Articles Posted in Commercial Litigation

In this appeal, the defendant Michael Maschmeyer’s conduct as a member of the plaintiff, Chicago Roof, Deck and Garden LLC (CRDG), led to an appeal regarding the claimed interest owed CRDG. Plaintiffs Darren Flynn and Tomasz Bartosiewicz owned the rest of the membership interest.

After a bench trial, the trial judge found that Maschmeyer breached his fiduciary duty as a member of CRDG by taking business opportunities that should have been first offered to CRDG. The trial court entered judgment in favor of CRDG and against Maschmeyer as follows: (1) $1,768,927 in compensatory damages, (2) $236,350 in prejudgment interest, and (3) $651,104 in punitive damages. The total judgment in favor of CRDG and against Maschmeyer was $2,656,381.

However, the trial judge also found that CRDG was required to compensate Maschmeyer for the fair value of his membership interest upon his disassociation from CRDG, which the court found occurred on June 16, 2014. The trial court determined that the fair value of Maschmeyer’s membership interest was $2,867,376 and entered judgment in favor of Maschmeyer and against CRDG in that amount. After setting off the amount of the judgment against Maschmeyer, the trial court’s judgments resulted in a net judgment in favor of Maschmeyer and against CRDG in the amount of $210,995.

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Clarisha Benson and Lorenzo Smith each purchased an opaque, seven-ounce box of Fannie May chocolates for $9.99 plus tax. Benson purchased Fannie May’s Mint Meltaways and Smith purchased Fannie May’s Pixies. Although the boxes accurately disclosed the weight of the chocolate within, and the number of pieces in each box, the boxes were emptier than either had expected.

The box of Mint Meltaways contained approximately 33% empty space and the box of Pixies contained approximately 38% empty space.

The plaintiffs eventually sued Fannie May on behalf of themselves and a putative class, alleging violations of Illinois Consumer Fraud and Deceptive Business Practices Act and asserted claims for unjust enrichment and breach of implied contract.

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The Illinois Appellate Court has affirmed the decisions of two Cook County judges related to the suit filed by SFG Capital LLC. The suit was filed against Patrick W. Kane in 2010; it was alleged that Kane defaulted on a loan. Following a consent agreement, the trial court entered a $783,000 judgment against Kane payable to SFG. In an attempt to satisfy the judgment, SFG initiated a citation to discover assets proceedings to identify available assets that Kane might have owned.

In 2012, William Platt, an estranged business partner of Kane, signed a promissory note for $1.2 million payable to Kane. The trial court ordered all rights, title and interest in the Platt note to be transferred to SFG on April 14, 2016, with instructions that SFG “may take such further action as necessary to enforce payment on the . . . note.”

Access Realty Group, the plaintiff in this case, acquired the SFG judgment by way of an assignment on April 14, 2017, and became the successor in interest to SFG. Platt is the sole shareholder of Access, as well as its president, secretary and registered agent.
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Within a year of when Michael Booth signed an employment agreement that had a non- competition clause, he resigned as president of Axion RMS and then went to work for a competitor. It was also alleged that, after leaving Axion RMS, he started luring away former colleagues. Axion sued Booth for the alleged violation of the non-compete contract.

A circuit court judge dismissed the case because (1) the alleged consideration for the restrictive covenant was Booth’s continued employment, and (2) several Illinois Appellate Court cases require, as a bright-line rule, two years of subsequent employment to qualify as adequate consideration for such provisions.

The circuit court judge also denied Axion’s request for leave to file an amended complaint that cured this problem (by alleging that the consideration for the non competition agreement included a boost in Booth’s salary, from $300,000 to $500,000 a year; his receipt of shares in the business; plus a promotion to president from vice president of sales).

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Illinois Gov. J.B. Pritzker has signed into law the Collective Bargaining Freedom Act, which became effective April 12, 2019. Under the new law, local governments will no longer be able to pass right-to-work ordinances.

The legislation is a signal of Gov. Pritzker’s approach to workforce regulation. A similar bill was passed in the previous General Assembly session, but the law was vetoed by then-Gov. Bruce Rauner.

The Act explains, “It is the policy of the State of Illinois that employers, employees, and their labor organizations are free to negotiate collectively.”

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The Illinois Appellate Court has reversed and remanded the decision dismissing the lawsuit brought by Advantage Marketing Group Inc. James P. Keane Sr. was one of the founders of Advantage Marketing Group Inc. Keane maintained a 35% shareholder stake in the company.  Keane had formally served as a director, officer and employee at Advantage Marketing.

Despite not being a company officer for the past several years, Keane repeatedly held himself as an owner and received the same bonus as Patty Hermann, the majority shareholder director at Advantage Marketing, and was a “principle employee . . . with wide-ranging responsibilities equivalent to those of an officer.”

Keane had developed and maintained Advantage Marketing’s natural records and explored strategic acquisitions, buying up competing businesses.

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Guitar Center sells musical instruments. It created a new brand of woodwind and brass instruments produced by Eastman known as “Ventus.”

Barrington owns the trademark “Vento,” which is used in relation to instruments it sells.  Barrington began using its mark in commerce in 2009 and achieved gross sales just under $700,000. Barrington filed for registration of its “Vento” mark in January 2010. In March 2011, Guitar Center began selling instruments using the “Ventus” mark, with gross sales totaling about $5 million.

Barrington filed suit against Eastman, Music & Arts, Guitar Center and Woodwind.

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Union Tank Car Co. relied on business records of third parties without any testimony from employees of those other companies to quantify damages caused by a breach of lease for 47 railcars.

An appeal was taken to the Illinois Appellate Court from a $1.27 million judgment entered in a Cook County bench trial. NuDevco Partners guaranteed the lease and argued that the trial court was wrong in ruling that Union Tank satisfied the requirement for the business records exception to the hearsay rule. NuDevco also claimed that the best-evidence-rule barred testimony about Union Tank’s wire transfers in payments to third parties.

The tankers were for shipping petroleum. The lessee, a subsidiary company of NuDevco, stopped paying rent and shipped the tankers back to Union Tank. To prove up freight, switching and storing charges, Union Tank presented invoices from its vendors, plus testimony from its director of fleet repair and the general manager of the lease division about receipts and payment of the bills.

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A December 2017 binding arbitration awarded unpaid sales representative commissions, punitive damages and attorney’s fees against Chicago medical device distributor MioMed Orthopaedics Inc. The  circuit court judge in the case confirmed judgment against the company in the amount of $91,654.21, plus costs.

The judgment was entered after Kreisman Law Offices’ attorney Robert Kreisman moved the court for summary judgment. MioMed’s counsel opposed the motion. After the motion was granted and judgment entered, MioMed’s lawyer moved to have the court reconsider that judgment order, which was denied.

Up to now, MioMed has refused to satisfy the judgment. Post-judgment processes are underway. Under Illinois law, judgments carry a 9% per annum interest rate until satisfied.

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A new law in Illinois prohibits employers from entering into noncompete contracts with employees who earn $13 per hour or less. The Illinois Freedom to Work Act (Public Act 099-0860) became effective on Jan. 1, 2017. The law makes it illegal for an Illinois employer to enter into a “covenant not to compete” contract with any of its “low-wage employees.”

The term “covenant not to compete” is defined to extend to any agreement restricting a covered employee from the following:

  • Working for another employer for a specified period of time.
  • Working in a specified geographic area.
  • Performing other “similar” work for another employer.

Any contract with a “low-wage employee” who contains any covenant not to compete is “illegal and void.” The act is limited to agreements entered into after the effective date of Jan. 1, 2017. The act comes out of the movement to curb employers from locking lower-level employees into unfair noncompeting contracts.

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