claims depended.

The majority was critical of the appellate court’s analysis of the commencement or continuation prong of Beaman’s malicious prosecution claim and its holding, in part, that Beaman could not establish that the detectives had proximately caused his criminal prosecution because the prosecutor’s decision to commence or continue suit broke the causal chain. According to the supreme court, the rule that a prosecutor’s independent decision to commence or continue a criminal action breaks the causal chain only applies in the absence of a police officer’s conduct that satisfies the significant-role assessment. It will not shield a police officer who deliberately supplies misleading information to the prosecutor.

The court then examined Beaman’s evidence of defendants’ conduct that was instrumental in the commencement or continuation of his criminal prosecution.  That conduct fell into four general categories: (a) bad-faith investigation, (b) concealment of exculpatory evidence, (c) misleading information during grand jury proceedings, and (d) knowingly providing misinformation to the prosecutor. The court found that Beaman presented sufficient evidence to create a genuine issue of material fact on the commence-and-continue element of his malicious prosecution claim.

In the interests of justice and judicial economy, the court then examined whether Beaman presented enough evidence to create questions of fact on other malicious prosecution elements, namely, termination of the proceeding in favor of the plaintiff, the absence of probable cause for such proceeding, and the presence of malice. After discussing the law and the arguments of the parties, the court concluded that Beaman created questions of fact on these elements as well.

In his dissent, Justice Michael Burke disagreed with the majority as to the commence-and-continue element of malicious prosecution, and, thus, found it unnecessary to discuss the remaining elements. Justice Burke believed that the existence of probable cause for instituting the original criminal proceeding against Beaman was a complete defense. He reasoned that the point at which probable cause should be assessed depends on a person’s role in the commencement or continuance of the criminal prosecution. According to Justice Burke, the evidence known to defendants when Beaman was arrested was not the same as the evidence known to the prosecutors at trial. In his opinion, even construing the evidence in the light most favorable to Beaman, the totality of the circumstances known to defendants at the time of Beaman’s arrest overwhelmingly supported probable cause and defendants did not play a significant role in the nondisclosure of the new evidence that supported the reversal of his conviction.

Indeck Energy Services, Inc. v. DePodesta, 2021 IL 125733

By Karen Kies DeGrand, Donohue Brown Mathewson & Smyth LLC

In this opinion, the Illinois Supreme Court defined what constitutes an injury in the context of claims for usurpation of a corporate opportunity, breach of fiduciary duty, and breach of contract. On the corporate opportunity issue, the justices split 4-3, with the majority upholding the trial court’s ruling that the defendants had not usurped a business development opportunity from their former employer. Notably, unlike the typical corporate usurpation case, this dispute involved business opportunities available to both the corporation and its employees.

The plaintiff, Indeck Energy Services, Inc., a privately held company that develops, owns, and operates power plants, sued Christopher DePodesta and Karl Dahlstrom on the theory that, while still in the plaintiff’s employ, DePodesta and Dahlstrom usurped two categories of opportunities to develop natural gas power plants in Texas. At the time of the events, DePodesta, vice-president of business development for Indeck, and Dahlstrom, whose job also focused on business development for the company, along with one other employee constituted Indeck’s development team. The case proceeded through discovery and a bench trial, and the supreme court’s opinion sets out a lengthy and detailed description of the factual record, which will not be recounted here. The opinion addresses the trial court’s rulings on Count I for breach of contract and Count V, in which Indeck claimed its former employees usurped corporate opportunities; on those counts, the trial court directed findings in favor of defendants. The supreme court also considered a breach of fiduciary duty claim, Count IV; on that count the trial court ruled in favor of Indeck at the conclusion of a bench trial.

Both sides sought relief on appeal. The supreme court, like the appellate court, affirmed the ruling for defendants on Count I, that plaintiff was not entitled to permanent injunctive relief for breach of a confidentiality agreement DePodesta and Dahlstrom signed. The supreme court concluded that the trial court properly directed a finding in favor of defendants based on plaintiff’s failure to prove it was entitled to permanent injunctive relief, including Indeck’s failure to establish irreparable harm or that it had sustained injury based on breaches of Indeck’s confidentiality agreement.

Both the supreme court and the appellate court also agreed with the trial court’s disposition of the claim in Count IV, finding that defendants had breached their fiduciary duties during their employment and ordering defendants to disgorge most of their salaries for 2013, the timeframe of the misconduct. On this claim, plaintiff challenged the trial court’s holding that defendants’ fiduciary duties ended when they resigned from the company. Deferring to the equitable discretion of the court to fashion the appropriate remedy for a breach of fiduciary duty, the supreme court found the record supported the trial court’s finding that the defendants’ breaches ended upon their respective resignations and observed that plaintiff presented no authority to support a claim for disgorgement of management fees and profit after the breach of fiduciary ended. The supreme court also agreed with the trial court’s determination that a constructive trust was not available, where plaintiff failed to link funds traceable to the breaches of fiduciary duties.

On Count V, a majority of the supreme court parted ways with the appellate court and upheld the trial court’s determination that, despite establishing defendants’ breach of fiduciary duties, plaintiff failed to prove usurpation of a corporate opportunity. In an opinion authored by Chief Justice Anne Burke, joined by Justices Theis, Neville, and Michael Burke, the majority observed that usurpation of a corporate opportunity, a cause of action distinct from a claim for breach of fiduciary duty, involves a specific injury: seizing a corporate opportunity and the corporation’s commensurate loss of that opportunity. The court defined “corporate opportunity” as a proposed business activity which “is reasonably incidental to the corporation’s present or prospective business and is one in which the corporation has the capacity to engage.” The majority focused on whether an identifiable opportunity existed for the corporation that its fiduciaries appropriated themselves.

The majority found that the record evidence supported the trial court’s conclusion that defendants were unsuccessful in attempting to appropriate for themselves the exclusive right to work on two opportunities identified as the subject of defendant’s breaches of fiduciary duties. The supreme court majority agreed that opportunities to develop the projects in Texas remained available to Indeck at the time of trial and saw no justification for adopting the appellate court’s conclusion that a plaintiff corporation can recover damages for corporate usurpation even if the opportunity remained available to the plaintiff and even where the fiduciary did not realize a wrongful gain.

In his dissent, joined by Justices Garman and Carter, Justice Overstreet characterized the majority’s conclusion on the claim for corporate usurpation as contrary to the core principle of the doctrine. In Justice Overstreet’s view of the evidence, while in plaintiff’s employ, defendants used corporate assets to develop business opportunities for themselves, which established actionable conduct regardless of whether opportunities remained available to plaintiff. Justice Overstreet expressed concern that the majority’s rule of law establishes a loophole for dishonest fiduciaries to avoid liability, merely by including contractual language that the opportunity in question is not exclusively available to any party.

People v. Dorsey, 2021 IL 123010

By Jay Wiegman, Office of the State Appellate Defender 

In 2019, the Illinois Supreme Court held that a prison sentence of 40 years or more imposed by a circuit court on a juvenile offender constitutes a de facto life sentence in violation of the Eighth Amendment. People v. Buffer, 2019 IL 122327. Since then, Illinois Courts have wrestled with the question of whether sentences greater than forty years constituted de facto life sentences when imposed upon juveniles who were sentenced when good conduct credit was available for those convicted of first degree murder. In People v. Dorsey, 2021 IL 123010, a six-person majority of the Court held that good conduct credit is relevant, and that a sentence imposed pursuant to a statutory scheme that affords a juvenile an opportunity to be released from prison after serving 40 years or less of the term imposed does not constitute a de facto life sentence.

In 1998, the then 14-year-old Derrell Dorsey was convicted of one count of first degree murder and two counts of attempted first degree murder. The circuit court imposed a cumulative, discretionary sentence of 76 years’s imprisonment. Because the sentence was imposed before the truth-in-sentencing act was validly enacted, Dorsey is eligible for day-for day credit. In 2014, two years after the United States Supreme Court held, in Miller v. Alabama, 567 U.S. 460 (2021), that the eighth amendment forbids a sentencing scheme that mandates life in prison without the possibility of parole for juvenile homicide offenders, Dorsey filed a successive post-conviction petition, in which he asserted that his 76-year sentence was a de facto life sentence. Though it found that the defendant had cause for failing to raise this claim earlier, the circuit court found that Dorsey could not establish prejudice because he was not sentenced to mandatory life without the possibility of parole in violation of the Supreme Court’s holding in Miller. The Appellate Court, First District, affirmed the circuit court’s denial of leave to file a successive post-conviction petition, as it considered the defendant’s receipt of good conduct credit to bring the defendant’s sentence within the limits set forth by the Illinois Supreme Court in Buffer.

In a 6-1 decision, the Illinois Supreme Court affirmed the appellate court. Writing for the majority, Justice Michael Burke observed that the Miller Court had not foreclosed the possibility of discretionary life sentences for juvenile homicide offenders provided that states afford some meaningful opportunity to obtain release based on demonstrated maturity and rehabilitation. Dorsey, 2021 IL 123010, ¶ 40. The Illinois Supreme Court also noted the recent decision in Jones v. Mississippi, 593 U.S. ___, 141 S. Ct. 1307 (2021), in which the United States Supreme Court “found that the eighth amendment allows juvenile offenders to be sentenced to life without parole as long as the sentence is not mandatory and the sentencing court had discretion to consider youth and attendant characteristics but that no factfinding by the sentencer is required.” Dorsey, 2021 IL 123010, ¶ 40. Because Dorsey is eligible for day-for-day credit, which allows him to demonstrate maturity and rehabilitation and effectively could reduce his sentence to 38 years, the Court held that the defendant was not sentenced to the functional equivalent of a life sentence without the possibility of parole in violation of Buffer’s “more-than-40-years pronouncement.” Dorsey, 2021 IL 123010, ¶ 49. Because Dorsey’s sentence offers an opportunity for release after serving 38 years in prison, the majority held that the defendant’s sentence was not a de facto life sentence in violation of the eighth amendment; as a result, the appellate court correctly determined that Dorsey could not satisfy the prejudice prong of the cause-and-prejudice test for bringing a post-conviction petition with respect to his eighth amendment claim. Dorsey, 2021 IL 123010, ¶ 49. The majority went on to reject the defendant’s claim that his sentence violates the proportionate penalties clause of the Illinois Constitution, finding that the claim was forfeited and barred by the doctrine of res judicata.

Justice Neville dissented. First, Justice Neville would hold that the availability of day‑for‑day, good‑conduct sentence credit is a factual determination that cannot be made at the pleading stage when reviewing a successive post-conviction petition to determine whether a court‑imposed prison sentence for a juvenile offender reaches the 40‑year threshold for a de facto life sentence. Therefore, at the pleading stage, Justice Neville would hold that defendant has adequately alleged that the court‑imposed, 76‑year sentence constitutes a de facto life sentence pursuant to Buffer.

Second, the dissenting justice would also hold that defendant has made a prima facie showing that his court‑imposed, 76‑year sentence violates the proportionate penalties clause of the Illinois Constitution. Justice Neville would also hold that defendant satisfied the prejudice requirement for filing a successive post-conviction petition. Therefore, he would reverse the judgment of the appellate court, which upheld the denial of defendant’s petition for leave to file a successive post-conviction petition, grant Dorsey’s requested relief, and remand the case to the trial court for further second stage post-conviction proceedings.

In some respects, the impact of today’s decision is narrow, given that good conduct credit has not been available to homicide offenders for more than 20 years. However, in stating that the holding of People v. Holman, 2017 IL 120655 – in which the Illinois Supreme Court held that Miller and its progeny apply to discretionary life without parole sentences as well as to mandatory life sentences – is now “questionable in light of” the recent United States Supreme Court decision in Jones, 141 S. Ct. 1307, the majority has signaled that more change is likely on the horizon. Dorsey, 2021 IL 123010, ¶ 41.          

 

Posted on August 2, 2021 by Timothy A. Slating
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