Court Opinion

ID: 3146746
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:21:21.967583+00
Date Added: 2024-06-11T11:55:14.008852
License: Public Domain

THIRD DIVISION
                                                                                   MARCH 28, 2007

No. 1-06-0993

CAREER CONCEPTS, INC.,                                                  )       Appeal from the
                                                                        )       Circuit Court of
        Plaintiff-Appellee,                                             )       Cook County.
                                                                        )
v.                                                                      )       No. 04 L 3087
                                                                        )
SYNERGY, INC.,                                                          )       The Honorable
                                                                        )       Paddy H. McNamara,
        Defendant-Appellant.                                            )       Judge Presiding.

        JUSTICE GREIMAN delivered the opinion of the court:

        Defendant Synergy, Inc., appeals from the judgment of the trial court in favor of plaintiff

Career Concepts, Inc. (CCI), on its breach of contract action. On appeal, defendant contends

that: (1) the trial court erred in allowing the case to proceed to a trial on the merits; (2) the

court’s liability finding was against the manifest weight of the evidence; and (3) the court abused

its discretion by awarding plaintiff attorney fees.

        Briefly stated, plaintiff, an employee placement agency, filed the underlying action in

order to recover a placement fee allegedly owed by defendant, a professional employer

organization (PEO).1 Plaintiff claimed that the parties had a valid contract and defendant was in

breach thereof because it failed to pay a placement fee after hiring Diane Takacs, an individual

previously connected with plaintiff. In response, defendant argued that the purported contract

was invalid because John Driscoll, the signator, did not have authority to enter into contracts on

        1
            A PEO provides employee-related services for smaller businesses.
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the company’s behalf. Moreover, defendant maintained that Diane Takacs was hired as a result

of wholly unrelated circumstances.

       Prior to trial, on June 17, 2005, defendant filed an "Emergency Motion in Limine, for

Directed Verdict and Entry of Judgment” on the basis that plaintiff violated Supreme Court Rule

213(f) (210 Ill. 2d R. 213(f)) by failing to adequately and completely disclose its intended

witnesses. Specifically, defendant argued that plaintiff’s three witness disclosures were

inadequate and incomplete because: (1) Diane Takacs’ address was not provided and her

testimony was not divulged in appropriate detail; (2) the testimony of the remaining two

witnesses, Amber Campbell and Keri Burton, was not divulged at all; and (3) John Driscoll was

not listed as a potential witness. Accordingly, defendant requested that the court bar plaintiff

from presenting any witnesses at trial. In the alternative, defendant argued that plaintiff could not

support its claim solely based upon the witnesses and minimal subjects disclosed; therefore, the

court should direct a verdict and enter judgment in defendant’s favor. After considering the

motion, the trial court granted plaintiff 28 days to supplement its witness disclosures and comply

with Rule 213.

       On September 29, 2005, defendant filed a "Renewed Motion in Limine, for Directed

Verdict and Entry of Judgment” on the basis that plaintiff failed to follow the trial court’s prior

order to supplement its witness disclosures. At the subsequent hearing, plaintiff provided timely-

filed copies of its supplemental witness disclosures. Plaintiff maintained that it had previously

faxed the document to defendant. The trial court ultimately denied defendant’s motion.

       Then, on November 23, 2005, defendant filed an "Emergency Motion to Dismiss”

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pursuant to sections 13.70 and 15.85 of the Business Corporation Act of 1983 (Act) (805 ILCS

5/13.70, 15.85 (West 2004)). Defendant argued that plaintiff, an Indiana corporation, was not

registered or authorized to do business as a foreign corporation in Illinois and therefore could not

file the underlying lawsuit. Without ruling, the trial court took the motion under advisement and

proceeded to trial.

       At trial, Amber Campbell testified that she was employed by plaintiff as an account

executive in 2001. Campbell stated that she initiated the relationship with defendant by "cold-

calling” the company, and, after describing the nature of her call, she was directed to Driscoll.

Driscoll stated that defendant was interested in hiring sales personnel; therefore, Campbell

forwarded a contract to him via facsimile. Campbell testified that she asked whether Driscoll

had authority to sign the contract. Driscoll responded in the affirmative and signed and returned

the contract.

       Under the terms of this standard contract, if defendant hired a candidate sent by plaintiff

within one year, it was required to pay a placement fee, which was 30% of the hired candidate’s

first year compensation, including bonuses. In addition, the contract stated that, in the event that

plaintiff was forced to pursue collection remedies, defendant agreed to "pay all expenses thereof,

including reasonable attorney’s fees.”

       Thereafter, in 2001, Campbell sent Takacs to interview with Driscoll and Jon

Skulborstad, defendant’s founder and president. Campbell spoke directly to Skulborstad after the

interviews, and he indicated that the company was not interested in hiring Takacs at that time.

Takacs subsequently ended her relationship with plaintiff. Approximately two years later, she

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contacted plaintiff again for employment assistance. At that time, the company learned that

defendant had hired Takacs later in 2001.

       On cross-examination, Campbell testified that Driscoll signed the contract at issue in his

capacity as hiring manager. Campbell admitted, however, that she did not know whether

Driscoll actually was the hiring manager and she did not attempt to verify his title or position.

She further admitted that she was never told by anyone within the company that Driscoll had

contract-signing or hiring authority. When Campbell spoke to Skulborstad, she never mentioned

the contract between the parties nor inquired into Driscoll’s position or authority. Campbell

stated that plaintiff was no longer in business.

       Arnie Eastburn, plaintiff’s owner and president, testified that Campbell was responsible

for the formation and oversight of the relationship with defendant. In 2002, Eastburn called

Skulborstad, whom he had known for years, to inquire whether he would be interested in

potentially hiring any candidates. According to Eastburn, Skulborstad responded that he would

be interested if there was a suitable candidate, and Eastburn alerted Skulborstad to the existing

contract between their companies. Then, in 2003, after learning that Takacs had been hired by

defendant in 2001, Eastburn sent Skulborstad an invoice for the outstanding placement fee of

$30,000 based on the belief that Takacs earned $100,000 in her first year. In response,

Skulborstad called Eastburn, announcing his refusal to pay the fee because the parties did not

have a contract for services.

       On cross-examination, Eastburn admitted that he never contacted Skulborstad when the

parties entered into the contract at issue. He further admitted that he did not attempt to verify

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whether Driscoll had contract-signing authority. Eastburn denied that plaintiff conducted

business in Illinois, but admitted that plaintiff worked with Illinois residents to find employment

positions in Illinois "on a regular basis.” Eastburn acknowledged attending a "couple” of

industry meetings in Illinois to "drum up” business. Eastburn further admitted that plaintiff was

not registered to conduct business in Illinois and never paid franchise fees or taxes to the Illinois

Secretary of State.

       John Driscoll testified that he was employed by defendant in 2001 as a sales manager.

Driscoll recalled being contacted by Campbell in early 2001 to begin a relationship between

plaintiff and defendant. Driscoll stated that he presented the contract at issue to Skulborstad and

was given authority to sign it. Driscoll recalled that Takacs was subsequently sent as a candidate,

and he and Skulborstad interviewed her, but she was not hired. Driscoll further stated that, while

he was employed by defendant, the company paid a fee to hire Melissa Donahue through a search

firm. Driscoll left defendant’s company around June 1, 2001.

       On cross-examination, Driscoll admitted that he never held the position of hiring manager

with defendant and did not have contract-signing authority. Driscoll further admitted that he

signed the contract at issue on behalf of defendant as its hiring manager; however, he denied that

this was a misrepresentation. Driscoll admitted that, prior to leaving defendant’s company

without any advance notice, he was in an altercation with Skulborstad. He further admitted that

he attempted to recruit defendant’s employees away from the company. Driscoll, however, stated

that he did not harbor any ill-will toward defendant.

       On redirect examination, Driscoll maintained that Skulborstad authorized him to sign

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another contract in addition to the one at issue. More specifically, the contract was for a sales

presentation. On re-cross-examination, Driscoll admitted that he was required to seek

Skulborstad’s approval before signing the sales presentation contract. Driscoll also admitted that

Melissa Donahue was hired as a temporary employee.

       Diane Takacs had no recollection of Campbell, but someone at plaintiff’s company

arranged an interview for her at defendant’s company in February 2001. Takacs only recalled

interviewing with Driscoll. She denied that she had a follow-up interview with Skulborstad.

When defendant did not hire her initially, Takacs ended her relationship with plaintiff. Takacs

admitted that she was hired by defendant several months later. However, immediately prior to

accepting a position with defendant, Takacs was employed by another company. While

employed there, she made a sales presentation to defendant that Skulborstad attended. Shortly

thereafter, Joe Fife, defendant’s director of sales, contacted Takacs and asked whether she would

be interested in working for defendant. Takacs subsequently interviewed with Fife and accepted

a position with defendant in July, 2001. Her base salary was approximately $70,000, plus bonus.

Ultimately, Takacs was compensated $89,000 in total for her first year. On cross-examination,

Takacs stated that she did not believe plaintiff contributed to her hiring.

       Jon Skulborstad testified that, during the time frame in question, he had complete hiring

and firing authority and was the only employee with contract-signing authority. Until abruptly

leaving the company, Driscoll was a sales manager for defendant. In that capacity, Driscoll was

required to find potential candidates for sales positions; however, only Skulborstad could hire an

acceptable candidate. Driscoll never held the position of hiring manager. Driscoll was aware of

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defendant’s hiring and firing and contract-signing restrictions, as well as the company’s policy

against using placement firms to find full-time employees because of the accompanying

placement fees. Skulborstad admitted that defendant used temp firms to hire temporary

employees, which required a fee; however, Skulborstad maintained that using temp firms was the

only method for obtaining temporary employees. He further stated that some temporary

employees had become full-time employees, such as Melissa Donahue. Skulborstad admitted

that he authorized Driscoll to hire Donahue as a full-time employee, but only after she

demonstrated satisfactory performance in her temporary capacity.

       Skulborstad stated that he had known Eastburn for years, and that the pair would see each

other at industry functions at least once per year. Skulborstad recalled receiving a phone call

from Eastburn regarding his company when it was in its infancy. Skulborstad relayed his

company’s policy against using placement firms, but told Eastburn to contact him if there was an

exceptional candidate. Eastburn never contacted Skulborstad after the parties allegedly entered

into the contract at issue. Skulborstad first became aware of the alleged contract in 2003 when

he received Eastburn’s invoice. Skulborstad admitted that he authorized Fife to hire Takacs in

2001 based on her sales presentation while employed elsewhere. Skulborstad had no recollection

of being introduced to Takacs by Driscoll or interviewing her earlier in the year. Because of

defendant’s policy against using placement firms, he never would have hired Takacs if he

thought she was connected to plaintiff. Takacs was employed by defendant for a little over one

year and left the company on good terms. Skulborstad denied authorizing Driscoll to sign the

contract at issue. He did, however, recall authorizing Driscoll to sign one unrelated sales

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contract. Further, Skulborstad denied ever speaking with Campbell about an interview with

Takacs.

        Joe Fife testified that, as director of defendant’s sales, he was Driscoll’s direct supervisor.

Fife reiterated that Skulborstad had sole contract-signing authority. Fife stated that Driscoll

neither held the position of hiring manager nor had contract-signing or hiring authority while

working under him. Moreover, Driscoll never told Fife that he had signed a contract with

plaintiff. Fife reiterated defendant’s well-known policy against using placement firms for full-

time employees. Fife recalled the circumstances of Takacs’ hiring in the same manner as

Skulborstad.

        The trial court ultimately found in favor of plaintiff. During defendant’s closing

argument, the court advised defense counsel to limit his argument to the issue of damages

because it had already determined that defendant was liable under the contract. Specifically, the

trial court found that Driscoll had apparent authority to enter into the contract at issue on

defendant’s behalf. Moreover, the trial court announced that Skulborstad and Takacs were not

credible witnesses. In particular, the court determined that both individuals were lying when they

denied that the initial interview took place while Takacs was involved with plaintiff. The court

awarded plaintiff damages in the amount of $26,7002 plus attorney fees, but denied prejudgment

interest. The court then ordered plaintiff to file its petition for attorney fees.

        Plaintiff subsequently filed its fee petition in the amount of $14,730,70 for attorney fees

        2
            This amount was calculated based on 30% of Takacs’ first year earnings of $89,000 in

salary and bonuses.

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and costs. Defendant responded by filing a memorandum in opposition to the fee petition,

arguing that plaintiff was not entitled to recover because it was unsuccessful in proving the entire

amount of requested damages in the underlying complaint, and the petition failed to include the

information necessary to satisfy its burden for proving that the fees were reasonable. In addition,

defendant filed a motion for a ruling on its prior motion to dismiss pursuant to plaintiff’s

violation of sections 13.70 and 15.85 of the Act.

       According to defendant, during the hearing, the trial court advised plaintiff’s counsel to

withdraw the contingency fee agreement that he previously entered with his client because it

would constrain the court’s ability to award attorney fees.3 Plaintiff’s counsel eventually agreed.

The trial court then reviewed each entry of the fee petition, striking an undisclosed number of

entries that apparently were too vague or excessive. Ultimately, the trial court denied

defendant’s motion to dismiss and entered a final order for $39,2754 in total damages in favor of

plaintiff. Defendant subsequently filed motions to reconsider all of the court’s judgments,

including those related to the pretrial motions. According to the parties, following a brief

hearing, the court denied the motions to reconsider.5 This timely appeal followed.

       3
           The record on appeal contains a bystander’s report of the trial (see 210 Ill. 2d R. 323);

however, the record does not contain a transcript, or acceptable substitute, of the posttrial

proceedings.
       4
           Plaintiff was therefore awarded $12,575 in attorney fees.
       5
           The record does not contain a transcript or an acceptable substitute of this proceeding.

See 210 Ill. 2d R. 323.

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        Defendant first argues that the trial court committed reversible error by denying its

pretrial motions in limine, for directed verdict and entry of judgment on the basis that plaintiff

failed to timely and adequately disclose witnesses in accordance with Rule 213. Because a trial

court’s ruling on a motion in limine is subject to reconsideration throughout the trial, the movant

must object to the evidence when it is introduced at trial otherwise the issue is waived for

purposes of appeal. Ford v. Herman, 316 Ill. App. 3d 726, 736 (2000). Although defendant filed

the pretrial motions and filed a posttrial motion to reconsider, defense counsel failed to object to

the witnesses’ testimony when offered at trial and, therefore, did not preserve the issue for

appeal. Cf. Jarke v. Jackson Products, Inc., 282 Ill. App. 3d 292, 295 (1996) (despite the defense

counsel’s failure to contemporaneously object to witness testimony, the issue was sufficiently

preserved where the defendant filed a pretrial motion in limine and the defense counsel made a

belated objection to the testimony during the course of trial). Accordingly, we find that

defendant waived this issue for purposes of our review.

        Notwithstanding defendant’s waiver, we would affirm the trial court’s denial of

defendant’s motions in limine, for directed verdict and entry of judgment because plaintiff

sufficiently complied with Rule 213(f).

        Defendant next contends that the trial court erred in denying its motion to dismiss based

on plaintiff’s violation of sections 13.70 and 15.85 of the Act. Plaintiff responds that defendant

failed to satisfy its burden of proving that plaintiff was transacting business in Illinois in violation

of the Act.

        Pursuant to the Act, in order to transact business in Illinois, a foreign corporation must

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obtain authority from the Secretary of State. See 805 ILCS 5/13.05 (West 2004). Further, the

Act posits that, unless it obtained the requisite authority, a foreign corporation may not maintain

a civil action in any Illinois court. See 805 ILCS 5/13.70 (West 2004). In addition, if a

corporation is required to pay a "franchise tax, license fee, penalty, or interest” under the Act and

has failed to do so, the corporation may not maintain a civil action. See 805 ILCS 5/15.85 (West

2004). The defendant bears the burden of proving that a corporation transacted business in

violation of the Act. Subway Restaurants, Inc., v. Riggs, 297 Ill. App. 3d 284, 289 (1998). A

foreign corporation may engage in occasional and isolated transactions in Illinois without being

required to obtain authorization. Riggs, 297 Ill. App. 3d at 289. Moreover, a foreign corporation

need not obtain authorization if it simply conducts interstate commerce. Riggs, 297 Ill. App. 3d

at 289.

          In the instant case, defendant failed to satisfy its burden of demonstrating that plaintiff

violated the Act. Defendant attached an affidavit to its motion to dismiss indicating that an

online search and telephone confirmation revealed that plaintiff was a corporation registered in

Indiana, but not listed as a foreign corporation authorized to conduct business in Illinois.

Defendant’s burden of proof, however, is not satisfied with this information alone. See Mass

Transfer, Inc., v. Vincent Construction Co., 223 Ill. App. 3d 746, 751-52 (1992). Defendant

additionally argues that the trial evidence "indisputably” demonstrated that plaintiff was regularly

transacting business in Illinois as an unauthorized foreign corporation. At trial, Eastburn testified

that his Indiana company was not registered to conduct business in Illinois. However, he stated

that plaintiff assisted Illinois residents with finding employment in Illinois on a regular basis and

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that he attended industry meetings to solicit business "a couple of times.” We disagree that this

evidence "indisputably” satisfies defendant’s burden. Rather, defendant has merely demonstrated

that plaintiff worked with Takacs in Illinois and some unknown number of other individuals.

Without more, we cannot assume that plaintiff violated the Act simply based on Eastburn’s use

of the words "regular basis.”

       Defendant additionally contends that the trial court erred in finding it liable for breach of

contract. Specifically, defendant argues that the contract at issue was invalid because Driscoll

did not have the authority, apparent or otherwise, to enter into it on defendant’s behalf.

       An agent may bind his principal by acts which he appears authorized to perform.

Lundberg v. Church Farm, Inc., 151 Ill. App. 3d 452, 461 (1986). The scope of an agent’s

purported authority is a question of fact; therefore, we will reverse the court’s finding on the

issue only if it is against the manifest weight of the evidence. Progress Printing Corp. v. Jane

Byrne Political Committee, 235 Ill. App. 3d 292, 306 (1992). Only when an opposite conclusion

is apparent or the finding appears unreasonable, arbitrary or not based on the evidence will a

finding be deemed against the manifest weight of the evidence. Amcore Bank, N.A., v.

Hahnaman-Albrecht, Inc., 326 Ill. App. 3d 126, 135 (2001).

       Apparent authority arises when the principal knowingly permits the agent to assume

authority or when he holds his agent out as possessing authority, and " 'a reasonably prudent man,

exercising diligence and discretion, in view of the principal’s conduct, would naturally suppose

the agent to possess.’ " Lundberg, 151 Ill. App. 3d at 461, quoting Hofner v. Glenn Ingram &

Co., 140 Ill. App. 3d 874, 882 (1985). In order to prove the existence of apparent authority, the

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plaintiff must demonstrate that: (1) the principal consented to or knowingly acquiesced in the

agent’s exercise of authority; (2) the third person reasonably concluded, based on the actions of

the principal and agent, that the party was an agent of the principal; and (3) the third person

justifiably relied on the agent’s apparent authority to his detriment. Letsos v. Century 21-New

West Realty, 285 Ill. App. 3d 1056, 1065 (1996).

       In the case at bar, we determine that defendant remains liable under the contract. Review

of the record demonstrates that, prior to submitting the contract to Driscoll, Campbell was

assured that he was authorized to sign on behalf of defendant. Driscoll admitted that he was not

a hiring manager, despite signing the contract as such; however, he concluded that he did not

misrepresent himself. He maintained that he received authorization from Skulborstad. In

addition, Driscoll interviewed Takacs and then forwarded her to Skulborstad for another

interview. After the interviews, Campbell contacted Skulborstad directly and learned that they

were not interested in hiring Takacs at that time. Moreover, Skulborstad admitted that he

expressly authorized Driscoll to enter into at least one contract and to hire Melissa Donahue as a

full-time employee. Further, although the exact timing of the conversation is unclear,

Skulborstad and Eastburn spoke at some point about plaintiff’s services and, at the very least,

Skulborstad told Eastburn to forward exceptional candidates to defendant.

       We recognize that defendant presented contradicting evidence; however, the trier of fact

determines the credibility of the witnesses, resolves conflicts in the evidence and attaches

relevant weight to the witness testimony. Seldin v. Babendir, 325 Ill. App. 3d 1058, 1063

(2001). The trial court specifically announced that Skulborstad and Takacs did not testify

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credibly. Furthermore, we may not reverse a judgment merely because the trial court could have

drawn different inferences and conclusions from the conflicting testimony. See Rainey v. City of

Salem, 209 Ill. App. 3d 898, 905 (1991). Despite the delay in Takacs’ actual hiring, in that she

was no longer affiliated with plaintiff and worked for an unrelated company at the time, the

contract remained in effect. According to its terms, "service fees are on a contingency basis and

are payable only if a candidate enters into a service relationship with [defendant] within one year

after our most recent communication relating to the candidate.” There is no dispute that Takacs

was hired within one year of Campbell and Driscoll’s first communication. Accordingly, we do

not find that a different result is clearly apparent or that the trial court’s judgment, based on the

evidence, was palpably erroneous and wholly unwarranted or arbitrary and unsubstantiated by the

evidence. See Amcore Bank, N.A., 326 Ill. App. 3d at 135.

       Defendant finally contends that the trial court erred in awarding plaintiff attorney fees.

The decision whether to award attorney fees is within the sound discretion of the trial court and

will not be disturbed absent an abuse of discretion. Med + Plus Neck & Back Pain Center, S.C.

v. Notfsinger, 311 Ill. App. 3d 853, 861 (2000). Usually parties are responsible for their own

attorney fees; however, if expressly authorized by statute or by agreement, the court may award

attorney fees so long as they are reasonable. Collins v. Hurst, 316 Ill. App. 3d 171, 173 (2000).

       Defendant relies on Med + Plus to argue that the court’s award was erroneous because

plaintiff failed to prevail on all aspects of its complaint. However, the instant case is

distinguishable because no evidence was presented that the parties’ had a fee-shifting provision

nor can defendant reasonably argue that the court’s reduction in award in compliance with the

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terms of the contract and refusal to award prejudgment interest were "significant issues” in the

case. Med + Plus, 346 Ill. App. 3d at 861 (defining a prevailing party for purposes of a fee-

shifting provision as one that is successful on any significant issue).

       Notwithstanding, we must reduce the award pursuant to the terms of the contingency fee

agreement between plaintiff and its attorney. The record demonstrates that plaintiff and its

attorney agreed to a contingency fee arrangement, and plaintiff does not dispute that the

agreement called for a one-third contingency fee. In the majority of case law analyzing

contingency fees, courts are concerned that contingency fees are unreasonable because they

would allow for the award of excessive fees. See, e.g., Collins, 316 Ill. App. 3d at 173;

Blankenship v. Dialist International Corp., 209 Ill. App. 3d 920, 927 (1991) (courts should

consider contingency fee agreements as only one factor in determining whether the attorney fees

are reasonable). The instant case is unique, however, in that plaintiff was awarded attorney fees

in excess of its contingency fee agreement. We presume that the contingency fee agreement

between plaintiff and its attorney was reasonable and find it enforceable. Consequently, the trial

court erred in allowing plaintiff’s attorney to unilaterally waive the contingency fee in favor of

the court’s own award. This court has a duty to guard against the collection of excessive attorney

fees, and we will generally enforce a reasonable contract between an attorney and his client. See

Corcoran v. Northeast Illinois Regional Commuter R.R. Corp., 345 Ill. App. 3d 449, 452 (2003).

Accordingly, we reduce plaintiff’s award of attorney fees to one-third of its damage recovery

pursuant to the contingency fee agreement. Therefore, because plaintiff recovered $26,700, it is

entitled to $8,900 in attorney fees.

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       Accordingly, we affirm the judgment of the circuit court of Cook County, but modify the

attorney fee award in accordance herewith.

       Affirmed; modified as instructed.

       KARNEZIS, J., and CUNNINGHAM, J., concur.

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