Justia Contracts Opinion Summaries

Articles Posted in Supreme Court of Illinois
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Restore was asked to mitigate and repair significant fire damage at Proviso East High School, having provided similar service to the District in the past. The District’s customary practice when contracting for repair and payment of losses covered by insurance was to proceed without a recorded vote of its Board. The fire loss was covered by insurance. The District’s superintendent executed contracts with Restore.The District was subject to the School District Financial Oversight Panel (FOP) and Emergency Financial Assistance Law (105 ILCS 5/1B-1) and the Financial Oversight Panel Law (105 ILCS 5/1H-1). The FOP’s chief fiscal officer attended construction meetings and approved numerous subcontracts, quotations, bids, sales orders, change orders, and invoices. Although there was no recorded vote, “a majority of the Proviso Board knew and informally approved" the work. Restore was paid by the insurers for all but $1,428,000. Restore sued, seeking recovery from the District based on quantum meruit. The District argued that it had no obligation to pay because the contracts had not been let out for bid and approved by a majority vote as required by the School Code (105 ILCS 5/1-1).The Illinois Supreme Court affirmed the reinstatement of the case following dismissal. The failure of a governmental unit to comply with required contracting methods is not fatal to a plaintiff’s right to recover based on quasi-contract or implied contract principles. The Board was subject to the FOP; the FOP was fully apprised of and approved the work. Any misconduct was on the part of the Board; allowing Restore to recover presents no “risk of a raid on the public treasury.” View "Restore Construction Co., Inc. v. Board of Education of Proviso Township High Schools District 209" on Justia Law

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Kiselewski was driving with his two granddaughters in the backseat. Klamm's vehicle crossed the center line and struck Kiselewski’s vehicle. Kiselewski, one granddaughter, and Klamm were killed. Klamm was insured under a Meridian policy issued to his mother that provides coverage for four vehicles. The policy contains an “antistacking clause” with respect to bodily injury liability limits of $100,000 per person and $300,000 per accident. In a declaratory judgment action, the circuit court found that the policy, taken as a whole, was ambiguous and declared that Meridian had a duty under the policy to aggregate the bodily injury coverage limits for all four vehicles covered by the policy, resulting in coverage in the amount of $400,000 per person and $1.2 million per accident.The Illinois Supreme Court reversed. When the declarations are read together with the antistacking clause, there is no ambiguity. The policy provides bodily injury liability coverage of $100,000 per person and $300,000 per accident, regardless of the number of claims, insureds, covered vehicles, premiums, or vehicles involved in the accident. The policy does not list liability limits separately for each covered vehicle. It lists the limits once on the first page of the declarations, next to Autos 1, 2, and 3, and once on the second page, next to Auto 4. View "Hess v. Estate of TJay Klamm" on Justia Law

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In 1994, based on doctored evidence from the City of Chicago Heights Police Department, Sanders was charged with murder, attempted murder, and armed robbery. Sanders was wrongfully convicted and imprisoned for approximately 20 years before being exonerated in 2014. From November 2011 to November 2014, Chicago Heights obtained primary liability insurance from Illinois Union and excess liability insurance from Starr. The primary insurance policy covered damages arising out of the “offense” of “malicious prosecution.” The Illinois Supreme Court held that, although the cause of action for malicious prosecution did not arise until the exoneration, the underlying event that triggered the obligation to provide coverage occurred in 1994, not during the policy period. The court noted that a typical occurrence-based policy, containing multiple references to coverage for occurrences or offenses happening during the term of the policy, reflects the intent to insure only for the insured’s acts or omissions that happen during a policy period. If exoneration were deemed to trigger for coverage of a malicious prosecution insurance claim, liability could be shifted to a policy period in which none of the acts or omissions giving rise to the claim occurred, which would violate the intent of the parties to an occurrence-based policy. View "Sanders v. Illinois Union Insurance Co." on Justia Law

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Plaintiffs purchased a recreational vehicle (RV) from Vacationland for $26,000.25. When it leaked during a rainstorm, they brought it in for repair. When it leaked again, causing extensive damage, they brought it back. A little more than two weeks after they dropped it off the second time and without a timetable for when the vehicle would be repaired, they told the seller that they no longer wanted the RV and asked for their money back. Plaintiffs sued, citing revocation of acceptance under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. 2310(d); breach of implied warranty of merchantability under the Magnuson-Moss Act; revocation of acceptance and cancellation of contract under Illinois’s adoption of the Uniform Commercial Code; and return of purchase price under the UCC. Defendant argued that plaintiffs’ failure to give it a reasonable opportunity to cure was fatal to their claims. The circuit court granted the defendant summary judgment. The appellate court affirmed. Plaintiffs sought review of the revocation of acceptance claim under the UCC (810 ILCS 5/2- 608(1)(b)). The Illinois Supreme Court reversed. The plain language of subsection 2-608(1)(b) does not require that the buyer give the seller an opportunity to cure a substantial nonconformity before revoking acceptance. View "Accettura v. Vacationland, Inc." on Justia Law

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The Property of Unincorporated Associations Act, 765 ILCS 115/2, requires a labor union to notify its members and obtain their approval before entering into an agreement to lease or purchase real estate. The circuit court held that an agreement is enforceable despite a union’s failure to follow these requirements because the Act is silent as to the consequences of noncompliance. The appellate court affirmed. The Illinois Supreme Court reversed. Where a party lacks the legal authority to form a contract, the resulting contract is void ab initio. Absent compliance with the statutory prerequisites, an unincorporated association has no power to execute a valid real estate contract. The apparent authority doctrine is not relevant. A contract that is void ab initio is treated as though it never existed and, thus, cannot be enforced by either party. View "1550 MP Road LLC v. Teamsters Local Union No. 700" on Justia Law

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The owners of units in Sienna Court Condominiums, a newly-constructed 111-residential-unit Evanston property sued, alleging that the developer, TR, sold the units with latent defects that resulted in water infiltration and other conditions that rendered the individual units and common areas unfit for habitation. The complaint alleged breach of an express warranty and breach of an implied warranty of habitability against TR, the general contractor, the architect and engineering design firms, material suppliers and several subcontractors. TR and the general contractor were bankrupt. The unit owners obtained relief from the automatic bankruptcy stay. TR and the general contractor had two separate insurance policies, each providing coverage of $1 million per occurrence with $2 million aggregate limits. Plaintiffs had recovered approximately $308,000 from TR through a warranty escrow fund required by Evanston ordinance. Subcontractors and the material suppliers asserted that they were not subject to an implied warranty of habitabililty. The circuit court denied their motion to dismiss. The Illinois Supreme Court reversed, holding that a purchaser of a newly constructed home may not assert a claim for breach of an implied warranty of habitability against a subcontractor who took part in the construction of the home, where the subcontractor had no contractual relationship with the purchaser. View "Sienna Court Condominium Assoc. v. Champion Aluminum Corp." on Justia Law

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Herndon sued Whiteside, doing business as Beam Oil, for breach of contract and conversion because defendant refused to pay plaintiff royalties arising from an oil and gas lease. The Macon County circuit court dismissed, finding that plaintiff did not own the claimed overriding royalty interest but defendant did. The Fourth District affirmed the dismissal of the conversion claim but remanded the breach of contract claim. Defendant appealed. The Illinois Supreme Court reinstated the dismissal. The instrument of assignment, signed after a series of transactions, unambiguously transferred all of plaintiff’s interest to defendant, so defendant’s refusal to pay plaintiff royalties was not a breach. Plaintiff and third parties each assigned to defendant “all of [their] right, title and interest in and to the oil, gas and mineral leases *** together with a like interest in and to all personal property located therein.” The instrument has no inconsistency or ambiguity that needs clarification. View "Ramsey Herndon LLC v. Whiteside" on Justia Law

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Fee-sharing provisions in otherwise valid retainer agreements between clients and two separate law firms are not unenforceable simply because the primary service performed by one firm is the referral of the clients to the other and the agreements fail to specifically notify clients that each firm has assumed joint financial responsibility for the representation.In 2007-2010, Plaintiff, a Gurnee law firm, was retained by 10 clients for representation under the Workers’ Compensation Act. Plaintiff contracted with attorney Esposito for assistance in representing the clients before the Workers’ Compensation Commission. A letter of understanding was drafted by defendant, confirming that the cases had been referred to defendant by plaintiff, outlining the parties’ respective responsibilities regarding representation of the clients, and specifying that the attorney fees obtained in each case would be split between Plaintiff and Esposito. The agreements did not specifically notify the clients that the lawyers in each firm had assumed joint financial responsibility for the representation. Plaintiff’s breach of contract suit against Esposito was dismissed. The Illinois Supreme Court affirmed the appellate court’s reversal, rejecting an argument that the agreements’ lack of an express statement that the attorneys assumed joint financial responsibility violated Rule 1.5(e) of the Illinois Rules of Professional Conduct and thereby rendered the agreements invalid. View "Ferris, Thompson & Zweig, Ltd. v. Esposito" on Justia Law

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The 2009 Video Gaming Act (230 ILCS 40/1)) legalized the use of video gaming terminals in licensed establishments, including bars, veterans’ organizations, and truck stops, and authorizes the Illinois Gaming Board to supervise all video gaming operations governed by the Act. A video gaming terminal may be placed in a licensed establishment only if the establishment has entered into a written use agreement with the licensed terminal operator. A use agreement may be assigned only from one licensed terminal operator to another. Action, an unlicensed terminal operator, executed “Exclusive Location and Video Gaming Terminal Agreements” with each of 10 establishments, stating that Action and the establishments would obtain licenses. In 2012 the parties amended their agreements by adding clauses, purportedly “necessary in order for the Agreement to comply with the [Act] and the rules and regulations," including clauses providing that Action could assign its rights and acknowledging that the agreement and the amendment “are subject to and contingent upon the [Gaming Board’s] review.” In 2012, the Board denied Action’s license application based on findings that Acton employees were associated with individuals who had been convicted of illegal gambling. Action assigned its rights under the agreements to J&J, a licensed operator. The establishments were not yet licensed. Subsequently, each of the establishments signed separate location agreements with Accel, a licensed operator. J&J and Action sued; the circuit courts ruled that the location agreements were not use agreements, but were valid contracts, and enjoined Accel from operating terminals at the establishments. The appellate court and the Illinois Supreme court held that the circuit courts lacked subject-matter jurisdiction because the Board has exclusive authority over contracts for the placement of video gaming terminals. The comprehensive statutory scheme vests jurisdiction over video gaming operations with the Board; the agreements purport to control placement and operation of video gaming terminals. View "J&J Ventures Gaming, LLC v. Wild, Inc." on Justia Law

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In 2005, Masterklad built a house in Glenview, including a brick patio that extended off the rear of the house. Because the ground underneath the patio sloped down, dirt and gravel were placed underneath it to support the bricks and make them level with the house's rear entrance. A retaining wall was built to contain the fill. In 2007, the house was sold by Masterklad to a Lubeck for $1,710,000. In the contract Lubeck “knowingly, voluntarily, fully and forever,” waived the implied warranty of habitability in exchange for an express warranty provided by Masterklad, with a one-year term. In 2010, Lubeck sold the house to Fattah, for $1,050,000, with a document stating that the house was being sold “as is” and that the seller made no representations or warranty regarding its condition. In 2011, parts of the retaining wall around the rear patio gave way and part of the patio collapsed. The owner sued. The circuit court found that the patio wall had given way due to latent defects in its construction, but that plaintiff could not recover because Masterklad had executed a valid, enforceable waiver of the implied warranty of habitability with Lubeck. The appellate court reversed. The Illinois Supreme Court reversed. The implied warranty of habitability may not be extended to a second purchaser of a house when a valid, bargained-for waiver of the warranty has been executed between the builder-vendor and the first purchaser. View "Fattah v. Bim" on Justia Law