*1
contends,
Finally, defendant
on appeal,
for the first time
that his
trial
gang
counsel was ineffective because he failed to
into the
probe
issue,
so,
bias
and had he done
outcome
trial would have
failing
differed. Defendant has
this
waived
issue
to raise it in his
Jones,
successive
se
pro
postconviction petition. See
Waiver court has held that trial counsel’s decision not pose gang questions during bias voir dire reasonable where the defendant and victim are both gang gang members and the evidence is being explain used to People Benford, motive. v. conclude, Defense counsel may reasonably aas matter of strategy, jurors
trial that questioning prospective about gang bias unduly emphasize would gang outweigh any potential issue and prejudice that may Benford, venire members 349 App. have. Ill. 3d at Therefore, 733. defendant’s claim alleging ineffective assistance of trial counsel fails.
Accordingly, judgment of the trial court is affirmed. Affirmed.
QUINN, EJ., J.,..concur. HARTMAN, CREDIT, LLC, FLEET BUSINESS Plaintiff-Appellee, v. ENTERASYS NETWORKS, INC., Systems, Inc., Cabletron Defendant-Appellant. f/k/a (4th Division)
First District No. 1 — 02—3884 Rehearing Opinion filed June denied October 2004. 2004. *2 (Michael Lord, Brook, Hassan, Chicago Griffin, Bissell & Hugh R. C. Wolfinger, counsel), Dearing, Travis B. and Sarah H. appellant. (James Weaver, Ltd., Rolfes, counsel), Sachnoff & Chicago ap- A. pellee. QUINN
PRESIDING JUSTICE opinion delivered the of the court: Defendant, Networks, (Enterasys), formerly Inc. known Systems, (Cabletron), as Cabletron Inc. corporation, Delaware ap- peals from circuit court orders granting summary judgment and a petition for entry of a damage award in favor of plaintiff, Fleet Busi- Credit, (Fleet), ness LLC liability Delaware limited company. ap-On peal, Enterasys asserts that “Referral and Remar- Agreement” keting (Remarketing Agreement) that was executed (as 2001), March amended on March is an penalty unenforceable clause and not a provision, as found *3 reasons, following the court. For the we affirm.
BACKGROUND telecommunications Enterasys manufactures and distributes and networking equipment. provides financing business-related to customers of Enterasys. Enterasys manufacturers like sought to stimulate the products by making sales retail financing programs available to its customers. Consequently, March Entera- sys and Remarketing Agreement, Fleet entered into the whereby Fleet agreed purchase products to from Enterasys which then would be to simultaneously Enterasys’ leased customers. Remarketing The Agreement obligations sets forth the terms and to all applicable financing of Enterasys’ products manufactured or distributed and requires and Fleet enter into a “Transaction Supple- financing ment” each time that Fleet to provides particular Entera- sys provisions by customer. Under the established Agreement, Supplement, among the Transaction things, other would subject identify products the customer and financing, specify applicable financing the discount rate to the and set forth to the provisions, particular warranties and covenants related financ- ing. Agreement, entering and into negotiating
While might products Fleet-financed Enterasys anticipated Fleet and staff, sales Enterasys’ quality Because of on occasion. returned necessary to remarket knowledge product and distribution network customers, on Entera- Fleet insisted new returned result, the Re- As remarketing services. sys’ provide commitment Enterasys’ relating to Agreement provisions included marketing (1) to: Enterasys agreed products. to remarket returned obligations Off- taking possession duties, including “Off-Lease” perform undertaking, on best products such products, refurbishing Lease rent, re-lease, products without basis, lease or sell efforts owned, any products discriminating in favor against products (2) monthly remarket- Enterasys; provide managed or remarketed (3) lessees, purchas- users or reports; prospective inform Fleet of ing and credit information for proposed ers and documentation (4) documents promptly deliver Fleet all approval; Fleet’s written immediately remit any product; related to the use, excise, sales, any remarketing, property, net of ad proceeds of valorem or similar taxes to Fleet. Agreement concerns raised also addressed contemporaneously negotiation to the plans, announced corporate structure. Ac- Remarketing Agreement, change release, Enterasys,
cording to a which February press form Cabletron, planned then conducted business stated that it Networks, Inc. operating namely, Riverstone companies, four affiliate Networks, (Riverstone), Enterasys (Enterasys-sub), Aprisma Inc. Management Technologies, and Global Network (Aprisma), Inc. (Global Network), reorganiza- had Technology begun Services its business. The process planned parts tion under to sell press goal separate, release noted that “the eventual have four publicly traded companies.” Sullivan, vice-president negotiated
Mark the Fleet who the Re- that he Enterasys, by deposition testified marketing regarding proposed expressed representatives concern to structure, stating, “[I] [d]on’t reorganization Enterasys’ corporate you to do as far as how these guys going know what are here companies look, credit-approving are a consolidated going but we’re you do entity, going to make sure that when our *4 do, support that you going whatever to have the same credit we’re we’re approving now.” Cardona, Entera-
Joseph the Fleet credit officer who reviewed sys transaction, potential effect also noted his concern about By deposition, Cardona corporate changes contemplated by Enterasys. regarding Enterasys’ testified obligation financially make Fleet whole to the percentage extent of the of agreed-upon recourse. Car- dona stateu:
“[Fleet’s] concern here was that —and it’s outlined in one of [En- terasys’] approvals entity that [Enterasys], other than —was time, existed at the would be in a position better to remarket the equipment as example, Enterasys well. For was in a better position *** because equipment they that was the manufacturing, were re- *** marketing, selling to their customers. So in the event that En- terasys change would standing and not be Cabletron or be a separate entity, we want to make party sure that we had the best to support [Remarketing Agreement].” concerns, aAs result of Fleet’s the Remarketing Agreement (1) would not: cease to support products comparable to subject financing was the (2) customers; sell, contracts between Fleet and Enterasys’ or transfer assets; convey substantial part any of its or effect party or be 4.3(d) merger Further, or consolidation.
Agreement states:
“In the event [Enterasys] creates and either subsidiaries continues to own their stock or allows such subsidiaries to issue their subsidiaries, shares to other longer investors and no [En- terasys] covenants subsidiary that each shall execute in favor of [Fleet] a guaranty assumption or an [Enterasys’] obligations Agreement under this and each Summary, satisfactory Transaction in form and [Fleet].” content to
Significantly, in upon Enterasys’ remarketing reliance commit- representations, ments and other and their importance to Fleet’s participation Enterasys financing program, Fleet also obtained Enterasys’ agreement purchase all “Retail Contracts” entered into Fleet with customers breached its representations, warranties or covenants. Section of the Remar- keting Agreement, entitled, Breach,” “Covenant provides: [Enterasys]
“If any is in breach representation, warranty or (other Agreement covenant in representation, warranty 4.3(d)) this than or any covenant contained in Section 4.2 in or or Transac- Supplement, tion thirty days and such breach is not cured within breach, [Fleet’s] after [Enterasys] notification or if is in 4.3(d) Agree- breach of covenant set forth in Section of this ment, [Enterasys] immediately upon by [Fleet] will demand pursuant [Fleet] Retail Contracts entered into Agreement Unpaid aggregate this for their Balances.” “ Section ‘Retail 1.5 states that writings evidencing reflecting: Contracts’ shall mean and all *5 [Enterasys] to (a) by sale of Products of the retail financing [Fleet’s] (b) or options, purchase nominal Customers, leases with including Agree- Remarketing The leasing of Products Customers.” [Fleet’s] as: to a Retail Contract unpaid respect balance with ment defines an “(i) amounts, including late and other past payments due rental Contract, from interest on same owing plus the Retail charges, at paid, calculated payment due until it is the date the was (ii) Contract, present Retail applicable Rate to such Discount on such Retail remaining payments value of the scheduled to such applicable Rate Contract, by using the Discount calculated (iii) Residual Contract, present of the Assumed value Retail Contract, Value, any, subject to such Retail if for the Product such Retail by using applicable Rate the Discount calculated Contract, as rent after the by [Fleet] less amounts received (iv) Contract, plus interest accrued on of such Retail initial term subject Value, any, relating to the Product Assumed Residual the to expiration time of the Retail Contract from and after the such equal to the term of Retail Contract at a rate the initial (v) Rate, out-of-pocket expenses, plus any reasonable Discount fees, by legal [Fleet] incurred in con- including without limitation subject to the Retail financing nection with its Product by paid [Fleet] or or to Aida connection with Contract incurred maintenance, cleaning, recovery, storage, testing, recondition- remarketing disposition services ing, refurbishment or other product.” for such
Therefore, Remarketing Agree- of the language under the express ment, if services contracted did for, response Enterasys’ an- protections violated crafted upon by demand corporate reorganization plans, Enterasys, nounced Fleet, remaining from Fleet the balances required was Enterasys’ financing from contracts that Fleet had executed with customers. through September
Beginning continuing in March 2000 and entered Agreement, Fleet pursuant to the terms customer, Vitts separate lease contracts with into four (Vitts), Networks, approximately in which Fleet financed Inc. Contracts). (Vitts equip- Retail $13,900,000 products worth by primarily of materials manufactured ment leased Vitts consisted had Enterasys, although parts it included also various and Walker & Associ- companies obtained from known as Net-to-Net Contracts, Fleet entry In the Vitts Retail ates. addition to its into Supplements Transaction simultaneously executed four related Retail financing set forth the Vitts Enterasys. Under the structure and, contem- Supplements as Contracts and related Transaction plated Agreement, purchased Fleet from Entera- sys as delineated in the Supplements Transaction then leased to Vitts. recognized that the market for Enterasys equipment used weak,
was that Enterasys’ systems heavy older necessitated discount- ing Enterasys equipment for new desperate and that for market share. analysis As articulated in the risk form Fleet completed to the contemporaneously execution of the Agreement, negotiated for and alleges received what it are two primary forms protection of credit from Enterasys part of the Vitts (1) financing, namely: a 75% payment upon a default; payment Enterasys’ remarketing any equip- ment returned Vitts. Sullivan testified that the combination of the *6 75% payment Enterasys’ recourse remarketing gave Fleet 100% credit protection, stating:
“[Generally way thought we viewed it was that we with the proper remarketing, plenty there of equipment was value in the quickly. should Vitts blow up [W]eunderstand there was less col- part lateral value out at the later big of the transaction. Our year concern was the of first If transaction. Vitts is not able to *** capital goes away, raise that and Vitts we had 75 percent [Enterasys], recourse from thought and we we were well covered *** percent with our 25 position proper remarketing residual with proper channels.” Sullivan, According that, through believed Agreement, Enterasys’ reselling of equipment Vitts-returned through Enterasys’ existing distribution channels for equip- the leased ment, which modems, consisted of switches and gave Fleet’s collateral the value necessary protection the 25% credit essential to analysis. Fleet’s risk
Prior to executing Remarketing Agreement, shows, the record Enterasys also was aware the essential role its remarketing would play protecting Fleet from a loss in the event of Vitts default. Sul- testified Enterasys livan that he had conversations with representa- tives to assure him Enterasys importance understood the remarketing responsibilities Enterasys committing perform was Remarketing Agreement. under expressed When Sullivan concern Enterasys’ representatives regarding they capable whether were Vitts, remarketing equipment according leased to to Sulli- van, “[s]ure, do representatives responded, we it all the time.” however, Remarketing Agreement, provided that made representations no warranties or as to the results of its efforts. 2001, and defaulted 7, bankruptcy February Vitts declared
On Enterasys’ triggered Contracts. Vitts’ default under the Vitts Retail set forth under the recourse obligations 2001, Enterasys fully 13, satis- On March Supplements. Transaction by Supplements under the Transaction obligation fied its recourse totaling price, unpaid purchase transferring 75% of wire $10,440,000, to Fleet. remarketing obliga- Enterasys’ triggered bankruptcy also
Vitts’ According En- Fleet. Agreement with tions under Enterasys began April terasys’ or about representatives, Vitts, making leased products Fleet had possession to take June, August and May, Vitts in products retrievals of subsequent retrievals, to have Vitts claims As a result of these September 2001. of, acknowledged receipt Enterasys, returned million. purchase price approximately an initial products $11 affidavit Schwartz, vice-president, by First stated Stuart that, Barber, vice-president senior Robert in June dispose of Enterasys could development, informed Fleet that business testi- million. Schwartz equipment approximately $9 the retrieved August revised in fied that the million estimate was by deposition $9 counsel, general Gerald $4,500,000 by Barber and shipments five Haines, inspected after had received and that, equip- by “[a]s Vitts. Haines stated affidavit equipment from [Enterasys], apparent it became returned and inspected virtually original packaging was in its equipment none of this used, and stored virtually had been handled substantial value poorly, and thus could be remarketed expense.” at Fleet’s Ac- refurbishing extensive without June, July 2001, the resale affidavit, August cording to Barber’s *7 actually returned Vitts equipment value of the entire amount of $500,000. told stated that he never totaled no more than Barber also value of $9 had an estimated Schwartz that the returned million. July 23, 2001, he received further stated on
Haines’ affidavit Enterasys-sub had been questioning a letter from Schwartz whether Haines company. a Enterasys separate and became “spun-off’ but spun-off, had been Enterasys-sub to responded Schwartz Enterasys’ obliga- all of Enterasys into and assumed merged instead therefore, that, “Fleet Remarketing Agreement tions under the through merger.” this were better off [Enterasys] case, Enterasys breached Fleet claims that Pertinent to the instant Agreement, thereby triggering Remarketing the obligations its under 4.4(b). in section provisions the covenant breach First, alleges Enterasys Remarketing Agree- Fleet breached the sell, to respect convey with its covenant not to or transfer assets, substantial of party merger amounts nor effect or be a to a or that, 16, consolidation. Schwartz stated his affidavit on February 2001, offering Riverstone undertook an initial public equity securi- ties, common ownership reduced of Riverstone’s equity from 100% July Enterasys disposed to 87%. On in a private buyout Global Network sale to a firm associated with group managers. According Enterasys of Global Network to subsequent disclosures, public August 6, Enterasys distributed its River- Enterasys date, stone Enterasys stock to shareholders. On that same merged announced that it had Enterasys-sub. The announcement also disclosed that had become the surviving corporation and changed Systems, Inc.,” its name from “Cabletron “Enterasys to Networks, Aprisma wholly subsidiary Inc.” remained a owned of this merged entity.
Second, Fleet claims that Enterasys approval failed to obtain Fleet’s prior reselling products to certain to Riverstone and to remit im- mediately proceeds According that sale.
Agreement, prior proposed remarketing, Enterasys required Fleet purchaser, with the name prospective copy lease, renewal, or proposed extension contract for the sale suf- ficient credit information with respect proposed purchaser to each Fleet “to an judgment” purchaser’s make informed as to the creditwor- completed, thiness. After sale is
obligates Enterasys promptly provide to Fleet “the executed contract for the sale of the Product and all effecting other documents or evidenc- Fleet, ing According sale.” breached the secretive, Agreement by entering heavily into a unap- discounted and proved $248,594. approximately sale with Riverstone for Fleet
465 provide. to Enterasys information contracted remarketing-related the requesting a letter to Barber 21, 2001, addressed May Schwartz On recovery and sale Enterasys report status that marketing plans Vitts, including Enterasys’ leased to equipment of of as to the amount and an assessment dispose Equipment of to respond to Enterasys failed to to be received. proceeds likely 2001, July 26, Haines a Schwartz sent request, whereafter Schwartz’s long monthly [remarketing] report due stating, “[t]he letter lack $3,500,000 at stake. Given approximately has [Fleet] overdue. the report that date I must demand any remarketing proceeds to reports be and that future June, immediately 2001 be furnished 2001, mail from 7, electronic August when due.” An delivered required request get reports “to to Barber noted Fleet’s Schwartz inventories, ASAP,” including [Remarketing by Agreement] documents, remarketing plans, orders, receipts, purchase shipping accounting proceeds. and an and refurbishment documents sales necessary informa- Enterasys failed to submit the Fleet that claims and, instead, fragmentary information in required provided tion as regarding raised additional concerns conflicting only manner that equipment the Fleet-owned retrieved Enterasys’ stewardship of listing Fleet a of returned Enterasys Vitts. sent returned with both the amounts Vitts claimed have conflicted retrieved inventory Fleet had conducted of the Enterasys and an Fleet Enterasys’ at facilities. asserts that products stored $3,500,000 it had retrieved from products could account for Fleet, According Entera- Vitts, contrary records. own difference $3,500,000 between value sys to reconcile the refused and the value returned products that Vitts claims have by Fleet’s inspection products August physical counted representative. 2, 2001, the Remar- the March amendment
Finally, pursuant keting Agreement, parties agreed: [Enterasys] nullifying any foregoing, agrees
“Without 30, guaranties, in form and by [Fleet] deliver to June [Remarketing] Agree- satisfactory to under the [Fleet] substance Supplements executed ment and each of the Vitts Transaction [Riverstone, Aprisma].” Network and Enterasys-sub, Global provide Fleet with written failed to claims 2001, anytime thereafter. guaranties June of certain August notice On noted, sec- Agreement. previously As under the defaults Enterasys to cure Remarketing Agreement allowed tion notification of days breach within 30 after Fleet’s covenant breach. Fleet claims that never cured set defaults forth in the August 20 notice.
On September pursuant to section of the Remar- keting Agreement, Fleet demanded Enterasys purchase the Vitts totaling $3,754,513.18, Retail Contracts for an amount plus per diem *9 1, 2001, payment interest payment, $972 October until which equal was the amount aggregate “Unpaid Fleet’s Balances” on such contracts, less credit for the payment recourse made in Enterasys March Enterasys 2001. the 1, 2001, refused demand on October but remitted to $247,847.50, Fleet which purportedly represented re- proceeds marketing products of its sale of to Riverstone previously noted. 10,
On 2001, October Fleet filed a against breach of contract action Enterasys in court, the circuit alleging that Re- violated the (1) marketing Agreement provide monthly because it failed to: remar- (2) keting reports; approval obtain Fleet’s of the of equipment sale (3) Riverstone; addition, and guaranties. submit written In al- Fleet leged Remarketing breached the Agreement on based Enterasys’ merger Enterasys-sub. breaches, Due to the above alleged Enterasys triggered purchase obligation under 4.4(b) section Remarketing Agreement sought damages in of $3,506,665.68, amount the amount to the equal unpaid balances on the Contracts, Vitts Retail plus interest and Fleet’s out-of-pocket expenses related to its rights efforts to enforce its under the Remar- keting Agreement. summary
Fleet moved for judgment on December In 2001. response, denied that it had breached the Agreement argued that, and further if it even had breached the Re- 4.4(b) marketing alleged, in the manner Fleet section was penalty provision unenforceable under Illinois law. damages characterized the amount of sought liquidated Fleet as damages. 20, 2002,
On granted June the circuit summary judgment court in favor Fleet on the of liability, issue for a future reserving determina- tion the question damages Fleet’s under Remarketing Agree- ment. The court the parties briefing ordered to submit further on the 4.4(b) issue of Remarketing Agreement whether section of the an was liquidated unenforceable damages clause.
On October the circuit argument court heard Fleet’s petition entry damage for of a award. argued section 4.4(b) Remarketing Agreement penalty of the an unenforceable (1) in because: did not that section advance was the for breach of the appropriate damages measure (2) a reasonable was not Remarketing Agreement; from breach of damages resulting actual forecast of as a by any, sustained damages, the actual Agreement; The court of estimation. capable are breaches alleged result Agreement as follows: characterized ‘Look, deal. got the it, Enterasys basically says, we I see “As we somebodyfor finances because got product. We need We’ve basically transaction is capital.’ what the have the That’s don’t about. you, Fleet, ‘Look, finance says, we’ll money people, which they’re looking protected.’ what to be So but we have underlying goes anything that bad.” you is for to take back deal damage of a granted petition entry The circuit court Fleet’s award, punitive is] because the finding, [section “I don’t think whole, making which more obligation nature judg- a December final [by] punitive.” definition can’t be In $3,506,665.68, order, represented awarded Fleet court Contracts, plus Retail unpaid prejudg- balances under the Vitts attorney 1, 2001, totaling $265,421.94, ment interest from October $84,214.42 $9,014.08 out-of-pocket costs. fees in the amount of granted part Enterasys’ motion part The court also and denied *10 2002, reconsideration, 9, modifying provide October order ad- any judgment reduction of the amount in the event Fleet obtained ap- related Retail Contracts. payments ditional 2002, 2002, 2, peals the court’s June October and December 2002, orders.
ANALYSIS whether section Enterasys’ appeal, To determine we must review (1) (2) ambiguous; of the is: damages provision; penalty provi- and an unenforceable liquidated sion.1 pleadings, where the
Summary judgment properly
granted
is no
on file and affidavits show that there
depositions, admissions
moving party
is entitled to
genuine
of material fact and that
issue
(West 2002); Ander
judgment as matter
law. 735 ILCS 5/2 — 1005
USA,
1104, 1110,
N.E.2d
Inc.,
App.
Ill.
3d
740
son v.Alberto-Culver
317
(2000).
must
clear and free
right
judgment
be
movant’s
strictly
doubt;
must be
supporting
from
the motion
evidence
favoring
construed
against
liberally
construed
the movant and
1 The
of Article 9
Illinois
applicability
did not raise
(810
seq.
et
Transactions
ILCS
Uniform Commercial Code—Secured
5/9 — 101
(West 2002))
Therefore,
do
it here.
below.
we
not address
respondent. Curtis v. Jaskey,
App.
90, 92-93,
326 Ill.
3d
759 N.E.2d
(2001);
America,
Quantum
Kleinwort Benson North
Inc. v.
Services,
208-09,
Inc.,
Financial
285 Ill.
3d
App.
I Enterasys initially asserts that the circuit court’s construction of section is inconsistent with the plain language the Remarket- ing Agreement. According to Enterasys, ignored court or misread provisions in Remarketing Agreement unambiguously which stated terms, that recourse any, would be at the discretion of separate would contained in the Transaction Supplements executed in conjunction grant with the financing of retail to a particular customer Enterasys points such as Vitts. to section 1.7 of Remarketing Agreement, provides: “ ‘Transaction Supplement’ supplement Agree- shall mean a to this prepared in connection with each extension of Retail Financ- Product(s)
ing [Fleet] which identifies the Customer subject Financing, the Retail applicable Discount Rate Retail Financing, any applicable provisions recourse respect with to such Financing, Retail ap- additional warranties covenants plicable to such Retail Financing.” Enterasys also provisions *11 terasys fully obligations maintains that it its complied with Supplements by under the Transaction Fleet of the paying 75% the price on Vitts Retail Contracts. responds Enterasys, point argument, at no asserts an ambiguity beyond that would have entitled the circuit court to look plain of the language Agreement to determine the 4.4(b). parties’ argues intent when that the including section
469 clear intent parties’ of section demonstrate explicit terms Enterasys’ obligations in event exact from the outset Fleet, given Remarketing Agreement. According its breach of in section language expressed meaning logical the normal forth of the contract set 4.4(b), correctly that the face the court found breach. remedy to create a parties’ intent vacuum; must its terms does not exist in A contract it was within which light of the commercial context understood Comm’n, 184 Co. Illinois Commerce v. drawn. Archer-Daniels-Midland Bartman, Ill. (1998); 250 400, Kellner v. 391, 2d N.E.2d 387 Ill. 704 (1993). aas 1030, A contract construed 1036, 3d 620 N.E.2d App. 607 by independently by may circuit court be construed matter of law the judgment. unrestrained court’s Lewis court, by the circuit reviewing 220, 232, 696 Stern, App. Cohen Insurance Trust v. 297 Ill. 3d X. Ill. 3d (1998); Hoffman, App. Co. v. 145 743 Zale Construction N.E.2d (1986). objective construing 235, 240, 830 principal 494 N.E.2d par intention of the give is to determine and effect to the a contract Davis, into Schweihs v. they ties at the time entered the contract. Friedman, Zavett, 493, 500, MacRae, App. Kane 344 3d 800 & Ill. Zale, 241; Co. (2003); 145 Ill. 3d at Products App. N.E.2d 448 Ancraft 694, 697, Co., 100 App. v. Universal Oil Products Ill. 3d 427 N.E.2d (1981). parties, look 585 To determine the intent of the the court must itself, surrounding circum purposes instrument stances of its execution and performance. meaning dispute parties
When a
exists between the
as to the
is
provision,
a contract
threshold issue is whether the contract
Installco,
783,
Ill.
3d
ambiguous.
Whiting Corp.,
App.
Inc. v.
336
(2002).
it is
language
ambiguous
N.E.2d 312
Contractual
when
784
“
‘susceptible
meaning
more than one
obscure
[citation]
”
Plus,
Pork
meaning through
expression.’
indefiniteness of
Shields
305, 310,
Ag Service,
App.
v.
Ill.
3d
N.E.2d
Valley
Inc.
Swiss
329
767
(2002),
Ass’n,
Ill.
3d
quoting
Chicago Shippers
App.
945
Wald v.
175
(1988).
607, 617,
An
is not created
ambiguity
529 N.E.2d
that,
here,
agree upon
interpreta
do not
parties
mere fact
Frainey,
v.
Ill.
3d
654 N.E.2d
App.
tion. Groshek
(1995);
241;
Realty, Inc. v.
Zale,
App.
Harlem-Irving
145 Ill.
3d at
Alesi,
courts
speak signed speaks it. It intention who and the it was executed must be determined intention It language changed from the used. is not to be extrinsic *12 470 ” Safety, Realty
evidence.’ Air
Teachers
Corp.,
Inc. v.
185 Ill. 2d
457, 462,
(1999),
706
quoting
N.E.2d 882
Illinois Oil Co. v.
Western
(1962).
Thompson,
287, 291,
26 Ill. 2d
“Construing together contemporaneous instruments simply means any provisions that if there are limiting, explain- one instrument ing, another, affecting provisions otherwise they of will be given effect ***. provisions This does not mean that the of one *** another; imported bodily may instrument are into they be separate entirely intended instruments and to dif- things.” § ferent 17AAm. Jur. 2d Contracts at 670 (3d 1993) See also USX Corp. Leasing, Inc., v. Prime 988 E2d 433 Cir. (finding that provisions security nonrecourse a note pertained only to certain breaches of the terms of documents which they appeared and preclude did not the lender from dam- recovering ages against any alleged the borrower for of the borrower’s breaches requirements notice of collateral assignments, part which were financing the same arrangement security agreement). as the note and Here, contrary Enterasys’ argument, the circuit court did not confuse what would make Fleet “whole” for default of Vitts’ the Vitts Retail Contracts with what would make Fleet “whole” breach of Remarketing Agreement. Section provides Fleet repayment financing of its of the Vitts Retail Contract separate Supplements’ the Transaction provisions it requires Enterasys to “purchase all Retail Contracts entered into pursuant Agreement] [Fleet] [the for their aggregate unpaid representation, balances” if “is in breach war- added.) ranty or covenant in Agreement].” (Emphasis [the unambiguous language This contractual provides that ensured recovery financing 100% on the Vitts Retail Contracts in the event Vitts defaulted and breached certain covenants as Remarketing Agreement. delineated in the Although 3.2(g) not section appeal, discussed entitled, Proceeds,” “Remarketing also Remarketing Agreement, recovery financing itsof entitled to 100% that Fleet was contemplated had Contracts, not breached even if Retail on the Vitts any remar- 4.4(b), stating proceeds under section covenants that, Enterasys’ out-of- after property shall be Fleet’s keting Fleet “the reimbursed, Enterasys obliged pay pocket costs are *** Unpaid Balance the Product until such Unpaid Balance for added.) (Emphasis reduced to zero.” certain challenge fact that breached does triggering the Remarketing Agreement, thereby
covenants under the 4.4(b). Further, Enterasys has neither advocated provisions nor of section interpretation an opposing reasonable *13 demonstrating why language of section any record evidence may ambiguous. be construed as to right “[t]he provides
A contractual assets, just not repayment personal of a loan from the borrower’s Dictionary from loan.” Black’s Law the collateral secured the (7th 1999). correctly Although Enterasys 1280 ed. notes that provisions in the Supplements provide certain recourse Transaction 4.4(b) default, Agreement Remarketing event a Vitts of the section pay remaining unpaid bal clearly requires Enterasys to Fleet the on the Retail Contracts breached ances Remarketing as in occurred Agreement, covenant 4.4(b) ambiguity Agree here. in section of the No exists summary judgment a Accordingly, as matter of law. favor proper. II 4.4(b)
Nevertheless, maintains that section of the damages liquidated provi an unenforceable Agreement is represents parties sion because it of the to default, citing damages paid amount of that must be in the event Inc., 122 Ill. 3d Energy Cooperative, App. Northern Illinois Gas Co. v. Fleet concedes 1049 notes that N.E.2d “remedy” provision, section which differs from recourse. Enterasys, damages to is a According liquidated provi obligation” although styled “purchase sion are as a “damages” Contracts for their requiring Enterasys buy all the Vitts Retail Ap outstanding upon a Missouri Court of balance. relies Inc., case, Barefoot, v. peals Supply, AAA & Linen Inc. Uniform (Mo. 2002), argument that section App. support S.W.3d 133 4.4(b) keep Entera penalty,” was “intended incentive —a myriad of and warranties sys violating from of the covenants contained Remarketing Agreement.
Fleet responds that section a purchase obligation, creates a liquidated damages not Ac- provision. Fleet, cording because decided to abandon its remarket- ing reporting obligations, dispose of returned without obtaining approval, merge Fleet’s an affiliate change corporate obtaining guaranties necessary structure without preserve Fleet’s and recourse rights, Enterasys should consequences by bear the purchasing previously the lease contracts financed Fleet. required reports failure to file the makes determine, what, it impossible to if anything, Enterasys to attempt did the equipment sell argues recovered Vitts. Consequently, that its are damages unpaid and, full amount of the balances therefore, properly the circuit court $3,506,665.68 awarded Fleet damages. Gas,
In Northern Illinois to providing in addition definition of a liquidated damages clause, appellate court held that the circuit court erred finding liquidated damages that a not a limita- clause is remedy tion damages. to seek an alternate measure of Northern parties agreed Illinois Gas court found that to a “[t]he liquidated damages [as] sum their in the event of default.” Northern Gas, Illinois 949. inap- at Northern Illinois Gas is plicable present because, here, to the case did default; rather, a liquidated sum in the Enterasys agreed event remaining from Fleet the unpaid balances on the Vitts Retail Contracts. Similarly, inapplicable because, AAA case the instant Uniform
there, the court refused to apply liquidated damages clause since it placed would have nonbreaching party position, a better rather *14 position, than the same had Uniform, the breach never occurred. AAA 81 Here, Enterasys’ S.W3d at 138. as provided breach the covenants Remarketing Agreement only the required that Fleet recover amount that it in put position prior agree- would the same it was in to ing to finance the Vitts Retail Contracts. 4.4(b)
To illustrate further a that section does not constitute damages clause, liquidated the record demonstrates that the Remar- to keting respect Enterasys’ involved risk allocation with abilities, specifically, to Enterasys’ promise remarket 4.4(b) products that Fleet if leased Vitts Vitts defaulted. Section Remarketing Agreement the allocated risk En- requiring for Fleet’s if terasys purchase remaining Retail the Contracts agreed upon breached certain covenants that the were the Agreement. Similarly, although financing agreement not a as in case, present “take-or-pay” contract, common in the natural which is gas industry, viewed as a risk-allocation contract: is the risks apportion clause is take-or-pay
“The of the purpose buyer the and seller. production between gas natural sales seller for production. compensate To seller the risk The bears taken, a minimum risk, take, if not buyer agrees pay for demand. The buyer the risk of market gas. The bears quantity of down, goes gas if the demand for take-or-pay clause insures that Quantity the delivered price the Contract seller will still receive Pipe Eastern Corp. v. Panhandle year.” each Universal Resources 1987). (5th Co., Line 813 F.2d Cir. clauses, Fleet ensured it would Here, like in take-or-pay the seller risk, namely, a 100% return receive full amount for its allocated buy and lease manufac- Vitts, by Enterasys’ to remarket equipment promise tured remaining balances upon unpaid Vitts default or equipment pay breached certain on the Vitts Retail Contracts covenants characterizes Agreement. Enterasys The record “relatively disagree. breaches as minor.” Wé various affiliate, Enterasys-sub, sold Enterasys merged shows that with its deeply price Fleet’s to an discounted without affiliate at a re- provide required Fleet’s and failed to their approval reports marketing necessary guaranties and obtain from subsidiar- efforts covenants, Therefore, by Entera- breaching ies June 2001. these pay unpaid from the Vitts sys obligated balances 4.4(b) obliga- Retail Contracts. breached its section pay $3,500,000, equal the amount tion when it failed to unpaid Contracts. balances under Vitts Retail has foregoing supports our conclusion that failed legal authority either or record appropriate this court with Remarketing Agree- evidence to that section establish purchase obligation upon that arose anything other than Enterasys’ breach of certain covenants.
Ill this find the Remarket- Even if court were to that section clause, section is not an ing Agreement liquidated damages ais penalty provision. unenforceable provision dam-
“The determination of whether a contractual ages damages penalty or a clause is liquidated a valid question Grossinger Motorcorp, Inc. v. American National law.” Co., Bank & Trust 607 N.E.2d Illinois, liquidated provisions In be found valid and damages will “(1) to the when: intended to in advance enforceable breach; might damages settlement of arise from at the time of contract- liquidated damages amount of was reasonable *15 ing, some bearing damages might sustained; relation which be damages and actual would be uncertain in amount difficult to prove.” 749; Grossinger, App. 240 Ill. 3d at see also Restatement (Second) 356(1) (1981). § of Contracts “The be damages speci- must breach, specific fied amount for a a penalty punish not nonperformance or as a means performance.” Grossinger, to secure 3d at 750.
Significantly, Enterasys asserts that this court should construe
4.4(b)
liquidated damages clause,
section
as an unenforceable
but then
argues
Enterasys
there
no
that Fleet
agreed
evidence
ever
in
4.4(b)
advance that
proper
section
would serve as the
or
measure
4.4(b)
settlement
damages. Enterasys
argue
cannot
that section
is a
liquidated damages
contradictorily
clause and then
claim there is no
evidence demonstrating
that
intended to include a
liquidated damages
in
Remarketing Agreement. Further,
although Enterasys notes
its
brief that the Remarketing
Enterasys
states
“makes no representations
warranties,”
context of that statement shows that it applies
Enterasys
when
meets
obligations
of its
the Remarketing Agreement
under
does
apply when Enterasys breaches the
covenants under the
Agreement. Instead, the record
demonstrates that Fleet and
agree
intended
payment
in advance to the
of damages
might
arise from certain
breaches
covenants
the form of a
4.4(b).
obligation
provided in
section
Next,
remaining
unpaid balances on the Vitts Retail Contracts
represented a
damages
reasonable amount of
at the time of contract-
ing,
they
in that
a clear
the damages
bore
relation to
which were
likely
and,
fact,
be
were sustained
Fleet when
breached certain
as provided
covenants
in the
Agree-
ment.
prohibiting
merg-
breached certain covenants
fromit
ing or conveying
assets,
substantial amounts of
which
its
resulted
ability
loss of Fleet’s
to enforce
remarketing provisions
of the Re-
marketing Agreement against
corporate
entity
believed would
provide
and,
consequently,
ability
services
to sell the returned
equipment through Enterasys’
Further,
established sales network.
En-
terasys’ failure to
essential
provide
reports necessary
Enterasys’ remarketing
damages
oversee
efforts also relates to the
might
by Fleet, namely,
sustained
of its
loss
investment
Although
Retail
Contracts.
we
with
damages
fix
secure
purpose
section
performance,
Enterasys to cure the breach
section
allowed
they
any of
days
within 30
does not contend that
cured
Further,
Fleet could recover
the breaches.
entering into the
it lost as a result of
no more than
this provision,
Contracts. In conformance
finance the Vitts Retail
reduc-
order
circuit court modified October
*16
Fleet obtained
additional
in the event
judgment
amount
tion
Contracts, thereby ensuring that
to the Vitts Retail
payments related
it had
more funds than
lost.
Fleet would not recover
at
time of
that the
the
Finally, although
claims
En-
damages
from
resulting
that the
could have concluded
contracting
estimation,
cites no record
capable of
it
terasys’ breaches were
Fleet’s
claims that
support
proposition.
of this
evidence
secondary
the
determined
reference to
damages
actual
can be
however, Enterasys’ assertion
networking equipment;
market for used
damages from
various
not
the valuation of
does
account for
covenants.
failed
Agreement’s
breaches of the
damages
formulation as
how to measure Fleet’s
propose
to
a
to
(1)
sell,
convey
breach of their covenant:
transfer or
assets,
merger
nor
or be
or
party
substantial amounts of its
effect
(2)
consolidation;
provide
regarding
Fleet with information
proceeds immediately
prospective purchaser
following
and remit the
(3)
sale;
monthly remarketing reports detailing
the
to submit
the
remarketing-related information;
products retrieved from Vitts and
guaranties by
Fleet with
June
2001. The
written
record evidence establishes that it was difficult to determine Fleet’s
Remarketing Agree-
at
the
regard
losses with
the time
discrepancy
a wide
the
was executed because there was
projected
equipment.
Leasing
future values of the
See Penske Truck
Chemetco,
Inc.,
v.
Based County Cook are affirmed.
Affirmed.
HARTMAN,J., concurs. THEIS, dissenting:
JUSTICE finding trial that it breached Enterasys does not contest the court’s 4.4(b) argues only that section Remarketing Agreement, but majority ap- penalty clause. The is an unenforceable requiring provision provision finds that recourse parently placed in the same position prior financing was in Contracts, Vitts Retail therefore, holding, is enforceable. In so majority, court, like the trial separate agreements confuses two conflates separate separate two remedies for breaches. Because I believe that section the Remarketing Agreement is not a provision default, recourse respectfully event a Vitts I dis- sent.
First, in this highly sophisticated transaction, the Remarketing explicitly never purpose states that the the resale to provide Fleet with upon recourse default of the customer, to provide Fleet with credit support whatsoever. Rather, two sections Agreement refer Supplements Transaction applicable provisions. the sole recourse explains “any Section 1.7 applicable provisions recourse respect Financing” to such Retail would be contained in the Transac- Supplement tion and section 3.3 that “[t]he states extent of man- ner of recourse shall be set forth the Transaction Supplement.” supplements specific These contained a event that Vitts whereby defaulted on its retail contract Enterasys would *17 pay Fleet 75% the of each price supplement with a decreas- ing percentage scale depending capital whether Vitts increased its by contrast, a certain amount. In Enterasys agreed in the Remarket- ing Agreement remarket the equipment upon either the expiration or termination of a lease or in a the event of customer default, using efforts,” but representations “best with “no war- or as ranties to uhe results of such I that Enterasys efforts.” find made guarantees no that Fleet would be made whole. majority parol evidence,
The including testimony by cites Fleet’s representatives, that the plus combination of the 75% credit recourse remarketing proceeds gave Fleet credit protection. 100% The majority despite uses this testimony finding that ambiguous. is not If the agreement unambiguous, is this court cannot beyond consider extrinsic evidence the four corners Air Safety, Thus, disagree the contract. 185 Ill. 2d at I 462-63. while any parol necessary case, that I evidence this must add additional ignored evidence majority. deposition, In his vice- Fleet’s president, Schwartz, if Enterasys complied Stuart testified that with Agreement, might of the terms of the not Fleet recover the ef- remaining proceeds 25% from best, question forts. At evidence on a parol this issue creates fact. majority language
While the finds that the contractual section 4.4(b) obligated Enterasys of its recovery with 100% “[Enterasys] Breach title of that section: financing, it omits the 4.4(b) then, remedy provision clear, section a It is Remedies.” a Agreement, breach of bad,” trial as the “went in the event that the deal fact, breach or default is unrelated court held. In section customer, by the Vitts. of the Remar- Enterasys’ breach language upon is clear that provide a
keting parties agreed in section Agreement, remedy damages as a formula to determine the damages Thus, is a liquidated breach. I would find that this section (find- Co., 3d at 454-55 Leasing clause. See Penske Truck did not forth liquidated damages paragraph where the set ing clause customer, but a sum certain case of breach breach). However, damages case I believe computing formula for of a fact is enforceable questions remain to whether Therefore, I reverse decision of the trial court penalty. would proceedings. for further remand ILLINOIS, Plaintiffs-Appellees, THE PEOPLE OF THE STATE OF v. BROGAN, Defendant-Appellant. TIMOTHY (4th Division) First District No. 1 — 03—0829 Opinion August 2004. filed notes is unclear whether the sale to for the purpose Riverstone was sale parts formerly or whether Riverstone sold leased greater Vitts for amount than paid Enterasys, what was and that proceeds received Riverstone are what should been paid have Fleet. also claims that provided never Fleet with sought approval order for the Riverstone prior sale written of this transaction. No evidencing documentation the sale or demon- Finally, strating presented Riverstone’s creditworthiness was to Fleet. report Fleet claims that failed to proceeds sale Fleet until October two expiration which was weeks after the 30-day period Remarketing Agreement. cure Third, monthly to provide maintains that failed remarketing reports detailing products retrieved from
Notes
notes from section 3.3 of the Remarketing Agreement support argument the contracting parties agreed the full extent of obligations recourse would be contained in the Transaction Supplements. Section 3.3 of the Re- marketing Agreement states: [Enterasys] may, to, “From time to time obligated but shall not be support respect [Fleet] credit particular Retail Financing transaction. The extent and manner ap- recourse shall be set Supplement forth the Transaction plicable to each Financing.” Retail Enterasys argues interpreting as providing meaningless 3.3, language renders sections 1.7 obligations Supplements. which limit recourse to the En- Transaction