Articles Posted in Breach of Contract

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An Illinois Appellate Court has affirmed a decision by a Cook County Circuit Court judge relating to a guaranty. In 2001, Paul Steiner and Ricky Nelson, representatives from Superior Wine Selections, submitted a credit application to a wine distributor, Morand. With the application, Steiner and Nelson each tendered a personal guaranty. The guaranty required Steiner and Nelson to pay fully and promptly for any amount due the wine distributor. The agreement stated that “the guaranty shall be continuing, absolute and unconditional and shall remain in full force and effect until written notice of its discontinuance shall be actually received . . . and also until any and all indebtedness existing before receipt of such a notice shall be fully paid.”

In addition, Steiner and Nelson waived notice and stated that the guaranty “shall be binding on the undersigned jointly and severally, and upon their legal heirs, legal representatives, successors and assigns of the undersigned and each of them.”

In 2002, Southern Wine and Spirits of Illinois purchased Morand — the wine distributor that received Steiner’s and Nelson’s personal guaranties. In May 2003, Superior began using Southern as a wholesale distributor — unaware that it had purchased Morand.

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The Illinois Appellate Court has affirmed in part and reversed and remanded in part a decision of a Cook County Circuit Court judge. In this case, Osep Armagan filed a lawsuit against Michael, Kathy and Stephen Pesha, individually and as agents for Gold Dust Coins. Armagan claimed that he gave Gold Dust 253 gold coins for safekeeping. When he later demanded that the coins be returned to him, the defendants refused to do so.

Gold Dust denied all of the material facts alleged in the plaintiff’s complaint, and then the plaintiff served Michael Pesha with a request to admit facts. The request was sent on Nov. 18, 2010. Pesha filed his response with the Clerk of the Circuit Court and mailed his response to Armagan on Dec. 17, 2010. On Dec. 30, 2010, Armagan moved to deem all requested admissions of fact admitted because of the late receipt of the response. Armagan argued that the response was not served on him within 28 days as required by Illinois Supreme Court Rule 12. According to that rule, service by mail is considered completed after 4 days after mailing, meaning that the Gold Dust notice was completed on Nov. 22 and service to Armagan was completed on Dec. 21, one day past the 28-day deadline.

Pesha argued that he served his response in a timely fashion by filing it on Dec. 17. The court granted Armagan’s motion and ordered all requested facts admitted.

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Advanced Tactical manufactures and sells PepperBall projectile irritants. The product, PepperBalls, resemble paintballs, but PepperBalls contain irritants and are designed to be used for crowd control by police, private security firms and similar organizations.

Advanced Tactical was headquartered in Indiana, though the company had at least one office in California. Advanced Tactical became the manufacturer of PepperBall items after it acquired trademark and other property in a foreclosure sale from a company called PepperBall Technologies Inc.

During the foreclosure sale, the chief operating officer of one of the PepperBall suppliers contacted Real Action Paintball Inc., a California company. The chief operating officer of this supplier asked Real Action whether it was interested in acquiring irritant projectiles. A deal was reached between the supplier and Real Action.

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In February 2009, Valerie Mobley’s Subaru developed transmission problems. Mobley found Best Transmissions, which acted as a broker and referred auto repair jobs to various repair shops. Mobley called the number listed on the website that she found and spoke to a salesman who told her that a neighborhood shop would do the repair work and that no work would be done without a prior estimate and customer authorization. Mobley was told that no charges would be assessed unless she decided to go elsewhere for the work.

Mobley received an e-mail that contained an agreement for authorization for the work on her car. The agreement listed the price not involving “hard parts” as $1,397. The next day a tow truck came and took the Subaru without telling her where the vehicle was being taken.

Mobley called Best Transmissions again and an employee there gave her the number of the repair shop. The repair shop was called Tramco and was located nearly 30 miles from her home. When Mobley called Tramco she was directed back to Best Transmissions. Mobley was told that Best Transmissions was the customer of Tramco, not Mobley.

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F. Gary Kovac, the plaintiff in this matter, sued the estate of Kenneth L. Barron Jr. for compensatory damages and exemplary or punitive damages. In the majority of jurisdictions, punitive damages are not allowed after the death of the defendant tortfeasor.

Kovac and Barron owned 50% of three different corporations. In his original lawsuit, Kovac accused Barron of a pattern of serious misconduct, which included diverting millions of dollars from the businesses. Kovac sued Barron in Kane County, Ill. When Barron died, Kovac continued the lawsuit against the administrator of Barron’s estate who was his widow, Sandra Barron.

At the end of the bench trial, the trial judge ordered Barron’s estate to pay $3,220,702 for fraud and an additional $450,000 in punitive damages.

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The plaintiff, Michigan Indiana Condominium Association, is a 119-unit residential condominium complex (the “Complex”).  Optima was the general contractor and selected a variety of subcontractors to do the construction work.  Construction was completed in June 2002.  One of the contractors was Jenni and Loucon.  Loucon was the masonry contractor.  On Sept. 2, 2003, Loucon was dissolved as an Illinois corporation.  Jenni was likewise dissolved on Jan. 1, 2006.

In the spring of 2010, the plaintiffs discovered latent defects in the Complex.  On Aug. 29, 2011, the plaintiffs filed a complaint for damages against Optima and other defendants.  Plaintiffs sought damages under breach of implied warranty of habitability and breach of implied warranty of good workmanship.  Optima added as third-party defendants Jenni and Loucon as well as others.  Optima alleged breach of contract and breach of implied warranties against Jenni and Loucon.  Optima sought indemnification and contribution.  Because both corporations had been dissolved, Optima served its notice upon the Secretary of State pursuant to Section 5.25 of the Illinois Business Corporation Act of 1983 (805 ILCS 5/1.01 et seq.)

Jenni and Loucon moved jointly to dismiss Optima’s third-party complaint pursuant to Section 2-615(a)(5) and (a)(9) of the Illinois Code of Civil Procedure.  Jenni and Loucon argued that since the third-party action against them was initiated more than 5 years after their dissolution (it was 6 years and 3 months after Jenni’s dissolution and 8 years and 8 months after Loucon’s dissolution), the Illinois Secretary of State was not authorized to act as the dissolved corporation’s agent under the Act.  Accordingly, they argued that service of summons on each was improper, and the court lacked personal jurisdiction.  On Nov. 29, 2012, the Circuit Court judge granted Jenni’s and Loucon’s joint motion to dismiss and dismissed them with prejudice. This appeal was taken by Optima.

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The 7th Circuit Court of Appeals in Chicago has reversed a district court judge’s decision in a case involving an indemnification clause in a contract.

Robert Krien was an employee of Riley Construction.  Riley was the general contractor on a construction project located in Wisconsin.  Riley in turn, hired Harsco Corporation to supply the scaffolding for the construction work.  Krien was injured when he fell from the scaffolding after a plank broke beneath him.  The parties settled Krien’s injury claim for $900,000.

Before the settlement, Harsco had filed a third-party complaint against Riley seeking indemnification for any damages Harsco might pay by way of judgment or settlement.  Then the parties filed cross-motions for summary judgment, and the district court judge granted Riley’s motion.  Harsco took this appeal to the U.S. Court of Appeals in Chicago.

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The Illinois Appellate Court for the First District in Chicago has found that a person can be held liable for a corporation’s debt even if he or she is not an officer or shareholder of the corporation.

In a case that amounts to a decision of wide-ranging implications and one of first impression on Illinois, the appeals court found that a default judgment in the amount of $421,582 against Palos Heights-based Silver Fox Pastries Inc. led to a judgment against an individual corporate “alter ego,” the defendant Haitham Aduzir.

The lawsuit brought against Silver Fox Pastries was for violations of the Illinois Trade Secrets Act.  In that lawsuit, first filed in 2006, the plaintiff John Buckley claimed that Silver Fox was a direct competitor of his business, Momma Gramm’s Bakery Inc. and that it had hired away two of its employees.

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TABFG is a limited liability corporation.  It brought a lawsuit against Richard Pfeil, claiming that among other things that Pfeil had tortuously interfered with a contract.  After a bench trial, the district judge entered judgment in favor of TABFG in the amount of $957,659.68, comprised of a principal of $674,121.87 plus prejudgment interest of $279,530.36 and costs of $4,007.45.  Pfeil appealed that judgment.

In April 2003, a joint venture was formed between the limited liability companies TABFG and NT Prop Trading (NT Prop).  The purpose of the joint venture was trading securities for financial gain. 

TABFG was made up of three individual members and managers whose responsibilities were all of the securities trading for the joint venture.  NT Prop was tasked with funding the joint venture and included two members who were also limited liability corporations.  The sole member, manager and owner of one of the limited liability corporations of NT Prop were Pfeil Commodity Fund, in which Richard Pfeil was known as the “money man” for the joint venture.

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In November 2006, Jose Lopez lent Jesus Quintana $20,570.  The purpose of the loan was for Quintana to purchase a car.  There was no written agreement for the loan, just an oral contract. 

According to Lopez’s lawsuit, Quintana defaulted on the loan by choosing not to make his payments in November 2009.  Lopez filed a lawsuit to collect the balance of the loan.  Quintana responded by moving to dismiss.

Quintana raised the statute of frauds, seeking to bar Lopez’s suit because he wanted enforcement of an oral agreement that would not be completed within a year of the date agreed upon in violation of the statute of frauds.  The statute of frauds is a legal principle that requires certain contracts to be reduced to writing.

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