Omnitrus Merging Corp. v. Illinois Tool Works, Inc.

628 N.E.2d 1165, 256 Ill. App. 3d 31, 195 Ill. Dec. 701, 1993 Ill. App. LEXIS 2096
CourtAppellate Court of Illinois
DecidedDecember 30, 1993
Docket1-92-2761
StatusPublished
Cited by80 cases

This text of 628 N.E.2d 1165 (Omnitrus Merging Corp. v. Illinois Tool Works, 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
Omnitrus Merging Corp. v. Illinois Tool Works, Inc., 628 N.E.2d 1165, 256 Ill. App. 3d 31, 195 Ill. Dec. 701, 1993 Ill. App. LEXIS 2096 (Ill. Ct. App. 1993).

Opinion

JUSTICE BUCKLEY

delivered the opinion of the court:

Plaintiff, Omnitrus Merging Corporation, brought an action seeking rescission, indemnification, and damages against defendant, Illinois Tool Works, Inc., for defendant’s alleged fraudulent misrepresentations and breach of certain warranties in relation to a merger agreement entered into between the parties. The trial judge granted defendant’s motion for summary judgment (Ill. Rev. Stat. 1991, ch. 110, par. 2 — 1005 (now 735 ILCS 5/2 — 1005 (West 1992))) on the grounds that indemnification was plaintiff’s exclusive remedy under the contract, that plaintiff’s action was barred by the limitations period included in the contract, and that plaintiff’s action was barred by the doctrine of laches. On appeal, plaintiff contends: (1) that the trial judge erred in finding that indemnification is plaintiff’s exclusive remedy under the contract; (2) that the merger agreement does not place a time limit on the filing of an appropriate action under the agreement; and (3) that the trial judge erred in applying the doctrine of laches. We affirm the judgment of the trial court.

On November 19, 1987, plaintiff acquired Truswal Systems Corp. from defendant. The merger agreement which the parties signed became éffective on January 6, 1988. Plaintiff alleges that on December 12, 1989, plaintiff became aware that defendant made certain material misrepresentations during the negotiation of the purchase. On December 28, 1989, plaintiff gave defendant notice of the alleged breaches of warranty. According to plaintiff, this notice began a contractually mandated six-month negotiation period. At the conclusion of the six-month negotiation period, the controversy remained unresolved. Therefore, on June 29, 1990, one day after the six-month period had elapsed, plaintiff filed its complaint.

Plaintiff subsequently filed a second-amended complaint in which it requested (a) indemnification under section 8.2 of the merger agreement, (b) rescission for breach of warranty, (c) damages for common law fraud, and (d) rescission for common law fraud. Defendant filed a motion for summary judgment (Ill. Rev. Stat. 1991, ch. 110, par. 2 — 1005 (now 735 ILCS 5/2 — 1005 (West 1992))) on the grounds that plaintiff’s action was barred by the exclusive remedy provision in section 8.2 of the merger agreement, by the limitations period in section 8.3 of the agreement, and by the doctrine of laches.

The trial judge granted defendant’s motion for summary judgment for all the reasons asserted by defendants in their motion. Plaintiff filed a timely appeal to this court.

Plaintiff’s first contention on appeal is that the trial judge erred in finding that indemnification is its exclusive remedy under the contract. Plaintiff contends that the term "exclusive of’ in section 8.2 of the merger agreement is reasonably susceptible of more than one meaning and thus makes the contract ambiguous. Therefore, plaintiff maintains that the trial judge erred when he found the contract to be unambiguous as a matter of law. Further, plaintiff asserts that it is settled Illinois law that an ambiguity in a contract is a question of fact for the jury. (TDC Development Corp. v. First Federal Savings & Loan Association (1990), 204 Ill. App. 3d 170, 561 N.E.2d 1142.) Plaintiff argues that, when a contract is unambiguous, the trial judge may only consider the contract from "within its four corners.” Plaintiff contends that the trial judge erred, therefore, when he considered extrinsic evidence offered by defendant, but struck similar parol evidence offered by plaintiff. Plaintiff asserts that the trial judge implicitly recognized that an ambiguity existed by his use of parol evidence in arriving at his conclusion.

On the other hand, defendant maintains that the term "exclusive of’ is unambiguous. Defendant contends that the only reasonable interpretation of section 8.2 is that indemnification is plaintiff’s exclusive remedy or else the other provisions of the merger agreement would be rendered meaningless. Additionally, defendant asserts that prior judicial interpretations and other legal authorities are not parol evidence.

Section 8.2(f) of the merger agreement states:

"The indemnity under this section 8.2 is exclusive of any other rights or remedies which [plaintiff! or its subsidiary corporations, or any of their respective successors or assigns, may have at law or in equity on account of, or with respect to, any of the matters covered by this Section 8.2, or any other action based upon any of the representations, warranties or covenants set forth in this Agreement.” (Emphasis added.)

In coming to the conclusion that this paragraph clearly and unambiguously provides for indemnification to be plaintiff’s exclusive remedy, the trial judge considered both Williston on Contracts (12 S. Williston on Contracts § 1457 (3d ed. 1970)) and the appellate court decision in Citicorp Savings v. Ascher (1990), 196 Ill. App. 3d 570, 554 N.E.2d 409. At the same time, the judge refused to consider and struck the affidavit of Professor Judith N. Levi, a linguistics professor from Northwestern University, who averred that the term "exclusive of’ has at least seven different meanings under the plain and ordinary usage of that term.

Summary judgment is proper when the pleadings, affidavits, and other evidence on file viewed in the light most favorable to the nonmovant demonstrate that there is no issue of material fact and that the movant is entitled to judgment as a matter of law. (Ill. Rev. Stat. 1991, ch. 110, par. 2 — 1005 (now 735 ILCS 5/2 — 1005 (West 1992)); Srivastava v. Russell’s Barbecue, Inc. (1988), 168 Ill. App. 3d 726, 730, 523 N.E.2d 30, 33.) The construction of a contract is a question of law for the trial judge and thus suitable for summary judgment. Srivastava, 168 Ill. App. 3d at 730, 523 N.E.2d at 33.

The primary objective in contract construction is to give effect to the intention of the parties and that intention is to be ascertained from the language of the contract. (Srivastava, 168 Ill. App. 3d at 730, 523 N.E.2d at 33.) If a contract is clear and unambiguous, the judge must determine the intention of the parties "solely from the plain language of the contract” and may not consider extrinsic evidence outside the "four corners” of the document itself. (Tishman Midwest Management Corp. v. Wayne Jarvis, Ltd. (1986), 146 Ill. App. 3d 684, 689, 500 N.E.2d 431, 434.) "Clear and unambiguous contract terms must be given their ordinary and natural meaning” and contracts must be interpreted "as a whole, giving meaning and effect to each provision thereof.” Srivastava, 168 PI. App. 3d at 730, 523 N.E.2d at 33.

A contract term will only be found to be ambiguous "if the language is reasonably or fairly susceptible to more than one construction.” (Tishman, 146 Ill. App.

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Bluebook (online)
628 N.E.2d 1165, 256 Ill. App. 3d 31, 195 Ill. Dec. 701, 1993 Ill. App. LEXIS 2096, Counsel Stack Legal Research, https://law.counselstack.com/opinion/omnitrus-merging-corp-v-illinois-tool-works-inc-illappct-1993.