Highway Group, Ltd. v. William Ryan Homes, Inc. , 2023 IL App (2d) 220019 ( 2023 )

2023 IL App (2d) 220019No. 2-22-0019
Opinion filed April 24, 2023
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
THE HIGHVIEW GROUP, LTD., and ) Appeal from the Circuit Court
THOMAS SWARTHOUT, ) of Lake County.
)
Plaintiffs-Appellees, )
)
v. ) No. 17-L-371
)
WILLIAM RYAN HOMES, INC., and )
NORTH SHORE BUILDERS, I, INC., ) Honorable
) Luis A. Berrones,
Defendants-Appellants. ) Judge, Presiding.
______________________________________________________________________________
PRESIDING JUSTICE McLAREN delivered the judgment of the court, with opinion.
Justices Hutchinson and Birkett concurred in the judgment and opinion.
OPINION
¶1 Defendants, William Ryan Homes, Inc. (William Ryan Homes), and its entity, North Shore
Builders, I, Inc. (North Shore Builders), appeal an order of the circuit court of Lake County
dismissing their petition to vacate a judgment pursuant to section 2-1401 of the Code of Civil
Procedure (Code) (735 ILCS 5/2-1401 (West 2020)). Defendants’ petition alleged that plaintiffs,
Thomas Swarthout, and his entity, The Highview Group, Ltd. (Highview Group), obtained a
judgment by fraud. Defendants argue that the trial court erred by dismissing their petition to vacate
because (1) they sufficiently alleged facts showing all the necessary requirements for relief under
section 2-1401 of the Code and (2) they demonstrated that the judgment was procured by fraud.
For the reasons set forth below, we reverse and remand for further proceedings.
2023 IL App (2d) 220019¶2 I. BACKGROUND
¶3 In May 2017, Swarthout and his company, Highview Group, filed a complaint against
defendants alleging, inter alia, breach of implied contract and unjust enrichment. The action
involved the development of a 47-acre farm, referred to as the Reilly family property (Reilly
property), in Lake Forest. The claims were tried before a jury, which returned a verdict of $510,000
in favor of plaintiffs on the unjust enrichment claim. Defendants moved for judgment
notwithstanding the verdict (judgment n.o.v.) or for a new trial, both of which were denied.
Defendants appealed the denial of their motion for judgment n.o.v., and we affirmed. Highview
Group, Ltd. v. William Ryan Homes, Inc., 2019 IL App (2d) 180913-U. Subsequently, defendants
brought a petition to vacate the judgment pursuant to section 2-1401 of the Code (735 ILCS 5/2-
1401 (West 2020)). Upon plaintiffs’ motion, without an evidentiary hearing, the trial court
dismissed defendants’ petition with prejudice.
¶4 A. The Underlying Litigation
¶5 During pretrial discovery Swarthout answered an interrogatory requesting a list of costs or
expenses plaintiffs incurred relating to the development of the Reilly property. Swarthout’s answer
contained a list of “Expenses to Date” indicating that Swarthout paid a total of $676,735.69 and
owed $1,372,629. Swarthout’s list stated that he paid engineer Michael Bleck, of Bleck’s
Engineering, $8430 and owed him $175,000 for mapping and engineering services. Swarthout’s
answer was verified pursuant to section 1-109 of the Code (id. § 1-109).
¶6 Prior to trial, Bleck filed a separate complaint against defendants, seeking damages in the
amount of $249,889 related to the same project. In this case, defendants filed a motion in limine
to bar, inter alia, evidence or argument relating to services provided by Bleck. Defendants argued
that evidence of Bleck’s fees should be barred to prevent double recovery. In response, plaintiffs
asserted that they were entitled to recovery for liabilities incurred and that “the testimony of the
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2023 IL App (2d) 220019plaintiffs is that those bills have been incurred, and plaintiffs intend on paying those bills out of
any award in this matter.” The court reserved judgment on defendants’ motion in limine.
¶7 The jury heard testimony in August 2018. Swarthout testified as follows. Swarthout learned
that the Reillys were interested in selling the Reilly property, and he spent several years pursuing
his “vision” for a residential development. Swarthout called his concept the “White Stable
Vineyard,” which would consist of 34 single family homes encircling a vineyard. The City of Lake
Forest (the city) zoned the property R-4, which required a minimum lot size of 60,000 square feet
for single family residences. Swarthout applied for a variance pursuant to an ordinance allowing
for a preservation district with smaller lot sizes and a tradeoff for open space. Swarthout planned
a road that would roughly encircle the property. The road would go around a large open space with
eight acres of vineyard, and homes would be built on the other side of the road. The roads would
not be asphalt but would be brick pavers. Residents would use the cottage that was “continuous to
the winery for guests that may come in for the weekend.”
¶8 Swarthout’s plan had three access points, and the city approved this plan. The plan also
had a pedestrian trail system that would “work its way into the adjacent property,” which was
owned by the city. Swarthout also planned to plant orchard trees along the berm along Route 60.
¶9 Swarthout hired Bleck and a land planner, Nicholas Patera from Teska Associates, to
implement his concepts at considerable expense. In December 2009, the city granted tentative
preliminary subdivision approval. Swarthout testified that such tentative approval signals to the
developer that he has a viable project and is likely to be granted final approval. Plaintiffs obtained
final approval of the plat of subdivision on June 21, 2010.
¶ 10 Swarthout testified that he had a contract with the Reilly family to purchase the Reilly
property for $17 million. However, the residential real estate market was “bleak,” and Swarthout
had trouble finding investors or lenders. Swarthout’s purchase contract with the Reilly family
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2023 IL App (2d) 220019expired in October 2013. Swarthout obtained from the city extensions for the zoning approvals,
but the final zoning approval extension was set to expire on June 27, 2014. As long as the Reilly
family owned the property, Swarthout could not record the plat and begin construction.
¶ 11 However, plaintiffs continued the process of obtaining all the necessary governmental
approvals, such as a permit from the United States Army Corps of Engineers for work related to
the pond. As part of the final engineering, plaintiffs were required to prepare a stormwater
management report and obtain a permit from the Lake County Stormwater Management Agency.
Plaintiffs were also required to obtain a permit from the Illinois Environmental Protection Agency
(IEPA) for the water connection, obtain a permit for the sanitary sewer, and prepare an
archeological survey.
¶ 12 Swarthout testified that, in May 2014, he identified Jacobs Homes as a potential developer
and investor. Plaintiffs and Jacobs Homes agreed to pursue the project together, and the Reilly
family agreed to sell the property for $10 million. However, in early June 2014, Jacobs Homes
withdrew from the project.
¶ 13 James Hanson and Jeffrey Wescott, intermediaries for plaintiffs, identified William Ryan
Homes as a potential partner. On June 9, 2014, Wescott scheduled a meeting with William Ryan,
the chief executive officer of William Ryan Homes and North Shore Builders. Swarthout sent
Ryan all the information he had accumulated for the project. Swarthout included copies of the final
plats, final landscape drawings, engineering drawings, marketing information, appraisals, and
approvals from the city.
¶ 14 On June 12, 2014, Ryan sent plaintiffs an e-mail setting forth six “purchase scenarios,”
each of which specified an amount that Swarthout would receive for his work toward the project’s
completion. The least lucrative scenario, which Ryan labeled the “worst case scenario,” specified
that Swarthout would receive $1.08 million, which was comprised of (1) a $250,000 fee when
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2023 IL App (2d) 220019defendants purchased the property from the Reilly family; (2) a $250,000 developer fee; (3) a
$10,000 project consulting fee for each of 33 lots as they were sold, amounting to $330,000; and
(4) the option of purchasing one of the homes at a $250,000 discount.
¶ 15 The day after sending the e-mail, on June 13, 2014, Ryan met with Swarthout and toured
the property. Swarthout testified that, after a conference call with Ryan and others, on June 20,
2014, he believed he had “a deal” with Ryan under which he “would be paid [a] million dollars
for past expenses, a million dollars for [his] fee, and [he] would be part of the project.” Swarthout
testified that he had over $1 million in expenses.
¶ 16 Bleck testified that Swarthout retained him to work on the White Stable Vineyard project.
Bleck surveyed the Reilly property, which included surveying the land, the location of the utilities,
the trees, the wetlands, and “all of the things that are needed to go into the design.” Bleck also
prepared a boundary survey. When that information was collected, it went “into a base map.” Bleck
then began the civil engineering for the project, which entailed designing the roads, the drainage,
and the sanitary sewer system and routing the utilities throughout the development. The pond that
was on the property was considered a flood plain. Bleck did a drainage study and a “study to get
the base foundation for that flood plain established” because it needed to be approved by Lake
Forest stormwater management. Bleck produced a topographical map, engineering plans, and a
tentative plat of the subdivision for submission to the city. Bleck assisted in applying for permits
from the Illinois Department of Natural Resources regarding the roads and from the United States
Army Corps of Engineers regarding the wetland areas around the pond. He also submitted an
application to the soil conservation district, assisted in getting the property annexed by the
Northshore Sanitary District, applied for a permit from the IEPA for water, applied for a sanity
sewer permit, and applied for approval from the Illinois Historic Preservation Agency.
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2023 IL App (2d) 220019¶ 17 According to Bleck, the tentative plats for White Stable Vineyard and defendants’ planned
development, Westleigh Farm, shared several precise measurements. The identical measurements
suggested to Bleck that defendants used plaintiffs’ survey and other planning materials, because a
survey resulting in the same measurements would be very unlikely.
¶ 18 During cross-examination, while comparing defendants’ and plaintiffs’ plats, Bleck
testified that “[t]he plats do not look copied.” Bleck testified that there were differences in the
parties’ tentative plats, including the amount of open space, the shape of roads, the width of the
main road, and the size and shape of the water retention areas. Defendants’ plat had fewer wetland
areas than plaintiffs’ plat, and plaintiffs’ plat showed a road that was not included in defendants’
plat. Defendants’ plat had a clubhouse and a pier, whereas plaintiffs’ plat did not have these
structures. Bleck also testified that the zoning dictated the maximum number of lots, which in this
case was 34, regardless of who developed the property. The permits plaintiffs had obtained
ultimately expired, and defendants had to reapply for each permit. Bleck testified that defendants
“had to go through the process.”
¶ 19 Wescott, a financier working with plaintiffs in 2014 on the White Stable Vineyard project,
testified that he was to be “paid out of the project.”
¶ 20 Hanson, a developer and advisor for plaintiffs, testified as follows. In 2012 or 2013,
Swarthout asked Hanson to assist him in getting investors for the White Stable Vineyard project.
Hanson had a verbal agreement with Swarthout that if the White Stable Vineyard “project went
forward [he] would pay me $200,000.” At the end of June 2014, the entitlements—the approvals
necessary to proceed—were about to expire, unless the final plat of the subdivision was signed by
the owners of the Reilly property and recorded. Wescott, Hanson’s business acquaintance, had a
relationship with Ryan.
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2023 IL App (2d) 220019¶ 21 Ryan testified that, in early June 2014, Wescott, who was a social acquaintance, called and
said that he was involved with a property in Lake Forest and was looking for a builder to buy lots.
Wescott said that they had most of the financing but their builder had suddenly dropped out and
they needed $3 million out of $10 million total. Wescott said that they were in a hurry. Ryan
expressed interest. Plaintiffs sent over numerous documents, including zoning approvals, a plat of
survey, permits, a market study, financials, engineering drawings, bids for infrastructure, and a
timeline for stormwater review. Ryan never requested these documents. Together, Swarthout and
Ryan drove around the Reilly property, and Swarthout explained his “vision of the winery and the
wine club,” including turning the stable into a wine club. Swarthout also told Ryan that he would
move the caretakers’ house and “make it into a B&B where somebody who was a member of the
club had family from out of town, they could bring them in and put them up for the weekend and
enjoy the wine club.” Ryan’s development, Westleigh Farm, is not a vineyard, did not take
advantage of the stable, and did not use the caretakers’ home; the stable was moved and used for
maintenance, and the caretakers’ home was demolished.
¶ 22 On June 12, 2014, Ryan sent an e-mail to Swarthout, stating, “In a nutshell we see the
worst[-]case scenario, us paying the seller $10 million for the property at one close, entitlements
in place, and [Swarthout] receiving $1 million throughout the deal.” In addition, Ryan offered
Swarthout up to $250,000 as reimbursement for his expenses, $250,000 to be the development
manager, and, as project consultant—obtaining permits and plans from the city—$10,000 for each
house sold. Swarthout rejected Ryan’s offer. In an e-mail Wescott sent to Ryan, he “quickly went
from I was going to need $3 million to I was going to need $7 million.” Then “it went from the
entitlements were expiring to the entitlements were no good,” as Swarthout’s deal with the sellers
unraveled and they wanted to keep him off the property. At the end of June 2014, North Shore
Builders entered into an agreement with the owners of the Reilly property for $10 million. The
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2023 IL App (2d) 220019owners of the Reilly property insisted on a confidentiality provision so that the deal could not be
discussed with Swarthout. But North Shore Builders and the owners of the Reilly property did not
close based on the June 2014 agreement and the property went back on the market, at which time
anyone could have bought it.
¶ 23 Ryan testified that North Shore Builders and the owners of the Reilly property entered into
a second agreement for the sale of the property for $9 million. North Shore Builders received final
plat approval from the city for Westleigh Farms development in April 2016. Ryan testified that his
company did not use plaintiffs’ entitlements. “We had to start from ground zero and get them
ourselves.” Plaintiffs’ entitlements expired at the end of June 2014. While Swarthout’s vision for
White Stable Vineyard included a vineyard, a wine club, and a bed and breakfast (B&B), Ryan
and his company developed Westleigh Farms. Plaintiffs and defendants used different designs,
building and design architects, land planners, and engineers. The only overlap was the landscape
architect, Teska, who did separate landscape plans for plaintiffs and defendants. Teska had been
involved with the Reilly property for over 20 years.
¶ 24 Nathan Wynsma, vice president of land for defendants, testified as follows. The plans for
plaintiffs’ White Stable Vineyard and defendants’ Westleigh Farm were similar; both had 34 lots,
access to the developments was from the same road (Jacqulyn Lane), and both had similar
perimeter roads, similar roadway constructions, and similar stormwater areas. However, the plans
had the same number of lots because of the math involved. The Reilly property is 47 acres that
reduced to 34 lots due to the topography and the fact that most of the lots are zoned for 60,000
square feet. The perimeter road was required by the city to create a buffer from Ridge Road, Route
60, and the neighborhoods to the west and to preserve the mature woodlands. Defendants did not
get the idea to build the perimeter road from plaintiffs. Defendants did not get the idea to have
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2023 IL App (2d) 220019Jacqulyn Lane be the access road from plaintiffs. The city decided it wanted one access road to the
development, and Jacqulyn Lane was the only existing logical and safe road for access.
¶ 25 Wynsma testified that there were differences between plaintiffs’ plat and defendants’ plat.
The geometry of the roads and the road configuration around the outer perimeter were different.
The entrances along Ridge Road were different. The sizes of the lots were different. The central
open space was different. Defendants had three ponds instead of two. Defendants were building a
clubhouse. Defendants designed a berm along Route 60 to be six feet taller, resulting in a larger
open space. Defendants added a retaining wall. Plaintiffs had three different access roads to Ridge
Road, which the city deemed too close to Route 60 for safety. Plaintiffs used most of the open
space for vineyards. Defendants’ open spaces were not vineyards and were located in different
areas than plaintiffs’.
¶ 26 Wynsma testified that defendants did not record plaintiffs’ plat. When defendants bought
the Reilly property they had to start over from scratch. Plaintiffs’ $10 million letter of intent to
Jacobs Homes was of no value to defendants. Tracy Cross’s 2012 market study was of no value to
defendants. During a meeting on June 17, 2014, Swarthout said that he was not the right person to
approach the owners of the Reilly property, because there was “an adversarial relationship”
between them.
¶ 27 During closing argument, plaintiffs’ counsel remarked on the damages for unjust
enrichment. Counsel argued that the materials retained by defendants were “obviously valuable”
and supported a verdict of “up to a million dollars.”
¶ 28 Regarding plaintiffs’ claim for unjust enrichment, the trial court instructed the jury that
plaintiffs had to prove that (1) plaintiffs conferred a benefit upon defendants, (2) defendants
received the benefit to plaintiffs’ detriment, and (3) defendants’ retention of the benefit violated
fundamental principles of justice, equity, and good conscience. Regarding the calculation of
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2023 IL App (2d) 220019damages, the court instructed the jury, “In calculating [the amount of damages], you should
determine the sum of money that reflects the Defendant[s’] gain, not the [plaintiffs’] loss. Thus,
you should not take into consideration the amount of [plaintiffs’] expenses in determining
damages. *** You should not award [plaintiffs] any damages for unjust enrichment based on any
services rendered by Bleck Engineering.”
¶ 29 The jury entered a verdict of $510,000 in plaintiffs’ favor on the unjust enrichment count.
The trial court entered judgment on August 10, 2018. The court denied defendants’ motion for
judgment n.o.v., and we affirmed. Highview Group, Ltd., 2019 IL App (2d) 180913-U, ¶ 12 (noting
that “Swarthout hired an engineer, Michael Bleck, and a land planner, Nicholas Patera from Teska
Associates, to implement his concepts, at considerable expense.”). We reasoned that “Swarthout
explicitly testified to plaintiffs’ expenses to create the plans and other documents that formed the
basis for the entitlements” that defendants “accepted and retained.” Id. ¶¶ 43-44.
¶ 30 After we affirmed the judgment, defendants paid plaintiffs the judgment award plus
postjudgment interest.
¶ 31 B. Defendants’ Section 2-1401 Petition
¶ 32 In May 2021, defendants filed a petition to vacate the judgment pursuant to section 2-1401
of the Code (735 ILCS 5/2-1401 (West 2020)). In this petition, defendants alleged that they had
discovered evidence indicating that Swarthout did not owe Bleck any money in connection with
his work on White Stable Vineyard. In discovery, Swarthout stated in sworn interrogatory answers
that he incurred over $1 million in expenses and that he owed Bleck Engineering $175,000.
Swarthout testified at trial that he incurred over $1 million in expenses. Throughout the trial and
the appeal, Swarthout contended that he owed Bleck payment for engineering services pursuant to
a disclosed written agreement. However, in the separate lawsuit filed by Bleck against defendants
before this case went to trial, both Bleck and Swarthout revealed during depositions that Swarthout
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2023 IL App (2d) 220019owed Bleck nothing. In July 2020, Swarthout testified that he did not owe Bleck any money
because they had a verbal side agreement, apart from a written agreement, that Bleck would be
paid $250,000 when Swarthout’s project was funded. Swarthout testified that, because the project
was not funded, he did not owe Bleck anything. 1 Bleck corroborated Swarthout’s deposition
testimony during his July 2020 deposition. In December 2021, during the Bleck trial, Swarthout
testified that, during the trial in this case, he testified that he had $1 million in expenses and that
the $250,000 he “owed” Bleck was included in the $1 million. After Swarthout received his
judgment award, he did not pay Bleck.
¶ 33 Defendants alleged that, based on the fraudulent concealment of the secret side agreement,
plaintiffs obtained a judgment of $510,000 on their unjust enrichment claim. Swarthout falsely
claimed in a written interrogatory that he owed Bleck $175,000 for engineering services. Further,
at trial, Swarthout testified that his financial obligations to Bleck and others totaled $1 million.
Defendants claimed they had a meritorious defense because Swarthout’s fraudulent concealment
of the secret side agreement deprived defendants of information that they could have used to
challenge plaintiffs’ damages claimed in the unjust enrichment claim; defendants suffered a
detriment; and plaintiffs’ retention of the benefit violated fundamental principles of justice, equity,
and good conscience. Defendants alleged that, absent Swarthout’s fraudulent concealment and
fraud on the court, defendants would have established that Swarthout owed nothing to Bleck
Engineering for its engineering plans that Swarthout shared with defendants. At trial, credibility
was critical to plaintiffs’ unjust enrichment claim. Swarthout introduced no invoices, no receipts,
and no proof of payment for any of his alleged expenses on the White Stable Vineyard project.
1
During oral argument, plaintiffs’ counsel stated that he first learned of the side agreement
between Swarthout and Bleck in July 2020, during Swarthout’s deposition.
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2023 IL App (2d) 220019Evidence of plaintiffs’ right to recover and their damages consisted solely of Swarthout’s
testimony in which he falsely inflated his expenses.
¶ 34 Defendants also alleged that their petition was timely filed within the two-year statute of
limitations because they did not discover the secret agreement until July 2020. Further, defendants
alleged that they were diligent in pursuing the petition, because they filed it 11 months after
discovering Swarthout’s fraudulent concealment and one month after the conclusion of the Bleck
lawsuit.
¶ 35 Defendants sought the following relief: (1) an evidentiary hearing on their petition;
(2) vacatur of the August 2018 judgment entered in plaintiffs’ favor; (3) an order directing
plaintiffs to pay defendants $569,104.11, plus interest (the amount defendants paid plaintiffs in
satisfaction of the judgment); (4) dismissal with prejudice of plaintiffs’ complaint; and
(5) sanctions against plaintiffs in the amount of reasonable attorney fees and costs incurred in
defending plaintiffs’ claims, litigating the appeal, and pursuing their petition to vacate.
¶ 36 In August 2021, plaintiffs filed a combined motion to dismiss defendants’ petition pursuant
to section 2-619.1 of the Code (id. § 2-619.1), arguing that defendants lacked a meritorious defense
and failed to file within two years and that therefore their petition should be dismissed pursuant to
section 2-619 of the Code (id. § 2-619). Plaintiffs also argued that defendants’ petition should be
dismissed pursuant to section 2-615 of the Code, based upon a lack of due diligence.
¶ 37 In response, defendants asserted that Swarthout’s fraud was a meritorious defense,
defendants’ petition was timely filed because it was filed within two years of learning of
Swarthout’s fraud, and defendants were diligent in filing their petition.
¶ 38 On December 14, 2021, following a hearing, the trial court granted plaintiffs’ combined
motion to dismiss defendants’ petition with prejudice, finding that, although defendants
established that the petition was timely filed and established due diligence, they failed to establish
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2023 IL App (2d) 220019a meritorious defense. The trial court’s dismissal of defendants’ section 2-1401 petition was based
on its determination that, even if Swarthout had been impeached at trial with the truth that he did
not actually owe Bleck anything, “it wouldn’t have made any difference to the rest of the testimony
with respect to” the jury’s unjust enrichment verdict and award of $510,000 in damages. The trial
court, therefore, determined that defendants failed to set forth a meritorious defense.
¶ 39 This timely appeal followed.
¶ 40 II. ANALYSIS
¶ 41 The trial court granted plaintiffs’ motion to dismiss defendants’ petition to vacate, pursuant
to section 2-619.1 of the Code (id. § 2-619.1). Section 2-619.1 allows a party to combine a section
2-615 motion to dismiss (id. § 2-615) with a section 2-619 motion to dismiss (id. § 2-619).
Walworth Investments-LG, LLC v. Mu Sigma, Inc., 2022 IL 127177, ¶ 39. A motion to dismiss
under section 2-615 challenges the legal sufficiency of the petition by alleging defects on its face.
Id. In reviewing the sufficiency of a petition, we accept as true all well-pleaded facts and all
reasonable inferences that may be drawn from those facts, and we construe the allegations in the
petition in the light most favorable to the petitioner. Id. A court should not dismiss a petition
pursuant to section 2-615 unless it is clearly apparent that no set of facts can be proved that would
entitle the petitioner to recovery. Doe v. Coe, 2019 IL 123521, ¶ 31.
¶ 42 Section 2-619 of the Code permits dismissal where “the claim asserted *** is barred by
other affirmative matter avoiding the legal effect of or defeating the claim.” 735 ILCS 5/2-
619(a)(9) (West 2020). A motion to dismiss under section 2-619(a)(9) admits the legal sufficiency
of the petition but asserts certain defects or defenses outside the pleadings that defeat the claim.
Dawkins v. Fitness International, LLC, 2022 IL 127561, ¶ 24. We review de novo a dismissal
under section 2-615 or 2-619 of the Code. Walworth Investments-LG, LLC, 2022 IL 127177, ¶ 40.
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2023 IL App (2d) 220019¶ 43 Section 2-1401 of the Code provides a comprehensive statutory procedure by which final
orders, judgments, and decrees may be vacated after 30 days from the entry thereof. 735 ILCS 5/2-
1401(a) (West 2020). To be entitled to relief under section 2-1401, the petitioner must
affirmatively set forth factual allegations supporting that (1) a meritorious claim or defense exists,
(2) the petitioner exercised due diligence in discovering the defense or claim in the original action,
and (3) the petitioner exercised due diligence in filing the section 2-1401 petition. Smith v. Airoom,
Inc., 114 Ill. 2d 209, 220-21 (1986). A meritorious defense is one that, were it credited by the
relevant trier of fact, would defeat the plaintiff’s claim in the underlying action. Lyons Lumber &
Building Center, Inc. v. 7722 North Ashland, LLC, 2016 IL App (3d) 140487, ¶ 22.
¶ 44 Defendants argue that they properly alleged the existence of a meritorious defense because
they alleged that (1) Swarthout’s misrepresentations called into question his credibility and,
(2) had Swarthout told the truth at trial, defendants would have presented evidence that would have
defeated plaintiffs’ unjust enrichment claim.
¶ 45 Regarding the issue of Swarthout’s credibility, we find instructive Cartwright v. Goodyear
Tire & Rubber Co., 279 Ill. App. 3d 874 (1996). In Cartwright, the plaintiff brought a product
liability action against a tire manufacturer to recover for personal injuries sustained as a result of
a vehicle accident. Id. at 876. The plaintiff testified in detail at trial that he was a Vietnam veteran
who had received multiple commendation medals, including the distinguished Purple Heart medal,
as a result of his courageous conduct under fire. Id. at 877. Further, the plaintiff’s counsel, during
opening statement and closing argument, referred to the plaintiff’s military heroism and recounted
the tale of the plaintiff’s valor under enemy fire. Id. at 880. The jury awarded over $9 million to
the plaintiff for his personal injuries and $2 million to the plaintiff’s wife for loss of consortium.
Id. Subsequently, the defendant filed a petition to set aside the judgments pursuant to section 2-
1401 of the Code, alleging that it had discovered evidence indicating that a letter presented at trial
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2023 IL App (2d) 220019purporting to document the plaintiff’s military heroism was fake and that all the plaintiff’s claims
of valor were false. Id. The trial court granted the plaintiff’s motion to dismiss the section 2-1401
petition, reasoning that the plaintiff’s testimony regarding his military service was irrelevant and
immaterial and that members of the jury had been instructed that neither sympathy nor prejudice
should influence their verdict. Id. at 883. On appeal, the reviewing court held that the trial court
erred in dismissing the section 2-1401 petition without holding an evidentiary hearing, because
“the allegations of false testimony call into question the veracity of [the plaintiff’s] assertions
relative to both liability and damages.” Id. at 885.
¶ 46 Here, examination of the record establishes that Swarthout’s credibility was an essential
element of plaintiffs’ claim for unjust enrichment and to the establishment of damages. To prevail
on a claim for unjust enrichment, a plaintiff must prove that the defendant “retained a benefit to
the plaintiff’s detriment, and that defendant’s retention of the benefit violates the fundamental
principles of justice, equity, and good conscience.” HPI Health Care Services, Inc. v. Mt. Vernon
Hospital, Inc., 131 Ill. 2d 145, 160 (1989). The measure of damages for unjust enrichment is the
reasonable value of the benefit received and retained by the defendant. Seiden Law Group, P.C. v.
Segal, 2021 IL App (1st) 200877, ¶ 31.
¶ 47 Swarthout’s testimony was the only evidence presented at trial to establish the value of the
benefit received and retained by defendants. Swarthout testified that he incurred $1 million in
expenses on the project and that he gave what he had to defendants. However, Swarthout provided
no invoices, receipts, nor proof of payment. Swarthout detailed Bleck’s engineering work,
including the plat Bleck prepared, which was included in materials defendants retained. Further,
during closing argument, counsel for plaintiffs argued that the proper amount of damages was a
minimum of $1 million “because that is the value that [plaintiffs] contributed to the property” and
that Swarthout had proved that he incurred “the expense of a million dollars.” Therefore, contrary
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2023 IL App (2d) 220019to the conclusion of the trial court, the evidence of Swarthout’s testimony regarding Bleck and the
value of the materials he gave to defendants cannot be characterized as immaterial and irrelevant
where the credibility of Swarthout’s testimony was of paramount importance.
¶ 48 Plaintiffs argues that, even if Swarthout provided false testimony, defendants failed to
demonstrate that the verdict would have been in their favor. Plaintiffs contend that the jury relied
on the testimony of three other witnesses who all testified that plaintiffs provided materials to
defendants. However, only Swarthout testified regarding the value of these materials. Only
Swarthout testified regarding the expenses he incurred in obtaining the materials and the value of
the benefit conferred on defendants. Plaintiffs offered no evidence, i.e., receipts, invoices, checks,
apart from Swarthout’s testimony, to establish the value of the materials he provided to defendants.
Therefore, Swarthout’s credibility was paramount to the jury’s verdict.
¶ 49 Plaintiffs also note that the jury did not hear the amount of Bleck’s engineering bill, and
the trial court instructed the jury that, when determining damages, it should not consider the
amount of plaintiffs’ expenses and it should not award damages based on services rendered by
Bleck. However, the trial court’s instructions did not preclude the jury from considering plaintiffs’
expenses in determining liability. Further, the court instructed the jury that plaintiffs claimed that
defendants received the benefit of plaintiffs’ “expensive materials” created in connection with the
project and claimed that it would be unjust if defendants did not pay for them. Swarthout testified
that he provided defendants with all of plaintiffs’ documents. The record indicates that many, if
not most of these documents were prepared by Bleck. The only evidence regarding the value of
these documents came from Swarthout, who valued them at a minimum of $1 million. With this
in mind, defendants’ allegation, that Swarthout lied about the value of the documents retained by
defendants, if believed by the jury, would have defeated plaintiffs’ unjust enrichment claim. See
Lyons Lumber & Building, 2016 IL App (3d) 140487, ¶ 22 (a meritorious defense is one that, if
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2023 IL App (2d) 220019believed by the trier of fact, would defeat the plaintiffs’ underlying claim). Based on this record,
we determine that defendants sufficiently set forth allegations establishing a meritorious defense.
¶ 50 Plaintiffs also argue that Swarthout did not knowingly provide false testimony. In 2018, at
the underlying trial, Swarthout testified that he provided defendants with valuable documents,
including many prepared by Bleck, and that Swarthout had incurred $1 million in expenses for
those documents. However, in 2020, at Bleck’s trial, both Swarthout and Bleck testified that in
2010, they agreed that Swarthout would pay Bleck only when the project was funded. Swarthout
also testified that, since the project was never funded, he did not owe Bleck any money. Because
Swarthout knew about the side agreement with Bleck long before he testified at the underlying
trial, we are perplexed at plaintiffs’ assertion—which is disingenuous at best—that Swarthout did
not knowingly provide false testimony. In any case, we accept all well-pleaded allegations as true,
unless positively rebutted by the record. Here, the record supports, rather than rebuts, defendants’
allegations.
¶ 51 Finally, plaintiffs note that we have already affirmed the jury’s verdict. See Highview
Group, Ltd., 2019 IL App (2d) 180913-U. However, “when a petitioner invokes section 2-1401 to
obtain relief from an adverse circuit court judgment, the petitioner is asking the circuit court to
revisit the correctness of the court’s own judgment.” Price v. Philip Morris, Inc., 2015 IL 117687,
¶ 25. This applies even where a reviewing court affirmed the original judgment. Id. ¶ 26.
¶ 52 In sum, because the allegations of false testimony call into question the veracity of
Swarthout’s testimony relative to both liability and damages, we determine the trial court erred by
dismissing defendants’ section 2-1401 petition. Because Swarthout presented a false interrogatory
answer and false testimony, we reverse the dismissal of defendants’ section 2-1401 petition to
vacate and remand the cause to the trial court with directions to conduct an evidentiary hearing to
determine whether the factual allegations regarding Swarthout’s false testimony are true. If the
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2023 IL App (2d) 220019allegations are true, the court shall vacate the judgment and consider any other relief sought by
defendants.
¶ 53 III. CONCLUSION
¶ 54 The judgment of the circuit court of Lake County dismissing the section 2-1401 petition is
reversed, and the case is remanded with directions.
¶ 55 Reversed and remanded with directions.
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2023 IL App (2d) 220019Highway Group, Ltd. v. William Ryan Homes, Inc., 2023 IL App (2d) 220019Decision Under Review: Appeal from the Circuit Court of Lake County, No. 17-L-371; the
Hon. Luis A. Berrones, Judge, presiding.
Attorneys C. Barry Montgomery, Michael Kozlowski, and Bradley Lohsl, of
for Esbrook P.C., of Chicago, for appellants.
Appellant:
Attorneys Joseph T. Morrison, of Kelleher & Holland, LLC, of North
for Barrington, for appellees.
Appellee:
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