Court Opinion

ID: 3148275
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:45:57.5104+00
Date Added: 2024-06-11T08:37:03.234209
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                         Appellate Court

        Santorini Cab Corp. v. Banco Popular North America, 2013 IL App (1st) 122070

Appellate Court            SANTORINI CAB CORPORATION, Plaintiff-Appellant, v. BANCO
Caption                    POPULAR NORTH AMERICA, Defendant-Appellee.

District & No.             First District, Sixth Division
                           Docket No. 1-12-2070

Filed                      October 25, 2013

Held                       In an action alleging that defendant breached a contract to sell taxicab
(Note: This syllabus       medallions to plaintiff, the appellate court rejected plaintiff’s contention
constitutes no part of     that the trial court erred in precluding lost profit damages by refusing to
the opinion of the court   calculate plaintiff’s damages using the market price of the medallions at
but has been prepared      the time of the trial, since plaintiff’s refusal to comply with the trial
by the Reporter of         court’s discovery order resulted in a lack of evidence showing with
Decisions for the          reasonable certainty the portion of plaintiff’s claimed lost profits caused
convenience of the         by defendant’s conduct.
reader.)

Decision Under             Appeal from the Circuit Court of Cook County, No. 07-L-10198; the
Review                     Hon. Brigid Mary McGrath, Judge, presiding.

Judgment                   Affirmed.
Counsel on                  Murphy & Hourihane, L.L.C., of Chicago (Eugene E. Murphy, Jr., John
Appeal                      N. Hourihane, Jr., John H. Scheid, Jr., David F. Hyde, and Randall S.
                            Borek, of counsel), for appellant.

                            Chuhak & Tecson, P.C., of Chicago (Sanjay Shivpuri, of counsel), for
                            appellee.

Panel                       JUSTICE LAMPKIN delivered the judgment of the court, with opinion.
                            Presiding Justice Rochford and Justice Reyes concurred in the judgment
                            and opinion.

                                              OPINION

¶1          Plaintiff Santorini Cab Corp. (Santorini) sued defendant Banco Popular North America
        (Banco) for breach of contract concerning the sale of two taxicab medallions. Following a
        bench trial, the trial court found that Banco had breached the contracts and awarded Santorini
        $37,550 in damages.
¶2          Santorini appeals, contending the trial court made erroneous partial summary judgment
        rulings in Banco’s favor prior to the bench trial. Specifically, Santorini argues the trial court
        erred by precluding lost profit damages and by failing to calculate Santorini’s damages by
        using the market price of the medallions at the time the case went to trial. For the reasons that
        follow, we affirm the judgment of the circuit court.

¶3                                        I. BACKGROUND
¶4          Santorini and Banco entered into two contracts for the sale of taxicab medallions. The
        May 2006 contract was for the sale of medallion number 2408 from Banco to Santorini for
        $48,000. The July 2006 contract was for the sale of medallion number 2361 from Banco to
        Santorini for $48,000. Both contracts contained substantially the same terms, including
        paragraph 6, which provided that if the parties were unable to obtain final approval from the
        department of consumer services of the City of Chicago (DCS) for the transfer of the
        medallions within 90 days of the date of the parties’ contract, or if during the 90-day period
        the DCS indicated that it would not approve Santorini as a qualified purchaser of the
        medallions, then in either event, Banco’s sole liability would be to refund Santorini’s deposit,
        and upon such refund, neither party would have any further rights, obligations, or claims
        against the other, and the contract would be deemed void and of no further force or effect.
        The contracts also contained provisions that any notice or other communication was to be
        delivered by hand, sent by overnight courier or mailed by registered or certified mail. Both

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       contracts also contained clauses stating that time was of the essence.
¶5          Plaintiff paid the required earnest money under each contract and at all relevant times
       was financially and otherwise able to purchase the two medallions.
¶6          After the 90-day period had expired under each of the contracts, the parties still continued
       to work together to close the sale. The last written communication between the parties was
       a letter from Banco’s counsel to Santorini’s counsel, dated December 15, 2006, which stated
       that an issue arose concerning whether Banco’s borrower had received the requisite notice
       in the underlying foreclosure proceedings on the medallions. Until that issue was resolved,
       Banco was not in a position to move forward with the sale to Santorini. Furthermore,
       although the DCS had received the documents concerning the medallion transfer, the DCS
       had not given its final approval to allow the transfer. Accordingly, Banco’s counsel stated:
            “No further steps should be taken to consummate the transaction until the issue of the
            borrower’s notice has been resolved. I will continue to work on this matter and try and
            bring it to an amicable resolution. Until that time, the transaction is being stayed.”
       However, at the December 2011 bench trial in this case, Banco’s counsel testified that he had
       telephone calls with Santorini’s counsel in January and February 2007 and told him that the
       deals concerning both contracts were “dead.”
¶7          In September 2007, Santorini filed this breach of contract lawsuit against Banco.
       Santorini alleged that its damages included the appreciation in the value of the medallions
       and the lost profits it would have derived from ownership of the medallions. Banco’s
       discovery requests sought specific documents relevant to the basis of the lost profits claim,
       such as tax returns, financial statements, before-tax revenue, expenses, costs, overhead, and
       profit. In response, Santorini produced tax returns for 2006 and 2007, and less than 20 checks
       payable to Santorini in 2008 and 2009. The trial court granted Banco’s motion to compel
       information concerning lost profits, but Santorini’s compliance with that discovery remained
       an issue. Banco filed a motion to dismiss or, in the alternative, a motion for rule to show
       cause.
¶8          In July 2009, the trial court sanctioned Santorini for failing to answer discovery
       concerning alleged lost profits by barring Santorini from relying on documents and
       information requested in Banco’s second set of discovery requests that had not been
       produced.
¶9          In September 2009, Banco attempted to return to Santorini the earnest money Banco had
       been holding in escrow, but Santorini did not cash the check due to the pending litigation.
¶ 10        Banco moved for partial summary judgment on Santorini’s lost profits claim, and in July
       2010, the trial court entered summary judgment precluding lost profits damages. Specifically,
       the court stated that it was like “pulling teeth getting documents from [Santorini] regarding
       damages.” Moreover, the court would not allow Santorini to circumvent the July 2009
       sanction order by having its witness, Savas Tsitiridis, testify about lost profits “off the top
       of his head without having any backup documents.” The trial court noted that Santorini’s
       refusal to provide the lost profits discovery to Banco prevented Banco from investigating that
       claim prior to Tsitiridis’s cross-examination.
¶ 11        Banco also moved for partial summary judgment on the issue of the damage calculation.

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       Specifically, Banco argued that damages should be based on the difference between the
       contract price of the medallions and the value of the medallions at the time of the breach of
       contract. In response, Santorini argued that damages should be based on the difference
       between the contract price of the medallions and the value of the medallions at the time of
       trial. In January 2011, the trial court granted Banco’s motion and held that “damages for
       breach of contract will be determined as the difference of the contract at the time of breach
       and the time of contract; no damages based on the price of medallions at trial are allowed.”
¶ 12        Banco filed another motion for summary judgment, arguing that Santorini failed to
       establish the correct measurement and computation of its damages and failed to mitigate its
       damages. The trial court did not grant that motion, but in June 2011, the court entered the
       summary determination that if any breach of contract occurred, it occurred no later than the
       date Santorini filed its complaint, September 27, 2007.
¶ 13        After a bench trial, the trial court found that Banco had breached the two contracts
       because it failed to either transfer the medallions or cancel the contracts in writing. The court
       also found that Banco waived all the provisions of paragraph 6, including the limitation of
       liability clause, by continuing to work with Santorini to close the sales after the relevant 90-
       day time periods had lapsed. The trial court also ruled that the proper measure of damages
       was the difference between the market price at the time Santorini learned of the breach and
       the contract price, plus any consequential damages less expenses saved as a result of the
       breach. Although Santorini could have been entitled to lost profits under this measurement,
       the trial court had previously barred Santorini from seeking those profits as a result of
       Santorini’s repeated failure to comply with discovery requests and the court’s orders on the
       issue of lost profits. The trial court found that Santorini knew of the breach of contract by
       February 2007. According to the evidence, there were 6,999 medallions in the City of
       Chicago, and over 2,550 medallions were bought and sold during the 3½-year time period
       from December 4, 2006, through June 15, 2010. In addition, Santorini’s medallion broker
       had testified that medallions had always been available for buying in the years 2006, 2007,
       2008 and 2009. The trial court determined that the average sale price of taxi medallions in
       Chicago during February 2007 was $66,775. The difference between $66,775 and the
       $48,000 contract price was $18,775. Accordingly, for the two contracts, Santorini’s total
       damages were $37,550.
¶ 14        Santorini timely appealed.

¶ 15                                     II. ANALYSIS
¶ 16       On appeal, Santorini challenges the trial court’s summary judgment rulings concerning
       the preclusion of lost profits and the measurement of Santorini’s damages. Summary
       judgment is appropriate when the pleadings, affidavits, depositions, and admissions on file,
       when viewed in a light most favorable to the nonmovant, present no genuine issue as to any
       material fact and show that the moving party is entitled to a judgment as a matter of law.
       Forsythe v. Clark USA, Inc., 224 Ill. 2d 274, 280 (2007). We review a trial court’s entry of
       summary judgment de novo. Ragan v. Columbia Mutual Insurance Co., 183 Ill. 2d 342, 349
       (1998).

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¶ 17                                          A. Lost Profits
¶ 18        Santorini argues the trial court improperly granted Banco summary judgment on the issue
       of lost profits. Santorini contends the trial court erred as a matter of law when it ruled that
       Santorini would not be able to provide sufficient evidence at the bench trial of its lost profits
       claim. Santorini also argues the trial court improperly weighed the evidence when it made
       its summary judgment determination. Santorini contends that lost profits may be recovered
       when there are any criteria to estimate them with reasonable certainty and this was not a
       situation where there was a complete lack of evidence. Santorini states that there was no
       question that it derived income from renting out taxicab medallions and the cancelled checks
       and tax returns it produced during discovery, even if deemed incomplete, were sufficient to
       create an issue of fact and thereby preclude summary judgment.
¶ 19        Lost profits are allowed when they can be proved with reasonable certainty, but they are
       not a proper element of damages where proof of the claimed profits is remote or speculative.
       Vulcan Metal Products, Inc. v. Schultz, 180 Ill. App. 3d 67, 73 (1989). The plaintiff bears the
       burden of presenting competent proof of lost profits from which a reasonable basis of
       computation may be derived. Girsberger v. Kresz, 261 Ill. App. 3d 398, 410 (1993).
¶ 20        We affirm the trial court’s partial summary judgment precluding lost profits damages
       because Santorini failed to present proof of any lost profits with reasonable certainty.
       Santorini’s refusal to comply with the court’s discovery order resulted in the July 2009 order
       that barred Santorini from relying on any documents and information concerning lost profits
       that were requested by Banco but never produced. Specifically, Santorini refused to answer
       Banco’s interrogatories that asked for Santorini’s revenues, expenses and before-tax profits.
       Instead, Santorini merely provided its 2006 and 2007 tax returns, which showed losses of
       $9,849 and $10,222, respectively, and some random checks for the years 2008 and 2009.
       Santorini never disclosed in discovery what those checks were for or what its expenses were
       in 2008 and 2009. Furthermore, Santorini never disclosed its variable and fixed expenses at
       any time.
¶ 21        We review a trial court’s decision to exclude or admit evidence for an abuse of
       discretion, which occurs where no reasonable person would take the view adopted by the
       court. Kim v. Mercedes-Benz, U.S.A., Inc., 353 Ill. App. 3d 444, 452 (2004). Furthermore,
       the imposition of a sanction for the violation of a discovery rule or order, provided by Illinois
       Supreme Court Rule 219(c) (eff. July 1, 2002), falls within the discretion of the trial court.
       Boyd v. City of Chicago, 378 Ill. App. 3d 57, 68 (2007). When imposing sanctions, the trial
       court must consider the surprise to the adverse party, the prejudicial effect of the witness’s
       testimony, the nature of the testimony, the diligence of the adverse party, the timeliness of
       the objection, and the good faith of the party seeking to offer the testimony. Nedzvekas v.
       Fung, 374 Ill. App. 3d 618, 620-21 (2007). No single factor is determinative, and each case
       presents a unique factual situation that the court must consider. Id. at 621.
¶ 22        On appeal, Santorini does not dispute that it failed to comply with the trial court’s
       discovery order. We find no abuse of discretion in either the trial court’s July 2009 discovery
       sanction order, or its July 2010 ruling that barred Santorini’s witness from testifying from

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       memory about Santorini’s expenses, income, and profits. To have allowed such testimony
       would have permitted Santorini to circumvent the July 2009 discovery sanction order and
       severely prejudiced Banco in its cross-examination of Santorini’s witness.
¶ 23       Santorini’s discovery sanction resulted in its inability to present evidence that would
       show with reasonable certainty the specific portion of its claimed lost profits that was caused
       by Banco’s conduct. There was no method to calculate lost profits because Santorini did not
       and, due to the discovery sanction, could not provide the information necessary to make that
       calculation. Contrary to Santorini’s assertion on appeal, the trial court did not improperly
       weigh the evidence because there was no evidence of lost profits to weigh. Because Santorini
       did not and could not present evidence of lost profits, there was no genuine issue of material
       fact concerning lost profits and the trial court properly granted Banco partial summary
       judgment by precluding lost profits damages.

¶ 24                                   B. Damage Calculation
¶ 25       Santorini argues the trial court’s damage calculation was erroneous as a matter of law.
       Santorini contends the trial court made an erroneous legal determination that damages should
       be measured as the difference between the contract price of medallions and the price of the
       medallions at the time Banco breached the contract, which was February 2007. Santorini
       complains that the trial court’s award denied Santorini the full benefit of its bargain with
       Banco and deprived Santorini of the increased value of the medallions at the time of trial in
       December 2011. According to Santorini, when the trial court set February 2007 as the date
       to use for the damage calculation, the court failed to consider the fundamental purpose of
       contract damage awards and failed to place Santorini into the position it would have been in
       if Banco had not breached the contracts. We disagree.
¶ 26       The measure of damages for breach of contract is the amount that will compensate the
       aggrieved party for the loss “which either fulfillment of the contract would have prevented
       or which the breach of it has entailed.” LeFevour v. Howorka, 224 Ill. App. 3d 428, 430-31
       (1991). “The purpose of damages is to put the nonbreaching party into the position he or she
       would have been in had the contract been performed, but not in a better position.” Walker
       v. Ridgeview Construction Co., 316 Ill. App. 3d 592, 596 (2000). “In determining which
       measure of damages to use, the trial court must examine the exact interest harmed.” Gvillo
       v. Stutz, 306 Ill. App. 3d 766, 770 (1999). “Compensation awarded in a breach of contract
       action should not provide plaintiff with a windfall.” Walker, 316 Ill. App. 3d at 596.
¶ 27       “It has long been the law in Illinois that the measure of damages in a breach of contract
       for the sale of personal property where the article is one obtainable in the market, is the
       difference between the contract price and the market price at the time of the breach.” Quad
       County Distributing Co. v. Burroughs Corp., 68 Ill. App. 3d 163, 165 (1979) (citing
       Loescher v. Deisterberg, 26 Ill. App. 520, 523 (1887)). When a breach has occurred, the
       buyer has the right to treat the contract as rescinded and to go into the market and purchase
       the article at its merchantable value, and then he has the right to recover the difference in the
       price which he was thus compelled to pay, with interest on the difference which he has paid.
       Slueter v. Wallbaum, 45 Ill. 43, 45-46 (1867).

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¶ 28        “The so-called avoidable consequences doctrine requires one injured by a breach of
       contract to use all reasonable means to minimize his damages.” Ashe v. Sunshine
       Broadcasting Corp., 90 Ill. App. 3d 97, 100 (1980); Hutchison Grocery Co. v. Louisville &
       Nashville RR. Co., 230 Ill. App. 291, 296 (1923). Nevertheless, in order to recover, it is not
       essential that the buyer must purchase the article after the breach occurs, and, if he does not,
       then the true measure of damages is the difference between the contract and the market price
       at the time of the breach. Slueter, 45 Ill. at 46-47. See also Benj. Harris & Co. v. Western
       Smelting & Refining Co., 381 Ill. 443, 449 (1942) (citing Ill. Rev. Stat. 1941, ch. 121½,
       ¶ 67(2) (which provided that when there is an available market, in the absence of special
       circumstances, the measure of damages is the difference between the contract price and the
       market or current price at the time the goods should have been delivered)). This rule,
       however, is not applicable if the buyer cannot obtain the article purchased in the market and
       resort must be had to other elements of value. Loescher, 26 Ill. App. at 523. If the article
       cannot be obtained in the market or elsewhere, the measure of damages is the actual loss the
       buyer has sustained. Id.; see also Benj. Harris & Co., 381 Ill. at 450 (when there is no market
       or current price available, “then the actual value must be determined by the best evidence
       available, and this being ascertained, the measure of damage is the difference between the
       contract price and the value of the thing sold, at the time and place of delivery”).
¶ 29        Illinois’s Uniform Commercial Code is in accord with the above case law and provides
       that the buyer may cover by making in good faith and without any unreasonable delay any
       reasonable purchase in substitution for the items due from the seller. 810 ILCS 5/2-712(1)
       (West 2010). Cover, moreover, is not a mandatory remedy for the buyer, who is always free
       to choose between cover and damages for the nondelivery. “[T]he measure of damages for
       non-delivery by the seller is the difference between the market price at the time when the
       buyer learned of the breach and the contract price together with any incidental and
       consequential damages *** but less expenses saved in consequence of the seller’s breach.”
       810 ILCS 5/2-713 (West 2010).
¶ 30        Santorini claims it is entitled to damages calculated as the difference between the
       medallions’ contract price of $48,000 each and the increased market price of the medallions
       at the time of the December 2011 bench trial. The trial court, however, made the partial
       summary judgment determinations that Santorini’s damages would be based on the
       medallions’ prices at the time of breach, and the breach of contract could not have occurred
       after Santorini filed its complaint for breach of contract. After the bench trial, the trial court
       concluded, based on the telephone conversations between counsel for the parties, that the
       contract was breached in February 2007. In order to establish the price of medallions in
       February 2007, the trial court referred to the evidence concerning the City of Chicago’s
       medallion transfer history for the month of February 2007, which recorded many medallion
       sales for that month. The trial court discarded three sales that were abnormally low and then
       averaged the remaining sales for an average market price of $66,775 per medallion. The
       difference between that average price and the $48,000 contract price was $18,775, which was
       multiplied by two for the two contracts for total damages of $37,550. We find no error in the
       trial court’s measure of damages for this breach of contract involving the sale of personal
       property that was available for purchase in the market.

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¶ 31        To support his assertion that his damages should be measured by the price of medallions
       at the time of trial, Santorini cites American National Bank & Trust Co. of Chicago v.
       Erickson, 115 Ill. App. 3d 1026 (1983), Mercantile Holdings, Inc. v. Keeshin, 261 Ill. App.
3d 546 (1993), and Nilsson v. NBD Bank of Illinois, 313 Ill. App. 3d 751 (1999).
¶ 32        Erickson, 115 Ill. App. 3d 1026, which involved a complaint that sought repayment for
       a loan of stock, is distinguishable from the instant case. In Erickson, the parties’ contract
       specifically provided that when the borrowed stock was returned, the loaning party would
       be placed in exactly the same position he would have been in had he not loaned the stock.
       Id. at 1028. Based on that contract language, the appellate court affirmed the trial court’s
       damage award, which was based on the value of the loaned stock at the time of judgment.
       Id. at 1030. The appellate court stated that a lesser award would have enabled the defendants
       to benefit from breaching the agreement. Here, in contrast, the contract at issue involved the
       sale of personal property, not the loan of stocks. Moreover, whereas the parties’ contract in
       Erickson set forth the parties’ own measure of damages in the event of a breach, Santorini’s
       contract did not contain any similar provision concerning damages.
¶ 33        Santorini’s reliance on Mercantile Holdings, Inc., 261 Ill. App. 3d 546, is also misplaced
       because that case, like Erickson, did not involve the buying or selling of goods or securities.
       In Mercantile Holdings, Inc., a lender loaned the debtors money that was secured by one
       debtor’s stock in a financial corporation. Id. at 547. Thereafter, a company entered into an
       assignment agreement with the debtors to obtain a beneficial interest in a land trust; however,
       the company failed to comply with the terms of the assignment agreement that required the
       company to repay the indebtedness of the debtors to the lender. Id. at 547-48. As a result, the
       lender sold the one debtor’s stock, which the lender had been holding as collateral, applied
       the proceeds to the indebtedness, and sued the debtors and the assignee company. Id. at 548.
       The debtors then counterclaimed against the assignee company for breach of the assignment
       agreement. Id.
¶ 34        Concerning the debtors’ counterclaim, the Mercantile Holdings court held that the proper
       measure of damages under those circumstances was the highest value of the stock between
       the date of the breach and the date that the judgment was entered, plus any lost dividends.
       Id. The court stated that because the debtor had been deprived of certain stock that she
       already owned before the assignment agreement was entered into, it would have been
       unreasonable and unfair to expect her to purchase other securities in order to mitigate losses
       caused by the assignees’ breach of contract. Id. The facts and contracts at issue in Mercantile
       Holdings, Inc. are nothing like the facts and contracts in the instant case. Santorini was not
       deprived of medallions it already owned and its contracts with Banco involved the sale of
       taxicab medallions.
¶ 35        Similarly, Nilsson, 313 Ill. App. 3d 751, does not help Santorini because that case
       involved a breach of contract action by the borrower against the bank, where the borrower
       had to sell stock he owned to repay the loan after the bank’s premature demand for payment.
       Under those circumstances, the court, citing Erickson and Mercantile Holdings, Inc., held
       the proper measure of damages was one that placed the injured party in the same position at
       the time of judgment as he would have been had the contract been performed. Id. at 760. As
       discussed above, the instant case is nothing like Erickson and Mercantile Holdings.

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¶ 36                               III. CONCLUSION
¶ 37   For the foregoing reasons, the judgment of the circuit court is affirmed.

¶ 38   Affirmed.

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