Saletech, LLC v. East Balt, Inc.

2014 IL App (1st) 132639, 20 N.E.3d 796
CourtAppellate Court of Illinois
DecidedOctober 29, 2014
Docket1-13-2639
StatusUnpublished
Cited by15 cases

This text of 2014 IL App (1st) 132639 (Saletech, LLC v. East Balt, 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
Saletech, LLC v. East Balt, Inc., 2014 IL App (1st) 132639, 20 N.E.3d 796 (Ill. Ct. App. 2014).

Opinion

2014 IL App (1st) 132639 No. 1-13-2639 Opinion filed October 29, 2014 Third Division ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

FIRST DISTRICT

______________________________________________________________________________

SALETECH, LLC, ) ) Appeal from the Circuit Court Plaintiff-Appellant, ) of Cook County. ) v. ) ) No. 12 L 18 EAST BALT, INC., EAST BALT OF EASTERN ) EUROPE, LLC, and LOU-EL, LTD, All ) Individually and d/b/a/ East Balt Ukraine, and ) The Honorable EAST BALT UKRAINE, ) Thomas L. Mulroy, Jr., ) Judge, presiding. Defendants-Appellees. ) ) ______________________________________________________________________________

JUSTICE HYMAN delivered the judgment of the court, with opinion. Justice Lavin and Justice Mason concurred in the judgment and opinion.

OPINION

¶1 After an agreement governed by Ukrainian law to distribute bakery products made by a

Ukrainian company went sour, plaintiff, also a Ukrainian company, sued for breach of contract

but never served the complaint on the Ukrainian company. Instead, plaintiff pursued three

American companies that were not signatories to the contract asserting theories of agency,

contract ratification, alter ego, promissory estoppel and unjust enrichment. The trial court

granted defendants’ motion to dismiss the third amended complaint under section 2-615 of the 1-13-2639

Illinois Code of Civil Procedure (Code) with prejudice. 735 ILCS 5/2-615 (West 2012). Plaintiff

now asks us to reverse the order of dismissal and permit the case to proceed to discovery. We

affirm, finding that the third amended complaint failed to state a cause of action for breach of

contract under theories of agency, ratification, and alter ego, and also failed to state a claim for

promissory estoppel and unjust enrichment.

¶2 BACKGROUND

¶3 Plaintiff Saletech, LLC (Saletech), is a distribution company organized under the laws of

the Ukraine. Defendants are (i) East Balt Ukraine (EB Ukraine), organized under the laws of

Ukraine and registered with the Ukraine government as an "Enterprise with Foreign

Investments," and three American entities—(ii) East Balt, Inc. (EB Inc.), a Delaware corporation

with its principal place of business in Chicago, which owns commercial bakeries globally and is

the parent company of (iii) East Balt of Eastern Europe, LLC (EB Europe), an Illinois limited

liability company with its principal place of business in Chicago, which in turn, owns EB

Ukraine. (Another defendant, Lou-El, Ltd., a subsidiary of EB Inc. and a Delaware company

with its principal place of business in Chicago, had no ownership interest in or involvement with

EB Ukraine and was not the subject of any claims or allegations in the third amended complaint.

Accordingly, we affirm the dismissal of Lou-El, Ltd.)

¶4 On August 12, 2011, Saletech entered into an agreement with EB Ukraine to be the

exclusive distributor of its bakery products. Under the agreement, which was amended on

September 15, 2011, Saletech would buy and distribute on a monthly basis a minimum of 4

million units of EB Ukraine's bakery items. Saletech contends that less than two months later, in

November, EB Ukraine breached the agreement. Saletech contacted EB Ukraine's general

director but when the problem was not resolved, Saletech's vice president, Simon Gordon,

-2- 1-13-2639

contacted Edward Gin, EB Inc.'s vice president and chief financial officer, who put Gordon in

touch with Stuart Lee, EB Inc.'s executive vice president of the European region. According to

Gordon, Lee told him EB Inc. and EB Europe suspected improprieties by management at EB

Ukraine, and stated that if Saletech would help investigate and obtain proof of those

improprieties, EB Ukraine's management team would be replaced and the terms of the exclusive

distribution agreement would be honored. Saletech agreed to help and claims it incurred all sorts

of expenses, including frequent flights from Ukraine to Chicago to meet with EB Inc.

representatives and the cost of hiring armed security, which it claimed it needed to protect its

offices and personnel after EB Ukraine sent threatening text messages.

¶5 The record does not reveal whether the investigation uncovered any improprieties or

whether EB Ukraine’s management was replaced but despite Saletech's assistance, EB Ukraine

remained in breach of the agreement. On January 3, 2012, Saletech filed a three-count complaint

against EB Inc., individually and doing business as EB Ukraine, alleging breach of contract,

promissory estoppel, and unjust enrichment. EB Inc. was served with the complaint; EB Ukraine

was not. On February 27, 2012, EB Inc. filed a motion to dismiss the complaint. Next, Saletech

filed an amended complaint, which named two additional defendants, EB Eastern Europe and

Lou-El, Ltd., individually and on behalf of EB Ukraine, and again raised breach of contract,

collateral estoppel, and unjust enrichment claims. Defendants filed a motion to dismiss, which

the trial court granted, with 28 days leave to file an amended complaint. Saletech filed its second

amended complaint on September 28, 2012. In count I of its six-count complaint, Saletech

alleged breach of contract against EB Ukraine. The remaining five counts against the other

defendants alleged breach of contract under a ratification theory (count II), an agency theory,

(count III), and an alter ego theory (count IV). Saletech also brought claims for promissory

-3- 1-13-2639

estoppel (count V) and unjust enrichment (count VI). All of the defendants except EB Ukraine

were served. The served defendants filed a motion to dismiss counts II through VI, which the

trial court again granted with leave to amend.

¶6 On January 18, 2013, Saletech filed its third amended complaint. In count I, Saletech

alleged breach of contract against EB Ukraine. Counts II through V alleged breach of contract by

ratification against EB Inc. (count II) and EB Europe (count III), breach of contract by actual or

apparent agency by EB Inc. (count IV), and breach of contract by EB Europe as an alter ego of

EB Ukraine (count V). Saletech also raised a promissory estoppel claim against EB Inc. (count

VI) and an unjust enrichment claim against EB Inc. and EB Europe (count VII). Again, all of the

named defendants except EB Ukraine were properly served.

¶7 On January 28, 2013, the served defendants moved to dismiss Saletech's third amended

complaint under section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2012)), which allows a

party to combine a section 2-615 motion to dismiss and a section 2-619 motion for involuntary

dismissal in one pleading. On April 9, 2013, after oral arguments, the trial court entered an order

dismissing counts II through VII of Saletech's third amended complaint under section 2-615 of

the Code (735 ILCS 5/2-615 (West 2012)). (Because EB Ukraine had not been served, the court

did not address count I of the amended complaint.) As to counts II and III alleging ratification

and count IV alleging agency, the trial court found Saletech failed to properly plead an agency

relationship between EB Ukraine and EB Inc. or EB Europe.

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Saletech, LLC v. East Balt, Inc.
2014 IL App (1st) 132639 (Appellate Court of Illinois, 2014)

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2014 IL App (1st) 132639, 20 N.E.3d 796, Counsel Stack Legal Research, https://law.counselstack.com/opinion/saletech-llc-v-east-balt-inc-illappct-2014.