Horbach], the consummation of such sale, if at all, or any action in connection therewith...." (Stock Purchase Agreement at 10-11). I have previously found that Mr. Horbach is a successor of rights of TyrRee. Horbach, 915 F. Supp. 18 at 21. Mr. Horbach, however, brings his claim in his individual capacity. The issue is whether Paragraph 11 bars all suits by TyrRee's successors, or whether claims brought in an individual capacity are permissible under Paragraph 11.
Under Illinois law, "where the sole dispute between the parties concerns the meaning of a contract provision, the threshold issue is whether the contract is ambiguous." Ford v. Dovenmuehle Mortgage, Inc., 273 Ill. App. 3d 240, 651 N.E.2d 751, 754, 209 Ill. Dec. 573, 576 (1st Dist. 1995). This is a matter of law for the court. Pepper Constr. Co. v. Transcontinental Ins. Co., 285 Ill. App. 3d 573, 673 N.E.2d 1128, 1130, 220 Ill. Dec. 707, 709 (1st Dist. 1996). In determining whether a contract provision is ambiguous, "the court must construe the contract as a whole, viewing each part in light of the others." Ford, 651 N.E.2d at 754, 209 Ill. Dec. at 576. "An ambiguity is said to exist in a contract when the contract contains language that is susceptible to more than one reasonable interpretation." Id.
The language of a contract, however, "is not ambiguous simply because the parties disagree upon its meaning...nor is it ambiguous if the court can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends." Foxfield Realty, Inc. v. Kubala, 287 Ill. App. 3d 519, 678 N.E.2d 1060, 1063, 223 Ill. Dec. 52, 55 (2d Dist. 1997)(citations omitted). "To the extent that a contract is susceptible of two interpretations, one of which makes it fair, customary, and such as prudent persons would naturally execute, while the other makes it inequitable, unusual, or such as reasonable persons would not be likely to enter into, the interpretation which makes a rational and probable agreement must be preferred." Id. "Courts will construe a contract reasonably to avoid absurd results." Id.
Mr. Kaczmarek argues the language in Paragraph 11 is unambiguous and that Mr. Horbach had years to institute a suit before he became a successor to TyrRee's rights in 1995. Thus, according to Mr. Kaczmarek, Paragraph 11 does not function as a pre-breach release by Mr. Horbach of his right to sue. Mr. Kaczmarek's argument relies on happenstance. Under Mr. Kaczmarek's interpretation of Paragraph 11, if two days after Mr. Horbach signed the Agreement he became TyrRee's successor, the window of opportunity for a lawsuit would only have been two days. A contract that permits such a result would be an unusual one for Mr. Horbach to sign. Further, under Illinois law, corporate property that has not been disposed of within five years of dissolution automatically passes to shareholders. Horbach, 915 F. Supp. at 21. Thus, Mr. Horbach, as a shareholder of TyrRee, became TyrRee's successor five years after the company dissolved whether he wanted to or not. Again, under Mr. Kaczmarek's interpretation of Paragraph 11, even if Mr. Horbach had become an unwilling successor to TyrRee's rights, his individual claims would be barred simply based on his status as a successor.
Additionally, the Agreement contemplates the possibility of a suit between Mr. Horbach and Mr. Kaczmarek. Paragraph 14 permits the recovery of attorney's fees "if a lawsuit arises between the parties...relative to [the] Agreement." (Stock Purchase Agreement at 12). Again, it would be unusual to include a paragraph on attorney's fees that could be rendered entirely moot by an assignment of rights within days of signing the Agreement.
Paragraph 11 is susceptible to more than one reasonable interpretation and thus, is ambiguous. "If contract terms are ambiguous or capable of more than one interpretation, parol evidence is admissible to determine the intent of the parties. The interpretation of an ambiguous contract is a question of fact." Pepper Constr. Co., 673 N.E.2d at 1130, 220 Ill. Dec. at 709.
Mr. Kaczmarek argues the extrinsic evidence leaves no doubt as to the meaning of Paragraph 11. To this end, Mr. Kaczmarek cites testimony by both attorneys who drafted the provision and Mr. Horbach, and a letter from one of Mr. Horbach's lawyers that was inadvertently disclosed during discovery. This evidence does not carry Mr. Kaczmarek's burden.
Mr. Kaczmarek notes that Thaddas Alston, the lawyer for Mr. Horbach responsible for helping to draft Paragraph 11, testified that, under the language of Paragraph 11, if Mr. Horbach himself was TyrRee's successor he would still have to indemnify or hold Mr. Kaczmarek harmless. (Alston Dep. at 72-73). Mr. Alston's testimony, however, is unclear as to whether he was considering a suit by Mr. Horbach in his capacity as a TyrRee successor or in an individual capacity.
Mr. Kaczmarek also cites the testimony of Jeffrey Gray, Mr. Kaczmarek's counsel responsible for drafting Paragraph 11. Mr. Gray testified the language of Paragraph 11 would foreclose Mr. Horbach from making a claim under the agreement "to the extent [Mr. Horbach is] a successor to TyrRee." (Gray Dep. at 71). Again, it is unclear from Mr. Gray's testimony whether he is considering the possibility of a suit by Mr. Horbach in Mr. Horbach's individual capacity as a party to the Agreement. Further, when asked directly whether Paragraph 11 barred a breach of contract claim by Mr. Horbach in his individual capacity, Mr. Gray stated he had no recollection. (Gray Dep. at 72). Additionally, Mr. Horbach's testimony does not indicate he believes Paragraph 11 bars his suit in his individual capacity.
Mr. Kaczmarek notes a letter written on March 6, 1996, by Robert Baker, a lawyer for Mr. Horbach, which indicates the Agreement requires Mr. Horbach to indemnify or hold Mr. Kaczmarek harmless. (Def.'s Ex. 43). The parties dispute whether the letter, which was inadvertently turned over during discovery, is still protected by the attorney-client privilege and if not, whether it is a party-admission. I agree that the inadvertent disclosure does not waive the attorney-client privilege.
Paragraph 11 bars suits by TyrRee's successors in their capacity as successors. Mr. Kaczmarek argues that Paragraph 11 is so broad it also captures Mr. Horbach, who sues in his individual capacity as a party to the Agreement. The language in this regard is ambiguous and open to more than one reasonable interpretation. Mr. Kaczmarek's presentation of extrinsic evidence does not settle the issue. Most of the testimony cited is ambiguous in regards to a suit by Mr. Horbach in his individual capacity. Accordingly, there is a genuine issue of material fact regarding the scope of Paragraph 11.
For these reasons, the motions for summary judgment are denied.
Elaine E. Bucklo
United States District Judge
Dated: December 5, 1997