Initial Evaluation And Development Of Legal Theories In Commercial Cases

Presented to The Chicago Bar Association

I. INITIAL CASE EVALUATION

A. General issues for both plaintiff and defendant

• 1.
• Conflict of interest issues

a. Illinois Rule of Professional Conduct, Rules 1.7-1.10

i. Rule 1.7 - Lawyer shall not represent client if representation will be "directly adverse" to or "materially limited" because of another client or third party unless:

(1) Lawyer reasonably believes representation will not be adversely affected, and

(2) Client consents after disclosure.

ii. Rule 1.9 - Former client

Lawyer shall not represent client in "same or substantially related manner"in which client's interests are "materially adverse" to former client.

iii. Rule 1.10 - Imputed Disqualification.

(1) Disqualification of one lawyer disqualifies firm, except:

(a) Newly associated lawyer with no protected client information, or is screened from participation.

(2) Firm may represent client with adverse interest to those of a client represented by a formerly associated lawyer if:

(a) Matter is not same or substantially related to representation of formerly associated lawyer; and

(b) No remaining lawyer in firm has protected information.

(3) This disqualification can be waived by the client with Rule 1.7 waiver.

(4) Lawyer deemed screened from participation in matter if:

(a) Lawyer isolated from confidences, secrets and material knowledge of matter;

(b) Lawyer isolated from all contact with client, client's agents or employees, or any witness for or against the client;

(c) Lawyer precluded from discussing the matter with firm; and

(d) The firm has taken affirmative steps to accomplish1-3.

b. You must make a conflicts check through office system.

• 2
• Attorney Due Diligence

a. Supreme Court Rule 137 - requires that an attorney sign every"pleading, motion, and other paper." The signature "constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after a reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation."

b. Federal Rules of Civil Procedure, Rule 11 has similar language.

c. Consider running a lawsuit filings check upon your prospective client.

B. Evaluation of a possible plaintiff's case

• 1.
• A good initial interview is critical

a. Who? What? When? Where?

i. Who are the fact witnesses? What will they say? Who employs them? Where do they reside? Are there any expected unfavorable witnesses to the claim?

ii. Who committed the wrong? Are they individuals? Partnerships? Corporations? Where are they located?

iii. What is the perceived wrong? Money damages or injunctive relief?

iv. When did the conduct occur? When was the wrongful conduct discovered? Is the claim time barred?

v. Where was the place of the wrong?

vi. Full explanation by prospective client regarding merits of claim - does it hold up under cross-examination?

• b.
• What are the material documents? Where are they located?

i. Contract? Warranties?

ii. Arbitration clause?

• c.
• What is the remedy desired?

i. Is the prospective plaintiff realistic regarding damages?

ii. What is the realistic range of recoverable damages available?

iii. Is time of the essence?

iv. What about settlement?

v. Has any money been offered or any discussion occurred regarding settlement?

• 2.
• Initial evaluation of the claim

a. Determine, and diary, the limitations period for filing.

b. Determine whether the claim can be filed in Cook County or the Northern District.

c. Interview key witnesses.

i. Decide whether written statement is appropriate.

(1) Be mindful that the attorney-client privilege does not protect your discussions.

d. Review material documents on liability and damages.

e. Legal research on needed issues.

f. Evaluate, and outline as necessary, proof of plaintiff's prima facie case.

g. Is a class action feasible?

h. Consider consultation with expert witnesses.

• 3.
• Agreement to take the case

a. Full discussion of legal theories and damages with prospective client.

b. Provide your realistic evaluation of liability and damages issues.

c. Make sure there is a meeting of the minds between you and your client regarding your evaluation of liability, damages and settlement value before you agree to take the case.

d. Obtain agreement on the place of filing and the theory of liability that will be alleged, as well as the damages to be claimed.

• 4.
• Agreement regarding fees

a. Contingency fee, hourly rate or combination thereof?

b. If contingency fee, see RPC 1.5.

i. Must be in writing and state method for determining fee.

ii. Referral arrangements must be disclosed.

iii. Expense arrangement must be agreed to.

c. If hourly rate.

i. Discussion of expected fees and how that compares to expected recovery.

ii. Discussion of expected expenses.

iii. Hourly fees paid monthly? Quarterly?

iv. Consider a retention requirement.

• 5.
• Choice of forum

a. Evaluation of jurisdiction and venue questions.

b. Consideration of federal court

i. Are you claiming a violation of federal law?

ii. Is there a diversity of citizenship for federal jurisdiction?

iii. Quicker to trial.

iv. The dreaded pre-trial order.

c. Is the case removable? Is there an Illinois resident to be joined as a defendant to defeat diversity?

C. Evaluation of a defense case

• 1.
• Initial interview

a. Who? What? When? Where? See above.

b. Is there an arbitration clause?

c. Are there legal bars to recovery?

d. Have others made claims like these?

i. Obtain pleadings from other cases.

ii. Obtain discovery from other cases.

e. What is the settlement value of the case?

i. Have there been prior discussions regarding settlement?

ii. Does the client desire to settle the case for a certain amount?

f. Agreement regarding fees - see above.

g. Reporting requirements to client.

• 2.
• Initial evaluation prior to filing responsive pleading

a. Are there statute of limitations defenses available? Other legal bars to recovery?

b. Jurisdiction

i. Federal

(1) Federal question 28 U.S.C.A. § 1331

(2) Diversity under 28 U.S.C.A. § 1332

(a) Each plaintiff diverse of each defendant, and

(b) Amount in controversy exceeds $75,000.

ii. All other actions in state court.

c. Elements of removal under 28 U.S.C.A. § 1441 et seq.

i. Applies to only a civil action brought in State court.

ii. Federal court must have original jurisdiction.

iii. Only defendant or defendants may remove case.

iv. Must move for removal within 30 days of receipt of initial pleading or service of summons.

v. Action must be removed to district court "embracing" where the state court action is pending.

d. Venue in State Court 735 ILCS 5/2-101

Venue is proper in any county in which any defendant resides or any county in which transaction or some part of it occurred. If no defendant is resident of Illinois then venue is proper in any county.

e. Forum Non Conveniens - Supreme Court Rule 187

Court has jurisdiction but will discretionarily refuse to exercise it. Must be filed within 90 days after party's last day to file an answer. Court will consider:

i. Plaintiff's interest or convenience,

ii. Inconvenience to defendant,

iii. Public's interest in case, including availability of witnesses, enforceability of judgment in other forum, congestion of court docket.

f. Interview key witnesses.

g. Determine location of documents. Review material documents.

i. There is nothing worse for the defense during discovery than late production of documents.

h. Legal research on needed issues.

• 3
• Agreed plan on strategy of defense

a. Should a motion to dismiss be filed? Is it of ultimate benefit?

b. Is a motion for summary judgment feasible? At what point in the defense of the case is it realistic?

c. Who will comprise the defense team - partners, associates, paralegal?

d. How many depositions should be noticed and who should take them?

e. Are settlement discussions appropriate? When?

II. DEVELOPMENT OF LEGAL THEORIES --

> Potential Causes of Action

A. Breach of Contract

1. Does Article 2 of the Uniform Commercial Code ("UCC") Apply to Transaction?

a. Does contract or agreement constitute a "transactions in goods"?

810 ILCS 5/2-102.

b. "Goods" are defined as "all things, including specifically manufactured goods, which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities . . . and things in action." 810 ILCS 5/2-105(1).

c. If "mixed" contract, i.e., for goods and services, if predominant purpose of transaction is the sale of goods then entire transaction governed by Article 2 of the UCC. Zayre Corp. v. S.M.&R. Co., Inc., 882 F.2d 1145 (7th Cir. 1989).

2. Elements of Breach of Contract:

a. The existence of an enforceable contract;

i. Offer, acceptance and consideration

ii. If oral agreement - is there a statute of frauds issue

iii. Is contract illegal

iv. Is contract unconscionable

v. Performance by plaintiff of conditions precedent;

c. Breach of the contract; and

d. Damage to plaintiff.

Sutherland v. Illinois Bell, 627 N.E.2d 145 (1st Dist. 1993).

3. Affirmative Defenses to Breach of Contract:

a. Failure of consideration, Kapoor v. Robins, 573 N.E.2d 292 (2d Dist. 1991);

b. Statute of Frauds, Swansea Concrete Products, Inc. v. Distler, 467 N.E.2d 388 (5th Dist. 1984);

c. Fraud in the inducement, 735 ILCS 5/2-613; Wilber v. PotPora, 462 N.E.2d 734 (1st Dist. 1984);

d. Discharge for material breach, Sun Chemical Corp. v. Illinois Asset Man., No. 95 L 2376, 1995 WL 437520 (N.D. Ill. July 21, 1995);

e. Mistake of law/fact (unilateral or mutual), Keller v. State Farm Ins. Co., 536 N.E.2d 194 (5th Dist. 1989);

f. Impossibility, impracticability or frustration of purpose, American Nat'l Bank v. Richiz, 545 N.E.2d 550 (2d Dist. 1989);

g. Failure of condition subsequent, Weeks v. Aetna Ins. Co., 501 N.E.2d 349 (2d Dist. 1986);

h. Failure to mitigate, Toushin v. Gonsky, 395 N.E.2d 1124 (1st Dist. 1979); and

i. Duress, First Security Bank v. Bawoll, 458 N.E.2d 193 (2d Dist. 1983).

4. Is there an arbitration clause which covers any of the disputed issues? Ifso, can the arbitration clause be circumvented?

5. Potential Evidentiary Issues:

a. Parol Evidence Rule

b. Admissibility of extrinsic evidence to interpret terms of contract, i.e., are terms of contract ambiguous

B. Breach of Warranty

1. Elements:

a. Existence of contract between parties; and

b. Breach of a representation or warranty contained therein.

Bunge Corp. v. Northern Trust Co., 623 N.E.2d 785 (4th Dist. 1993).

2. Additional Elements if Breach of Warranty Under UCC:

a. Notice of breach within a reasonable time after discovery of breach, Berry v. G.D. Searle & Co., 309 N.E.2d 550 (Ill. 1974); and

b. Provider of goods is a "seller," or "merchant" (if alleging breach of implied warranty of merchantability). See 810 ILCS 5/2-313, 314 and 315.

3. Affirmative Defenses:

a. Disclaimer, 810 ILCS 5/2-316;

b. Privity, 810 ILCS 5/2-318; and

c. Limitation of Remedies For Breach, 810 ILCS 5/2-719.

C. Promissory Estoppel

1. Elements include:

a. Unambiguous promise;

b. Reasonable reliance on promise;

c. Reliance expected and foreseeable; and

d. Damage as a result of reliance.

Quake Const., Inc. v. American Airlines, Inc., 565 N.E.2d 990 (Ill. 1990)

2. While party may plead in the alternative counts for breach of contract and promissory estoppel, when "it is established, either by an admission of a party or by judicial finding, that there is in fact an enforceable contract between the parties and therefore consideration exits, then a party may no longer recover under the theory of promissory estoppel." Prentice v. UDC Advisory Services, Inc., 648 N.E.2d 146, 150 (1st Dist. 1995). If, however, the terms of the parties' enforceable contract are disputed or unclear, a party may still pursue a claim for promissory estoppel. Trans America Airlines, Inc. v. British Aerospace Holdings, Inc., No. 95 C 0370, 1996 WL 465391 (N.D. Ill. Aug. 8, 1996).

D. Equitable Estoppel

1. Elements:

a. Words or conduct consisting of misrepresentations or concealment of material facts;

b. The defendant must have actual or implied knowledge at the time the representations are made that they are untrue;

c. The plaintiff does not know that the representations are untrue at the time that they are made;

d. The party estopped must intend or expect that his conduct or representations will be acted on by the plaintiff; and

e. The plaintiff relies on the representations in such a manner that he would be prejudiced if the party making the representations is allowed to deny the truth thereof.

Nichols Motorcycle Supply, Inc. v. Dunlop Tire Corp., 913 F. Supp. 1088, 142 (N.D. Ill. 1995).

2. Many Illinois courts do not distinguish between promissory and equitable estoppel.

E. Unjust Enrichment

1. Defendant unjustly retained benefit to plaintiff's detriment; and

2. Defendant's retention of benefit violates fundamental principles of justice, equity and good conscience.

HPI Health Care Serv., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672 (Ill. 1989).

F. Common Law Fraud

1. Elements include:

a. A false statement of material fact;

b. Known or believed to be false by the party making the it;

c. With the intent to induce other party to act;

d. Reliance by other party on the truth of the statement; and

e. Damage to the other party as a result of its reliance.

Siegel v. Levy Org. Dev. Co., 607 N.E.2d 194, 198 (Ill. 1992).

2. Promissory Fraud - Unlike majority of jurisdictions, in Illinois, promise of future conduct made without the intent to perform does not support cause of action for fraud unless made as part of a "scheme to defraud." Desnick v. American Broadcasting Co., 44 F.2d 1345 (7th Cir. 1995).

3. Omission of material fact will not support fraud count unless party failing to disclose fact had a duty to disclose. AMPAT/Midwest, Inc. v. Illinois Tool Works, Inc. 896 F.2d 1035, 1040 (7th Cir. 1990). There is no duty to disclose absent a fiduciary or other legal relationship between the parties. Magna Bank v. Jameson, 604 N.E.2d 541, 544 (5th Dist. 1992).

4. Reliance must be reasonable. Astor Chartered Limousine Co. v. Runnfeldt Inv. Corp., 910 F.2d 1540 (7th Cir. 1990).

5. Fraud must be proven by "clear and convincing" evidence. Ray v. Winter, 367 N.E.2d 678 (Ill. 1977).

6. Punitive damages may be available. Federal Deposit Ins. Co. v. W.R. Grace & Co., 877 F.2d 614 (7th Cir. 1989).

G. Negligence - Negligent Performance of Contractual Duty

1. Elements are same as traditional negligence action: duty, breach, proximate cause and damages. Kotarba v. Jamrozik, 669 N.E.2d 1185 (1st Dist. 1996).

2. Scope of duty is governed by the terms of the contract. Id.

H. Negligent Misrepresentation

1. Elements are the same as fraud cause of action except that the defendant's mental state is different. The defendant need not know the statement is false. Rather mere carelessness or negligence in ascertaining truth of statement is sufficient. Board of Ed. v. A,C and S, Inc., 546 N.E.2d 580 (Ill. 1989).

2. In order to recovery solely "economic loss," the defendant must also be "in the business of supplying information for the guidance of others in their business relations with third parties." Rankow v. First Chicago Corp., 870 F.2d 356, 360 & 363 (7th Cir. 1989); see discussion of Moorman Doctrine, infra at 20-21.

I. Conspiracy

1. Elements:

a. A conspiracy;

b. An over act in furtherance of the conspiracy; and

c. Damages to the plaintiff as a result of the act.

Bosak v. McDonough, 549 N.E.2d 643 (1st Dist. 1989).

2. Conspiracy consists of an agreement between two or more persons for the purpose of accomplishing some concerted action either an unlawful purpose or a lawful purpose by unlawful means. Adcock v. Brakegate, Ltd., 645 N.E.2d 888 (Ill. 1994).

3. Punitive damages may be available. Sarno v. Thermen, 608 N.E.2d 11 (1stDist. 1992).

J. Tortious Interference with Contract or Prospective Economic Advantage

1. Elements (Contract):

a. Existence of a valid and enforceable contract between plaintiff and another;

b. Defendant's knowledge of contractual relationship;

c. Intentional and unjustified inducement of a breach of that contract;

d. Breach of the contract by other caused by defendant's conduct; and

e. Damages.

Scheduling Corp. of America v. Massello, 456 N.E.2d 298 (1st Dist. 1983).

2. Elements (Prospective Economic Advantage):

a. Plaintiff's reasonable expectation of entering into a valid business relationship;

b. Knowledge of that relationship on the part of the defendant;

c. Intentional and malicious interference by the defendant to defeat the expectancy;

d. Injury resulting from the interference.

Israeli Aircraft Industries, Ltd. v. Sanwa Business Credit Corp., 850 F. Supp. 686, 692 (N.D. Ill. 1993).

3. Plaintiff must show that the defendant's acts of interference were "directed by the defendant toward a third party," rather than solely at the plaintiff. Id. at 692-93; see also Douglas Theater Corp. v. Chicago Title & Trust Co., 641 N.E.2d 584 (1st Dist. 1994) (plaintiff failed to allege specific actions by defendants directed at third parties as required to state claim for tortious interference with prospective economic advantage); Schuler v. Abbott Lab., 639 N.E.2d 144 (1st Dist. 1993) (plaintiff must show action by defendant directed toward party with whom plaintiff expects to do business).

4. Justification and privilege to interfere with contractual relationship constitute affirmative defenses. Roy v. Coyne, 630 N.E.2d 1024 (1st Dist. 1994).

K. Breach of Restrictive Covenants - Employment Agreement

1. Covenant must be reasonable in geographical and temporal scope. Abel v. Fox, 654 N.E.2d 591 (4th Dist. 1995).

2. Necessary to protect a legitimate business interest. Id.

3. Ancillary to a valid contract or relationship. Creative Enter., Inc. v. Lorenz, 638 N.E.2d 217 (1st Dist. 1994).

4. Supported by adequate consideration. Id.

L. Breach of Fiduciary Duty

1. Elements:

a. Fiduciary duty;

b. Breach of duty;

c. Breach proximately caused damages; and

d. Damages.

Havoco of America, Ltd. v. Sumitomo Corp. of America, 971 F.2d 1332, 1345 (7th Cir. 1992).

2. Fiduciary relationship may arise by operation of law, e.g., principal-agent or attorney-client, or it may arise "where trust and confidence, by reason of friendship, agency and experience, are reposed by one person in another who, as a result, gains an influence and superiority over him." Wold v. Wold, 357 N.E.2d 627, 630 (2d Dist. 1976). The existence of a fiduciary relationship not arising by operation of law must be proved by clear and convincing evidence. Kester v. Crilly, 91 N.E.2d 419 (Ill. 1950).

M. Defamation - Commercial Disparagement

1. Elements (Defamation):

a. False or misleading statement(s);

b. Defaming or impugning plaintiff's business reputation and integrity;

c. Damages.

Allcare, Inc. v. Bork, 531 N.E.2d 1033 (1st Dist. 1980).

2. Elements for commercial disparagement are the same except false or misleading statements must concern plaintiff's goods, services or business rather than plaintiff. Crinkley v. Dow Jones & Co., 385 N.E.2d 714 (1st Dist. 1978).

3. Consider trademark claim - Lanham Act, see infra at 18.

4. Affirmative Defenses:

a. Truth, Unique Concepts, Inc. v. Manuel, 669 F. Supp. 185 (N.D. Ill. 1987); and

b. Privilege; Parillo, Weiss & Moss v. Cashion, 537 N.E.2d 851 (1st Dist. 1989).

N. State Statutory Causes of Action

1. Consumer Fraud

a. Section 2 of 815 ILCS 505/2 states: Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with an intent that others rely upon the concealment, suppression or omission of such material fact, or the use of employment of any practice described in Section 2 of the "Uniform Deceptive Trade Practices Act," approved August 5, 1965 [815 ILCS 510/2], in the conduct of any trade or commerce are hereby declared unlawful whether any person as in fact been misled, deceived or damaged thereby. In construing this section consideration shall be given to the interpretations of the Federal Trade Commission and the Federal Courts relating to Section 5(a) of the Federal Trade Commission Act [15 U.S.C. §45].

b. Elements:

i. Deceptive act or practice;

ii. Intent on the defendant's part that plaintiff rely on the deception;

iii. That the deception occurred in the course of conduct involving trade or commerce; and

iv. Damage.

Siegel v. Levy Org. Dev. Co., 607 N.E.2d 194, 198 (Ill. 1992); Duran v. Leslie Oldsmobile, Inc., 594 N.E.2d 1355 (2d Dist. 1992).

c. The significant difference between a claim under the statute and a claim for common law fraud, is that the former does not require actual reliance. Id.

2. Misappropriation of Trade Secrets (Illinois Trade Secrets Act, 765 ILCS 1065/1, et seq.)

a. Elements:

i. Misappropriation of;

ii. A trade secret;

iii. Causing damage to plaintiff.

American Antenna Corp. v. Amperex Elec. Corp., 546 N.E.2d 41, 44 (2d Dist. 1989).

b. "Misappropriation" is defined as:

i. Acquisition of a trade secret of a person by another person who knows or has reason to know that the trade secret was acquired by improper means; or

ii. Disclosure or use of a trade secret of a person without express or implied consent. 765 ILCS 1065/1-9.

c. "Trade secret" is defined as "information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that: (1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. 765 ILCS 1065/2(d).

3. Deceptive Trade Practices (Uniform Deceptive Business Practices Act, 815 ILCS 510-1, et seq.)

O. Federal Statutory Causes of Action

1. Securities Fraud (Rule 10b-5, §§ 12(2) & 17 of the Securities Act of 1933, and §§ 14(a) & (e) of Securities Exchange Act of 1934)

2. Antitrust (Sherman Act, 15 U.S.C. §§ 1 & 2.)

3. Trademark claim (Lanham Act, 15 U.S.C. § 1051, et seq.)

4. Civil RICO (18 U.S.C. § 1961 et seq.)

III. REMEDIES

A. Damages

1. Breach of Contract (common law)

a. "Benefit of the bargain"/compensatory damages: nonbreaching party is entitled to recover those damages which would put it in the same position it would have been if both parties had fully performed. Hutchinson v. Brotman-Sherman Theatres, 419 N.E.2d 530 (1st Dist. 1981).

i. Such damages must fairly, reasonably and naturally arise from breach of contract. Madigan Bros. v. Melrose Shopping Center, 556 N.E.2d 730 (1st Dist. 1990).

ii. Plaintiff has burden of proving his/her damages and damages must have a reasonable basis. Kohlmeier v. Shelter Ins. Co., 525 N.E.2d 94 (5th Dist. 1988).

b. "Consequential" Damages: plaintiff may also recover damages which are unique to plaintiff if such damages were within the reasonable contemplation of the parties at time contract was entered into. Midland Hotel Corp. v. R.H. Donnelley Corp., 515 N.E.2d 61 (Ill. 1987).

c. "Lost profits" are recoverable, but only if: (i) their loss is proved with a reasonable degree of certainty; (ii) the court is satisfied that the wrongful act of the defendant caused the loss of profits; and (iii) the profits were reasonably within the contemplation of the defaulting party at the time the contract was entered into. Milex Products, Inc. v. ALRA Labs., Inc., 603 N.E.2d 1226 (2nd Dist. 1992). Recovery of lost profits of a new business is not prohibited per se, but must not be based on mere speculation. Id.

d. Plaintiff has duty to make reasonable efforts to mitigate the effect of breach. Culligan Rock River Water. Cond. Co. v. Gearhart, 443 N.E.2d 1065 (2nd Dist. 1982).

2. Remedies under UCC

a. Remedies of Seller (810 ILCS 5/2-703):

i. Withhold delivery;

ii. Stop delivery by carrier;

iii. Resell goods and recover difference;

iv. Cancel contract; and

v. Recover damages:

(1) Difference between market price and contract price (810 ILCS 5/2-708); or

(2) In certain circumstances, the price of goods (810 ILCS 5/2-709).

b. Remedies of Buyer (810 ILCS 5/2-710):

i. Cancel;

ii. Cover - buy substitute goods and recover difference between price of substituted goods and contract price;

iii. Recover goods identified in contract;

iv. Specific performance; and

v. Damages: difference between market price at time plaintiff learned of breach and contract price (810 ILCS 5/2-713).

3. Liquidated Damages

a. If damages constitute a penalty, then liquidated damages provision is void. Stride v. 120 W. Madison Building Corp., 477 N.E.2d 1318 (1st Dist. 1985).

b. To be enforceable:

i. Damages provided in provision must be reasonable estimate at time of contracting of the likely damages resulting from breach; and

ii. Actual damages must have been difficult to measure at that time.

Yockey v. Horn, 880 F.2d 945 (7th Cir. 1989).

4. Damages Under Tort Cause of Action

Moorman Doctrine - Under Illinois law, a party typically cannot recover in tort for solely "economic loss," but instead must rely on its contractual remedies. Moorman Mfg. Co. v. National Tank Co., 435 N.E.2d 443 (Ill. 1982). "Economic loss" includes "damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits . . . ." Id. at 449. Exceptions to the Moorman Doctrine include:

a. Where plaintiff sustains damage, i.e., personal injury or other property damage, resulting from a sudden or dangerous occurrence;

b. Intentional misrepresentation; and

c. Negligent misrepresentation by a defendant in the business of supplying information for guidance of others in their business transactions. Trans State Airlines v. Pratt & Whitney, 682 N.E.2d 45 (Ill. 1997).

B. Injunctive Relief

1. Elements for an award of injunctive relief are:

a. Defendant violated or threatened to violate a protectable legal right;

b. Plaintiff will be irreparable damaged as a result; and

c. Plaintiff has no adequate remedy at law.

American Nat'l Bank v. Carroll, 462 N.E.2d 586 (1st Dist. 1984).

2. Specific Performance:

a. Must be inadequate remedy at law, Lakshman v. Vecchione, 430 N.E.2d 199 (1st Dist. 1981)

b. Elements:

i. Existence of valid and enforceable contract;

ii. Compliance by plaintiff with terms of contract or fact that plaintiff is ready, willing and able to perform; and

iii. Failure or refusal of defendant to perform. McCormick Road Assocs. v. Taub, 659 N.E.2d 52 (1st Dist. 1995).

C. Rescission

1. Grounds for rescission:

a. Material breach, Powe v. Chicago, No. 95 C 1708, 1996 WL 99711 (N.D.Ill. March 4, 1996);

b. Fraud, Id.;

c. Duress or coercion, Moore v. Cooper, No. 94 L 788, 1996 WL 207187 (N.D. Ill. April 24, 1996);

d. Mistake, McCracken Cont. Co. v. V.R.L. DePrizio & Assocs., Inc., 462 N.E.2d 682 (1st Dist. 1984);

e. Failure of consideration, Solar v. Weinberg, 653 N.E.2d 1365 (1st Dist. 1995); and

f. Mutual consent, Powe, 1996 WL 99711.

2. Generally, parties must be returned to pre-contract status quo. Wilkonson v. Yovetich, 618 N.E.2d 1120 (1st Dist. 1993).

D. Declaratory Judgment

1. The elements of a cause of action for declaratory judgment include:

a. There must be an actual controversy; and

b. The party seeking the declaratory judgment must have a tangible, legal interest in that controversy.

Schwanke, Schwanke & Assoc. v. Martin, 609 N.E.2d 654 (1st Dist. 1992).

E. Reformation

1. The purpose of contract reformation under Illinois law is to make a written contract express the agreement the parties intended when they, having attempted to reduce their agreement to writing, fail to express their agreement correctly. Board of Trustees v. Insurance Corp. of Ireland, Ltd., 969 F.2d 329, 332 (7th Cir. 1992).

2. A party seeking the reformation of a written instrumentmust prove that there has been a meeting of the minds which resulted in an actual agreement between the parties, but that when the agreement was reduced to writing and executed, an agreed upon provision was omitted or one not agreed upon was inserted as a result of either the mutual mistake of the parties or a mistake by one party and fraud by the other. Patrick Media Group, Inc. v. Chicago, 626 N.E.2d 1066, 1069 (1st Dist. 1993).

3. Must be established by clear and convincing evidence. RS & P/WC Fields Ltd. Partnership, 829 F. Supp. 928 (N.D. Ill. 1993).

4. A party is obligated to learn or know the contents of a written contract before he signs it, Magnus v. Lutheran General Health Care System, 601 N.E.2d 907 (1st Dist. 1992), and, therefore, failure to read terms of a negotiated contract does not rise to the level of mistake necessary for contract reformation. RS&P/WC Fields, 829 F. Supp. at 969.