Articles Posted in Contract Litigation

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In 1952, the owner of a parcel of land in Illinois granted a pipeline operator an easement for two pipelines to cross his land. The first pipeline was built immediately.

The easements specified that the second pipeline, if constructed, was required to be built within ten feet of the first pipeline. The pipeline operator promised the landowner that the land would remain farmable.

In 2012, the current pipeline operator notified the landowner that it planned to build the second pipeline. The owner responded with a lawsuit to quiet title. The pipeline operator removed the case to the federal district court under diversity jurisdiction.

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Fortunee Massuda was an investor in a group of Panda Express restaurants in Chicago. The restaurants were owned by a joint venture, RC Partnership, made up of Panda Express Inc. and Rezko Concessions Inc. Massuda invested $4 million in the joint venture in exchange for an ownership interest of 11% in the joint venture. The joint venture also owned and controlled PE Chicago, a Delaware LLC. By the year 2001, the value of the RC Partnership was estimated to be $56.4 million.

By 2005, Rezko Concessions’ owner, Tony Rezko, was in deep financial and legal trouble. In April 2006, Massuda went to Panda and informed it of her intent to sue Rezko and asked whether Panda would be interested in buying her 11% share. Panda’s general counsel declined the offer and instead told Massuda that her stake was worthless.

In mid-May 2006, Rezko was urgently in need of money. In order to secure funds, Rezko offered to sell PE Chicago’s interest in RC Partnership to Panda. Panda agreed to pay Rezko $3 million, keep the deal between them secret and grant Rezko personally a buy-back option.

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Gamesa Technology Corp. entered into a contract with Minnesota-based Outland Renewable Energy to provide maintenance for Gamesa’s wind turbines. Iberdrola Renewables Inc. runs the Gamesa-made turbines at the Cayuga Wind Farm located in Livingston County, Ill.

While servicing a Cayuga turbine, one of Outland’s employees, Aaron McCoy, was electrocuted when the turbine unexpectedly re-energized. McCoy filed a personal injury lawsuit in state court against Iberdrola Renewables and Gamesa. The case was removed from state court to federal court on diversity of citizenship grounds. Iberdrola Renewables impleaded Outland Renewable Energy LLC, claiming indemnification based on the contract and the Illinois Joint Tortfeasor Contribution Act.

Outland then filed 22 counterclaims, which included indemnification raising federal and state anti-trust claims and other state law claims. Outland was not successful in seeking a preliminary injunction against Gamesa’s allegedly unfair competitive practices.

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The 7th Circuit U.S. Court of Appeals in Chicago has affirmed a decision dismissing a copyright claim brought by Catherine Conrad, who was a self-employed singing and dancing entertainer. Conrad calls herself the “Banana Lady” and performs wearing a costume in the shape of a giant banana.

Conrad was hired by several credit unions to perform a “singing telegram” at a credit union trade association event. Conrad claimed that she told the arrangers that members of the audience were not to take photos or video of her performing except for their own personal use. The exception to the rule that she imposed was that postings on Facebook pages would be allowed.

In Conrad’s pro se lawsuit brought against the credit union, she alleged that the organizers did not inform the audience of these restrictions until after she completed her performance. As a result, she claimed several audience members took photos and videos during the performance and posted them to the Internet.

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The plaintiff, Michigan Indiana Condominium Association, is a 119-unit residential condominium complex (the “Complex”).  Optima was the general contractor and selected a variety of subcontractors to do the construction work.  Construction was completed in June 2002.  One of the contractors was Jenni and Loucon.  Loucon was the masonry contractor.  On Sept. 2, 2003, Loucon was dissolved as an Illinois corporation.  Jenni was likewise dissolved on Jan. 1, 2006.

In the spring of 2010, the plaintiffs discovered latent defects in the Complex.  On Aug. 29, 2011, the plaintiffs filed a complaint for damages against Optima and other defendants.  Plaintiffs sought damages under breach of implied warranty of habitability and breach of implied warranty of good workmanship.  Optima added as third-party defendants Jenni and Loucon as well as others.  Optima alleged breach of contract and breach of implied warranties against Jenni and Loucon.  Optima sought indemnification and contribution.  Because both corporations had been dissolved, Optima served its notice upon the Secretary of State pursuant to Section 5.25 of the Illinois Business Corporation Act of 1983 (805 ILCS 5/1.01 et seq.)

Jenni and Loucon moved jointly to dismiss Optima’s third-party complaint pursuant to Section 2-615(a)(5) and (a)(9) of the Illinois Code of Civil Procedure.  Jenni and Loucon argued that since the third-party action against them was initiated more than 5 years after their dissolution (it was 6 years and 3 months after Jenni’s dissolution and 8 years and 8 months after Loucon’s dissolution), the Illinois Secretary of State was not authorized to act as the dissolved corporation’s agent under the Act.  Accordingly, they argued that service of summons on each was improper, and the court lacked personal jurisdiction.  On Nov. 29, 2012, the Circuit Court judge granted Jenni’s and Loucon’s joint motion to dismiss and dismissed them with prejudice. This appeal was taken by Optima.

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The 7th Circuit Court of Appeals in Chicago has reversed a district court judge’s decision in a case involving an indemnification clause in a contract.

Robert Krien was an employee of Riley Construction.  Riley was the general contractor on a construction project located in Wisconsin.  Riley in turn, hired Harsco Corporation to supply the scaffolding for the construction work.  Krien was injured when he fell from the scaffolding after a plank broke beneath him.  The parties settled Krien’s injury claim for $900,000.

Before the settlement, Harsco had filed a third-party complaint against Riley seeking indemnification for any damages Harsco might pay by way of judgment or settlement.  Then the parties filed cross-motions for summary judgment, and the district court judge granted Riley’s motion.  Harsco took this appeal to the U.S. Court of Appeals in Chicago.

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On Dec. 17, 2007, Rico Industries entered into an agreement with TLC Group Inc., in which TLC would serve as Rico’s exclusive sales representative to Wal-Mart.

Rico, an Illinois corporation that specializes in production of novelty and sports-affiliated merchandise, entered into the agreement, specifying that any change, cancellation or termination of the agreement must be mutually agreed by both TLC and Rico in writing.

Rico claimed that it was not represented by an attorney during the negotiations and drafting of the contract.  Further, Rico claimed that in the drafting of the contract, the entire length of which was under one page,  there were no other conditions in which the contract could be terminated.

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TABFG is a limited liability corporation.  It brought a lawsuit against Richard Pfeil, claiming that among other things that Pfeil had tortuously interfered with a contract.  After a bench trial, the district judge entered judgment in favor of TABFG in the amount of $957,659.68, comprised of a principal of $674,121.87 plus prejudgment interest of $279,530.36 and costs of $4,007.45.  Pfeil appealed that judgment.

In April 2003, a joint venture was formed between the limited liability companies TABFG and NT Prop Trading (NT Prop).  The purpose of the joint venture was trading securities for financial gain. 

TABFG was made up of three individual members and managers whose responsibilities were all of the securities trading for the joint venture.  NT Prop was tasked with funding the joint venture and included two members who were also limited liability corporations.  The sole member, manager and owner of one of the limited liability corporations of NT Prop were Pfeil Commodity Fund, in which Richard Pfeil was known as the “money man” for the joint venture.

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