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Semir D. Sirazi and Pe Chicago, LLC v. Panda Express

January 13, 2011

SEMIR D. SIRAZI AND PE CHICAGO, LLC, PLAINTIFFS,
v.
PANDA EXPRESS, INC., PANDA RESTAURANT GROUP, INC., CITADEL PANDA EXPRESS, INC., ANDREW
CHERNG, AND PEGGY CHERNG, DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

Plaintiffs Semir Sirazi and PE Chicago, LLC have moved the Court to reconsider its December 13, 2011 decision denying their motion for summary judgment and granting in part defendants' motion for summary judgment [docket no. 228]. Sirazi v. Panda Express, Inc., No. 08 C 2345, 2011 WL 6182424 (N.D. Ill. Dec. 13, 2011). The present decision assumes familiarity with the December 13 decision. For the reasons stated below, the Court denies plaintiffs' motion.

Discussion

Plaintiffs argue that the Court's previous decision makes both a manifest error of fact and manifest errors of law.

A. Claimed factual error

One of Sirazi's claims against Panda Express is that Panda Express fraudulently concealed from him the fact that it was buying PE Chicago's stake in the Rezko-Citadel partnership. Panda Express moved for summary judgment, arguing that Sirazi could not show that Panda Express had a duty to disclose the sale of PE Chicago's interest to him as the claim requires. See Neptuno Treuhand-Und Verwaltungsgesellschaft MBH v. Arbor, 295 Ill. App. 3d 567, 573, 692 N.E.2d 812, 817 (1998). One of Sirazi's arguments in response was that Panda Express had a duty to disclose the sale to him because he was an owner of PE Chicago.

The Court declined to enter summary judgment for Panda Express on this claim because Sirazi provided enough evidence for a reasonable jury to find that he was an owner of Rezko Concessions, Inc. (Concessions) and Rezko Enterprises, LLC (Enterprises) and that PE Chicago was an alter ego of both companies, such that Sirazi was effectively an owner of PE Chicago. From this conclusion, a reasonable jury could find that Panda Express had a duty to tell him that it was buying PE Chicago's interest in Rezko-Citadel. Sirazi provided evidence that he was an owner of Concessions and Enterprises because he had received ownership interests in the companies through the terms of a guarantee that he provided to Antoin Rezko and a stock pledge made to him by a business association of Rezko.

Although the Court's previous decision denied summary judgment on Sirazi's fraudulent concealment claim as a whole, the Court stated that a reasonable jury could not use other evidence that Sirazi had provided to conclude that he was an owner of Concessions and Enterprises. Sirazi, 2011 WL 6182424, at *9. Sirazi's other evidence consisted of warrants that he could exercise to obtain an ownership interest in the companies. The warrant agreements specifically provided, however, that until Sirazi exercised the warrants, he did not have the rights of an owner of either company. Mot. to Reconsider, Ex. 1 ¶ 6; Compl., Ex. 3 ¶ 5. Sirazi provided no evidence that he had exercised the warrants at the time that PE Chicago sold its interest to Panda Express.

Sirazi also seemed to argue that he would have exercised the warrants before the sale if he had been given notice of the sale, which was defined as a liquidity event under the warrant agreements. In its previous decision, the Court stated that the warrant agreements did not require the companies to give notice to Sirazi if a liquidity event occurred. Sirazi, 2011 WL 6182424, at *8. Plaintiffs claim that this statement was a manifest error of fact by the Court.

The warrant agreements did not expressly require that Enterprises and Concessions give notice of a liquidity event to Sirazi. Each agreement contained a provision requiring that the companies redeem Sirazi's warrants for a large amount of cash if a liquidity event, as defined in the agreements, occurred. Mot. to Reconsider, Ex. 1 ¶ 5; Compl., Ex. 3 ¶ 4. Neither of these clauses provided that the companies were to give notice to Sirazi of a liquidity event. Plaintiffs make two arguments that notice was nonetheless required.

First, plaintiffs note that the redemption provision of the warrants required the companies to give Sirazi notice when the warrants were redeemed. Mot. to Reconsider, Ex. 1 ¶ 2; Compl., Ex. 3 ¶ 2. Nothing in these provisions, however, required the companies to give Sirazi notice of a liquidity event. Concessions and Enterprises never redeemed the warrants and thus never gave notice to Sirazi. As set out in the warrant agreement, his remedy for the companies' failure to redeem the warrants was to "pursue all remedies available to him at law or in equity or exercise the Warrants." Mot. to Reconsider, Ex. 1 ¶ 5.

Second, plaintiffs state that Sirazi was entitled to exercise the warrants in return for ownership stakes in the companies forty-five days after the occurrence of a liquidity event. Mot. to Reconsider, Ex. 1 ¶ 4; Compl., Ex. 3 ¶ 3. They argue that Sirazi could know when the forty-fifth day after a liquidity event only if Concessions and Enterprises provided him with notice of the event. The warrant agreements also provide, however, that Sirazi could exercise the warrants at any time between August 30, 2003, and August 31, 2006. Id. The liquidity event in question, the sale of PE Chicago's interest in the Rezko-Citadel partnership to Panda Express, occurred on June 1, 2006. At the time, Sirazi could exercise his warrants without restriction. There was thus no need for him to be told of a trigger enabling him to exercise his warrants.

In sum, the Court's decision did not make a manifest error of fact when it stated that the warrant agreements did not require Enterprises and Concessions to ...


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