Goldstick v. ICM Realty
788 F.2d 456 (1986)
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Rule of Law:
A plaintiff may proceed to trial on theories of agency, promissory estoppel, or restitution, even if an express contract claim fails for indefiniteness, provided there are genuine issues of material fact regarding the existence of an agency relationship, a sufficiently definite promise that induced reliance, or the conferral of a benefit for which payment was reasonably expected.
Facts:
- ICM Realty (ICM) owned an apartment complex and leased it to John Kusmiersky, advancing him $1.5 million to operate the property and pay past-due real estate taxes.
- Kusmiersky retained the law firm of Goldstick and Smith (plaintiffs) on a contingent-fee basis to seek a reduction in the property's past-due taxes.
- ICM knew of and approved the contingent-fee arrangement with the plaintiffs.
- The plaintiffs successfully reduced the tax liability by approximately $870,000 and subsequently billed Kusmiersky for their $290,000 fee, which was never paid.
- To facilitate a transfer of the failing property to a new investor, Ted Netzky, Netzky required that the plaintiffs release their claim for legal fees.
- Kusmiersky first offered the plaintiffs a reduced fee of $250,000 payable over 10 years, which they refused.
- ICM then drafted a release stating the fee would be paid only out of future profits, which the plaintiffs also refused to sign.
- Kusmiersky then assured Goldstick that 'something would be worked out,' prompting the plaintiffs to sign the release, which allowed the deal with Netzky to close.
Procedural Posture:
- Plaintiffs Goldstick and Smith filed a diversity suit for breach of contract against John Kusmiersky, U.S. Managers Realty, Inc., and ICM Realty in the U.S. District Court for the Northern District of Illinois.
- Defendant ICM Realty moved for summary judgment against the plaintiffs.
- The district court (a court of first instance) granted ICM's motion for summary judgment.
- Plaintiffs settled their claims with defendants Kusmiersky and U.S. Managers.
- Plaintiffs Goldstick and Smith, as appellants, appealed the district court's grant of summary judgment in favor of appellee ICM Realty to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Does a genuine issue of material fact exist regarding whether a property owner (ICM) is liable for legal fees under theories of agency, promissory estoppel, or restitution, thereby making summary judgment in its favor improper?
Opinions:
Majority - Posner, J.
No. Summary judgment was improper because genuine issues of material fact exist regarding ICM's potential liability. The court's reasoning rests on several alternative theories. First, a question of fact exists as to whether Kusmiersky acted as ICM's agent when hiring the plaintiffs, which would bind ICM to the original fee contract. ICM's approval of the fee arrangement could be interpreted by a jury as evidence of agency or, alternatively, as a ratification of Kusmiersky's actions. Second, while the assurance that 'something would be worked out' is too indefinite to form a new express contract, it may support a claim for promissory estoppel. A jury could find this was an unambiguous promise that payment would not be contingent on profits, which foreseeably induced the plaintiffs to sign the release to their detriment. A promise can be enforceable under this doctrine if its 'minimum value' is clear, even if other terms are not. Finally, the plaintiffs may have a claim for restitution. By signing the release, they conferred a direct benefit on ICM by enabling the Netzky deal to close—a benefit for which a businessperson would normally expect payment. While restitution is not available for the original tax work (which was covered by an express contract with Kusmiersky), it may be available for the value of the release itself.
Analysis:
This decision clarifies that summary judgment is inappropriate in complex commercial disputes where plausible, alternative theories of liability exist, even if one theory like breach of express contract fails. The court's analysis of promissory estoppel is particularly significant, as it suggests a promise can be enforceable if its core assurance is clear (e.g., payment will not be contingent), even if specific terms like the payment schedule remain vague. This widens the door for promissory estoppel claims where negotiations fall short of a formal contract. The opinion serves as a reminder that fact-intensive questions, such as the existence of an agency relationship or reasonable reliance, are properly reserved for a jury, not a judge on a dispositive motion.
