Echols v. LSE Enterprises, Inc.

2020 IL App (1st) 190634-U

• Court: Appellate Court of Illinois
• Decided: January 14, 2020
• Docket: 1-19-0634
• Status: Unpublished

Opinion

2020 IL App (1st) 190634-U FIRST DISTRICT, SECOND DIVISION January 14, 2020

No. 1-19-0634

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1). _____________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT _____________________________________________________________________________

DEBORAH J. ECHOLS, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County, Illinois. v. ) ) No. 15 CH 9627 LSE ENTERPRISES, INC. and LARRY ROBERTS, ) JR., ) Honorable ) Daniel J. Kubasiak, Defendants-Appellees. ) Judge Presiding. _____________________________________________________________________________

JUSTICE COGHLAN delivered the judgment of the court. Justices Lavin and Pucinski concurred in the judgment.

ORDER

¶1 Held: Plaintiff’s 2015 suit for an accounting was time-barred under the applicable five- year statute of limitations, since the undisputed evidence showed that the business partnership on which her suit was based ended in 2008.

¶2 In 2006, plaintiff Deborah Echols and defendant LSE Enterprises, Inc. (per its president,

defendant Larry Roberts) jointly opened a barber and beautician college in Chicago. Their

agreement provided that LSE would control the day-to-day operations of the college and pay

monthly dividends to Echols. No. 1-19-0634

¶3 In 2015, Echols brought the present suit, alleging that she had not received any dividend

payments since January 1, 2009. She therefore sought an accounting and payment of all amounts

owed. The trial court granted summary judgment to defendants, finding that Echols’ accounting

claim was time-barred. Echols filed a pro se appeal, arguing that (1) there are material issues of

fact as to when her cause of action accrued and (2) the trial court erred in transferring her case

from the Chancery Division to the Law Division. We disagree and affirm the judgment of the

trial court.

¶4 BACKGROUND

¶5 LSE is a company that runs Larry’s Barber Colleges at various locations in the

Chicagoland area. Roberts founded LSE in 2004 and is LSE’s president.

¶6 In 2006, Echols had a lease for commercial property at 701-709 East 79th Street in

Chicago. She approached Roberts about opening a barber and beautician college at that location.

On June 23, 2006, LSE and Echols entered into a “Preferred Share Purchase Agreement” to open

a “Larry’s Barber College and Entourage Beauty College” (the college) together. The contract

stated that LSE (the “Seller”) would have a 49% interest while Echols (the “Purchaser”) would

have a 51% interest. (It is unclear whether the parties were referring to ownership interests in the

college or in LSE.) The contract further provided that “[a] fixed sum of whatever the two

discuss will be payable on closing of this Agreement.” LSE agreed to control the day-to-day

operation of the college and provide Echols with dividend payments, for which Roberts agreed to

be personally liable.

¶7 At the time of the parties’ agreement, Echols was behind on rent and facing eviction.

LSE paid the arrearage and was added to the lease. Echols had already purchased styling

stations and chairs for the college (the parties dispute exactly how many) and paid for the

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construction of classrooms with electricity and lighting. LSE paid for additional remodeling,

including installation of plumbing and an additional restroom, and various equipment. With

their combined efforts, the college obtained a cosmetology school license and started operation

in November 2006.

¶8 The parties dispute what caused their business relationship to go sour. Roberts alleged

that Echols never compensated him for her share in the business and also stole money from the

business by taking students’ tuition for personal use. Sometime in 2008, Roberts told Echols that

they “could no longer be in business because she was stealing from the business.” According to

Roberts, Echols then broke into the beautician college at night and removed all the equipment

without Roberts’ permission. The next day she told Roberts, “We not in business no more.”

Later in 2008, the college was evicted for nonpayment of rent. Roberts signed a new lease solely

for the half of the property containing the barber college, and he continues to operate a Larry’s

Barber College at that location to this day.

¶9 Roberts admitted that he never paid Echols any dividends, but he asserted that the college

never made a profit, “mostly because of the fact [Echols] was taking from the business and

didn’t allow it to make money.”

¶ 10 For her part, Echols admitted not paying any money for her interest in the school, but she

alleged that she compensated defendants through the provision of assets (styling equipment and

the remodeled premises) and services (enrolling students in the school). She denied taking

students’ tuition for her own purposes, and she denied agreeing to close the school or leave the

business. Rather, she alleged that she tried to operate the beautician college but was prevented

from doing so by her own illness and by Roberts’ actions.

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¶ 11 On June 19, 2015, Echols filed the instant suit, styled as a “Complaint for Accounting,”

in the Chancery Division of the circuit court. As amended, her complaint alleged that she

entered into a contract with Roberts to become a 51% owner of LSE and a partner in the

operation of the college and of LSE. In count I, she sought an accounting of LSE’s receipts and

business transactions, as well as her share of the company’s profits. In count II, she sought

damages for breach of contract, since defendants failed to pay dividends.

¶ 12 On November 7, 2017, the trial court, apparently on its own motion, entered an order

transferring the case to the Law Division. The court explained that “the accounting sought is not

an equitable remedy, but instead a remedy at law based on an alleged contract between the

parties.”

¶ 13 Defendants moved to dismiss both counts of the complaint under section 2-619 of the

Code of Civil Procedure (735 ILCS 5/2-619 (West 2016)). With regard to Echols’ accounting

claim, they argued it was time-barred under the applicable five-year statute of limitations, since

Entourage Beauty College closed on or around November 2008. With regard to her breach of

contract claim, defendants argued that the parties’ contract was too indefinite to be enforced

since no purchase price was stated.

¶ 14 On September 6, 2018, the trial court granted defendants’ motion as to the breach of

contract claim (a ruling which Echols does not contest on appeal), but denied it as to the

accounting claim, since “LSE and Roberts [did] not attach any evidence or affidavit supporting

their assertion [that the college closed in 2008], and the court has no basis on which it can

determine when Entourage Beauty College dissolved.”

¶ 15 Defendants then moved for summary judgment on Echols’ accounting claim, again

arguing that it was time-barred. In support, they attached an affidavit from Roberts stating that

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Entourage Beauty College closed and ceased all business operations in 2008. They also attached

Echols’ reply to defendants’ affirmative defenses, in which she stated: “Plaintiff admits

Entourage Beauty College at 701-709 E. 79th Street, Chicago closed in 2008.”

¶ 16 On March 1, 2019, the trial court granted defendants’ summary judgment motion. It

explained that Echols’ accounting claim was based on two allegations: an alleged oral agreement

that she would take ownership interest in LSE, and an alleged business partnership with Roberts.

But the alleged oral agreement took place in 2006, and Echols did not file her complaint until

2015, after the five-year statute of limitations for oral agreements (735 ILCS 5/13-205 (West

2016)) had expired. As for her alleged business partnership with Roberts, the trial court found

that Echols had not presented any evidence to create a genuine issue of material fact as to when

the partnership was dissolved. Because the undisputed facts showed that Entourage Beauty

College closed in 2008, and a right to an accounting based on a business partnership accrues at

the time of dissolution, Echols’ claim for accounting was time-barred under the five-year statute

of limitations for accounting claims (Santa Claus Industries, Inc. v. First National Bank of

Chicago, 216 Ill. App. 3d. 231, 236 (1991)).

¶ 17 ANALYSIS

¶ 18 Echols argues that the trial court’s grant of summary judgment for defendants must be

reversed because (1) there were material issues of fact as to when the college closed and (2) the

trial court erred in transferring her case from the Chancery Division to the Law Division.

Although defendants have not filed an appellate brief, the record is sufficiently clear for us to

decide this appeal on Echols’ brief alone. Capitol Mortgage Corp. v. Talandis Construction

Corp., 63 Ill. 2d 128, 133 (1976); State Farm Mutual Insurance Co. v. Ellison, 354 Ill. App. 3d

387, 388 (2004).

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¶ 19 We review the trial court’s grant of summary judgment de novo (Williams v. Manchester,

228 Ill. 2d 404, 417 (2008)), keeping in mind that summary judgment is appropriate where “there

is no genuine issue as to any material fact and *** the moving party is entitled to a judgment as a

matter of law.” 735 ILCS 5/2-1005(c) (West 2016). To prevail, the nonmoving party must

present some evidence that would arguably entitle her to recover at trial. Keating v. 68th &

Paxton, L.L.C., 401 Ill. App. 3d 456, 472 (2010).

¶ 20 Echols first argues that summary judgment is inappropriate because there are material

issues of fact as to when the college closed. As the trial court stated, the statute of limitations for

accounting claims is five years (Santa Claus, 216 Ill. App. 3d at 236), and a partner’s right to an

accounting accrues when the partnership is dissolved (McSweeney v. Buti, 263 Ill. App. 3d 955,

962 (1994)). The trial court found that Entourage Beauty College closed and the partnership

dissolved in 2008, more than five years before Echols filed her complaint on June 19, 2015.

Echols argues that a material issue of fact exists as to when the college closed, and she

specifically claims that Entourage Beauty College remained open until September 30, 2010. In

support, she cites her response to defendants’ motion to dismiss, to which she attached a

screenshot from the website of the Illinois Department of Financial and Professional Regulation

reflecting that Entourage Beauty College’s cosmetology school license expired on that date.

¶ 21 However, the trial court correctly observed in ruling on defendants’ motion to dismiss

that “the termination of this license does not necessarily show that Entourage Beauty College

dissolved on September 30, 2010.” Significantly, in Echols’ reply to defendants’ affirmative

defenses, she admitted that Entourage Beauty College closed in 2008. She also admitted as

much in an affidavit on August 17, 2017. Echols’ admissions are corroborated by Roberts’

affidavit and his deposition, in which he testified that the college opened in 2006 and operated

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for around two years, until in 2008 Echols removed all the equipment from the beautician

college, thus rendering it inoperable, and the college was evicted from the premises. Nor did

either party present any evidence that the beautician college was open for business at any time

past 2008. Thus, the trial court did not err in finding that, under the undisputed facts, Echols’

claim for an accounting of the business partnership was time-barred.

¶ 22 Echols next argues that the trial court erred in transferring her case from the Chancery

Division to the Law Division. She concedes that the written contract between the parties was

unenforceable but alleges the case should have stayed in the Chancery Division in order for her

to obtain equitable relief based on “the undisputed investment and expectation from the business

venture.”

¶ 23 Transferring a case to another division is within the sound discretion of the trial court.

Douglas Theater Corp. v. Chicago Title & Trust Co., 266 Ill. App. 3d 1037, 1049 (1994). Here,

Echols presents no case law or other legal authority in support of her contention that the transfer

was an abuse of discretion. Accordingly, she has forfeited this point. Ill. S. Ct. R. 341(h)(7) (eff.

May 25, 2018).

¶ 24 Furthermore, as we recognized in Kaplan v. Keith, 60 Ill. App. 3d 804, 809 (1978):

“Since jurisdiction over [a] cause of action [is] vested generally in the circuit

courts, which are organized and divided for administrative convenience, the transfer of

[an] equitable cause of action from the Chancery Division to the Law Division does not

limit the remedy available to one at law. Equitable relief is available even though the

case is in the Law Division. No error resulted from the transfer of the plaintiffs’ claim.”

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Just as we held that no error resulted from the transfer of plaintiffs’ claim from the Chancery

Division to the Law Division in Kaplan, no error resulted from the transfer of Echols’ claim

from the Chancery Division to the Law Division in this case.

¶ 25 Echols additionally argues that the trial court erred by “keeping [the] matter on Chancery

call for 2 years” before transferring the case, implying that the trial court’s delay in transferring

the case caused the statute of limitations on her claim to expire. However, the statute of

limitations had already expired when Echols filed her initial complaint in the Chancery Division

on June 19, 2015. See 735 ILCS 5/13-205 (West 2016); Santa Claus, 216 Ill. App. 3d at 236.

¶ 26 CONCLUSION

¶ 27 For the foregoing reasons, the trial court’s grant of summary judgment in favor of

defendants is affirmed.

¶ 28 Affirmed.

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