1550 MP Road LLC v. Teamsters Local Union No. 700, 91 N.E.3d 444

Background

In May 2008 1550 MP Road LLC (plaintiff) and Teamsters Local 726 (an unincorporated association) executed a lease and purchase agreement (LPA). Only Thomas Clair (secretary‑treasurer) signed; Local 726 did not follow bylaw notice/vote or the Property of Unincorporated Associations Act procedures. Local 726 occupied the premises in Jan 2009.
The International Brotherhood of Teamsters investigated Local 726 for financial mismanagement; in 2009 it placed Local 726 in trusteeship and then revoked its charter, dissolving Local 726 and simultaneously chartering Local 700 (consolidating most of Local 726’s membership, assets, CBAs and liabilities) with John Coli appointed trustee.
Plaintiff sued, alleging breach of the LPA by the successor Local 700 (count I); alternatively asserting fraudulent transfer claims under the Uniform Fraudulent Transfer Act (counts II–III); and tortious interference claims against Coli and others (count VIII). Trial court found the LPA enforceable, held Local 700 liable under successor‑liability theories, found fraudulent transfer liability, and found Coli liable for tortious interference; awarded ~ $2M plus fees.
On appeal defendants challenged (inter alia) that the LPA was void for failure to comply with the Act/bylaws, Clair lacked authority, successor liability was improper, CBAs are not transferable assets under the Fraudulent Transfer Act, Coli was not liable for interference, and the liquidated damages clause was unenforceable.
The appellate court affirmed enforceability of the LPA, Clair’s apparent authority (and board ratification), and that Local 700 is successor‑liable for breach; reversed the Fraudulent Transfer Act judgments (no transfer by a debtor and no proved value of CBAs); reversed Coli’s tortious interference judgment (privileged conduct); and affirmed damages based on an enforceable liquidated‑damages provision.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Is the LPA void ab initio for failure to comply with the Property of Unincorporated Associations Act or Local 726 bylaws?	The Act/bylaws do not bar enforcement; LPA is valid.	Noncompliance with statutory/bylaw formalities renders the contract void.	LPA not void ab initio; statute is silent on consequences and public policy favors enforcement.
2. Did Clair have authority to bind Local 726?	Clair, as principal officer, had apparent authority and board later ratified the LPA.	Clair lacked actual authority; plaintiff should have investigated his authority.	Clair lacked actual authority but had apparent authority; executive board ratified the LPA.
3. Is Local 700 liable as successor for Local 726’s breach?	Local 700 consolidated Local 726’s membership, assets, CBAs and liabilities and had notice, so successor liability applies.	Labor unions lack traditional ownership continuity; consolidation language was descriptive only.	Affirmed: Local 700 is successor and liable under merger/mere‑continuation/fraud exceptions.
4. Do Local 726’s CBAs constitute transferable "assets" and was there a fraudulent transfer to Local 700?	CBAs and consequent dues are assets; transfer was to avoid LPA liabilities.	CBAs/dues are not transferrable assets; the International effectuated the consolidation, not a debtor transfer.	Reversed: no transfer by a debtor under the Fraudulent Transfer Act; in any event plaintiff failed to prove value of CBAs.
5. Is Coli liable for tortious interference with the LPA?	Coli orchestrated the dissolution and then intentionally refused to perform, inducing breach.	Coli acted in a fiduciary capacity with a privilege to protect members; actions were within official duties.	Reversed: Coli’s conduct was privileged as trustee/International officer and not tortious interference.
6. Is the LPA’s liquidated damages clause unenforceable as a penalty?	Clause reasonably approximates landlord’s present value of unpaid rent; damages uncertain.	Clause is punitive and allows recovery in addition to actual damages.	Affirmed: clause enforceable; present value of future rent is a reasonable measure and defendants forfeited detailed challenge.

Key Cases Cited

K. Miller Constr. Co. v. McGinnis, 238 Ill. 2d 284 (Ill. 2010) (statutory silence requires balancing public policy before declaring contracts void)
Perlstein v. Wolk, 218 Ill. 2d 448 (Ill. 2006) (equitable considerations may limit void‑ab‑initio doctrine)
Vine Street Clinic v. HealthLink, Inc., 222 Ill. 2d 276 (Ill. 2006) (reluctance to declare private contracts void on public policy grounds)
Vernon v. Schuster, 179 Ill. 2d 338 (Ill. 1997) (mere‑continuation successor‑liability rationale)
Eychaner v. Gross, 202 Ill. 2d 228 (Ill. 2002) (manifest‑weight standard for reviewing factual findings)