Opinion ID: 658820
Heading Depth: 1
Heading Rank: 3

Heading: the issue of consideration

Text: 13 Vitkus first asserts that the district court erred in granting summary judgment on the question of whether the Release was supported by consideration. We agree with the district court that the severance benefits Vitkus received pursuant to the Termination Letter were consideration for the Release. 4 D.C.Op. at 33. In doing so, we reject Vitkus's contention that Beatrice had a pre-existing duty under the Severance Agreement to pay these severance benefits and, consequently, that their payment could not serve as consideration for the Termination Letter and Release. See De Fontaine v. Passalino, 222 Ill.App.3d 1018, 165 Ill.Dec. 499, 505, 584 N.E.2d 933, 939 (1991) (A promise to do something one is already obligated to do is no consideration....). We hold that Beatrice did not have a pre-existing duty to pay the benefits under the Severance Agreement because Vitkus failed to comply with a condition precedent required for his receipt of such benefits under the agreement. 14 As an initial matter, the parties dispute who had the burdens of proof and production regarding the validity of a release on motion for summary judgment under Celotex and Illinois law. Under Illinois law, Beatrice had the initial burden of production on the existence of a release that is legal and binding on its face. O'Keefe v. Greenwald, 214 Ill.App.3d 926, 158 Ill.Dec. 342, 347, 574 N.E.2d 136, 141 (1991). Beatrice met this initial burden under Illinois law by pointing to the recitation in the Release itself that the Release was executed [f]or good and valuable consideration. In doing so, it also met its burden under Celotex of pointing to places in the record showing a lack of disputed fact. See Applied Genetics, 912 F.2d at 1241 (citing Celotex, 477 U.S. at 324, 106 S.Ct. at 2553). Once Beatrice showed the existence of a release that recited that it was in exchange for good and valuable consideration, a presumption of the release's validity arose. O'Keefe, 158 Ill.Dec. at 347, 574 N.E.2d at 141; Wasmund v. Metropolitan Sanitary Dist., 135 Ill.App.3d 926, 90 Ill.Dec. 532, 534, 482 N.E.2d 351, 353 (1985). Under Illinois law, the burden then shifted to Vitkus to prove that the release was invalid by clear and convincing evidence. O'Keefe, 158 Ill.Dec. at 347, 574 N.E.2d at 141; Aqua-Aerobic Systems, Inc. v. Ravitts, 166 Ill.App.3d 168, 117 Ill.Dec. 77, 79, 520 N.E.2d 67, 69 (1988); Wasmund, 90 Ill.Dec. at 534, 482 N.E.2d at 353. This meant that Vitkus was required to set forth specific facts showing that there was a genuine issue as to the existence of consideration. See Applied Genetics, 912 F.2d at 1241 (citing Celotex, 477 U.S. at 324, 106 S.Ct. at 2553). Furthermore, because Vitkus would have had to prove the release's invalidity by clear and convincing evidence at trial, we judge whether the evidence in the record could support a reasonable jury finding that there was no consideration under the clear and convincing evidence standard. See Anderson, 477 U.S. at 252, 255-56, 106 S.Ct. at 2512, 2513-14. 15 Although Vitkus admittedly received a large severance payment, he claims that payment should not be regarded as consideration for the Release because Beatrice had a pre-existing duty to pay him those benefits under the Severance Agreement. The fatal flaw in this argument is that Vitkus failed to show that he complied with a condition precedent under the Severance Agreement that had to be satisfied before Beatrice would become legally obligated under that Agreement to pay him such severance benefits. 16 A condition precedent is one which must be performed before a contract becomes effective or which is to be performed by one party to an existing contract before the other party is obliged to perform. Lyntel Products Inc. v. Alcan Aluminum Corp., 107 Ill.App.3d 176, 63 Ill.Dec. 4, 7, 437 N.E.2d 653, 656 (1981); see Wasserman v. Autohaus on Edens, Inc., 202 Ill.App.3d 229, 147 Ill.Dec. 571, 576, 559 N.E.2d 911, 916 (1990). If the condition remains unsatisfied, the obligations of the parties are at an end. Lyntel Products, 63 Ill.Dec. at 8, 437 N.E.2d at 657. 17 The district court properly found that the Severance Agreement required Vitkus to give timely written notice to Beatrice if he intended to quit pursuant to the Severance Agreement provision that permitted him to leave for good reason and thereby receive the Severance Agreement benefits. The provision stated: 18 Any termination of your employment for good reason shall be made in writing by delivery of notice thereof to the Company within 120 days after the first occurrence of the event giving rise to such good reason. 19 Aplt.App. 472. The provision clearly gave a time limit within which notice had to be given and was conspicuously located next to the definition of good reason. We therefore conclude that the provision was a condition precedent. Cf. Ansvar America Ins. Co. v. Hallberg, 209 Ill.App.3d 206, 154 Ill.Dec. 77, 79, 568 N.E.2d 77, 79 (1991) (holding that where requirement in contract was inconspicuously placed, gave no time limit for its satisfaction, and was included under heading Additional Duty, it was not a condition precedent). 20 Vitkus does not point to evidence in the record showing that he gave such notice, nor does he even allege that he did so. Consequently, Beatrice's obligation to pay severance benefits under the Severance Agreement was not triggered and the company therefore had no pre-existing duty to pay Vitkus the benefits under the Severance Agreement. The payment of benefits under the Termination Letter thus constituted consideration for the Release which was attached to the Termination Letter.