Court Opinion

ID: 9715792
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:14:43.187204+00
Date Added: 2024-06-11T18:23:38.175581
License: Public Domain

PRESIDING JUSTICE THEIS, specially concurring: In this case, the majority finds that plaintiffs do not have standing to assert their breach of contract claim against defendant because they are not parties to the loan and letter agreements. Thus, the majority affirms the circuit court’s order granting defendant’s section 2 — 615 motion to dismiss plaintiffs’ complaint. Although I would also affirm the circuit court’s order granting defendant’s motion to dismiss, I would find that plaintiffs failed to state a cause of action for breach of contract because they did not plead that their alleged injury resulted from the alleged breach. As the majority points out, we review the circuit court’s grant of a section 2 — 615 motion to dismiss de novo. W.W. Vincent & Co. v. First Colony Life Insurance Co., 351 Ill. App. 3d 752, 757, 814 N.E.2d 960, 965 (2004). In addition, we may affirm based upon any reason appearing in the record, even if that reason was not relied upon by the circuit court. W.W. Vincent & Co., 351 Ill. App. 3d at 757, 814 N.E.2d at 965. In order to state a claim for breach of contract, a plaintiff must establish: (1) the existence of a valid, enforceable contract; (2) performance of the contract by the plaintiff; (3) a breach by the defendant; and (4) damages resulting from the breach. Unterschuetz v. City of Chicago, 346 Ill. App. 3d 65, 69, 803 N.E.2d 988, 991 (2004). More specifically, the damages pled must have proximately resulted from the alleged breach. 24 R Lord, Williston on Contracts §64.13 (4th ed. 2002); see also, e.g., Economy Fire & Casualty Co. v. GAB Business Services, Inc., 155 Ill. App. 3d 197, 201, 507 N.E.2d 896, 899 (1987). Otherwise, there can be no recovery. Restatement (Second) of Contracts §351(1) (1981). The Restatement (Second) of Contracts offers the following test for determining whether damages are the foreseeable result of a breach of contract: “Loss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.” Restatement (Second) of Contracts §351(2) (1981). Here, plaintiffs alleged that Performance entered into a “commercial security agreement” with defendant by which defendant would loan money to Performance. Performance pledged specified assets as collateral. That agreement was also conditioned on the execution of two commercial guaranties. In those guaranties, which were executed contemporaneously with the loan, Mary and Vito each guaranteed repayment of Performance’s loan to defendant. The commercial security agreement also specified that Mary’s and Vito’s guaranties had to be furnished prior to the disbursement of any loan proceeds. The majority treats the guaranties and the commercial security agreement as separate agreements. However, this cannot be the case. A guaranty must be supported by consideration just as any other contract would be, even though that consideration need not directly and personally benefit the guarantor. Restatement (Third) of Surety-ship and Guaranty §9 (1996); see also Finn v. Heritage Bank & Trust Co., 178 Ill. App. 3d 609, 612, 533 N.E.2d 539, 542 (1989); Lauer v. Blustein, 1 Ill. App. 3d 519, 521, 274 N.E.2d 868, 869-70 (1971). Here, the consideration for the guaranties was the loan to Performance. At oral argument, counsel for plaintiffs admitted as much. In addition, the loan was expressly conditioned upon the guaranties, and without the guaranties, defendant would not have made the loan to Performance. “ ‘The general rule is that “in the absence of evidence of a contrary intention, where two or more instruments are executed by the same contracting parties in the course of the same transaction, the instruments will be considered together and construed with reference to one another because they are, in the eyes of the law, one contract.” ’ ” Magnuson v. Schaider, 183 Ill. App. 3d 344, 357, 538 N.E.2d 1309, 1318 (1989), quoting Peters & Fulk Realtors, Inc. v. Shah, 140 Ill. App. 3d 301, 305, 488 N.E.2d 635, 637 (1986), quoting Tepfer v. Deerfield Savings & Loan Ass’n, 118 Ill. App. 3d 77, 80, 454 N.E.2d 676, 679 (1983). Thus, the guaranties are part of the bargained-for exchange of the loan agreement, and the majority is incorrect to treat them separately. After the parties established this initial contract, plaintiffs alleged in their complaint that the agreement was subsequently modified when defendant agreed to forbear from seizing Performance’s accounts receivable and reopen Performance’s line of credit in exchange for the furnishing of information about Performance’s financial status. Plaintiffs claimed that although the requested information was tendered, defendant breached the agreement when it did not provide Performance with access to the funds. Plaintiffs alleged that as a result, Mary, the former president of Performance, was damaged because she has “been called upon personally to pay a large portion of Performance’s liability to the IRS, which would have been paid but for CIB’s breaches.” At oral argument, plaintiffs added that it was Mary’s status as a former director of Performance that caused the IRS to pursue her personally for Performance’s outstanding tax liability. This injury does not “follow in the ordinary course of events” from defendant’s failure to abide by the loan agreement and any subsequent modifications. See Restatement (Second) of Contracts §351(2) (1981). This injury to Mary is the result of Performance’s failure to remain solvent. In addition, this injury does not arise by virtue of the fact that Mary and Vito were guarantors of the loan but, rather, by virtue of the fact that Mary was a director of Performance. Because this injury is not the direct result of the alleged breach of the agreement by defendant, plaintiffs have failed to state a cause of action for breach of contract. See, e.g., Economy Fire & Casualty Co., 155 Ill. App. 3d at 201, 507 N.E.2d at 899 (holding that plaintiff failed to state a claim for breach of contract where the alleged injury was not the result the defendant’s conduct). Therefore, on these grounds, I would affirm the circuit court’s order granting defendant’s section 2 — 615 motion to dismiss plaintiffs’ complaint.