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08/03/88 Don Carrillo, Indiv. and v. Jam Productions

August 3, 1988

DON CARRILLO, INDI

v.

AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,

v.

JAM PRODUCTIONS, LTD., ET AL., DEFENDANTS (JAM PRODUCTIONS, LTD., THIRD-PARTY PLAINTIFF-APPELLANT; BADK, INC., ET



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

al., Third-Party Defendants-Appellees;

Production Associates, Ltd., et al.,

Third-Party Defendants)

527 N.E.2d 964, 173 Ill. App. 3d 693, 123 Ill. Dec. 326 1988.IL.1201

Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.

APPELLATE Judges:

JUSTICE RIZZI delivered the opinion of the court. WHITE, P.J., and FREEMAN, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RIZZI

Third-party plaintiff-appellant, Jam Productions, Ltd. (Jam), appeals from a judgment of the circuit court of Cook County dismissing its complaint as a result of a section 2-615 motion (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) made by third-party defendants-appellees, BADK, Inc., Bob Arum, Don King, Don King Productions, Inc., and Top Rank, Inc. We reverse and remand.

This litigation stems from an agreement between Jam and BADK to telecast the June 20, 1980, Sugar Ray Leonard/Roberto Duran prizefight (prizefight). During the closed circuit telecast, there was allegedly a problem with the television picture and sound. Soon thereafter, Don Carrillo, a patron of the closed circuit telecast, filed a suit on behalf of himself and a class he purported to represent. In his two-count complaint against Jam, Carrillo sought (1) to restrain Jam from disposing of the proceeds from the ticket sales to the telecast and (2) a refund of the cost of the tickets.

Jam moved for and was granted a judgment on the pleadings as to Carrillo's count seeking a preliminary injunction. The remaining count was transferred to the law division. This count was ultimately appealed to the Illinois Supreme Court because the trial court had denied class certification. The supreme court held that the class action was not properly raised by Carrillo in the trial court and remanded the case to ascertain whether Carrillo's case could in fact be maintained as a class action. (Carrillo v. Jam Productions, Ltd. (1983), 97 Ill. 2d 371, 454 N.E.2d 649.) Carrillo is not a party to this appeal.

In the event that Carrillo might prevail in his suit against Jam, Jam filed third-party claims seeking indemnification from: (1) BADK for alleged breach of its agreement with Jam; (2) Don King, Don King Productions, Bob Arum and Top Rank as BADK's alleged alter egos on the theory of piercing the corporate veil; and (3) Top Rank for failure to procure proper insurance coverage to offset any losses that might arise from Carrillo's suit. Jam also filed a third-party action against National Union Fire Insurance Company (National) seeking a declaration of rights under the insurance policy.

The agreement entered into between Jam and BADK was a television license agreement (Agreement). BADK was formed by Bob Arum and Don King for the purpose of promoting the prizefight. The terms of the Agreement provided that Jam would promote the prizefight in Chicago, and BADK would deliver the video and audio signal of the fight to Jam in return for 55% of the gross ticket receipts. The Agreement further provided that Jam was to procure insurance naming both Jam and BADK as insureds for all refunds that might occur due to any malfunctioning of the transmission of the telecast. Top Rank agreed to purchase, on behalf of Jam, the type of insurance required by the Agreement. Top Rank then supplied Jam with an "Application for Closed Circuit Television Breakdown Insurance" from National, and insurance was thereafter obtained from National by Jam. National has, however, now taken the position that because there was only a partial, rather than a total blackout of the video and audio signal of the prizefight, it does not have to provide liability coverage for the claims made by Carrillo. National is not a party to this appeal.

In the circuit court, the third-party defendants filed section 2 -- 615 motions to dismiss Jam's third-party complaints. To support these motions, they argued that the existence of the insurance provision in the Agreement between Jam and BADK precluded Jam from asserting any right of implied indemnity. The third-party defendants therefore ...


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