Tarin Ex Rel. Back-Of-The-Yards Cool Heat, Inc. v. Pellonari

625 N.E.2d 739, 253 Ill. App. 3d 542, 192 Ill. Dec. 584
CourtAppellate Court of Illinois
DecidedAugust 20, 1993
Docket1-91-2932
StatusPublished
Cited by32 cases

This text of 625 N.E.2d 739 (Tarin Ex Rel. Back-Of-The-Yards Cool Heat, Inc. v. Pellonari) 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
Tarin Ex Rel. Back-Of-The-Yards Cool Heat, Inc. v. Pellonari, 625 N.E.2d 739, 253 Ill. App. 3d 542, 192 Ill. Dec. 584 (Ill. Ct. App. 1993).

Opinion

JUSTICE COUSINS

delivered the opinion of the court:

Plaintiff David Tarin (Tarin) appeals from a final judgment entered against him by the circuit court pursuant to Supreme Court Rule 301 (134 Ill. 2d R. 301). Tarin and defendants Kenneth Pellonari (Pellonari) and Jose Diaz (Diaz) are directors and shareholders of a radiator business known as Back-of-the-Yards Cool Heat, Inc. (BOYCH). This controversy arose when defendants created a new radiator business, Cool Rite Corporation (Cool Rite) which Tarin contends is in competition with BOYCH. On May 4, 1990, Tarin, individually and on behalf of BOYCH, filed a five-count complaint against Pellonari, Diaz and Cool Rite seeking the following relief: the imposition of a constructive trust for the benefit of BOYCH and Tarin upon misappropriated corporate opportunities and assets in counts I and II; an injunction and damages for the misappropriation of the “Cool Heat” trademark in count III; removal of Pellonari and Diaz from their positions as directors of BOYCH pursuant to section 8.35 of the Business Corporation Act of 1983 (Ill. Rev. Stat. 1989, ch. 32, par. 8.35) in count IV; and an accounting in count V. Following a bench trial, the court concluded that counts I and II and the portion of count V relating thereto were barred by laches, and granted judgment for the defendants on the remaining counts.

We affirm.

Background

INTRODUCTION

In 1978, Tarin and Larry Stein (Larry) became co-owners of a corporation known as Cool Heat, Inc., which operates a facility at 2859 West Montrose, Chicago, Illinois (Montrose); its primary business is the repair of auto radiators and air conditioning systems. Defendants Diaz and Pellonari were employees at Montrose. Between 1982 and 1985, Tarin and Larry expanded their business by opening additional stores. The first new store was established at 9818 Grand Avenue, Franklin Park, Illinois, and is known as Franklin Park Cool Heat, Inc. The next was BOYCH, which was established at 4701 South Damen, Chicago, Illinois. BOYCH and the other Cool Heat stores have used a distinctive logo to advertise continuously since 1978.

BOYCH was established in approximately November of 1982. Tarin, Larry, Pellonari and Diaz each owned 25% of the stock of BOYCH. Larry died in April 1986 and his son, Nick Stein (Nick), succeeded to his interests in BOYCH. Subsequently, in approximately March 1989, Nick’s interest was conveyed to Tarín, and at the time of trial, the ownership interest in BOYCH was as follows: Tarin 50%; Diaz and Pellonari 25% each. At all times, Pellonari and Diaz have been officers and directors of BOYCH. Since its inception, Pellonari and Diaz have controlled the day-to-day operations of BOYCH and managed the business. Tarin has never had any direct involvement in the operation of BOYCH.

THE FORMATION OF COOL RITE

By 1984 or 1985, the facility at 4701 South Damen was not adequate to handle all the business BOYCH was generating. Tarin, Diaz and Pellonari frequently discussed the possibility of expanding the operations at BOYCH or, alternatively, purchasing additional property elsewhere and establishing a new radiator store. In late 1987, Pellonari and Diaz began looking at prospective property sites at which to establish a new radiator business. On February 27, 1988, Tarin, Pellonari, Diaz and Diaz’s brother Raphael Diaz entered into a contract to acquire premises located at 8100 South Kedzie, Chicago, Illinois. The proposed acquisition did not materialize, however, because the parties were unable to obtain financing.

Pellonari and Diaz continued to search for a new property site. They stated that Tarin consistently expressed interest in locating a new property site and establishing a radiator business with them. Near the end of 1988, Pellonari and Diaz located a suitable property at 11701 South Pulaski, Alsip, Illinois, and invited Tarin to inspect the property. Shortly thereafter, in approximately November of 1988, Pellonari, Diaz and Tarin visited the property site. According to Diaz, Tarin said that the property was excellent and the three parties agreed to proceed with the venture together.

Diaz and Pellonari testified that the three individuals subsequently had several conversations concerning the business plan for the new radiator shop. Pellonari explained that it was Tarin’s idea to name the new business Cool Rite. Diaz testified that they discussed advertising with Tarin and he agreed at that time that business cards should be ordered with the name and address of both BOYCH and Cool Rite on the same card. Finally, Pellonari stated that he discussed ordering equipment and supplies for Cool Rite through BOYCH with Tarin, and Tarin agreed to the arrangement.

In contrast, Tarin testified that he was not aware that defendants were still looking for a property site until they called him and invited him to see the Pulaski property. Tarin denied agreeing to order joint business cards or allow Cool Rite to order its equipment and supplies through BOYCH. He stated that he told defendants that the property was too expensive, but they informed him that they had already signed the contract and would send him a copy in the mail.

A real estate contract dated December 5, 1988, was drafted naming “Pellonari, Diaz or Nominee” as purchasers. According to defendants, the word “nominee” was inserted because Tarin could not be located when the contract needed to be signed. They testified that Tarin never told them that he did not wish to be involved in the deal prior to December 5.

Both plaintiff and defendants testified that Tarin backed out of the deal two weeks prior to closing. Pellonari and Diaz contemplated that six individuals would participate in the venture and they told Tarin that all persons involved should have an equal one-sixth interest in the business. Tarin demanded that a 25% interest be allocated to himself and a 25% interest allocated to Marty Poretta, his partner at another Cool Heat store. When defendants refused to accede to his demands, he told them to forget the deal and that he refused to participate.

Tarin admitted that at the time he backed out of the Pulaski venture, in mid January 1989, he was aware that defendants were planning to go ahead with the plans to open the new radiator shop. He testified that he warned defendants that they would not be able to operate two radiator stores, and defendants assured him that they knew what they were doing. Pellonari and Diaz acquired the Pulaski property during the last week of January 1989, and Cool Rite was formed in February of 1989.

CONFLICTS ARISE

Cool Rite opened for business in February or March of 1989, and Diaz recruited Mark Esquivel to run the store. Esquivel testified that Diaz and Pellonari gave him business cards that contained both “Cool Heat” and “Cool Rite” logos and instructed him to tell customers that Cool Rite was “some kind of subdivision of Cool Heat.” He testified that they also instructed him to distribute advertisements for Cool Rite while wearing a jacket which said “Cool Heat.” Esquivel worked at Cool Rite until approximately April 1990, and he testified that up until the time he left, he was still giving those business cards to customers.

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Cite This Page — Counsel Stack

Bluebook (online)
625 N.E.2d 739, 253 Ill. App. 3d 542, 192 Ill. Dec. 584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tarin-ex-rel-back-of-the-yards-cool-heat-inc-v-pellonari-illappct-1993.