## Facts

- Jerry Cherney and Robert Gainsberg (the directors) were shareholders, officers, and directors of Eagle Insurance Agency, Inc. (Eagle) and Legal Financial Associates, Inc. (LFA).
- Until September 1993, Burton Cherney was also an officer and director of Eagle and LFA.
- Larry Soldinger performed accounting services for the corporations.
- In 1985, the directors discovered that Burton had obtained $63,000 in excess advance payments from the corporations.
- Burton executed a $63,000 promissory note payable to Eagle to evidence his indebtedness.
- After discovering the excess advances, the directors instructed Soldinger to ensure Burton’s advance account would not exceed the directors’ advance accounts by large amounts and to advise the directors if additional compensation should be drawn to equalize yearly compensation.
- The directors later alleged that Soldinger breached fiduciary duties by failing to advise them that Burton continued receiving excess salary and compensation, failing to disclose that the $63,000 note had been reduced to $23,000 through payment of excess monies, and preparing corporate books and records that disguised the transactions.
- Before suing Soldinger, the directors litigated their dispute with Burton in chancery court concerning the same excess salary/advance matters.
- The directors and Burton settled and executed an unconditional release in which the directors released Burton from any causes of action relating to any matter occurring before the release date.
- The release contained no reservation of rights regarding Soldinger or third parties generally.
- After the release, the directors sued Soldinger in circuit court, including a claim for breach of fiduciary duty tied to the same monetary loss.
- Soldinger moved for summary judgment on the fiduciary-duty count, arguing the unconditional release of Burton also barred the claim against him; the circuit court denied the motion and certified the question for interlocutory appeal under Illinois Supreme Court Rule 308.

## Issues

1. Does an unqualified, unconditional release of one party for a single monetary loss bar a later breach-of-fiduciary-duty claim against another party alleged to have caused the same loss, considering the Illinois Joint Tortfeasor Contribution Act and Illinois common law?

## Decision

- Yes.
- The appellate court answered the certified question in the affirmative.
- The court reversed the portion of the circuit court’s order denying Soldinger’s motion for summary judgment on the breach-of-fiduciary-duty count and remanded.

## Legal Principles

- At common law in Illinois, an unconditional release of one of multiple tortfeasors responsible for the same injury releases the others unless the instrument shows a contrary intent.
- The Illinois Joint Tortfeasor Contribution Act provides that a release does not discharge other tortfeasors unless the release’s terms so provide, but the Act does not permit a plaintiff to pursue additional damages for the same injury after giving an unqualified release that resolves that injury without reserving rights.
- For release purposes, the controlling question is whether the later claim seeks recovery for the same injury (here, a single monetary loss), not whether the later claim is pleaded under a different label (such as fiduciary duty rather than direct wrongdoing).
- A party who intends to settle with one alleged wrongdoer while preserving claims against others must include an express reservation of rights; a broad, unconditional release with no reservation can bar later claims tied to the same loss.

## Conclusion

Because the directors executed a broad, unconditional release of Burton covering all claims relating to matters before the release date, and because the later fiduciary-duty claim against Soldinger sought damages for the same monetary loss arising from Burton’s excess compensation and advances, Illinois law treated the release as a bar to the action against Soldinger, requiring summary judgment in his favor on that count.


Cherney v. Soldinger, 702 N.E.2d 231 (1998)