Eby-Brown Company, LLC v. IYS Ventures, LLC

2024 IL App (3d) 230300-U
Appellate Court of Illinois·Decided June 24, 2024·No. 3-23-0300·Unpublished

Opinion

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

2024 IL App (3d) 230300-U

Order filed June 24, 2024

IN THE

APPELLATE COURT OF ILLINOIS THIRD DISTRICT

2024

EBY-BROWN COMPANY, LLC, a ) Appeal from the Circuit Court Delaware Limited Liability Company, ) of the 18th Judicial Circuit, ) Du Page County, Illinois.

Plaintiff-Appellee, )

)

v. )

)

IYS VENTURES, LLC, an Illinois ) Appeal No. 3-23-0300 Limited Liability Company, IMART ) Circuit No. 22-LA-217 STORES, LLC, a Minnesota Limited ) Liability Company, MUWAFAK S. ) RIZEK, and ISAM SAMARA, )

)

Defendants )

) The Honorable

(IMart Stores, LLC, and Isam Samara, ) David E. Schwartz, Defendants-Appellants). ) Judge, Presiding.

JUSTICE PETERSON delivered the judgment of the court.

Presiding Justice McDade and Justice Davenport concurred in the judgment.

ORDER

¶1 Held: In an appeal in a civil case for breach of contract and other related causes of action pertaining to defendants’ alleged failure to pay for convenience store products that they had purchased wholesale from plaintiff to resell in their gas stations and convenience stores, the appellate court found that the sole remaining defendant on appeal failed to present a sufficient record to support his claims of

error relating to the trial court’s entry of an order of default and a default judgment against him and its denial of his petition to vacate the order of default.

The appellate court also found that the sole remaining defendant forfeited all but one of his claims of error on appeal as to the default judgment amount by failing to make those claims in the trial court and that the default judgment amount was properly entered. The appellate court, therefore, affirmed the trial court’s judgment.

¶2 Plaintiff, Eby-Brown Company, LLC, filed a civil lawsuit against defendants, IYS Ventures, LLC (IYS), IMart Stores, LLC (IMart), Muwafak S. Rizek, and Isam Samara, for breach of contract and other related causes of action pertaining to defendants’ alleged failure to pay for convenience store products that they had purchased wholesale from plaintiff to resell in their gas stations and convenience stores. During pretrial proceedings, the trial court entered an order of default (default order) and a default judgment against defendants for repeatedly failing to comply with the trial court’s orders, including the trial court’s discovery orders. Defendants filed a petition to vacate, which the trial court denied as to the default order but granted as to the default judgment. A second prove-up hearing was conducted, and the trial court entered a new default judgment against the two defendants that had not filed for bankruptcy protection, IMart and Samara. IMart and Samara appealed. After the appeal was filed, however, IMart filed for bankruptcy protection as well and was subsequently dissolved as a limited liability company by the federal bankruptcy court. For the reasons that follow, we affirm the trial court’s judgment as to the sole remaining defendant on appeal, Samara.

¶3 I. BACKGROUND

¶4 Plaintiff was a wholesale distributor of convenience store products. Defendants, IYS and IMart, were limited liability companies that owned and operated gas stations and convenience stores in multiple states, including Illinois. Defendants, Rizek and Samara, were business partners and the owners/members of IYS and IMart.

¶5 In December 2018, IMart entered into a credit and security agreement with plaintiff so that IMart could obtain products from plaintiff on credit to resell in IMart’s gas stations and convenience stores. The agreement was signed by Rizek and Samara on behalf of IMart and provided, among other things, that (1) plaintiff would provide products to IMart on credit pursuant to the terms of the agreement; (2) IMart would pay for those products within 14 days of delivery; (3) IMart’s liabilities under the agreement would include the liabilities of any other customer of plaintiff in which IMart, Rizek, or Samara had an ownership interest; (4) if IMart’s account became past due, interest would accrue on any unpaid balances at a rate of 12% per year, compounded monthly; and (5) if IMart defaulted on the agreement, it agreed to pay all reasonable costs and expenses, including attorney fees and court costs, that plaintiff incurred in enforcing the agreement and collecting the amount due. IYS entered into a similar credit and security agreement with plaintiff in July 2020. That agreement was signed by Rizek on behalf of IYS. In addition to signing the credit agreements on behalf of IMart and IYS, Samara and Rizek also each signed a personal guaranty individually ensuring all payments owed to plaintiff by IMart (Samara’s personal guaranty) and IYS (Rizek’s personal guaranty).

¶6 Over the course of several months, IMart and IYS, at the direction of Samara and Rizek, ordered, accepted, and received millions of dollars in products from plaintiff for resale in IMart’s and IYS’s gas stations and convenience stores. At some point during that time period, however, IMart and IYS fell behind in their payments to plaintiff. In October, November, and December 2021, IMart and/or IYS issued over $800,000 in payments to plaintiff through checks and electronic fund transfers that were later returned by the banks because of insufficient funds or because the checks were deemed to be altered or fictitious. Although plaintiff initially continued to ship products to IMart and IYS in reliance upon defendants’ repeated promises to pay for the

products received, it eventually became concerned and stopped all shipments. In February 2022, plaintiff notified defendants by letter that they were in default on the credit agreements (and the personal guarantees) because of their continued failure to pay the amount that was due. IMart and IYS’s unpaid balance at that time was over $6 million.

¶7 In March 2022, plaintiff filed the instant civil lawsuit against defendants. Plaintiff’s complaint contained seven counts, including claims for breach of contracts (the credit and security agreements), personal guarantees, account stated, unjust enrichment, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2018)). Plaintiff attached to its complaint copies of the credit and security agreements and the personal guarantees that defendants had signed.

¶8 Later that same month (March 2022), plaintiff filed a motion to appoint a receiver over defendants’ businesses and to have the trial court take certain measures to preserve defendants’ assets for plaintiff’s later possible recovery. Defendants opposed the motion and, according to plaintiff, engaged in actions to delay the trial court proceedings. Near the end of June 2022, defendants filed an answer to plaintiff’s complaint and admitted many of the underlying facts that plaintiff had alleged.

¶9 In July 2022, a hearing was held on plaintiff’s motion to appoint receiver. At the conclusion of the hearing, the trial court denied plaintiff’s request for a receiver; granted plaintiff’s request to freeze defendants’ assets and to be allowed to retrieve its property from defendants’ possession; and directed defendants to provide plaintiff with a list of all real estate that defendants owned, including the names and addresses of the titleholders, by the end of August 2022. The written order specifically provided that “[d]efendants [were] enjoined from directly or indirectly transferring and/or disposing of any assets until further order of court.”

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Eby-Brown Company, LLC v. IYS Ventures, LLC, 2024 IL App (3d) 230300-U (Ill. Ct. App. 2024).

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