Kaluzny Bros. v. Mahoney Grease Service, Inc.

518 N.E.2d 1269, 165 Ill. App. 3d 390, 116 Ill. Dec. 289, 1988 Ill. App. LEXIS 63
CourtAppellate Court of Illinois
DecidedJanuary 26, 1988
Docket3-87-0260
StatusPublished
Cited by3 cases

This text of 518 N.E.2d 1269 (Kaluzny Bros. v. Mahoney Grease Service, 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
Kaluzny Bros. v. Mahoney Grease Service, Inc., 518 N.E.2d 1269, 165 Ill. App. 3d 390, 116 Ill. Dec. 289, 1988 Ill. App. LEXIS 63 (Ill. Ct. App. 1988).

Opinion

JUSTICE STOUDER

delivered the opinion of the court:

The plaintiff, Kaluzny Bros., Inc. (Kaluzny), a corporation engaged in the rendering of animal products, processing grease, and sales of the resulting products, and the defendant, Mahoney Grease Service, Inc., a corporation engaged in the collection and sale of unprocessed grease, entered into a joint venture-partnership agreement (the Agreement). The Agreement was finalized and the parties began operations under the name of Midwest Recycling Co. (Midwest). Contemporaneously, the parties entered into a supply purchase and sale agreement, management agreement and lease agreement. The management agreement stated that the management and control of the business and affairs of the partnership were to be administered by a management committee. The committee consisted of two members of the Kaluzny family and two members of the Mahoney family. The day-to-day supervision and management was delegated to Kaluzny.

Although the Agreement proved to be profitable, the partners began having disagreements, resulting in Kaluzny’s filing suit against Mahoney and Mendota Rendering, which is a rendering plant owned by Mahoney. Kaluzny alleges that Mahoney and Mendota, as their alter ego, have breached the joint vénture’s agreements. Specifically, Kaluzny alleges Mahoney and Mendota have breached the joint venture’s covenant not to compete and the fiduciary duty arising out of the joint venture and have tortiously interfered with the joint venture’s contract and supply agreement.

Mahoney filed a counterclaim alleging numerous complaints with regard to Kaluzny’s noncompliance' with the Agreement in reporting, payment of management fees, and pricing of the inedible grease. Ma-honey also filed a third-party complaint against all shareholders of Kaluzny Bros., alleging they had violated the joint venture agreement’s covenant not to compete by processing certain inedible grease at Kaluzny’s own plant and that they had interfered with the joint venture agreement.

The two cases were consolidated for trial with the liability issue to be tried first, followed by the accounting and damages issues. The trial court issued its initial decision orally and found neither party at fault or in breach of contract commitments. The court further found that the parties, because of past disputes and differences, could not continue as a joint venture and ordered dissolution of the joint venture, which included sale of its assets, and the termination of the joint venture agreement, the supply purchase and sale agreement, management agreement, and except as required by a purchaser of the joint venture business and assets, the termination of the lease agreement. The court also appointed an independent accountant as a court officer to oversee the dissolution of the joint venture and perform other duties.

Prior to the reduction of the oral decision into a written judgment, Kaluzny filed a motion to reopen proofs to submit evidence not before the court due to the separation of the liability and damages issues. Kaluzny sought to submit evidence on the economic impact on Kaluzny by the court’s ordering the dissolution and termination of the agreements contrary to their terms. The court denied the motion and issued a formal written judgment.

Kaluzny has appealed. On appeal, Kaluzny contends: (1) that the trial court was incorrect in finding that Mahoney did not breach the joint venture agreement; (2) that the trial court was incorrect in finding that Mahoney Grease and James and John Mahoney did not breach a fiduciary duty owed to Kaluzny; (3) that the Mahoneys should be found liable for tortious interference with the contractual relationship between Kaluzny, Midwest and Mahoney Grease; (4) that the trial court was incorrect in ordering the termination and dissolution of the joint venture agreement; and (5) the trial court’s denial of Kaluzny’s motion to reopen proofs was an abuse of discretion. Kaluzny’s contentions will be addressed in the order they have been presented.

Initially, Kaluzny argues that the trial court’s finding that defendant did not breach the joint venture agreement was contrary to the manifest weight of the evidence.

Kaluzny contends the defendants have breached the joint venture agreement in two ways: (1) that the defendants improperly sold grades of white grease they collected to a competing firm; and (2) that the purchase and operation of a separate grease processing facility constituted a breach of the Agreement’s covenant not to compete clause.

The supply purchase and sale agreement entered into between the defendant, the plaintiff, and Midwest does not specifically qualify the type and quality of the grease the defendant was to deliver to the plaintiff. The Agreement provides:

“That Mahoney shall sell and deliver to the Joint Venture *** all of the unprocessed inedible grease which it purchased and/or collects at the prices as hereinafter set forth in Paragraph 2 hereof and the Joint Venture shall buy from Mahoney all said unprocessed inedible grease which, when processed, can meet the specifications of the New York Produce Exchange grease standard.”

The trial court found that the Agreement called for the defendant to deliver all of the unprocessed inedible yellow grease the defendant collects to the plaintiff. Thus, the court interpreted the Agreement to exclude all forms of white grease. At various times throughout the joint venture, the defendant sold grade B white grease to customers other than Midwest. The plaintiff argues that the evidence indicates the parties agreed to exclude only choice white grease and not grade B white grease and by selling grade B white grease to other customers, the defendant has breached the Agreement.

James Mahoney, an officer and director of the defendant corporation, testified that he understood the Agreement to exclude all forms of white grease. Mr. Mahoney stated that he did not become aware that the defendant was supplying grade B white grease to the joint venture until a number of years after the joint venture was in operation. After he did discover this supplying error, Mahoney demanded that Midwest pay the correct price for the higher quality grease.

Both sides presented evidence concerning their respective interpretation of the Agreement. Although both parties agree there is an exclusion in the contract, the plaintiff’s experts testified that the exclusion pertains to choice white grease only and not grade B white grease.

A reviewing court will not disturb a trial court’s finding and substitute its own unless the trial court’s holding is manifestly against the weight of the evidence. (Ross v. Steiner (1978), 66 Ill.App. 3d 567, 384 N.E.2d 398.) Examining the record, it is clear that conflicting evidence was presented with regard to the exclusion issue. Based upon the evidence presented, the trial court could have and did determine that the Agreement applied exclusively to inedible yellow grease. Consequently, the defendant was not breaching the Agreement when selling the grade B white grease to other processors.

Kaluzny’s next contention is that Mahoney Grease breached the Agreement by selling yellow grease to National By-Products.

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Cite This Page — Counsel Stack

Bluebook (online)
518 N.E.2d 1269, 165 Ill. App. 3d 390, 116 Ill. Dec. 289, 1988 Ill. App. LEXIS 63, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kaluzny-bros-v-mahoney-grease-service-inc-illappct-1988.