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Delta Oil Co. v. Arnold

OPINION FILED OCTOBER 30, 1978.

DELTA OIL COMPANY, INC., PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,

v.

LLOYD ARNOLD, DEFENDANT-COUNTERPLAINTIFF AND THIRD-PARTY PLAINTIFF-APPELLANT. — (JAMES J. KOKENIS, THIRD-PARTY DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.

MR. JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:

This case began with the filing by Delta Oil Company, Inc., of an action in Cook County circuit court for a declaratory judgment that Lloyd Arnold has no interest in an oil drilling venture called State-Chester 3-30, and is entitled to a refund of $25,000 paid in connection with that venture, but no other payments. Arnold then filed an answer, a two-part counterclaim against Delta and a third-party complaint against James Kokenis, president and majority stockholder of Delta. In the counterclaim and third-party claim, Arnold sought enforcement of an alleged agreement he made with Delta under which he obtained a 50% interest in the State-Chester 3-30 venture, and also a refund of $40,000 he had paid to Delta in connection with another venture, known as the Hanover Prospect, on the grounds that Delta and Kokenis failed in that transaction to comply with provisions of the Illinois Securities Act.

After Delta and Kokenis had filed motions for summary judgment as to all issues in the case and Arnold had filed a motion for summary judgment as to the securities issue alone, Arnold presented a petition for change of venue. Arnold's petition for change of venue was denied, and summary judgment was granted as to all issues in favor of Delta and Kokenis.

It is from these rulings and judgments that Arnold appeals.

For the reasons stated below, we find that the circuit court's denial of the petition for change of venue was error.

The facts relevant to this issue are as follows:

Delta commenced its declaratory judgment action on October 2, 1974. Arnold's answer, counterclaim and third-party claim were filed on January 20, 1975.

Delta and Kokenis filed motions for summary judgment with respect to Arnold's claims concerning the Hanover Prospect and for a protective order regarding certain of Arnold's discovery requests. Hearing and ruling on the motions for summary judgment were reserved pending further discovery. The motion for a protective order, together with a motion to sever the issues of liability and damages, was briefed, argued and decided on May 21, 1975. Severance was denied and discovery was ordered to proceed, subject to certain limitations.

On March 19, 1976, an order was entered setting a bench trial of the case for the following June 3. On May 17, Delta filed an amended complaint and an amended answer which varied from its original complaint and answer in that they did not consider Arnold and Delta to have entered into any binding agreement regarding the State-Chester 3-30 venture. Arnold then filed an amended answer and a reply to affirmative defenses raised by Delta's amendments.

On June 2, 1976, a telephone conversation occurred between Delta's counsel and the trial judge. Arnold's counsel was previously notified by Delta's counsel that such a conversation was intended, but received no information regarding its content until June 3, when a hearing was held in which the following exchange occurred:

"Mr. Scotellaro: I will agree with Mr. Murray that the issue raised in the previously filed motion for summary judgment, probably, is appropriate for disposition by summary judgment.

The basic issues in the case are not —

We have two diametrically opposed stories, plaintiff's and ...


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