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Saletech, LLC v. East Balt, Inc.

Court of Appeals of Illinois, First District, Third Division

October 29, 2014

SALETECH, LLC, Plaintiff-Appellant,
v.
EAST BALT, INC., EAST BALT OF EASTERN EUROPE, LLC, and LOU-EL, LTD, All Individually and d/b/a/ East Balt Ukraine, and EAST BALT UKRAINE, Defendants-Appellees

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Appeal from the Circuit Court of Cook County. No. 12 L 18. The Honorable Thomas L. Mulroy, Jr., Judge, presiding.

SYLLABUS

In an action arising from the failure of an agreement plaintiff, a Ukrainian company, had with another Ukrainian company for the distribution of bakery products, the trial court properly dismissed plaintiff's amended complaint against three American companies that were not signatories to the distribution agreement but did have business connections to the Ukrainian signatory and agreed to honor the agreement if plaintiff would assist them in investigating and obtaining proof of suspected improprieties in the management of the signatory business, since plaintiff's amended complaint alleged breach of contract under a ratification theory, an agency theory, an alter ego theory, and promissory estoppel and unjust enrichment, but failed to allege that the added defendants had an agency relationship with the signatory and that they retained a benefit or expressed an intent to be bound by the distribution agreement, and plaintiff did not allege facts supporting the claim that the signatory was defrauding its creditors or that defendants received any benefit from plaintiff's assistance in the investigation.

FOR PLAINTIFFS-APPELLANTS: Kenneth C. Apicella, Drost, Gilbert, Andrew & Apicella, LLC, Palatine, Illinois.

FOR DEFENDANTS-APPELLEES: Kenneth L. Schmetterer, Eric M. Roberts, DLA Piper LLP, Chicago, IL.

JUSTICE HYMAN delivered the judgment of the court, with opinion. Justice Lavin and Justice Mason concurred in the judgment and opinion.

OPINION

HYMAN, JUSTICE.

Page 801

[¶1] After an agreement governed by Ukrainian law to distribute bakery products made by a Ukrainian company went sour, plaintiff, also a Ukrainian company, sued for breach of contract but never served the complaint on the Ukrainian company. Instead, plaintiff pursued three American companies that were not signatories to the contract asserting theories of agency, contract ratification, alter ego, promissory estoppel and unjust enrichment. The trial court granted defendants' motion to dismiss the third amended complaint under section 2-615 of the Illinois Code of Civil Procedure (Code) with prejudice. 735 ILCS 5/2-615 (West 2012). Plaintiff now asks us to reverse the order of dismissal and permit the case to proceed to discovery. We affirm, finding that the third amended complaint failed to state a cause of action for breach of contract under theories of agency, ratification, and alter ego, and also failed to state a claim for promissory estoppel and unjust enrichment.

[¶2] BACKGROUND

[¶3] Plaintiff Saletech, LLC (Saletech), is a distribution company organized under the laws of the Ukraine. Defendants are (i) East Balt Ukraine (EB Ukraine), organized under the laws of Ukraine and registered with the Ukraine government as an " Enterprise with Foreign Investments," and three American entities--(ii) East Balt, Inc. (EB Inc.), a Delaware corporation with its principal place of business in Chicago, which owns commercial bakeries globally and is the parent company of (iii) East Balt of Eastern Europe, LLC (EB Europe), an Illinois limited liability company with its principal place of business in Chicago, which in turn, owns EB Ukraine. (Another defendant, Lou-El, Ltd., a subsidiary of EB Inc. and a Delaware company with its principal place of business in Chicago, had no ownership interest in or involvement with EB Ukraine and was not the subject of any claims or allegations in the third amended complaint. Accordingly, we affirm the dismissal of Lou-El, Ltd.)

[¶4] On August 12, 2011, Saletech entered into an agreement with EB Ukraine to be the exclusive distributor of its bakery products. Under the agreement, which was amended on September 15, 2011, Saletech would buy and distribute on a monthly basis a minimum of 4 million units of EB Ukraine's bakery items. Saletech contends that less than two months later, in November, EB Ukraine breached the agreement. Saletech contacted EB Ukraine's general director but when the problem was not resolved, Saletech's vice president, Simon Gordon, contacted Edward Gin, EB Inc.'s vice president and chief financial officer, who put Gordon in touch with Stuart Lee, EB Inc.'s executive vice president of the European region. According to Gordon, Lee told him EB Inc. and EB Europe suspected improprieties by management at EB Ukraine, and stated that if Saletech would help investigate and obtain proof of those improprieties, EB Ukraine's management team would be replaced and the terms of the exclusive distribution agreement would be honored. Saletech agreed to help and claims it incurred all sorts of expenses, including frequent flights from Ukraine to Chicago to meet with EB Inc. representatives and the cost of hiring armed security, which it claimed it needed to protect its offices and personnel after EB Ukraine sent threatening text messages.

[¶5] The record does not reveal whether the investigation uncovered any improprieties or whether EB Ukraine's management was replaced but ...


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