Greenberg v. Mallick Management, Inc.

527 N.E.2d 943, 173 Ill. App. 3d 653, 123 Ill. Dec. 305, 1988 Ill. App. LEXIS 1148
CourtAppellate Court of Illinois
DecidedAugust 2, 1988
Docket87-2692
StatusPublished
Cited by1 cases

This text of 527 N.E.2d 943 (Greenberg v. Mallick Management, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Greenberg v. Mallick Management, Inc., 527 N.E.2d 943, 173 Ill. App. 3d 653, 123 Ill. Dec. 305, 1988 Ill. App. LEXIS 1148 (Ill. Ct. App. 1988).

Opinion

JUSTICE EGAN

delivered the opinion of the court:

This is an appeal from an order granting the defendant’s motion for summary judgment in a breach of contract action. The trial court held, as a matter of law, that a purported amendment to a contract lacked consideration.

In 1981, the defendant, Mallick Management, Inc. (Mallick), sold Toppers Restaurant to All That Jazz — Topper’s Restaurant, Inc. (All That Jazz). The plaintiff, Charles Greenberg (Greenberg), at that time owned 10% of the shares of All That Jazz. As part of the sales agreement, All That Jazz purchased all the personalty located inside the restaurant and gave Mallick a chattel mortgage which required All That Jazz to make monthly payments to Mallick.

Mallick, as owner of the realty upon which the restaurant was located, also entered into a lease agreement with All That Jazz which obligated All That Jazz to make monthly rental payments to him.

In early May 1984 Greenberg purchased the remaining shares and became the sole shareholder of All That Jazz. By late May 1984 All That Jazz was several months in arrears on its payments under both the chattel mortgage and the lease. Greenberg then decided to close the restaurant.

Mallick then instituted foreclosure proceedings under the Uniform Commercial Code (Ill. Rev. Stat. 1983, ch. 26, par. 1 — 101 et seq.) in order to force the sale of the personalty covered by the chattel mortgage. Those proceedings were stayed when All That Jazz filed for bankruptcy.

Greenberg and Mallick entered into an agreement dated June 28, 1984 (First Agreement or June Agreement), which provided that Mallick would pay Greenberg the sum of $5,000 for all the personalty and $20,000 in consideration for Greenberg’s promise not to compete with the new lessee for two years. In addition, the agreement contained the following clause:

“5. This Agreement is contingent upon dismissal of Bankruptcy No. 84 B 08081 prior to 11:00 a.m. on June 29, 1984. All sums payable hereunder shall be made at the conclusion of Agreement with new purchasers. Failure of MALLICK to pay GREENBERG the amounts provided for when due shall subject MALLICK to a penalty of 2% over prime from due date of payment to actual date of payment.”

Greenberg was unable to dismiss the bankruptcy action by 11 a.m. on the following day, June 29, 1984, because bankruptcy rules require that there be a prior meeting with creditors and certain creditors objected to the dismissal.

In August 1984 Greenberg and Mallick signed a document titled “Amendment to Agreement Dated June 28, 1984 Between Charles Greenberg and Mallick Management, Inc.” (Second Agreement or August Agreement). That Second Agreement read as follows:

“WHEREAS, it has been determined that bankruptcy case No. 84 B 08081 cannot be dismissed until after the first meeting of creditors and upon leave of court;
WHEREAS, both Mallick and Greenberg desire to amend their agreement dated June 28,1984; IT IS AGREED:
1. The first sentence of Paragraph No. 5 is deleted and is null and void and the following language is substituted therefore:
‘That agreement of June 28, 1984, is contingent upon attorneys for Greenberg executing and presenting to the United States Bankruptcy Court in Case Number 84 B 08081 an agreed application for relief from automatic stay and for authorization to sell collateral or dismiss Case No. 84 B 08081.’
2. That the last sentence of Paragraph No. 5 is amended to include ‘and reasonable attorney fees.’ ”

The restaurant’s liquor license had expired on May 30, 1984. Mallick’s president testified at his deposition that he was unaware of the license expiration, and he failed to renew it. He further testified that he had negotiated for the sale or lease of the restaurant with the prospective tenant, but the deal was not consummated, in part, because of the loss of the liquor license.

On October 5, 1984, Mallick’s attorney sent a letter to Green-berg’s attorney which read in part as follows:

“Please be advised that the alleged Agreement dated June 28, 1984, between Mr. Greenberg and Mallick Management, Inc., is null and void because your client failed to comply with the intention set forth in said writing and any amendments thereto.
Therefore, my client is taking the necessary action to obtain a release of the automatic stay relating to the assets of Toppers Restaurant, Inc.”

Greenberg’s attorney responded by letter on October 12, 1984, in which he asserted that the actual reason for Mallick’s actions was its loss of the liquor license. He characterized the defendant’s conduct as an anticipatory breach of the contract.

On December 11, 1984, the defendant’s attorney did obtain a partial release of the stay order in the bankruptcy court. According to the plaintiff’s affidavit, that was done with the cooperation of his lawyer, and the bankruptcy case was later dismissed.

Our first task is to determine what issues are before us, because the parties have not made it clear. For that matter, it is not clear exactly what issues were before the trial court. The complaint alleged that both the June Agreement and the August Amendment were “for good and sufficient consideration.” The defendant filed a motion for involuntary dismissal alleging that any payment was contingent upon a sale of the business to a potential lessee and that no potential lessee was ever submitted by the plaintiff; that the plaintiff abandoned the premises and that there was not any consideration for either agreement. That motion was ordered stricken. Another order was entered later granting the defendant leave to withdraw his motion to dismiss without prejudice on the ground that the motion should have been for summary judgment.

The motion for summary judgment was filed, alleging, in substance, that there was never a conclusion of an agreement with a new purchaser. There was no allegation of a lack of consideration. Memoranda of law were filed. In the reply memorandum the defendant alleged that it was entitled to summary judgment because the plaintiff did not dismiss his bankruptcy suit before 11 a.m. on June 29, 1984. In the argument on that point, it anticipated that the plaintiff would argue that the time contingency in the original contract did not apply because the parties signed an amendment. The defendant said that the amendment did not become effective because it lacked consideration.

The defendant filed an amended motion for summary judgment. That amended motion alleged that there was never a conclusion of an agreement with new purchasers as provided in the agreement of June 29, 1984, and that the plaintiff never dismissed the bankruptcy case prior to 11 a.m. on June 29, 1984. There was nothing in the amended motion addressing the question of consideration for the August Amendment.

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527 N.E.2d 943, 173 Ill. App. 3d 653, 123 Ill. Dec. 305, 1988 Ill. App. LEXIS 1148, Counsel Stack Legal Research, https://law.counselstack.com/opinion/greenberg-v-mallick-management-inc-illappct-1988.