Peregrine Financial Group v. Trademaven

• Decision Date: 06 May 2009
• Docket Number: No. 1-08-1111.,1-08-1111.
• Citation: Peregrine Financial Group v. Trademaven, 909 N.E.2d 837, 391 Ill. App. 3d 309, 330 Ill.Dec. 815 (Ill. App. 2009)
• Parties: PEREGRINE FINANCIAL GROUP, INC., Plaintiff-Appellant, v. TRADEMAVEN, L.L.C., Jeffrey Ganis and Douglas Zalesky, Defendants-Appellees.
• Court: Appellate Court of Illinois

909 N.E.2d 837

391 Ill. App. 3d 309

PEREGRINE FINANCIAL GROUP, INC., Plaintiff-Appellant, v. TRADEMAVEN, L.L.C., Jeffrey Ganis and Douglas Zalesky, Defendants-Appellees.

No. 1-08-1111.

Appellate Court of Illinois, First District, Third Division.

May 6, 2009.

Bellows and Bellows, P.C. (Joel J. Bellows and Christopher L. Gallinari, of counsel), Chicago, for Appellant.

Wildman, Harrold, Allen & Dixon, LLP (Brian W. Lewis, Denise A. Lazar and E. Timothy Walker, of counsel), Chicago, for Appellee.

Justice QUINN delivered the opinion of the court:

In a prior action in the United States District Court for the Northern District of Illinois, the plaintiff, Peregrine Financial Group (Peregrine), and defendant TradeMaven L.L.C. (TradeMaven), were named as defendants by Trading Technologies, Inc. (Trading Technologies), in a patent infringement lawsuit (patent litigation).¹ That suit was resolved when Peregrine and TradeMaven entered into separate settlement agreements with Trading Technologies, and all three parties agreed to a consent judgment, which was entered by the district court.

Peregrine then filed suit in the circuit court of Cook County against TradeMaven and two of its principals, Jeffrey Ganis and Douglas Zalesky, alleging breach of contract, breach of warranty, indemnification, and tortious interference with prospective business advantage. The circuit court granted TradeMaven's motion for partial summary judgment on the indemnification claim, based on its affirmative defense of res judicata. Peregrine filed a motion for reconsideration, which was denied, and Peregrine now appeals. For the reasons set forth below, we affirm the judgment of the circuit court.

I. BACKGROUND

On or about October 27, 2004, Peregrine, a commodities brokerage firm, and TradeMaven, a company that develops and licenses electronic trading software, entered into a "TradeMaven Licensing Agreement" (licensing agreement) that granted Peregrine a license to use TradeMaven's software. Pursuant to section 8(a) of the licensing agreement, TradeMaven warranted that the licensed software "contains no material that violates the rights of any third party or that gives rise to any claim of such violation, including, without limitation * * * claims of infringement of any trademark, service mark, trade names, copyrights or other proprietary right." In section 10(b) of the agreement, TradeMaven agreed to indemnify Peregrine and hold it harmless from any claims for "expenses and costs (including any reasonable legal fees and expenses related to [Peregrine's] defense) arising from any claim of infringement of any trademark, service mark, trade name, copyright, or other proprietary right."

On or about July 19, 2005, Trading Technologies filed suit against Peregrine and TradeMaven in the United States District Court for the Northern District of Illinois alleging that the software licensed by TradeMaven to Peregrine infringed on Trading Technologies' proprietary patent rights. Peregrine contends that both before and during the patent litigation it sought and received assurances from Jeremy Short, a TradeMaven officer, that TradeMaven would indemnify Peregrine against the costs and defenses of the patent litigation, including attorney fees. Peregrine did not, however, file any claims in the patent litigation against TradeMaven for indemnification or otherwise.

On January 30, 2006, TradeMaven entered into a settlement agreement with Trading Technologies, pursuant to which TradeMaven admitted infringement and agreed to pay Trading Technologies $200,000. Peregrine was not a party to this settlement agreement. On February 3, 2006, one of Peregrine's attorneys sent a letter to TradeMaven's counsel expressing disappointment with the terms of the settlement agreement and reminding TradeMaven of its contractual duty to indemnify Peregrine, stating "TradeMaven is obligated to indemnify PFG for any claims against it for infringement. These obligations are continuing."

On March 15, 2006, Peregrine also entered into a settlement agreement with Trading Technologies. TradeMaven was not a party to that agreement, but that same day, TradeMaven amended its own settlement agreement with Trading Technologies. There is a disagreement between the parties as to the terms of TradeMaven's amended settlement agreement. TradeMaven contends it agreed to pay Trading Technologies an additional $50,000 in exchange for Trading Technologies executing a general release in Peregrine's favor. Peregrine, however, asserts that it did not ask TradeMaven to make an additional payment to Trading Technologies, that any additional payment was not to discharge any obligation Peregrine had, nor did it extinguish TradeMaven's obligation to indemnify Peregrine.

In conjunction with the two settlement agreements, Peregrine, TradeMaven and Trading Technologies agreed to a consent judgment, which was entered by the federal district court on March 23, 2006. Of significance to this case is the final paragraph of the consent judgment, which states that "Each party shall bear its own costs and attorneys' fees."

Two months later, on May 23, 2006, Peregrine's counsel again sent a letter to TradeMaven's counsel regarding TradeMaven's contractual obligation to indemnify Peregrine. That letter stated, in part, "Now that the litigation between PFG and TT has been successfully resolved (from PFG's standpoint) it is time to address the matter of TradeMaven's indemnification. PFG's expenses of that litigation are $416,081.22."

TradeMaven did not indemnify Peregrine, and on September 22, 2006, Peregrine filed a four-count complaint against TradeMaven in the circuit court of Cook County to recover damages for breach of warranty, indemnification, breach of contract and tortious interference with prospective business advantage. In its indemnification claim, Peregrine seeks to recover the $416,081.22 in attorney fees and costs it incurred in the patent litigation with Trading Technologies. After the circuit court granted TradeMaven's motion to dismiss the breach of warranty claim, TradeMaven filed its verified answer to the remaining counts and asserted affirmative defenses of res judicata and collateral estoppel with regard to Peregrine's indemnification claim. TradeMaven subsequently filed a motion for partial summary judgment pursuant to section 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-1005 (West 2006)), asserting that Peregrine's indemnification claim was precluded by the doctrine of res judicata and by collateral estoppel because the parties had agreed in the consent judgment that each party would bear its own costs and attorney fees.

After a hearing on the motion, the circuit court issued an order stating that TradeMaven was not entitled to summary judgment on collateral estoppel grounds because a "consent judgment is not entitled to collateral estoppel effect." Arnett v. Environmental Science & Engineering, Inc., 275 Ill.App.3d 938, 944, 212 Ill.Dec. 467, 657 N.E.2d 668 (1995). However, the court stated that TradeMaven was entitled to summary judgment on res judicata grounds because the elements of res judicata were met in that there was (1) an identity of parties or their privies; (2) an identity of the causes of action; and (3) a final judgment on the merits. Cole v. Board of Trustees of the University of Illinois, 497 F.3d 770, 772 (7th Cir.2007). Peregrine filed a motion to reconsider, which the circuit court denied. This appeal followed.

II. ANALYSIS

Appellate review of an order granting partial summary judgment is de novo. Adams v. Northern Illinois Gas Co., 211 Ill.2d 32, 43, 284 Ill.Dec. 302, 809 N.E.2d 1248 (2004). Summary judgment "shall be rendered without delay if the pleadings, depositions, 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 judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2006). "If the court determines that there is no genuine issue of material fact as to one or more of the major issues in the case, but that substantial controversy exists with respect to other major issues * * * the court shall thereupon draw an order specifying the major issue or issues that appear without substantial controversy, and directing such further proceedings upon the remaining undetermined issue as are just." 735 ILCS 5/2-1005(d) (West 2006).

In deciding a summary judgment motion, the court must construe the pleadings, affidavits, depositions and admissions on file strictly against the moving party and liberally in favor of the opponent. Adams, 211 Ill.2d at 43, 284 Ill.Dec. 302, 809 N.E.2d 1248. A triable issue precluding summary judgment exists where the material facts are disputed or where, the material facts being undisputed, reasonable persons might draw different inferences from the undisputed facts. Bagent v. Blessing Care Corp., 224 Ill.2d 154, 162-63, 308 Ill.Dec. 782, 862 N.E.2d 985 (2007). Although summary judgment can aid in the expeditious disposition of a lawsuit, it remains a drastic means of disposing of litigation and, therefore, should be allowed only where the right of the moving party is clear and free from doubt. Bagent, 224 Ill.2d at 163, 308 Ill.Dec. 782, 862 N.E.2d 985.

When the moving party is a defendant, as in this case, the materials need only establish the defendant's factual position on the affirmative defense raised. Winnetka Bank v. Mandas, 202 Ill.App.3d 373, 387, 147 Ill.Dec. 621, 559 N.E.2d 961 (1990). Once the movant has carried that burden, the respondent may not rely on the factual issues raised by the pleadings, but must submit affidavits or refer to depositions or admissions on file that present a contrary version of the facts. Winnetka Bank, 202 Ill.App.3d at 387, 147 Ill.Dec. 621, 559 N.E.2d 961. While parties opposing a summary judgment motion are not required to prove their case, they are under a duty to present...