Pielet v. Pielet
942 N.E.2d 606
Ill. App. Ct.2010Background
- Arthur Pielet entered into a 1986 Consulting Agreement with Pielet Inc. (later Pielet Corp.) for annual $130,000 payments to be made until Arthur’s death, then to his widow for life.
- In 1988 Pielet Corp. and PBS One formed Pielet LP, transferring half interests and adsorbing liabilities; Pielet LP agreed to pay under the Consulting Agreement.
- The 1988 Asset Purchase and related Assignment/Assumption agreements contemplated an assignment of obligations, including the Consulting Agreement, to Pielet LP and later National Material.
- Pielet LP (later Midwest Metallics) continued payments to Arthur under the Consulting Agreement until July 1998; Arthur died in 1999, Midwest Metallics filed bankruptcy in 1999.
- PBS One dissolved in 1994; Tang controlled PBS One, Pielet LP, and later NM Holding and National Material through a web of ownership and transfers.
- Plaintiff Dorothy Pielet (as Arthur’s widow and estate representative) sued multiple defendants in 1998–2005 for breach of the Consulting Agreement and related liabilities; the trial court granted summary judgment against PBS One, National Material, and NM Holding on Counts IX–XI, which the appellate court reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Survival Statute applicability to the contract claim | Survival Statute preserves rights/liabilities existing before dissolution. | Survival Statute applies only to accrued causes of action. | Statute applies to rights/liabilities, not just causes of action; summary judgment reversed on related counts. |
| Novation versus assignment/assumption | No novation; PBS One/Pielet Corp. remained obligors; assignee bears liability. | There was a novation substituting Pielet LP for prior obligors; plaintiff assented implicitly. | Triable issue of fact on whether novation occurred; cannot grant summary judgment on novation. |
| Express assumption by National Material | Assumption language extends to Consulting Agreement obligations; liability transfers. | Assumption limited to PBS One’s limited partnership interest; no clear assumption of Consulting Agreement. | Issue of whether Assumption Agreement encompassed Consulting Agreement contested; summary judgment improper. |
| Mere continuation as successor liability | National Material is a mere continuation of PBS One; liability should follow. | No continuation; distinct entities with legitimate reorganization. | Continuity of ownership/control supports mere-continuation liability; fact questions remain. |
| Personal liability of Tang | Tang controlled the entities; may be held liable depending on theories. | Corporate shield applies; Tang not personally liable absent piercing the corporate veil. | Personal liability not decided; remanded for further proceedings. |
Key Cases Cited
- Vernon v. Schuster, 179 Ill.2d 338 (1997) (four exceptions to successor liability; express/implicit assumption, merger, continuation, fraud)
- Cornick v. Hi Grade Cleaners, Inc., 595 F. Supp. 718 (N.D. Ill. 1984) (survival statute applies to causes of action; plaintiff’s theory rejected in that case but not controlling here)
- Henderson-Smith & Associates, Inc. v. Nahamani Family Service Center, Inc., 323 Ill.App.3d 15 (2001) (survival statute discussion; limited to cause of action context in that case)
- Park v. Townson & Alexander, Inc., 287 Ill.App.3d 772 (1997) (continuity of shareholders as factor in mere continuation analysis)