Articles Posted in Breach of Contract

Doug Miller owned two companies in Indiana:  E.T. Products, which blended and sold fuel-additive products, and Petroleum Solutions, which blended and sold lubricant products.

Petroleum Solutions also supplied a few customers with fuel additives from E.T. Products.

In January 2011, a group of investors led by Tom Blakemore purchased E.T. Products. As part of the sale, Miller and his son, Tracy, signed essentially identical non-competition agreements.

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The 1st District Appellate Court has reversed in part, vacated in part and remanded a decision by a Cook County judge in a case involving the use of trust money and investments.

Arie Zweig was the trustee of the Arie Zweig Self Declaration of Trust dated June 28, 1990. He used $2 million from the trust for an equity investment in a partnership supporting an ambulatory surgical center called Bedford Med. Bedford Med was operated by Bedford Med LLC. He said he was induced to invest by Nadar Bozorgi, Mandan Garahati and Guita Bozorgi Griffiths, acting as the Bozorgi Limited Partnership.

Zweig claimed that the Bozorgi defendants represented to him that the value of the Bedford Med operation was appraised at $21 million and that permanent financing had been secured. Zweig also claimed that the Bozorgi defendants maintained that they invested more than $5 million in the project, that the real estate had been already leased or was about to be finalized and that the investment would be used as equity and for working capital, generating an annual profit of 15-20%.

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Generally the law in Illinois states that a guarantor is entitled to assert the same defenses that would be available to the principal obligor. W.W. Merck White Lead Co. v. McGahey, 159 Ill.App. 418 (1st Dist. 1911).

“Under Illinois law, ‘the liability of a guarantor is limited by and is no greater than that of the principal debtor and . . . if no recovery could be had against the principal debtor, the guarantor would also be absolved of liability.’ ‘Although the language of a guaranty agreement ultimately determines a specific guarantor’s liability, the general rule is that discharge, satisfaction or extinction of the principal obligation also ends the liability of the guarantor.’” Riley Acquisitions v. Drexler, 408 Ill.App.3d 392, 402 (1st Dist. 2011), quoting Edens Plaza Bank v. Demos, 277 Ill.App.3d 207, 209 (1st Dist. 1995).

In the Riley case, the guarantors were two joint obligations to the bank. The bank released one of the obligors. The other obligor was a dissolved corporation. Under the applicable state law, the five-year post-dissolution time period for collecting against the dissolved corporation had expired.

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On Oct. 28, 2013, Robert Skahill signed a contract with Metropolitan Properties & Development Inc. The contract called for him to buy the property from Metropolitan for $3.1 million.

Skahill was required to put down $50,000 as earnest money of which $5,000 was due on the signing of the contract and the remaining $45,000 to be paid following the Nov. 18 inspection.

He Skahill paid $5,000, but never paid the remaining $45,000 in earnest money.

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The Neck & Back Clinic in Chicago was providing physical rehabilitation services to patients. In 1998, the clinic signed a series of leases for exterior building wall space to advertise its services. The clinic leased that advertising space through a company called Travisign, operated by David Travis. The Neck & Back Clinic alleged that Travis “represented that he was authorized to lease certain walls for advertising and that he had secured the requisite permits to place advertisements on the designated walls.”

However, in 2009, the clinic was notified that it had violated the Chicago Municipal Code by putting up advertisements without the proper city permits. The clinic was fined $3,000 and received another notice of violation. The clinic filed suit against Travis claiming breach of contract and fraud.

Travis and the clinic filed motions for summary judgment claiming that the other had failed to live up to its contractual obligations. The Circuit Court judge granted summary judgment in favor of the clinic finding that “Travis never secured the proper permits” and that he “did not perform his contractual obligations.” The Circuit Court judge awarded more than $10,000 in damages to the clinic. After dismissing a secondary claim against another party, Travis appealed.

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In 1986, Nina Willoughby operated a small business in which she sold retail clothes in a rented store. That year, she and Louis Fideli took out a $315,000 loan and purchased the store with other properties. The store property was kept solely in Fideli’s name. However, in 2003, Willoughby missed several mortgage payments; in 2004, the bank sued and foreclosed on her shop.

Fideli made Willoughby co-owner and then sole owner of the property after which she received a loan of $577,000 from the refinancing. John Heffron helped Willoughby with the transaction. Fideli received no compensation for transferring the property to Willoughby. The property was valued at $1.2 million in a loan application.

In June 2006, Fideli filed a lawsuit against Willoughby claiming that she had promised to repay him 50% interest in the property once she had avoided the foreclosure action. He charged her with unjust enrichment.

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The Illinois Appellate Court has affirmed a Cook County trial judge’s order regarding the effect of an attorney’s lien notice sent to a defendant’s attorneys rather than the defendant directly.

Randy Brown was the owner and operator of a Harold’s Chicken Shack in suburban Broadview, Ill., until Jan. 15, 2009. On that date, the building’s roof collapsed, and the restaurant was destroyed.

The building was leased to Brown by Tap Investment LLC. It was managed by Universal Realty Group. Tap and Universal were defendants in this case. Brown sued both companies and their principals. His lawsuit was filed on Aug. 2, 2010, and the complaint was signed by a lawyer with the law firm representing Brown. The law firm was based in Naperville, Ill.

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In October 2006, Stericycle Inc. entered into a contract with RQA Inc. to buy a segment of its business for $8 million.

Stericycle acquired the unlimited right to use RQA’s software. In addition, the two companies entered into a non-competition agreement. In 2010, the two companies contracted again, this time entering into an asset purchase agreement for $18 million.

One of the assets purchased was RQA’s “Recall and Retrieval Business Services Unit,” which was called the RR assets. The agreement made note that Stericycle would be refunded a portion of the purchase price if Stericycle did not achieve certain pre-set revenues.

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Late in 2002, the developer of 1717 S. Prairie Ave. in Chicago, Ill., retained the defendant Hansen & Hempel Co. to complete the masonry work for a 23-story condominium complex. When the building was nearly finished in March 2004, it started to experience water leakage. The condominium association, Board of Directors of the Prairie District Homes Tower Condominium Association, hired an engineering firm to design and implement a repair that was estimated to cost over $6,500,000.

Because of the report on the defects to the building, the association filed a lawsuit wherein the case was tried to a jury on the sole issue of breach of implied warranty of habitability.

The plaintiff board of directors of the condominium association contended that 90% of the through-wall flashing in dams installed by the defendant masonry company were either missing or installed improperly and claimed that because of those material defects it allowed water to penetrate the inner cavity of the building.

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Larry Fabian was hired in 2001 by Cantor Fitzgerald to be a broker at the Chicago Mercantile Exchange. In 2007, he was transferred to BGC, which was a spinoff company of Cantor Fitzgerald.

In 2008, Fabian was named as a partner of “Founding Partner No. 69.” According to Fabian, he earned 100,393 “founding partner units” which could later be converted into common stock of the company.

On March 27, 2009, Fabian quit working for BGC to work for another securities firm. Shortly after leaving BGC, Fabian initiated arbitration before the Chicago Mercantile Exchange where he received $121,758 in commissions that he was owed from Cantor Fitzgerald. This did not include any reimbursement for his “founding partner units.”

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