Downs v. Rosenthal Collins Group

ILLINOIS OFFICIAL REPORTS
Appellate Court

Downs v. Rosenthal Collins Group, L.L.C., 2011 IL App (1st) 090970

Appellate Court MICHAEL A. DOWNS, Individually; and ROSENTHAL COLLINS
Caption GROUP, L.L.C., Derivatively By Michael A. Downs, Plaintiffs-
Appellees, v. ROSENTHAL COLLINS GROUP, L.L.C., Defendant-
Appellant (Dreadnought Partners, L.L.C.; Knot, L.L.C.; J. Roberts
Collins; and Leslie Rosenthal, Defendants).

District & No. First District, Sixth Division
Docket Nos. 1-09-0970, 1-09-2091 cons.

Filed December 16, 2011
Rehearing denied January 30, 2012
Held In an action arising from plaintiff’s termination from his position as chief
(Note: This syllabus executive officer of defendant company, the judgment finding that
constitutes no part of plaintiff owned 2.5% of defendant and awarding him profits from the
the opinion of the court time of his termination plus prejudgment interest on that award was
but has been prepared reversed, but the finding that plaintiff did not have additional 4% equity
by the Reporter of interest was affirmed, since plaintiff did not execute a promissory note for
Decisions for the the “book value” of the 2.5% interest as required by his employment
convenience of the agreement, and the evidence did not support plaintiff’s contentions that
reader.)
defendant waived the requirement of a note, that there was an oral
contract granting plaintiff an additional 4% ownership interest, and that
he was entitled to additional compensation based on the doctrine of
quantum meruit.
Decision Under Appeal from the Circuit Court of Cook County, No. 04-CH-11729; the
Review Hon. Leroy K. Martin, Judge, presiding.

Judgment Reversed in part; affirmed in part.
Counsel on Wolin, Kelter & Rosen, Ltd., of Chicago (Jeffrey Schulman and Elizabeth
Appeal Schutte, of counsel), for appellant.

Sperling & Slater, P.C., of Chicago (Steven C. Florsheim, Daniel A.
Shmikler, and Michael G. Dickler, of counsel), for appellee Michael A.
Downs.

Panel JUSTICE LAMPKIN delivered the judgment of the court, with opinion.
Justice Garcia concurred in the judgment and opinion.
Presiding Justice R. Gordon concurred in part and dissented in part, with
opinion.

OPINION

¶1 Following a bench trial, a declaratory judgment was entered awarding plaintiff, Michael
Downs, 2.5% equity interest in defendant company, Rosenthal Collins Group, L.L.C. (RCG),
and the resulting profit/loss distributions since his termination from the company in 2004.
The court additionally found that plaintiff was entitled to statutory prejudgment interest.1 The
court, however, concluded that plaintiff did not have an additional 4% equity interest in
RCG, as claimed by plaintiff.
¶2 On appeal, RCG contends the trial court’s finding that plaintiff owns 2.5% of the
company and is entitled to the resulting profit/loss distributions was against the manifest
weight of the evidence because plaintiff failed to execute a promissory note to purchase the
equity interest as required by the parties’ employment agreement. Additionally, RCG
contends the trial court erred in calculating the requisite “book value” that plaintiff owed for
his equity interest. RCG further contends the trial court’s award of prejudgment interest was
erroneous.
¶3 Plaintiff cross-appeals, contending the trial court erred in concluding he does not own an
additional 4% of RCG. In the alternative, plaintiff contends he is entitled to damages
pursuant to the equitable principle of quantum meruit.
¶4 Based on the following, we reverse the judgment of the trial court finding that plaintiff
owns 2.5% of RCG and awarding him profits since 2004 and going forward. We
consequently reverse the trial court’s award of prejudgment interest on that award. We,
however, affirm the trial court’s judgment finding that plaintiff did not obtain an additional
4% equity interest in the company.

1
The court also awarded summary judgment in favor of plaintiff on a claim for severance
pay and awarded prejudgment interest on that claim. Neither ruling is contested on appeal.

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¶5 FACTS
¶6 In August 1997, plaintiff became the chief executive officer (CEO) of RCG. At that time,
RCG was a limited partnership with J. Robert Collins and Leslie Rosenthal as its general
partners. The parties entered an employment agreement on August 1, 1997. The employment
agreement described plaintiff’s position as having “supervisory responsibility over all day
to day trading, administrative, operation and financial matters,” while also serving as “the
senior executive with respect to the trading financial, operational, business development and
administrative matters of [RCG], subject, however, to the advice and direction of the
[majority owners].”
¶7 In addition, the employment agreement provided plaintiff with an annual salary of
$350,000 and the right to purchase, at “book value,” a 2.5% limited partnership interest in
RCG by executing a promissory note. “Book value” was not defined in the employment
agreement. It is undisputed, however, that plaintiff never executed a note at “book value” for
his interest in RCG.2
¶8 The employment agreement contained an integration clause providing:
“This Agreement constitutes the entire agreement between the parties and contains all
of the agreements between the parties with respect to the subject matter hereof. This
agreement supersedes any and all other agreements, either oral or in writing, between the
parties hereto with respect to the subject matter hereof. No change or modification of this
Agreement shall be valid unless the same be in writing and signed by the parties hereto.
No waiver of any provision of this Agreement shall be valid unless in writing and signed
by the person or party to be charged.”
¶9 According to his testimony at trial, prior to accepting his position at RCG, plaintiff was
employed elsewhere and was not looking for employment. Plaintiff, however, stated that he
was induced to accept employment with RCG based on the salary offer and the offer for the
right to ownership. Plaintiff testified that he had three conversations with Collins in 1997 and
1998 regarding the execution of a note for his RCG equity interest. Plaintiff testified that he
offered to execute the requisite note, but Collins declined because the “book value” of RCG
was “unknown, subjective, and difficult to determine” due to an outstanding receivable owed
by Rosenthal to the company. Collins disputed the existence of these conversations.
¶ 10 Plaintiff testified that he believed the “book value” at the time he joined RCG in 1997
was approximately $5 million. Plaintiff’s calculation was based on the fact that Collins had
$11 million equity in RCG, but Rosenthal owed $6.6 million to the company. According to
plaintiff, RCG was therefore worth $5 million and 2.5% of that “book value” was
approximately $125,000. Richard Horgan, RCG’s chief financial officer (CFO), testified
regarding his opinion of how to calculate “book value,” as did an expert for each party. All

2
Simultaneously, George Spaniak hired plaintiff as CEO of Prime International Trading Ltd.
(Prime). Spaniak was the principle of Prime and a longtime associate of RCG. Spaniak was
responsible for connecting plaintiff with RCG. In conjunction with his employment at Prime,
plaintiff also had the opportunity to purchase a 2.5% equity interest in Prime upon execution of a
promissory note at “book value,” which he completed when he started his position with Prime.

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 three witnesses agreed that “book value” is determined based on the equity of all classes of
members. None of these individuals, however, provided a valuation of the “book value” of
RCG in 1997 or 2.5% thereof. Horgan did testify that the “book value” of the company when
it was a limited partnership was calculated based on the total equity of both general and
limited partners.
¶ 11 In October 1998, the company changed to a limited liability company. RCG’s operating
agreement contained three classes of members. The general partners under the limited
partnership became class A members and the limited partners became class C members.
Collins and Rosenthal were the only class A members, as majority owners and managing
members. According to the operating agreement, class A members had the sole authority to
carry out management responsibilities and control the operations of the firm. Plaintiff was
a nonvoting class C member. As a class C member, plaintiff owned less than one-tenth of 1%
of RCG. Class C memberships were given in exchange for a $100 capital contribution. The
operating agreement gave the class A members the sole discretion to make cash distributions
“in such amounts and at such times” as determined by their unanimous consent. Moreover,
pursuant to the operating agreement, the class B and C members gave the class A members
the right to purchase their interests and execute a full assignment of those interests at any
time provided the class B or C member was given a five-day notice period. Class C members
did not participate in the management of the firm. Class C members had the ability to
withdraw their capital at any time.
¶ 12 In 1999, plaintiff received compensation over and above his salary in relation to August
1997 through the year-end and for 1998. Up until that point, plaintiff received only his salary.
The parties dispute the character of this compensation. According to plaintiff, the money he
received was his 2.5% equity distribution for the relevant time. According to Rosenthal, the
monies were provided as a performance-based bonus and not in relation to any ownership
interest. Thereafter, the parties agree that plaintiff received a 2.5% distribution through 2002;
however, Rosenthal maintained that the monies were part of a bonus-based profit-sharing
allocation, whereas plaintiff considered the distributions to be related to his ownership
interest.
¶ 13 In late 2001 or early 2002, Collins was absent from RCG for approximately six months
due to illness. According to plaintiff, his responsibilities at RCG grew as a result, even
continuing once Collins returned to work. Plaintiff testified that he and Rosenthal verbally
negotiated an additional 4% ownership interest for a total of 6.5% in relation to his increased
responsibilities, and he received 6.5% profits thereafter. Rosenthal testified that he agreed
to the increased percentage, but considered it an increase in profit-sharing allocation and not
any form of equity in the company.
¶ 14 On January 5, 2004, RCG gave plaintiff notice of his termination. Collins and Rosenthal
exercised their right and option, as class A members, to purchase plaintiff’s class C
membership interest for $100. Plaintiff did not cash the check.
¶ 15 Plaintiff filed the underlying lawsuit requesting, in relevant part, a declaratory judgment
that he held a 6.5% ownership interest in RCG and the entry of an injunction requiring
defendants to provide him with his share of the profits. In the alternative, plaintiff claimed

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 defendants breached the employment agreement where he performed all of his obligations
under the contract except for executing the note, performance of which was waived by
defendants, yet defendants failed to provide plaintiff his contractual equity.
¶ 16 The trial court ultimately concluded that plaintiff held a 2.5% ownership interest in RCG
and was entitled to profit/loss distributions since his employment in 1997 and on a going-
forward basis. The court, however, expressly found that RCG did not waive its right to a note
for the “book value” of the ownership interest. As a result, the court determined that the
parties should be placed in the position they would have been had the note been executed in
1997. The court’s decision was based on witness testimony, finding “the parties entered into
a contract. And that contract called for Mr. Downs to possess two and a half percent of an
interest in the business, provided he executed a note and paid book value. It appears *** that
on several occasions, Mr. Downs attempted to do so and was thwarted in his efforts by the
actions of the defendant.” The decision was further based on the 2.5% distributions that RCG
paid plaintiff “early on in their relationship,” which were “consistent with [plaintiff’s]
ownership in the business.”
¶ 17 The court provided:
“And I don’t believe it is fair–equitable that the defendants should rely upon their
failure to supply Mr. Downs with the information that he requested and rely upon that
as a basis to deny that he owns two and a half percent.
Though it is true, he never executed the note, he never paid the defendants for the two
and a half percent, I believe that his lack of performance was attributable to the
impossibility of performing. And that impossibility was as a result of the conduct of the
defendants. And I don’t think, therefore, that he should be penalized for that.
So I am of the opinion and it is my finding today that Mr. Downs does, in fact own
two and a half percent. He should be awarded two and a half percent. I also, in that same
vein, gentlemen, I reject the idea that the defendants, however, have waived receiving
payment from the two and a half percent because of their actions. I think that what the
Court ought to do is attempt to put the parties where they should have been, had the
transaction been consummated the way it should have been consummated.
So, therefore, I think it only equitable that Mr. Downs compensate, pay to the
defendant, as was contemplated in their agreement, the two and a half percent of book
value as it existed in 1997 when Mr. Downs first went to work for RCG.”
The court noted that it begrudgingly was forced to accept plaintiff’s “book value” of the
company as of 1997 because “the Court isn’t allowed to speculate” and it “didn’t hear
anything from defendants as to what the value was in 1997.”
¶ 18 In regard to plaintiff’s claim for an additional 4% interest, the trial court concluded there
was no “meeting of the minds” between the parties where material elements of the contract
were missing and, therefore, no contract was formed. As a result, the court denied plaintiff’s
claim for an additional 4% ownership interest in RCG despite recognizing that plaintiff did
receive an additional 4% “distribution.”

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¶ 19 DECISION
¶ 20 I. 2.5% Ownership Interest
¶ 21 RCG contends the trial court erred in holding that plaintiff had a 2.5% ownership interest
in the company where he failed to comply with the terms of the parties’ employment
agreement by not performing the condition precedent, i.e., executing a note, in order to
obtain an ownership interest. Plaintiff accepts that the execution of the note was a condition
precedent. “A condition precedent is a condition which must be performed before there is
formation of a contract binding on the parties.” Wasserman v. Autohaus on Edens, Inc., 202
Ill. App. 3d 229, 235, 559 N.E.2d 911 (1990). Plaintiff contends the evidence supported the
trial court’s finding where RCG waived the condition precedent.
¶ 22 The parties dispute the question presented on appeal and the applicable standard of
review. RCG contends the question is one of contract interpretation; therefore, we must apply
the de novo standard to the question of law. See Quake Construction, Inc. v. American
Airlines, Inc., 141 Ill. 2d 281, 288, 565 N.E.2d 990 (1990). Plaintiff, instead, contends the
question before us is one of fact because the trial court made factual determinations to
support its ultimate conclusion that plaintiff was an owner of RCG. See id. Plaintiff,
therefore, contends the trial court’s finding is subject to deference, such that it may not be
overturned unless it is against the manifest weight of the evidence. Lozman v. Putnam, 379
Ill. App. 3d 807, 820, 884 N.E.2d 756 (2008). We conclude that the initial question, namely,
whether plaintiff obtained an ownership interest in RCG pursuant to the terms of the
employment agreement, is one requiring the interpretation of the parties’ contract. Therefore,
we begin by reviewing the trial court’s decision de novo. Dallas v. Chicago Teachers Union,
408 Ill. App. 3d 420, 427, 945 N.E.2d 1201 (2011).
¶ 23 The main objective of contract interpretation is to ascertain the intention of the parties.
Thompson v. Gordon, 241 Ill. 2d 428, 441, 948 N.E.2d 39 (2011). In order to do so, a court
must look to the language of the contract as a whole, taken in context. Id. Where the terms
are unambiguous, a court must apply the language as written, given its plain, ordinary, and
popular meaning. Id.
¶ 24 The parties do not allege the employment agreement was ambiguous. We, therefore, must
turn to the express language of the contract to ascertain the parties’ intent. At issue is the
provision within the employment agreement that provides plaintiff with a right to purchase
equity in RCG. The provision stated: “In addition to the base salary ***, concurrent with the
execution of this agreement, Employee shall be entitled to acquire, at book value, a 2.5%
limited partnership interest in [RCG] ***. The acquisition of the aforementioned interests
shall be funded through a note.” Consequently, the employment agreement explicitly
provided that, in order for plaintiff to receive a 2.5% equity interest in RCG, he was required
to execute a note for the “book value” of that interest. There is no dispute that plaintiff failed
to execute a note for the “book value” of RCG. “A court will not interpret a contract in a
manner that would nullify or render provisions meaningless, or in a way that is contrary to
the plain and obvious meaning of the language used. [Citation.] Further, when parties agree
to and insert language into a contract, it is presumed that it was done purposefully, so that
the language employed is to be given effect.” Thompson, 241 Ill. 2d at 442. The parties

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 agreed on the language of the employment agreement. Plaintiff, therefore, agreed that, as a
condition precedent to obtaining his ownership interest, he was required to provide a note
to RCG for 2.5% of the company’s “book value.” Plaintiff did not comply with the terms of
the agreement and, consequently, did not purchase an ownership interest in RCG.
¶ 25 The parties included an integration clause in the employment agreement such that it
superseded any and all prior contracts, oral or written, and any changes to the agreements or
waivers thereof had to be in writing. “Where parties to a contract include an integration
clause, ‘they are explicitly manifesting their intention to protect themselves against
misinterpretations which might arise from extrinsic evidence.’ [Citation.] Thus, in
interpreting the contract, the court examines the language of the contract alone, without
considering extrinsic evidence of prior negotiations.” L.D.S., LLC v. Southern Cross Food,
Ltd., 2011 IL App (1st) 102379, ¶ 30. Accordingly, plaintiff’s testimony regarding the
negotiations of the terms of his employment, namely, that he left his prior employment
because of the ability to become an owner of RCG, is extrinsic evidence with no relevance.
Further, it is undisputed that the terms of the employment agreement were not modified in
writing nor that either party waived those terms in writing.
¶ 26 Notwithstanding, plaintiff argues that RCG waived the condition precedent through the
actions and deeds of Collins and Rosenthal, resulting in him obtaining the 2.5% ownership
interest. Primarily, plaintiff relies on three conversations taking place after the parties entered
the agreement during which Collins advised him that Collins was unable to ascertain the
“book value” of the company and, therefore, failed to provide plaintiff with the requisite
amount for the note. Plaintiff additionally argues that RCG’s actions supported a finding of
waiver where plaintiff continually received 2.5% distributions on a yearly basis.3
¶ 27 We recognize that “[a] party to a contract may waive performance of a condition
precedent by the other party where the condition precedent is intended for the benefit of the
waiving party.” Catholic Charities of the Archdiocese of Chicago v. Thorpe, 318 Ill. App.
3d 304, 309, 741 N.E.2d 651 (2000). Waiver may be established by conduct demonstrating
that strict compliance with the contractual provision will not be required. Whalen v. K mart
Corp., 166 Ill. App. 3d 339, 343, 519 N.E.2d 991 (1988). An implied waiver of a right may
be shown when the conduct of the person against whom waiver is asserted is inconsistent
with any intention other than to waive the right. Id.
¶ 28 The potential for waiver of a condition precedent through actions or deeds involves a
question of fact to which we defer to the trial court. Sosin v. Hayes, 258 Ill. App. 3d 949,
952, 630 N.E.2d 969 (1994). We will not overturn the judgment of the trial court unless it
is against the manifest weight of the evidence. Id. A trial court’s judgment is against the
manifest weight of the evidence when an opposite conclusion is apparent or when the
findings appear unreasonable, arbitrary, or not based on the evidence. Lozman, 379 Ill. App.
3d at 820.
¶ 29 We conclude the evidence supported the trial court’s finding that RCG did not waive its
right to a note for 2.5% of the “book value” of the company. We, however, conclude the trial

3
Up until 2002, when he began receiving 6.5% distributions.

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 court’s finding that plaintiff obtained 2.5% ownership interest without complying with the
condition precedent was inherently inconsistent with the finding of nonwaiver and, therefore,
was against the manifest weight of the evidence. Evidence supporting the finding that RCG
did not waive its right to receive the note at “book value” cannot also support a finding that
RCG provided plaintiff with his 2.5% ownership interest without first obtaining the note.
Because the court determined that RCG’s actions and deeds did not demonstrate an intent
to waive performance of the condition precedent, the employment agreement required
plaintiff to execute the note prior to receiving his equity interest. It is undisputed that
plaintiff did not execute the note; therefore, based on the evidence, plaintiff is not entitled
to 2.5% equity of RCG.
¶ 30 The record demonstrates the trial court’s findings were based on the fact that plaintiff had
received 2.5% distributions since 1997, that RCG failed to provide plaintiff with the “book
value” for his interest, and that RCG’s actions created an impossibility for plaintiff to
perform the condition precedent. We discuss the evidence related to those findings in turn.
¶ 31 RCG began paying plaintiff the disputed 2.5% in 1999. At that time, plaintiff was given
a bonus for his services with RCG beginning in 1997 and then was paid 2.5% through 2002,
when he began receiving 6.5% until his termination in 2004. The evidence demonstrated that
the additional 2.5% compensation was an annual profit sharing bonus and not an ownership
payout. Other employees were similarly compensated and there was no dispute that they were
nonowners. The trial testimony demonstrated that plaintiff’s distributions were included in
RCG’s monthly financial statements designated as “profit distribution.” Distributions made
to other nonowners were also included in these statements and were designated as such.
¶ 32 RCG was a limited liability company for the majority of the time at issue. There is no
dispute that the operating agreement named only Collins and Rosenthal as class A members
and, therefore, majority owners and managing members of RCG. Plaintiff was a nominal
owner as a class C member. Plaintiff’s class C nominal ownership did not afford him the
benefits and burdens commonly inured as a result of ownership. Distributions do not
necessarily create ownership. Ownership, instead, provides a member with company profits,
but also requires the owner to contribute to the company’s expenses and liabilities. There was
no evidence showing plaintiff was treated as a class A member; rather, plaintiff concedes he
was a class C member. Plaintiff did not purchase his 2.5% ownership interest. Further, there
was no evidence demonstrating that plaintiff was liable for the expenses or operating costs
of RCG. Tellingly, the operating agreement was signed by Collins and Rosenthal and was
not signed by plaintiff as an owner. The operating agreement provided class A members with
the right to authorize distributions, which Collins and Rosenthal did to plaintiff as well as
other members based on performance and various agreements with Collins and Rosenthal.
The operating agreement did not provide plaintiff with 2.5% ownership interest or 2.5% of
the liabilities of the company, and plaintiff unquestionably did not have 2.5% voting rights
for member decisions.
¶ 33 Rosenthal did testify, “anybody that got a profit allocation, got a profit allocation on what
we called up and down, which means that they shared both in profits and losses.” Horgan
clarified, however, that all class C members could be responsible for losses in the event of
a catastrophic incident wherein the capital contributions of the class C members could be

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 made available to creditors. Accordingly, the loss component was in line with plaintiff’s
responsibility as a class C member and not a result of obtaining equity interest. Moreover,
there was no evidence demonstrating plaintiff was responsible for losses over and above his
class C membership. In addition, Rosenthal testified that, in the event of the sale of the
company, he and Collins planned to provide plaintiff as well as other members a percentage
of the profits; however, the operating agreement did not provide the class C members with
the ability to participate in the sale of the company. Tellingly, the profit distribution to
plaintiff upon the sale of the company was discretionary.
¶ 34 The trial court’s ruling that RCG did not necessarily demonstrate an intent to provide
plaintiff with 4% equity by giving of an additional 4% in distributions from 2002 until 2004
further supports our decision related to the disputed 2.5%. Specifically, the trial court said:
“[Plaintiff puts] forth the proposition that there is an oral contract between the plaintiff,
Mr. Downs, and RCG by way of a conversation that Mr. Downs had with Mr. Rosenthal
regarding this four percent. Plaintiff also points out that subsequent to this conversation,
the plaintiff began to receive distributions in the amount of six and a half percent interest
in the business.
And I must say, gentlemen, that I don’t agree. I think there are some material facts
missing from a contract. I got the opportunity to listen to Mr. Rosenthal testify. And I
came away convinced that the parties failed to have a meeting of the minds, if you will.
I believe that the parties walked away from that meeting with two different ideas of what
was to take place. And so I just–I just don’t see or sense that there was truly a contract
formed by the conversation that these gentlemen had.”
¶ 35 Simply stated, the issuance of 2.5% distributions to plaintiff did not demonstrate plaintiff
was in fact a 2.5% equity owner of RCG. The trial court’s equitable decision to the contrary
was against the manifest weight of the evidence where the facts, as concluded by the court,
did not demonstrate that RCG waived the condition precedent required by the parties’
employment agreement.
¶ 36 Moreover, RCG’s failure to provide plaintiff with an accurate “book value” of the
company did not establish evidence of ownership. There is nothing in the employment
agreement showing that it was RCG’s burden to provide the “book value” to plaintiff. The
employment agreement merely required plaintiff to execute a note in the amount of 2.5% of
the “book value” of the company in order to obtain the same interest. “Book value” was left
undefined. Even giving deference to the trial court’s credibility finding regarding the three
conversations between plaintiff and Collins during which plaintiff attempted to execute a
note, nothing Collins said barred plaintiff from executing that note in the appropriate amount.
Plaintiff testified:
“Q. And why didn’t you give a note for book value for your two and a half percent
interest in RCG?
A. I attempted–I can recall three separate occasions I approached Mr. Collins about
the execution of a note, and for various reasons he said it wasn’t necessary.
Q. What was the first time you approached Mr. Collins about the note?
A. Shortly after I came over–I approached him and–said, Bob, I’d like to take care

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 of this. There’s an open issue in the book. And he said–it’s really hard to determine the
book value–I think the term was it’s not science, it’s art. And then he shared with me, in
terms of the receivable, he had a substantial receivable due from Mr. Rosenthal that
would affect the valuation of the company, in terms of book value; and he wanted
to–essentially, he said, that’s my responsibility, I got to take care of that. And he also
made reference that there was [sic] some additional amounts owed to him personally by
Mr. Rosenthal, and he was trying to figure out how to handle those.
Q. Was that the only time you and Mr. Collins discussed the topic of you giving a
note for your two and a half percent equity interest in RCG?
A. No. I had another conversation with him in 1998. Early 1998 I approached him
again, ‘cause I felt that, essentially, I owed Bob money. The interest came out of his side
of the allocation and–I wanted to pay my bills–I said, Bob, you know, I’d like to settle
this out, get this behind us–And he said, hey, focus on making money, focus on doing a
good job. That’s enough for me, don’t worry about it.
Q. Did you have any other discussions with him about executing a note for you equity
interest?
A. As we got down to the end of 1998, we were going to essentially dole out the
partner allocations–And I was going to give Bob the opportunity, if he felt that he was
entitled to a note or whatever he felt that he was appropriate, I just wanted to make sure
that I was forthright, in terms of coming to him and asking.
Q. What did he say?
A. Once again, he said don’t, you know don’t worry about it. I think he said you can
buy me lunch as a response.
Q. Did you buy him lunch?
A. Yes, I did.”
¶ 37 Plaintiff’s own testimony reveals that, although he offered to provide payment for the
ownership interest, nothing Collins said demonstrated that he would be given the ownership
interest without execution of the note. The conversations merely demonstrate Collins’ failure
to give the “book value.” Nothing prevented plaintiff from obtaining the accurate “book
value” by other means, especially when obtaining that information was the key to becoming
an owner of the company. The “book value” was ascertainable. Horgan, the CFO, testified
that he reported the “book value” on monthly financial documents. Plaintiff testified that his
definition of “book value” was based on the outstanding money Rosenthal owed the
company and the amount of equity Collins had in RCG. These figures could have been found
when plaintiff had the conversations with Collins. Plaintiff admitted as much when he
testified that “from a purely accounting standpoint” he had an idea of the “book value” at the
time of the conversations with Collins. The bottom line is plaintiff knew that he had an
obligation to pay 2.5% of the “book value” of RCG in order to obtain the same in equity
interest, and he took advantage of Collins’ lackadaisical approach when plaintiff inquired
into providing the requisite note. There is no testimony that plaintiff even actually tendered
a note to Collins or that Collins refused the tender. Plaintiff cannot, and has not, argued that
as a result of the conversations he thought that Collins’ offer to perform well and buy lunch

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 were acceptable substitutes to purchasing the ownership interest. Rather, plaintiff’s testimony
reveals that his attempts to perform his portion of the contract were limited to the three
conversations and if Collins “didn’t want to receive payment” then plaintiff was “thankful.”
¶ 38 Furthermore, the trial court’s finding excusing plaintiff’s performance of the condition
precedent on the basis of impossibility was erroneous. At the outset, we acknowledge
plaintiff’s argument that the trial court did not apply the doctrine of impossibility, but, rather,
used the term “in its lay sense.” Our review of the record and the context within which the
term was used, however, leads us to conclude that the trial court was applying the doctrine
of impossibility as a legal principle. The trial court said, “I believe that [plaintiff’s] lack of
performance was attributable to the impossibility of performing. And that impossibility was
as a result of the conduct of the defendants.” (Emphasis added.)
¶ 39 Impossibility of performance is a contractual doctrine excusing performance “where
performance is rendered objectively impossible due to destruction of the subject matter of
the contract or by operation of law.” YPI 180 N. LaSalle Owner, LLC v. 180 N. LaSalle II,
LLC, 403 Ill. App. 3d 1, 6, 933 N.E.2d 860 (2010) (citing Leonard v. Autocar Sales &
Service Co., 392 Ill. 182, 187, 464 N.E.2d 477 (1945)). “Impossibility of performance, as a
ground for rescission of a contract, refers to those factual situations where one party to a
contract finds that the purposes for which a contract was made have become impossible to
perform on one side.” 30 Samuel Williston & Richard A. Lord, A Treatise on the Law of
Contracts § 77:95, at 593 (4th ed. 2004). The doctrine “does not apply to excuse performance
‘as long as it lies within the power of the promisor to remove the obstacle of performance.’
[Citation.]” YPI 180 N. LaSalle Owner, LLC, 403 Ill. App. 3d at 8. Rather, application of the
doctrine “requires that the circumstances creating the impossibility were not and could not
have been anticipated by the parties, that the party asserting the doctrine did not contribute
to the circumstances, and that the party demonstrate that it has tried all practical alternatives
available to permit performance.” Illinois-American Water Co. v. City of Peoria, 332 Ill.
App. 3d 1098, 1106, 774 N.E.2d 383 (2002). Impossibility in the contractual sense is defined
as “[a] fact or circumstance that excuses performance because *** the method of delivery
or payment has failed.” Black’s Law Dictionary 824 (9th ed. 2009). Moreover, the doctrine
is applied only in narrow circumstances “ ‘due in part to judicial recognition that the purpose
of contract law is to allocate the risks that might affect performance and that performance
should be excused only in extreme circumstances.’ ” YPI 180 N. LaSalle Owner, LLC, 403
Ill. App. 3d at 6 (quoting Kel Kim Corp. v. Central Markets, Inc., 519 N.E.2d 295, 296 (N.Y.
1987)).
¶ 40 The doctrine of impossibility was not applicable in the case before us. There was no
destruction of the subject matter of the contract. See, e.g., Parker v. Arthur Murray, Inc., 10
Ill. App. 3d 1000, 1002-03, 295 N.E.2d 487 (1973) (after the plaintiff suffered injuries
rendering him incapable of continuing dance lessons, the court ruled he was entitled to
recovery of the prepaid sums). Rather, as previously discussed, it was within plaintiff’s
power to ascertain the “book value” for his equity interest; plaintiff contributed to his failure
to execute the note by not attempting to do so beyond merely mentioning on three occasions
that he had an open obligation. See American National Bank in De Kalb v. Richoz, 189 Ill.
App. 3d 775, 779-80, 545 N.E.2d 550 (1989) (although the defendants were prevented from

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 selling the property on which they held four outstanding notes to the plaintiff because the
plaintiff had changed the locks to the property, the doctrine of impossibility did not excuse
the defendants from performing their obligation to repay the notes because the property was
not an essential element to the parties’ contract). This was not a situation where Collins
prevented plaintiff from executing the requisite note or refused to accept a tendered note. See
Lukasik v. Riddell, Inc., 116 Ill. App. 3d 339, 346, 452 N.E.2d 55 (1983) (the plaintiff was
entitled to retirement benefits even though he did not work until the age of 65 as required by
the condition precedent where the plaintiff continued to work for the defendant as promised
until he was fired by the defendant, thus preventing him from performing the condition
precedent of remaining an employee until the age of 65); Barrows v. Maco, Inc., 94 Ill. App.
3d 959, 967-68, 419 N.E.2d 634 (1981). Here, there was no failure of delivery of payment
because there was no actual attempt at delivering payment.
¶ 41 Additionally, the trial court’s conclusion that plaintiff’s “lack of performance was
attributable to the impossibility of performing” is legally inconsistent with its finding that
defendant did not waive its right to the note. The trial court concluded that the actions of
Collins and Rosenthal did not demonstrate an intent to waive plaintiff’s requirement to
execute a note for the book value of the equity interest at issue. Importantly, plaintiff
conceded at trial that he was capable of generating the “book value”; therefore, it was not
impossible for him to perform his portion of the contract. The trial court’s ruling that the
same actions upon which it found no waiver somehow created an impossibility of
performance is legally inconsistent. See generally Mrowca v. Chicago Transit Authority, 317
Ill. App. 3d 784, 786, 740 N.E.2d 372 (2000) (legally inconsistent verdicts must be set aside
and a new trial granted). Simply stated, the evidence did not demonstrate impossibility.
¶ 42 Contrary to plaintiff’s assertion, the facts of this case are distinguishable from those in
Wasserman. In Wasserman, the appellate court concluded that a manager of a car dealership
was entitled to his shareholder status pursuant to the terms of the parties’ oral contract where
he provided the requisite capital for his percentage of ownership interest and the defendants
accepted the payment and filed documents reporting the capital and issuance of the
equivalent shares. The Wasserman court found that the execution of a written agreement
restricting transfer of the shares was not a condition precedent of the issuance of the shares
to the plaintiff but, rather, merely was a “buy-sell” agreement negotiated between the parties.
In the alternative, the court determined that the defendants waived any condition precedent
by accepting the payment and issuing the stock and were, therefore, estopped from denying
the benefits of shareholder status to the plaintiff where the defendants’ actions prevented the
execution of the written “buy-sell” agreement. Wasserman, 202 Ill. App. 3d at 236-39. In
comparison, the instant case indisputably involves a condition precedent that was not
complied with by plaintiff and does not involve principles of estoppel where plaintiff
received a salary as compensation for his performance of the employment agreement and was
not entitled to a 2.5% equity interest unless he complied with the condition precedent of
purchasing that interest at “book value.”
¶ 43 We do not come to our decision lightly. The judge, however, misapplied the law.
Moreover, we are mindful that plaintiff was a sophisticated business person. He had a law
degree and was a certified public accountant with decades of experience in the industry, who

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 left a self-described excellent job to join RCG and Prime as the CEO of both companies.
Plaintiff entered into a contract that plainly stated he was required to execute a note for the
“book value” of 2.5% of the company in order to obtain that percentage of ownership
interest. Plaintiff could have contracted for countless other terms to protect himself from the
situation at issue, but he did not. See generally Midwest Builder Distributing, Inc. v. Lord
& Essex, Inc., 383 Ill. App. 3d 645, 670-71, 891 N.E.2d 1 (2007) (sophisticated parties are
capable of bargaining for explicit contract terms). Plaintiff accepted the plain terms as
written and gambled that he would receive an ownership interest despite failing to execute
the note because of the relationship he enjoyed with Collins. Although the annual 2.5%
distributions give the specter of ownership where the percentage of ownership at issue
matched the distributions, as we stated previously, the distributions in and of themselves did
not establish ownership. The trial court seemingly agreed when it refused to find that plaintiff
obtained the additional 4% ownership despite receiving an additional 4% in profit
distributions.
¶ 44 Because we have found plaintiff was not a 2.5% owner of RCG, we conclude plaintiff
was not entitled to 2.5% profit/loss distributions since 2004 and, consequently, was not
entitled to prejudgment interest on that award. We, therefore, need not address those
arguments.

¶ 45 II. Additional 4% Ownership Interest
¶ 46 In his cross-appeal, plaintiff contends the trial court erred in concluding the parties did
not have an oral contract granting plaintiff an additional 4% ownership interest in RCG. In
the alternative, plaintiff contends he is entitled to damages pursuant to the doctrine of
quantum meruit.
¶ 47 Whether parties intended to enter into a contract is a question of fact left to the trial court
unless it is against the manifest weight of the evidence. Seymour v. Williams, 249 Ill. App.
3d 264, 270, 618 N.E.2d 966 (1993).
¶ 48 Plaintiff testified that in 2002 he had a series of brief conversations with Rosenthal in
which plaintiff requested a 4% increase equity distribution for his increased obligations that
began when Collins went on sick leave. Plaintiff also requested a 1.5% profit distribution for
two employees, Maureen Downs and Horgan. Plaintiff threatened that, if he and the other
two employees did not receive the increased interest, he would take Maureen and Horgan and
RCG customers to a competing company. Rosenthal testified that he agreed to provide the
increased distributions, but that they were “profit sharing” distributions and not equity. All
three distributions were recorded on the company’s monthly profit distribution schedules
without any indication of ownership or indication regarding the nature of the distributions.
It is undisputed that Maureen and Horgan were not equity owners of RCG.
¶ 49 “For an oral contract to be valid and enforceable, its terms must be definite and
consistent. [Citation.] When it appears that the language used or the terms proposed are
understood differently by the parties, there is no meeting of the minds and no contract exists.
[Citation.]” Martin v. State Farm Mutual Automobile Insurance Co., 348 Ill. App. 3d 846,
855, 808 N.E.2d 47 (2004). When confronted with an unresolvable ambiguity in a purported

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 contract, a court may conclude that the contract does not exist. People v. Cherry Valley
Public Library District, 356 Ill. App. 3d 893, 899, 828 N.E.2d 748 (2005).
¶ 50 The trial court concluded that, after hearing the witness testimony and reviewing the
transcripts,4 the parties did not have a meeting of the minds as to the character of the
additional 4%. The court recognized that subsequent to the conversation at issue plaintiff
began receiving an additional 4% in distributions; however, the court concluded that no
contract was formed because the parties did not agree on the character of the compensation.
Based on the evidence presented, we do not find that the trial court’s judgment was against
the manifest weight of the evidence.
¶ 51 Plaintiff contends, in the alternative, that he is entitled to additional compensation
pursuant to the doctrine of quantum meruit. Plaintiff argues that he would not have
performed the additional services for profit participation because he was interested in
growing his equity participation. Plaintiff maintains that the additional compensation he
received was inadequate for the additional services he rendered.
¶ 52 Plaintiff raised this equitable theory for the first time before this court. Issues not raised
before the trial court are waived on appeal. Greenwich Insurance Co. v. RPS Products, Inc.,
379 Ill. App. 3d 78, 85, 882 N.E.2d 1202 (2008). Plaintiff argues that it could not have raised
the equitable theory because he assumed the trial court would have concluded that the parties
had a contract for the 4% equity interest. We disagree. Plaintiff could have raised the theory
in the alternative as he has on appeal or could have asserted it in a motion to reconsider.
Waiver, however, is a restriction on the parties and not on this court. Catholic Charities of
Archdiocese of Chicago, 318 Ill. App. 3d at 311.
¶ 53 Plaintiff received 4% additional compensation in the form of profit distributions for his
additional services from 2002 until 2004. Specifically, the 4% increase provided plaintiff
with an additional $520,000 in compensation. Quantum meruit compensates for services
rendered. Bernstein & Grazian, P.C. v. Grazian & Volpe, P.C., 402 Ill. App. 3d 961, 979,
931 N.E.2d 810 (2010). Recovery is given for the reasonable value of services not
gratuitously rendered and to which the defendant benefits. Id. There is no dispute that
plaintiff was compensated for the additional services he rendered beginning in 2002. Plaintiff
fails to cite to any authority demonstrating that the doctrine of quantum meruit entitles him
to compensation in perpetuity. We, therefore, reject plaintiff’s quantum meruit claim.

¶ 54 CONCLUSION
¶ 55 We conclude that the judgment of the trial court finding that plaintiff owns 2.5% of RCG
and awarding him profits on a going-forward basis was against the manifest weight of the

4
Contrary to plaintiff’s assertion, the court was not required to determine which party’s
characterization of the distribution was correct in order to make a credibility determination. After
assessing the credibility of the parties, the court concluded that neither was on the same page. In its
oral ruling, the trial judge said, after reviewing Downs’ testimony, that he did not agree with Downs’
opinion regarding the formation of a contract for the additional 4% and that, after hearing
Rosenthal’s testimony, he was convinced that the parties did not have a mutual agreement.

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 evidence and must be reversed. We consequently reverse the trial court’s award of
prejudgment interest on that award. We, however, affirm the trial court’s judgment finding
that plaintiff did not obtain an additional 4% equity interest in the company.

¶ 56 Reversed in part; affirmed in part.

¶ 57 PRESIDING JUSTICE ROBERT E. GORDON, concurring in part, and dissenting in
part:
¶ 58 I concur with the portion of the majority’s opinion that affirms the trial court’s finding
that the parties did not have an oral contract to grant plaintiff an additional 4% ownership
interest in RCG. Supra ¶¶ 46-51. I also concur, for the reasons stated by the majority, with
the majority’s denial of plaintiff’s cross-appeal based on the doctrine of quantum meruit.
Supra ¶¶ 51-53.
¶ 59 However, I must respectfully dissent, for the reasons explained below, from the portion
of the majority’s opinion that reverses the trial court’s finding that plaintiff had a 2.5%
ownership interest.
¶ 60 As the majority observes, this is an issue about waiver. Supra ¶ 28. Waiver is established
by the conduct of the parties. Supra ¶ 28. It is a question of fact, and an appellate court can
overturn a trial court’s finding of waiver only if it is against the manifest weight of evidence.
Supra ¶ 28. There was certainly evidence here to support the trial court’s finding of waiver,
so it was not against the manifest weight. Supra ¶¶ 29-37 (where the majority discusses the
evidence and explains why it did not find the evidence as persuasive as the trial court did).
¶ 61 The trial court did list–as only one of its reasons supporting waiver–that plaintiff did not
execute the note because defendants made it “impossible,” or thwarted him, and thus waived
the necessity of executing the note at that time. It is clear that the trial court is using the word
“impossible” in the lay sense rather than as an attempt to invoke the formal, legal doctrine
of impossibility. That is why the trial court made no reference to the requirements or
elements of this legal doctrine. The fact that this doctrine is also known by other names, such
as the doctrine of impracticability and the doctrine of commercial frustration, makes it more
likely that the word may be used in a lay sense. Pancoe v. Singh, 376 Ill. App. 3d 900, 911
(2007) (using the terms “impossibility” and “impracticability” interchangeably in a
discussion of the doctrine); Illinois-American Water Co. v. City of Peoria, 332 Ill. App. 3d
1098, 1106 (2002) (discussing the very “similar” doctrines of “commercial frustration” and
“impossibility”).
¶ 62 Plaintiff makes this very argument, that the trial court used the word “impossible” in a
lay sense, and the majority rejects this argument by stating that its review of the record
convinced it that the trial court was referring to the doctrine–in other words, that the majority
found support for the doctrine in the record. Supra ¶ 38. But then the majority goes on to find
no support for the doctrine in the record, which is the very reason to think that the trial court
was not using it.
¶ 63 Given our standard of review, I cannot reverse based on these facts. As the majority

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 observed, the question of whether actions waived a condition precedent is a question of fact,
and we will not overturn the trial court’s factual finding unless it is against the manifest
weight of the evidence. Supra ¶ 28. A finding is against the manifest weight of the evidence
only when the opposite conclusion is readily apparent or when the finding appears to be
unreasonable, arbitrary, or not based on the evidence. Vancura v. Katris, 238 Ill. 2d 352, 386
(2010). “This deferential standard is grounded in the reality that the circuit court is in a
superior position to determine and weigh the credibility of the witnesses, observe the
witnesses’ demeanor, and resolve conflicts in their testimony.” People v. McDonough, 239
Ill. 2d 260, 266 (2010).
¶ 64 Here, the trial court listened to plaintiff’s testimony and believed him that there were
conversations between him and Collins that there was no need to execute the note at that
moment. Supra ¶¶ 9, 16, 36. In essence, according to Collins, it would be better to wait until
the whole debt situation with Rosenthal was cleared up. Supra ¶¶ 9, 16, 36. If you accept
plaintiff’s testimony, as the trial court did, then the trial court’s ruling makes perfect sense.
Since there was only a waiver of performance at that time, the trial court found both that
plaintiff received the 2.5% ownership interest and that he had to perform now.
¶ 65 For the above reasons, I would affirm the trial court’s ruling in its entirety.

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