1.265 Million Awarded to Investors After Corporation Cancels Stock – Dore, et al. v. Sweports Ltd.

There’s the old adage “you don’t get something for nothing,” a concept that holds particularly true in business dealings. Yet in the business litigation case of John A. Dore, Andrew G. Chenelle, Michael O’Rourke and Michael C. Moody v. Sweports Ltd., 07 L 12136, the defendants expected to do just that. The lawsuit was filed after the defendant company took the plaintiff investors money, but then rescinded all of the plaintiffs’ stock interest.

The four plaintiffs, Dore, Chenelle, O’Rourke, and Moody, became involved in Sweports, Ltd. in 2006. Sweports, a Delaware company, was looking for investors for its subsidiary, UMF Corporation. UMF created and sold various antimicrobial cleaning products under the trademark name “PerfectClean.” Dore et al. agreed to help finance UMF in exchange for 11 percent of the company’s stock.

However, in June 2007, Sweports’s president, George Clarke, passed a corporate resolution that effectively rescinded all of Dore et al.’s stock interest in the company. This resolution was passed without any prior notice to the plaintiffs. So just a year after Dore et al. had invested around $800,000 in Sweports and UMF, they no longer owned any portion of the company. Dore et al. promptly filed a business litigation suit against Sweports, Ltd.

The business complaint alleged that Sweports had breached its contract with the four plaintiffs. Dore et al. alleged that they had signed a contract documenting their payment of $800,000 to Sweports in exchange for 11 percent ownership of the company. The business lawsuit was a way for the plaintiffs to recover the lost value of their stock after Sweports rescinded it.

During the pretrial proceedings, the plaintiffs’ attorneys filed a motion for summary judgment, in which they asked the judge to consider the case facts and rule in favor of the plaintiffs. A summary judgment is entered when there facts are so overwhelmingly in one party’s favor that there is only one conclusion that can be reached. Apparently the judge in Dore v. Sweports felt that these conditions applied; he entered a judgment stating that Sweports had breached the terms of its contract with the plaintiffs. This judgment was based on the judge’s finding that Sweports had used the plaintiffs’ funds and then later rescinded their stock.

Because the judge had already decided in favor of the plaintiffs, the only thing left for the jury to decide was the amount of damages the plaintiffs would be awarded. The defendant argued at the jury trial that the plaintiffs were not entitled to any damages because the value of their stock had decreased. The defense argued that the plaintiffs would not have made any money if it had not rescinded their stock options and therefore should not be awarded any money by the jury.

However, the jury disagreed and awarded a total of $1.265 million to the four plaintiffs. The award may be broken down as follows:
• $345,000 to John Dore;
• $345,000 to Michael O’Rourke;
• $345,000 to Michael Moody; and
• $230,000 to Andrew Chenelle;
This jury verdict falls in line with the damages that Timothy J. Touhy and Myles P. O’Rourke, the attorneys for the four plaintiffs, had asked for prior to the close of the jury trial. Touhy and O’Rourke had asked the jury to return a verdict between $1 million and $2 million.

Kreisman Law Offices has been handling Illinois business litigation matters for 36 years in and around Chicago, Cook County, and surrounding areas, including Hinsdale, Naperville, Schaumburg, Addison, Cicero, Franklin Park, Hoffman Estates, and Hanover Park.

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