INDEPENDENT TRUST CORPORATION v. HURWICK ITI (2004)

The plaintiff, Independent Trust Corp. (Intrust), brought suit against the defendants, Laurence W. Capriotti, Jack L. Hargrove, Alan L. Hurwick, ITI Enterprises, Inc. (ITI), and Wholesale Real Estate Services, Inc.¹ , alleging breach of contract, fraud, breach of fiduciary duty, and conversion.   The complaint also sought an accounting.   The circuit court granted Intrust's motions for summary judgment, and judgments in the amount of $68,096,551.78 ($68.1 million) were entered against each of the defendants.   The defendants, with the exception of Mr. Hurwick, appeal from the judgment of the circuit court.²

Messrs. Hargrove and Capriotti and the corporate defendants raise the following issues on appeal:  whether the circuit court erred when it denied the defendants' motions for a more particular statement of facts and bills of particulars and whether the circuit court erred when it granted the motions for summary judgment.   Mr. Capriotti raises an additional issue:  whether the circuit court erred when it denied Mr. Capriotti's motion to dismiss counts II, III and IV of the complaint.

FACTUAL BACKGROUND

Intrust was an Illinois corporate fiduciary organized under the Corporate Fiduciary Act (205 ILCS 620/1-1 et seq. (West 1998)) and was regulated by the Illinois Commissioner of Banks and Real Estate (the OBRE).³  In re Possession & Control of the Commissioner of Banks & Real Estate of Independent Trust Corp., 327 Ill.App.3d 441, 449, 261 Ill.Dec. 775, 764 N.E.2d 66 (2001) (Banks & Real Estate Corp.).   Intrust served as the custodian for various investment trust assets that its customers placed in its custody.   Banks & Real Estate Corp., 327 Ill.App.3d at 449-50, 261 Ill.Dec. 775, 764 N.E.2d 66.

On April 14, 2000, after Intrust failed to comply with its directions, the OBRE seized control of Intrust, appointed PricewaterhouseCoopers, LLP (PWC), as receiver and commenced an action for dissolution and liquidation of Intrust.   Banks & Real Estate, 327 Ill.App.3d at 451, 261 Ill.Dec. 775, 764 N.E.2d 66.

The complaint in this case, filed on June 1, 2000, stems from the discovery of a $68.1 million cash shortage from trust funds deposited for investment with Intrust.   See Banks & Real Estate Corp., 327 Ill.App.3d at 449, 261 Ill.Dec. 775, 764 N.E.2d 66.

The following facts are taken from the complaint, depositions, affidavits, and exhibits in the record.

Intercounty Title Company (Intercounty) was owned by ITI Enterprises, Inc. Mr. Capriotti was president of both ITI and Intercounty and was a director of Intrust.   Mr. Hargrove was a director of Intercounty and chairman of Intrust's board of directors. Mr. Hargrove owned Intrust through Intrust's parent company, Madison Avenue Investments, Inc. Mr. Hurwick was the chief financial officer (CFO) of ITI and Intercounty.

As of 1992, Intrust's board of directors had five members.   At the end of 1994, Intrust's board of directors consisted of Messrs.   Hargrove, Capriotti, and Gary Bertacchi, president of Intrust.

In 1990, Mr. Capriotti instructed Gary Irwin, then president of Intrust, to set up an escrow agreement whereby Intrust could deposit trust-holder funds into an escrow account managed and controlled by Intercounty.   Mr. Irwin had previously worked at Intercounty for Messrs.   Capriotti and Hargrove.   His salary at Intrust was paid by Intercounty.   In 1992, Mr. Irwin returned to work at Intercounty at the direction of Mr. Hargrove.

Under the escrow agreement with Intercounty, Intrust agreed to deposit funds with Intercounty.   In turn, Intercounty pledged that it would hold the funds in an interest-bearing account (the escrow account) at LaSalle National Bank (LaSalle Bank), unless and until it was specifically authorized by Intrust to remove the funds.   Other than the above provision, Intrust had no control over the escrow account.   Only Intercounty could remove funds from the escrow account.   On December 4, 1990, Intrust deposited funds in the escrow account in the amount of $16,582,098.78 with Intercounty.

In the performance of its regulatory function, the OBRE noted that Intercounty commingled the Intrust funds with its other funds.   In its February 28, 1994, report, the OBRE pointed out that the commingling created a breach of fiduciary duty and directed Intrust to insure that its deposits with Intercounty were segregated in a separate account.   However, the OBRE's May 2, 1995, report noted that the funds were still being commingled and that Intrust was not receiving statements directly from LaSalle Bank, relying instead on spreadsheets supplied by Intercounty.   The OBRE recommended that Intrust establish a separate trust account containing only cash which is the property of the various trusts.   At the July 25, 1995, Intrust board of directors meeting, Mr. Capriotti stated that he would contact Intercounty and make sure Intrust's funds were segregated from other funds.

On January 1, 1996, the OBRE again directed the segregation of Intrust's funds being held by Intercounty, and again, Mr. Capriotti agreed to have the funds placed in a separate LaSalle Bank account prior to the next OBRE examination.   Despite Mr. Capriotti's statement to the board of directors at the May 20, 1996, meeting that he was going to have the funds segregated, Intrust's funds remained commingled with Intercounty's funds.   Mr. Capriotti failed to respond to Mr. Bertacchi's repeated requests to place the funds in a segregated account.

On January 21, 1997, Mr. Bertacchi sent a memorandum to George Stimac, with copies to Messrs.   Capriotti and Hurwick, authorizing and directing him to deposit $54 million in Intrust escrow funds into the new segregated escrow account (segregated account) opened at LaSalle Bank. Despite another memorandum to Mr. Capriotti, Intrust's funds were still not transferred to the segregated account.

At the March 28, 1997, Intrust board meeting, Mr. Capriotti advised that the segregation process would be completed by the end of the second quarter of 1997.   On May 21, 1997, Mr. Bertacchi advised Mr. Hargrove of the difficulties he was having with Mr. Capriotti over the transfer of Intrust's funds to the segregated account.

At the June 6, 1997, board meeting, Mr. Capriotti advised that he was finalizing the segregation process and that it would be completed by the end of the second quarter.   On or before June 27, 1997, Mr. Bertacchi spoke with Mr. Capriotti, who told him he would send Mr. Bertacchi a copy of a bank statement for the segregated account.   On June 27, 1997, Mr. Bertacchi received a LaSalle Bank statement showing a balance of $54,894,943 in the segregated account, which corresponded with the amount that Intercounty should have had in Intrust's account, based upon the Intrust's history of deposits and withdrawals.   The LaSalle Bank statement was faxed, using an ITI fax cover sheet, and was sent by “Larry/Susan.”

On August 20, 1998, Mr. Bertacchi sent a memorandum to Mr. Hargrove, explaining that, despite the fax from “Larry and Susan,” Intrust's funds had never been transferred to the segregated account, and asked for his assistance.

On August 31, 1998, the OBRE issued another report in which it noted that Intrust did not hold signatory authority over the segregated account and did not receive bank statements from LaSalle Bank. The OBRE further noted the close relationship between the Intercounty and Intrust which, arguably, created a situation where the corporate fiduciary was benefitting from the trust funds, a violation of trust principles.   Intrust responded that its board had considered the comments and that Mr. Capriotti was taking steps to resolve the situation prior to the next audit.

Also, on or about August 31, 1998, Mr. Bertacchi received, either by fax or messenger, another LaSalle Bank statement from Intercounty, showing a balance of $54,840,466.02 in the segregated account.   In a September 15, 1998, letter to Mr. Bertacchi on ITI letterhead, Mr. Hurwick stated that Intercounty was holding $54,832,735.26 as of August 31, 1998.

At the December 10, 1998, Intrust board of director's meeting, the OBRE's report was discussed.   In Intrust's written response to the OBRE's August 31, 1998, report, Mr. Bertacchi advised the OBRE that Mr. Capriotti had indicated that he would take the necessary steps to satisfy the OBRE as to the segregated account situation.

In an April 6, 1999, memorandum to Mr. Capriotti, Mr. Bertacchi advised that Intrust had lost a large investment advisor because Intrust could not produce a nonqualified audit report and that he had not made any progress with Mr. Hurwick toward securing Intrust's control of the segregated account.

On April 21, 1999, Mr. Capriotti called Mr. Bertacchi and proposed that Intrust deposit $3.5 million into the segregated account.   According to the tape of the conversation with Mr. Capriotti, the transfer was necessary because Messrs.   Hargrove and Capriotti needed the funds in connection with a business project, but the funds would be returned to Intrust by April 30, 1999.

At the April 23, 1999, board of directors meeting, Mr. Capriotti indicated that he would like to see the balances at LaSalle Bank increased by $10 million.   The proposal was supported by Mr. Hargrove and, over the objection of Mr. Bertacchi, the board authorized another $5.7 million to be wire-transferred from Intrust to the segregated account.   According to the tape recording of the meeting, Messrs.   Capriotti and Hargrove claimed that they needed the money to secure more favorable interest rates on loans they had and that the funds would be returned to Intrust by April 30, 1999.

On April 21, 1999, Intrust wire-transferred $3.5 million into the segregated escrow account;  on the same day, Intercounty transferred the same amount out of the segregated escrow account.   On April 23, 1999, Intrust wire-transferred $5.7 million into the segregated escrow account;  again, on the same day, Intercounty transferred the same amount out of the segregated escrow account.   By May 1999, the funds had not been returned to Intrust, and Mr. Bertacchi's efforts to retrieve Intrust's funds were unsuccessful.

In May and June 1999, Mr. Bertacchi wrote to Mr. Hurwick requesting wire-transfers of $15 million and the $10 million from the segregated escrow account to Intrust, but received no response.   Mr. Bertacchi also wrote to Mr. Capriotti requesting the return of the $9.2 million and that control of Intrust's deposits be transferred to Intrust.   Finally, on August 3, 1999, Mr. Bertacchi wrote to Mr. Hurwick requesting proof that Mr. Binkowski and Mr. Bertacchi had been added as signatories on the segregated escrow account or, in the alternative, the funds in the segregated escrow account were to be placed in an account under the control of Intrust. On August 10, 1999, Mr. Hurwick responded that he could take no action until the matters were addressed and voted on by the Intrust board of directors.

Also on August 10, 1999, the OBRE issued another report, requiring the dissolution of the escrow agreement between Intrust and Intercounty.   At the August 24, 1999, Intrust board meeting, Mr. Capriotti stated that the funds from the segregated escrow account should be moved to a new account in Intrust's name at LaSalle Bank. On August 31, 1999, when Messrs.   Bertacchi and Binkowski went to LaSalle bank to set up the new account, they were informed that Intercounty had transferred all of its accounts to another bank.   Mr. Bertacchi again requested that Mr. Hurwick wire-transfer the Intrust funds held by Intercounty, but he failed to do so, even after Mr. Capriotti assured Mr. Bertacchi that he would direct Mr. Hurwick to transfer the funds.

On September 15, 1999, the OBRE issued a corrective action order to Intrust to terminate the escrow agreement with Intercounty and take control of the trust assets.   At a September 30, 1999, board meeting, Mr. Capriotti assured the Intrust board of directors that its funds were in no danger due to the fact that Intercounty was audited not only by its own auditors but by the title insurance company and their reinsurer, who in turn was audited by the Illinois Department of Financial Institutions.   The Intrust board sent a letter to the OBRE stating that the transfer of the funds to Intrust would take place no later than October 15, 1999.

The OBRE officials attended the November 9, 1999, Intrust board meeting.   Mr. Capriotti stated that he would direct LaSalle bank to send the OBRE copies of the signature card and bank statements for the previous six months.   He also stated that he would see to it that the segregated escrow account was closed, and the Intrust deposits returned to Intrust by November 20, 1999.   At a November 17, 1999, meeting with the OBRE, Mr. Capriotti reiterated that the account would be closed and the funds transferred that day.

In December 1999, Mr. Capriotti sent the OBRE a signature card, signed by Messrs.   Hurwick, Bertacchi, Capriotti for an account at LaSalle Bank in the name of Intrust as Trustee.   The OBRE also received a copy of a corporate resolution which purported to inform LaSalle Bank as to the signatory authority over the above account.   Included was a note stating that Messrs.   Capriotti and Hargrove would be working with LaSalle Bank to address the remaining questions concerning the escrow account.   Although Mr. Hurwick had signed the resolution, he held no position at Intrust.

By the beginning of 2000, the funds had still not been transferred.   Mr. Capriotti blamed the delay on problems encountered in opening the new account at LaSalle Bank. Mr. Capriotti assured the OBRE that Intrust had no problems and that the transfer delay was due to the unavailability of Intrust's president.

In January 2000, in a tape-recorded conversation, Messrs.   Capriotti and Hargrove instructed Mr. Bertacchi to deposit more Intrust funds into the segregated escrow account.   However, after Mr. Bertacchi threatened to resign, no transfer took place.   On February 4, 2000, Mr. Hurwick wrote to Mr. Bertacchi advising him that, as of December 31, 1999, Intercounty was holding $67,817,367.99 in funds belonging to Intrust.   On that same date, Mr. Capriotti told the OBRE that Mr. Hurwick had been the assistant treasurer of Intrust for two years, although Intrust had never employed Mr. Hurwick.

At the time Intrust was placed into receivership, there were no funds in the segregated escrow account.   After reviewing and analyzing the relevant Intrust, Intercounty and bank records, Patricia Tilton, a principal with PWC, concluded that the Intercounty monthly statements to Intrust had falsely reported to Intrust the balances that were actually in the escrow accounts and that the escrow accounts actually held far less money.   According to her affidavit, in most instances, Intercounty's monthly statements overestimated the amount of escrow funds being held by Intercounty by tens of millions of dollars.

Circuit Court Proceedings

Initially, the defendants responded to the complaint by filing demands for bills of particulars and moving for a more definite statement.   After those motions were denied, the defendants filed motions to dismiss pursuant to section 2-615 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615 (West 2000)).   After the denial of the motions to dismiss, the corporate defendants filed a “statement in lieu of answer” reiterating that they could not answer the complaint in its present form.   Messrs.  Hargrove and Capriotti filed answers asserting their fifth amendment privilege against self-incrimination.

Intrust filed separate motions for summary judgment against the corporate defendants, Mr. Hurwick, and Messrs.   Capriotti and Hargrove.

On February 27, 2001, the circuit court granted summary judgment in the amount of $68.1 million on count I (breach of contract) and on count II (fraud) in favor of Intrust and against the corporate defendants.   On July 31, 2001, the circuit court entered summary judgment in the amount of $68.1 million in favor of Intrust on counts III and IV (breach of fiduciary duty) and against Messrs.   Hargrove and Capriotti and on count II against Mr. Capriotti (fraud).

This timely appeal followed.

ANALYSIS

I. The Complaint

[Editor's Note:  Text omitted pursuant to Supreme Court Rule 23.]

[The following material is nonpublishable under Supreme Court Rule 23].

The following section is nonpublishable.

A. Standard of Review

A circuit court's rulings on the sufficiency of a complaint and on a motion to dismiss a complaint pursuant to section 2-615 of the Code are reviewed de novo.   See Rubino v. Circuit City Stores, Inc., 324 Ill.App.3d 931, 259 Ill.Dec. 156, 758 N.E.2d 1 (2001);  Carroll v. Faust, 311 Ill.App.3d 679, 684, 244 Ill.Dec. 291, 725 N.E.2d 764 (2000).

B. Discussion

1. Sufficiency of the Complaint

All of the defendants contend that Intrust's complaint violated section 2-603 of the Code (735 ILCS 5/2-603 (West 2000)).   They argue that the complaint failed to contain plain and concise statements of the causes of action alleged, that it failed to sufficiently define the issues involved and did not reasonably inform the defendants of the nature of the claims made against them.   The individual defendants further argue that it is unclear from the complaint in what capacity they are being sued.

The Code mandates that “ ‘[a]ll pleadings shall contain a plain and concise statement of the pleader's cause of action’ [citation] and that ‘[e]ach separate cause of action upon which a separate recovery might be had shall be stated in a separate count * * * and each [count] shall be divided into paragraphs numbered consecutively, each paragraph containing, as nearly as may be, a separate allegation’ [citation].”  Rubino, 324 Ill.App.3d at 938, 259 Ill.Dec. 156, 758 N.E.2d 1, quoting 735 ILCS 5/2-603(a), (b) (West 2000).   A complaint may be dismissed if it is drafted in such a manner as to render any attempt to answer futile.  Rubino, 324 Ill.App.3d at 938, 259 Ill.Dec. 156, 758 N.E.2d 1.

In Rubino, the reviewing court agreed with the circuit court that the plaintiff's 14-page, 23-count complaint, consisting of over 200 paragraphs failed to comply with section 2-603.   As an example, the court noted that many of the counts incorporated by reference various paragraphs from other counts.   The court stated as follows:

“Thus, plaintiff's complaint combines more than a dozen factual allegations into a single paragraph, i.e., count XX paragraph 1,4 rather than dividing them into separate paragraphs numbered consecutively and containing, as nearly as may be, a separate allegation as provided by statute.   In addition, the order of the incorporated paragraphs is nonsensical;  some of the class certification allegations fall before the identification of the parties or the allegations of fact giving rise to plaintiff's claim, and some fall after.   Also, plaintiff's subdivision of the paragraph drawn from count XVI paragraph 2, i.e., count IX paragraph 2, into subsections ‘a)’ through ‘d)’ is at best confusing, and at worst incomprehensible.”  Rubino, 324 Ill.App.3d at 940, 259 Ill.Dec. 156, 758 N.E.2d 1.

The court concluded that the complaint violated section 2-603 and made it impossible for the defendants to understand the plaintiff's allegations and adequately respond.  Rubino, 324 Ill.App.3d at 940-41, 259 Ill.Dec. 156, 758 N.E.2d at 8.

In Mueller v. Community Consolidated School District 54, 287 Ill.App.3d 337, 222 Ill.Dec. 788, 678 N.E.2d 660 (1997), the plaintiff's complaint alleged the same operative facts as giving rise to four distinct tort theories.   The reviewing court determined that nothing in the Code, including section 2-603, prohibited the plaintiff from “ ‘restating the same claimed acts and omissions' in each count if such acts or omissions give rise to liability under multiple theories of recovery.”  Mueller, 287 Ill.App.3d at 340, 222 Ill.Dec. 788, 678 N.E.2d 660.   The court concluded that because the plaintiff's complaint plainly and clearly attempted to allege four different causes of action, the plaintiff had fulfilled the requirements of section 2-603.  Mueller, 287 Ill.App.3d at 341, 222 Ill.Dec. 788, 678 N.E.2d 660.

In this case, the complaint set forth an extensive list of factual allegations as to the activities of the individual defendants and the corporate defendants.   The complaint then set forth in separate counts the various causes of action alleged against the defendants.   While each cause of action in Intrust's complaint referenced all of the factual allegations contained in the first 75 paragraphs of the complaint, each count clearly set forth the elements of the cause of action as well as a general statement as to the actions of the defendants pertinent to that count.   There is none of the referencing between counts that rendered the complaint in Rubino incomprehensible.

The purpose of section 2-603 is to give notice to the court and to the parties of the claims being presented.  Smith v. Heissinger, 319 Ill.App.3d 150, 154, 253 Ill.Dec. 543, 745 N.E.2d 666 (2001).   Complaints are to be liberally construed with an eye toward doing justice between the parties.  Smith, 319 Ill.App.3d at 154, 253 Ill.Dec. 543, 745 N.E.2d 666.   However, conclusions of fact will not suffice to state a cause of action regardless of whether they inform the defendant of the nature of the claim against him.  Grund v. Donegan, 298 Ill.App.3d 1034, 1039, 233 Ill.Dec. 56, 700 N.E.2d 157 (1998).   Nonetheless, a trial court should dismiss a cause of action on the pleadings only if it is clearly apparent that no set of facts can be proven which will entitle a plaintiff to recover.  Illinois Graphics Co. v. Nickum, 159 Ill.2d 469, 488, 203 Ill.Dec. 463, 639 N.E.2d 1282 (1994).

We are satisfied from our review of the complaint that Intrust clearly set forth causes of action against the defendants, supported by sufficient factual allegations, and fulfilled the requirements of section 2-603.   Unlike the defendants, we had no difficulty understanding in which capacity the defendants were being sued in the various counts of the complaint.   We find the defendants' criticisms of the complaint unwarranted.

We conclude that the circuit court did not err when it denied the defendants' motions to make the complaint more specific and for bills of particulars.

2. Section 2-615 Motion to Dismiss

Mr. Capriotti contends that the circuit court erred when it denied his motion to dismiss count II, alleging fraud, and counts III and IV, alleging breaches of his fiduciary duty to Intrust.

When the legal sufficiency of a complaint is challenged by a section 2-615 motion to dismiss, all well-pleaded facts alleged in the complaint are taken as true.  Carroll, 311 Ill.App.3d at 684, 244 Ill.Dec. 291, 725 N.E.2d 764.   On review of a section 2-615 dismissal, the reviewing court must determine whether the allegations in the complaint, when interpreted in a light most favorable to the plaintiff, sufficiently set forth a cause of action on which relief may be granted.  Carroll, 311 Ill.App.3d at 684, 244 Ill.Dec. 291, 725 N.E.2d 764.   The motion should be granted only if the plaintiff can prove no set of facts to support the cause of action asserted.  Carroll, 311 Ill.App.3d at 684, 244 Ill.Dec. 291, 725 N.E.2d 764.   This process does not require the reviewing court to weigh findings of fact and determine credibility, and as such, it is not required to defer to the trial court's judgment.  Carroll, 311 Ill.App.3d at 684, 244 Ill.Dec. 291, 725 N.E.2d 764.

a. Fraud

“ ‘To sustain a cause of action for fraud, plaintiffs must plead the following basic elements:  statements of material facts were made;  defendants must have known or believed such statements to be untrue;  plaintiffs had a right to rely or were justified in relying upon those statements;  the statements were made for the purpose of inducing plaintiffs to act or rely upon them;  and plaintiffs were damaged as a result of their reliance upon said statements.’   [Citations.]”  Prime Leasing, Inc. v. Kendig, 332 Ill.App.3d 300, 308-09, 265 Ill.Dec. 722, 773 N.E.2d 84 (2002).  “ ‘The facts which constitute an alleged fraud must be pleaded with specificity and particularity, including “what misrepresentations were made, when they were made, who made the misrepresentations and to whom they were made.” ’  [Citations.]”  Kendig, 332 Ill.App.3d at 309, 265 Ill.Dec. 722, 773 N.E.2d 84.

Initially, Mr. Capriotti argues that Intrust failed to state a cause of action for fraud against him based upon the piercing the corporate veil doctrine.

In count II, Intrust alleged that Mr. Capriotti, individually, made false statements regarding the status of escrow account to Intrust and that he made the statements with the intent to induce Intrust to deposit funds in the escrow account and with the intent to conceal the ongoing fraud.   See Allabastro v. Cummins, 90 Ill.App.3d 394, 45 Ill.Dec. 753, 413 N.E.2d 86 (1980) (where the corporate officers had personally instigated or participated in the breach of fiduciary duty, the trial court did not err in finding them personally liable). 5

Therefore, the sufficiency of count II as to Mr. Capriotti does not depend on piercing the corporate veil.

Mr. Capriotti further argues that because Intrust alleged that Messrs.   Hargrove and Capriotti controlled Intrust and that Mr. Hargrove knew of the alleged misappropriation, the alleged misrepresentations by Mr. Capriotti could not have been made for the purpose of defrauding Intrust, nor could Intrust have detrimentally relied on them.

A corporation is a legal entity separate and distinct from its shareholders, directors and officers.  In re Rehabilitation of Centaur Insurance Co., 158 Ill.2d 166, 172, 198 Ill.Dec. 404, 632 N.E.2d 1015 (1994).  “Fraud of officers or agents of a corporation, practiced against the corporation, although known to them, is not imputable to the corporation, where the corporation has not accepted the benefits or otherwise ratified the fraud.”   3 W. Fletcher, Private Corporations § 826, at 134 (rev.vol.2002).

Therefore, even if, as alleged, Mr. Hargrove knew of the misappropriation of the funds, that knowledge would not defeat the fraud action against Mr. Capriotti.

We conclude that count II stated a cause of action for fraud against Mr. Capriotti.

b. Breach of Fiduciary Duty to Intrust

In order to plead a cause of action for breach of fiduciary duty, a complaint must allege that:  (1) a fiduciary duty exists;  (2) the fiduciary duty was breached;  and (3) such breach proximately caused the injury of which the plaintiff complains.  Kendig, 332 Ill.App.3d at 313, 265 Ill.Dec. 722, 773 N.E.2d 84.

Mr. Capriotti acknowledges that he owed a fiduciary duty to the shareholders of Intrust but points out that as Mr. Hargrove was the sole shareholder of Intrust, Mr. Capriotti's fiduciary duty was owed only to Mr. Hargrove.   Since Mr. Hargrove allegedly participated in the misappropriation, Mr. Capriotti argues that he could not be said to have violated his fiduciary duty to Intrust.   He maintains that Intrust's allegation that he owed a duty to Intrust's account holders is an incorrect statement of the law.   See Johnson v. Edwardsville National Bank & Trust Co., 229 Ill.App.3d 835, 840, 171 Ill.Dec. 490, 594 N.E.2d 342 (1992) (“A fiduciary relationship does not exist as a matter of law between a bank and its depositors.   Rather, the relationship is simply that of debtor-creditor”).

Intrust was not a bank but a corporate fiduciary serving as custodian for various investment trust assets, including individual retirement accounts.   See Banks & Real Estate, 327 Ill.App.3d at 449-50, 261 Ill.Dec. 775, 764 N.E.2d 66.   Generally, a trustee owes a fiduciary duty to a trust's beneficiaries and is obligated to carry out the trust according to its terms and to act with the highest degrees of fidelity and utmost good faith.   Giagnorio v. Emmett C. Torkelson Trust, 292 Ill.App.3d 318, 325, 226 Ill.Dec. 693, 686 N.E.2d 42 (1997);  see also Masi v. Ford City Bank & Trust Co., 779 F.2d 397, 401 (7th Cir.1985) (individual retirement accounts are “special deposits that constitute a trust relationship wherein the Bank owes a fiduciary duty to the depositor”).

Therefore, Mr. Capriotti owed a fiduciary duty to Intrust's account holders.

Finally, Mr. Capriotti argues that Intrust has failed to allege any facts showing that it was subject to domination and influence on his part.   Johnson, 229 Ill.App.3d at 840, 171 Ill.Dec. 490, 594 N.E.2d 342 (no fiduciary duty will be found to exist absent facts showing that the depositor was subject to domination and influence on the part of the bank).   However, that requirement is not applicable here as the fiduciary relationship and accompanying duty exist as a result of Mr. Capriotti's position as a director of Intrust, a corporate fiduciary, not a bank.

We conclude that count III stated a cause of action against Mr. Capriotti for his breach of his fiduciary duty to Intrust.

c. Breach of Intercounty's Fiduciary Duty to Intrust

Mr. Capriotti argues that Intrust failed to allege sufficient facts to pierce the corporate veil and hold him liable for any breach of fiduciary duty to Intrust committed by Intercounty.   However, as was the case with count II, the allegations of count IV are not dependent on piercing Intercounty's corporate veil.   See Allabastro, 90 Ill.App.3d 394, 45 Ill.Dec. 753, 413 N.E.2d 86.

In count IV, Intrust alleged that Intercounty and Mr. Capriotti owed a fiduciary duty to Intrust, based on Intercounty's agreement to serve as escrow agent and trustee for Intrust.   In the allegations of fact, incorporated by reference into count IV, Intrust alleged that:  Mr. Capriotti failed to segregate Intrust's funds after being requested to do so by the OBRE;  Mr. Capriotti and another individual sent a LaSalle Bank statement to Intrust, which, on information and belief, Mr. Capriotti knew to be a forgery;  Mr. Capriotti failed to transfer control of the LaSalle account to Intrust, as requested by the OBRE;  at the direction of Mr. Capriotti and Mr. Hargrove, $9.2 million of Intrust's funds were wire-transferred to the Intrust's LaSalle account so that Intercounty could receive more favorable interest rates;  while Mr. Capriotti had stated the funds would be returned to Intrust, the money was never returned;  Mr. Capriotti falsely represented to Mr. Bertacchi that the Intrust funds had been placed in an account at ABN AMRO International, the parent company of LaSalle Bank, and that the funds would be transferred to an account at Cole Taylor Bank;  and Intrust and Mr. Capriotti continued to delay the transfer of Intrust's funds to an account controlled by Intrust.

The allegations of the complaint, if proven true, establish that Intercounty acted through Mr. Capriotti and that Mr. Capriotti personally participated in Intercounty's breach of fiduciary duty through his failures to protect Intrust's funds, his misrepresentations and his use of Intrust funds to benefit Intercounty.

We conclude that Intrust alleged sufficient facts to establish that Mr. Capriotti personally participated in Intercounty's breach of fiduciary duty to Intrust.   Therefore, count IV stated a cause of action against Mr. Capriotti.

In summary, we conclude that the circuit court did not err in denying Mr. Capriotti's section 2-615 motion to dismiss.

[The preceding material is nonpublishable under Supreme Court Rule 23].

II. Summary Judgment

The defendants contend that the circuit court's granting of Intrust's motions for summary judgment was erroneous.

A. Standard of Review

This court reviews motions for summary judgment de novo.  Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill.2d 278, 292, 258 Ill.Dec. 792, 757 N.E.2d 481 (2001).

We are aware that in Luu v. Kim, 323 Ill.App.3d 946, 256 Ill.Dec. 667, 752 N.E.2d 547 (2001), another panel of this court, while stating that summary judgment is reviewed de novo, nonetheless went on to state that the granting of summary judgment would be reversed only upon an abuse of discretion.  Luu, 323 Ill.App.3d at 952, 256 Ill.Dec. 667, 752 N.E.2d 547.   To the extent that Luu holds that the abuse of discretion standard applies to review of the granting of summary judgment, it is an incorrect statement of the law and should not be followed.   See Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992).

B. Discussion

Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.   Outboard Marine Corp., 154 Ill.2d at 102, 180 Ill.Dec. 691, 607 N.E.2d 1204.   In determining whether a genuine issue of material fact exists, a court must construe the pleadings, admissions and affidavits strictly against the movant and liberally in favor of the opponent.  Gilbert v. Sycamore Municipal Hospital, 156 Ill.2d 511, 518, 190 Ill.Dec. 758, 622 N.E.2d 788 (1993).

The defendants contend that the circuit court erred when it denied their evidentiary challenges to the motions for summary judgment and that genuine issues of material fact existed which required that the summary judgment motions be denied.

1. Evidentiary Matters

a. Supporting Affidavits

The defendants acknowledge that they did not obtain a ruling from the circuit court on their challenges to the affidavits filed in support of Intrust's motions for summary judgment.   The defendants maintain, however, that the circuit court ignored their challenges to the affidavits when granting the motions for summary judgment.

 “When a party moves to strike an affidavit filed in summary judgment proceedings, it is that party's duty to bring his motion to the attention of the trial court and to get a ruling on the motion.   Failure to obtain such a ruling will operate as a waiver of the objections to the affidavit.  [Citation.]”  Woolums v. Huss, 323 Ill.App.3d 628, 633, 257 Ill.Dec. 39, 752 N.E.2d 1219 (2001).

 However, in considering whether to grant a motion for summary judgment, the circuit court must determine the sufficiency of the affidavits, even in the absence of a motion challenging the affidavits.   See Jackson v. Graham, 323 Ill.App.3d 766, 774, 257 Ill.Dec. 330, 753 N.E.2d 525 (2001) (although evidentiary rulings are usually reviewed under an abuse of discretion standard, the granting of a motion to strike an affidavit as insufficient made in conjunction with a motion for summary judgment would be reviewed de novo).

Since our determination of whether summary judgment was properly granted in this case requires that we review the sufficiency of the affidavits, we will address the challenges raised by the defendants.

The defendants argue that the circuit court erred when it failed to grant their motions seeking to strike portions of the affidavit of James Binkowski and to strike the affidavit of Mark Vogel;  the affidavit of Michael Morehead, together with certain attached documents;  certain attachments to Intrust's motion for summary judgment against the corporate defendants;  and related portions of other affidavits.

The defendants challenge Mr. Vogel's and Mr. Binkowski's affidavits on the basis that they were insufficient to authenticate certain records offered in support of the summary judgment motions.

 For the admission of a business record, only proof that the records were made in the regular course of business and that it was in the regular course of business to prepare such records is necessary.  People v. Hagan, 199 Ill.App.3d 267, 287, 145 Ill.Dec. 322, 556 N.E.2d 1224 (1990), aff'd, 145 Ill.2d 287, 164 Ill.Dec. 578, 583 N.E.2d 494 (1991) (witness's testimony that she did not know how the record keeping worked and that the records only looked like they came from the bank she worked for was sufficient to establish admission of bank records).   The Vogel and Binkowski affidavits satisfied those requirements.

 The defendants also challenge the affidavits of Joy Hall, an Intrust employee, and Michel Morehead, an OBRE attorney, as insufficient to authenticate certain documents.   However, Ms. Hall's affidavit stated that she was familiar with the documents Intrust generated and that the documents she was authenticating were the types of records retained or generated as a normal part of Intrust's business.

 Ms. Hall's affidavit also referred to documents that were sent to Intrust by Intercounty.   Mr. Morehead's affidavit stated only that he received certain documents from Mr. Hurwick at Intercounty in response to a subpoena.   These documents were admissible as an admission of a party opponent.  Danville Polyclinic, Ltd. v. Dethmers, 260 Ill.App.3d 108, 114, 197 Ill.Dec. 620, 631 N.E.2d 842 (1994).

The defendants then challenge the affidavits of Ms. Tilton, of PWC, and Mr. Binkowski on the basis that their affidavits offered opinion testimony, although neither of them had been disclosed as an opinion witness in violation of Supreme Court Rule 213(g) (210 Il.2d R. 213).

 Since the defendants' challenge is based upon a violation of a supreme court rule and not the sufficiency of the affidavits, the defendants' failure to secure a ruling by the trial court waives the issue.  Woolums, 323 Ill.App.3d at 633, 257 Ill.Dec. 39, 752 N.E.2d 1219.

b. Tape and Transcripts of Telephone Conversations

In support of the summary judgment motions, Intrust submitted tape recordings and transcripts of the tapes of telephone conversations of Messrs.   Hargrove, Capriotti, Bertacchi and Hurwick.

Messrs. Hargrove and Capriotti contend that the circuit court should have suppressed the tape recordings since they were obtained in violation of the eavesdropping statute.   Intrust responds that the undisputed evidence established that Messrs.   Hargrove and Capriotti consented to the taping of their telephone conversations.

In Illinois, the eavesdropping statute provides that a person commits eavesdropping when he:

“[u]ses an eavesdropping device to hear or record all or any part of any conversation unless he does so (1) with the consent of all of the parties to such conversation.”  720 ILCS 5/14-2(a) (West 1998).

 Effective December 15, 1994, section 14-1(d) of the eavesdropping statute defined “ ‘conversation’ ” as “ ‘any oral communication between 2 or more persons regardless of whether one or more of the parties intended their communication to be of a private nature under circumstances justifying that expectation.’ ”  People v. Nestrock, 316 Ill.App.3d 1, 7, 249 Ill.Dec. 276, 735 N.E.2d 1101 (2000), quoting 720 ILCS 5/14-1(d) (West 1996).   Evidence obtained in violation of the statute is inadmissible in any civil or criminal trial, with the sole exception of trials for a person charged with violating the eavesdropping statute.  Nestrock, 316 Ill.App.3d at 7, 249 Ill.Dec. 276, 735 N.E.2d 1101;  720 ILCS 5/14-5 (West 1998).

Prior to the proceedings on the motions for summary judgment, Messrs. Hargrove and Capriotti filed motions to preclude the admission of the tape and the tape transcripts pursuant to section 14-5 of the Criminal Code of 1961 (720 ILCS 5/14-5 (West 2000)), supported by their affidavits.   In his affidavit, Mr. Hargrove denied that he had consented to the taping of any of his telephone calls to or from Intrust and that he was unaware that any of his calls had been tape-recorded.   He stated that, while he was aware of the taping system at Intrust in which a recorded call was preceded by an announcement to that effect, private lines, which were answered either by the person to whom the call was directed or directed to voice mail, were not part of the taping system.   In his affidavit, Mr. Capriotti stated that he was unaware that any of his conversations with Mr. Hargrove or Mr. Bertacchi were being recorded and that he never consented to the recording of those conversations.

In response, Intrust submitted the affidavit of Mr. Bertacchi and the affidavit and deposition testimony of James Jurewicz, an Intrust vice-president in charge of technology.   According to these affidavits, in 1996, Intrust's board of directors, which included Messrs.   Hargrove and Capriotti, sought and approved a new taping system which would record most, if not all, telephone calls.   In his deposition, Mr. Jurewicz stated that, prior to the recording of the telephone conversations admitted in this case, he had told Mr. Capriotti that all of Intrust's telephone lines were recorded.   Even though there were private lines that were answered by the person receiving the call or by voice mail, the private lines were all part of the taping system.

 It is the function of the trial court to determine the admissibility of evidence, and its rulings will not be disturbed absent an abuse of discretion.  People v. Buss, 187 Ill.2d 144, 219, 240 Ill.Dec. 520, 718 N.E.2d 1 (1999).   Here, however, the circuit court did not conduct an evidentiary hearing but decided the issue based upon the affidavits and the arguments of counsel.   When the trial court makes its determination based upon documentary submissions only, credibility is not a factor and, on review, we have before us all that was before the trial court.  Stojkovich v. Monadnock Building, 281 Ill.App.3d 733, 743, 217 Ill.Dec. 35, 666 N.E.2d 704 (1996).   When the only question before the court is the legal conclusion to be drawn from a given set of facts, and the credibility of the witnesses is not in issue, review of the trial court's holding is de novo.  Stojkovich, 281 Ill.App.3d at 743, 217 Ill.Dec. 35, 666 N.E.2d 704.

Intrust argues that undisputed evidence establishes that Messrs. Hargrove and Capriotti knew that all calls into and from the telephones at Intrust were recorded under the taping system installed in 1996, and, therefore, they consented to the recording of their telephone conversations.   See People v. Jenkins, 128 Ill.App.3d 853, 858, 84 Ill.Dec. 118, 471 N.E.2d 647 (1984) (where the victim could observe a police officer listening on an extension telephone, she “consented” to his act of listening to her conversation with the defendant).⁶

The affidavit and deposition evidence did not set forth a “given set of facts.”   Rather, the competing affidavits raised a fact question as to whether Messrs.   Hargrove and Capriotti were aware that their calls were being taped and placed the credibility of all of the affiants at issue.

 In light of the fact that the evidence was disputed as to whether Messrs.   Hargrove and Capriotti consented to the taping of their conversations, we conclude that the circuit court erred in denying their motions to preclude admission of the tape recordings and the tape transcript without an evidentiary hearing.

c. Privilege Against Self-Incrimination

Messrs. Hargrove and Capriotti maintain that their assertion of the privilege against self-incrimination cannot be a basis for liability in this case.

In granting the motion for summary judgment, Judge Hall stated as follows:

“Now, secondly, with respect to the question of adverse inferences that might be drawn from the plea of the Fifth Amendment in a civil case, the Court believes that it can draw those adverse inferences to the extent it might need to do so in this summary judgment context.

The Court believes however that there is evidence of a breach of fiduciary duty that is not reliance on drawing adverse inferences from a plea of the Fifth Amendment.”

 The fifth amendment does not prohibit an adverse inference against civil litigants who refuse to testify in response to probative evidence against them.  Gabriel v. Columbia National Bank of Chicago, 228 Ill.App.3d 240, 246, 170 Ill.Dec. 120, 592 N.E.2d 556 (1992).

In Gabriel, the court held that it was a violation of the defendant's constitutional right against self-incrimination to grant judgment on the pleadings for the defendant's invocation of the privilege in her answer to the complaint.  Gabriel, 228 Ill.App.3d at 248, 170 Ill.Dec. 120, 592 N.E.2d 556.   The court relied on National Acceptance Co. of America v. Bathalter, 705 F.2d 924 (7th Cir.1983), in which the court held that “ ‘even in a civil case, a judgment imposing liability cannot rest solely upon a privileged refusal to admit or deny at the pleading stage.   We conclude that defendant's claim of privilege should not have been deemed an admission, and that plaintiff should have been put to its proof, either by way of evidentiary support for a motion for summary judgment or at trial.’ ”  Gabriel, 228 Ill.App.3d at 247, 170 Ill.Dec. 120, 592 N.E.2d 556, quoting Bathalter, 705 F.2d at 932.

 In the context of a summary judgment motion, the court must construe the pleadings, admissions, and affidavits strictly against the movant and liberally in favor of the opponent.  Gilbert, 156 Ill.2d at 518, 190 Ill.Dec. 758, 622 N.E.2d 788.   While the circuit court could draw a negative inference from the assertion of the privilege at this stage of the proceeding, it could only grant summary judgment if there was evidentiary support of the motion as well.⁷  See LaSalle Bank Lake View v. Seguban, 54 F.3d 387 (7th Cir.1995) (in a summary judgment proceeding, the admission the assertion of the privilege against self-incrimination does not lead directly and without more to the entry of summary judgment but merely establishes the factual basis from which summary judgment analysis will proceed).

Therefore, in our review of the granting of the motions for summary judgment, we must determine whether there was sufficient evidentiary support for the motions for summary judgment in addition to the assertion of the privilege against self-incrimination.

d. Destruction of the Computer Hard Drive

[Editor's Note:  Text omitted pursuant to Supreme Court Rule 23.]

[The following material is nonpublishable under Supreme Court Rule 23].

The material in this section is nonpublishable.

The defendants maintain that certain of the documentary evidence in this case was taken from Mr. Bertacchi's computer.   The defendants questioned the authenticity of those documents and requested access to the hard drive of Mr. Bertacchi's computer.   While initially agreeing to make the hard drives available for forensic review, Intrust then informed the circuit court that the computers had been “reformated,” and no computer media would be available for review.

Intrust responds that it agreed to provide access to the computer hard drives, subject to a protective order.   However, the parties were unable to agree to the terms of the protective order as to the hard drives, and the defendants dropped their request.

The defendants dispute that they “dropped” their request for the computer hard drives but have provided no citation to the record as to where Intrust informed the court that the computers had been “reformated” even after Intrust called this oversight to their attention in its appellee brief.   The defendants also failed to cite any authority in support of their entitlement to review the computer hard drives.   Therefore, any issue in connection with the defendants' inability to examine the computer hard drives is waived.   See Official Reports Advance Sheet No. 21 (October 17, 2001), Rule 341(e)(7), eff. October 1, 2001.

[The preceding material is nonpublishable under Supreme Court Rule 23].

2. Genuine Issues of Material Fact

All of the defendants contend that issues of material fact precluded the granting of summary judgment in this case.   In light of our prior determinations in this case, we must decide if the granting of the summary judgments as to Messrs.   Hargrove and Capriotti was proper without the tape recording evidence.

a. Corporate Defendants

[Editor's Note:  Text omitted pursuant to Supreme Court Rule 23.]

[The following material is nonpublishable under Supreme Court Rule 23].

The material in this section is nonpublishable.

The corporate defendants argue, first, that a genuine issue of material fact exists as to whether Intercounty and ITI breached their contract with Intrust.

The corporate defendants maintain that there was no evidence that Wholesale Real Estate Services Inc., as opposed to Intercounty, was a party to the escrow agreement Intercounty was charged with breaching.   However, the record contains a copy of a document from the Illinois Secretary of State's office showing that Intercounty changed its name to Wholesale Real Estate Services, Inc. on August 1, 1997.

Next, the corporate defendants maintain that the escrow agreement was limited to the initial $16 million it was opened with, and that Intercounty had broad rights with respect to the use of the funds.   However, the escrow agreement clearly provided for additional deposits as well as the withdrawals of funds.   The broad rights given to Intercounty allowed it merely to commingle the funds with other escrows.   It did not alleviate Intercounty's responsibility to account for Intrust's funds in the escrow account.

The corporate defendants then argue that the summary judgment motion and supporting documents failed to provide clear and convincing evidence of fraud on the part of the corporate defendants.

To establish that the corporate defendants defrauded Intrust, Intrust was required to show:  statements of material facts were made;  the defendants must have known or believed such statements to be untrue;  the plaintiffs had the right to rely or were justified in relying upon those statements;  the statements were made for the purpose of inducing the plaintiffs to act or rely on upon them;  and the plaintiffs were damaged as a result of their reliance on said statements.  Kendig, 332 Ill.App.3d at 309, 265 Ill.Dec. 722, 773 N.E.2d 84.

In support of their argument, the corporate defendants offer little besides general criticisms of the evidence as conclusory in nature and consisting of inadequate affidavits.   The corporate defendants direct specific criticism at the affidavit and deposition testimony of Patricia Tilton.   The parties dispute the nuances of Ms. Tilton's deposition answer when she was asked whether she had any knowledge or information as to who took Intrust's money and where the funds went.   Her response, that the investigation was continuing and no conclusions had been reached as yet, did not fix blame on any of the defendants.   However, Ms. Tilton's affidavit and deposition testimony was but a part of the evidence that established that the corporate defendants had committed fraud in this case.

The uncontroverted evidence in this case established that both Intercounty and ITI sent statements to Intrust indicating balances in the escrow account that Intercounty and ITI knew did not exist.   The evidence further established that the corporate defendants intended for Intrust to rely on those statements so that Intrust would continue making payments into the escrow account and to cover up the depletion of the escrow account.   Finally, the evidence established damages to Intrust in that $68.1 million of Intrust's funds were missing.

Finally, the corporate defendants argue that Intrust could not maintain both a cause of action for breach of contract and fraud, utilizing the same facts.

A remedy based upon affirmance of a contract is inconsistent with a remedy arising out of the same facts and based on disaffirmance of the contract;  election of one remedy is an abandonment of the other.  SJS Investments. Ltd. v. 450 East Partnership, 232 Ill.App.3d 429, 432, 174 Ill.Dec. 1, 597 N.E.2d 1213 (1992).   The doctrine of election of remedies applies where double compensation is threatened, the plaintiff's conduct has misled the defendant causing the defendant to change his or her position in reliance on it, or the doctrine of res judicata is applicable.  SJS Investments, Ltd., 232 Ill.App.3d at 432, 174 Ill.Dec. 1, 597 N.E.2d 1213.

However, for one proceeding to operate as a bar to another, the remedies of each must proceed from opposite and irreconcilable claims of right and must be so inconsistent that a party could not logically assume to follow one without renouncing the other.  Casati v. Aero Marine Management Co., 90 Ill.App.3d 530, 536, 45 Ill.Dec. 789, 413 N.E.2d 122 (1980).   The doctrine of election of remedies is inapplicable, despite a history of inconsistencies, where no threat of double recovery exists, the defendant is not misled and has not changed his position in reliance on the plaintiff's conduct, and there is nothing about the action that would serve to bar the instant remedy by reason of res judicata.   Casati, 90 Ill.App.3d at 536-37, 45 Ill.Dec. 789, 413 N.E.2d 122.

Intrust did not seek to rescind its contract with the defendants, and therefore, the present case is distinguishable from those relied on by the corporate defendants.   Compare Estes v. Smith, 244 Ill.App.3d 681, 185 Ill.Dec. 335, 614 N.E.2d 469 (1993);  SJS Investments, Ltd.;  Wilbur v. Potpora, 123 Ill.App.3d 166, 78 Ill.Dec. 615, 462 N.E.2d 734 (1984).

Allegations that the defendants could breach a valid contract and do so by means of fraud are not logically inconsistent.   The defendants were not misled by the allegations of both causes of action, and res judicata would not have barred one remedy based upon a finding on the other.

Nonetheless, this is a situation where a double recovery is threatened.   The circuit court awarded $68.1 million in damages against both corporate defendants on both count I (breach of contract) and count II (fraud).   The basis for both the breach of contract and the fraud was the taking of Intrust's funds and the failure to return them.   Since Intrust was awarded damages under both counts, the circuit court was, in effect, awarding it $136.2 million in damages for the same conduct by the defendants.8  But see Kel-Keef Enterprises, Inc. v. Quality Components Corp., 316 Ill.App.3d 998, 250 Ill.Dec. 308, 738 N.E.2d 524 (2000) (trial court presented with a double recovery situation where a party was both excused from performing under an agreement and awarded damages for breach of the agreement).

We conclude that the circuit court correctly entered summary judgment against the corporate defendants on both the breach of contract and the fraud counts of the complaint.   However, this case must be remanded for Intrust to make an election on which count damages should be awarded.

[The preceding material is nonpublishable under Supreme Court Rule 23].

b. Mr. Hargrove

[Editor's Note:  Text omitted pursuant to Supreme Court Rule 23.]

[The following material is nonpublishable under Supreme Court Rule 23].

The material in this section is nonpublishable.

Mr. Hargrove contends that the circuit court erred in entering summary judgment against him for breach of fiduciary duty to Intrust based upon his position as a director of Intrust (count III) and his position as escrow agent (count IV).

i. Count III

Mr. Hargrove argues that as a director of Intrust, he owed a fiduciary duty to Intrust and its shareholders but not to the account holders.   We have previously rejected that same argument with respect to Mr. Capriotti.   See Banks & Real Estate, 327 Ill.App.3d at 449-50, 261 Ill.Dec. 775, 764 N.E.2d 66;  Giagnorio, 292 Ill.App.3d at 325, 226 Ill.Dec. 693, 686 N.E.2d 42;  see also Masi, 779 F.2d at 401.

In Shlensky v. South Parkway Building Corp., 19 Ill.2d 268, 166 N.E.2d 793 (1960), our supreme court outlined the duties and responsibilities of directors of a corporation as follows:

“ ‘The directors of a corporation are trustees of its business and property for the collective body of stockholders in respect to such business.   They are subject to the general rule in regard to trusts and trustees, that they cannot, in their dealings with the business or property of the trust, use their relationship to it for their own personal gain.   It is their duty to administer the corporate affairs for the common benefit of all the stockholders and exercise their best care, skill and judgment in the management of the corporate business solely in the interest of the corporation.  * * * It is a breach of duty for the directors to place themselves in a position where their personal interests would prevent them from acting for the best interests of those they represent.’  (Emphasis added.)”  Shlensky, 19 Ill.2d at 278, 166 N.E.2d 793, quoting Dixmoor Golf Club, Inc. v. Evans, 325 Ill. 612, 616, 156 N.E. 785 (1927).

Mr. Hargrove argues that, for purposes of its summary judgment motion, Intrust failed to establish that he violated his fiduciary duty owed to Intrust as a director.   While conceding that the $68.1 million is missing, he maintains that there is no evidence that he took Intrust's funds.

Intrust was not required to prove that Mr. Hargrove took Intrust's funds in order to establish that he violated his fiduciary duty to Intrust.   However, for purposes of summary judgment, it was required to establish, as a matter of law, that Mr. Hargrove did not use his best judgment in connection with the establishment and operation of Intrust's escrow account and did not act solely in the best interests of Intrust.

In count III, Intrust alleged that Mr. Hargrove violated his fiduciary duty to Intrust by using Intrust's assets to benefit Intercounty, an entity owned and controlled by Messrs.   Hargrove and Capriotti.9

In his affidavit, submitted in support of Intrust's motions for summary judgment, Mr. Bertacchi set forth Mr. Hargrove's activities in connection with the management of Intrust's escrow account, supported by the minutes of Intrust's board of directors meetings and memoranda sent by Mr. Bertacchi to Mr. Hargrove, informing him of the ongoing problems with Intrust's escrow account.

As described in Mr. Bertacchi's affidavit, Mr. Hargrove was present at Intrust board of directors meetings and agreed that Intrust's funds should be segregated from Intercounty's other escrows.10  As set forth in Mr. Bertacchi's affidavit and supported by the minutes of the board of director's meetings, however, it was Mr. Capriotti who assumed responsibility for establishing the segregated account and acknowledged that the escrow account was his responsibility.   Mr. Bertacchi continued to deal with Mr. Capriotti in connection with the escrow account and the difficulties in verifying that Intrust controlled the account and that its funds were actually deposited in the account.11  Mr. Bertacchi sent memoranda to Mr. Hargrove advising him of difficulties he was encountering in achieving control of Intrust's segregated escrow account and in obtaining copies of bank statements for the account, but that Mr. Hargrove failed to respond.

According to the minutes of the April 23, 1999, Intrust board of directors meeting, Mr. Capriotti proposed the transfer of $10 million in Intrust's funds to the LaSalle bank account.   Mr. Bertacchi opposed the transfer, but both Mr. Hargrove and Mr. Capriotti voted to approve the transfer.

In a memorandum, dated April 23, 1999, Mr. Bertacchi advised Mr. Binkowski that he had been instructed to transfer $5.7 million of Intrust's trust funds into the segregated account at LaSalle bank “in the name of Intercounty Title Company as escrowee” for Intrust. According to the memorandum, Mr. Bertacchi was assured that the funds would be returned by April 30, 1999.   The memorandum was acknowledged and signed by Messrs.   Hargrove and Capriotti.12  On May 5, 1999, and May 6, 1999, Mr. Bertacchi sent memoranda to Mr. Hargrove advising him that the funds had not been returned and seeking his help in obtaining the return of the funds.   He received no response from Mr. Hargrove.   According to Mr. Bertacchi, the $9.2 million was never returned to Intrust.   On June 21, 1999, Mr. Bertacchi sent another memorandum to Mr. Hargrove advising him of Mr. Capriotti's explanations regarding the Intrust funds.   He further advised Mr. Hargrove that the Intrust's funds must be transferred to its designated bank account, or Mr. Bertacchi would seek help from the regulators.

On September 30, 1999, Mr. Hargrove, together with Mr. Capriotti and Mr. Bertacchi, signed a report to the OBRE, which provided that, pursuant to Mr. Capriotti's instruction, Intrust's trust funds would be placed under the direction and control of the officers and directors of Intrust no later than October 15, 1999.   However, that did not take place.

The above evidence establishes that Mr. Capriotti was responsible for Intrust's escrow account and that Mr. Bertacchi's contacts were with Mr. Capriotti, rather than Mr. Hargrove, with regard to Intrust's escrow account.   Mr. Hargrove never opposed Mr. Bertacchi's requests for a separate escrow account for Intrust but left the details up to Mr. Capriotti.   While Mr. Hargrove voted to transfer the $5.7 million of Intrust's funds to Intercounty, there is no evidence that he knew at that time that the money would not be paid back or that a short term loan was adverse to the interests of Intrust.   Finally, Mr. Hargrove's failure to respond to Mr. Bertacchi's memoranda advising him of the problem with the escrow account is troublesome.   However, the evidence that Mr. Capriotti was responsible for the escrow and that Mr. Bertacchi dealt almost exclusively with Mr. Capriotti and Mr. Hurwick in regard to Intrust's escrow funds, raises genuine questions of material fact as to whether Mr. Hargrove breached his fiduciary duty owed as a director to Intrust. 13

ii. Count IV

Mr. Hargrove argues that, as only one director of Intercounty, he was not responsible for any wrongdoing by Intercounty since he lacked control of Intercounty's board of directors.   He further argues that as an Intercounty director, he may have owed a fiduciary duty to Intercounty but not to Intrust.

An escrowee has been described as a “ ‘trustee’ ” of both the party making the deposit and the party for whose benefit it is made.  Toro Petroleum Corp. v. Newell, 33 Ill.App.3d 223, 228, 338 N.E.2d 491 (1974).   As we previously observed, generally, a trustee owes a fiduciary duty to a trust's beneficiaries and is obligated to carry out the trust according to its terms and to act with the highest degrees of fidelity and utmost good faith.  Giagnorio, 292 Ill.App.3d at 325, 226 Ill.Dec. 693, 686 N.E.2d 42.   In this case, Intercounty acted as escrowee for Intrust and therefore, owed a fiduciary duty to Intrust's account holders.

“ ‘As a general rule, a corporate officer or director is not liable for fraud of other officers or agents merely because of his official character, but his [sic.] is individually liable for fraudulent acts of his own or in which he participates.’  [Citation.]”  Allabastro, 90 Ill.App.3d at 398, 45 Ill.Dec. 753, 413 N.E.2d 86.

The evidence in this case established that funds were removed from Intrust's escrow account with Intercounty without Intrust's consent.   The fact that the funds were not in Intercounty's escrow account where they were supposed to be established the breach of fiduciary duty by Intercounty.   However, based upon our review of the evidence discussed above, we determine that a genuine issue of fact as to whether Mr. Hargrove participated in Intercounty's breach of fiduciary duty exists.

Therefore, the circuit court erred in granting summary judgment on the breach of fiduciary duty counts as to Mr. Hargrove.

[The preceding material is nonpublishable under Supreme Court Rule 23].

c. Mr. Capriotti

Mr. Capriotti contends that genuine issues of material fact preclude summary judgment against him on the fraud and violation of fiduciary duty counts.

i. Fraud

 Mr. Capriotti contends that summary judgment should not have been granted in this case because fraudulent intent is normally a question of fact.   However, where the evidence of intent to defraud is unrefuted, summary judgment is appropriate.   See Home Savings & Loan Ass'n of Joliet v. Samuel T. Isaac & Associates, Inc., 99 Ill.App.3d 795, 806, 54 Ill.Dec. 768, 425 N.E.2d 985 (1981).

Mr. Capriotti maintains that a genuine issue of material fact exists as to whether he made any statements that he knew were false and were intended to induce Intrust to act and that Intrust relied on his statements.

Mr. Capriotti argues, first, that the minutes of the April 23, 1999, Intrust board meeting are unreliable because of the differences between the minutes and the transcript of the tape recording of the meeting.

The minutes of the April 23, 1999, Intrust meeting reflect that Mr. Capriotti brought up a review of the custodial trust funds depositories and proposed that $10 million be transferred from Intrust to increase the balance at LaSalle Bank account.   Over Mr. Bertacchi's objection, the motion passed.

Since we have determined that the tape recordings are not to be considered in our review of the granting of summary judgment, we cannot compare the differences between the written minutes of the April 23, 1999, Intrust board meeting and the transcript of the tape recording relied on by Mr. Capriotti.

However, we note that Mr. Capriotti signed the minutes he now claims are unreliable.   In addition, Mr. Bertacchi's memorandum to Mr. Binkowski that Mr. Capriotti and Mr. Hargrove requested that Intrust funds be transferred to Intercounty was signed by both Mr. Capriotti and Mr. Hargrove.

Next, Mr. Capriotti challenges the reliability of Mr. Bertacchi's affidavit.   He attacks Mr. Bertacchi's credibility by asserting that Mr. Bertacchi had a secret agreement with Intrust's receiver, that Mr. Bertacchi could not recall the circumstances surrounding the making of his affidavit, that Mr. Bertacchi made inconsistent statements as to an agreement he reached with the federal government and that Mr. Bertacchi violated his own fiduciary duty to Intrust by failing to follow up his request for the return of Intrust's funds.   Mr. Capriotti concludes that given the factual inconsistencies, he should have been permitted to question Mr. Bertacchi before a jury.

Other than finding it “incredible” that Mr. Bertacchi did not have an agreement with Intrust's receiver because Mr. Bertacchi was not sued, Mr. Capriotti offers no evidence indicating the existence of such an agreement.   While Mr. Bertacchi testified in his deposition that he had no agreement with the government, he did acknowledge receiving a proffer letter from the government.   Taken in context, Mr. Bertacchi's statements did not reflect negatively on his credibility.   Mr. Bertacchi's failure to recall the details of the making of the affidavit does not make its contents less truthful. Finally, Mr. Capriotti fails to provide a meaningful connection between Mr. Bertacchi's alleged breach of fiduciary duty and the allegations of fraud against Mr. Capriotti.

Next, Mr. Capriotti maintains that there is no evidence that he created a forged LaSalle Bank statement which was sent to Intrust.   He concedes that the document may be false but that there is no evidence that he was responsible for the fact that it was false.

According to Mr. Bertacchi's affidavit, at the May 20, 1996, Intrust board of directors meeting, Mr. Capriotti indicated that, in response to the OBRE's directive regarding the segregation of the Intrust escrow funds, he would have the funds segregated into a separate fund at LaSalle Bank. On or before June 27, 1997, Mr. Bertacchi spoke with Mr. Capriotti who indicated to him that he would send him a copy of a bank statement for the segregated escrow account.   On June 27, 1997, Mr. Bertacchi received a fax from ITI purporting to be a LaSalle Bank statement showing a balance of $54,894,943 in the account.   The fax cover sheet stated that it was from “Larry/Susan.”   The actual amount in the escrow account, as reflected in the May 31, 1997, statement to Intercounty, was $45,949.24.

The above evidence, standing by itself, stops short of establishing as a matter of law that Mr. Capriotti knew that the faxed document was forged.

In connection with the $9.2 million that was transferred from Intrust to the escrow account, Mr. Capriotti maintained that the reason for the transfer was to achieve better interest rates.   While the stated reason was perhaps an inappropriate one, given that the interest rate was to benefit Messrs.   Capriotti and Hargrove, nonetheless, there is no evidence that it was not the reason for the transfer.   Therefore, his statements to Mr. Bertacchi in this regard were not false and cannot support a claim of fraud.   While Mr. Capriotti did assure Mr. Bertacchi that the funds would be returned to Intrust, there is no evidence establishing that he knew that the funds would not be returned when he made the statement to Mr. Bertacchi.

 Without the tape recordings, the remaining evidence in support of summary judgment on the fraud count against Mr. Capriotti, even if considered with any adverse inferences from Mr. Capriotti's assertion of the privilege against self-incrimination, is insufficient for a determination that, as a matter of law, Mr. Capriotti defrauded Intrust.

We conclude, therefore, summary judgment against Mr. Capriotti on count II of the complaint must be reversed.

ii. Breach of Fiduciary Duty

Mr. Capriotti owed a fiduciary duty to Intrust's account holders.   See Banks & Real Estate, 327 Ill.App.3d at 449-50, 261 Ill.Dec. 775, 764 N.E.2d 66;  Giagnorio, 292 Ill.App.3d at 325, 226 Ill.Dec. 693, 686 N.E.2d 42;  see also Masi, 779 F.2d at 401.   Further, as noted above, in its role as “escrowee” for Intrust, Intercounty was a trustee of both Intercounty and Intrust and owed a fiduciary duty to the trust's beneficiaries, in this case, Intrust's account holders.

Mr. Capriotti contends that, for purposes of summary judgment, Intrust failed to establish that he violated the fiduciary duty he owed to Intrust as a director.   He maintains that the evidence failed to establish that he took the money from the escrow, relying on Ms. Tilton's deposition statement that the investigators had not yet reached any conclusions as to who took Intrust's funds or where the funds went.

 As was the case with Mr. Hargrove, it was not necessary to establish that Mr. Capriotti took Intrust's funds.   In order to prove a breach of fiduciary duty, Intrust was required to establish, as a matter of law, that Mr. Capriotti did not use his best judgment in connection with the establishment and operation of Intrust's escrow account and did not act solely in the best interests of Intrust.

According to Gary Irwin, president of Intrust from 1990 to January 1992, Mr. Capriotti instructed him to set up an escrow account, managed and controlled by Intercounty, and to deposit Intrust's funds to be transferred into that account.   According to Mr. Bertacchi's affidavit, when the OBRE informed him that Intrust's funds needed to be segregated from Intercounty's funds and controlled by Intrust, it was Mr. Capriotti who assumed responsibility for meeting OBRE's requirements.   However, Mr. Bertacchi's affidavit further establishes that Mr. Capriotti delayed the transfer of Intrust's funds into the segregated account, to be controlled by Intrust, for a substantial period of time.

The undisputed fact is that the Intrust's money is missing, and even if Mr. Capriotti did not take the money himself, the evidence established that his lack of diligence in segregating Intrust's funds from Intercounty's funds, despite the warnings and orders of the OBRE, was not in the best interest of the account holders.

We further conclude that the above evidence established, as a matter of law, Mr. Capriotti's personal liability for Intercounty's breach of fiduciary relationship as alleged in count IV.

Unlike Mr. Hargrove, the evidence established that Mr. Capriotti assumed responsibility for the escrow account, but he failed to act to insure the security of Intrust's funds by delaying compliance with OBRE's requirements for segregating Intrust's funds and failed to act when Intrust's funds were not repaid.   In short, the evidence establishes that Mr. Capriotti was directly and personally involved in Intercounty's breach of its fiduciary relationship to Intrust.

We conclude that the evidence establishes as a matter of law that Mr. Capriotti breached his fiduciary duties as a director of Intrust and that he participated in Intercounty's breach of its fiduciary duty to Intrust.   Therefore, the circuit court did not err in granting summary judgment to Intrust as to Mr. Capriotti on counts III and IV of the complaint.¹⁴

CONCLUSION

In summary, we vacate the circuit court's order denying suppression of the tape recordings and the tape transcripts and remand for an evidentiary hearing to determine the admissibility of the tapes and the transcripts.   We affirm the granting of summary judgment to Intrust as to the corporate defendants on the breach of contract and fraud counts of the complaint, but we vacate the damage awards made on those counts and remand to the circuit court for Intrust to make an election on which count damages are to be awarded.¹⁵ We reverse the granting of summary judgment to Intrust as to Mr. Hargrove on the breach of fiduciary duty counts.¹⁶  We reverse the granting of summary judgment to Intrust as to Mr. Capriotti on the fraud count.   We affirm the grant of summary judgment to Intrust as to Mr. Capriotti as to the breach of fiduciary duty counts.

Finally, we wish to reiterate that, at this stage of the proceedings, the circuit court may not draw any adverse inferences from Messrs.   Hargrove's and Capriotti's assertion of the privilege against self-incrimination.

The judgment of the circuit court is vacated in part, reversed in part, affirmed in part and remanded with directions.

Vacated in part and reversed in part and affirmed in part;  cause remanded with directions.

FOOTNOTES

1.   Prior to a change of name in 1997, Wholesale Real Estate Services, Inc., was known as Intercounty Title Company.

2.   In their appellant brief, Mr. Hargrove and the corporate defendants state that Mr. Hurwick died on May 12, 2002.

3.   The Office of Banks and Real Estate.

4.   “ ‘COUNT XX CLASS ACTION AGAINST CIRCUIT CITY1.  The plaintiff incorporates by reference paragraphs 3-6 of Count IX, Count XIX and ¶ 2 and 3 of Count XVI.2. The class action is appropriate under the Illinois Consumer Fraud and Deceptive Practices Act.' ” Rubino, 324 Ill.App.3d at 938, 259 Ill.Dec. 156, 758 N.E.2d 1.

5.   In its motion for summary judgment, Intrust explained that it had charged Mr. Hargrove with fraud under the piercing the corporate veil theory.   Therefore, Intrust was not proceeding against Mr. Hargrove on the fraud count because it had not charged Mr. Hargrove with personally committing the fraud, unlike Mr. Capriotti.

6.   While Jenkins was decided prior to the 1994 amendment, we find that its discussion of what constitutes “consent” is still relevant.

7.   In the context of standing in a forfeiture action, our supreme court has held that a claimant asserting the privilege against self-incrimination may suffer an adverse inference in the context of a motion attacking his standing.  People v. $1,124,905 U.S. Currency & One 1988 Chevrolet Astro Van, 177 Ill.2d 314, 226 Ill.Dec. 627, 685 N.E.2d 1370 (1997).

8.   At oral argument, counsel for Intrust acknowledged that Intrust was not arguing that judgment on both the breach of contract count and the fraud count entitled it to collect $136.2 million from the defendants.

9.   We note that, throughout these proceedings, both Mr. Hargrove and Mr. Capriotti deny that they controlled Intercounty.   However, the evidence of their actions on behalf of Intercounty in its dealings with Intrust belie that denial.

10.   Mr. Hargrove participated in the board meetings either by telephone or in person.

11.   Mr. Bertacchi also dealt with Mr. Hurwick on the transfer of Intrust's funds.

12.   An additional $3.5 million was transferred as requested by Mr. Capriotti in a taped conversation between Mr. Bertacchi and Mr. Capriotti.

13.   In his May 6, 1999, memorandum to Mr. Hargrove, Mr. Bertacchi, in explaining that the $9.2 million had not been returned, states, “but since it seems both you and I are stuck in the middle of this with little or no power to resolve it,” suggests that Mr. Hargrove return to Chicago “soon.”

14.   We note that in connection with the fiduciary duty counts, the circuit court specifically stated that it did not need to draw any adverse inferences based upon the assertion of the privilege against self-incrimination in light of the other evidence on those counts.

15.   Analysis is contained in the nonpublished portion of this opinion.

16.   Analysis is contained in the nonpublished portion of this opinion.

Justice HALL delivered the opinion of the court: