XL Disposal Corp. v. John Sexton Contractors Co.

659 N.E.2d 1312, 213 Ill. Dec. 665, 168 Ill. 2d 355, 1995 Ill. LEXIS 220
CourtIllinois Supreme Court
DecidedDecember 21, 1995
Docket78505
StatusPublished
Cited by34 cases

This text of 659 N.E.2d 1312 (XL Disposal Corp. v. John Sexton Contractors Co.) is published on Counsel Stack Legal Research, covering Illinois Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
XL Disposal Corp. v. John Sexton Contractors Co., 659 N.E.2d 1312, 213 Ill. Dec. 665, 168 Ill. 2d 355, 1995 Ill. LEXIS 220 (Ill. 1995).

Opinion

JUSTICE FREEMAN

delivered the opinion of the court:

As part consideration for assets of a business, the buyer, Sexton Contractors Company, agreed to pay an attorney who had done legal work for the seller, XL Disposal Corporation. Sexton later challenged the legality of the payments. We hold Sexton cannot challenge the payments for the reasons it asserted.

BACKGROUND

Robert Blair, an attorney, secured for XL Disposal Corporation (XL Disposal) land upon which it operated two waste transfer facilities. In August 1984, XL Disposal agreed to compensate Blair for his past services. A typewritten letter from Blair, signed by XL Disposal, confirmed the agreement. XL Disposal was to pay Blair, or his estate upon his death, $5,000 every month, the amount increased annually by 6%, from the letter’s date until XL Disposal ceased operating the two facilities.

One of the facilities was located on South Laflin Street in Chicago. The Laflin Street facility was operated on land leased for a five-year term, from 1983 to 1988. The lease was renewable for four additional terms, but would end in 2008.

In June 1985, XL Disposal sold, subject to that lease, the assets of the Laflin Street facility to the John Sexton Contractors Company (Sexton). For the assets, Sexton agreed to pay XL Disposal $443,200 and to continue monthly payments, as modified, to Blair. Sexton promised to pay Blair $2,650 every month, with the same 6% yearly increase, from July 1985 until the time Sexton ceased to operate the Laflin Street facility. Sexton’s promise was set out in an addendum to the letter stating XL Disposal’s previous agreement to pay Blair. The addendum was incorporated by, and referred to, the typewritten contract stating the terms of the asset sale. Blair, himself, was not a party to the addendum.

In April 1989, Sexton, though it continued to operate the Laflin Street facility, stopped paying Blair. In turn, XL Disposal sued Sexton. XL Disposal sought a declaration that the asset sale contract obligated Sexton to continue to pay Blair.

Sexton raised numerous affirmative defenses in answer to the complaint: XL Disposal’s agreement to pay Blair was fraudulent as based on past consideration; the agreement was an excessive legal fee arrangement; the agreement was contrary to public policy as a contingent-fee arrangement for Blair to lobby the City of Chicago for public contracts; Sexton’s promise to Blair was similarly one for Blair to lobby for city contracts as Sexton’s attorney and, therefore, the addendum was also an excessive fee agreement; and, finally, the promises of both XL Disposal and Sexton to pay Blair were perpetual contracts.

Sexton also filed a verified counterclaim, as amended, against Blair. The counterclaim stated five counts, each based on one or more of the affirmative defenses Sexton asserted against XL Disposal. Sexton sought declaratory relief and recovery of money it had paid to Blair.

Blair moved pursuant to section 2—619(a)(9) to dismiss Sexton’s counterclaim. (Ill. Rev. Stat. 1989, ch. 110, par. 2—619(a)(9).) Blair argued that Sexton had no standing to challenge XL Disposal’s original promise to pay him. Further, Sexton’s allegations that its payments were for something other than the assets of the Laflin Street facility were barred by the paroi evidence rule. Blair also argued that neither XL Disposal’s nor Sexton’s promise to pay him was a perpetual contract, for a termination date could be ascertained in the lease under which the Laflin Street facility was operated.

XL Disposal moved for summary judgment (Ill. Rev. Stat. 1989, ch. 110, par. 2—1005) on its complaint against Sexton. XL Disposal’s arguments for summary judgment were the same ones Blair raised in his then still pending motion to dismiss Sexton’s counterclaim.

Blair’s motion to dismiss was granted and, four days later, XL Disposal was awarded summary judgment.

Sexton filed a notice of appeal which sought review of both the counterclaim’s dismissal and the grant of summary judgment. The appellate court, ruling in Sexton’s favor, reversed and remanded. (No. 1—91—1809 (unpublished order under Supreme Court Rule 23).) The court stated that Sexton had standing to challenge XL Disposal’s agreement to pay Blair and that the trial judge was wrong not to find the agreement invalid. The court directed on remand that the trial judge was free to "review the reasonableness of the fees” and award Sexton any "excessive fees” it had paid to Blair.

Blair sought, and was granted, leave to appeal (145 Ill. 2d R. 315).

DISCUSSION

The Appellate Court Order

In the appellate court, Sexton had challenged both the grant of Blair’s motion to dismiss the counterclaim and the grant of XL Disposal’s motion for summary judgment on its complaint. The appellate court did not separately consider the two rulings. Presumably, that was because the motions involved like bases, and an appeal of a section 2 — 619(a)(9) dismissal involves the same concerns as an appeal of a grant of summary judgment (see Kedzie & 103rd Currency Exchange, Inc. v. Hodge (1993), 156 Ill. 2d 112, 116-17 (stating the standard of review)). But the motions were of different parties, were directed at or involved different pleadings, and sought different relief.

In directing that Sexton could be awarded fees found to be excessive, the appellate court effectively granted summary judgment for Sexton. Notwithstanding that Supreme Court Rule 366 would allow for entry of "any judgment *** that ought to have been *** made” or the grant of "any relief,” the appellate court’s ruling exceeded the scope of the appeal. (134 Ill. 2d R. 366.) Sexton did not move for summary judgment against either Blair on its counterclaim or XL Disposal in a cross-motion for summary judgment. Certainly, Sexton’s argument that it was not obligated to continue to pay Blair presented a legal question the court could decide. But no evidence whatsoever had been presented as to Blair’s services by which any determination could be made about the reasonableness or unreasonableness of the compensation.

Blair alone has contested the appellate court’s order and only the viability of Sexton’s counterclaim against Blair is at issue. The disposition here is limited accordingly.

The Relationship Between the Parties as Affecting Sexton’s Defenses

Sexton argues that its obligation cannot be separated from XL Disposal’s agreement to pay Blair for legal services. In effect, Sexton says it stepped into XL Disposal’s shoes and "assumed a direct contractual obligation to Blair.” Therefore, Sexton says it can challenge the legality of XL Disposal’s agreement to pay Blair as, for example, one for excessive legal fees, though it was not a party to it.

That particular argument is premised on the role this court plays in policing attorney discipline in Illinois. The court is duty-bound to guard against the collection of excessive legal fees, both contingent and fixed. (See In re Teichner (1984), 104 Ill. 2d 150, 161; see generally 107 Ill. 2d R.

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Cite This Page — Counsel Stack

Bluebook (online)
659 N.E.2d 1312, 213 Ill. Dec. 665, 168 Ill. 2d 355, 1995 Ill. LEXIS 220, Counsel Stack Legal Research, https://law.counselstack.com/opinion/xl-disposal-corp-v-john-sexton-contractors-co-ill-1995.