business judgment rule in Illinois

2024See Stamp, 263 Ill. App. 3d at 1017 . ¶ 40 We next examine plaintiff’s argument that the trial court incorrectly concluded that plaintiff failed to rebut defendant’s evidence that the business judgment rule barred its claims.

2022Plaintiff maintains that she and other members were not informed about the Board’s actions and calls into question whether the Board exercised due care in its procedure to remove a sitting board member citing Stamp v. Touche Ross Co., 263 Ill. App. 3d 1010, 1015-16 (1993) as support. ¶ 37 Defendants contend that the circuit court properly found that its decision to remove plaintiff was protected under the business judgment rule.

2025“Rather, it is a rebuttable presumption that arises as a matter of law; the burden is thus on the plaintiff to present sufficient evidence to rebut it.” Id.; see Ferris Elevator Co., 285 Ill. App. 3d at 355 (holding “that the business judgment rule is neither an affirmative [nor] special defense which need be plead pursuant to section 2-613 of the [Code]”).

2025See Travelers Insurance Co. v. First National Bank of Blue Island, 250 Ill. App. 3d 641, 645 (1993). ¶ 63 “The business judgment rule is a presumption that directors of a corporation make business decisions on an informed basis, in good faith, and with the honest belief that the course taken was in the best interests of the corporation.” Ferris Elevator Co. v. Neffco, Inc., 285 Ill. App. 3d 350, 354 (1996).

2020Kim’s contentions lack merit. ¶ 37 The business judgment rule provides that “[a]bsent evidence of bad faith, fraud, illegality, or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment by corporate directors.” Fields v. Sax, 123 Ill.

2014"Under the business judgment rule, '[a]bsent evidence of bad faith, fraud, illegality, or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment by corporate directors.' " Goldberg, 2012 IL App (1st) 110620, ¶ 63 (quoting Fields v. Sax, 123 Ill.

2019Indeed, Milazzo testified that at one point he became concerned “that we as a board would be negligent if we took no action” to address Boucher’s behavior. ¶ 77 Circumstances like these are precisely why the board’s decisions are protected by the business judgment rule. “[A]bsent evidence of bad faith, fraud, illegality or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment by corporate directors.” Feliciano v. Geneva Terrace Estates Homeowners Ass’n, 2014 IL App (1st) 130269, ¶ 39 ; see also Goldberg v. Astor Plaza Condominium Ass’n, 2012 IL App (

2018Indeed, Milazzo testified that at one point he became concerned "that we as a board would be negligent if we took no action" to address Boucher's behavior. ¶ 77 Circumstances like these are precisely why the Board's decisions are protected by the business judgment rule. "[A]bsent evidence of bad faith, fraud, illegality or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment by corporate directors." Feliciano v. Geneva Terrace Estates Homeowners Ass'n , 2014 IL App (1st) 130269 , ¶ 39, 383 Ill.Dec. 257 , 14 N.E.3d 540 ; see also Goldberg v. Astor Pl

2016The parties dispute whether the business judgment rule can apply to such claims and also, if it does, whether Babbitt alleged sufficient facts to overcome the presumption in this case. ¶ 49 Although Babbitt “does not concede the rule’s application” in connection with either claim, it cites authority only for the proposition that the rule “is no defense to a breach of contract claim.” (Internal quotation marks omitted.) Willmschen v. Trinity Lakes Improvement Ass’n, 362 Ill.

2016The parties dispute whether the business judgment rule can apply to such claims and also, if it does, whether Babbitt alleged sufficient facts to overcome the presumption in this case. ¶ 49 Although Babbitt “does not concede the rule’s application” in connection with either claim, it cites authority only for the proposition that the rule “is no defense to a breach of contract claim.” (Internal quotation marks omitted.) Willmschen v. Trinity Lakes Improvement Ass’n, 362 Ill.

2009The business judgment rule creates “a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).

2007The business judgment rule creates a “presumption that in making a business decision, the directors of a corporation acted on an informed basis,... and in the honest belief that the action taken was in the best interests of the company [and its shareholders.]” In re The Walt Disney Co., 907 A.2d at 747 , quoting Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).

2009Because courts are ill-equipped to engage in post hoc substantive review of business decisions, the business judgment rule “ ‘operates to preclude a court from imposing itself unreasonably on the business and affairs of a corporation.’ ” In re Walt Disney Co., 907 A.2d at 746 , quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 360 (Del. 1993).

2007Because courts are ill-equipped to engage in post hoc substantive review of business decisions, the business judgment rule “operates to preclude a court from imposing itself unreasonably on the business and affairs of a corporation.” In re The Walt Disney Co., 907 A.2d at 746 , quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 360 (Del. 1993) (Cede III).

2024Davis, 387 Ill. App. 3d at 693 ; Wolinsky, 114 Ill. App. 3d at 534 . ¶ 64 Plaintiff points to Davis as evidence that the business judgment rule cannot protect condominium officers when they violate the Act or the condominium’s declaration, but plaintiff has misapprehended the procedural posture of Davis.

2022If directors fail to exercise due care, then they may not use the business judgment rule as a shield for their conduct.” Davis v. Dyson, 387 Ill. App. 3d 676, 694 (2008).

2025In that regard, “if a board seeks legal advice before reaching its decision and relied on that advice in reaching its decision, it will be found to have properly exercised its business judgment.” Palm, 2014 IL App (1st) 111290, ¶ 112 . ¶ 20 After reviewing the record, we conclude that the summary judgment in favor of Du Bois on the breach of fiduciary duty claims was appropriate, as the Association breached its fiduciary duty and the business judgment rule does not shield it from liability.

2025“However, if board members have failed to exercise due care, then they may not use the business judgment rule as a shield for their conduct.” Palm v. 2800 Lake Shore Drive Condominium Ass’n, 2014 IL App (1st) 111290, ¶ 111 .

1994(See Shlensky, 95 Ill.App.2d at 175 , 237 N.E.2d 776 ; Fields, 123 Ill.App.3d at 461 , 78 Ill.Dec. 864 , 462 N.E.2d 983 .) In sum, plaintiff's position that the business judgment rule does not apply to corporate officers is unsupported by Illinois law and, notwithstanding the Platt decision, is against the substantial weight of judicial authority from other jurisdictions on the issue.

1994(See Shlensky, 95 Ill.App.2d at 175 , 237 N.E.2d 776 ; Fields, 123 Ill.App.3d at 461 , 78 Ill.Dec. 864 , 462 N.E.2d 983 .) In sum, plaintiff's position that the business judgment rule does not apply to corporate officers is unsupported by Illinois law and, notwithstanding the Platt decision, is against the substantial weight of judicial authority from other jurisdictions on the issue.

2024“The business judgment rule shields directors who have been diligent and careful in performing their duties from liability for honest errors or mistakes in judgment.” Id. at 788 .

2008App. 3d at 788-89 , 656 N.E.2d at 95 (shareholder derivative suit against current and former corporate directors dismissed in its entirety because plaintiffs failed to allege facts that would prevent application of the business judgment rule).

2022Id. -14- ¶ 42 Thus, the circuit court did not err in determining that defendants were entitled to summary judgment because no genuine issue of material fact existed as to defendants being entitled to protection under the business judgment rule.

2022Defendants maintain that there is nothing in the record that could challenge the presumption that defendants were entitled to rely on counsel’s advice when they properly exercised their business judgment. ¶ 38 The business judgment rule provides a presumption that in the course of making a business decision, “directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” Sherman v. Ryan, 392 Ill. App. 3d 712, 722 (2009).

2008App. 3d 462, 467 , 448 N.E.2d 940, 945 (1983) (directors must be diligent and careful in carrying out their duties to earn the protection of the business judgment rule); Ferris Elevator Co. v. Neffco, Inc., 285 Ill.

2008App. 3d 462, 467 , 448 N.E.2d 940, 945 (1983) (directors must be diligent and careful in carrying out their duties to earn the protection of the business judgment rule); Ferris Elevator Co. v. Neffco, Inc., 285 Ill.

2022Seitz-Partridge, 409 Ill. App. 3d at 82 . ¶ 43 CONCLUSION ¶ 44 For the foregoing reasons, the judgment of the circuit court is affirmed. ¶ 45 Affirmed. -15-

2022Seitz-Partridge v. Loyola University of Chicago, 409 Ill. App. 3d 76, 82 (2011).

2019See Walker, 644 A.2d at 636 . ¶ 48 The business judgment rule permits a trier of fact to presume that a corporate board made its decisions “on an informed basis, in good faith and in an honest belief that the actions taken are in the best interest of the company.” (Internal quotation marks omitted.) Spillyards v. Abboud, 278 Ill.

2018See Walker , 644 A.2d at 636 . ¶ 48 The business judgment rule permits a trier of fact to presume that a corporate board made its decisions "on an informed basis, in good faith and in an honest belief that the actions taken are in the best interest of the company." (Internal quotation marks omitted.) Spillyards v. Abboud , 278 Ill.

2019See Walker, 644 A.2d at 636 . ¶ 48 The business judgment rule permits a trier of fact to presume that a corporate board made its decisions “on an informed basis, in good faith and in an honest belief that the actions taken are in the best interest of the company.” (Internal quotation marks omitted.) Spillyards v. Abboud, 278 Ill.

2018See Walker , 644 A.2d at 636 . ¶ 48 The business judgment rule permits a trier of fact to presume that a corporate board made its decisions "on an informed basis, in good faith and in an honest belief that the actions taken are in the best interest of the company." (Internal quotation marks omitted.) Spillyards v. Abboud , 278 Ill.

2016See Board of Managers of Weathersfield Condominium Ass’n, 307 Ill.

2015See Board of Managers of Weathersfield Condominium Ass’n, 307 Ill.

2008Kalata v. Anheuser-Busch Cos., 144 Ill. 2d 425, 434 , 581 N.E.2d 656, 661 (1991), citing Barthel v. Illinois Central Gulf R.R.

2008Kalata v. Anheuser-Busch Cos., 144 Ill. 2d 425, 434 , 581 N.E.2d 656, 661 (1991), citing Barthel v. Illinois Central Gulf R.R.

2007Omnicare, 818 A.2d at 943, 947 (Veasey, C.J., and Steele, J., dissenting). 3 Such provision requires that a merger agreement be placed before a corporation’s stockholders for a vote, even if the corporation’s board of directors no longer recommends it. 8 Del.

2007Omnicare, 818 A.2d at 943, 947 (Veasey, C.J., and Steele, J., dissenting). 19 1-05-3849 (1) the inclusion of a “section 251(c) provision” in the merger agreement;3 (2) the absence of any effective fiduciary out clause; and (3) a voting agreement between two shareholders and Genesis which ensured that a majority of shareholders voted in favor of the transaction.

2025Wolinsky v. Kadison, 2013 IL App (1st) 111186, ¶ 62 .

2024Wolinsky v. Kadison, 2013 IL App (1st) 111186, ¶¶ 65-67 (citing Carney v. Donley, 261 Ill. App. 3d 1002 (1994) and Goldberg v. Astor Plaza Condominium Ass’n, 2012 IL App (1st) 110620, ¶ 65 ).

2009Because courts are ill-equipped to engage in post hoc substantive review of business decisions, the business judgment rule “ ‘operates to preclude a court from imposing itself unreasonably on the business and affairs of a corporation.’ ” In re Walt Disney Co., 907 A.2d at 746 , quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 360 (Del. 1993).

2009The issues raised on appeal involve the application of the business judgment rule, which “serves to protect and promote the role of the board as the ultimate manager of the corporation.” In re Walt Disney Co. Derivative Litigation, 907 A.2d 693, 746 (Del.

2019App. 3d 1010, 1017 (1993) (plaintiff failed to plead the absence of business judgment where “[n]owhere in the complaint does plaintiff allege that the defendants did not make informed judgments or use due care in arriving - 15 - at those judgments”); Feliciano, 2014 IL App (1st) 130269, ¶ 40 (trial court properly granted summary judgment to homeowners’ association on the basis of the business judgment rule, since plaintiffs’ allegations of bad-faith decisionmaking were mere “conjecture”). ¶ 79 And the protection afforded the board’s action under the business judgment rule is mirrored in the pr

2019Indeed, Milazzo testified that at one point he became concerned “that we as a board would be negligent if we took no action” to address Boucher’s behavior. ¶ 77 Circumstances like these are precisely why the board’s decisions are protected by the business judgment rule. “[A]bsent evidence of bad faith, fraud, illegality or gross overreaching, courts are not at liberty to interfere with the exercise of business judgment by corporate directors.” Feliciano v. Geneva Terrace Estates Homeowners Ass’n, 2014 IL App (1st) 130269, ¶ 39 ; see also Goldberg v. Astor Plaza Condominium Ass’n, 2012 IL App (

2012Grobow v. Perot, 539 A.2d 180, 187 (Del. 1988) (citing Aronson, 473 A.2d at 812), overruled on other grounds, Brehm, 746 A.2d at 254 .

1996In Grobow v. Perot (Del. 1988), 539 A.2d 180 , the court rejected similar entrenchment arguments made for purposes of establishing demand futility.