Statement dated March 1, 2004 contained a detailed list of the transactions between
TruServ and Flegles, along with a clearly itemized account of the amount owed to
TruServ by Flegles for any and all of the merchandise, advances, and services that
TruServ provided or caused to be provided for Flegles.

Defendants argue that the $78,174.81 stated in the March 1, 2004 Members
Statement should also credit Flegles with a $1,025.54 patronage dividend check
(“Dividend Check”) that TruServ sent to Flegles, but that Flegles returned to
TruServ without cashing. There is no dispute that the $1,025.54 reflected in the
Dividend Check belongs to Flegles. The court notes that TruServ has already
applied other amounts and credits owed to Flegles which have become due since
Flegles termination as a member. TruServ did not exercise its right under the
Member Agreement to place a lien on the patronage dividend, but instead mailed the
dividend check to Flegles which was then returned to TruServ. Under these facts,
there is no reason whatsoever that the $1,025.54 should not also be applied as a
credit. Therefore, we find that as a result of Flegles’ breach of the Member

Agreement, TruServ has been damaged in the amount of $77,149.27.

IL. Prejudgment Interest, Attorney’s Fees, and Costs

TruServ maintains that pursuant to the Member Agreement, it is entitled to


an increase in attorney’s fees with respect to the additional briefing on damages
would not be reasonable. Accordingly, we find that TruServ’s earlier request of
$43,922.00 should only increase by $6,452.50 to account for the attorney’s fees
charged after March 22, 2004 that relate to the hours spent preparing for the filing of
TruServ’s reply brief in support of its motion for summary judgment. Therefore,

TruServ is entitled to $50,374.50 in attorney’s fees which we find to be reasonable.

C. Costs

In its request for costs, TruServ has submitted exhibits and a detailed affidavit
which itemizes all of the costs and expenses TruServ has incurred in this litigation.
TruServ contends that the appropriate amount of costs totals $10,879.72.
Defendants contend that TruServ’s request is unreasonable and that their own
counsel has incurred a legal cost for less than that requested by TruServ. We
disagree. Based upon the facts and the costs TruServ has incurred, we cannot find
that TruServ’s request is unreasonable. Therefore, this court finds that TruServ is

entitled to $10,879.72 in costs.

Ill. Set-Offs

Defendants argue that Flegles is entitled to a set-off for any TruServ stock it


Ameritech Information Systems, Inc. v. Bar Code Resources, Inc, 331 F.3d 571, 575
(7th Cir. 2003).

We have found that the actual amount of damages as a result of Flegles’
breach is $77,149.27. TruServ terminated Flegles as a member on February 18,
2003 for breach of the Member Agreement. Defendants argue that TruServ has
already charged Flegles interest as a “service charge” on the amount due from the
date Flegles was terminated up to and including March 14, 2003. TruServ has not
disputed this contention. Accordingly, Flegles should not be charged prejudgment
interest for that period prior to March 14, 2003. As such, TruServ is entitled to
prejudgment interest on the amount of $77,149.27 from March 14, 2003 until July
21, 2004, the date of entry of judgment in this action. See Ameritech, 331 F.3d at
575(stating that statutory interest, under Illinois law, “can be recovered at the
discretion of the court ”). Therefore, in applying the rate of 5% to $77,149.27, we

find that TruServ is entitled to $5,143.28 in prejudgment interest.

B. Attorney’s Fees

In its request for attorney’s fees, TruServ has submitted exhibits and a detailed
affidavit which set forth the hours spent and rates the attorneys charged in this

litigation. Pl.’s Ex. B. Based on these exhibits, TruServ contends that the


prejudgment interest, attorney’s fees, and costs. We agree. The Member Agreement

provides:

“Jn the event that the Company initiates proceedings to recover amounts due it by
Member or for any breach of this agreement to seek equitable or injunctive relief against
the Member, the Company shall be entitled to the recovery of all associated costs,
interest, and reasonable attorney’s fees.” (emphasis added)

Pl.’s Ex. A.

A. Prejudgment Interest

TruServ and Flegles agree that under Illinois law, prejudgment interest applies
at the rate of 5% per annum as prescribed by the Illinois Interest Act. 815 ILCS
205/2. Specifically, 815 ILCS 205/2 provides:

Creditors shall be allowed to receive at the rate of five (5) per centum per
annum for all moneys after they become due on any bond, bill, promissory
note, or other instrument of writing; on money lent or advanced for the use of
another; on money due on the settlement of account from the day of
liquidating accounts between the parties and ascertaining the balance; on
money received to the use of another and retained without the owner's
knowledge; and on money withheld by an unreasonable and vexatious delay
of payment. In the absence of an agreement between the creditor and debtor
governing interest charges, upon 30 days! written notice to the debtor, an
assignee or agent of the creditor may charge and collect interest as provided in
this Section on behalf of a creditor.

815 ILCS 205/2.
Further, under Illinois law, in order for a court to award prejudgment interest,

the actual amount due must be a “liquidated amount or subject to easy computation.”


prevailing party has obtained “excellent results, his attorney should recover a fully
compensatory fee.” Id.

In the instant case, the claims of TruServ all involved the same common core
of facts and are based on the same legal theories. Namely, that Flegles breached the
Member Agreement and that Flegles and Ms. Flegle were liable to TruServ as a
result of that breach. Additionally, TruServ’s litigation was successful inasmuch as
TruServ established its claims for breach of contract and breach of personal
guaranties. Further, we find that based on the nature of this case and the experience
of the attorneys involved, the hourly attorney rates that TruServ was charged, as
manifested in the affidavit of attorney David J. Chizewer, are reasonable.

We note that when TruServ filed its motion for summary judgment on March
22, 2004, TruServ’s Rule 56.1 Statements reflected that its request for attorney’s
fees was $43,922.00. PI.’s Ex. A. TruServ’s latest request maintains that its
attorney’s fees have increased to $58,339.50. The increased request of attorney’s
fees by TruServ appears to be based on hours related to the filing of TruServ’s reply
brief in support of its motion for summary judgment and for the additional briefing
on damages. However, the court notes that the additional briefing relating to
damages was ordered by the court due to the insufficient briefing on that issue by the

parties at the summary judgment motion stage. Given the above facts, a request for



ES ae,

Sgleorm (06/97)

Sol

United States District Court, Northern District of Illinois

Name of Assigned Judge _ iava Sitting Judge if Other
or Magistrate Judge Samuel Der-Yeghiayan than Assigned Judge
CASE NUMBER 03 C 3284 DATE 9/28/2004
CASE Truserv vs. Flegles
TITLE
{In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOTION: of the motion being presented.}

DOCKET ENTRY:

(1) a Filed motion of [ use listing in “Motion” box above,]

(2) ao Brief in support of motion due

(3) a Answer brief to motion due. . Reply to answer brief due.

4 a Ruling/Hearing on set for at

(5) QO Status hearing[held/continued to] [set for/re-set for]on__—ssetfor_ at

(6) Qa Pretrial conference[held/continued to] [set for/re-set for] on set for at

(7) oO Trial[set for/re-set for] on _at

(8) Oo [Bench/Jury trial] [Hearing] held/continued to at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}

OOFRCP4(m) GLocal Rule 41.1 OFRCP41(a)(1) O FRCP41(a)(2).

(10) Ml [Other docket entry} For the reasons stated in the attached memorandum opinion, plaintiff's request
for damages is granted as follows: Damages are awarded in the amount of $77,149.27, $5,143.28 in
prejudgment interest, $50,374.50 in attorney’s fees and $10,879.72 in costs, totaling $143,546.77. All
pending dates and motions are hereby stricken as moot. Terminating case. This is a final an appealable
order. Enter Memorandum Opinion.

di) [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

notices requir
No notices required. number of notices

SEP 29 2on4

date do}

‘Notices mailed by judge’s staff.

Notified counsel by telephone.

| Docketing to mail notices. Memorandum
opinion distributed in open Court.

Mail AO 450 form,

docketing, fey hitials

Copy to judge/magistrate judge.

date nutied notice
courtroom

deputy’s
initials

MwW6

Date/timie received in «1
central Clerk's Office

railing deputy initads



Defendants and award $77,149.27 in damages, $5,143.28 in prejudgment interest,

$50,374.50 in attorney’s fees, and $10, 879.72 in costs, totaling $143,546.77.

De A(bh—

Samuel Der-Yeghiayf °°
United States District Court Judge

Dated: September 28, 2004

ll


owns. Specifically, Defendants request that a specific amount in TruServ stock that
Flegles owns be set-off and deducted from the amount of judgment entered by this
court. However, Defendants’ request is without merit. Defendants have failed to
establish how, under the terms of the Member Agreement, they are entitled to an
immediate set-off in this judgment of any TruServ stock it owns. The Member
Agreement provides that TruServ:

“...shall have a lien on and a right of setoff against any stocks or notes...”

PL’s Ex. A. In addition, we note that Defendants themselves have attached to their
Memorandum in Opposition to TruServ’s Request for Damages (“Opposition”) a

document dated August 12, 2004 from TruServ to Flegles, which provides in part:

“Upon redemption of Flegles’ stock, TruServ will issue a five-year note payable in the
amount of $20,153.34. Flegles will receive notice of issuance of that note by August 31,
2004, with the first payment of principal and interest on December 31 , 2004,”

Opposition at Ex. 2. TruServ has indicated that it will issue Flegles a five-year note
payable in the amount of $20,153.34 based on Flegles current Securities Account
with TruServ. Jd. Therefore, we find that Defendants have failed to establish that

Flegles is entitled to any set-off in this litigation for any TruServ stock it owns.

CONCLUSION

Therefore, based on the forgoing, we rule in favor of TruServ against

10


appropriate amount of attorney’s fees that it should be awarded totals $58,339.50.
Defendants maintain that TruServ’s request is unreasonable and that TruServ is
entitled to attorney’s fees of no more than $16,000.

The Seventh Circuit Court of Appeals has stated that a request for attorney’s
fees “can turn a simple civil case into two or even more cases--the case on the
merits, the case for fees, the case for fees on appeal, the case for fees proving fees,
and so on ad infinitum, or at least ad nauseam.” See Divane v. Krull Electric Co.,
319 F.3d 307, 314, (7th Cir. 2003)(quoting Ustrak y. Fairman, 851 F.2d 983, 987
(7th Cir. 1988). In determining whether to grant a request for attorney’s fees to a
prevailing party, Illinois Courts have applied the factors set forth by the United
States Supreme Court in Hensley v. Eckerhart, 461 U.S. 424, 434-37 (1983).
Cannon y. William Chevrolet/GEO, INC, 794 N.E.2d 843, 852-855, (2003); Cress v.
Recreation Services, 795 N.E.2d 817, 855-56, (2003). In Hensley, the Supreme
Court instructs a court to determine the “number of hours reasonably expended on
the litigation multiplied by a reasonable hourly rate.” 461 U.S. at 433. In addition, a
court must decide whether the prevailing party’s claims were separate and unrelated
or whether they involved a “common core of facts” that were based on “related legal
theories.” Jd. at 434-35. Ultimately, a court must examine the success of the

litigation by considering the “results obtained,” and where it is established that a


On July 21, 2004, in a memorandum opinion, we granted TruServ’s motion
for summary judgment on Counts I and III. In addition, we denied TruServ’s motion
for summary judgment as to Count II and dismissed Count II as moot. Because at
summary judgment the parties had not sufficiently briefed the damages issue,
including any applicable set-offs, attorney’s fees, and costs, we ordered the parties to

submit briefing on damages.

DISCUSSION

L_ Contract Damages

On May 16, 2003, TruServ requested damages from Defendants for breach of
contract in the amount of $78,627.04, exclusive of interest, costs, and attorney’s
fees. The $78,627.04 amount was based on a May 1, 2003 TruServ Members
Statement for Flegles. Pl.’s Ex. A. Since that time, TruServ, in accordance with the
Member Agreement, has applied amounts owed to Flegles. These amounts include
credits for merchandise applied to Flegles’ account balance and services, as well as
notes payable by TruServ to Flegles which have now become due since Flegles’
termination as a member. On March 1, 2004, TruServ issued a new Members
Statement for Flegles that reflected these new amounts applied, with a reduced

balance of $78,174.81 owed to TruServ. Pl.’s Ex. A. Additionally, the Members


(“Flegles”), as a retail member, entered into a written agreement entitled “Retail
Member Agreement with TruServ Corporation an Independent Retailer Cooperative”
(“Member Agreement”). The Member Agreement governed the relationship
between TruServ and Flegles and allowed Flegles, as a retail member, to purchase
merchandise and services from TruServ for amounts stated in the member’s
statements of accounts (“Members Statements”) for Flegles. According to the terms
of the Member Agreement, it was agreed to by TruServ and Flegles that Illinois law
would govern the Member Agreement. On February 18, 2003, pursuant to the
Member Agreement TruServ terminated F legles as a member for nonpayment of
outstanding debt owed to TruServ.

On May 16, 2003, TruServ filed a three count complaint against Defendants
in this court. In Count I, TruServ contended that Flegles breached the Member
Agreement. In Count Il, TruServ contended that Flegles was liable pursuant to the
Member Agreement for an account stated claim. In Count III, TruServ contended
that Ms. Alice Mae Flegle (“Ms. Flegle”) breached three separate guaranty
agreements (“Guaranty Agreements”) that she executed which guaranteed to
TruServ the payment “of any indebtedness or balance of any past, present, or future
indebtedness...” that Flegles owed to TruServ. TruServ moved for summary

judgment on all counts.



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

TRUSERV CORPORATION )
f/k/a COTTER & COMPANY, )
)

Plaintiff, )

)

v. ) No. 03 C 3284

)

FLEGLES INC, d/b/a FLEGLES TRUE y
VALUE HOME CENTER and )
ALICE MAE FLEGLE, )
)

Defendants. )

MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, District Judge

This matter is before the court on Plaintiff TruServ Corporation’s (“TruServ”)
request for damages from defendants Flegles, Inc. and Ms. Alice Mae Flegles
(collectively “Defendants”). For the reasons stated below, we rule in favor of
TruServ against Defendants and award $77,149.27 in damages, $5,143.28 in
prejudgment interest, $50,374.50 in attorney’s fees, and $10,879.72 in costs, totaling
$143,546.77.

BACKGROUND

On or about January 20, 2000, TruServ, as a company, and Flegles, Inc.