author:
JUSTICE WHITE
     JUSTICE GREIMAN,

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. DARRYL REID, Defendant-Appellant.
    First District (3rd Division)
    No. 1 — 85—2582
    Opinion filed August 7, 1991.
    — Rehearing denied December 17, 1991.
    GREIMAN, J., specially concurring.
    Karen Daniel, of State Appellate Defender’s Office, of Chicago, for appellant.
    Jack O’Malley, State’s Attorney, of Chicago (Thomas V. Gainer, Jr., John A. Gasiorowski, and Susan J. Crane, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE WHITE

delivered the opinion of the court:

Defendant was found guilty in a jury trial of murder and armed robbery and sentenced to concurrent 20- and 9-year terms of imprisonment. This court reversed defendant’s convictions on the ground that the trial court committed reversible error when it failed to answer a question submitted by the jury concerning a point of law on which the jury had not been instructed. (People v. Reid (1988), 174 Ill. App. 3d 1009, 529 N.E.2d 590.) This court’s decision was reversed by the Illinois Supreme Court, and the cause was remanded to us for consideration of those issues raised in defendant’s appeal but not resolved by our earlier decision. (People v. Reid (1990), 136 Ill. 2d 27, 554 N.E.2d 174.) The only unresolved issue remaining concerns the effect of an anonymous telephone call received by one of the jurors during deliberations.

The record reveals that the jury’s deliberations began on Thursday May 16, 1985. Late Thursday evening, the jury was sequestered for the night in a nearby motel. Deliberations continued all day Friday until 6:37 p.m., when the jury returned verdicts of guilty on both the armed robbery and murder counts. Subsequently, defendant was sentenced to 20 years’ imprisonment.

Six days after the sentencing hearing, defendant filed a motion for a new trial alleging that one of the jurors, Kent Bullock, received an anonymous telephone threat while the jury was sequestered at the motel. At the hearing on defendant’s motion, Bullock testified that when the jury was sequestered Thursday evening, it was deadlocked 11 to 1 in favor of conviction on the armed robbery count. Bullock further testified that during the bus ride to the motel, the jurors attempted to figure out who the holdout was and that he admitted to another juror that he had voted against conviction.

Bullock testified that, at the motel, he was assigned to a room by himself and that after he had been in the room some time, the telephone rang. Bullock answered the telephone but there was no response. Approximately two hours later the telephone rang again. When Bullock answered it, a male voice said “you son of a bitch, we’ll get you for that.” Bullock testified that he did not recognize the voice, that he did not report the telephone call to any of the sheriffs sequestered with the jurors, and that he did not report the call to the court.

During deliberations the following morning, Bullock continued to vote for acquittal on the armed robbery count for approximately three hours. Around 11 a.m., Bullock finally changed his vote and a guilty verdict was signed. The jury then began deliberations on the murder charge.

Bullock testified that when the first vote was taken on the murder charge, nine jurors, including himself, were in favor of acquittal. This number eroded during the day and by 6 p.m., only three jurors were in favor of acquittal. Bullock testified that around 6 p.m., after being informed that the judge wanted to see them, the jurors took one last vote, at which time all 12 voted for a conviction on the murder charge.

There was no testimony from Bullock that he connected the phone call with his being the lone holdout on the armed robbery count and he stated that the phone call was not the reason he changed his vote on the murder count late Friday afternoon. However, he also testified in response to a question from the court that the call did cause him to be fearful about his vote and that his desire to avoid having to spend the weekend at the motel was a factor in his decision to change his vote.

During cross-examination by the State’s Attorney, Bullock admitted that the defendant’s mother was a member of his church and that the church had set up a fund to aid defendant’s family. Bullock also testified that he had attended defendant’s sentencing hearing and that he had done so out of concern for defendant’s mother.

Also testifying at the hearing were Frank Caputo, vice-president of the motel at which the jurors were sequestered; Victor Petriw, a maintenance laborer for the motel; and Andrew Lakatos, one of the sheriffs who was sequestered with the jurors. Caputo testified that it was normal procedure to disconnect the telephones of jurors sequestered at the motel. However, he had no personal knowledge of whether the normal procedure was followed in this case. Petriw testified that on May 16, near the end of his shift, he was instructed to disconnect the telephones in the rooms that were to be used by the jury. According to Petriw, he did this by removing the mouthpieces and earpieces from each of the phones. Petriw also testified that he had no independent recollection of the evening of May 16 and that his testimony was based on an entry in the motel’s logbook for that night. Sheriff Lakatos testified that after the jurors arrived at the motel, he checked some of the rooms to make sure the televisions and telephones were disconnected, but he did not check all of them.

At the close of the hearing, the trial court denied defendant’s motion for a new trial. The trial court stated that there was no way it could state with confidence that Bullock’s phone was disconnected. However, the court held that, based on “what Mr. Bolick [sie] testified as occurring and his responses as to what occurred,” it could not conclude that the jury’s verdict was impeached.

On appeal, defendant argues that the trial court’s finding that the telephone call did not result in prejudice was manifestly erroneous. Defendant contends that the telephone call Bullock received was made by one of the other jurors and that the call was directly related to Bullock’s being the lone holdout on the armed robbery charge. Defendant further contends that it must be presumed that the telephone call resulted in prejudice. Defendant also argues that the trial court erred in basing its finding of no prejudice on Bullock’s testimony about the effect of the call on his deliberations.

Turning first to defendant’s argument that Bullock should not have testified about the effect of the phone call on his mental processes, we note that Illinois courts have held that evidence of the effect of outside influences upon the mind of a jury member is inadmissible. (People v. Holmes (1978), 69 Ill. 2d 507, 372 N.E.2d 656; People v. Spice (1977), 54 Ill. App. 3d 539, 370 N.E.2d 129.) Accordingly, we agree that Bullock should not have been allowed to testify concerning the effect of the phone call. However, we cannot agree that the trial court erred in finding that the verdict was not impeached.

Defendant bases his argument that the telephone call resulted in prejudice on the Supreme Court’s decision in Remmer v. United States (1954), 347 U.S. 227, 98 L. Ed. 654, 74 S. Ct. 450. There, an unidentified third party contacted one of the jurors in a tax evasion trial, telling the juror that he could profit by bringing in a verdict favorable to the defendant. The juror reported the incident to the trial judge, and the Federal Bureau of Investigation was called in to conduct an inquiry. After it was determined that the statement was made in jest, the trial continued and the defendant was found guilty. Defendant appealed his conviction, arguing that the incident deprived him of a fair trial. Stating that the contact with the juror was presumptively prejudicial, the Supreme Court vacated the conviction and remanded the case for a hearing to determine whether the incident was harmful to the defendant.

We believe that the Remmer case is distinguishable. Unlike Remmer, where the contact was between a juror and an unidentified third party, here, it is defendant’s position that the telephone call was made by a fellow juror upset by the fact that Bullock was holding out on the armed robbery charge. Although we have found no Illinois cases on point, a number of courts in other jurisdictions have held that similar contact did not result in prejudice.

In United States v. Kohne (W.D. Penn. 1973), 358 F. Supp. 1046, a juror attempted to impeach a guilty verdict, claiming that he had joined in the verdict because of threats made by other jurors. The juror testified that at the end of the first day of deliberations, he was the lone holdout against conviction and that, because of the failure to reach a verdict, the jury was sequestered overnight in an hotel. The holdout juror testified that on following day, one of the other jurors stated that if the jury had to spend another night at the hotel he would be in court the next morning for murder. He also testified that a second juror told him “I do not get mad, I just get even.” Finally, he testified that two other jurors acted in such a manner that he thought they would pick up a chair and break it on his head because he would not vote guilty. The court found that this testimony, even if true, was insufficient to impeach the verdict.

A similar conclusion was reached in People v. Keenan (1988), 46 Cal. 3d 478, 758 P.2d 1081, 250 Cal. Rptr. 550. There, defendant alleged that a juror pointed at the lone holdout, an elderly woman, and shouted “If you make this all for nothing, if you say we sat here for nothing, I’ll kill you and there’ll be another defendant out there — it’ll be me.” (46 Cal. 3d at 540, 758 P.2d at 1120, 250 Cal. Rptr. at 590.) There was evidence that, after this outburst, the holdout juror began shaking and crying and became physically ill. Pointing out that heated disagreements between jurors were not uncommon, the court held that even if the threat occurred, it could not conclude as a matter of law that it amounted to prejudicial misconduct sufficient to impeach the verdict.

Finally, in People v. Jacobson (1981), 109 Misc. 2d 204, 440 N.Y.S.2d 458, the court rejected a claim that the jury’s verdict had been coerced by the action of a juror who threw a chair. The court stated that the alleged contact was insufficient to warrant vacatur of the verdict.

In the present case, the trial court apparently accepted Bullock’s claim that he received a threatening telephone call; however, the court concluded that the call had no effect on the jury’s verdict. We agree with this conclusion.

The alleged threat in this case differs little from those found to be harmless in Keenan and Kohne, and unlike Jacobson, where it was alleged that a chair was thrown, here, there was never any physical act of intimidation. In addition, when the jury was polled in open court, all of the jurors, including Bullock, expressed agreement with the verdict. The complaining juror’s failure to speak out when the jury was polled was cited in Keenan, Kohne, and Jacobson as a factor in the courts’ refusal to disturb the verdicts.

Accordingly, we find that the telephone call received by Bullock was not sufficient to impeach the verdict and that the trial court did not err in denying defendant’s motion for a new trial.

For the foregoing reasons, the judgment of the circuit court is affirmed.

Judgment affirmed.

CERDA, P.J., concurs.

JUSTICE GREIMAN,

specially concurring:

I concur with the majority and believe that the judgment of the circuit court should be affirmed.

However, the majority has distinguished Remmer v. United States (1954), 347 U.S. 227, 98 L. Ed. 654, 74 S. Ct. 450. The majority suggests that in Remmer the contact was between a juror and an unidentified third party while here the defendant argues that the telephone call was made by a fellow juror upset by the fact that Bullock was uncooperative in making a unanimous vote in favor of conviction.

The record does not establish that the alleged telephone call was made by a fellow juror or that, in fact, it had anything to do with Bullock’s service as a juror.

I would distinguish Remmer for other reasons. In Remmer, the court’s focus was upon the fact that an FBI agent had been sent in to investigate the juror’s conduct in the midst of a trial and that such an investigation was bound to impress the juror and “very apt to do so unduly.”

The court observed that “[a] juror must feel free to exercise his functions without the F.B.I. or anyone else looking over his shoulder.” Remmer, 347 U.S. at 229, 98 L. Ed. at 656, 74 S. Ct. at 451.

The Remmer court was also mindful of the trial court’s failure to share with the defense the information regarding the contact with the juror although the prosecutor had been made aware of these events.

      Justice White authored this opinion prior to his date of retirement.


source: Caselaw Access Project

author: JUSTICE LEWIS JUSTICE STOUDER,

license: Public Domain

text:
    WILLIS TAYLOR, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Burton Auto Springs Corp., Appellee).
    First District (Industrial Commission Division)
    No. 1 — 90—2588WC
    Opinion filed September 20, 1991.
    — Rehearing denied December 6, 1991.
    STOUDER, J., specially concurring.
    Carl H. Ebert & Associates, of Chicago (Regan D. Ebert, of counsel), for appellant.
    Kane, Day & Harrington, of Chicago (Gerald F. Cooper, Jr., of counsel), for appellee.
   JUSTICE LEWIS

delivered the opinion of the court:

Claimant, Willis Taylor, filed an application for adjustment of claim pursuant to the Workmen’s Compensation Act (Ill. Rev. Stat. 1977, ch. 48, par. 138.1 et seq.) for an injury to his legs received in a work-related accident during the course of his employment with the respondent, Burton Auto Springs Corporation. Following a hearing, the arbitrator found that the claimant had failed to prove he had any permanent disability and denied the claimant workers’ compensation benefits. On review, the Industrial Commission (Commission) affirmed the arbitrator’s decision. The claimant then sought review of the Commission’s decision before the circuit court; however, the court dismissed the claimant’s appeal sua sponte for lack of subject matter jurisdiction because the claimant had failed to file a request for summons as required by section 19(f)(1) of the Workers’ Compensation Act (the Act) (Ill. Rev. Stat. 1989, ch. 48, par. 138.19(f)(1)). The claimant appeals. The sole issue raised in this appeal is whether the circuit court’s dismissal of the claimant’s cause of action for lack of subject matter jurisdiction for failure to file a written request for issuance of summons was erroneous.

The facts of this case are undisputed. Following the issuance of the Commission’s decision on June 4, 1986, the claimant sought review in the circuit court. On June 12, 1986, a summons was sent by the circuit clerk to the Commission seeking a certified copy of the transcript of proceedings before the Commission, and a designated return date of August 6, 1986, was given on the summons. The summons indicated that the claimant had requested review of the Commission’s decision on June 12, 1986. Also on June 12, 1986, another summons was sent to the respondent and the respondent’s attorneys, and the designated return date on this summons was likewise August 6, 1986. A certificate of mailing signed by the circuit clerk and dated June 12, 1986, indicated that the circuit clerk had mailed copies of the summons to the parties and attorneys at the addresses listed thereon, and below this statement the respondent’s name and address and the respondent’s attorneys’ name and address appeared. A receipt of payment for the record from the Commission was also filed in the circuit court by the claimant on June 12, 1986. However, the record does not contain a written request for issuance of the summons.

On April 2, 1990, the claimant filed a motion in the circuit court asking that this matter be set for hearing. There is no explanation in the record for the delay between June 1986 and April 1990. A briefing schedule and an oral argument schedule were set by order of the court, and on August 2, 1990, the parties appeared for hearing. At this time, the circuit court sua sponte dismissed the claimant’s case, finding that the court did not have subject matter jurisdiction of the matter because the claimant had failed to file a written request for issuance of summons as required by statute.

On appeal, the claimant contends that the court erroneously dismissed his cause of action for lack of jurisdiction, as he had substantially complied with the statutory requirements for review. The claimant argues that the timely filing of the receipt of payment for the record from the Commission, the timely filing of the certificate of mailing, the issuance of the summons, and the presence of all of the parties before the court constituted substantial compliance with the statutory requirements for review, and that to dismiss his appeal for such a technicality serves only to deprive an individual of his right to be heard. The claimant asserts that, because the respondent did not contest the court’s jurisdiction on review, the parties waived the lack of jurisdiction.

The circuit court, in dismissing the claimant’s review of the Commission’s decision for lack of subject matter jurisdiction, relied on Whitmer v. Industrial Comm’n (1989), 187 Ill. App. 3d 409, 549 N.E.2d 353, as the basis for its decision. We find that the circuit court’s dismissal of the claimant’s review was proper, as the facts in the instant case are identical to the facts in Whitmer. In Whitmer, the claimant filed a summons to the Commission, a summons to the respondent’s attorney, a certificate of mailing, and a receipt for payment of the record to the Commission, but the claimant failed to file a written request for issuance of summons, just as was done here. Similarly, the claimant in the case sub judice makes the same arguments as those presented in Whitmer, i.e., that the tendency of the courts has been to simplify procedure, to honor substance over form, and to prevent technicalities from depriving a party of the right to be heard. However, as this court decided in Whitmer, the failure to file a written request for issuance of summons is a substantive requirement under the statute, and the claimant’s failure to file the written request was not strict compliance with the statutory requirements for review. This failure deprived the circuit court of subject matter jurisdiction.

We further note that the claimant’s argument that the parties waived the lack of jurisdiction must fail. The review of the Commission’s decision by the circuit court is essentially appellate review. It is well established that a reviewing court must sua sponte inquire into its jurisdiction, and if it determines that jurisdiction is lacking, the reviewing court must decline to proceed. (Sutherland v. Norbran Leasing Co. (1988), 180 Ill. App. 3d 95, 535 N.E.2d 1.) Additionally, the respondent’s failure to object to the lack of jurisdiction cannot confer jurisdiction upon the court, for subject matter jurisdiction can neither be conferred by agreement nor waived by the parties. Jenner v. Wissore (1988), 164 Ill. App. 3d 259, 517 N.E.2d 1220.

For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

McCULLOUGH, PM., and McNAMARA and WOODWARD, JJ., concur.

JUSTICE STOUDER,

specially concurring:

I agree Whitmer v. Industrial Comm’n (1989), 187 Ill. App. 3d 409, 549 N.E.2d 353, is controlling in this case. The facts are indistinguishable.

I am troubled by the trend of cases which suggests minor deviations from the appeal procedure result in what is characterized as lack of subject matter jurisdiction. It follows from this characterization that any action thereafter is void and the invalidity can be raised at any time. It seems to me that such a result bears no relationship to the objects and goals of the appeal procedure. Rather than liberally construing the appeal procedure, we are establishing rigid rules which would make those associated with common law pleadings appear liberal.

In the context of the general definition of jurisdiction, namely the power to hear a particular controversy between parties who are subject to the authority of the court, deficiencies in the appeal procedure ought not to result in lack of subject matter jurisdiction. Such requirements should be regarded as conditions precedent in bringing the controversy to the court or should be regarded as relating to jurisdiction of the parties. In either event the deficiencies could be waived by the parties and would be deemed so waived unless raised at the earliest point in the proceeding.

In the instant proceeding the praecipe for summons was not filed. Yet someone requested the issuance of the summons because it is undisputed summonses were served and the parties appropriately notified. No prejudice is shown. Neither are any benefits ascribed from the procedure justifying the consequences of deviation therefrom.

It seems to me that we might do well to reconsider the trend of cases thereby ameliorating the results caused by inflexible adherence to procedural form over substance.


author: PRESIDING JUSTICE MANNING

text:
    JEFFREY KALETA et al., Plaintiffs-Appellants, v. WHITTAKER CORPORATION et al., Defendants-Appellees. — JEFFREY KALETA et al., Plaintiffs-Appellants, v. TUG MANUFACTURING CORPORATION, DefendantAppellee.
    First District (1st Division)
    Nos. 1 — 89—1340, 1—90—0005 cons.
    Opinion filed September 23, 1991.
    — Rehearing denied December 2, 1991.

      David J. DeJong & Associates, Ltd., of Chicago (David J. DeJong and John J. O’Leary, of counsel), for appellants.
    Lapin, Hoff, Spangler & Greenberg, of Chicago (John Scott Hoff, of counsel), for appellees.
   PRESIDING JUSTICE MANNING

delivered the opinion of the court:

In appeal No. 1 — 89—1340, plaintiffs, Jeffrey Kaleta (hereafter Jeffrey or plaintiff) and his wife, Lisa Kaleta, brought an action against several corporations, not a part of this appeal, Whittaker Corporation (hereafter Whittaker or defendant) and its wholly owned subsidiary, Cochran Systems, Inc. (hereafter Cochran Systems or defendant). In their fourth amended complaint, plaintiffs allege that defendants are the corporate successor of Cochran Airport Systems (hereafter Cochran Airport), the original manufacturer of a defective beltloader that caused Jeffrey’s injuries, and seek recovery based upon the theories of strict product liability, breach of warranty and negligence. Following several hearings, the trial court granted summary judgment in favor of defendants.

The issues on this appeal are whether Whittaker or its subsidiary, Cochran Systems, is liable to plaintiffs as the successor corporations of manufacturer, Cochran Airport, and whether Whittaker expressly assumed liability for Cochran Airport pursuant to the sales agreement. The pertinent facts follow.

On September 12, 1985, Jeffrey, a baggage loader for American Airlines at O’Hare field, was inside the baggage hold of an American Airlines jetliner unloading baggage that was being transported up from the ground level by a beltloader when the front end of the conveyor of the mobile beltloader fell on his legs. He was severely injured with near fatal crush injuries to both legs that resulted in amputation of the right leg below the knee and permanent nerve and muscle damage to the left leg. A mobile beltloader is a piece of motorized ground equipment that has a conveyor belt which can be raised up to the level of the jet aircraft baggage hold.

The beltloader, serial number 660-316 (referred to as a cargoveyor by defendants), was manufactured by Cochran Airport in December 1979 in its Peachtree, Georgia, facility and sold to American Airlines on January 21, 1980. Almost two years later, on December 16, 1981, Tug Manufacturing Corporation purchased the entire 660 beltloader product line from Cochran Airport. Thereafter, Cochran Airport continued its production of other aviation-related products until October 28, 1983, when it sold its remaining assets to Whittaker pursuant to an agreement of purchase and sale of assets (hereafter Agreement). The sale of assets did not include the 660 beltloader product line or the subject beltloader involved in this incident. Thereafter Whittaker transferred all of the Cochran Airport assets to Whittaker Holdings Corporation, a wholly owned subsidiary, and the subsidiary changed its name to Cochran Systems, Inc., on November 8, 1983. Cochran Airport, the predecessor corporation, then executed articles of dissolution on December 1, 1983, and filed them on December 31, 1983. Also commencing October 28, 1983, Whittaker employed Mr. Joseph Cochran as the president of Cochran Systems for a period of 15 months pursuant to an employment agreement. Joseph Cochran was the president and majority shareholder of Cochran Airport and negotiated the sale of assets to Whittaker.

In their suit, plaintiffs asserted that Whittaker and Cochran Systems were liable for the torts of Cochran Airport either on the theory of a de facto merger of the corporations or on the basis of Whittaker’s express assumption of liability pursuant to the Agreement. Defendants moved for summary judgment, arguing that plaintiffs had failed to establish all of the requirements for proof of a de facto merger and that defendants had not expressly assumed any liabilities of Cochran Airport other than the liabilities specifically set forth in the Agreement. In support of their respective contentions on the summary judgment motion, the parties filed several memoranda, affidavits of company officials, documents and exhibits.

On January 23, 1989, the trial court found: (1) that “there was a sale of assets from CAS, Inc. (Cochran Airport) to Whittaker and its subsidiary”; (2) that “there was no continuity of ownership or successor liability from CAS, Inc. to either Whittaker or any subsidiary, including Cochran Systems, Inc.”; and (3) that “there was no express assumption of liability of CAS, Inc. by Whittaker, other than set out in the Asset Sale Agreement dated 28 Oct. 1983.” Following the trial court’s denial of their motion for reconsideration of the summary judgment order, plaintiffs filed a timely notice of appeal to this court.

In Illinois, the general rule is that a corporation that merges with another corporation takes on the latter corporation’s obligations and liabilities while a corporation which merely purchases the assets of another corporation is not liable for the debts and obligations of the transferor corporation (Manh Hung Nguyen v. Johnson Machine & Press Corp. (1982), 104 Ill. App. 3d 1141, 1143, 1148, 433 N.E.2d 1104; Domine v. Fulton Iron Works (1979), 76 Ill. App. 3d 253, 256, 395 N.E.2d 22), in the absence of an agreement providing otherwise. (Hernandez v. Johnson Press Corp. (1979), 70 Ill. App. 3d 664, 388 N.E.2d 778.) However, this rule is not without limitation as it is also well established under what circumstances a corporation that purchases the assets of another corporation will be held liable for the transferor corporation. In Hernandez v. Johnson Press (70 Ill. App. 3d at 667), this court delineates the “several recognized exceptions:

(1) where there is an express or implied agreement of assumption; (2) where the transaction amounts to a consolidation or merger of the purchaser or seller corporation; (3) where the purchaser is merely a continuation of the seller; or (4) where the transaction is for the fraudulent purpose of escaping liability for the seller’s obligations.

[Citations.] Exception (2) is recognized in Illinois [citation], and has been interpreted to include a de facto merger. [Citation.]” Like in Hernandez, plaintiffs here assert the existence of a defacto merger.

The criterion for establishing the existence of a de facto merger is identified in Hernandez and reiterated in Nguyen. A de facto merger may occur when the following factors are present:

(1) there is a continuity of the business enterprise between seller and buyer, including continuity of management, employees, location, general business operations and assets;
(2) there is a continuity of shareholders, in that shareholders of the seller become shareholders of the buyer so that they become a constituent part of the buyer corporation;
(3) the seller ceases operations and dissolves as soon as possible after the transaction; and
(4) the buyer assumes those liabilities and obligations necessary for the uninterrupted continuation of the seller’s business.

Nguyen, 104 Ill. App. 3d at 1143; Hernandez, 70 Ill. App. 3d at 667.

In the present case, the record does not reflect that there was a continuity of management, directors or shareholders of the two corporations with the exception of Cochran. The trial court concluded that while the other three requirements of the de facto merger test might present issues of fact, a jury could not as a matter of law have found continuity of shareholder, so as to meet the “merger exception” to the general rule on nonliability. We agree. No continuity of shareholders resulted from Whittaker paying for the acquired assets of Cochran Airport with shares of its stock. The purchase was for cash in the amount of $290,000 rather than shares of stock in the new corporation. Although Cochran received 74 shares of Whittaker stock, the record demonstrates that the amount was de minimus as it represented only .00037% of Whittaker’s stock. Additionally, he received the stock pursuant to an employee stock plan which was available to all employees. The stock was worth $1,200. Thus, we believe that the Whittaker stock was received by Cochran as consideration for services as an employee rather than as an element of consideration of the asset sale.

In Nguyen, this court determined that continuity of shareholders is probably the most important element and concluded that “without continuity of shareholders, it does not appear just to require the successor corporation to assume the liabilities of the predecessor when it has already paid a substantial price for the assets of the predecessor.” (Nguyen, 104 Ill. App. 3d at 1149.) Since the factor of continuity of shareholders is absent, we agree with the trial court’s disposition that no de facto merger transpired between Whittaker or Cochran Systems and Cochran Airport.

Furthermore, Whittaker’s purchase of the Cochran Airport assets did not include the beltloader line of products or the subject beltloader involved in Jeffrey’s accident. Such products and product line had been sold to Tug approximately two years prior to the Agreement.

Plaintiffs next assert that Whittaker expressly agreed to assume all of Cochran Airport’s liabilities that arose after the date of the Agreement. In support of this argument, plaintiffs rely on Cochran’s testimony given during his deposition and the language in Paragraph 10(d) of the Agreement. Plaintiffs allege that during the deposition Cochran stated that his intention and understanding of the Agreement were that Whittaker was to assume all liability for any product liability claims of Cochran Airport which accrued after the sale of the assets or the date of the Agreement.

Paragraph 10(d) provides that seller and Cochran were to indemnify Whittaker for:

“Any claims against, or liabilities or obligations of Seller (Cochran Airport) or Cochran (Mr. Joseph Cochran) not specifically assumed by Buyer (Whittaker) pursuant to this Agreement including, without limitation, claims for products liability in connection with the Products manufactured prior to the Closing Date (October 28, 1983) and claims arising from the exceptions to Seller’s and Cochran’s representations noted on Schedule 3; provided, however, that Cochran’s obligation to indemnify Buyer for products liability shall be limited to claims arising out of occurrences which precede the date of this Agreement.”

Plaintiffs urge that because the language of paragraph 10(d) provides that both Cochran and Cochran Airport were to indemnify Whittaker for claims which were in existence prior to the Agreement, there exists an implication, or question of fact, as to whether Whittaker was to assume liability for those claims arising after the date of the Agreement.

We have reviewed the Agreement in general and paragraph 10(d) in particular. Plaintiffs’ interpretation of the indemnification clause is without merit. We found no agreement on the part of Whit-taker to assume the general liabilities and obligations of Cochran Airport. Further, we discovered that the limiting language of the indemnification clause with respect to products liability claims refers to Cochran alone, and not both Cochran and Cochran Airport.

Moreover, the Agreement contains an express disclaimer clause releasing Whittaker of any and all liabilities of Cochran Airport arising from the purchased assets or the operation of Cochran Airport. (Accord Climatrol Industries, Inc. v. Fedders Corp. (1986), 149 Ill. App. 3d 533, 501 N.E.2d 292.) In relevant part, paragraph 3 states that Whittaker “does not assume and shall not be responsible for any obligations or liabilities of Seller or Cochran whatsoever.” We discerned that Whitaker expressly agreed to assume four very limited and specific obligations, none of which, however, included any liability for the incident involving plaintiffs.

We conclude that the trial court’s finding that there was no express assumption of liability on the part of Whittaker other than the liabilities it accepted as specifically set forth in the Agreement was correct. Even though Cochran gave his interpretation of paragraph 10(d), the record reflects that such interpretation was made without the benefit of counsel, made out of context, and made without the benefit of mention or reconciliation with the disclaimer of liability clause contained in paragraph 3.

We hold that summary judgment is proper where, notwithstanding Cochran’s deposition testimony, the language of the Agreement is clear on its face. Summary judgment will be affirmed whenever the facts in the record support the decision of the trial court. Sentry Insurance Co. v. S & L Home Heating Co. (1980), 91 Ill. App. 3d 687, 414 N.E.2d 1218.

Accordingly, we affirm the judgment of the circuit court in appeal No. 1-89-1340.

In the complaint in appeal 1 — 90—0005, plaintiffs sued Tug Manufacturing Corporation (hereafter Tug or defendant) alleging that Tug was liable for Jeffrey’s injuries on the grounds that (1) Tug acquired and maintained the product line of Cochran Airport and (2) Tug breached its duty to warn of defects in its predecessor’s products. Plaintiffs’ first contention is based upon the “product line” approach to successor liability as set forth in the California case of Ray v. Alad Corp. (1977), 19 Cal. 3d 22, 560 P.2d 3, 136 Cal. Rptr. 574, and as adopted in other State cases. (See Turner v. Bituminous Casualty Co. (1976), 397 Mich. 406, 244 N.W.2d 873; Ramirez v. Amsted Industries, Inc. (1981), 86 N.J. 332, 431 A.2d 811.) Based upon our research, we found that in Illinois in Nguyen (104 Ill. App. 3d 1141, 433 N.E.2d 1104), this court declined to address the specific issue and rejected the analyses and results of the other States which did recognize the “product line” approach. Similarly in Gonzalez v. Rock Wool Engineering & Equipment Co. (1983), 117 Ill. App. 3d 435, 453 N.E.2d 792, we affirmed the dismissal of plaintiff’s fourth amended complaint and refused to adopt the product line exception to the general rule of nonliability of a purchaser of assets as set forth in Ray.

In Ray the manufacturer of the ladder on which the plaintiff was injured, Alad I, sold its assets, trade name and goodwill to Alad II. Approximately nine months later, plaintiff was injured and sued Alad II. Alad II had continued to manufacture the same line of ladders under the same name, used the same equipment and personnel, and solicited its predecessor’s customers through the same sales representatives. In reversing the trial court’s grant of summary judgment on behalf of Alad II, the California Supreme Court held that a transferee which continues a product line is subject to strict liability for defective units of the same line which was manufactured and distributed by the transferor. Although the Ray court could find no basis for imposing liability on defendant under traditional exceptions, it relied upon policy considerations. Those considerations are: (1) the nonavailability of plaintiff’s remedies against the original manufacturer due to the acquisition of the business by the successor; (2) the successor’s ability to assume the original manufacturer’s risk-spreading rule; and (3) the fairness involved in requiring the successor to bear the burden for any defects as a consequence of the successor’s use of the original manufacturer’s goodwill in continuing the product line.

In Turner plaintiff was injured by a power press manufactured by a New York corporation. Several years prior to the injury, the New York corporation had sold for cash its entire business, goodwill, name and assets to Harris Corporation. The court decided it was insignificant that the corporate transfer was for cash and not stock and held that there may be a cause of action against the corporate successor “where the totality of the transaction demonstrates a basic continuity of the enterprise.” (Turner, 397 Mich, at 411, 244 N.W.2d at 875.) However, an additional factor in Turner was that the purchaser corporation agreed to assume the liabilities of the seller corporation while defendant here made no such agreement.

In Ramirez, the New Jersey court relied upon the same principles as the Turner court. However, it rejected the result reached in Turner and instead held that liability could be imposed on the successor as long as the successor continued to manufacture and sell the same product as the predecessor, and Ramirez expressly adopted the California court’s decision in Ray.

We have thoroughly reviewed the cases relied upon by both plaintiff and defendant. Although the Ray, Turner and Ramirez courts found liability despite the successor corporation’s lack of or minimal involvement with the product, our research reveals that the doctrine, often referred to as the “product line” approach to successor liability, has been repeatedly rejected by Illinois courts for several legal reasons and policy considerations. See Gonzalez, 117 Ill. App. 3d 435, 453 N.E.2d 752; Nguyen, 104 Ill. App. 3d 1141, 433 N.E.2d 1104; Domine, 76 Ill. App. 3d 253, 395 N.E.2d 22; Hernandez, 70 Ill. App. 3d 664, 388 N.E.2d 778; Johnson v. Marshall & Huschart Machinery Co. (1978), 66 Ill. App. 3d 766, 384 N.E.2d 141.

In Johnson this court directly addressed the Ray rule. In addressing the issue of whether a successor corporation may be held amenable to a suit based on strict liability for the torts of its predecessor, this court affirmed the grant of summary judgment in favor of the defendant on the grounds that defendant did not manufacture the press which injured the plaintiff and that it had not agreed to assume liability for tort claims against predecessors. The Johnson court stated:

“The purpose of strict liability in tort is to place the loss caused by defective products on those who create the risk and reap the profit by placing such products in the stream of commerce, regardless of whether the defect was caused by ‘negligence’ on the part of the manufacturer. [Citation.] The rationale underlying this liability is threefold: (1) the public interest in human life and safety demands broad protection against the sale of defective products; (2) the manufacturer solicits and invites the use of his product by representing that it is safe and suitable for use; and (3) the losses caused by defectively dangerous products should be borne by those who have created the risk and reaped the profit by placing the product into commerce. [Citation.]” (Johnson, 66 Ill. App. 3d at 769.)

Thus, the court rejected the rationale of Ray and held that under the circumstances presented the defendant did not assume liability for the defective products of its predecessor. In the instant case, similar to Johnson, Tug did not manufacture the beltloader which injured Jeffrey and neither did it agree to assume the liability for the tort claims of Cochran Airport.

In Domine this court held that the Ray doctrine was not in conformity with the law of strict liability in Illinois because the Illinois Supreme Court had specifically refused to impose strict liability upon a defendant who is outside of the original producing and marketing chain. (Domine, 76 Ill. App. 3d at 257, citing Peterson v. Lou Bachrodt Chevrolet Co. (1975), 61 Ill. 2d 17, 329 N.E.2d 785.) The court there also opined that the public policy of Illinois does not favor the extension of the doctrine of strict liability to a successor corporation.

In Hernandez this court found an additional reason to reject the product line exception in reliance on statements enunciated in Leannais v. Cincinnati, Inc. (7th Cir. 1977), 565 F.2d 437. The Court of Appeals for the Seventh Circuit stated:

“In recent years for a variety of reasons, many have thought it necessary to turn to the courts in search of solutions to social problems. Courts are ill-equipped, however, to balance equities among future plaintiffs and defendants. Such forays can result in wide-ranging ramifications on society, the contemplation of which is precluded by the exigencies of deciding a particular case presented on a limited record developed by present parties. Absent compelling necessity, therefore, a Federal Court should not impose the policy pronouncements of the Supreme Court of one state upon the citizens of another. Nor are we at liberty to impose our own view as to what the law of Wisconsin should be. As the Wisconsin Supreme Court has recognized, such broad public policy issues are best handled by legislatures with their comprehensive machinery for public input and debate.” Leannais, 565 F.2d at 441.

In Nguyen, this court extensively reviewed several hypotheses for creating liability on the part of the successor corporation and rejected each of them. The court concluded that the “arguments offered by plaintiff do not justify imposing the predecessor’s potential liability on the successor. *** Perhaps that law should be changed, but the change must come from the legislature.” (Nguyen, 104 Ill. App. 3d at 1151.) We agree.

As stated in Green v. Firestone Tire & Rubber Co. (1984), 122 Ill. App. 3d 204, 460 N.E.2d 895, while the Illinois courts have been struggling with this issue, none have adopted the approach. Accordingly, in light of the recent decisions of this court and because the circumstances here do not mandate a different result, we decline to adopt the “product line” approach to successor liability.

Plaintiffs next suggest that Illinois courts will recognize a cause of action for personal injuries against the purchaser of a product line for failing to warn of defects in its predecessor’s products. (Nguyen, 104 Ill. App. 3d at 1147; Gonzalez, 117 Ill. App. 3d 435, 453 N.E.2d 752.) They argue that the trial court improperly and narrowly interpreted Illinois law when it determined that a successor corporation has a duty to warn of defects in a predecessor’s product only if the successor has a written service contract covering the particular product and because no such contract exists here, Tug is not liable. In Gonzalez, we clarified Nguyen by stating that “it is impossible to conceive of such a duty on the part of the successor corporation unless the circumstances following the corporate transfer give rise to the duty” (Gonzalez, 117 Ill. App. 3d at 438), i.e., a continuing relationship between the successor corporation and the product manufactured by its predecessor.

In order to determine the presence of a relationship effective to create a duty to warn, the following factors will be considered: (1) succession to a predecessor’s service contracts; (2) coverage of the particular machine under a service contract; (3) service of that machine by the purchaser corporation; and (4) a purchaser corporation’s knowledge of defects and of the location or owner of that machine. Gonzalez, 117 Ill. App. 3d at 438.

The trial court below primarily addressed the issue of lack of service contracts in rejecting plaintiffs’ contention that a continuing relationship existed between Tug, American Airlines and the product itself. We find no error by the trial court in ruling on the summary judgment motion on this basis. Our review of the record has found no evidence of a continuing relationship between Tug and American Airlines with respect to servicing of the 660 line of beltloaders. The record reflects that Tug notified American of the obligation it undertook to service the warranty on the product, if any. Although Tug may have told American to relate to it any problems concerning the product, such communications and contacts alone fail to constitute evidence of a continuing relationship between the parties under the Gonzalez test. The letter of agreement did not include provisions for either a succession to the service contracts of Cochran Airport or coverage of the particular beltloader in question under a service contract. In fact, the subject beltloader was sold and shipped by Cochran Airport and plaintiffs produced no evidence that the particular machine was ever serviced by Tug. Like Gonzalez, in the absence of evidence indicating a continuing relationship between Tug and American Airlines, we believe that there is no basis for the imposition of liability upon Tug for breach of a duty to warn.

In our opinion, the trial court properly granted summary judgment in favor of Tug since Tug did not have a written service contract covering the subject beltloader that caused Jeffrey’s injuries and Tug did not have any duty to warn of the beltloader’s purported defects before an injury occurred. 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 a judgment as a matter of law. (Ill. Rev. Stat. 1987, ch. 110, par. 2— 1005; Kroll v. Sugar Supply Corp. (1983), 116 Ill. App. 3d 969, 452 N.E.2d 649.) Accordingly, the judgment of the trial court in appeal No. 1 — 90—0005 is affirmed.

Based upon our review of the record and in applying the aforementioned principles of law, we conclude that the trial court’s grant of summary judgment in favor of defendants in the consolidated appeal is appropriate where, after consideration of all grounds urged and facts raised in the trial court, the moving parties are entitled to judgment as a matter of law.

Affirmed.

CAMPBELL and O’CONNOR, JJ., concur.

      Although the sale occurred in January 1980, Cochran Airport did not ship the beltloader to American Airlines until December 31,1981.


author: JUSTICE JOHNSON

text:
    NEWCASTLE PROPERTIES, INC., Plaintiff-Appellee, v. SIDNEY SHALOWITZ et al., Defendants-Appellants.
    First District (4th Division)
    No. 1 — 90—1248
    Opinion filed September 26, 1991.
    — Rehearing denied November 20, 1991.

      Torshen, Sehoenfield & Spreyer, Ltd., of Chicago (Jerome H. Torshen and Steven P. Garmisa, of counsel), for appellants.
    Schiff, Hardin & Waite, of Chicago (James A. Clark, Barbara E. Hermansen, and Darren Van Puymbrouck, of counsel), for appellee.
   JUSTICE JOHNSON

delivered the opinion of the court:

Defendants, Sidney and Phyllis Shalowitz, appeal the trial court’s order granting plaintiff, Newcastle Properties, Inc. (hereinafter Newcastle), its motions for summary judgment (Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1005) and prejudgment interest, and denying defendants’ motions for summary judgment and rehearing.

The following issues are before this court for review: (1) whether the seller’s recovery pursuant to a real estate contract that allows for the payment of earnest money by letter of credit, and contains a provision that the buyer shall forfeit “all sums theretofore paid to the Seller,” is limited to the amount paid by the buyer on the date of default, where the contract permits the seller to draw upon the letter of credit in order to recover the amount as liquidated damages, and the seller failed to do so; (2) whether the liquidated damages provision of the real estate contract is ambiguous and should be construed against the drafter to limit the seller’s remedy for the buyer’s breach of contract; and (3) whether the “avoidable consequences” rule precludes the seller from suing for recovery of $109,500 in liquidated damages, and $33,135 in prejudgment interest, pursuant to a provision which limits the amount of liquidated damages to “all sums theretofore paid to Seller,” because the seller failed to mitigate its damages by presenting and drawing upon the letter of credit before it expired.

We reverse.

Background

Defendants agreed to purchase condominium unit 36D (hereinafter purchase agreement) in the building known as “One Magnificent Mile,” located at 950 North Michigan Avenue in Chicago, Illinois. The seller was the La Salle National Bank and Trust Company, as trustee under trust No. 100049. During the time when the events occurred that gave rise to this lawsuit, the Levy Organization Development Company, Inc. (hereinafter the Levy Organization), was the agent of the beneficiaries of La Salle National Bank trust No. 100049, who were the owners of One Magnificent Mile.

On November 1, 1983, the ownership interest of the residential portion of One Magnificent Mile was transferred to La Salle National Bank trust No. 103785. On December 31, 1985, Newcastle became the sole beneficiary of trust No. 103785 and the successor in interest to the original owner of the property.

The Levy Organization prepared the purchase agreement. The Levy Organization and defendants executed the purchase agreement on May 10, 1982. Paragraph 12 of the purchase agreement states the following relevant provision:

“Performance. Time is of the essence of this Purchase Agreement. If Purchaser defaults on any of Purchaser’s covenants or obligations hereunder, then, *** all sums theretofore paid to Seller (including without limitation earnest money and payments for Extras) by Purchaser shall be forfeited as liquidated damages and shall be retained by Seller.”

Under the terms of paragraph 2(aX3) of the purchase agreement, defendants had the option to pay their earnest money in cash or in the form of an unconditional and irrevocable letter of credit for the benefit of the Levy Organization, which would expire no earlier than 21 days after the estimated date of completion of the unit. Paragraph 2(a)(3) also provided that in the event the letter of credit expired prior to the closing date, defendants were obligated to either “(p]ay to Seller the amount of the Letter of Credit by cashier’s or certified check,” or deliver a replacement letter of credit 30 days prior to the expiration date of the original letter of credit. In addition, paragraph 2(a)(3) of the purchase agreement also specified that “[fjailure by Purchaser to deliver such replacement Letter of Credit when required to do so shall entitle Seller to draw upon the Letter of Credit and hold and disburse the funds as earnest money hereunder.”

Defendants posted an irrevocable standby letter of credit in the amount of $109,500 as an earnest money deposit. Defendants obtained the letter of credit from the Continental Illinois National Bank and Trust Company of Chicago (hereinafter Continental Bank) in December 1980.

A standby letter of credit requires the issuer (Continental Bank) to pay the beneficiary (plaintiff) a sum certain prior to the expiration of the note upon the presentation of documents specified in the purchase agreement which demonstrate that the parties who procured the letter’s issuance (defendants) have defaulted. Pastor v. National Republic Bank (1979), 76 Ill. 2d 139, 147; Jupiter Orrington Corp. v. Zweifel (1984), 127 Ill. App. 3d 559, 562; Stringer Construction Co. v. American Insurance Co. (1981), 102 Ill. App. 3d 919, 922; First Arlington National Bank v. Stathis (1980), 90 Ill. App. 3d 802, 807; see also Byrne, An Examination of UCC Article 5 (Letters of Credit), 45 Bus. Law. 1521 (1990); Givray, Letters of Credit, 45 Bus. Law. 2381 (1990); Symons & White, Banking Law 204-06 (1984); Joseph, Letters of Credit: The Developing Concepts & Financing Functions, 94 Banking L.J. 816 (1977).

The standby letter of credit obtained by defendants in the instant case was drafted to expire on May 22, 1983. The estimated date of completion of defendants’ condominium unit was October 10, 1983. Defendants extended the letter of credit to June 22, 1983. Defendants obtained this amended letter of credit in recognition of their obligation under the purchase agreement.

Thereafter, construction of defendants’ unit was delayed beyond the original closing date. The Levy Organization notified defendants of this change. In a letter dated February 14, 1983, the Levy Organization reminded defendants that since their amended letter of credit would expire on June 22, 1983, it would either have to be extended at least 21 days beyond the estimated date of completion of their unit, or defendants would have to replace the original letter of credit with a substitute letter of credit 30 days prior to the expiration date of the original letter of credit, pursuant to the purchase agreement. The letter also stated that the Levy Organization would be “entitled to draw on the Letter of Credit” if defendants breached the contract.

Defendants responded by seeking to extend their amended standby letter of credit. Defendants executed a “Request For Amendment To Commercial Letter of Credit” at Continental Bank on June 20, 1983. Four days later, the Levy Organization contacted Sidney Shalowitz and informed him that it had not received written confirmation extending the expiration date of the amended letter of credit.

After defendant learned that the letter of credit had not been extended, he directed Continental Bank not to extend or renew the letter of credit. Defendant instructed Continental Bank in this manner on June 27, 1983. In July 1983, defendants informed the Levy Organization that they would not close on the unit or pay any of the money required by the purchase agreement.

The Levy Organization failed to present the $109,500 amended standby letter of credit prior to its expiration on June 23, 1983. At the time defendants breached the purchase agreement, they had only paid the Levy Organization $3,122 for “extras” under the contract. Defendants refused to pay any additional funds because they maintained that no further payment was required pursuant to the liquidated damages provision of the purchase agreement.

The Levy Organization retained the $3,122 and sued defendants for an additional $109,500 and $33,135 in prejudgment interest. The Levy Organization and defendants filed motions for summary judgment. (Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1005.) Plaintiff's motion was granted, and defendants’ countermotion was denied. The court awarded plaintiff $109,500, in addition to $33,135 in prejudgment interest. Defendants then filed this appeal.

Opinion

I

First, defendants contend that under the terms of the purchase agreement, $3,122 was properly forfeited as liquidated damages because that amount was “theretofore paid” on the date of the breach. Defendants maintain that they are not liable for $109,500, because that sum was payable only under the letter of credit prior to its expiration. Defendants rely upon Schek v. Chicago Transit Authority (1969), 42 Ill. 2d 362, Abingdon Bank & Trust Co. v. Bulkeley (1945), 390 Ill. 582, Moscov v. Mutual Life Insurance Co. (1944), 387 Ill. 378, Joseph v. Carter (1943), 382 Ill. 461, Jones v. Seiwert (1987), 164 Ill. App. 3d 954, National Tea Co. v. American National Bank & Trust Co. (1981), 100 Ill. App. 3d 1046, Rhoads v. Clifton, Gunderson & Co. (1980), 89 Ill. App. 3d 751, Epstein v. Yoder (1979), 72 Ill. App. 3d 966, Walgreen Co. v. American National Bank & Trust Co. (1972), 4 Ill. App. 3d 549, Devco Development Corp. v. Hooker Homes, Inc. (Fla. App. 1987), 518 So. 2d 922, Makris v. Williams (Fla. App. 1983), 426 So. 2d 1186, Stewart v. Mehrlust (Fla. App. 1982), 409 So. 2d 1085, Giammattei v. Egan (1949), 135 Conn. 666, 68 A.2d 129, Supreme Court Rule 366(b)(l)(i) (134 Ill. 2d R. 366(b)(l)(i)), and the Restatement of Contracts (Second) §212, comment d (1979).

Plaintiff maintains that defendants cannot succeed on their claims of forfeiture and waiver under Illinois law. Specifically, plaintiff maintains that defendants will not prevail for the following four reasons: First, the purchase agreement will not support a forfeiture; second, equity condemns defendants’ conduct; third, the avoidable consequences rule will neither sustain defendants’ forfeiture theory nor relieve them of their obligation to pay prejudgment interest on funds withheld for over seven years; and fourth, defendants cannot allege that plaintiff knowingly and intentionally relinquished its right to the earnest money as is required to impose a waiver under Illinois law. Plaintiff relies upon Peck v. Chicago Rys. Co. (1915), 270 Ill. 34, Jones v. Seiwert (1987), 164 Ill. App. 3d 954, Bocchetta v. McCourt (1983), 115 Ill. App. 3d 297, Hart v. Lyons (1982), 106 Ill. App. 3d 803, Lempera v. Karner (1979), 79 Ill. App. 3d 221, Aden v. Alwardt (1979), 76 Ill. App. 3d 54, Epstein v. Yoder (1979), 72 Ill. App. 3d 966, Parenti v. Wytmar & Co. (1977), 49 Ill. App. 3d 860, Allstate Insurance Co. v. National Tea Co. (1975), 25 Ill. App. 3d 449, Slavis v. Slavis (1973), 12 Ill. App. 3d 467, Walgreen Co. v. American National Bank & Trust Co. (1972), 4 Ill. App. 3d 549, Hudson v. Shepard (1900), 90 Ill. App. 626, and Ford v. Illinois Refrigerating Construction Co. (1890), 40 Ill. App. 222.

The role of the court is to enforce a valid contract. (Joseph v. Carter (1943), 382 Ill. 461, 466.) “A court cannot remake a contract and give a litigant a better bargain than he himself was satisfied to make; and when the terms of a contract are clear and unambiguous, they must be enforced.” (Walgreen Co. v. American National Bank & Trust Co. (1972), 4 Ill. App. 3d 549, 554; see also Abingdon Bank & Trust Co. v. Bulkeley (1945), 390 Ill. 582, 591; Lucas v. Beaton (1990), 201 Ill. App. 3d 341, 346-47.) Whether or not an ambiguity exists is a matter of law for the court to determine. (National Tea Co. v. American National Bank & Trust Co. (1981), 100 Ill. App. 3d 1046, 1049; Susmano v. Associated Internists of Chicago, Ltd. (1981), 97 Ill. App. 3d 215, 219.) “The mere fact that the parties do not agree upon the meaning of the terms of a contract does not create an ambiguity.” (Hickox v. Bell (1990), 195 Ill. App. 3d 976, 990.) “Where the question [before the court] involves one of contract construction, a court of review may ascertain the meaning of contract provisions from the instrument itself as a matter of law ***.” (Magnuson v. Schaider (1989), 183 Ill. App. 3d 344, 357; see also 134 Ill. 2d R. 366(b)(l)(i); Rhoads v. Clifton, Gunderson & Co. (1980), 89 Ill. App. 3d 751; Restatement of Contracts (Second) §212, comment d (1979).) “[C]ontract terms must be given their plain, ordinary, popular and natural meaning.” Village of Glenview v. Northfield Woods Water & Utility Co. (1991), 216 Ill. App. 3d 40, 48.

We consider case law from other jurisdictions when there is no law within this jurisdiction that addresses matters raised in a case at bar. In the instant case, we will rely upon Florida case law as there is no relevant case law in this jurisdiction. The Florida Appellate Court has held that a seller of real property may not recover as liquidated damages sums which have not been paid by the buyer. (Makris v. Williams (Fla. App. 1983), 426 So. 2d 1186; Stewart v. Mehrlust (Fla. App. 1982), 409 So. 2d 1085.) The Florida Appellate Court has also found that a seller of real estate who fails to present a letter of credit held in escrow prior to the letter’s expiration is not entitled to the full amount of the letter in liquidated damages after the buyer defaults. Devco Development Corp. v. Hooker Homes, Inc. (Fla. App. 1987), 518 So. 2d 922, 923-24.

In Makris v. Williams, the parties entered into a real estate contract that required payment of $40,000 as earnest money. (Makris, 426 So. 2d at 1187.) The contract also contained the following liquidated damages provision: “If buyer fails to perform any of the covenants of this contract, all money paid pursuant to this contract by buyer as aforesaid shall be retained by or for the account of the seller as consideration for the execution of this contract and as agreed liquidated damages and in full settlement of any claims for damages.” (Emphasis in original.) (Makris, 426 So. 2d at 1187.) The buyer’s attorney made a representation to the sellers that he was holding $10,000 in escrow as partial payment of the earnest money. However, the buyer’s attorney never received the funds. (Makris, 426 So. 2d at 1188.) Shortly thereafter, the buyer refused to close the deal, and the seller sued the buyer for $40,000 in liquidated damages. (Makris, 426 So. 2d at 1188.) The trial court held that the buyer was bound by his attorney’s misrepresentation, and it ordered the buyer to pay the seller $10,000. Makris, 426 So. 2d at 1188.

The buyer then appealed, alleging that the trial court erred when it ordered him to pay the seller $10,000. The seller contended the trial court should have awarded the requisite $40,000 down payment as liquidated damages. (Makris, 426 So. 2d at 1188.) The appellate court affirmed the trial court’s $10,000 judgment against the buyer. (Makris, 426 So. 2d at 1188.) In addition, the court found that the seller was not entitled to $40,000 in liquidated damages because the seller could only recover a sum that had already been paid. The court stated that “ ‘[w]hen a real estate contract provides that if a sale is not closed because of the fault of the buyer, the deposit paid under the contract is to be retained by the seller, the seller cannot recover a deposit not actually made.’ ” Makris, 426 So. 2d at 1188, quoting Stewart v. Mehrlust (Fla. App. 1982), 409 So. 2d 1085,1086.

Similarly, in Stewart v. Mehrlust (Fla. App. 1982), 409 So. 2d 1085, the real estate contract between the buyer and the seller had the following liquidated damages clause, which is similar to the provision in the contract between the parties in the case at bar: “If Buyer fails to perform this Contract within the time specified, the deposits) paid by the Buyer aforesaid may be retained by or for the account of Seller as liquidated damages ***.” (Emphasis added.) {Stewart, 409 So. 2d at 1086.) The contract in Stewart further provided that the buyers were obligated to pay $10,000 earnest money. The buyers failed to tender the earnest money. However, the sellers signed the contract and proceeded with the agreement even though the earnest money had not been paid. {Stewart, 409 So. 2d at 1086.) Eventually, the buyers breached the contract and the sellers filed a complaint seeking recovery of the $10,000 unpaid earnest money as liquidated damages. The court in Stewart held that “[w]hen a real estate contract provides that if a sale is not closed because of the fault of the buyer, the deposit paid under the contract is to be retained by the seller, the seller cannot recover a deposit not actually made.” (Emphasis added.) {Stewart, 409 So. 2d at 1086.) The court went on to say that “[t]he [buyers] did not tender a deposit, so there was nothing to be retained by the sellers.” Stewart, 409 So. 2d at 1086.

Finally, in Devco Development Corp. v. Hooker Homes, Inc. (Fla. App. 1987), 518 So. 2d 922, the Florida Appellate Court addressed the issue of whether a seller of real property who fails to present a letter of credit held in escrow prior to the letter’s expiration may obtain the full amount of the letter in liquidated damages after the buyer defaults. In Devco Development Corp., the contract between the buyer and the seller required the buyer to “deposit *** an irrevocable bank letter of credit in the amount of $200,000.” (Devco Development Corp., 518 So. 2d at 923.) The contract also had a liquidated damages clause which made the following provision: “[I]n the event [the Buyer] defaults with respect to its obligations under this Contract, the *** Letter of Credit held by [the Seller] on this contract may be taken and kept by [the Seller] as full liquidated damages.” (Devco Development Corp., 518 So. 2d at 923.) The trial court held that the letter was Devco’s sole liquidated damage remedy, and that Devco relinquished its right to recover the amount of the letter of credit in liquidated damages by failing to take the requisite steps to collect upon the letter prior to its expiration. (Devco Development Corp., 518 So. 2d at 923.) The appellate court affirmed the trial court’s finding and held that the seller had no right to recover the proceeds of the letter of credit as liquidated damages because the seller failed to present the letter of credit before it expired. Devco Development Corp., 518 So. 2d at 923-24.

In the instant case, we find that plaintiff is only entitled to retain the $3,122 paid to the Levy Organization prior to defendants’ breach. Paragraph 12 of the purchase agreement provided that “all sums theretofore paid to [the] Seller” would be “forfeited as liquidated damages” and “retained” by the seller. (Emphasis added.) We are required to attribute the “plain, ordinary, popular and natural meaning” to the terms of this purchase agreement. (Village of Glenview v. Northfield Woods Water & Utility Co. (1991), 216 Ill. App. 3d 40, 48.) “In common usage, ‘paid’ does not mean ‘payable.’ ” (Giammattei v. Egan (1949), 135 Conn. 666, 668, 68 A.2d 129, 130.) The word “paid” is the past tense of the verb “to pay,” while the word “payable” is an adjective which refers to sums which are owed but have not yet been paid. Giammattei, 135 Conn. at 668, 68 A.2d at 130.

The aforementioned provision is an explicit liquidated damages clause. (See Siegel v. Levy Organization Development Co. (1989), 182 Ill. App. 3d 859, 862.) “In general, Illinois courts give effect to liquidated damage provisions if the parties have expressed their agreement in clear and explicit terms, and there is no evidence of fraud or unconscionable oppression ***.” (Hartford Fire Insurance Co. v. Architectural Management, Inc. (1990), 194 Ill. App. 3d 110, 115.) In some instances, the amount of liquidated damages may exceed the amount of actual damages. In other cases, the amount of actual damages will exceed the amount established as liquidated damages. In the instant case, both parties agreed to accept this inherent risk when they agreed to include a liquidated damages provision in the purchase agreement. “[A] contract may be drafted in such a manner as to allow the forfeiture not only of a deposit actually made but, in addition, a deposit that was agreed to be made.” (Brecker v. Furman (Fla. App. 1987), 508 So. 2d 514, 515.) However, a seller of real property may not recover as liquidated damages sums which have not been paid by the buyer, absent a contrary provision. Makris v. Williams (Fla. App. 1983), 426 So. 2d 1186, 1188; Stewart v. Mehrlust (Fla. App. 1982), 409 So. 2d 1085, 1086; Brecker, 508 So. 2d at 515.

Under the circumstances, we must enforce the liquidated damages provision of the purchase agreement because its terms are clear and unambiguous (see Village of Glenview v. Northfield Woods Water & Utility Co. (1991), 216 Ill. App. 3d 40, 48), and there is no evidence of unconscionable oppression or fraud. (See Hartford Fire Insurance Co., 194 Ill. App. 3d at 115.) We cannot rewrite this contract and give plaintiff a better bargain than it was satisfied to make. (See Walgreen Co. v. American National Bank & Trust Co. (1972), 4 Ill. App. 3d 549, 554; Siegel, 182 Ill. App. 3d at 862.) The parties could have drafted the purchase agreement to include a liquidated damages clause which provided for the forfeiture of all sums theretofore agreed to be paid by the buyer in the event that the buyer breached the contract. (See Brecker, 508 So. 2d at 515.) The purchase agreement established the amount of liquidated damages as the amount “theretofore paid” (emphasis added) which shall be “retained” by plaintiff, not the amount which would have been payable had plaintiff properly presented the letter of credit. In the instant case, the only amount “paid” and “retained” by plaintiff was $3,122 for extras. Plaintiff may not recover $109,500 from defendants because this sum was not “theretofore paid.” Plaintiff failed to present the standby letter of credit before it expired. Accordingly, we find that plaintiff’s recovery under the liquidated damages clause of paragraph 12 of the purchase agreement is limited to the amount paid by the buyer on the date of default.

In addition, we find plaintiff’s waiver argument inappropriate. Plaintiff is correct that defendants in effect argue that plaintiff waived its right to collect $109,500 in liquidated damages under the letter of credit. Plaintiff maintains that it did not waive its right to collect the aforementioned sum. We disagree. A waiver constitutes an intentional relinquishment of a known right. (Lempera v. Karner (1979), 79 Ill. App. 3d 221, 223; Allstate Insurance Co. v. National Tea Co. (1975), 25 Ill. App. 3d 449, 461; Slavis v. Slavis (1973), 12 Ill. App. 3d 467, 474.) One party which alleges that another party has waived its right must demonstrate by clear and unequivocal evidence that said party knowingly and intentionally relinquished its right. (Slavis, 12 Ill. App. 3d at 474.) A right may be waived expressly or impliedly by conduct. (Hart v. Lyons (1982), 106 Ill. App. 3d 803, 806.) We find that defendants have properly demonstrated that plaintiff knowingly and intentionally relinquished its right to collect $109,500 in liquidated damages. The record shows that plaintiff waived its right to collect the proceeds of the letter of credit. Plaintiff acknowledged that it could have avoided any loss by drawing upon the letter of credit in a letter to defendants dated February 14, 1983. Plaintiff stated that it could obtain the earnest money under the letter of credit at any time between May 22 and June 22, 1983, “if we do not receive the replacement Letter of Credit by thirty days prior to June 22, 1983 ***.” If plaintiff had mitigated its damages by presenting the letter of credit, $109,500 would have been “theretofore paid” and “retained.” Having failed to present the letter of credit, plaintiff is not entitled to an award of $109,500 in damages.

Finally, plaintiff’s argument that paragraph 12 of the purchase agreement is an illegal forfeiture provision and its citations of Jones v. Seiwert (1987), 164 Ill. App. 3d 954, Bocchetta v. McCourt (1983), 115 Ill. App. 3d 297, Aden v. Alwardt (1979), 76 Ill. App. 3d 54, Epstein v. Yoder (1979), 72 Ill. App. 3d 966, Parenti v. Wytmar & Co. (1977), 49 Ill. App. 3d 860, and Hudson v. Shepard (1900), 90 Ill. App. 626, which enunciate the law with respect to forfeiture, are inappropriate. Paragraph 12 of the purchase agreement provides for defendants to forfeit “all sums theretofore paid” as liquidated damages in the event of a breach. Such provisions must be construed “strictly and narrowly.” (Jones, 164 Ill. App. 3d at 957.) Accordingly, we find that this liquidated damages provision does not constitute a contract forfeiture by plaintiff. Presentment of the letter of credit prior to its expiration was a condition precedent to plaintiff’s being paid pursuant to the liquidated damages clause. Plaintiff failed to present the letter of credit prior to its expiration. Plaintiff’s failure to satisfy this condition precedent and defendants’ subsequent refusal to tender $109,500 does not constitute a contract forfeiture by plaintiff, nor does it render the liquidated damages clause illegal.

For the aforementioned reasons, we rule that plaintiff’s retention of $3,122 was proper because that amount was “theretofore paid” on the date of the breach. However, defendants are not liable for $109,500, because that sum was payable only under the letter of credit prior to its expiration.

II

Next, defendants contend in the alternative that paragraph 12 of the purchase agreement is ambiguous because the forfeiture provision may be reasonably interpreted as meaning that only the $3,122 “theretofore paid” to plaintiff should be forfeited as liquidated damages. Defendants contend that this ambiguity should be construed against the drafter. Defendants rely upon Siegel v. Levy Organization Development Co. (1989), 182 Ill. App. 3d 859, Carrico v. Delp (1986), 141 Ill. App. 3d 684, and Susmano v. Associated Internists of Chicago, Ltd. (1981), 97 Ill. App. 3d 215.

Plaintiff maintains that paragraph 12 of the purchase agreement does not limit its damages to an indeterminate sum paid for extras. Plaintiff also alleges that this court’s ruling in Siegel supports the finding of the trial court, and that defendants’ interpretation of the purchase agreement does not reflect the intent of the parties.

The primary objective of a court in construing a contract is to give effect to the intent of the parties. (Abingdon Bank & Trust Co. v. Bulkeley (1945), 390 Ill. 582, 591; Lucas v. Beaton (1990), 201 Ill. App. 3d 341, 346.) Whether or not the terms of a contract are ambiguous is a matter of law for the court to determine. (National Tea Co. v. American National Bank & Trust Co. (1981), 100 Ill. App. 3d 1046, 1049; Susmano v. Associated Internists of Chicago, Ltd. (1981), 97 Ill. App. 3d 215, 219.) “A contract will be considered to be ambiguous if it is ‘ “one capable of being understood in more senses than one.” ’ ” (National Tea Co., 100 Ill. App. 3d at 1049, quoting Standard Steel & Wire Corp. v. Chicago Capital Corp. (1975), 26 Ill. App. 3d 915, 919.) However, “[t]he mere fact that the parties do not agree upon the meaning of the terms of a contract does not create an ambiguity.” (Hickox v. Bell (1990), 195 Ill. App. 3d 976, 990.) Where there is no ambiguity in the terms used, “the instrument itself is the only criterion of the intention of the parties.” Abingdon, 390 Ill. at 591; see also Lucas, 201 Ill. App. 3d at 347.

In the instant case, we have already found that the liquidated damages provision in paragraph 12 of the purchase agreement is not ambiguous. The mere fact that plaintiff and defendants disagree with respect to the meaning of the terms of a contract does not mean that the contract terms are ambiguous. (See Hickox, 195 Ill. App. 3d at 990.) The express language of the purchase agreement has convinced us that no ambiguity exists.

Furthermore, plaintiff’s argument that defendants’ interpretation of the purchase agreement does not reflect the intent of the parties does not pass muster because where there is no ambiguity in the contract terms, “the instrument itself is the only criterion of the intention of the parties.” (Emphasis added.) Abingdon Bank & Trust Co. v. Bulkeley (1945), 390 Ill. 582, 591.

Plaintiff’s contention that this court’s ruling in Siegel v. Levy Organization Development Co. (1989), 182 Ill. App. 3d 859, supports the finding of the trial court has no merit. Siegel is distinguishable from the case at bar. In Siegel, the plaintiff contracted to purchase a condominium unit in the same building where defendants in the case at bar sought to purchase a condominium unit. (Siegel, 182 Ill. App. 3d at 860.) As in the present case, paragraph 12 of the plaintiff’s purchase agreement provided that “all sums theretofore paid to Seller” would be “forfeited” and “retained” as liquidated damages. In addition, Mr. Siegel posted two standby letters of credit as earnest money. Mr. Siegel then defaulted as defendants did in the instant case. However, Siegel is distinguishable from the case at bar because in Siegel, the sellers presented and drew upon the letters of credit before they expired. The proceeds of these letters of credit were “paid” prior to the closing date and “retained” as liquidated damages. Siegel does not address the question of whether a seller’s recovery pursuant to a real estate contract which contains a provision that the buyer shall forfeit “all sums theretofore paid to the Seller” is limited to the amount paid by the buyer on the date of default, where the seller failed to draw upon the letter of credit to recover liquidated damages.

For the aforementioned reasons, we conclude that the liquidated damages provision of the purchase agreement is not ambiguous and that only the sum “theretofore paid” to plaintiff may be forfeited as liquidated damages.

Ill

Finally, defendants contend that the “avoidable consequences” rule precludes plaintiff from recovering the sums it could have obtained by mitigating its damages by presenting the letter of credit. Plaintiff maintains that paragraph 12 of the purchase agreement unequivocally establishes that $109,500 is the measure of damages to which it is entitled, and that this provision is consistent with this court’s opinion in Siegel v. Levy Organization Development Co. (1989), 182 Ill. App. 3d 859, and is consistent with defendants’ own assertions at trial.

In light of our finding above, it is unnecessary for us to address the argument regarding the appropriateness of the application of the avoidable consequences doctrine.

For the aforementioned reasons, we reverse the trial court’s decision.

Reversed.

LINN and McMORROW, JJ., concur.


text:
    THE LOMBARD COMPANY, Plaintiff-Appellant, v. THE CHICAGO HOUSING AUTHORITY, Defendant-Appellee.
    First District (1st Division)
    No. 1 — 90—1579
    Opinion filed September 30, 1991.
    — Rehearing denied November 25, 1991.

      James D. Montgomery & Associates, Ltd., of Chicago (James D. Montgomery and Robert P. Vogt, of counsel), for appellant.
    Schiff, Hardin & Waite, of Chicago (Walter C. Greenough and Mark C. Friedlander, of counsel), for appellee.
   PRESIDING JUSTICE MANNING

delivered the opinion of the court:

Plaintiff, The Lombard Company (hereafter plaintiff or TLC), appeals from the order of the circuit court of Cook County dismissing its verified four-count breach of contract complaint against defendant, the Chicago Housing Authority (hereafter defendant or CHA), for failure to timely file the cause of action pursuant to the four-year statute of limitations found in section 13 — 214 of the construction limitations act (Ill. Rev. Stat. 1987, ch. 110, par. 13 — 214). TLC contends that the 10-year statute of limitations found in section 13 — 206 (Ill. Rev. Stat. 1987, ch. 110, par. 13 — 206) is the governing provision because its complaint sought damages for extra work caused by defendant’s obstruction and interferences with TLC’s performance on a construction project in violation of the parties’ written contract. In the alternative, TLC contends that CHA was estopped from relying on section 13 — 214 to bar its action. We affirm in part, reverse in part and remand.

On October 7, 1981, TLC, an Illinois building contractor, was awarded a bid contract by CHA to construct 180 apartment units (hereafter the project). The contract required TLC to complete construction of the project within 480 days of November 2, 1981, i.e., by February 19, 1983. However, according to TLC because of CHA’s obstructions and interferences, it did not begin the project until mid-March 1982 and actually completed the construction on or about September 19, 1983.

In its complaint filed on September 12, 1989, TLC charged that CHA failed to fulfill its obligations pursuant to the contract and that such actions and inactions caused substantial construction delays, to wit, 267 days. The complaint specifically alleges, inter alia, that: (1) CHA failed to make the site available on November 2, 1981, as promised and, in fact, did not obtain title to the site until December 24, 1981; (2) CHA delayed in obtaining the necessary zoning permits until March 25, 1982; (3) CHA delayed the city’s issuance of a building permit until July 29, 1982, because it waited until May 1982 to authorize the architect, Graham, Anderson, Probst & White (hereafter architect or Graham, Anderson) to release the site plans to the city, a prerequisite for issuance of the building permit; and (4) CHA failed to approve shop drawings in the allocated time period or within a reasonable time although the parties had agreed to a condition that allowed CHA to be a part of the shop drawing submittal process and a new schedule which gave CHA and Graham, Anderson 30 days in which to review and approve or reject the shop drawings submitted by TLC. The complaint further alleged that after construction of the building itself finally began, CHA requested numerous changes; however, CHA then failed to timely approve TLC’s cost approvals that were required prior to implementation of the requested changes. TLC also alleged that CHA delayed getting utility services, which prevented TLC from installing gas and electric lines into the building, and CHA failed to supply kitchen appliances when required.

As a result of CHA’s actions, TLC incurred costs beyond those contemplated in the contract, to wit: (1) $69,165 in extra costs for additional materials, equipment and rental costs; (2) $116,205 in costs for masonry protection that was required because TLC had to construct temporary, winter protection structures in order to proceed with the concrete work when CHA failed to obtain title to the site or make arrangements for utility services for the buildings in a timely fashion; (3) $76,649 in extra expenses for wage increases; (4) $143,718 in extra expenses for field overhead; and (5) $130,348 in extra expenses for office overhead, for a total damages amount of $536,885. The complaint also alleged that CHA improperly withheld from TLC a retainage fund payment in the amount of $37,260.

CHA also entered into a contract with architect Graham, Anderson to perform all professional services necessary for planning and designing the project and architectural work. CHA, in turn, was required to approve the design documents and each phase of the work.

Soon after construction commenced, TLC began negotiating with CHA for reimbursement of the increased costs and, on May 14, 1982, submitted a formal request to CHA for a change order indicating that TLC was going to incur some $500,000 in extra costs. The complaint also alleges that some time during the series of meetings held in 1982 CHA acknowledged its liability to TLC for extra costs incurred due to CHA’s interference with TLC’s contract performance; that TLC was to hold its claim in abeyance during the period of contract performance; that once the building was completed, TLC was to submit a claim to CHA for the extra costs; and that TLC was entitled to additional days for contract completion due to delays not originating with TLC. CHA commissioners then approved “Change Order No. 34,” a payment to TLC in the amount of $142,538. TLC executed the order with the proviso that “it did not waive the remainder of its claim.” However, CHA never executed the change order. On October 20, 1983, TLC submitted its formal claim to CHA for extra compensation in the amount of $527,087.

On November 27, 1989, CHA filed a section 2 — 615 motion to dismiss the complaint (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615), on the ground that TLC’s claims were barred by the statute of limitations since CHA had engaged in the planning, designing, supervision or management of the project. CHA asserted that section 13— 214(a) requires a party to bring a construction-related action within four years from the time the person bringing the action knew or should have known of the act or omission giving rise to the cause of action. Thereafter, TLC filed briefs in opposition to the motion to dismiss relying on section 13 — 206 which provides a 10-year statute of limitations for an action on a written contract. The trial court granted CHA’s motion to dismiss on April 3, 1990, and thereafter denied TLC’s amended motion for reconsideration. In its amended motion to reconsider, TLC requested the trial court to consider facts “which show that defendant is equitably estopped from asserting a statute of limitations defense” and it attached correspondence between the parties to support its position that CHA never disputed liability, that settlement negotiations were limited to the extent of damages, and that the parties were negotiating both before and after the expiration of the putative limitations period.

The trial court held: “[The CHA] got so involved in the construction process and so involved in hindering and delaying and by their own mismanagement [they] brought themselves within the protection of [section 13 — 214].” TLC has appealed from these two adverse rulings, and for purposes of this appeal, all allegations of fact in TLC’s verified complaint filed are accepted as true.

TLC first argues on appeal that section 13 — 214 does not apply to the present case because the complaint does not contain any allegations of fact that CHA engaged in an act or omission described by this section, but merely alleges that CHA is being sued as a landowner for breach of contract. TLC contends that its complaint is not, in any way, based on some act or omission relating to “planning, designing, supervising or management” of the project within the meaning of section 13 — 214. Rather, this is the typical situation whereby an owner hires an architect to prepare plans and designs that a builder thereafter follows, and the landowner’s function, on the other hand, is limited to obtaining title to the land, arranging for utilities to be provided, and providing any additional information that might be needed. Thus, TLC argues that the instant complaint is merely a breach of contract action governed by section 13 — 206. Although we agree with the trial court that section 13 — 214, rather than section 13 — 206, is the correct statute to consider in this case in determining whether TLC’s complaint was timely, we disagree with the reasoning of the trial court in reaching that decision.

Section 13 — 214(a) provides:

“Actions based upon tort, contract or otherwise against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property shall be commenced within 4 years from the time the person bringing an action, or his or her privity, knew or should reasonably have known of such act or omission.” Ill. Rev. Stat. 1987, ch. 110, par. 13 — 214(a).

TLC relies on C.S. Johnson Co. v. Champaign National Bank (1984), 126 Ill. App. 3d 508, 467 N.E.2d 363, where this court held that section 13 — 214 does not apply to actions against landowners where the action is based on the defendant’s status as a landowner, and not on an act or omission in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property. (C.S. Johnson, 126 Ill. App. 3d at 511.) The court there reached its decision by looking to the legislative history of the statute. Representative Dunn, one of the bill’s sponsors, stated “The purpose of this Bill is to provide some relief for professionals, who are trying to exercise their sound judgment in the design and construction of improvements to real property ***.” (80 Ill. Gen. Assem., House Proceedings, May 25, 1979, at 32 (statements of Representative Dunn).) However, in 1986 our supreme court harmonized the C.S. Johnson case and the later decision in Lehmann v. Arnold (1985), 137 Ill. App. 3d 412, 484 N.E.2d 473, when it explained in People ex rel. Skinner v. Hellmuth, Obata & Kassabaum, Inc. (1986), 114 Ill. 2d 252, 500 N.E.2d 34, that the current statute “does not exclude persons based upon their status,” but “protects, on its face, anyone who engages in the enumerated activities.” (Emphasis in original.) Skinner v. Hellmuth, 114 Ill. 2d at 261.

In support of its argument, CHA maintains that section 13 — 214 applies by its terms to all persons engaged in construction-related activities. We agree. We have reviewed the cases and believe that they hold that section 13 — 214 is not applicable to a landowner unless that landowner is actually engaged in the professional planning, supervision or management of a construction project or the construction of an improvement to the property. For purposes of a motion to dismiss, the court must look to the allegations of fact contained in the complaint to determine whether the particular activities the landowner has purportedly engaged in or failed to engage in, as the case may be, fall within the purview of the statute.

Of the complained-of activities in TLC’s complaint, we believe that the allegation that CHA failed to approve or reject the shop drawings within the time schedule brings this action within the purview of the statute. As the trial judge stated, “CHA interposed itself into the process of shop drawings.” When TLC reluctantly agreed to allow CHA to participate in the shop drawing process, it allowed it to become involved in the planning, supervision and management of the construction project.

Accordingly, we hold that although one of the main purposes of section 13 — 214 is to prevent liability in perpetuity against persons involved in the design and construction of buildings, such as architects, contractors and engineers (see 80th Ill. Gen. Assem., House Proceedings, May 25, 1979, at 11), it also governs a landowner in a breach of contract action who is being sued for an act or omission of one of the specified construction-related activities or for actual construction. Thus, we affirm the trial court’s order dismissing the complaint as time barred by section 13 — 214.

We now turn to the issue of whether CHA is estopped from asserting the statute of limitations as a defense. It is well settled that “equitable estoppel” and “waiver” are two distinct concepts which, however, are very similar and often used interchangeably. A waiver is defined as a voluntary relinquishment of a known right, claim or privilege (Pantle v. Industrial Comm’n (1975), 61 Ill. 2d 365, 335 N.E.2d 491), whereas an equitable estoppel may arise even though there was no intention on the part of the party estopped to relinquish any existing right. Moreover, prejudice to the other party is one of the essential elements of an equitable estoppel. The principle of equitable estoppel has been applied to bar reliance on the statute of limitations even where there was no intent to deceive or mislead. (Witherell v. Weimer (1987), 118 Ill. 2d 321, 330, 515 N.E.2d 68.) The doctrine of equitable estoppel has also been applied against local governmental entities. See Kievman v. Edward Hospital (1985), 135 Ill. App. 3d 442, 481 N.E.2d 909 (and the cases cited therein).

We believe that the doctrine of equitable estoppel applies to the present case. The facts alleged in TLC’s amended motion for reconsideration adequately raised the defense of estoppel. Sometime in 1987, the parties agreed to submit all of their documentation to an accounting firm for an analysis and review of the figures. On August 6, 1987, CHA’s attorney wrote a letter to TLC indicating that “[i]f we are unable to negotiate a settlement, we agreed to file a joint demand for arbitration sixty (60) days after you have authorized Ernst & Whinney to proceed, on approximately October 19, 1987.” According to TLC, the parties were continuing their negotiations on April 5, 1989, when CHA first raised section 13 — 214 as a bar to TLC’s claim. Even so, the letter of that date discusses settlement “[i]f substantial justice can be achieved.”

Accordingly, the documentation attached to the motion arguably shows that the conduct and representations of the CHA officials, coupled with the negotiations between the parties in 1987 and 1989, both before and after the expiration of the limitation period, lulled TLC into a false sense of security that its claim would be settled regardless of the limitation period. (See Searcy v. Chicago Transit Authority (1986), 146 Ill. App. 3d 779, 497 N.E.2d 410.) Like our decision in Searcy, we find that “[s]uch conduct may work an estoppel.” Searcy, 146 Ill. App. 3d at 784.

Because TLC’s estoppel argument presented a question of fact, it was improper for the court to dispose of the issue as a matter of law. (See Kinsey v. Thompson (1963), 44 Ill. App. 2d 304, 194 N.E.2d 565.) We further find that because TLC included in the record and raised before the court the basis for a factual determination on its equitable estoppel argument, the trial court should have allowed an amendment to the pleadings. Although a proposed written amendment is desirable, it is not crucial where the record, as here, reveals that the movant articulated the substance of the amendment and the reasons therefor to the court in such a manner that the materiality of the proposed change or addition is made plain to the court or in the proceedings. See Old Salem Chautauqua Association v. Illinois District Council of the Assembly of God (1958), 13 Ill. 2d 258, 266-67, 148 N.E.2d 777.

Based on the foregoing, we affirm the trial court’s finding that this action is governed by section 13 — 214 of the Code; we reverse the trial court’s order dismissing the complaint and remand the cause for further proceedings consistent with this opinion.

Affirmed in part; reversed in part and remanded.

CAMPBELL and BUCKLEY, JJ., concur.