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Kirk v. Young

United States District Court, N.D. Illinois, Eastern Division

June 18, 2015

PHILIP KIRK, Plaintiff,
v.
JACK YOUNG, ROBERT NOVICK, and KIRBY SHEET METAL WORKS, INC., an Illinois Corporation, Defendants.

MEMORANDUM AND OPINION

JAMES B. ZAGEL, District Judge.

Plaintiff Philip Kirk ("Plaintiff") has brought this action against Defendants Jack Young, Robert Novick, and Kirby Sheet Metal Works, Inc. ("Defendants"), alleging breach of contract (Count I) and seeking declaratory judgment (Count II) and specific performance (Count III). Defendants answered Plaintiff's Complaint and filed a counterclaim alleging breach of contract by Plaintiff. Plaintiff and Defendants have filed cross motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the following reasons, partial summary judgment is granted in favor of Plaintiff.

I. STATEMENT OF FACTS

In 1996, Philip Kirk, Jack Young, Robert Novick, and Richard Ralph, shareholders of Kirby Sheet Metal Works, Inc. ("Corporation"), entered into a Shareholder Agreement ("Agreement"). At this time, Kirk, Young, and Novick were the Corporation's officers and directors. On March 1, 2000, Plaintiff received a letter from Ralph wherein he stated his intention to resign from the Corporation on June 1, 2000. Ralph provided more than sixty (60) days' notice of his intention to resign. Plaintiff and Defendants purchased Ralph's shares approximately ninety (90) days after his notice, on June 1, 2000. Thereafter, Ralph was permitted to hold office in the Chicagoland Sheet Metal Contractor's Association pursuant to a Consulting Agreement, See Ex. 1.C, and Kirk, Young, and Novick each owned one-third (1/3) of the Corporation's shares.

On or around March 1, 2013, Plaintiff sent and Defendants received Kirk's letter of resignation, effective August 30, 2013, from his position as Vice President, Member of the Board of Directors, and employee of Kirby Sheet Metal Works, Inc. One hundred eighty (180) days after March 1, 2013 was August 28, 2013. Young and Novick did not suggest to Plaintiff that there was a problem or defect with Plaintiff's notice of resignation. Plaintiff did not learn that Young, Novick, and the Corporation were claiming a defect with his written notice of retirement until on or around November 15, 2013, through a letter from Defendants' attorney that Defendants had no obligation to purchase Plaintiff's shares pursuant to the terms of the Agreement because Plaintiff's notice was defective.

II. LEGAL STANDARD

Summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of triable fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Pugh v. City of Attica, Ind., 259 F.3d 619, 625 (7th Cir. 2001). The Court's "function is not to weigh the evidence but merely to determine if there is a genuine issue for trial." Bennett v. Roberts, 295 F.3d 687, 694 (7th Cir. 2002).

Once the moving party has set forth the basis for summary judgment, the burden then shifts to the nonmoving party who must go beyond mere allegations and offer specific facts demonstrating that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); see Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The nonmoving party must offer more than "[c]onclusory allegations, unsupported by specific facts" in order to establish a genuine issue of material fact. Payne v. Pauley, 337 F.3d 767, 773 (7th Cir. 2003) (citing Lujan v. Nat'l Wildfire Fed'n, 497 U.S. 871, 888 (1990)). A party will be successful in opposing summary judgment only if it presents "definite, competent evidence to rebut the motion." EEOC v. Sears, Roebuck & Co., 233 F.3d 432, 437 (7th Cir. 2000). I consider the record in the light most favorable to the nonmoving party, and draw all reasonable inferences in the nonmoving party's favor. Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002).

III. DISCUSSION

There are no material facts in dispute in this case; rather, the central issue before the court is one of contract interpretation: what notice was required under 4.01 of the Agreement. Parties offer differing interpretations of how many days' notice was required under the "sixty (60) days written notice" provision of the Agreement. Specifically, Plaintiff argues that the notice required under the Agreement was at least sixty days, while Defendants maintain that the Agreement required exactly sixty days. Based on the grounds that Plaintiff allegedly provided defective notice by providing more than sixty days' notice, Defendants Young, Novick, and the Corporation refused to repurchase Plaintiff's shares in the Corporation. Plaintiff alleges that he provided Defendants adequate notice pursuant to the Agreement, but that Defendant breached the Agreement by (1) refusing to provide the personal guarantee to secure payment of the Corporation's purchase of Kirk's shares and (2) failing to purchase Kirk's shares for $463, 329.00 within 180 days from the date it received the notice.

Under Illinois law, the Court's "primary objective in construing a contract is to give effect to the intent of the parties." Pamado, Inc. v. Hedinger Brands, LLC, 785 F.Supp.2d 698, 706 (N.D. Ill. 2011)(citing Gallagher v. Lenart, 226 Ill.2d 208, 314 Ill.Dec. 133, 874 N.E.2d 43, 58 (2007)). "A court must initially look to the language of a contract alone, as the language, given its plain and ordinary meaning, is the best indication of the parties' intent." Id. Moreover, "because words derive their meaning from the context in which they are used, a contract must be construed as a whole, viewing each part in light of the others." Id. "The intent of the parties is not to be gathered from detached portions of a contract or from any clause or provision standing by itself." Id.

Here, the Agreement, in relevant part, provides:

4. Option Upon Termination of Employment
4.01 If a Shareholder intends to retire from employment by the Corporation, he shall give sixty (60) days written notice to the Corporation and the remaining Shareholders of his intention to so retire. Within one eighty sixty (180) [sic] days of the date of the remaining Shareholders receipt of the notice the remaining Shareholders may exercise an option to purchase, pro rata, all of the shares of the retiring Shareholder. If the remaining Shareholders do not purchase all of the shares of the retiring Shareholder within the time period specified herein, ...

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