O'brien and O'mara Frossard, JJ., concur.
Appeal from the Circuit Court of Cook County.
Honorable WILLARD J. LASSERS, Judge Presiding.
PRESIDING JUSTICE BUCKLEY delivered the opinion of the court:
Plaintiffs the Lewis X. Cohen Insurance Trust and the Harold B. Cohen Trust brought an action against defendants Merit Financial Corporation (Merit) and Jerome H. Stern (Stern) alleging breach of a stock purchase agreement (Agreement). The trial court entered summary judgment for plaintiffs, finding that Merit wrongfully refused to pay plaintiffs certain postclosing sums recovered by Merit. The trial court also found that Stern had personally guaranteed to indemnify plaintiffs for any damages they might suffer as a result of breach of the Agreement. Defendants appeal and raise the following issues: (1) whether, pursuant to the express language of section 6(b) of the Agreement, Merit's obligation to pay plaintiffs the contingent price contemplated in section 2(f) of the Agreement was excused by the Illinois Department of Insurance's objection; (2) whether enforcement of Merit's obligation to pay plaintiffs the contingent price under the Agreement is contrary to public policy; (3) whether Stern is a proper party to this suit and personally obligated to pay plaintiffs the contingent price under the indemnity provision of section 10(a) of the Agreement; and (4) whether plaintiffs' damages could be properly calculated on a motion for summary judgment. Plaintiffs cross-appeal on the issue of one portion of the calculation of damages.
In November 1990, plaintiffs owned shares in Merit Financial Corporation, a holding company that owned 100% of the stock of Merit Casualty Company, formerly known as Merit Insurance Company (Merit Insurance). On November 9, 1990, plaintiffs entered into a written stock purchase agreement to sell their shares to Merit and Stern.
On September 21, 1994, plaintiffs filed suit against Merit and Stern seeking additional consideration from Merit pursuant to a contingent price provision contained in section 2(f) of the Agreement. This provision provided:
"Merit shall pay an additional purchase price (the 'Contingent Price') to [plaintiffs], contingent upon any recovery by Merit Insurance Company pursuant to the proofs of claims of *** [the Claimants] against the insolvent estate of Midland Insurance Company and its excess insurance policy, XL 2625, filed with the Liquidation Bureau of the State of New York Insurance Department or the department of insurance or guaranty fund of any other state (collectively the 'Proofs of Claims'), which Proof of Claims were assigned to Merit Insurance pursuant to a settlement agreement dated June 7, 1990 by and among Merit Insurance and the Claimants. The Contingent Price shall be paid in an amount equal to one-third of the net proceeds recovered by Merit Insurance pursuant to the Proofs of Claims. For purposes hereof, net proceeds shall mean the gross amount (including interest) actually received by Merit Insurance pursuant to the order of the Liquidation Bureau of the State of New York Insurance Department or any court or governmental agency or any settlement of such Proofs of Claims, reduced by all federal, state and other income and other taxes incurred by Merit or Merit Insurance as a result of any recovery pursuant to such Proofs of Claims and further reduced by court costs, attorneys fees and costs and all other direct costs and expenses incurred by Merit Insurance in pursuing such Proofs of Claims, all as may be incurred by Merit Insurance from July 7, 1990 to the date of payment. ***. The Contingent Price shall be paid at the Closing [of the Agreement] to [plaintiffs], or if no recovery has been made at such time by Merit Insurance pursuant to such Proofs of Claims, within thirty days of any recovery by Merit Insurance pursuant to such Proofs of Claims."
By late 1993, Merit Insurance was experiencing financial difficulty and the Illinois Department of Insurance (DOI) issued the first of a series of corrective orders placing Merit Insurance under the supervision of the DOI. Merit Insurance operated under the series of corrective orders from September 20, 1993, through January 11, 1995. As of January 11, 1995, Merit Insurance has operated under an agreed plan of rehabilitation entered and approved by the circuit court of Cook County, Illinois, county department, chancery division (In the Matter of the Rehabilitation of Merit Casualty Co., No. 94 CH 011337).
In October 1993, Merit Insurance received a payment of $250,000 from the Illinois Guaranty Fund on account of one of the proofs of claims referenced in the contingent price provision. After unsuccessfully seeking payment, plaintiffs filed suit. In count I, they sought recovery from Merit based on the contingent price provision. In count II, they sought recovery from Stern personally based on the contingent price provision together with section 10(a), an indemnity provision.
On April 19, 1996, after a hearing, the trial court granted summary judgment in favor of plaintiffs and against Merit. On May 30, 1996, after another hearing, the trial court entered a judgment of liability against Stern, found that the principal amount of the liability against Merit and Stern was $72,523.65, set the matter for further hearing on the issues of interest and attorney fees, and allowed discovery and briefing on those issues. On July 17, 1996, the trial court entered a judgment against Merit and Stern for $72,523.65 in principal, $9,669.82 in interest, and $23,835.14 in attorney fees. Merit and Stern appeal from the April 19, 1996, order, the May 30, 1996, order and the July 17, 1996, order. Plaintiffs cross-appeal on the issue of the calculation of damages.
A. EXCUSE FROM PAYMENT OF CONTINGENT PRICE
Merit and Stern's first argument is that the trial court erred as a matter of law in granting summary judgment for plaintiffs because, pursuant to the express provisions of the Agreement, Merit's obligation to pay plaintiffs the contingent price contemplated in section 2(f) of the Agreement was excused by the DOI's objection. Merit and Stern fail, however, to provide any citations to the record or authority to support its argument, in violation of Supreme Court Rule 341(e)(7) (155 Ill. 2d R. 341(e)(7)). "Arguments made without citation of supporting authority are deemed waived on appeal. [Citation.] The party who thus waives the question is bound by his waiver, but the court, which has the responsibility of reaching a just decision, is not so bound." In re Marriage of Winters, 160 Ill. App. 3d 277, 281 (1987). Accordingly, notwithstanding waiver, we will address this issue.
This case comes to us on a grant of summary judgment, so our review is de novo. Barnett v. Zion Park District, 171 Ill. 2d 378, 385 (1996). Summary judgment is appropriate if the pleadings, depositions, and affidavits show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Maher & Associates, Inc. v. Quality Cabinets, 267 Ill. App. 3d 69, 77 (1994); 735 ILCS 5/2-1005(c) (West 1994). A triable issue of fact exists where there is a dispute as to material facts or where the material facts are undisputed but reasonable persons might draw different inferences from those facts. In re Estate of Hoover, 155 Ill. 2d 402, 411 (1993). The interpretation of a party's agreement or contract on appeal is a question of law to be determined by the appellate court de novo. Best Coin-Op, Inc. v. Old Willow Falls Condominium Ass'n, 120 Ill. App. 3d 830, 833 (1983).
Merit and Stern assert that Merit's obligation under section 2(f) was excused by the DOI's objection and directs this court to section 6(b) of the Agreement, which provides:
"6. Conditions to Obligations of [Stern] and Merit. The obligations of [Stern] and Merit hereunder shall be subject to the delivery of those items required to be delivered by [plaintiffs] at the Closing and to the conditions that:
(a) The representations and warranties made by [plaintiffs] herein shall be true at the Closing as though such representations and warranties were made at such time, and all of the terms and conditions of this Agreement to be performed and complied with; provided, however, [Stern] and Merit may waive any such condition by a statement in writing to that effect, delivered to [plaintiffs].
(b) Neither [Stern] nor Merit shall have received notice of any inquiry, investigation or objection from any governmental agency or from any court of competent jurisdiction with respect to restraining, prohibiting or obtaining damages or other relief in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby.
(c) [Stern] and Merit shall have secured financing for the transactions contemplated hereby in an amount and on terms acceptable to [Stern] and Merit."
Merit and Stern argue that since the payment of the additional purchase price was contingent on the recovery of certain postclosing sums, the transaction would be consummated after the closing and, therefore, falls within the phrase "transactions contemplated" contained in section 6(b) of the Agreement. Merit and Stern assert that since the DOI objected to the payment of the contingent price, then pursuant to the language of section 6(b) they were under no obligation to pay plaintiffs the contingent price contemplated under section 2(f) of the Agreement.
Plaintiffs contend that Merit and Stern's argument must fail for two reasons. First, plaintiffs assert that the evidence refutes Merit and Stern's contention that the DOI prevented them from paying plaintiffs. We agree.
At the time Merit Insurance received the $250,000 payment from the Illinois Insurance Guaranty Fund, the first corrective order was in place and continued until the next corrective order was issued on December 20, 1993. The first corrective order provided that "[a]ll expenses of Merit [Insurance] and its affiliates shall be subject to monthly review by this Department." As plaintiffs assert, under the first corrective order, the DOI did not approve or disapprove expenses before they were paid. Several deposition excerpts support this argument.
James Stephens of the DOI, the man immediately responsible for overseeing Merit Insurance while the corrective orders were in place, testified as follows concerning his review of Merit Insurance's expenses under the first corrective order:
"Q. In other words, it wasn't a question of you telling Merit [Insurance] what it should or shouldn't pay?
A. There was a certain amount of questioning of whether an expense was ...