Illinois Official Reports

Appellate Court

ICD Publications, Inc. v. Gittlitz, 2014 IL App (1st) 133277 Appellate Court ICD PUBLICATIONS, INC., Plaintiff and Counterdefendant- Caption Appellee, v. IAN GITTLITZ, Defendant and Counterplaintiff- Appellant.–IAN GITTLITZ, individually and derivatively, on behalf of ICD PUBLICATIONS, INC., Plaintiff-Appellant, v. CYNTHIA EVANS and DAVID PALCEK, Defendants-Appellees. District & No. First District, First Division Docket No. 1-13-3277 Filed December 29, 2014 Rehearing denied January 27, 2015 Decision Under Appeal from the Circuit Court of Cook County, Nos. 07-L-06836, Review 08-CH-40858; the Hon. Patrick J. Sherlock, Judge, presiding. Judgment Affirmed. Counsel on Ian Gittlitz, of Stony Brook, New York, pro se. Appeal Dykema Gossett, PLLC, of Chicago (Jonathan S. Feld, Mark J. Magyar, and John F. Rhoades, of counsel), for appellee. Panel JUSTICE CUNNINGHAM delivered the judgment of the court, with opinion. Presiding Justice Delort and Justice Harris concurred in the judgment and opinion. OPINION ¶1 from a September 27, 2013 order of the circuit court of Cook County following a bench trial in which the court entered judgment in favor of ICD Publications, Inc. (ICD), in the amount of $9,791,840 based upon Gittlitz’s breach of fiduciary duty and fraud. Gittlitz also appeals from the dismissal of his affirmative defenses and his claims against ICD alleging unjust enrichment and denial of his right to inspect ICD’s corporate books and records following his termination from the company. ¶2 BACKGROUND ¶3 ICD, an Illinois corporation which produced trade publications for the housewares industry, was founded in 1989 by Gittlitz, Cyndi Evans, and David Palcek, all of whom owned the company in equal one-third shares. Until 2007, Gittlitz served as ICD’s president and chief executive officer, and Gittlitz’s wife, Ellen, was employed as ICD’s administrative manager. Evans and Palcek were each senior vice presidents of the corporation; Evans was also ICD’s corporate secretary. ¶4 ICD had two main offices, one on Long Island, New York, and another in Illinois. Gittlitz and his wife worked at the New York office, where ICD’s financial records were maintained. As administrative manager, Ellen Gittlitz paid ICD’s bills from ICD’s checking account. ICD also maintained an American Express credit card for business expenses; credit card bills were sent to ICD’s New York office and were paid through ICD’s checking account. Gittlitz was the only shareholder of the three who carried an ICD corporate credit card. Evans and Palcek worked out of ICD’s office in Lincolnshire, Illinois, and did not have immediate access to ICD’s checkbook, bank account or credit card records. ¶5 From at least 2001 until his termination from ICD in 2007, Gittlitz engaged in a fraudulent practice of submitting improper expense reports seeking reimbursement for business-related expenses that he falsely claimed to have incurred. In these instances, Gittlitz charged certain expenses to the ICD corporate credit card account, which were then paid for by ICD directly. Nevertheless, Gittlitz also submitted reports of these same expenses to ICD as if he had personally paid them. Through this practice of “double dipping,” Gittlitz received improper “reimbursement” payments from ICD for expenses that he had not paid in the first place. ¶6 Apart from his expense report fraud, Gittlitz engaged in another form of embezzlement from at least October 2000 to 2007. Specifically, Gittlitz used ICD’s checking account to write himself checks, including many labeled as “advances,” for which he never repaid the company. Although ICD shareholders were permitted to take “advances” if they were later credited against actual, legitimate business expenses, Gittlitz simply took such “advances” for his own benefit. ¶7 Gittlitz’s business partners, Evans and Palcek, became suspicious of his activities in early 2007. In late January or early February 2007, Evans was reviewing an expense report

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submitted by Gittlitz. Coincidentally, at the same time Evans was reviewing a hotel reservation confirmation for an upcoming business-related event. Evans noticed that the last four digits of the ICD corporate credit card number on her hotel reservation matched the last four digits of the credit card number on a receipt submitted by Gittlitz for reimbursement. Evans became suspicious that Gittlitz was submitting expense reports for reimbursement of costs that had been paid through ICD’s credit card. ¶8 After Evans showed the documents to Palcek, they planned a meeting with Gittlitz on April 10, 2007 in Chicago. At that meeting, Palcek and Evans did not tell Gittlitz that they suspected him of committing fraud, but presented him with a letter in which they stated they were “no longer comfortable without having an internal financial reporting process in place with equal access to all information.” In the letter, they requested “to be better informed of the company’s financial standing *** and that a true and transparent checks and balance process be initiated.” At the meeting, Evans and Palcek requested that Gittlitz provide them with ICD bank and credit card statements for the prior year. Gittlitz responded that it would be burdensome to provide the previous 12 months’ worth of statements, but agreed to provide records for the two-month period of January and February 2007. ¶9 In April or May 2007, Gittlitz provided to Evans and Palcek the ICD financial statements for January and February 2007. Upon review of these records, Evans and Palcek discovered that Gittlitz had falsely altered hotel receipts from another ICD employee and submitted them for reimbursement as his own expenses. The records confirmed that Gittlitz had received reimbursements for expenses that had been paid using ICD’s credit card. ¶ 10 After confirming the false expense reports, Palcek and Evans contacted an accounting firm, Manning Silverman, to discuss changing ICD’s financial controls. Although they wanted to limit Gittlitz’s control over the company’s finances, at that time Evans and Palcek still desired that Gittlitz, their business partner of nearly 20 years, would remain as ICD’s president. ¶ 11 With the assistance of the Manning Silverman firm, Evans and Palcek drafted an agreement which would change control of the company’s finances while retaining Gittlitz as president. The agreement was drafted in the form of a letter agreement from Evans and Palcek to Gittlitz with the subject heading “ICD Publications Change of Financial Controls” (the CFC agreement). The CFC agreement recited that Evans and Palcek “believe there is a need for immediate change of financial controls” as “the possibility exists that certain Shareholders may have been disenfranchised from funds properly due them.” The CFC agreement stated its goal was “to effect immediate change in the financial controls of ICD that allow for its continuity.” ¶ 12 The agreement set forth numerous “Changes in Organization,” including the addition of Evans and Palcek as signatories on ICD’s bank and credit card accounts, as well as the transfer of accounting and bookkeeping functions from Gittlitz and his wife to the Manning Silverman firm. The agreement also called for Ellen Gittlitz to retire from ICD and stated that she would no longer be a signatory on ICD’s accounts. However, the CFC agreement specified that Ian Gittlitz was to “retain[ ] all other duties as President” of the company. ¶ 13 Following the proposed changes, under the heading “Restitution,” the document specified that Evans and Palcek would “appoint an independent auditor to determine the amount of restitution owed by [Gittlitz].” Furthermore, under the heading “Confidentiality,” the document stated that: “Cyndi [Evans] and Dave [Palcek] agree not to seek legal remedies, either criminally or civilly, nor involve the IRS in any findings as it specifically relates to the

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misuse of company funds provided restitution is made.” The CFC agreement also provided that the matter “w[ould] not be discussed outside of the Shareholders” and their advisors. ¶ 14 Evans and Palcek scheduled a meeting with Gittlitz on May 7, 2007, when all three would be in Orlando, Florida, to attend an industry trade show. Evans and Palcek did not notify Gittlitz about their suspicions or the CFC agreement before the meeting, and both testified that they did not sign the agreement prior to the meeting. ¶ 15 Evans and Palcek questioned Gittlitz at the May 7, 2007 meeting regarding the accuracy of his expense reports. Initially, Gittlitz denied any wrongdoing. However, after Evans and Palcek showed him documents proving that he had altered a receipt from another ICD employee, Gittlitz became emotional and admitted to falsifying the receipt. According to Palcek’s and Evans’ trial testimony, Gittlitz expressed remorse and claimed that this fraud “ha[d]n’t been going on for that long” and that it “hasn’t [involved] a lot of money.” Evans testified: “Ian convinced us at that moment that this was a short period of time, was a limited amount of money.” Although Gittlitz admitted to submitting invalid expense reports at that meeting, he did not disclose to Evans or Palcek that he had also been embezzling from ICD by writing himself “advance” checks for many years. ¶ 16 Palcek and Evans showed Gittlitz the CFC agreement they had drafted. Evans testified that she told Gittlitz that “if you agree to this, then we’ll move on,” as “we wanted to keep [Gittlitz]. We did not want to disrupt the company.” Evans and Palcek signed the agreement at the meeting. Gittlitz did not sign immediately, but asked to return it the next day after speaking with his wife. The following day, May 8, 2007, Gittlitz met with Evans and signed the CFC agreement. At that time, he again told Evans that his misconduct had not involved a great deal of money and had been for a “short period of time.” ¶ 17 After the meeting with Gittlitz, and pursuant to the CFC agreement, Evans and Palcek hired the accounting firm Lasko and Associates (Lasko) to conduct an audit to determine the amounts that Gittlitz owed ICD. To further the audit, Lasko informed Evans that she could request access to ICD’s bank records in her capacity as secretary of the corporation. Evans called ICD’s bank and requested a copy of ICD’s file. The bank initially denied Evans’ request, as its records indicated that Ellen Gittlitz, not Evans, was ICD’s corporate secretary. Surprised, Evans faxed to the bank a board resolution that identified her as ICD’s corporate secretary. The bank eventually provided Evans with ICD’s file in early June 2007. ¶ 18 Upon reviewing the bank file, Evans and Palcek were astonished to find that it contained a purported account signature card that falsely listed Ellen Gittlitz, rather than Evans, as the corporate secretary, and that Evans and Palcek had been removed as signatories on ICD’s bank account. In addition, the file contained a fraudulent ICD corporate resolution, dated November 2006, which falsely listed Ellen Gittlitz as ICD’s corporate secretary, incorrectly stated ICD was a New York rather than an Illinois corporation, and recited a purported July 1999 board of directors meeting that had never occurred. These items had never been mentioned by Gittlitz to either Evans or Palcek. ¶ 19 In addition, the bank records also showed that, in March 2007 alone, Gittlitz had written to himself over $80,000 in checks from ICD’s checking account, most of which were labeled as “advances,” with no record of repayment to ICD. The bank records revealed that since at least October 2000, Gittlitz had paid himself more than one million dollars in such “advances.” ¶ 20 Gittlitz, Evans, and Palcek next met on June 21, 2007. At that meeting, Gittlitz revealed that he intended to purchase a company known as Travel Trade, which he described as a

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“production” company. Gittlitz told Evans and Palcek that in order to work on the Travel Trade purchase, he wished to change his role at ICD from president to “chairman” of the company and would agree to a reduced salary. He had not previously mentioned Travel Trade to Evans or Palcek. Upon further questioning about Travel Trade, Gittlitz admitted to Evans and Palcek that the company was, like ICD, a business-to-business publication company. Evans and Palcek subsequently learned that Gittlitz had been negotiating the Travel Trade transaction for several months. Although Gittlitz had learned of the Travel Trade opportunity in his capacity as ICD’s president, he had not previously disclosed the potential opportunity to Evans or Palcek. ¶ 21 After the June 21, 2007 meeting, Evans and Palcek concluded they had cause to terminate Gittlitz from ICD based on fraud, embezzlement, and their belief that he had usurped the Travel Trade opportunity to the detriment of ICD. Through a corporate resolution dated July 2, 2007 signed by Evans and Palcek, ICD terminated Gittlitz for cause, citing that Gittlitz “committed various acts involving dishonesty or fraud with respect to [ICD] including *** submitting and approving false expense reports, utilizing corporate funds to pay personal expenses,” “usurping corporate opportunities,” and “presenting false statements and corporate resolutions to the corporation’s bank.” Also on July 2, 2007, ICD filed a complaint against Gittlitz in the circuit court of Cook County. That complaint alleged counts of: (1) breach of fiduciary duty; (2) usurpation of corporate opportunity; (3) corporate computer misuse; (4) misuse of personnel; and (5) fraud. ¶ 22 On July 10, 2007, through another ICD corporate resolution signed by Palcek and Evans, they elected to purchase Gittlitz’s shares in the company on an involuntary basis. The resolution cited the “Amended and Restated Shareholders’ Agreement of ICD Publications, Inc.,” dated May 20, 2003 (shareholders agreement), which specifies that ICD has the right to repurchase a terminated employee’s shares at “book value.”1 The ICD resolution scheduled a closing of the transaction for September 10, 2007. On July 18, 2007, Gittlitz, through his legal counsel, advised ICD that he “contest[ed] the validity of the Board Resolutions setting up this sale.” At the same time, Gittlitz demanded to inspect ICD’s corporate books and records, including all records related to ICD’s lawsuit against him. As Gittlitz refused to transfer his shares, ICD subsequently amended its complaint to add a count seeking specific performance of the stock repurchase terms of the shareholders agreement. ¶ 23 On March 17, 2008, Gittlitz answered the amended complaint and also asserted various affirmative defenses and counterclaims. In those and subsequent pleadings, Gittlitz claimed that the CFC agreement constituted a binding settlement and release, and that Evans and Palcek had breached this contract by suing Gittlitz and failing to keep the matter confidential. On June 16, 2008, Gittlitz filed amended counterclaims against ICD and an amended third-party complaint against Evans and Palcek, which asserted that Gittlitz had been denied his statutory right as a shareholder to inspect ICD’s books and records after his termination. On August 1, 2008, Gittlitz filed an amended verified counterclaim which added a claim of

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“anticipatory breach of contract” with respect to the shareholders agreement, claiming that ICD was not entitled to buy back his shares for “book value.” ¶ 24 On October 29, 2008, Gittlitz filed a separate complaint instituting a new case, pleaded as a purported derivative action “on behalf of ICD” against Evans and Palcek. That pleading alleged that Evans and Palcek had committed breaches of fiduciary duty, fraud, and other torts arising out of the CFC agreement, Gittlitz’s termination, and ICD’s attempt to repurchase his stock. That separate action was later consolidated with ICD’s initial lawsuit against Gittlitz. ¶ 25 On March 9, 2011, Gittlitz filed yet another counterclaim alleging his entitlement to his share of undistributed profits retained by ICD. In that pleading, Gittlitz alleged that ICD became a subchapter S corporation under the Internal Revenue Code in 2000 and that he had since paid taxes on his one-third share of ICD’s taxable income, although such amounts had not been distributed to him. He alleged that his portion of undistributed ICD profits totaled more than $1 million. Gittlitz further claimed that the three shareholders “orally agreed to leave the three individuals’ monies in the corporation but each of them could require payment of their monies upon demand,” and that every year the agreement was renewed by telephonic meetings. Gittlitz thus claimed ICD had deprived him of his share of undistributed ICD funds. The counterclaim pleaded breach of contract against ICD, Evans, and Palcek, as well as “unjust enrichment” against ICD for its retention of the funds. ¶ 26 The same pleading also asserted two new affirmative defenses. First, Gittlitz argued that the provision of the shareholders agreement allowing ICD to purchase Gittlitz’s shares of the company at “book value” was an “unenforceable penalty.” Second, Gittlitz asserted that the election of remedies doctrine precluded ICD from recovering monetary damages as well as obtaining specific performance of the stock repurchase provisions. ¶ 27 Pending this civil proceeding, in 2009 Gittlitz was arrested and indicted in Lake County, Illinois for committing theft against ICD. See 720 ILCS 5/16-1(a)(1)(A) (West 2008). On October 6, 2011, Gittlitz pleaded guilty to one count of Class 3 felony mail fraud with respect to his submission of fraudulent expense reports. See 720 ILCS 5/17-24(b)(1) (West 2010). That plea specified that between October 2001 and June 2007, Gittlitz “submitted by mail personal expense reports for reimbursement *** knowing such expense reports to be fraudulent” and that he received reimbursement when he “knew these same expenses had been previously paid for with an ICD Publications American Express credit card” and that he “did so with the intent to defraud [ICD’s] officers and shareholders.” In conjunction with that plea, Gittlitz admitted that he had stolen $250,000, and he paid restitution in that amount to compensate ICD. Notably, his embezzlement through the writing of illegitimate “advances” to himself from the ICD account was not referenced in that criminal plea. ¶ 28 On November 3, 2011, the trial court in this action dismissed counts I through V of Gittlitz’s purported derivative complaint against Evans and Palcek and the first four counts of his amended counterclaims against ICD, including his counterclaims for breach of the CFC agreement and anticipatory breach of the shareholders agreement. ¶ 29 On December 22, 2011, ICD moved for partial summary judgment to establish Gittlitz’s liability with respect to ICD’s counts of breach of fiduciary duty, common law fraud, and specific performance. At the same time, ICD moved for summary judgment to dismiss those counts of Gittlitz’s counterclaim and derivative complaint regarding ICD’s alleged refusal to allow his inspection of corporate books and records. ICD also moved for summary judgment with respect to Gittlitz’s affirmative defense asserting a “release” in the CFC agreement.

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¶ 30 On July 3, 2012, the trial court granted summary judgment in favor of ICD with respect to the counts of breach of fiduciary duty and fraud. However, the court found that trial was necessary to determine remaining “issues of reasonable reliance regarding misrepresentations” surrounding the parties’ entry into the CFC agreement, as well to determine damages. The July 3, 2012 order also granted ICD’s summary judgment motion to dismiss Gittlitz’s claims that ICD wrongfully denied his right as a shareholder to inspect corporate books and records. However, Gittlitz’s additional counterclaim for unjust enrichment regarding his share of undistributed ICD corporate profits remained. ¶ 31 On August 17, 2012, the trial court entered an order finding–contrary to Gittlitz’s contention that an earlier employment agreement entitled him to “market value” for his shares of stock–“that the 2003 Shareholders’ Agreement provision for the repurchase of shares at Book Value” governed ICD’s count seeking specific performance. On September 28, 2012, the court granted summary judgment for ICD on that count, finding that Gittlitz breached the shareholders agreement by refusing to transfer his shares, and thus ordered specific performance for the transfer of his stock back to ICD for “book value.” At the same time, the court rejected Gittlitz’s defense that the repurchase provisions of the shareholders agreement constituted an “unenforceable penalty.” ¶ 32 After further motion practice, trial was scheduled for July 22, 2013. On July 9, 2013, Gittlitz filed an emergency motion to postpone the trial date, submitting a letter from his physician in New York stating that he had been diagnosed with lymphedema, or swelling of the extremities, as a complication of “right axillary cancer.” The letter stated that Gittlitz had “noticed an increase in swelling during [a] flight” and that “Mr. Gittlitz won’t be able to fly until September.” ICD opposed the motion, arguing that Gittlitz could find an alternate form of transportation to travel to Chicago. Gittlitz’s motion was denied on July 10, 2013. ¶ 33 The action proceeded to trial on July 22-25, 2013. On behalf of ICD, Palcek and Evans each testified that, although they knew prior to the May 7, 2007 meeting that Gittlitz had submitted fraudulent expense reports, they had relied on his statements at the meeting that the fraud had been for a short period of time and had not involved a lot of money. Both testified that they would not have offered the CFC agreement to Gittlitz had they known the true extent of his fraud over several years. Evans testified she had believed him because “if he signed the agreement, he must have not stolen too much, because he wouldn’t be signing this agreement otherwise.” Palcek likewise testified that he placed “enormous reliance” on Gittlitz’s statements that his misconduct had occurred for only a short time. ¶ 34 On the issue of damages, the trial court admitted the expert report and testimony of ICD’s expert witness Matthew Bialecki, a certified public accountant. Bialecki testified that he had calculated the amounts Gittlitz received through “unsupported checks” from ICD, including “advances” written to himself, for the years 2000 through 2007, and that these checks totaled $1,220,623. Bialecki also testified that by reviewing tax returns, he had calculated that the ICD compensation received by Gittlitz from 2001 through 2007 totaled $6,021,657. This amount consisted of wages in the amount of $5,412,384 as well as corporate distributions of $609,273. ¶ 35 At the conclusion of ICD’s case, upon Gittlitz’s motion, the court entered a directed verdict for Gittlitz with respect to ICD’s claim that Gittlitz usurped a corporate opportunity with respect to the Travel Trade transaction. The court also dismissed ICD’s counts alleging computer misuse and misuse of personnel. ¶ 36 Gittlitz testified on his own behalf at trial and admitted he embezzled funds from 2001 through 2007. Gittlitz admitted that he had stolen $250,000 though submission of false

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expense reports and had pled guilty to mail fraud. Gittlitz also admitted that he embezzled by writing “advance” checks to himself from ICD’s account. Gittlitz did not dispute that these checks totaled $1,220,623, as calculated by ICD’s expert, and admitted that this amount was still owed to ICD. He admitted that he intentionally defrauded Evans and Palcek and violated his duties to them. Gittlitz conceded that he never disclosed his fraud to either Evans or Palcek, although he repeatedly insisted that they “could have asked any questions they wanted” and “could have come to New York if they wanted to look at any records.” ¶ 37 Gittlitz recalled the May 7, 2007 meeting where Evans and Palcek confronted him about his fraudulent expense reports. He recalled that he “got emotional” and admitted his wrongdoing at that meeting. However, Gittlitz’s account of the meeting differed from that of Evans and Palcek. In particular, he testified that Evans and Palcek had already signed the CFC agreement when they presented it to him. He also claimed that Evans and Palcek demanded that he had to sign the agreement within 24 hours and told him he could not consult an attorney. Gittlitz also testified he “congratulated” Evans and Palcek when they showed him the CFC agreement as he “thought they did a really good job on” it, but told them “the only part where they did something that was wrong was letting my wife retire, letting her go.” He testified that he met with Evans and signed the agreement the next day, but did not testify that he ever told Evans or Palcek that his fraud was for a limited amount of money or a short period of time. ¶ 38 In support of his unjust enrichment counterclaim, Gittlitz also testified regarding the undistributed ICD earnings that he claimed were owed to him. He testified that his understanding of his right to the undistributed funds was supported by a footnote within ICD’s consolidated financial statements for the years 2005 and 2006, prepared by an outside accounting firm. The footnote stated that since ICD was an S corporation under the Internal Revenue Code, “[i]n lieu of corporate income taxes, the shareholders of an S corporation are taxed on their proportional share of the Company’s taxable income. *** Undistributed S corporation earnings of approximately $2,938,000 at December 31, 2006 may be distributed to the stockholders without further tax consequences.” Gittlitz testified that he, Evans and Palcek had discussed the footnote and agreed that it referred to “undistributed distributions or dividends from the company available to all three of us personally,” and that each shareholder “was entitled to the money.” Gittlitz testified that through telephonic meetings, he and the other shareholders had agreed that each could claim his or her share of these retained funds and “take it at any time.” ¶ 39 Following Gittlitz’s testimony, ICD recalled Palcek to testify as a rebuttal witness regarding Gittlitz’s counterclaim. Regarding the footnote in ICD’s financial statements, Palcek testified: “It’s simply a footnote regarding tax consequences of undistributed S corp[oration] earnings or also referred to as retained earnings.” Palcek testified that, notwithstanding the $2,938,000 figure in the footnote, this did not mean the company had “an account with 2.9 million dollars in it waiting to be distributed,” as there was actually much less cash available in the company, about $600,000, at the time. Thus, Palcek stated that such distributions were “not even realistic, could not even happen.” He elaborated that “if this conversation supposedly took place and somebody said I want 250,000 today, which would be interesting because you now have one shareholder overruling the other two, the company could not satisfy that because it didn’t have the cash.” Although he acknowledged the shareholders had discussed the undistributed earnings described in the footnote, Palcek testified that “we didn’t have an annual conversation like Mr. Gittlitz said that any one of us could demand any amount at any time.”

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¶ 40 At the conclusion of trial, the court requested the parties prepare posttrial findings of fact and conclusions of law by August 30, 2013. The record indicates Gittlitz’s posttrial submission was filed on that date. On September 20, 2013, the trial court issued an order and opinion, which included a note that Gittlitz had not submitted a posttrial brief. Gittlitz responded by filing an emergency motion stating that he had, in fact, filed a timely posttrial brief. In response, the trial court vacated the September 20, 2013 order to allow an opportunity to review Gittlitz’s posttrial submission. On September 27, 2013, the trial court issued a new order whose findings and conclusions were substantially identical to those contained in the vacated order. ¶ 41 As Gittlitz’s liability for breach of fiduciary duty and fraud had already been established upon summary judgment, the posttrial order addressed the amount of damages, Gittlitz’s affirmative defenses, and Gittlitz’s unjust enrichment counterclaim. With respect to damages, the trial court first concluded that ICD could recover forfeited compensation “for the entire period during which he was breaching his fiduciary duties.” The court noted that Gittlitz, by his own admission, engaged in his “double dipping” expense report scheme from at least October 2001 through June 2007, and had written himself improper “advance” checks from “October 2000 through at least April 2007.” ¶ 42 The court found that “Gittlitz’s guilty plea, as a fiduciary, is evidence of his willful, deliberate, and repeated breaches of his fiduciary duty that justifies the complete forfeiture of his compensation from January 1, 2001 through June of 2007.” The court found that Gittlitz’s compensation for this period totaled $6,021,657 (as calculated by ICD’s expert witness), and ordered forfeiture of this full amount. In addition to the forfeiture of compensation, the trial court found that damages should include the “amount of money that Gittlitz misappropriated from ICD,” which was not disputed to be $1,220,623, as calculated by ICD’s expert witness. The court also found ICD was entitled to interest on that sum in the amount of $549,560. ¶ 43 The court then noted that “[p]unitive damages and forfeiture damages are not mutually exclusive remedies, and both may be awarded for a defendant’s intentional breach of a fiduciary duty.” The court found that Gittlitz had breached his “duty of honesty” to Evans and Palcek “continuously over an almost seven-year period” and that he “h[i]d his nefarious conduct from his business partners.” The court found that “Gittlitz’s conduct was calculated, planned and intentional” and, concluding that “this type of conduct should be punished,” imposed punitive damages in the amount of $2,000,000. The court thus entered judgment in ICD’s favor in the total amount of $9,791,840. ¶ 44 Turning to Gittlitz’s affirmative defense of “release,” the court addressed the argument that ICD’s suit was barred by the statement in the CFC agreement that Evans and Palcek agreed “not to seek legal remedies, either civilly or criminally *** provided restitution is made.” The court reasoned that “a settlement agreement amongst parties in a fiduciary relationship will be voidable if a fiduciary fails to fully disclose material facts upon entering the agreement.” The court found that Gittlitz’s “failure to disclose fully his misconduct makes the CFC Agreement voidable” by ICD, and that “ICD validly elected to repudiate the contract.” The court explained that “[c]ontrary to Gittlitz’s statement that his defalcations had been for a short period of time and a small amount of money,” ICD had subsequently learned that Gittlitz had submitted fraudulent documents to ICD’s bank and had “lied about the scope and duration of his embezzlement.” The court thus concluded the CFC agreement was voidable. The court further reasoned that, even if the language of the CFC agreement constituted a release, “it does

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not apply to the years of [Gittlitz’s] embezzlement that he did not disclose to Evans or Palcek,” under the principle that “[g]eneral terms of release do not apply to unknown claims.” ¶ 45 The court next rejected Gittlitz’s affirmative defense that the stock repurchase provision of the shareholders agreement constituted an unenforceable penalty. The court noted that Gittlitz cited no authority to dispute the agreement’s enforceability and, “[a]s it was included in the [Shareholders] Agreement and signed by the parties, the Court infers that it was bargained for” and enforceable. The court concluded that the company’s purchase of Gittlitz’s stock at “book value” was “a contractually bargained for transaction, not a penalty.” ¶ 46 The court also rejected Gittlitz’s argument that, under the election of remedies doctrine, ICD was foreclosed from obtaining monetary damages in addition to specific performance of the stock repurchase. The court held the monetary damages and stock buyout in this case did not arise from the same breach, but explained that the monetary award arose from Gittlitz’s breach of fiduciary duty, whereas the remedy of specific performance arose from Gittlitz’s separate breach of the shareholders agreement. ¶ 47 Finally, the court dismissed Gittlitz’s counterclaim for unjust enrichment, noting the claim was premised on his assertion that “a contract existed between ICD’s shareholders whereby any shareholder could demand payment of their proportional share of [ICD’s] retained earnings.” The court found that Gittlitz “failed to prove the existence” of such an agreement and thus “[f]ailed to meet his burden of proof on his counterclaim.” ¶ 48 Gittlitz filed a timely notice of appeal on October 13, 2013; accordingly, we have jurisdiction. His appeal seeks reversal of numerous orders, including the orders granting summary judgment in favor of ICD on its claims of breach of fiduciary duty, fraud, and specific performance of the shareholders agreement, as well as the findings of fact and conclusions of law of the September 27, 2013 posttrial order.

¶ 49 ANALYSIS ¶ 50 Gittlitz’s argument on appeal does not contest that he committed fraud or breached his fiduciary duties, but asserts numerous errors in the trial court’s assessment of damages and rejection of his affirmative defenses and counterclaims. He challenges the assessment of forfeiture of compensation and assessment of $2 million in punitive damages. He also asserts the court erred in rejecting his affirmative defense that the CFC agreement released ICD’s claims and precluded its lawsuit. With respect to the order of specific performance for ICD’s repurchase of his stock, Gittlitz disputes that the shareholders agreement controls, argues the stock repurchase at “book value” is an unenforceable penalty, and claims that the order violates the election of remedies doctrine. With respect to his counterclaim of unjust enrichment, Gittlitz maintains that he is entitled to over $1 million due to ICD’s retention of his share of undistributed profits. ¶ 51 Apart from the findings of the September 27, 2013 order, Gittlitz also challenges the earlier dismissal of his claim that ICD violated his right to inspect ICD’s books and records. Gittlitz also contends that the court improperly declined to grant his emergency motion to postpone trial, and that the court erroneously found his testimony not credible on the basis of speech difficulties related to a 2009 stroke. He also claims error since the court, after initially issuing an order stating that Gittlitz had not filed a posttrial brief, entered a new order one week later whose content was largely identical.

- 10 - ¶ 52 Before we examine the specific challenges to the trial court’s rulings, we first note that, with respect to the court’s findings of fact, “[t]he standard of review in a bench trial is whether the trial court’s judgment is against the manifest weight of the evidence,” which occurs “only if the opposite conclusion is apparent or if the finding appears to be arbitrary, unreasonable, or not based on the evidence.” Martinez v. River Park Place, LLC, 2012 IL App (1st) 111478, ¶ 14. “Under this standard of review, we give great deference to the circuit court’s credibility determinations and we will not substitute our judgment for that of the circuit court because the fact finder is in the best position to evaluate the conduct and demeanor of the witnesses.” (Internal quotation marks omitted.) Staes & Scallan, P.C. v. Orlich, 2012 IL App (1st) 112974, ¶ 35. Thus, “[w]e will not disturb the findings and judgment of the trier of fact if there is any evidence in the record to support such findings.” (Internal quotation marks omitted.) Id. ¶ 53 We turn to the trial court’s finding that Gittlitz should forfeit all compensation from the years in which he embezzled funds from ICD. We note this is a matter of the trial court’s discretion, as “when one breaches a fiduciary duty to a principal the appropriate remedy is within the equitable discretion of the court.” In re Marriage of Pagano, 154 Ill. 2d 174, 190 (1992) (“While the breach may be so egregious as to require the forfeiture of compensation by the fiduciary as a matter of public policy [citation], such will not always be the case.”). ¶ 54 “Illinois law permits a complete forfeiture of any salary paid by a corporation to its fiduciary during a time when the fiduciary was breaching his duty to the corporation.” Levy v. Markal Sales Corp., 268 Ill. App. 3d 355, 373 (1994). “The purpose of ordering forfeiture of a fiduciary’s compensation earned during the period of a breach is not to compensate the injured party but rather to deprive the wrongdoer of the gains from the breach of duty and to deter disloyalty. [Citation.] It lies within the equitable discretion of the trial court to determine the appropriate remedy for breach of a fiduciary duty.” Tully v. McLean, 409 Ill. App. 3d 659, 681 (2011). ¶ 55 On appeal, Gittlitz does not dispute that forfeiture is permissible under Illinois law, but argues that the court erred in determining the compensation subject to forfeiture. Gittlitz complains that the trial court accepted ICD’s calculation of his compensation at “face value” and awarded forfeiture of his gross compensation of salary and commissions, without any deductions. He argues that the trial court’s award “charges Gittlitz for compensation he never received” because it was not reduced to reflect amounts withheld from his wages for federal and state income taxes and undistributed corporate dividends. He also argues that the portion of his compensation representing commissions which were not regular “salary” should not be included in the forfeiture award. Further, he claims that he should not be required to forfeit any compensation for the years 2001, 2002, and 2003 based on the fact that his expense reports for those years were not located. After all deductions he believes he is entitled to, Gittlitz’s appeal submits a new forfeiture total of $164,838, a small fraction of that awarded by the trial court. ¶ 56 Gittlitz cites no authorities supporting his argument that a forfeiture award cannot be gross compensation and must reflect deductions. Illinois case law has permitted forfeiture of all compensation, without specifying whether that amount is to be calculated before or after withheld taxes or whether such amounts include corporate distributions or “commissions” as well as salary. We see no compelling reason to carve out new exceptions to reduce such damages, especially as the purpose of forfeiture is not compensatory but “to deprive the wrongdoer of the gains from the breach of duty and to deter disloyalty” by fiduciaries. Tully, 409 Ill. App. 3d at 681. - 11 - ¶ 57 Moreover, we will not overturn a trial court’s determination regarding damages as contrary to the manifest weight of the evidence if there is “evidence in the record to support the judgment amount.” Staes & Scallan, P.C., 2012 IL App (1st) 112974, ¶ 37. In this case, Bialecki’s expert report and testimony provided evidence to support the court’s finding on the amount of compensation subject to forfeiture. Gittlitz attacks Bialecki’s conclusions due to the unavailability of Gittlitz’s ICD expense reports for certain years. However, Bialecki testified that his calculations of wages and distributions were based on tax records for Gittlitz and ICD. Thus, the missing expense reports were irrelevant to the question of Gittlitz’s compensation.^[2] ¶ 58 Apart from the initial calculation of compensation earned, Gittlitz argues that the trial court should not have ordered a complete forfeiture of that compensation. In Pagano, our supreme court recognized that “[w]hile the breach may be so egregious as to require the forfeiture of compensation by the fiduciary as a matter of public policy [citation], such will not always be the case.” Pagano, 154 Ill. 2d at 190. However, we have held that “ ‘[a] willful and deliberate breach of a fiduciary duty requires complete forfeiture of all compensation during the period of the breach.’ ” Tully, 409 Ill. App. 3d at 681 (quoting LID Associates v. Dolan, 324 Ill. App. 3d 1047, 1071 (2001)). In this case, we cannot find error in the court’s determination that Gittlitz’s breach was willful and deliberate, warranting complete forfeiture of compensation. The court’s findings were certainly not against the weight of the evidence; to the contrary, the severity of Gittlitz’s breach was well established and indeed undisputed. Although the trial court found that Gittlitz had contributed to ICD’s success, Gittlitz engaged in deliberate fraud that spanned several years and actively concealed that fraud from his fellow shareholders through the creation of false documents, including a fake corporate resolution. The trial court also properly cited Gittlitz’s guilty plea as “evidence of his willful deliberate, and repeated breaches of his fiduciary duty,” and Gittlitz at trial admitted that, through improper expense reports totaling $250,000 and fraudulent “advance” payments to himself totaling $1.2 million, he embezzled from the corporation over the course of several years. Given this evidence, as well as forfeiture’s function to deter breaches of fiduciary duty (Tully, 409 Ill. App. 3d at 681), the trial court was well within its equitable discretion in determining that Gittlitz’s misconduct warranted the complete forfeiture of his ICD compensation. ¶ 59 We also find no error with respect to the $2 million award of punitive damages. “[P]unitive damages are available as a matter of law for a breach of fiduciary duty.” Tully, 409 Ill. App. 3d at 670. The factual question of whether the defendant’s conduct was of a character warranting punitive damages is reviewed under a deferential standard. “We review the court’s factual determination that defendants acted willfully and that aggravating factors exist under the manifest-weight standard of review.” Id. “In applying this standard, we give deference to the trial court as the finder of fact because it is in the best position to observe the conduct and demeanor of the parties and the witnesses.” Id. Apart from the factual findings regarding the nature of defendant’s conduct, “[w]e review the court’s determination that punitive damages should be awarded under the abuse of discretion standard. [Citation.] An abuse of discretion occurs where no reasonable person would agree with the position adopted by the trial court.” (Internal quotation marks omitted.) Id. at 672.