Malatesta v. Leichter

• Decision Date: 17 July 1989
• Docket Number: 1-88-0838,Nos. 1-88-0038,s. 1-88-0038
• Citation: Malatesta v. Leichter, 186 Ill.App.3d 602, 542 N.E.2d 768, 134 Ill.Dec. 422 (Ill. App. 1989)
• Parties: , 134 Ill.Dec. 422 Nicholas MALATESTA, Plaintiff-Appellee/Cross-Appellant, v. Leo LEICHTER, Defendant-Appellant/Cross-Appellee.
• Court: Appellate Court of Illinois

Page 768

542 N.E.2d 768

186 Ill.App.3d 602, 134 Ill.Dec. 422

Nicholas MALATESTA, Plaintiff-Appellee/Cross-Appellant, v. Leo LEICHTER, Defendant-Appellant/Cross-Appellee.

Nos. 1-88-0038, 1-88-0838.

Appellate Court of Illinois First District, First Division.

July 17, 1989.

Rehearing Denied Aug. 30, 1989.

Jenner & Block, Chicago, for defendant-appellant/cross-appellee (Thomas P. Sullivan, Russell J. Hoover, Barry Sullivan, Robert W. Kent, Jr., of counsel).

William J. Harte, Ltd. and Richard J. Prendergast, Ltd., Chicago, for plaintiff-appellee/cross-appellant. (William J. Harte, Richard J. Prendergast, James Prendergast, Joseph E. Tighe, of counsel).

Justice BUCKLEY delivered the opinion of the court:

This consolidated appeal arises from an action brought by Nicholas Malatesta (plaintiff) against Leo Leichter (defendant) for tortious interference with plaintiff's prospective economic advantage. Following a jury trial, plaintiff was awarded $2 million in compensatory damages and $225,000 in punitive damages.

Defendant appeals the jury award, raising the following issues for our review: (1) whether plaintiff is precluded as a matter of law from recovery; (2) whether the jury's findings are against the manifest weight of the evidence; (3) whether the trial court committed reversible error in excluding reference to plaintiff's concealment of a felony conviction; and (4) whether plaintiff made improper closing remarks which require a reversal. Plaintiff cross-appeals the trial court's denial of his motion for sanctions under section 2-611 of the Illinois Code of Civil Procedure (Ill.Rev.Stat.1987, ch. 110, par. 2-611) and Illinois Supreme Court Rule 219 (107 Ill.2d R. 219), presenting us with the question of whether the trial court erred in denying his motion. We affirm as to both these appeals.

BACKGROUND

In November 1978, plaintiff and James Lesniak entered into a buy-sell agreement ¹ with Robert Thompson for the purchase of Thompson Chevrolet in Villa Park, Illinois for $1.5 million, and they submitted an application to General Motors to obtain the required approval of the franchise purchase. In reviewing plaintiff's application on March 23, 1979, General Motors contacted defendant, the owner of Biggers Chevrolet in Elgin, Illinois, to confirm plaintiff's statement that he had owned, from 1970 through 1973, a one-third ownership interest in Biggers Chevrolet. Defendant informed General Motors that plaintiff had never had a prior ownership interest in Biggers Chevrolet. General Motors subsequently disapproved plaintiff's application, and plaintiff did not acquire the Thompson dealership.

Plaintiff's Efforts to Purchase Thompson Chevrolet

In his application to General Motors, plaintiff outlined his experience in automobile sales since 1953, his financial position and his and Lesniak's intent to each invest $250,000, and an additional sum of $100,000 in unsecured financing, if necessary. At trial, plaintiff explained that before applying for the Thompson Chevrolet dealership, he had been a retail automobile salesman, a wholesale manager, a partner in a new car dealership, ² an owner of a used car dealership, and an automobile wholesaler. Plaintiff also presented testimony from banker Robert Behr, who stated, in response to a hypothetical question, that he "would have recommended that [his bank] look favorably on trying to find a way to make a loan" to plaintiff to cover the operating expenses of Thompson Chevrolet in 1979, although he admitted that there were factors unknown at the time that would have been material to his bank's determination. Lesniak's father, Joseph Lesniak, an experienced automobile dealer, also testified that he would have "backed" his son "up" if he was unable to obtain the necessary financing.

On January 30, 1979, Thompson Chevrolet in Villa Park received "blueprint approval"--General Motors' determination to continue to operate a dealership at the seller/dealer's location. General Motors evaluated candidates for the dealership during the first three months of 1979. David Welday, the Chicago Zone Manager for the Chevrolet Division of General Motors from 1976 to 1980, testified as to General Motors' approval process. He stated that Zone Management evaluated all applicants to determine the best applicant, that an applicant who Zone Management recommended to Chevrolet's regional and central management became the "prime" candidate, and that the existence of a buy-sell agreement does not automatically make an applicant the "prime" candidate. Welday estimated that more than 10 other applicants were on file for the period, but not necessarily for any specific dealership location.

General Motors executive Matthew Harper, whose duties included evaluating applicants and proposals for dealerships, testified that he participated in evaluating plaintiff's application and that "as we had knowledge of a buy/sell [agreement] existing [with Thompson], that made Mr. Malatesta the prime candidate at that time." Welday, on the other hand, testified that General Motors preferred a person who he believed to be a "Mr. Lee," a black candidate.

Various documents were introduced by the parties in this regard. The request for blueprint approval signed by Welday, dated January 30, 1979, states that the Zone has a different applicant than the dealer's chosen applicant and that "management of the Zone is very interested in replacing this dealer point with a minority candidate." A March 13, 1979 memorandum to a General Motors executive which was prepared and signed by John M. Swetish, Harper's assistant manager, recommends that Thompson be notified that General Motors does not consider plaintiff to be the prime candidate. ³ Finally, a March 23, 1979 letter sent from Welday to Thompson states that General Motors is "diligently considering" plaintiff's application.

Following defendant's March 23, 1979 representations to General Motors, Welday, in a March 30 letter, informed Thompson that General Motors had disapproved plaintiff's application as the successor dealer operator of Thompson Chevrolet. In a letter dated June 8, 1979, R.P. Sullivan, an upper-level General Motors executive, notified Thompson that plaintiff had been disapproved because he had misrepresented his interest in Biggers Chevrolet. In response to plaintiff's attorney's pleas to General Motors for a reversal of its decision, General Motors enclosed, in a July 17 letter to plaintiff's attorney informing him that its decision was final, a copy of a July 2 letter from defendant to General Motors, wherein defendant denied plaintiff's prior ownership in Biggers Chevrolet.

At trial, plaintiff also introduced testimony from Harper that the June 8, 1979 letter from Sullivan correctly stated the reasons for General Motors' decision, that plaintiff was not rejected because General Motors wanted a minority dealer in that location, and that he knew of no other reason for rejection of plaintiff's application.

Plaintiff's Criminal Convictions

In his application for the Thompson Chevrolet dealership, plaintiff represented that he had never been convicted of a crime when in fact he had been convicted of larceny and rape in 1945. General Motors first became aware of plaintiff's criminal record in October 1979, after plaintiff had instituted this litigation and during the course of an investigation supervised by attorney Robert Hallock, who was hired by General Motors to represent it in the litigation.

Before trial, plaintiff moved to exclude any reference to his criminal convictions. Following a voir dire of Hallock and General Motors executive Donald Grieve as to the results of their investigation, the trial court ruled that plaintiff's convictions, as well as their concealment, could be referred to during the trial only as "misrepresentations." The court further rejected defendant's suggestion to refer to the convictions as a "felony conviction" and as a "misdemeanor conviction" or as "two crimes."

At trial, Hallock testified to numerous "misrepresentations" which his investigation had uncovered. As to plaintiff's criminal convictions, Hallock testified only that there were two other "inconsistencies," which in his opinion were serious. On cross-examination, plaintiff's counsel attacked the accuracy of many of the "misrepresentations," but conducted no cross-examination as to the criminal-conviction "misrepresentation." On cross-examination of plaintiff, defense counsel was also permitted to elicit from plaintiff that he had answered "no" to a question on his application which should have been answered "yes."

Grieve testified that the misrepresentations were the worst he had ever seen and that he would have recommended plaintiff's termination if plaintiff had obtained the dealership, although on cross-examination he admitted that he had never recommended the termination of any General Motors dealer. Testimony from Welday and Harper revealed that they also would have recommended plaintiff's termination.

Defendant made an offer of proof to the court that had he been permitted to inquire specifically into plaintiff's convictions, (1) Welday and Harper would have testified that plaintiff's criminal-conviction concealment would have warranted rejection of his application, (2) Harper would have testified that plaintiff's convictions would have warranted rejection of his application and that plaintiff's convictions and their concealment both would have been sufficient grounds for terminating plaintiff's dealership if they surfaced after he had obtained the dealership, and (3) Grieve would have testified that he would not have considered plaintiff's application if the convictions had been revealed and would have recommended plaintiff's termination if the facts were discovered after he obtained the dealership.

PLAINTIFF'S RELATIONSHIP WITH BIGGERS CHEVROLET

Defendant entered into a stock purchase agreement with Jerry Biggers of Biggers...