are successors to, the same as and/or the alter ego of Kling and Wilco.
The issue presently confronting the court is one of privity. Privity of contract or estate has been defined as "mutual or successive relationship to the same rights of property." Collins Co. v. Carboline Co., 125 Ill. 2d 498, 511, 532 N.E.2d 834, 839, 127 Ill. Dec. 5 (1988) (emphasis in original). The relationship may arise by operation of law, by descent, or by voluntary or involuntary transfer. Id. (citing Towle v. Quante, 246 Ill. 568, 573, 92 N.E. 967 (1910)). As can be inferred from the above quoted definition of privity, courts typically confront the issue of privity within the context of a plaintiff who is not a party to a contract yet seeks to assert the rights embodied therein. Thus, comes the pervasive view that "'properly understood, privity is only a means of protecting a party guilty of breach against losses suffered by remote parties which are unanticipated and therefore not included in the calculation of costs.'" Id. (citing Kessler, Products liability 76 Yale L.J. 887, 892 (1967); Speidel, Warranty Theory, Economic Loss, and the Privity Requirement: Once More into the Void, 67 B.U. L. Rev. 9, 24-25 & n.54 (1987)).
Nonetheless, we can envision a situation where the "remote parties" (i.e., those not parties to the contract), rather than suffering losses as a result of a party's breach, cause by their actions unanticipated losses to a party to the contract. Under such circumstances, privity may operate to protect the contracting party in the same manner as the concept is invoked to protect remote parties as described above. To be sure, Illinois courts have long recognized that a valid assignment of contractual obligations conveys privity so that the remaining party to the contract may sue the assignee to enforce the terms of the contract. See, e.g., Leitch v. New York Central R.R. Co., 388 Ill. 236, 242, 58 N.E.2d 16 (1944) (if lessee's assignee assumes the lease obligations, privity of contract exists between the assignee and lessor). Similarly, and more relevant to the instant case, a corporate obligee may not avoid its contractual obligations by continuing its operation under a different corporate name. For example, in Terminal Freezers, Inc. v. Roberts Frozen Foods, Inc., 41 Ill. App. 3d 981, 354 N.E.2d 904 (3d Dist. 1976), defendant Roberts filed a counterclaim for breach of contract, alleging that the parties had entered into a contract which provided specific rates for storage and freezing services and Terminal Freezers had violated the terms and rates set out in the contract. Id. at 982-83, 354 N.E.2d at 906. Terminal Freezers argued that the contract could not be binding upon it as its name did not appear on the contract. Rather, the contract purported to be between Roberts and Service Ice and Cold Storage, Inc. Id. at 985, 354 N.E.2d at 907. Finding that Terminal Freezers and Service Ice were the same corporation in all but name, the court held "that Terminal Freezers succeeded to the obligations and benefits of the Service Ice contract with Roberts." Id. at 986, 354 N.E.2d at 908.
Whether Incentive Network is nothing more than a continuation of Wilco and Kling under a different corporate name is a question of fact to be determined by a jury. It may be, as defendants claim, that Incentive Network is neither the same entity nor a successor to Wilco and Kling. This determination will be made in light of such factors as (1) the timing between the dissolution of the former entities and the incorporation of the later, (2) the overlap of ownership interest, and (3) the overlap of corporate management. Nonetheless, Kaeser's proffer, including the solicitation letter which expressly states that "in 1989, [Noah Willens] reopened the company [i.e., Wilco] under the name of The Incentive Network, Ltd," is sufficient to create a genuine issue of material fact. As such, we deny Incentive Network summary judgment on Count III of Kaeser's complaint.
Assuming that Incentive Network may be held liable under the October 29, 1986 sales contract as a successor to Wilco and Kling, Noah Willens maintains that he may not be held responsible for such obligations because, at all times pertinent to the alleged breach of contract, he was acting solely in his capacity as president of Incentive Network and for its benefit." Indeed, as a general rule, an officer, director or employee of a corporation acting within his corporate capacity may not be held personally liable for the corporation's debts. Motsch v. Pine Roofing Co., 178 Ill. App. 3d 169, 176, 533 N.E.2d 1, 6, 127 Ill. Dec. 383 (1st Dist. 1988). This rule, of course, is not without exception. Illinois courts have held that an officer-agent of a corporate principal may be held liable for torts of the corporation in which the officer has personally participated. Id. Likewise, Illinois courts will pierce the veil of limited liability where "there [is] such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist . . . and circumstances [are] such that adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice." Van Dorn Co. v. Future Chemical and Oil Corp., 753 F.2d 565, 569-70 (7th Cir. 1985) (citing Macaluso v. Jenkins, 95 Ill. App. 3d 461, 50 Ill. Dec. 934, 420 N.E.2d 251 (1981)); see also Sea-Land Servs., Inc. v. Pepper Source, 941 F.2d 519, 520 (7th Cir. 1991) (interpreting Illinois law).
While Count III represents a claim for breach of contract and, absent fraud in the inducement, corporate officers cannot be held personally liable for contractually incurred debts, see First Nat. Bank of Boston v. Heuer, 702 F. Supp. 173, 176 (N.D. Ill. 1988) (interpreting Illinois law), the instant case may warrant piercing Incentive Network's corporate veil to hold Noah Willens personally liable. In determining whether a corporation is so controlled by another to justify disregarding their separate identities, the Illinois courts focus on four factors: "(1) the failure to maintain adequate corporate formalities, (2) the commingling of funds or assets, (3) undercapitalization, and (4) one corporation treating the assets of another corporation as its own. Van Dorn, 753 F.2d at 570. Once unity of interest and ownership is established, the plaintiff must show that circumstances are such that adhering to the corporate fiction would constitute either the sanctioning of a fraud (intentional wrongdoing) or the promotion of injustice (some wrong beyond the inability to collect upon the debt). Sea-Land Servs., 941 F.2d at 522-524. We highlight the term "may" above to indicate the absolute devoid of facts from which we can assess the unity of interest and ownership between Noah Willens and Incentive Network. True, ordinarily "opponents to summary judgment motions cannot simply rest on their laurels, but must come forward with specific facts showing that there is a genuine issue for trial." Id. at 522. Nevertheless, we observe that defendants' motion for summary judgment was filed a mere thirty-six days after Kaeser instituted this action, leaving little, if any, time for Kaeser to engage in discovery on these relevant matters. As such, rather than resolving the issue on the basis of Kaeser's failure to meet its burden of production and possibly working substantial injustice to Kaeser, we will defer ruling on this matter until the record is more fully developed.
For the reasons set forth above, defendant Noah Willens and Incentive Network's motion for summary judgment on Counts II and III of Kaeser's complaint is denied. It is so ordered.
MARVIN E. ASPEN
United States District Judge