Court Opinion

ID: 9521241
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:01:05.019723+00
Date Added: 2024-06-11T12:45:41.891549
License: Public Domain

JUSTICE BILANDIC, dissenting: I respectfully dissent. The plaintiffs’ complaint alleged that the plaintiffs purchased a boiler from Diversey Heating and Plumbing, a business engaged in the selling, installing and servicing of heating and plumbing systems located at 2830 N. Lincoln in Chicago. At the time of the plaintiffs’ purchase, Jim Schuster owned Diversey Heating and his son, defendant Jerry Schuster, worked with him in the business. When Jim died in October 1993, Jerry took over the business. Apparently without interruption, Jerry continued to operate Diversey Heating and Plumbing as a business engaged in the selling, installing and servicing of heating and plumbing systems. Not only did Jerry retain the name of his father’s business, he also continued to operate the business out of the same location and apparently continued to service his father’s customers, as evidenced by his dealings with the plaintiffs alleged in count II of the plaintiffs’ complaint. In my view, these alleged facts clearly provide sufficient support for the plaintiffs’ allegation that Jerry Schuster d/b/a Diversey Heating and Plumbing was a mere continuation of Jim Schuster d/b/a Diversey Heating and Plumbing. Yet, despite these allegations, the majority finds it appropriate to uphold the dismissal of the plaintiffs’ successor liability claims on a section 2 — 615 motion. I cannot agree that the plaintiffs’ claims should be so prematurely rejected. The majority finds that, as a matter of law, the plaintiffs cannot prove successor liability in this case. The sole reason successor liability is not possible is that Jim Schuster was a sole proprietor. According to the majority, no other fact or circumstance is relevant because the "essential” element of continuity of ownership is absent. I disagree. As the majority notes, the reason for recognizing exceptions to the general rule of nonliability for successor businesses is to "offset the potentially harsh impact” of the rule. 179 Ill. 2d at 345. Accordingly, those exceptions should be interpreted and applied in a manner that attempts to achieve fairness in a particular situation. The majority, however, ignores that consideration and applies an overly restrictive interpretation of the mere continuation exception. Under the majority’s view, even when the facts of a case overwhelmingly demonstrate that a successor business is a mere continuation of the predecessor, a lack of common ownership will allow the successor to escape liability. I would apply an interpretation of the mere continuation exception which considers the totality of the circumstances surrounding the transfer to determine if the successor business is merely a continuation of the predecessor. Continuity of ownership is only one consideration, and its absence should not defeat a plaintiffs claim if the remainder of the circumstances clearly demonstrate that the exception should, in fairness, apply. Other courts have followed such an approach to this exception. See Kaeser & Blair, Inc. v. Willens, 845 F. Supp. 1228, 1233 (N.D. Ill. 1993); C. Mac Chambers Co. v. Iowa Tae Kwon Do Academy, Inc., 412 N.W.2d 593, 597 (Iowa 1987); see also Baltimore Luggage Co. v. Holtzman, 80 Md. App. 282, 297, 562 A.2d 1286, 1293 (1989) (noting that, while " 'common officers, directors, and stockholders’ ” is a traditional indication of a continuing corporation, it is not an essential factor), quoting 15 W. Fletcher, Private Corporations § 7122 (Perm. ed. Supp. 1988). In this case, liberally construing the plaintiffs’ complaint, I would find that the plaintiffs sufficiently alleged that Jerry Schuster d/b/a Diversey Heating and Plumbing was a mere continuation of Jim Schuster d/b/a/ Diversey Heating and Plumbing. I note that the defendant contends that, even if common ownership is not essential, the plaintiffs have failed to allege sufficient facts regarding the transfer of the business from Jim to Jerry to support the mere continuation exception. As noted above, I believe that the facts alleged by the plaintiffs are sufficient to state a claim pursuant to that exception. Further, it must be noted that the trial court prevented the plaintiffs from obtaining discovery from the defendant by staying discovery pending the outcome of the defendant’s motion to dismiss. The plaintiffs should therefore not be faulted for failing to include in their complaint more specifics regarding the transfer of the business. Discovery may support the plaintiffs’ claim that the defendant’s business was a mere continuation of his father’s business, or it may reveal that the defendant’s business was not a mere continuation. The plaintiffs should be allowed the opportunity to discover the true nature of the transfer of the business from Jim to Jerry. In addition, I would also find that the plaintiffs’ complaint sufficiently alleged a second exception to the general rule of successor nonliability. The plaintiffs alleged that, on Jim’s death, the defendant succeeded to the assets, rights and obligations of Jim’s business. In my view, this allegation is sufficient to allow the plaintiffs to proceed under the theory that the defendant expressly or impliedly assumed the obligations of his father’s business. Due to the trial court’s restriction on discovery, at this juncture, we have no knowledge of the circumstances of the transfer of the business from Jim to Jerry. Discovery may well reveal that, in the course of that transfer, the defendant either expressly or impliedly agreed to assume the obligations of the business, along with its assets and rights. Supporting that conclusion is the fact that the defendant continued to operate the business out of the same location as his father. This suggests that the defendant may have assumed at least one of the obligations of his father’s business, the lease. The plaintiffs should have the opportunity to discover the full extent of the terms under which the defendant acquired his father’s business. In sum, I believe that the plaintiffs’ successor liability counts against the defendant should be permitted to proceed. The plaintiffs’ allegations, when viewed in the light most favorable to the plaintiffs, are clearly sufficient to state a cause of action upon which relief can be granted. Dismissal of the plaintiffs’ claims under section 2 — 615 was therefore improper. I would affirm the judgment of the appellate court reversing the dismissal. JUSTICES MILLER and McMORROW join in this dissent.