Nomanbhoy Family Ltd. v. Mcdonald's Corp.

• Citation: 579 F.Supp.2d 1071
• Decision Date: 30 September 2008
• Docket Number: No. 08 C 3787.,08 C 3787.
• Court: U.S. District Court — Northern District of Illinois
• Parties: NOMANBHOY FAMILY LIMITED PARTNERSHIP, Plaintiff, v. McDONALD'S CORPORATION, Mc-Donald's USA, LLC, Rick Levin & Associates, Inc., and Rick Levin, Defendants.

579 F.Supp.2d 1071

NOMANBHOY FAMILY LIMITED PARTNERSHIP, Plaintiff, v. McDONALD'S CORPORATION, Mc-Donald's USA, LLC, Rick Levin & Associates, Inc., and Rick Levin, Defendants.

No. 08 C 3787.

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

September 30, 2008.

COPYRIGHT MATERIAL OMITTED

Stuart Michael Widman, Miller Shakman & Beem LLC, Chicago, IL, for Plaintiff.

Brian C. Haussmann, Karina H. De-Hayes, Tabet Divito & Rothstein, LLC, Thomas F. Falkenberg, Williams Montgomery & John, Ltd., Robert Michael McCann, Wildman, Harrold, Allen & Dixon, LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER RE: PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

JEFFREY COLE, United States Magistrate Judge.

INTRODUCTION

The Complaint charges that on June 18, 2008, the plaintiff entered into a written contract with McDonald's Corporation and McDonald's USA, LLC ("McDonald's") to purchase five parcels of property in Wisconsin, Indiana and Illinois, and that the next day, McDonald's breached the agreement and sold the properties at auction to other purchasers. The closings are scheduled for October 6. The Complaint seeks injunctive relief prohibiting McDonald's from closing and, alternatively, damages for breach of contract of not less than $5,000,000

On August 4, 2008, the district court granted the plaintiff's Motion For A Temporary Restraining Order and extended it for another 10 days on August 15. It has since expired. The parties have consented to jurisdiction here for the limited purpose of deciding the plaintiff's Motion For A Preliminary Injunction. See 28 U.S.C. § 636(c).

McDonald's contends (1) that the plaintiff rejected McDonald's written offer (Exhibit A to Complaint) early in the morning of June 18—that fact is undisputed—and that a valid and enforceable contract was never formed because the parties' subsequent all-day negotiations did not result in a "meeting of the minds" on all essential terms; (2) that if there was a "meeting of the minds" on June 18, essential terms of the agreement were that the agreement was not to be binding until reduced to writing, executed by the plaintiff, and sent to McDonald's before 1:00 p.m. CDT on June 19 before the auction began; (3) since those conditions precedent did not occur, there was no binding contract, and McDonald's was free to sell the property at auction; and (4) that the Statute of Frauds' requirement that a contract for the sale of land be in writing has not been satisfied and thus the plaintiff cannot prevail.

The plaintiff has filed notices of lis pendens on all five parcels of land purchased at the June 19 auction. Under the terms of the auction contracts, If McDonald's cannot deliver clear title by a date certain, the purchasers are entitled to a return of their earnest money deposits, and Mc-Donald's will have no further obligations to them.

I. THE PROCEEDINGS BEFORE THE DISTRICT COURT

On August 4, 2008, the district court entered an order temporarily restraining the defendants from closing on one of the parcels on August 5. The other four closings were scheduled for October 6, 2008. After considering the complaint, the memorandum in support of the motion for injunctive relief, the arguments of counsel, and the affidavit of Shamir Nomanbhoy,¹ the court found that the plaintiff had shown a likelihood of success on the merits because the evidence indicated that there was "a meeting of the minds" of the parties on June 18 regarding the sale of the five parcels. (Temporary Restraining Order of August 4, 2008, ¶ 1). The court also found that the plaintiff would suffer irreparable harm if the defendants sold those properties to other purchasers, that it had no adequate remedy at law, and that the balance of equities weighed in the plaintiffs favor. The TRO was set to expire on August 14, 2008.

The plaintiff moved to extend the TRO on August 13. In the interim, McDonald's had submitted its own briefs with exhibits comprised of affidavits of its in-house counsel, Bruce Neumann, Mary Meyer, McDonald's Regional Real Estate Manager for the Chicago Region, and Ira Lauter, an associate at Rick Levin and Associates, Inc., which was acting on behalf of Mc-Donald's and was to be the auctioneer of the properties. Also submitted were the email communications between the parties on June 18, 19, and 20.

On August 14, plaintiff filed a reply brief. While conceding that McDonald's initial offer sent early in the morning of June 18 to Mr. Nomanbhoy was rejected and that over the course of the next ten hours there were numerous offers and counteroffers involving the key terms of the deal, (see also Complaint, ¶ 13, admitting continued negotiations), the reply brief argued that in the evening on June 18, Mr. Lauter verbally suggested that the parties return to the original written offer that had been rejected by the plaintiff 10 hours earlier, and that Nomanbhoy agreed. McDonald's vehemently denied the allegation.

McDonald's responded on the 14th with a motion for leave to file a sur-reply, which argued that in Illinois an offer once rejected ceases to exist and cannot thereafter be accepted, that the Statute of Frauds required that the purported verbal agreement to go back to the rejected offer itself had to be in writing and signed by Mc-Donald's to be enforceable. The next day, August 15, the district court granted the plaintiffs motion to extend the TRO for an additional ten days. The court again found that the plaintiff had demonstrated a likelihood of success on the merits, irreparable harm, lack of adequate legal remedy, etc. The Order extending the TRO made no mention of the claimed verbal agreement between McDonald's and plaintiff on the evening of June 18 or of the Statute of Frauds argument raised by McDonald's.

The Order concluded that as a consequence of an email sent by McDonald's to Mr. Nomanbhoy at 11:30 a.m. CDT on the morning of the 19th, all that was required for performance by the plaintiff was that the earnest money deposit be wire-transferred before the auction commenced at 1:00 p.m. CDT. (Order at 2-5, 7):

[McDonald's] was emphatically clear to Nomanbhoy [in the email] that the validity of the contract and the cancellation of the auction depended entirely on confirmation of the wire transfer:

You must have the earnest money delivered to Rick Levin's account this morning. Our discussions with you are occurring only hours prior to the scheduled auction.... If the earnest money comes in so late that we do not know that we have it, we must have the right to move forward with the auction and all offers/contracts with you are automatically terminated.

It is currently 11:30 Central time. The auction is scheduled for 1:00 today. If you have wired the earnest money, you must provide us with the confirmation number immediately.

(Order of 8/15/08, at 7, citing McDonald's Ex. 14)(Emphasis supplied).

The court found that there had been no mention "that the June 19 a.m. proposal needed to be returned prior to the auction's start, only the wire transfer of the earnest money." (Id. at 7). Based on the record before it, the court found plaintiffs likelihood of success was "somewhat better than negligible," thereby tipping the balance in favor of temporary injunctive relief:

If [plaintiff] timely transferred the money, then he filled the requirements of performance specified by [defendant] and the auction should not have gone forward or, failing that, the auction sales should have been declared void. If he failed, then the contract was void, as specified by [defendant]. Given the possibility that the money transfer occurred in a timely fashion before the commencement of the auction, and that fact has somehow fallen into the interstices of [defendants'] argument, the court finds that the auction and [defendants'] disavowal of the contract on the evening of June 19, 2008 might well have been improper.

(Id. at 8). The TRO was extended for an additional ten days; it has since expired.²

On August 19, the plaintiff's Motion For A Preliminary Injunction was referred to me for a Report and Recommendation. At the time of the referral, I was out of the country. I met with counsel for the parties on August 29, the day after my return. I granted the parties' requests to file supplemental briefing, which sharpened and clarified the parties' positions. As a consequence of a long-standing prior commitment of McDonald's counsel, oral argument on the Motion For A Preliminary Injunction could not be scheduled until Friday, September 12. On September 9, the parties consented to jurisdiction here for the limited purpose of deciding the Motion For A Preliminary Injunction.

Given significant factual disputes in the affidavits, an evidentiary hearing was scheduled. In re Aimster Copyright Litigation, 334 F.3d 643, 654-55 (7th Cir. 2003); Certified Restoration Dry Cleaning Network, LLC v. Tenke Corp., 511 F.3d 535, 553 (6th Cir.2007). As a consequence of a commitment of Mr. Nomanbhoy, the hearing could not proceed until Tuesday, September 23. Mr. Nomanbhoy testified for the plaintiff, and McDonald's called three witnesses, Mr. Neumann, Ms. Meyer and Mr. Lauter. The hearing was concluded on September 24.

Before turning to the merits, I would like to commend Mr. Widman, counsel for the plaintiff, and Ms. DeHayes and Mr. Haussmann, counsel for McDonald's, for the extraordinary degree of civility and professionalism that they displayed throughout the case and for their skillful written and oral presentations. Ours is an adversarial system, and judges depend upon input from lawyers. United States v. Cronic, 466 U.S. 648, 655, 104 S.Ct. 2039, 80 L.Ed.2d 657 (1984); Burdett v. Miller, 957 F.2d 1375, 1380 (7th Cir.1992). Indeed, Justice Brandeis was of the view that a "judge rarely performs his functions adequately unless the case before him is adequately presented." The Living Law, 10 Ill.L.Rev. 461, 470 (1916). The presentations of the parties in this case...