II. GM's Motion for Summary Judgment

GM asserts that the Complaint was brought approximately
eight years after Harrell knew or should have known of his
alleged claims and injuries. Further, the following Counts of
Harrell’s Complaint are governed by a five-year statute of
limitations (735 Ill. Comp. Stat. 5/13-205): breach of a
written/oral contract (Count I)3; negligence (Count II);
fraudulent misrepresentation (Count III); negligent
misrepresentation (Count IV); fraudulent nondisclosure (Count V);
conspiracy (Count VIII), unjust enrichment (Count IX), conversion
(Count X); and breach of fiduciary duty (Count XI). Moreover,
malice/defamation (Count VI) has a one-year statute of
limitations (735 Ill. Comp. Stat. 5/13-201) and securities fraud
(Count VII) has a three-year statute of limitations (815 Ill.
Comp. Stat. 5/13(D)). Harrell does not challenge the fact that
the Complaint was brought approximately eight years after Harrell
expressed to GM that he had been wronged. Instead, Harrell
claims that the statutes of limitations on each of these claims

should be equitably tolled. Specifically, Harrell alleges that

3 In addition, Harrell’s Complaint refers to the

investment agreement between Harrell and GM as containing both
written and oral terms. In Harrell’s later pleadings, he appears
to concede that this claim is time-barred and as a result,
Harrell refers to an entirely new agreement which was allegedly
breached, namely a written Stockholders Agreement, which is
governed by a ten-year statute of limitations (735 I1l. Comp.
Stat. 5/13-206). However, for the reasons discussed supra in
Section III, this claim is meritless as well.

4



based upon the Asset Purchase Agreement under the theory that he
is a third-party beneficiary. As a result, the ten-year statute
of limitations for a written contract is inapplicable; and as
such, the claim is barred by the five-year statute of limitations
for oral contracts.
CONCLUSION

For the reasons set forth above, the Court denies Harrell’s

Motion for Leave to File an Amended Complaint and grants

Defendant GM’s Motion for Summary Judgment.

ENTER:

DATED:



creer

substituting for John Does 1-4. The first new count, Count I, is
for breach of contract under the Stockholders agreement and/or
Asset Purchase Agreement and the second new count, Count XI, is a
breach of an oral contract claim.

Any time after a responsive pleading has been served, a
party must seek leave from the court or written consent of the
adverse party to amend a pleading. Amendola v. Bayer, 907 F.2d
760, 764 (7** Cir. 1990) (citing Fed. R. Civ. 15(a)). Although
leave to amend is to be given freely where justice so requires,
it may be denied for apparent or declared reasons, such as “undue
delay, bad faith, dilatory motive, undue prejudice to the
opposing party, or when the amendment would be futile.” Bethany

Pharmacal Co., Inc. v. QVC, Inc., 241 F.3d 854, 861 (7th Cir.

2001).

Harrell sought leave to amend approximately eight months
after GM filed its Motion to Dismiss and Motion for Summary
Judgment, apparently in response to GM’s dispositive motions. If
the leave to amend is granted, this will only result in another
round of dispositive motions and briefing, which will not only
prejudice the defendant but also preclude the Court from
adjudicating the case in a timely and efficient manner.

Moreover, Count I for breach of the Stockholders’s Agreement
and Count XI for breach of an oral contract are also time-barred

and thus, the amendment is futile. Count XI for breach of an



the Court should apply the continuing~-tort theory to his claims.
Under Illinois law, a cause of action accrues “when a person
knows or reasonably should know that it was wrongfully caused.”

Knox College v. Celotex Corp., 88 I1l.2d 407, 415 (1981).

Moreover, “the delay in the commencement of the limitations
period for continuing torts does not apply to contractual torts.”

Federal Signal Corp. v. Thorn Automated Systems, Inc., 693 N.E.2d

418, 421 (18* Dist. 1998). Here, because all the torts alleged
arise out of underlying contractual relationships, the
limitations begin to run on the date of the alleged breach. See
Hermitage Corp. v. Contractors Adjustment Co, 651 N.E.2d 1132,
1135 (Ill. 1995). As has been shown, Harrell knew of the wrong
caused by GM resulting from their contractual negotiations in
1994 as is evident in a letter that he wrote to GM stating his
grievance. Therefore, the statute of limitations are not tolled
and as such, each claim is barred by the previously stated
applicable statute of limitations.

Therefore, because all of Harrell’s claims are time-barred,
GM’s Motion for Summary Judgment is granted.

III. Harrell’s Motion for Leave to File an Amended Complaint

In his amended complaint, Harrell re-alleges Counts II
through X of his original complaint, which as previously
explained, are time-barred. In addition, Harrell also seeks to

add a new Count I and Count XI, as well as, four new parties



asserting this Claim over eight years later in response to a
Motion to Dismiss and a Motion for Summary Judgment.

Furthermore, Harrell contends that he has a viable breach of
action claim based upon an alleged breach of the Asset Purchase
Agreement between Motors Holding Company (a division of GM) and
Bowers. This would be true if Harrell could prove that he is a
third-party beneficiary to this contract. “The rule is settled
in this State that, if a contract be entered into for a direct
benefit of a third person not a party thereto, such third may sue
for breach thereof. The test is whether the benefit is direct to
him or is but an incidental benefit to him arising from the
contract. If direct, he may sue on the contract; if incidental

he has no right of recovery thereon.” Carson Pirie Scott & Co.

v. Parrett, 178 N.E. 498, 501 (Ill. 1931). In Illinois, in order
for a party to properly fall withing the category of a third-

party beneficiary: “the promisor’s intention must be evidenced by
an express provision in the contract identifying the third-party

beneficiary”. McCoy v. Illinois Intern. Port Dist., 778 N.E.2d

705, 712 (18% Dist. 2002). “There is a strong presumption that
the parties to a contract intend the provisions of that contract
to apply only to them and not to third parties.” Id. In this
case, there is no express provision in the contract identifying
Harrell as a third-party beneficiary. Therefore, it is not

proper to allow Harrell to sustain a breach of contract claim



‘Minute Order Form (06/97)

Wy

United States District Court, Northern District of Illinois

eror Magia Judge George M. Marovich “Than signed Suge
CASE NUMBER 02 C 8252 DATE 9/16/2003
CASE Harrell, Sr. vs. Bower Motors, Inc., et al.
TITLE
[In the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(1) Qo Filed motion of [ use listing in “Motion” box above.]
(2) Qo Brief in support of motion due
(3) a Answer brief to motion due___. Reply to answer briefdue___.
{4) a Ruling/Hearing on setfor sat
(5) o Status hearing[held/continued to] [set for/re-set for}on__setfor__—_at
(6) Oo Pretrial conference[held/continued to] {set for/re-setfor]on___——ssetfor_———saat_—
(7) aq Trial[set for/re-set for]on_____at
(8) a [Bench/Jury trial] [Hearing] held/continuedto___at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) OlLocal Rule 41.1 OFRCP41(a)(1) [1 FRCP41(a)(2).
(do) «xf {Other docket entry] ENTER MEMORANDUM OPINION AND ORDER. GM’s motion for

e83)

summary judgment is granted. GM’s motion to dismiss is denied as moot. Harrell’s motion for leave to

file an amended complaint is denied. Harrell’s motion to remand is denied as moot.

Oo {For further detail see order (on reverse side of/attached to) the original minute order.]

No notices required, advised in open court.

No notices required. number of notices

Notices mailed by judge’s staff.

Notified counsel by telephone. EP 1 /,20083

de
Docketing to mail notices.

Mail AO 450 form. dock yin

Copy to judge/magistrate judge.

date mailed notice

courtroom,
ID deputy’s
initials

central Clerk's Office mailing deputy initials



oral contract is barred by a five year statute of limitations
(735 Ill. Comp. Stat. 5/13-205).

In Count I, Harrell alleges a breach of Section VI of
Stockholders Agreement and a breach of the Asset Purchase
Agreement. Clause VII‘ of the Stockholder’s Agreement states
“[t]he operator represents that the Operator has had an
opportunity to review with counsel of the Operator’s own choice
this Agreement and all other documents executed or to be executed
in connection with the formation and financing of the Dealer
Company.” Despite this express language, Harrell claims that he
was not afforded access to accurate information regarding the
financial condition of the Dealership. Nonetheless, Harrell did
voluntarily sign the 1994 Stockholders Agreement despite his
later allegation that he did so “under duress”. In addition, the
record demonstrates that Harrell subsequently entered into and
executed two additional Stockholders Agreements, containing the
identical clause confirming that he was provided with adequate
information and could protect his own interests. Therefore,
Harrell essentially waived his right to later contest this clause

under a breach of contract theory and as such, is barred from

‘The language quoted in Harrell’s pleading does not appear
in Section VI of the 1994, 1995 or 1996 Stockholders Agreements.
The Court can only assume that Harrell meant to refer to Section
VII of the Stockholders Agreement as opposed to Section VI.

7



Dealership reached a new low in 1994, As a result, Harrell began
complaining to GM about the Dealership’s purported financial and
other problems. For example, on December 9, 1994, Harrell wrote
to GM, stating: “[A]t this point we are maxed out on expenses for
being in business only a month. We continue to uncover large
expenditures that were not clearly explained at the time of the
buy sell.” Similar statements were sent to GM in later years
until Harrell filed this Complaint in September, 2002.
DISCUSSION

I. Standard for Motion for Summary Judgment

Summary judgment should be granted when “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
When making such a determination, the court must construe the
evidence and make all reasonable inferences in favor of the non-
moving party. See Anderson v. Liberty Lobb’ Inc., 477 U.S. 242,
247 (1986). Summary judgment is appropriate, however, when the
non-moving party “fails to make a showing sufficient to establish
the existence of an element essential to the party’s case, and on
which that party will bear the burden of proof at trial.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); See also
Courtney v. Biosound, 42 F.3d 414, 418 (7th Cir. 1994).



BACKGROUND

Unless otherwise noted, the following facts are not in
dispute. In October 1994, Harrell was given an opportunity to
invest, via the GM Minority Dealer Development Program, with a
Division of GM in the purchase of a Dealership called Buick of
Countryside (the “Dealership”). The investment agreement Harrell
entered with GM contained both written and verbal terms. This
investment agreement set forth that Harrell agreed to invest
$500,000 as an initial investment of capital towards the
purchase. However, Harrell alleges that during the investment
negotiations, he was precluded from participating in the due
diligence process of the Dealership and therefore, Harrell was
“led to purchase a non-Project 2000 dealership”.? On October 5,
1994, Motors Holding Division (a division of GM) and Bower
executed an Asset Purchase Agreement, where Motors Holding
Division agreed to purchase Bower’s assets and assume Bower’s
responsibilities. On October 27, 1994, January 26, 1995 and
October 4, 1996, Mr. Harrell, GM and the Dealership entered into
and executed Stockholders Agreements for the stock in the
Dealership. Additionally, Harrell became dealer operator of the
Dealership.

Shortly after deciding to invest in and operate the

Dealership in 1994, Harrell asserts that the retail sales of the

?Harrell defines Project 2000 as: “GM’s strategy to obtain a
strong dealer body by the year 2000. GM’s blueprint for success
that mandates that all GM dealerships have the proper combination
of GM franchises.” (Complaint, J 15).

2



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CHARLES H. HARRELL, SR.,

Plaintiff,
02 C 8252

v. Judge George M. Marovich

BOWER MOTORS, INC; GENERAL
MOTORS CORP.; and JOHN DOES
1-10,

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Charles H. Harrell, Sr. (“Harrell”) filed an
eleven-count Complaint against Bower Motors, Inc. (“Bowers”) AP 4
General Motors Corp. (“GM”) and John Does 1-10 on September 18P 17 2003
2002 in Cook County Circuit Court. Subsequently, GM removed the
case to this court based on diversity grounds (735 Ill. Comp.

Stat. § 1332); filed a Motion to Dismiss; and filed a Motion for
Summary Judgment. Thereafter, Harrell moved to remand the case
back to state court on the grounds that there was a non-diverse
defendant and then presented a motion for leave to file an
amended complaint on July 16, 2003. For the reasons set forth

below, the Court denies Harrell’s leave to file an amended

complaint and grants GM’s motion for summary judgment.?

‘Because this Court is granting GM’s motion for summary
judgment and denying Harrell’s motion for leave to file an
amended complaint, Harrell’s motion to remand and GM’s motion to
dismiss are denied as moot.

3/