Articles Posted in Breach of Contract

When workers get sued by their employer for breaching their employment contract, it’s fairly common for the workers to argue that the contract was invalid, but it’s less common for them to claim their signature on the contract was forged. That’s what Eric M. Frieman said when USI Insurance Services, LLC, sued him for allegedly stealing clients away from Wells Fargo to work with his new employer, RCM&D Self-Insured Services Inc., otherwise known as SISCO.

Frieman started working for Wells Fargo Insurance Services USA Inc. in 2008 as an employee benefits producer. In 2010, he signed an employment contract with Wells Fargo that included clauses that forbade him from working for a competitor and/or soliciting clients from Wells Fargo to switch to his new employer.

But when Frieman left Wells Fargo in 2016 to go work for RCM&D, he allegedly actively solicited 18 clients he had served while working at Wells Fargo and invited them to switch over to RCM&D, which they did. USI purchased Wells Fargo in 2017 and they are named as the main plaintiffs in the non-compete lawsuit against Frieman.

Rather than denying that the employment contract he signed with Wells Fargo is valid, Frieman claimed that he had never signed the document and that his signature had been forged. He insisted he only has one signature and that the signature above his name on his employment contract with Wells Fargo does not match his signature. Continue reading ›

After the manufacture of granola bars went awry, the company that hired the manufacturer sued the manufacturer alleging breach of contract among other claims. The granola company alleged that the manufacturer failed to supply the required number of granola bars and supplied bars that were defective. The suit was filed in Illinois, and the defendant manufacturer, headquarters in Illinois, attempted to transfer the case to Michigan where the production of the bars had occurred. The trial court denied this motion, finding that Illinois was an appropriate forum, and the appellate panel of the Illinois Appellate Court agreed and affirmed.

18 Rabbits, Inc. is a California corporation with headquarters in San Francisco, CA. Hearthside Food Solutions is a Delaware corporation with headquarters in Downers Grove, IL. 18 Rabbits hired Hearthside to toll manufacture its premium organic granola bars, in a process by which 18 Rabbits would supply the raw materials for the bars, Hearthside would manufacture them, and 18 Rabbits would own the completed product. In August 2016, the two companies executed a mutual confidentiality agreement.

The two companies met shortly thereafter to discuss the possibility of Hearthside manufacturing the bars. Beginning in September 2016, Hearthside’s Illinois-based managers participated in multiple, weekly telephone calls with 18 Rabbits. Hearthside represented that it could manufacture the bars to 18 Rabbits’ specifications and to satisfy all of 18 Rabbits’ customers’ orders for bars. Continue reading ›

Two property owners got into a dispute regarding a roof that encroached onto a neighboring property. The roof was constructed after the prior owners of both properties agreed and entered into a revokable license. The trial court found that the roof was an encroachment and granted summary judgment for the plaintiffs. The appellate panel disagreed, finding that the encroachment was unintentional, and the cost of replacing the roof was great while the benefit to the plaintiff of having the roof replaced was minimal. Therefore the panel determined that the trial court abused its discretion in finding for the plaintiff.

JCRE Holdings owns property in Peoria Heights. GLK Land Trust owns the neighboring property. Gary L. Kempf is the trustee of GLK Land Trust. The two properties share a common wall. In 1982, the prior owners of the properties entered into and recorded a “Party Wall Agreement.” The agreement designated the shared wall as a common support wall. In 1996, when two other sets of owners owned the properties, one received permission from the other to construct a sloped roof that hung over a portion of the wall onto the others’ property.

In 2014, JCRE sued GLK alleging that the overhanging roof constituted a trespass. The complaint sought injunctive and other relief. The parties filed cross-motions for summary judgment. The trial court denied both motions. After motions to reconsider, the trial court granted JCRE’s motion, finding that the agreement between the prior property owners constituted a revocable license that JCRE revoked. GLK then appealed. Continue reading ›

After a tradeshow exhibit vendor was stiffed on the payment of a contract by a middleman, it sued the tool manufacturer to recover its debt. At the same time, it filed a claim in the bankruptcy proceeding of the middleman. The district court ruled that the plaintiff could not pursue a claim against the manufacturer because it had a claim pending in the middleman’s bankruptcy proceeding. The 7th Circuit panel reversed, finding that there was no concept of judicial estoppel where a pending claim in a bankruptcy proceeding barred seeking the collection of a debt from a third party.

TRUMPF, Inc., the U.S. subsidiary of an international business, makes specialty tools such as precision laser cutters. TRUMPF sells many of its products at trade shows. It hired Lynch Exhibits to handle its appearance at the 2017 FABTECH show in Chicago. Lynch then subcontracted with CSI Worldwide to provide some of the necessary services.

CSI contended that it told TRUMPF that it was unsure of Lynch’s reliability. CSI stated that it would do the work only if TRUMPF paid it directly or guaranteed Lynch’s payment. According to CSI, TRUMPF assented. The two entities did not sign any undertaking to that effect. CSI did the work and then billed Lynch. Lynch did not pay. CSI filed an involuntary bankruptcy petition against Lynch, who then filed a voluntary bankruptcy petition. CSI claimed approximately $530,000 as a creditor, and also filed suit against TRUMPF under diversity jurisdiction, seeking $530,000 on theories including unjust enrichment and promissory estoppel. Continue reading ›

Business owners and consumers alike know that contracts are an everyday part of life. Equally common though are modifications or amendments to those contracts. Some modifications are memorialized in writing. Many more, however, are made orally and even worse some are implied through a party’s conduct. As we have discussed previously, Illinois law permits the parties to a contract to orally modify their contracts, even if the contract provides that all amendments must be in writing. However, certain contracts are subject to specific statutory provisions that prohibit oral modifications.

One such statutory prohibition against oral modifications is Section 2-209 of the Illinois Commercial Code, 810 ILCS 5/2-209(2). Section 2-209 of the Illinois UCC governs modification, rescission, and waiver of contracts for the sale of goods. Specifically, Section 2-209(2) bars oral modifications but only when the prior written contract includes a provision that “excludes modification or rescission except by a signed writing.” Business owners must be aware though that Section 2-209 does not apply to all contracts. It is limited to transactions in goods and may be extended only to contracts that are predominantly for the sale of goods. Business owners must be aware of the requirements for Section 2-209 to apply.  Continue reading ›

After two companies got into a dispute about the timeframe for payment of invoices, the 7th Circuit Court of Appeals found that the district court had erred in not considering the parties’ course of dealings to determine what a fair time to pay would have been.

In 1999, Valley Drive Systems, Inc. began manufacturing parts for Arctic Cat, Inc. In 2002, Driveline assumed control of Valley Drive Systems, Inc.’s assets. In June of that year, Driveline and Arctic Cat entered into a contract where Driveline would provide specifically-manufactured hubs, axels/half-shafts, outer and inner tie rods, shift shafts, and steering stops. The contract made Driveline a “just-in-time supplier” for Arctic Cat. Driveline provided its goods and filled orders daily with regular deliveries to Arctic Cat. Continue reading ›

After two companies got into dispute over fallout from jointly hosted party during Indianapolis 500, the appellate court affirmed the district court’s view that the plaintiff had no non-speculative evidence of damages, and that the plaintiff had committed a breach of contract by not promoting the event across the social media channels that it agreed to use.

The Indianapolis Motor Speedway, LLC sponsors the annual Indianapolis 500 race and associated race-weekend events, which include musical acts and other festivities. In 2015, Karma International became a licensee of Maxim, a men’s magazine. Karma has hosted Maxim-branded entertainment at large sporting events, including a party prior to the 2016 Super Bowl in San Francisco.

In early 2016 Karma began negotiations with the Speedway to host a Maxim-branded event at that year’s 100th-running of the race. The parties eventually agreed on terms in a March 2016 agreement. The agreement required each party to cross-promote the event across their social media channels. The Speedway complied with its obligations under the agreement, but Karma never ran the banner ad it promised to show on Maxim.com. It also did not use Maxim’s social-media channels to promote race-weekend events. Continue reading ›

A condo association held an insurance policy on its condo buildings. In 2014, a hail and wind storm damaged the siding on several of the buildings. The storm, however, damaged only the south and west-facing sides of the buildings. The association’s insurer initially paid the association several million to repair the damage, which covered the replacement cost of siding for the south and west sides of the buildings. The association found, however, that matching siding was no longer produced. The insurer refused to pay the cost of replacing the siding on all sides of the building, so the association sued. The district court ruled in favor of the association, and the insurer appealed. The appellate panel affirmed. The panel found that requiring the insurer to replace all sides of the building was a sensible construction of the contract, given that replacing the siding such that two sides of the building did not match the other two would reduce the value of the properties and keep the insured from being made whole.

Windridge of Naperville Condominium Association held an insurance policy via Philadelphia Indemnity Insurance Company. In May 2014, a hail and wind storm-damaged buildings owned by Windridge. These buildings were insured by Philadelphia Indemnity. The storm directly damaged the siding only on the buildings’ south and west sides. Philadelphia Indemnity paid Windridge $2.1 million for the damage, which covered the replacement of the siding on the south and west sides.

Windridge, however, sought replacement of the siding on all four sides of the building, as matching siding for the south and west sides was no longer available. Philadelphia Indemnity refused to pay those costs, arguing that it was only responsible for replacing the siding that was directly damaged by the storm. The district court granted summary judgment for Windridge, and Philadelphia Indemnity appealed. Continue reading ›

A couple purchased an RV from a retailer in 2014. The RV came with a warranty from the manufacturer that limited the warranties to one year from the date of purchase. The warranty required that the purchasers notify the manufacturer or an authorized dealer within five days of discovering any defect. The purchasers experienced continual problems with the RV over the time that they owned it. The RV was repaired multiple times, but the service technicians were never able to fully resolve the defects. The purchasers asked the manufacturer to repurchase the RV from them. When the manufacturer refused, the purchasers sued, claiming the manufacturer breached its warranties. The district court granted summary judgment to the manufacturer. The appellate panel affirmed, finding that the purchasers had not given the manufacturer enough chances under Indiana law to cure the defects with the RV.

Vanessa and Randy Mathews purchased a Holiday Rambler Presidential RV in May 2014 from Mellott Brothers Trailer Sales, Inc. The RV came with a warranty from the manufacturer, REV Recreation Group. The warranty limited both express and implied warranties to one year from the purchase date. To take advantage of the warranty, the Mathews had to notify REV or an authorized dealer within five days of discovering a defect.

The Mathews alleged that they encountered problems with the RV almost as soon as they drove it off the lot. They called the dealership to report that there were issues with the interior lights, the refrigerator, and the leveling system. A month later, the Mathews encountered further difficulty: the converter was blowing fuses, the leveling jacks worked only intermittently, the curbside slide cable broke, and there were problems with the TV and the DVD player. After calling the dealer again, the Mathews were given the number for REV so that they could locate an authorized repair center. Continue reading ›

A company that purchases tax liens in order to obtain tax deeds to properties sued Law Bulletin for breach of contract over a misprinted hearing date in a Take Notice, which the company alleged cost it $1 million when the circuit court denied the company’s tax deed application due to the misprint. Following a trial, the jury entered a verdict in favor of Law Bulletin and against the company finding that the company had not fully performed its obligations under the parties’ contract. The First District Appellate Court affirmed finding that the trial court had not committed an error in denying the company’s pre-trial motion for summary judgment or mid-trial motion for a directed verdict.

Every year, Wheeler Financial purchased hundreds of tax liens from the Cook County Treasurer’s Office at the annual auction to sell tax liens on properties with delinquent tax bills. Under the Illinois Property Tax Code, if the property owner fails to satisfy a tax lien by paying the amounts due within the applicable redemption period, the tax lien purchaser may obtain fee simple title to the property. To obtain title to the property, the tax lien purchaser must apply to the circuit court for a tax deed and publish a Take Notice in a newspaper giving the property owner certain information including the hearing date on which the petition for tax deed will be heard by the court.

Law Bulletin publishes these Take Notices in its newspaper, the Chicago Daily Law Bulletin. Wheeler Financial used the Law Bulletin exclusively to publish its Take Notices for 15 years, publishing between 1000 to 1600 Take Notices annually with the Law Bulletin during that time. In one instance, Law Bulletin misprinted the hearing date for the tax deed for a particular property. When the circuit court discovered that the wrong hearing date had been published in the Take Notice, it denied Wheeler Financial’s petition for a tax deed. Continue reading ›

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