Articles Posted in Contract Construction

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On June 14, 1988, Thomas John Heck Jr. executed a note in favor of Paul D. Heck.  The note promised to pay $51,000 at 7% interest, compounded annually, with this instruction: “Borrower shall make a single payment on demand within 90 days of demand letter. If payment is not demanded or paid by Borrower, this note will renew automatically in full force of the terms until said note is paid.”

Thomas John Heck Jr. died on Nov. 7, 2016 without Paul Heck ever demanding payment on the note. Paul Heck demanded payment from the Estate of Thomas John Heck Jr. (Estate) on Dec. 8, 2017.

Paul Heck filed suit on Jan. 3, 2018 seeking $362,886.62, plus interest, attorney fees and costs.

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The defendant, Toad L. Dragonfly Express Inc., appealed an award of contribution entered against it and in favor of the defendant C.H. Robinson Worldwide Inc. and other corporate entities collectively, CHR.

After the jury trial, judgments totaling $23,225,000 were entered, jointly and severally against Dragonfly and its owner, Luann G. Whitener-Black who is now deceased, DeAn Henry, and CHR in three consolidated tort actions stemming from the fatal automobile crash. Henry was the driver of the semi-tractor involved in the incident. Dragonfly is a federally licensed motor carrier that had leased Henry’s semi-tractor at the time of the accident and CHR was the broker of the load Henry was carrying at the time.

After CHR fully satisfied the tort judgments (including postjudgment interest), CHR sought contribution from Dragonfly under the Illinois Joint Tortfeasor Contribution Act (Act) (740 ILCS 100/0.01 et seq. (West 2014)). The trial court granted CHR’s contribution claim against Dragonfly for 50% of the jury’s total award in the underlying tort actions, including post-judgment interest. Dragonfly then appealed the trial court’s order granting contribution to CHR. Dragonfly argued that CHR is not entitled to contribution from Dragonfly because the Act creates a right of contribution based upon comparative fault, and neither CHR nor Dragonfly were at fault in this case.

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The contract clause of the United States Constitution restricts the power of states to disrupt contractual arrangements. It provides that “No state shall  pass any . . . law impairing the obligation of contracts.” U.S. Const., Art. I, ¶ 10, cl. 1.

This was a case about life insurance proceeds. It generated a single dissent in the U.S. Supreme Court about the Constitution’s contract clause, which prohibits states from enacting laws that impair the obligation of contracts.

Mark Sveen named his wife, Kaye Melin, as the beneficiary of a life insurance policy he purchased in 1998. A 2002 Minnesota statute automatically revoked the designation (as beneficiary) when the couple divorced in 2007. Sveen’s children from a prior marriage claimed the life insurance proceeds as contingent beneficiaries when he died in 2011.

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Daniel Dumrauf was a director with Medix Staffing Solutions Inc., a Chicago-based staffing agency. Dumrauf, who worked at Medix’s Scottsdale, AZ, office, had an employment agreement containing a noncompete clause that restricted him from any affiliation “with the ownership, management, operation or control” of any business in competition with Medix either directly or indirectly.

The noncompete clause had an 18-month lifespan and covered a 50-mile radius.

On Aug. 10, 2017, he resigned from his position with Medix and informed the company he would be taking a position with ProLink, a direct competitor of Medix. In his resignation correspondence, Dumrauf noted that 90% of his activity with ProLink would be done in Ohio and Kentucky.

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A contract was entered into between Beckett Media LLC and OnRamp Technologies to allow Beckett to use OnRamp’s applications and websites for “inventory management and sales solution.” According to the contract, “in the event of any litigation of any controversy or dispute arising out of or related to this agreement, the prevailing party shall be entitled to an award of reasonable attorneys’ fees and costs.”

On Oct. 1, 2010, Beckett filed a lawsuit against OnRamp claiming breach of contract, unjust enrichment and violation of the Uniform Deceptive Trade Practices Act and the Consumer Fraud of Deceptive Business Practices Act.

During the trial, the parties voluntarily dismissed the claims about violation of the two deceptive practices act. Beckett filed an amended complaint for unjust enrichment, breach of contract and replevin, seeking the return of its server as well as money damages incurred by OnRamp’s refusal to return the server.

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The Illinois Appellate Court for the First District has affirmed a judgment that pierced the corporate veil of a closely held corporation and then awarded the plaintiff attorney fees connected to this litigation. The case was reported to be one of first impression in Illinois.

Steiner Electric sold electrical products on credit to Delta Equipment Co., a corporation wholly owned by an individual, Leonard Maniscalco. Although there were many attempts to collect payment, Steiner finally sued Delta and obtained a default judgment for the purchase price plus interest, attorney fees and costs. By the time judgment was entered, Delta no longer existed. Steiner  filed suit against Maniscalco and Sackett Systems Inc., another corporation wholly owned by Maniscalco. That lawsuit sought to pierce Delta’s corporate veil and hold both Maniscalco, individually and Sackett Systems Inc., liable for the default judgment.

Steiner was successful in proving that it was entitled to pierce the veil wherein both Maniscalco and Sackett Systems appealed from that order.

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The Illinois Appellate Court for the First District has held that an insurer had a duty to defend an additional insured who was entitled under the policy of insurance to coverage because of vicarious liability even though the underlying complaint against it included no allegations of vicarious liability. CSR Roofing Contractors was the general roofing contractor for a construction project in Lisle, Ill. It hired a subcontractor, Zamastil Exteriors, to perform a portion of the work in accordance with a master subcontract agreement.

The subcontract agreement required Zamastil to obtain additional insurance coverage for CSR that was not limited to vicarious liability. Vicarious liability is a term based on the principles of agency. In accident cases like this, the negligence of an employee or independent contractor can be imputed to the person’s employer when acting within the scope of employment. The legal doctrine of vicarious liability would make an employer liable for the acts of its employee. In other words, if the person is acting on behalf of the employer or master, the employer or the master can be held responsible for negligence caused by that employee.

The agreement between Zamastil and CSR provided that both CSR and Zamastil were responsible for complying with all federal safety regulations.

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On July 26, 2011, Lashaunda Carter was driving her car when she was involved in a crash with an uninsured motorist, Cortez Williams. Jasmine Carter was in Carter’s car and was injured as a result of the collision. Lashaunda was insured by American Access Insurance Co. Lashaunda’s insurance policy covered any compensatory damages Lashaunda would have to pay arising from bodily injury caused by her in an auto accident.

Under the terms of the insurance policy, American Access “shall defend any civil suit alleging such bodily injury.” The auto policy also required Lashaunda to give American Access written notice of any accident or loss as well as any filings in a lawsuit brought against her.

The policy stated that American Access would “not be obligated to pay . . . unless [American Access] received actual notice of a lawsuit before judgment had been entered in said suit.”

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The Illinois Appellate Court has reversed and remanded a decision by a circuit court judge regarding a contract.  Global Care S.C. was a medical services corporation that leased several office suites from K&K Holdings. The term of the leases was seven years.  The lease was to end on July 31, 2011.  The original leases were signed on July 30, 2004.

On Oct. 13, 2006, a rider was attached to the original lease, which terminated one of Global Care’s rental suites and added a new one. 

The rider removed Global Care’s ability to terminate the lease early, requiring six months’ notice and payment.  The payment schedule attached to the rider provided for rental payments through Oct. 31, 2013.  There was nothing in the addendum to the rider that extended the lease though October 2013. 

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