Supreme Court Summaries
Opinions filed October 18, 2012
Pielet v. Pielet, 2012 IL 112064
Appellate citation: 407 Ill. App. 3d 474.
JUSTICE KARMEIER delivered the judgment of the court, with opinion.
Chief Justice Kilbride and Justices Thomas, Garman, and Theis concurred in the judgment and opinion.
Justice Burke concurred in part and dissented in part, with opinion, joined by Justice Freeman.
Pielet Brothers Scrap Iron and Metal, Inc., was founded in Lake County by Arthur Pielet and his brothers shortly after World War II. Arthur sold his interest to his sons in 1986 through an agreement providing for a lifetime payment to him of a “consulting” fee, and, on his death, for a lifetime fee payment to his wife, Dorothy. The agreement also provided that it was binding on the parties’ “successors and assigns,” of which there were subsequently several because of company restructuring and changes of name. In 1994, the then-current successor company, P.B.S. One., Inc., dissolved, but payments to Arthur continued until 1998, when its successor, known as Midwest Metallics, began to experience financial difficulties. It filed for bankruptcy in 1999. Litigation was then commenced by Dorothy and continued for years until Arthur died, and beyond. In 2005, Dorothy filed the fifth amended complaint that is at issue here, seeking fee payment. In 2009, the circuit court of Lake County concluded the matter with a summary judgment award to the widow of almost $2 million. Three successor companies, P.B.S. One, National Material, and N.M. Holding, appealed.
In the appellate court, the award was challenged by P.B.S. One under the traditional rule that a cause of action that accrued (in this case in 1998) after corporate dissolution (in this case in 1994) cannot be brought against a dissolved corporation. This position also has statutory support under the Business Corporation Act, but the appellate court rejected this line of authority, holding that Dorothy’s claim could survive. However, the appellate court was also of the opinion that there were triable issues of material fact, inappropriate for summary judgment, as to whether P.B.S. One could be relieved of liability for the fee under a theory of “novation.” Based on this, it reversed Dorothy’s summary judgment and remanded for further proceedings, seeing the defendants as also not being entitled to summary judgment because of the remaining novation question.
In this decision, the supreme court disagreed with the appellate court, following the traditional analysis and holding that Dorothy’s claim against P.B.S. One alleging breach of contract could not survive the corporate dissolution and failed as a matter of law. The circuit court should not have entered summary judgment for her and against P.B.S. One. The issue of novation thus became irrelevant as to P.B.S. One, and summary judgment on this count should have been entered by the circuit court in P.B.S. One’s favor.
Two other successor corporations, National Material and N.M. Holding, claimed that they were also entitled to summary judgment in their favor, but, as to them, the issue of novation is not irrelevant. Both the appellate and supreme courts saw issues of material fact as to novation which precluded summary judgment for them. The supreme court thus found no basis for disturbing the appellate court’s conclusion that summary judgment should not have been entered in favor of Dorothy on these claims. That said, the appellate court should not have gone on and assessed whether there would be grounds for holding these latter two defendants liable if it should turn out, on remand, that there was, in fact, no novation. The appellate court should have refrained from any further discussion of the merits, and that part of its opinion was set aside.