Articles Posted in Contract Litigation

Jefferson City Retirement LLC (“JCR”) appealed from the circuit court’s judgment in favor of Twehous Excavating Inc. on its claims for breach of contract and quantum meruit. JCR contended that the court erred in granting Twehous’s relief on both claims because the claims were mutually exclusive and inconsistent as a matter of law.

However, the Missouri Appellate Court affirmed the judgment, stating that the claims are not mutually exclusive.

In 2013, JCR began building a retirement and assisted living community on property it owned in Jefferson City, Mo. JCR hired Omni Construction Co. Inc. as the general contractor on the project. Omni entered into a subcontract agreement with Twehous to provide excavation work under Omni’s direction.

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ABC Acquisition Co.’s breach of fiduciary duty claim was brought against James Trausche, the former president of Aetna Bearing Co. Trausche’s business assets were acquired by ABC.  This issue of law presented a question of first impression under Illinois law about an officer’s obligations to a successor corporation.

After ABC purchased substantially all of Aetna’s assets (including intellectual property) and hired three of Aetna’s employees (including Donald Koziel) Trausche formed AIP Products Corp., hired Koziel and started competing against ABC.

ABC filed a federal complaint in the Northern District of Illinois in Chicago. ABC alleged that Trausche, AIP, and Koziel violated the federal Defend Trade Secrets Act and the Illinois Trade Act (Count 1 and 2). The complaint also alleged that Koziel violated the Computer Fraud and Abuse Act and breached his employment agreement (Count 3 and 4) and that Trausche and Koziel breached fiduciary duties allegedly owed to ABC.

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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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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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Noncompete agreements have always been controversial for the way they intend to or unintentionally restrict employees from gaining employment after leaving a job where a noncompete agreement was signed. In 2017, the Illinois General Assembly addressed concerns about noncompete clauses found in low-wage employees. Effective January 2017, the Illinois Right to Work Act prohibits private-sector employers from entering into noncompete agreements with low-wage employees, rendering such agreements facially illegal and void.

This Illinois law is similar to other states that have passed legislation that also limits the employer’s ability to restrict low-wage employees in noncompete contracts in the private-sector.

For example, in the last couple of years, Alabama, Hawaii, New Mexico, Nevada, Oregon, Utah and Washington have passed laws that restrict the enforceability of noncompete agreements. Other states, including New Jersey and Pennsylvania, have proposed legislation that mirrors restrictions in enforceability of noncompete agreements.

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A breach of lease case resulted in a $278,198 default judgment, which was Count II of a Complaint brought by A.L. Dougherty Real Estate and Phyllis K. Dougherty. The complaint was filed against Cube Global LLC and March Fasteners Inc.  The complaint alleged that Cube Global was liable as March’s alter ego.

A bench trial was held.  The plaintiff presented evidence that Cube Global, which was incorporated while the lease case was pending, wound up with all of March Fastener’s assets and customers.

With the underlying decree boosted by fees, costs and interest, the judgment against Cube Global was $676,222. The judgment was against Su Chin Tsai, whose 16-year-old daughter was listed as Cube’s incorporator, and it totaled $435,584.

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The issue in this case was whether the financial condition of Wexford Health Sources, the defendant in this federal lawsuit, is relevant for Federal Rule of Civil Procedure 26(b) to apply. This rule limits discovery to that which is “relevant to any party’s claim or defense.” If a corporate defendant’s wealth may not be considered when assessing punitive damages, it is not “relevant,” but if it may be properly considered then, of course, it is relevant. In this U.S. Federal District Court of Illinois (Central District) lawsuit, the initial question to be answered was whether Wexford’s financial condition could be investigated through discovery; this was answered mostly by the case of Zazu Design v. L’Oréal, 979 F.2d 499 (7th Cir. 1992).

In Zazu, a case relied upon by Wexford, the defendant in this case, the court considered the defendant’s appeal in a trademark infringement action. The court reversed and remanded, finding that the plaintiff did not have superior rights in trademark to the defendant and, even if it had, the damages award was excessive.

Regarding the punitive damages award, the court noted that although courts “take account of a defendant’s wealth when an amount sufficient to punish or deter one individual may be trivial to another,” such may not be the case when the defendant is a corporation. The court explained:

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The United States Court of Appeals for the Seventh Circuit in Chicago has affirmed in part and reversed in part the district court’s decision regarding a third-party lawsuit.

Sam Chee was driving with his wife, Toni Chee, in August 2010 when their car slammed into a tree. Toni was seriously injured and taken to a hospital where she died within a week. The estate of Toni Chee filed two lawsuits. One was against Sam Chee for negligent driving and another was against the hospital and the attending physicians claiming medical negligence was a cause of Toni’s death.

The defendants in the medical malpractice claim filed a third-party action against Sam Chee, seeking contribution or other compensation from him should the medical defendants be held liable to the estate.

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Three Illinois workers and two public worker unions waited for the U.S. Supreme Court to weigh in on a carbon copy of their union-fee dispute. The case they were waiting on from the Supreme Court was Friedrichs v. California Teachers Association. Because of the death of Supreme Court Associate Justice Antonin G. Scalia, there was 4-4 split on the issue of whether mandatory payment of union fees for nonmember public workers is a First Amendment violation.

Because of the spit decision,  the 9th U.S. Court of Appeals ruling in Friedrichs stands, but does not create a national precedent.

“Our case is in a strong position to be the next case on this topic that the Supreme Court takes up,” said attorney Jacob H. Huebert of the Liberty Justice Center, which represents the three plaintiff workers challenging whether union fees should be paid for nonmembers.

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