Mayster v. Santacruz
163 N.E.3d 246
Ill. App. Ct.2021Background
- Scaramouche (Mayster) agreed to sell the Mathnasium of Barrington franchise to Schoolhouse 4 Math (Santacruz) for $100,000 under an asset purchase agreement (APA). Math assumed certain leases.
- After the Illinois Department of Revenue issued a bulk-sales stop order requiring withholding of ~ $13,000, Santacruz terminated the APA citing tax concerns and missing balance sheets; he later sought to reinstate the deal with conditions.
- Santacruz offered to reinstate the purchase shortly after termination if Mayster produced balance sheets, agreed to an asset-lien search, and extended the closing; Mayster later demanded full cash at closing and declined key reinstatement terms.
- Mayster relisted Barrington at $130,000, declined the franchisor’s targeted internal advertising (Mathnasium Matters), received no post-breach offers, and voluntarily closed the business in February 2018.
- At bench trial the court found Math wrongfully terminated the APA but ruled Scaramouche failed to mitigate damages (raising price, refusing targeted advertising, refusing reasonable reinstatement terms), and entered judgment for Math; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Scaramouche fail to mitigate damages after Math terminated the APA? | Mayster acted reasonably (kept listing price, had prior offers, worried about staff turnover from wider advertising). | Mayster unreasonably raised price, refused Math’s prompt reinstatement offers, and rejected targeted advertising. | Court: Scaramouche failed to mitigate; findings not against manifest weight. |
| If Scaramouche failed to mitigate, must defendant prove the precise amount of avoidable loss or may the court bar recovery entirely? | Scaramouche: Math had to prove how much damages should be reduced; cannot be reduced to zero without proof. | Math: Scaramouche’s conduct made 100% of loss avoidable (Math’s reinstatement offer would have avoided all loss). | Court: Doctrine of avoidable consequences can bar recovery if all loss was reasonably avoidable; here 100% avoidable, so no recovery. |
| Standard of review for mitigation findings | Scaramouche: argued de novo review. | Math: argued manifest-weight (fact question). | Court: manifest-weight standard applies to damages/mitigation findings. |
Key Cases Cited
- Material Service Corp. v. Department of Revenue, 98 Ill. 2d 382 (proposition that a prevailing party cannot appeal merely because it dislikes the trial court’s reasoning)
- Maere v. Churchill, 116 Ill. App. 3d 939 (applying avoidable-consequences: plaintiff’s failure to accept offered mitigation barred recovery)
- Danada Square, LLC v. KFC National Management Co., 392 Ill. App. 3d 598 (plaintiff must accept reasonable substitute to avoid all loss when offered)
- St. George Chicago, Inc. v. George J. Murges & Assocs., Ltd., 296 Ill. App. 3d 285 (clarifying that failure to mitigate precludes compensation for avoidable injuries)
- MBC, Inc. v. Space Center Minnesota, Inc., 177 Ill. App. 3d 226 (seller’s post-breach refusal to offer same terms constituted failure to mitigate)
- Wired Music, Inc. v. Clark, 26 Ill. App. 2d 413 (failure to mitigate means plaintiff is not compensated for injuries it could have avoided)
- Doornbos Heating & Air Conditioning, Inc. v. James D. Schlenker, M.D., S.C., 403 Ill. App. 3d 468 (damages is a question of fact; review for manifest weight)
- Med+Plus Neck & Back Pain Center, S.C. v. Noffsinger, 311 Ill. App. 3d 853 (measure of damages reduced by amounts reasonably avoidable)
- Kelly v. Chicago Park District, 409 Ill. 91 (plaintiff cannot recover consequences that were readily avoidable)