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Scentura Creations, Inc. v. Long

September 18, 2001


Appeal from the Circuit Court of Du Page County. No. 99--AR--499 Honorable Richard A. Lucas, Judge, Presiding.

The opinion of the court was delivered by: Justice McLAREN.


Defendant, Daniel Long, appeals from the trial court's order granting summary judgment in favor of plaintiff, Scentura Creations, Inc., on its complaint for breach of a consignment contract. He also appeals from the trial court's order granting plaintiff's petition for attorney fees and the trial court's order that denied leave to file a counterclaim against plaintiff based on the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act or Act) (815 ILCS 505/1 et seq. (West 2000)). We reverse and remand.

Plaintiff is a manufacturer and distributor of rendition perfume products to independent wholesaler consignees. On November 29, 1995, defendant entered into a consignment contract with plaintiff. Pursuant to the contract, plaintiff was to provide defendant with perfume products. Defendant would sell the products to an end user for the consignment price. Payment of the consignment price for the perfume products was due when defendant sold the products to an end user. The agreement was for a term of 30 days and was automatically renewed unless one party gave written notice of termination. If defendant terminated the agreement, he was to hold all merchandise in his possession for a period of 30 days "until [plaintiff] shall have an opportunity to remove such merchandise."

Under the contract, defendant had the potential to be compensated by plaintiff for locating other consignees to enter into a business relationship with plaintiff. In the event plaintiff paid defendant a commission arising from the sale of merchandise by another consignee, the contract obligated defendant to pay plaintiff for the shipments of merchandise to the other consignees as though they had been shipped to defendant. This provision of the contract was not specific concerning the compensation to be given to defendant for locating other consignees.

It allowed plaintiff sole discretion in determining the amount of compensation to be given, if any. Paragraph 19 of the contract provided as follows:

"From time to time, at SCENTURA'S sole discretion, SCENTURA may offer incentives to CONSIGNEE to encourage or reward CONSIGNEE for bringing other consignees or in assisting other consignees, to or in furtherance of a business relationship with SCENTURA. Any and all compensation paid for such efforts, whether in the form of commissions or otherwise, shall, at all times be solely at the discretion of SCENTURA and CONSIGNEE shall not be deemed in any way to have earned, or be entitled to, any compensation. It is further understood and agreed that any compensation which may be paid to CONSIGNEE by SCENTURA arising out of the sales by SCENTURA to other consignees, notwithstanding any course of dealing or practice by and between SCENTURA and CONSIGNEE to the contrary, may be terminated by SCENTURA without notice at any time, without any liability to CONSIGNEE. Under no circumstances, will SCENTURA be obligated to pay to consignee any commissions or other compensation, except in SCENTURA's sole discretion, and notwithstanding anything to the contrary, SCENTURA shall not pay to CONSIGNEE any commissions or other compensation following the date of the termination of this agreement. It is further agreed by and between the parties that any commission or other compensation paid by SCENTURA to CONSIGNEE arising out of the sale of merchandise by any other consignee, shall be deemed for all purposes to obligate CONSIGNEE for any subsequent or future shipments by SCENTURA to such consignee whose sale of goods resulted in the payment of a commission, to guarantee to SCENTURA those same guarantees specified in paragraph 16 of this Agreement, as if the goods shipped to such other consignee had been shipped to CONSIGNEE herein. In that respect, any commissions or other compensation paid to CONSIGNEE for such sales by third parties, shall be deemed a fee and consideration for the guarantee by CONSIGNEE of such third party's performance under any such third party's consignment agreement with SCENTURA. CONSIGNEE's guarantee of such third party's consignment agreement with SCENTURA shall be for the entire amount that may be due to SCENTURA by such third party consignee, notwithstanding that other consignees might also, pursuant to the provisions similar to those contained herein, have guaranteed to SCENTURA such third party consignee's performance, it being understood and agreed that their liability is joint and several."

Plaintiff delivered 2,284 bottles of perfume to defendant. The consignment price for the perfume was $10 per bottle.

On January 11, 1999, defendant contacted plaintiff and advised that he was terminating his relationship with plaintiff. On January 28, 1999, plaintiff mailed defendant a letter demanding the return of the perfume products in his possession. Plaintiff also demanded that defendant return the perfume products in the possession of other consignees who entered into separate contracts with plaintiff.

Defendant returned all of the perfume in his possession to plaintiff. He also attempted to return the perfume of the other consignees as plaintiff requested. Nevertheless, on March 1, 1999, plaintiff filed a complaint against defendant, alleging breach of the consignment contract. The complaint alleged that plaintiff delivered merchandise on consignment to defendant and that defendant failed to tender the consignment price for the merchandise or return it to plaintiff in the same condition as received. The complaint alleged that defendant owed plaintiff a total of $31,236.44, plus court costs and attorney fees. The complaint was filed in the arbitration division. On defendant's first court appearance on March 31, 1999, an arbitration date of June 21, 1999, was assigned.

On April 1, 1999, defendant served plaintiff with a demand for a bill of particulars that sought a list of the merchandise delivered to defendant, a list of merchandise not returned or damaged, and a list of the cost of all items allegedly not returned or damaged. In response, plaintiff provided documentation indicating that it sought to hold defendant liable for 2,954 bottles of perfume at $10 per bottle not returned by other consignees, for 2,565 damaged perfume cartons at 50¢ per carton, and for freight charges in the amount of $500.37 for perfume returned by defendant to plaintiff.

Defendant filed a motion to continue the arbitration hearing and for time to conduct discovery. The motion asserted that defendant was unable to prepare his defense adequately because he was not in possession of any documents identifying the products delivered to the other consignees. He asserted that depositions of a representative of plaintiff and the other consignees were necessary to prepare for the arbitration hearing. The trial court allowed defendant an extension of time to file an answer to plaintiff's complaint but denied his motion to continue the arbitration hearing. Defendant filed an answer denying that he breached the consignment contract. His affirmative defenses indicated that plaintiff breached the agreement, that the agreement was not supported by consideration, that plaintiff destroyed evidence, and that the agreement was illusory and unconscionable.

The matter proceeded to arbitration as scheduled on June 21, 1999. The arbitration panel found in favor of defendant and against plaintiff. Plaintiff filed a notice of rejection of the arbitration award on July 13, 1999.

On July 15, 1999, defendant filed a motion for leave to file an amended answer and counterclaim. The motion asserted that, based on the deposition of Robert Hasty, vice-president of operations for plaintiff, taken the morning of the arbitration hearing, defendant learned that plaintiff was attempting to hold defendant liable for products delivered to eight other persons with their own contracts with defendant. Based on this testimony, defendant sought to file a counterclaim alleging that the contract at issue violated the Consumer Fraud Act. The trial court denied defendant's motion to amend his answer and set the matter for trial in September 1999.

The trial date was continued, and plaintiff filed a motion for summary judgment. The motion asserted that plaintiff entered into a consignment contract whereby defendant guaranteed the perfume delivered to other consignees. The motion asserted that, at the time of defendant's termination of the contract, defendant and other consignees referred by defendant were in possession of 6,563 bottles of perfume at a consignment price of $10 per bottle; that defendant returned 3,618 bottles of perfume to plaintiff on January 29, 1999; that 2,564 cartons for the bottles at 50ยข per carton were damaged at a replacement cost of $1,282.00; and that plaintiff incurred freight charges of $500.37 for the returned perfume bottles. Pursuant to the terms of the contract, plaintiff alleged that defendant owed a total of $31,236.44, which represented the cost of 2,945 bottles of perfume not returned by other consignees, freight charges, and damages to the returned cartons. The motion asserted that the terms of the contract ...

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