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Paul J. Salce v. Young Sil Saracco

May 12, 2011

PAUL J. SALCE,
PLAINTIFF-APPELLANT,
v.
YOUNG SIL SARACCO, A/K/A YOUNGSIL CHO, AND JOHN LACKOS, DEFENDANTS-APPELLEES
(EURO WORLD WINES, INC., DEFENDANT).



Appeal from the Circuit Court of Du Page County. Honorable Dorothy F. French, Judge, Presiding. No. 06-L-1018

The opinion of the court was delivered by: Justice Schostok

JUSTICE SCHOSTOK delivered the judgment of the court, with opinion. Justices Bowman and Birkett concurred in the judgment and opinion.

OPINION

The plaintiff, Paul Salce, appeals from the orders of the circuit court of Du Page County dismissing his first amended complaint and granting the motion of the defendants, Young Sil Saracco and John Lackos,*fn1 for judgment on the pleadings as to his second amended complaint. On appeal, the plaintiff argues that the trial court misinterpreted the parties' shareholders' agreement. We affirm.

On October 17, 2006, the plaintiff filed a complaint sounding in breach of contract. The complaint alleged that the plaintiff and the defendants formed the corporation Euro World Wines, Inc., and on October 31, 2003, entered into a shareholders' agreement. The corporation was established to sell spirits, wine, beer, olive oil, and water cider. The plaintiff held 51% of the shares of the corporation and the defendants each held 24.5% of the shares. The shareholders' agreement provided in pertinent part:

"Article 4. Contributions to Corporation

Future Contributions

Section 4.01. Each Shareholder shall be obligated to make the advances as hereinafter set forth in this Paragraph, until such obligations shall be terminated by a vote of the holder(s) of fifty-one percent (51%) or more of the stock of the Corporation. Each Shareholder shall advance to the Corporation the Shareholder's pro rata share (the ownership percentage set opposite the name of each Shareholder on page 1 of this Agreement) of all costs, expenses, or charges with respect to the operation of the Corporation and the ownership, operation, maintenance and upkeep of any Corporation Property, including but not limited to ad valorem taxes, debt amortization (including interest payments), insurance premiums, repairs, costs of capital improvements made on approval by the Shareholders as herein provided, management fees or salaries, advertising expenses, professional fees, wages and utility costs, to the extent such costs, expenses, or charges exceed the income, if any, derived from the Corporation and the proceeds of any loans made to the Corporation.

The holder(s) of fifty-one percent (51%) or more of the stock of this Corporation may estimate the cash requirements of the Corporation for periods of up to one (1) year in advance and request payment of each Shareholder's pro rata share of said estimated cash requirements, and each Shareholder shall pay said amount within ten (10) days after receiving a statement thereof."

The corporation conducted business through 2006. On February 16, 2006, the plaintiff tendered to the defendants a capital call, requesting them to pay their pro rata shares of the corporate liabilities. The defendants refused to pay those amounts. The plaintiff thereafter filed a complaint for breach of contract.

On December 7, 2006, the defendants filed a request for a bill of particulars as to the corporation's income as well as the costs, expenses, and charges that it had incurred. On May 8, 2007, the plaintiff filed a revised bill of particulars. In that bill, the plaintiff indicated that he, or companies that he owned, had loaned $212,889 to the corporation. He indicated that none of those loans had been repaid. The plaintiff further indicated that for 2002 through 2007, the corporation had total revenues of $143,753 and total losses of $275,237. This resulted in a net loss of $131,484.

On June 4, 2007, the defendants filed a motion to dismiss the plaintiff's amended complaint, pursuant to section 2-615 of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2-615(a) (West 2008)). The defendants argued that the plaintiff's bill of particulars revealed that the corporation's income plus loans received exceeded the corporation's actual out-of-pocket expenses. As such, the defendants insisted that a capital call could not be made under section 4.01 of the shareholders' agreement. The defendants therefore argued that the amended complaint had failed to state a valid cause of action.

On June 11, 2008, following a hearing, the trial court granted the defendants' motion to dismiss the plaintiff's complaint with prejudice with regard to a "current capital call." The trial court, however, granted the plaintiff leave to file a second amended complaint under a "future needs capital call" theory.

On August 6, 2008, the plaintiff filed a second amended complaint. Count I alleged a breach of the capital call provisions contained in the second paragraph of section 4.01 of the shareholders' agreement. Count I alleged that the plaintiff had notified the defendants of the corporation's anticipated cash-flow obligations over the next 12 months, including the repayment of loans that were owed to the plaintiff. The plaintiff alleged that the defendants failed to pay their pro rata shares of said capital call within 10 days after receiving the request. Count II of the plaintiff's second amended complaint restated the allegations of the first ...


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