Articles Posted in Corporations

A contract was entered into between Beckett Media LLC and OnRamp Technologies to allow Beckett to use OnRamp’s applications and websites for “inventory management and sales solution.” According to the contract, “in the event of any litigation of any controversy or dispute arising out of or related to this agreement, the prevailing party shall be entitled to an award of reasonable attorneys’ fees and costs.”

On Oct. 1, 2010, Beckett filed a lawsuit against OnRamp claiming breach of contract, unjust enrichment and violation of the Uniform Deceptive Trade Practices Act and the Consumer Fraud of Deceptive Business Practices Act.

During the trial, the parties voluntarily dismissed the claims about violation of the two deceptive practices act. Beckett filed an amended complaint for unjust enrichment, breach of contract and replevin, seeking the return of its server as well as money damages incurred by OnRamp’s refusal to return the server.

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The Illinois Appellate Court for the Third District has held that persons with claims against a corporation dissolved for more than 5 years could not recover against the corporation’s liability insurers.

In this case, defendant insurers included Employers Insurance Co. of Wausau, TIG Insurance Co. and Travelers Casualty and Surety Co.  The claimants were numerous individuals who were former employees of Sprinkmann Sons Corp. of Illinois who were diagnosed with mesothelioma and lung cancer.  The claimants brought a lawsuit against the former Sprinkmann company, its previous owners and its liability insurers in 2011.

The former Sprinkmann company, however, had been dissolved in 2003 with certain of its assets having been sold to a new corporation, Sprinkmann Insulation Inc.  The new Sprinkmann company did not acquire any liabilities or insurance policies of the older dissolved Sprinkmann company.

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In a landlord-tenant case that included a bankruptcy, the Illinois Appellate Court weighed in on the law of unjust enrichment and constructive trust. The case involved the payments on a commercial lease, a bankruptcy and the legal principles.

The commercial lease tenant — Montgomery Ward — had filed for bankruptcy protection in 1997. Montgomery Ward had defaulted on its lease that same year. A proof of claim was filed and approved for the commercial landlord, DiMucci LLC. DiMucci defaulted on its loan from GALIC. GALIC filed a motion in the bankruptcy court in the case seeking an assignment of DiMucci’s claim against Montgomery Ward. The court allowed the assignment of the allowed bankruptcy claim of $640,000 for the default in lease payments.

In February 2001, the check in the amount of the assignment — $638,537.50 —  was received by DiMucci LLC, which was supposed to deliver the payment of $640,000 to its lender, GALIC. Instead, DiMucci LLC pocketed the check. The lender’s insurer, National Union, then filed a state court action against the landlord’s officer to recover the $640,000. The trial judge granted summary judgment for the plaintiff on its unjust enrichment and constructive trust counts. The defendant, landlord officer, appealed.

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This was a breach of contract case that started out in the Chancery Division of the Circuit Court of Cook County and then became a law matter tried before a jury. In this case, a verdict of $971,858 was the outcome in a lawsuit brought by the Harold O. Schulz Co. Inc. for work it did as a general contractor in the renovation and construction work at 1435 and 1431 N. Astor Street in Chicago.

The work was done from 2007 through 2010.  The two property addresses consisted of three residential buildings, including a 20,000-square-foot historic mansion built in 1894, a coach house and an adjacent residence.

The main house involved in this lawsuit was inhabited by Jay Prtizker, Mary Pritzker and her family.

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The U.S. Court of Appeals for the Seventh Circuit in Chicago has affirmed a decision by a trial judge that led to the forfeiture of an oil and gas franchise. Emmanuel Joseph operated a British Petroleum (BP) service station in Chicago.  Sasafrasnet, LLC was the authorized distributor of BP products.  Joseph was the franchisee with Sasafrasnet being the franchisor. 

In November 2010, Sasafrasnet served Joseph with notice of its intent to terminate the franchise. The termination was based on the three occasions when Sasafrasnet’s attempt to debit Joseph’s bank account to pay for fuel deliveries was declined because of insufficient funds. 

In May 2011, Joseph sought a preliminary injunction to stop the termination. The U.S. District Court judge denied the request finding that Joseph chose not to show “sufficiently serious questions going to the merits to make such questions fair ground for litigation.” Joseph appealed the denial to the Seventh Circuit Court of Appeals. The appeals court first returned the matter to the trial judge for additional findings and conclusions on whether Joseph’s insufficient funds denials amounted to “failures” under the Petroleum Marketing Practices Act (PMPA). PMPA is a federal law that regulates the sales of many petroleum products by producers of oil and gas products to franchised dealers who sell to the public.

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The Illinois Appellate Court has reversed and remanded a decision by a circuit court judge regarding a contract.  Global Care S.C. was a medical services corporation that leased several office suites from K&K Holdings. The term of the leases was seven years.  The lease was to end on July 31, 2011.  The original leases were signed on July 30, 2004.

On Oct. 13, 2006, a rider was attached to the original lease, which terminated one of Global Care’s rental suites and added a new one. 

The rider removed Global Care’s ability to terminate the lease early, requiring six months’ notice and payment.  The payment schedule attached to the rider provided for rental payments through Oct. 31, 2013.  There was nothing in the addendum to the rider that extended the lease though October 2013. 

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In a class action brought by Motorola investors it was maintained that during 2006, the company made false statements in order to disguise its inability to deliver a mobile phone for sale that would employ three different protocols. When it became public that Motorola could not produce the new mobile phone, its stock sank significantly. 

After the lawsuit had been pending for four years, the district court denied Motorola’s motion for summary judgment. After that, the parties settled for $200 million. The class members approved the settlement, but objected to the judge’s decision to award 27.5% of the settlement to the trial lawyers who represented the class.

One of the former class members filed an objection a month after the deadline. Though he filed an objection to the award of legal fees, the objector chose not to file a claim for his share of the settlement fund. As a result, the court of appeals concluded that the objector lacked any interest in the amount of attorney fees awarded and as a result, dismissed his appeal.

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Bank of America (“Bank”) lost about $34 million when Knight Industries went bankrupt. In the Bank’s lawsuit under federal diversity jurisdiction, it was alleged that Knight’s directors and managers looted the company and that its accountants neglected to detect the fraud. The parties had agreed that Illinois law applied. The district court dismissed all of the Bank’s claims on the pleadings on a motion. 

The accounting firm, Frost, Ruttenberg & Rothblatt, P.C. were Knight’s accountants.The accountants sought to invoke the protection of Illinois law under 225 ILCS 450/30.1, which provides that an accountant is liable only if the accountant himself/herself committed fraud or “was aware that a primary intent of the client was for the professional services to benefit or influence the particular person bringing the action.”  The district court here concluded that the bank’s complaint did not allege plausibly that the accounts knew that Knight’s “primary intent” was to benefit the bank. 

The lawsuit alleged that the accountants knew that Knight furnished copies of the financial statements to its lenders, including the Bank. But the district court judge observed that auditors always know that clients send statements to lenders (existing or prospective). The statute would be ineffectual if knowledge that clients show financial statements to third parties were enough to demonstrate that the client’s “primary intent” was to benefit a particular lender.

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Edward Myles, a truck driver, claimed that he lost earnings due to the defendants’ unfair acts and practices. The claim stemmed from the defendants’ breach of contract relating to the sale of commercial trucking equipment.

Mr. Myles claimed loss of revenue due to the defendants’ intentional interference with a third-party contract.

The defendants denied all of the plaintiff’s claims and filed a counterclaim seeking to recover the unpaid balance on the equipment.

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The Illinois Appellate Court affirmed the ruling of the trial judge dismissing a breach of fiduciary duty claim regarding a troubled condominium development. The west-side Chicago development was managed by Two South Leavitt, LLC, whose duties were directed by an individual, John R. Joyce. Mr. Joyce was an attorney employed by the defendant Stahl Cowen Crowley Addis, LLC. Mr. Joyce later moved on to two other law firms.

Before the start of the construction of the condominium development, Two South Leavitt and Joyce, with another business partner, were looking for investors. The solicitation they offered guaranteed a 12 percent annual return. Several investors contributed a total of $757,000 to Leavitt. On top of that, bank financing was secured.

Joyce was acting as legal counsel for Leavitt and negotiated a construction contract with a construction firm. Joyce, also acting as Leavitt’s manager, approved the construction contract. Construction began in 2004, but delays in costs overruns caused the building to remain unfinished. A lawsuit was filed shortly thereafter.

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