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12/16/96 COMDISCO v. DUN & BRADSTREET COMPUTER

December 16, 1996

COMDISCO, INC., PLAINTIFF-APPELLEE,
v.
THE DUN & BRADSTREET COMPUTER LEASING, INC., AND FILLUPAR LEASING PARTNERSHIP, DEFENDANTS-APPELLANTS.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE JOHN N. HOURIHANE, JUDGE PRESIDING.

Released for Publication January 29, 1997.

Presiding Justice Campbell delivered the opinion of the court. Buckley, J., and Wolfson, J., concur.

The opinion of the court was delivered by: Campbell

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Defendants Dun & Bradstreet Corporation (D&B), Dun & Bradstreet Computer Leasing, Inc. (D&BCL), and Fillupar Leasing Partnership (Fillupar), appeal an order of the circuit court of Cook County denying their motion to compel arbitration of disputes between defendants and plaintiff Comdisco, Inc. (Comdisco).

The record on appeal indicates that on March 20, 1995, Comdisco filed a "Verified Complaint for a Declaratory Judgment and Other Relief" in the circuit court of Cook County. In this complaint, Comdisco alleged that on or about September 3, 1991, it entered into two sale/leaseback transactions with D&B and Fillupar; given that the agreements used "virtually similar" language, the complaint refers to the transactions as one. Fillupar later came under the control of D&BCL. D&B, who allegedly had a $35.1 million investment in the transaction, approved the deal on July 17, 1991; the closing occurred on September 3, 1991.

Fillupar allegedly purchased approximately $185 million worth of IBM and Amdahl mainframe computers from Comdisco, who simultaneously leased the equipment from Fillupar on a variety of terms. For example, both leases provided that Comdisco had the right to terminate the leases on an "early termination date". In the event that Comdisco exercised this option, it would pay D&B the "early termination value" of the equipment. One definition of the "early termination value" was the "fair market value" of the equipment on the "early termination date". "Fair market value" was also defined in the leases. Each lease involved several categories of IBM and Amdahl equipment; each category had a different "early termination date."

Comdisco exercised its early termination rights as to all categories of equipment on the respective early termination dates. Subsequently, in June 1992, a dispute arose between the parties regarding the value of the equipment. Comdisco took the position that the fair market value should be determined as of the early termination date as stated in the agreement. D&B took the position that fair market value should be determined by assuming that the early termination date was a delivery date, with the fair market value being determined as of a date 30 to 45 days prior to the termination date, which would represent the date upon which the parties typically would have agreed upon a price. Comdisco estimated that D&B's date could result in an additional four million dollars of exposure. The parties exchanged letters in June 1992 and met in July 1992 in an effort to resolve the dispute, but were not successful.

In September 1992, the parties exchanged letters regarding a proposed arbitration of their dispute. A draft of an agreement to submit the dispute to arbitration was being discussed by the parties by May 1994. In November 1994, the parties executed an Arbitration Agreement (Agreement). The first paragraph of the Agreement reads as follows:

"1. AGREEMENT TO ARBITRATE. The parties hereto hereby agree to submit to binding arbitration, in accordance with the terms of this Agreement, the disputes which have arisen (A) between Fillupar and Comdisco concerning the amounts, if any, owed by Comdisco to Fillupar under the terms of the Equipment Leases as a result of Comdisco's exercise of its early termination options with respect to each category of leased equipment, and (B) between Dun & Bradstreet and Comdisco concerning the amounts, if any, owed by Comdisco to Dun & Bradstreet under the Equipment Value Certificates."

On November 11, 1994, the parties retained former Judge Nicholas J. Bua to arbitrate the dispute.

The parties conducted discovery in March 1995. D&B allegedly raised claims that it was entitled to a "volume premium" and an "in-place premium" for the first time during this discovery period. D&B alleged that these premiums would result in Comdisco owing an additional $18 million above what Comdisco had already paid for the equipment.

Accordingly, Count I of the complaint sought a declaration that the Agreement was null and void. Count II alleged breach of contract. Count III alleged a breach of the covenants of good faith and fair dealing. Count IV alleged that defendants fraudulently induced Comdisco to enter into the Agreement. Count V alleged that there was no "meeting of the minds" regarding the Agreement. Count VI sought injunctive relief, staying the arbitration until the court determined which issues were arbitrable.

On April 6, 1995, the defendants filed a motion to compel arbitration pursuant to the Agreement. On May 3, 1995, the trial court entered an agreed order stating that defendants were not required to further answer or otherwise plead until the court ruled on the motion to compel. On October 13, 1995, following argument on the matter, the trial court entered an order denying defendant's motion to compel arbitration. The transcript of proceedings shows that the trial court based ...


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