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Pancoe v. Singh

September 17, 2007

ROBERT PANCOE, PLAINTIFF-APPELLEE,
v.
GULZAR SINGH, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. No. 02 CH 4757. Honorable Barbara Disko, Judge Presiding.

The opinion of the court was delivered by: Justice Robert E. Gordon

Published opinion

In 2002, Robert Pancoe sued Gulzar Singh for breach of an agreement calling for the dissolution of an alleged joint venture between the parties. According to plaintiff, the underlying venture was for the operation of Pan-Oceanic Engineering Co. (Pan-Oceanic), and N.K. Contracting and Equipment Co. (N.K.). Following a bench trial, the circuit court of Cook County entered judgment in favor of plaintiff and awarded damages in the amount of $92,959. Defendant appeals, arguing, among other things, that (1) the trial court erred in (a) denying defendant's motion for judgment on the pleadings pursuant to section 2-615(e) of the Code of Civil Procedure (Code) (735 ILCS 5/2-615(e) (West 2004)), and (b) denying defendant's motion for judgment at the close of plaintiff's case pursuant to section 2-1110 of the Code (735 ILCS 5/2-1110 (West 2004)); (2) the evidence was insufficient to establish the existence of the underlying venture; (3) the trial court should not have allowed defendant's expert witness to testify in plaintiff's case, in violation of Rule 213(f) (210 Ill. 2d R. 213(f)); (4) the trial court lacked jurisdiction to enter the judgment; and (5) the court's damages award was not supported by the evidence. Plaintiff cross- appeals, arguing that the trial court erred in awarding only $92,959 in damages rather than the $433,976.71 urged by plaintiff. For the reasons set forth below, we affirm the judgment of the circuit court, as modified.

BACKGROUND

In October 2002, plaintiff filed a three-count verified amended complaint against Singh, Pan-Oceanic and N.K. Counts I and II sought the involuntary dissolution of Pan-Oceanic and N.K., respectively, pursuant to the Illinois Business Corporation Act of 1983 (Act) (805 ILCS 5/1.01 et seq. (West 2004)). Count III of the complaint was against Singh for breach of contract. In June 2003, upon motion of defendants, the circuit court dismissed counts I and II against Pan-Oceanic and N.K. From this point forward, the case proceeded solely against Singh for breach of contract.

In count III of the amended complaint--the only remaining count--plaintiff alleged that he and defendant entered into an agreement "in or about 1998" to create and operate Pan-Oceanic, a construction company. Plaintiff further alleged that "[i]n or about the spring of 2000," he and defendant agreed to create and incorporate N.K., a small equipment rental company. According to plaintiff, the two men intended to operate Pan-Oceanic and N.K. "as a single venture" in which N.K. would serve as an equipment rental subcontractor on Pan-Oceanic's construction projects.

Plaintiff also alleged that in early 2001 he told defendant that he was dissatisfied with certain personnel decisions defendant had made, and plaintiff wanted to end his affiliation with the venture by the end of 2001. Plaintiff asserted that "[o]n or about September 17, 2001," he and defendant entered into a written agreement for the dissolution of the venture. A copy of this one- page agreement, showing signatures by both parties, was attached to plaintiff's complaint. The agreement included, inter alia, the following stipulations: (1) any money the venture received for projects then under contract was to be deposited in Pan-Oceanic's checking account, (2) no new contracts were to be entered into on behalf of the venture, and (3) upon payment of all venture obligations, any amounts remaining in the checking account were to be disbursed equally to the two parties. The agreement was titled, "Memorandum of Agreement Between Gulzar Singh and Robert Pancoe re dis[s]olution of Venture known as Pan-Oceanic Engineering Co. and N.K. Contracting and Equipment Co. Dated this 17th Day of September, 2001 And covering all projects under contract as of this date."

According to the amended complaint, defendant breached this agreement in that, "since September 17, 2001, he has, without notice to Pancoe or Pancoe's knowledge or consent, bid for work on behalf of the Venture, failed to report payments on accounts receivable, failed to supply Pancoe with an accounting of the venture's profits and money, used the venture's funds for new business and revived a previously suspended contract." Plaintiff sought, as damages, the amount to which he was entitled "in accordance with the Agreement." Plaintiff added that, because he lacked access to the venture's books and records, he was uncertain, at that time, as to the precise amount that was due.

In his amended answer to count III of the complaint, defendant acknowledged the existence of Pan-Oceanic and N.K. but denied that he and plaintiff agreed to create the two companies. Defendant also denied that he and plaintiff intended to operate Pan-Oceanic and N.K. as a single venture. With regard to the agreement for dissolution of the venture, defendant admitted that he signed the agreement in his individual capacity but stated that his signature was procured through fraud, misrepresentation and duress.

Defendant alleged, as an affirmative defense, that he signed the dissolution agreement under duress and the contract therefore was void and unenforceable. Defendant described the September 2001 meeting where the agreement was signed and claimed that, during this meeting, which was attended only by plaintiff and defendant, plaintiff physically threatened him. According to defendant, plaintiff told him that if he did not sign the agreement, plaintiff would "do something" to defendant that defendant would not like, and defendant would "totally disappear." Defendant stated that he signed the document "out of fear for his personal safety and well-being." Defendant alleged, in addition, that he could not read the document because plaintiff "deliberately placed his hand over the wording."

In March 2005 plaintiff filed witness disclosures pursuant to Supreme Court Rule 213(f) (210 Ill. 2d R. 213(f)). Plaintiff's disclosures included one independent expert witness, Christopher O. Ihejirika, who had formerly done accounting work for Pan-Oceanic. Among the expert witnesses disclosed by defendant was Dennis Steffens, who succeeded Ihejirika as PanOceanic's accountant. According to defendant's Rule 213(f) disclosures, the subjects about which Steffens was to testify included (1) the total net profit from Pan-Oceanic's contracts that were outstanding at the time plaintiff's relationship with Pan-Oceanic ended, and the calculation of that profit, and (2) the interpretation of Pan-Oceanic's and N.K.'s financial statements and income tax returns. It is undisputed that Steffens was not named in plaintiff's Rule 213(f) disclosures.

On April 30, 2005, plaintiff served Steffens with a trial subpoena and a deposition subpoena. Steffens' deposition took place on May 12, 2005, with defendant present.

On May 31, 2005, just prior to the start of trial, defendant moved for judgment on the pleadings pursuant to section 2-615(e) of the Code (735 ILCS 5/2-615(e) (West 2004)). Defendant pointed to his previously asserted affirmative defense that he had signed the dissolution agreement under duress. Defendant noted that plaintiff never filed an answer to this affirmative defense. According to defendant, plaintiff's failure to respond constituted an admission of the truth of all facts alleged in the affirmative defense. Defendant contended, therefore, that because the contract was signed under duress, it was void and unenforceable, and judgment should be entered in his favor on the pleadings. The trial court denied the motion.

Plaintiff appeared as a witness in his own case.*fn1 A portion of plaintiff's testimony dealt with the execution of the dissolution agreement. Plaintiff stated, among other things, that he and defendant signed the agreement during a meeting on September 17, 2001, in plaintiff's office in Cicero, Illinois. According to plaintiff, he showed defendant a copy of the contract and the two of them "went over the provisions" and "mutually agreed" that those provisions were the basis of their agreement. Plaintiff denied making any threats against defendant to force him to sign the agreement. On cross-examination, plaintiff acknowledged that there was no written document reflecting the underlying agreement between him and defendant to operate Pan-Oceanic and N.K. as a single venture.

On June 1, 2005, the second day of trial, plaintiff indicated that he intended to call defendant's expert witness, Dennis Steffens (Pan-Oceanic's accountant), to testify in plaintiff's case-in-chief. Defendant objected and orally moved to bar Steffens from testifying. Defendant noted that plaintiff, in his Rule 213(f) disclosures, did not disclose Steffens as a witness. Defendant complained that he was given no notice that plaintiff planned to call defendant's witness to testify in plaintiff's case, and defendant argued that Steffens therefore should be prohibited from so testifying. The trial court denied defendant's motion and allowed Steffens to testify in plaintiff's case. The parties and the court agreed that this testimony was not to exceed Steffens' deposition testimony.

Much of Steffens' testimony dealt with financial statements he had prepared for Pan-Oceanic. Steffens explained how he had arrived at some of the key figures set forth in the statements. He also explained how some of these figures related to a damages analysis he had prepared in the case at bar, at the request of defense counsel. In one portion of this damages analysis, Steffens calculated the actual profitability of the six Pan-Oceanic projects which were under contract in September 2001 when the dissolution agreement was signed, as compared with previous estimates of these projects' profitability.*fn2 According to Steffens, these jobs, whose future earnings were projected at about $22,000, actually ended up losing more than $152,000. Steffens also testified, under extensive questioning from plaintiff's counsel, regarding Steffens' assessment of overhead to these six projects.

At the conclusion of plaintiff's case, defendant filed a motion for judgment in his favor pursuant to section 2-1110 of the Code. According to defendant, plaintiff failed to prove the existence of a valid and enforceable contract and therefore failed to establish a prima facie case of breach of contract. Defendant noted that the agreement in question was for the dissolution of a "Venture" between plaintiff and defendant for the operation of Pan-Oceanic and N.K. Defendant argued that in order for plaintiff to prove the validity of this contract for dissolution of the venture, plaintiff must first establish the existence of the underlying venture itself. Defendant contended in his motion that plaintiff presented no evidence that this venture existed. The circuit court denied defendant's motion.

Also at the conclusion of plaintiff's case, defendant renewed his motion for judgment on the pleadings pursuant to section 2-615(e) of the Code. Defendant argued, as he had prior to trial, that plaintiff's failure to file an answer to defendant's affirmative defense of duress constituted an admission of all facts alleged in that defense. According to defendant, his defense that he signed the agreement under duress was established as a matter of law, and the contract thus was void and unenforceable. The circuit court denied this motion as well.

In his case-in-chief, defendant presented evidence in support of his affirmative defense of duress. Testifying in his own case, defendant described the September 2001 meeting where the dissolution agreement was signed. Defendant stated, as he had in his amended answer to plaintiff's complaint, that he signed the agreement under duress after plaintiff physically threatened him. Defendant added that he could not see what he was signing because plaintiff blocked his view of the document. According to defendant, he signed what he thought was a blank piece of paper.

Besides adducing evidence in support of his affirmative defense of duress, defendant also presented evidence in support of his claim, in his section 2-1110 motion, that plaintiff failed to establish the existence of the underlying venture for the operation of Pan-Oceanic and N.K. Defendant testified in his case-in-chief that plaintiff was not an owner of either company and that defendant never had an agreement or understanding with plaintiff regarding the ownership or operation of Pan-Oceanic or N.K.

Also testifying in defendant's case was Dennis Steffens, defendant's expert witness who had testified in plaintiff's case. In his testimony in defendant's case, Steffens explained the steps he had taken in preparing a damages analysis in the case at bar. Portions of this analysis were based on financial statements Steffens had prepared for Pan-Oceanic. According to Steffens' damages analysis, the amount remaining to be split between plaintiff and defendant (under the dissolution agreement) totaled $54,847. Steffens testified that, based on this $54,847 figure, plaintiff's 50% share would be $27,424. Steffens added that he had no opinion as to whether plaintiff was entitled to any amount under the agreement.

In closing argument, plaintiff's counsel relied on relevant financial statements and Steffens' analysis to determine the amount of plaintiff's damages claim. Plaintiff adopted much of Steffens' analysis and approach, but disagreed with certain parts. Plaintiff expressly adopted, for example, Steffens' conclusion regarding the profitability of the projects which were under contract at the time the dissolution agreement was signed. According to Steffens, these projects, whose future earnings were projected at about $22,000, actually ended up losing $152,310. Although plaintiff adopted this and other portions of Steffens' approach, he rejected the amount of overhead Steffens assessed (for the year ending February 28, 2002) against the projects which were under contract when the dissolution agreement was signed.

According to plaintiff, the total amount available to be split between plaintiff and defendant under the dissolution agreement was $867,953.43 (as opposed to Steffens' figure of $54,847). Plaintiff argued that his 50% share, therefore, was $433,976.71 (in contrast to Steffens' amount of $27,424).

Following closing arguments, defendant once again renewed his motion for judgment on the pleadings pursuant to section 2-615(e) of the Code and his motion for judgment pursuant to section 2-1110. The circuit court again denied these motions.

On June 28, 2005, the circuit court entered judgment in favor of plaintiff and against defendant in the amount of $92,959. In reaching this decision, the court concluded, contrary to defendant's assertions, that (1) plaintiff contributed money to the business as a capital contribution, and (2) plaintiff and defendant were operating the business as partners based on an oral agreement to that effect. The court also ...


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