Union Tank Car Co. v. NuDevco Partners Holdings, LLC
123 N.E.3d 1177
Ill. App. Ct.2019Background
- NuDevco guaranteed (by guaranty dated March 3, 2015) Associated Energy’s payment obligations under a lease of 47 DOT-111 railcars; Union Tank later acquired the lease interest.
- Associated Energy terminated the lease in Sept. 2015, returned the cars, and stopped rental payments; Union Tank invoked the guaranty and sued NuDevco for breach after NuDevco refused to pay.
- Union Tank incurred cleaning, freight, switching, and storage costs for the returned cars and sought additional future storage and blasting costs; it introduced third‑party invoices and witness testimony about payment procedures.
- After a bench trial, the court awarded Union Tank roughly $1.27 million (including past rent, cleaning, freight, switching, past and future storage) but denied present-value acceleration of future rent and later reduced attorney fees by $10,000.
- NuDevco appealed raising UCC applicability, UCC condition-precedent to damages, speculative damages (future storage/blasting), and admission of invoices/payment testimony; Union Tank cross-appealed fee reduction and denial of present-value future rent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the UCC governs Union Tank’s claim on the guaranty | Guaranty liability stems from lease obligations and UCC governs leases | Guaranty is separate contract promising payment of debt, not a lease; UCC inapplicable | UCC does not apply to the guaranty (guaranty is not a lease contract) |
| Whether Union Tank was barred from recovery for failure to satisfy UCC disposal/mitigation prerequisites | Not applicable because UCC doesn’t govern; recovery under guaranty allowed | If UCC applied, Union Tank didn’t satisfy UCC conditions to recover full damages | Rejected NuDevco’s UCC‑based attack; UCC conditions not applicable |
| Whether damages for future storage and anticipated blasting were recoverable | Future storage and blasting are foreseeable damages from breach; witnesses established need and cost estimates | Future blasting and some future costs are speculative and uncertain; cannot recover both blasting and future storage in inconsistent scenarios | Past and future storage awarded; anticipated future blasting vacated as too speculative |
| Admissibility of third‑party invoices and testimony that payments were made | Invoices admissible as business records; Union Tank relied on them and paid on their basis; testimony about payment admissible (fact independent of writing) | Invoices are hearsay without third‑party witnesses; payment testimony improper without Bank of America confirmations (best evidence rule) | Invoices and payment testimony properly admitted under business‑records exception; best‑evidence rule inapplicable |
| Cross‑appeal: entitlement to present value of future rent under guaranty | Guaranty’s "damages" clause authorizes acceleration/present-value of future rent | Illinois common law bars present obligation to pay future rent absent contract clause; guaranty contains no acceleration term | Denied: present value of future rent not recoverable where guaranty/lease contain no acceleration provision |
| Cross‑appeal: $10,000 reduction in attorney fees | Reduction excessive; only ~$5,917 in entries identified | Trial court reasonably found duplicative/excess work across multiple entries and reduced fees $10,000 | Affirmed: $10,000 reduction not an abuse of discretion |
Key Cases Cited
- Hessler v. Crystal Lake Chrysler-Plymouth, Inc., 338 Ill. App. 3d 1010 (de novo review of contract construction)
- Kimble v. Earle M. Jorgenson Co., 358 Ill. App. 3d 400 (business records rationale and reliability)
- Old Colony Partners, L.P. v. City of Chicago, 364 Ill. App. 3d 806 (third‑party records admissible when custodian testifies to regular receipt/retention)
- Apa v. National Bank of Commerce, 374 Ill. App. 3d 1082 (foundational requirements for business‑records exception)
- Miner v. Fashion Enterprises, Inc., 342 Ill. App. 3d 405 (future rent not accelerated absent contractual clause)