author: JUSTICE JOHNSON

text:
    TOLONA PIZZA PRODUCTS CORPORATION, Plaintiff-Appellant, v. DAVY McKEE CORPORATION et al., Defendants-Appellees.
    First District (4th Division)
    No. 1—88—0327
    Opinion filed August 10, 1989.

      Chadwell & Kayser, of Chicago (Champ W. Davis, Jr., Julia D. Mannix, and Erica A. Munzel, of counsel), for appellant.
    Phelan, Pope & John, of Chicago (David L. Doyle and Thomas P. Cimino, Jr., of counsel), for appellees Davy McKee Corporation and James Edgar.
   JUSTICE JOHNSON

delivered the opinion of the court:

Plaintiff, Tolona Pizza Products Corporation, an Illinois corporation, appeals from an order of the circuit court of Cook County dismissing two counts of its complaint against defendants, Davy McKee Corporation, a Delaware corporation, and James Edgar, its employee, for failure to state a claim for which relief could be granted. (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615.) The sole issue presented for review is whether the trial court erred, as a matter of law, in ruling that a professional malpractice action cannot be sustained under Illinois law if plaintiff seeks damages for economic loss due to defeated commercial expectations.

We affirm.

For purposes of review, we will accept plaintiff’s allegations as true. (Anderson Electric, Inc. v. Ledbetter Erection Corp. (1986), 115 Ill. 2d 146, 148.) Plaintiff is engaged in the business of manufacturing and selling pizza crusts and related products and supplies. Defendant Davy McKee Corporation (hereinafter McKee) is an international concern engaged in furnishing engineering and architectural services to industry. Defendant Edgar, a registered professional engineer, was an employee of McKee.

Plaintiff retained McKee to conduct a preliminary study into the feasibility of automating its pizza crust line. Plaintiff speculated that automation of its manufacturing system would reduce costs and increase output, thereby improving its position in the marketplace. Edgar was assigned by McKee to conduct the study. Based upon Edgar’s recommendations, McKee was hired to design, procure, and supervise the installation of an automated pizza crust line that would achieve plaintiff’s objectives.

The line was installed in August 1985. Plaintiff alleged that the system failed to function at the outset due to numerous deficiencies in design by defendants. Plaintiff alleges that damages were sustained in the amount of $1.7 million as a result of defendants’ negligence.

On April 6, 1987, plaintiff filed a complaint against defendants. AMF Union Machinery, Inc., and Dunbar Systems, Inc., were also named as defendants, but they are not parties in this appeal. Counts I through IV were directed against defendants. Counts I and IV sought damages for professional malpractice against McKee and Edgar, respectively. Count II was directed against McKee for breach of contract. Count III was directed against McKee for negligent misrepresentation.

Defendants moved pursuant to the Illinois Code of Civil Procedure, section 2 — 615, to dismiss plaintiff’s complaint. (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615.) Plaintiffs counts against McKee for breach of contract and for negligent misrepresentation are currently pending. The court found that economic loss occasioned by negligent misrepresentation states a possible cause of action in tort as an exception to the bar against recovery for economic losses as set forth in Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 88-89, and reaffirmed in Anderson Electric, Inc. v. Ledbetter Erection Corp. (1986), 115 Ill. 2d 146, 153-54.

The trial court granted defendants’ motion to dismiss counts I and IV relying on Anderson Electric, Inc. v. Ledbetter Erection Corp. (1986), 115 Ill. 2d 146, which held that there can be no recovery in tort for economic loss due to defeated commercial expectations regardless of plaintiff’s inability to recover under an action in contract. No just reason was found to delay appeal from the rulings on these counts. (107 Ill. 2d R 304.) This appeal followed.

Plaintiff contends the trial court erred in finding that, pursuant to Anderson, a cause of action could not be maintained in tort for economic loss due to defeated commercial expectations. Plaintiff argues that the case at bar is distinguishable on three grounds: (1) Anderson did not involve an action for malpractice; (2) defendants supplied professional services while defendant in Anderson was the manufacturer of the product in question; and (3) plaintiff’s economic loss was occasioned by defendants’ professional malpractice which, pursuant to Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290, is still a viable cause of action in Illinois when services are rendered pursuant to a contract. We disagree.

The Illinois Supreme Court in Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, held that there can be no recovery for economic loss in either negligence or strict liability to recover solely economic losses unless the tort involves either negligent or intentional misrepresentation. The Moorman court adopted the definition of economic loss as set forth in the Columbia Law Review note entitled Economic Loss in Products Liability Jurisprudence, 66 Colum. L. Rev. 917, 918 (1966). Economic loss was defined as “ ‘damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits — without any claim of personal injury or damage to other property *** [citation].” Moorman, 91 Ill. 2d at 82.

In Anderson the Illinois Supreme Court reaffirmed the Moor-man bar against recovery for economic loss and expanded the definition so as to include damages resulting from defeated commercial bargains. (Anderson Electric, Inc. v. Ledbetter Erection Corp. (1986), 115 Ill. 2d 146, 153.) The plaintiff in Anderson had entered into a contract with defendant Ledbetter to perform electrical work on two precipitator units manufactured by defendant Walther. Ledbetter and Walther then entered into a contract which set forth Walther’s functions and responsibilities as construction superintendent. There was no allegation of a contractual relationship between plaintiff and defendant. Plaintiff sued Walther in negligence, alleging that Walther had failed to perform a service which resulted in the plaintiff having to have the work redone, thereby incurring additional expense or economic loss. Plaintiff sued Ledbetter for breach of contract. The court held that “[a] plaintiff seeking to recover purely economic losses due to defeated expectations of a commercial bargain cannot recover in tort, regardless of the plaintiff’s inability to recover under an action in contract.” Anderson, 115 Ill. 2d at 153.

Plaintiff first asserts that Anderson may be distinguished from the instant case, since Anderson was not a professional malpractice action and plaintiff and defendant in Anderson were not in privity of contract, as the parties here. We find this to be a distinction without a difference. The relevant inquiry is the type of loss sustained, not the nature of the relationship between the parties which resulted in the alleged damage. (People ex rel. Skinner v. Graham (1988), 170 Ill. App. 3d 417, 435.) The focus of the inquiry in Anderson was the type of damages sustained, not the relationship between the parties. In fact, a review of the appellate court decision in Anderson reveals that the complaint was vague as to the nature of Walther’s company and its exact responsibilities. Anderson Electric, Inc. v. Ledbetter Erection Corp. (1985), 133 Ill. App. 3d 844, 850, aff’d (1986), 115 Ill. 2d 146.

Plaintiff in the instant case is alleging economic loss due to defendants’ failure in the design, procurement, and supervision of the installation of the automated pizza crust line which would achieve plaintiff’s objectives. Plaintiff’s economic loss was due to defeated commercial expectations. We find that plaintiff’s allegations clearly come within the purview of Anderson.

Plaintiff next attempts to distinguish Anderson on grounds that defendants in the instant case provided services, whereas one of the defendants in Anderson was the manufacturer of the product in question. We do not find this distinction determinative of when economic loss can be recovered in tort. Further, we are not persuaded that Anderson did not in fact deal with the issue of applying Moor-man to service contracts. We found the appellate court’s decision in Anderson instructive in determining the extent to which the court applied the Moorman bar against recovery for economic loss.

The appellate court stated that “[t]he Moorman court was dealing with products rather than with services, but we perceive no reason why the same rationale should not apply [to the case at bar]. Plaintiff makes no claim for personal injury or property damage; it seeks only recovery of the additional cost of redoing portions of the project; there is no allegation of a sudden calamitous event, only dissatisfaction with the quality of assistance received from Walther.” Anderson, 133 Ill. App. 3d at 847.

Defendants correctly point out that Illinois cases subsequent to Anderson have barred recovery in tort for economic loss when services provided by an architect were product related. This court recently interpreted Anderson so as to apply to service contracts in Werblood v. Columbia College (1989), 180 Ill. App. 3d 967. In Werblood, we denied recovery for economic loss due to negligent administration of defendant’s by-laws in the termination of plaintiff’s teaching services, pursuant to Anderson and Moorman. (See also Fence Rail Development Corp. v. Nelson & Associates, Ltd. (1988), 174 Ill. App. 3d 94 (which held that Moorman plaintiff could not recover damages for economic loss due to architect’s plans which did not meet plaintiff’s contractual requirements); People ex rel. Skinner v. Graham (1988), 170Ill. App. 3d 417 (which held that economic loss due to professional negligence of architects and engineers in designing a building was not recoverable pursuant to Moorman and Anderson]); but see People ex rel. Skinner v. FGM, Inc. (1988), 166 100. App. 3d 802 (which allowed recovery for economic loss occasioned by an architect’s professional negligence relying on Rosos Litho Supply Corp. v. Hansen (1984), 123 . App. 3d 290, 295, decided prior to Anderson).) We find that Anderson should not be interpreted so as to not apply to cases relating to services provided by defendant architects or engineers.

Finally we will address plaintiff’s contention that pursuant to Rosos Litho Supply Corp. v. Hansen (1984), 123 Ill. App. 3d 290, economic loss is recoverable in professional malpractice actions. Rosos, however, was decided prior to Anderson. In Rosos, the plaintiff brought an action against various contractors and defendant architect for negligent supervision over the construction of a storage building addition to plaintiff’s existing structure. The court, in finding a valid cause of action for professional malpractice for the negligent performance of services, interpreted Moorman as having not abolished by inference all professional malpractice actions charging economic losses, arising from service contracts, against architects and engineers. (Rosos, 123 Ill. App. 3d at 297.) We do not agree.

In light of Anderson and Werblood v. Columbia College (1989), 180 Ill. App. 3d 955, recently decided by this court, we no longer find the distinction between services and products, relied upon in Rosos, determinative as to when economic loss may be recovered in tort. Nor do we find that the relationship between the parties should dictate when economic loss may be recovered in tort. In People ex rel. Skinner v. Graham (1988), 170 Ill. App. 3d 417, the court interpreted Moorman as not carving out an exception for professionals. (Skinner, 170 Ill. App. 3d at 436.) The issue that should be addressed is the type of damages sustained and not the nature of the relationship between the parties. Skinner, 170 Ill. App. 3d at 435.

Accordingly, we do not find that the trial court erred in finding that pursuant to Anderson, plaintiff failed to state a cause of action based on defeated commercial expectations.

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

Affirmed.

JIGANTI, P.J., and LINN, J., concur.


source: Caselaw Access Project

author: JUSTICE LORENZ

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. ROBERT WHEATLEY, Defendant-Appellant.
    First District (5th Division)
    No. 1—87—0143
    Opinion filed August 11, 1989.

      Randolph N. Stone, Public Defender, of Chicago (Tina Liebling, Assistant Public Defender, of counsel), for appellant.
    Cecil A. Partee, State’s Attorney, of Chicago (Inge Fryklund and Kim A. Novi, Assistant State’s Attorneys, of counsel), for the People.
   JUSTICE LORENZ

delivered the opinion of the court:

Defendant, Robert Wheatley, appeals from his convictions for armed robbery (Ill. Rev. Stat. 1985, ch. 38, par. 18 — 2(a)) and unlawful use of a weapon by a felon (Ill. Rev. Stat. 1985, ch. 38, par. 24 — 1). He received concurrent sentences of eight years’ imprisonment for armed robbery and three years’ imprisonment for unlawful use of a weapon. On appeal, he raises the following four issues: (1) whether the trial court committed reversible error when it allowed the State to amend its answer to discovery by adding a name to its list of witnesses on the third day of trial; (2) whether he was denied his sixth amendment right of confrontation when a witness’ prior inconsistent statement was admitted in evidence; (3) whether he was proven guilty beyond a reasonable doubt; and (4) whether he is entitled to credit for time served in custody prior to sentencing. For the following reasons, we affirm.

Defendant was tried for armed robbery and unlawful use of a weapon by a felon, and his brother, Kenneth Wheatley (Kenneth), was tried for armed robbery stemming from the same incident. Defendant waived his right to a jury trial but Kenneth was tried by a jury. The State presented its witnesses against both defendants with the jury present and the jury was excused from the courtroom when defendant’s attorney was cross-examining the State’s witnesses. When the State rested its case against Kenneth, he presented his defense to the jury without defendant present. Afterward, the State continued its case against defendant and defendant presented his defense to the trial judge.

The State’s witnesses established the following. Richard Gillis, the complaining witness, testified that on October 9, 1985, shortly before 10:45 p.m., he was walking home from work when he saw two black men standing in front of him on the sidewalk near an alley. One of the men, whom Gillis identified as Kenneth, pulled out a chrome-colored gun and demanded his money. Gillis said, “Alright. I’ll give you my money,” but Kenneth stated, “Get into the alley.” Gillis offered to give him his money where they were but Kenneth again demanded he move into the alley. At this point, the second man led Gillis into the alley while Kenneth also pushed Gillis. They shoved Gillis into a door, and when Gillis hit it, the door flew open. They pushed him into the vestibule area. As Kenneth pointed his gun at Gillis, the second man went through his pockets. At this point, Gillis noticed the second man also had a gun, which was blue or black steel with a rubber band wrapped around the barrel. The second man took $17 from Gillis’ pocket and said he knew Gillis had more money. Gillis gave the second man an envelope that he pulled out from his boot containing $140, a $35 check, and a deposit slip from his bank. The deposit slip had Gillis’ name, business address, and account number imprinted on it. Pointing their guns at him, the men told Gillis to walk down the stairs and stay there for 5 or 10 minutes. After the men left, Gillis waited a minute or two and immediately called the police when he arrived home at approximately 10:45 p.m.

Sergio Rajkovich, a Chicago police officer, testified that on October 9, 1985, at approximately 11:20 p.m., he and his partner, Reno Baiocchi, were driving in a marked squad car when they observed a vehicle without license plates driving ahead of them and pulled it over. Inside the vehicle were defendant, who was the driver, Ted McLeod, who was the front seat passenger, Kenneth, who was in the back seat behind McLeod, and Vincent Wheatley (Vincent), who was in the back seat behind defendant. Defendant did not have a driver’s license and was arrested. When Rajkovich asked the remaining occupants if any of them had a license to drive the car, Kenneth responded that he had a license. McLeod exited the vehicle so that Kenneth, who was in the back seat, could drive. As Kenneth got out of the car, Rajkovich saw a chrome .357 magnum gun lying on the back seat where Kenneth was sitting. The occupants were ordered out of the car and all four men were handcuffed. Rajkovich searched the car and found a bluesteel .22 caliber gun with a rubber band wrapped around it. The gun was concealed under a seat cushion where Vincent was sitting. Both guns found in the car were loaded. On the floor of the driver’s side, Rajkovich also found a bank deposit slip with the name “R.W. Gillis” imprinted on it.

The men were arrested and advised of their Miranda rights. At this time, Kenneth admitted that the chrome .357 magnum gun was his and they were in the area delivering phone books. At the station, the men were searched again and $61 was recovered from Vincent and $40 from McLeod.

Rajkovich testified that the four men were arrested approximately seven or eight blocks from where the robbery took place.

At approximately 1 a.m. on October 10, 1985, Gillis viewed a lineup of six persons which included defendant and Kenneth. Gillis identified Kenneth as one of the men who robbed him.

The State then rested its case against Kenneth and requested a continuance of defendant’s trial to present additional witnesses against him. Over defendant’s objection, his bench trial was continued for six days. Kenneth’s jury trial proceeded and defendant’s attorney did not participate in the court proceedings when Kenneth presented his defense to the jury.

Kenneth called his brother, Vincent, to testify in his behalf. Vincent testified that on the night in question, Kenneth, defendant, McLeod, and he were delivering telephone books. They made three stops, and each time defendant and McLeod got out of the car to make the delivery. Vincent and Kenneth remained in the back seat of the car. At the last stop defendant and McLeod left the car for approximately three to five minutes with two or three telephone books. When they returned, the group began to drive home. Shortly thereafter, Vincent noticed a police car following them with its emergency lights on. Before pulling over, McLeod handed defendant a gun and defendant handed two guns back to Vincent, telling him to “put them up.” Vincent put one of the guns behind him and the other behind Kenneth. Vincent’s testimony exculpated Kenneth but inculpated defendant in the robbery.

When the bench trial continued against defendant, the State moved to amend its answer to discovery to add Vincent’s name to its list of witnesses. Defendant objected but the trial court granted the motion. The case was continued approximately two more weeks because another State witness was not present in court.

At the next date for trial, the State called Vincent as a witness against defendant. When asked what his name was, Vincent stated, “I do not want to testify in this case, period, because I do not remember.” When asked whether he was the same Vincent Wheatley who previously testified at Kenneth’s trial he stated, “I don’t remember.” He admitted defendant was his brother. Vincent testified he did not remember where he lived, whether he owned a car, or whether he was with defendant on the night of the robbery. When asked again whether he remembered testifying previously, he stated, “I don’t know, would you stop hassling me, I don’t know, can I be excused, Judge?” The court reminded Vincent he was subpoenaed to testify as a witness. When the State asked whether he previously testified at Kenneth’s trial, Vincent stated, “I have, did.” Later, he again stated he did not remember testifying previously. During Vincent’s testimony the trial court offered defendant’s counsel the opportunity to speak with Vincent and continue the trial for two days but defendant’s counsel declined. After further questioning by the State, Vincent stated he was claiming the fifth amendment. The court found he waived the fifth amendment privilege by testifying previously on the same matter. The State questioned Vincent concerning his prior testimony but Vincent continued to answer “I don’t know” or “I don’t remember.”

Over defendant’s objection, the trial court allowed the State to introduce Vincent’s prior testimony at Kenneth’s trial as substantive evidence under section 115 — 10.1 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1985, ch. 38, par. 115 — 10.1). The State read portions of Vincent’s prior testimony and asked whether he remembered testifying. He continued to answer “I don’t remember.”

Defendant cross-examined Vincent but he would only answer “I don’t remember” to every question. Defendant’s attorney then stated, “I can’t cross-examine him, that’s all that I have, he said I doesn’t [sic] remember to everything, it’s fruitless for me to go on.”

On the State’s motion, the court found Vincent in contempt of court, citing his prior testimony 21k weeks earlier, and indicated that Vincent was subverting justice by feigning memory loss. The court sentenced him to 30 days’ imprisonment.

The parties stipulated that Vincent previously testified under oath in the case against Kenneth and that the transcript of his testimony on that day was accurate.

The parties also stipulated that defendant was convicted of burglary in 1980, convicted of theft in 1982, and again convicted of theft in 1984. The State then rested and defendant’s motion for a directed verdict was denied.

Defendant testified that on the night of the robbery, he was working for Rueben H. Donnelly delivering telephone books. His brothers, Kenneth and Vincent, and his neighbor, Ted McLeod, went with him in Vincent’s car. While they were delivering the telephone books, they smoked marijuana. They made 10 stops that evening. At different stops, two, three, or all four of the men would get out of the car to make the deliveries. On the last stop, Vincent and McLeod left the car to deliver the telephone books. Three or four minutes after the last delivery at approximately 11:40 p.m., they were stopped by the police, who asked whether they had drugs in the car. After the police officers searched each of them and searched the car, they were placed under arrest.

Defendant admitted he was on parole on October 9, 1985, and he knew the consequences of parole violations. Defendant testified he did not have a gun with him that evening and did not know that any of the others had guns with them. Defendant denied committing the armed robbery and did not know whether any of the others robbed Gillis. He also denied that he handed two guns to Vincent when the police were following them.

The court found defendant guilty of armed robbery and unlawful use of a weapon by a felon and denied defendant’s motion for a new trial. Defendant now appeals.

Opinion

I

Initially, defendant argues the trial court erred when it allowed the State to add Vincent to its list of witnesses on the third day of trial. The trial court, in granting the State’s request, noted that Vincent’s name had previously appeared on the State’s witness list filed for both defendants but was stricken before trial. The trial was then continued for two weeks because another State witness was not present in court.

Supreme Court Rule 412 provides that upon a defendant’s written motion, the State is required to disclose the names and addresses of the persons it intends to call as witnesses “as soon as practicable.” (107 Ill. 2d R. 412.) The trial court has the discretion to allow a previously unlisted witness to testify at trial and its decision will not be disturbed on review unless defendant was surprised or prejudiced. People v. Millan (1977), 47 Ill. App. 3d 296, 361 N.E.2d 823.

On appeal, defendant relies solely on Millan, which is clearly distinguishable from the present case. In Millan, the State moved to add a witness three days prior to trial. When defendant requested a continuance to prepare for the witness, the State withdrew the name and stated it would not call that witness in its case in chief. Three days later, on the first day of trial, the State reiterated that it would not call that witness. The next day, however, the State moved to add the witness for its case in chief. Defendant’s objection was overruled. Defendant’s counsel was allowed to interview the witness before he testified that day. Defendant was found guilty, but on appeal, the reviewing court reversed his convictions based on the surprise and prejudice to defendant. The court found that defense counsel’s quick interview with the witness was not a substitute for the State’s compliance with discovery rules and defendant’s counsel should have been given ample time to prepare for the witness. The court, in reversing the convictions, found that the State’s representations that it would not call the witness bordered on bad faith.

Unlike the defendant in Millan, defendant here was not surprised or prejudiced by the addition of Vincent’s name to the State’s list of witnesses. In Millan, the witness’ name did not appear on the State’s witness list prior to trial. In the present case, however, defendant concedes Vincent’s name appeared on the State’s witness list prior to trial but was stricken the day trial began. Although the State moved to add Vincent to its list of witnesses on the third day of trial, the trial was continued two weeks before Vincent would testify. During Vincent’s testimony defendant’s counsel declined the trial court’s offer to continue the trial an additional two days. Defendant’s counsel then had ample time to prepare for Vincent’s testimony.

Also unlike Millan, the record in the present case does not indicate that the State’s conduct amounted to bad faith. In its reply brief, defendant contends that he was prejudiced by the State’s “tactics” in removing Vincent’s name from its witness list, continuing defendant’s trial, and then calling Vincent as a witness after he testified for Kenneth. This conduct, however, does not rise to the level of the State’s mispresentations that occurred in Millan.

Defendant also argues, without citation to authority, that he was prejudiced because he should have been allowed to cross-examine Vincent when he testified on the stand in Kenneth’s trial. It is important to note, however, that Kenneth called Vincent as a witness to testify in his behalf in what was essentially a separate trial. Vincent was not a State witness at that point under which circumstances defendant would have had the right to cross-examine him.

From a review of the record, defendant had ample time to prepare for the witness and there was no evidence of bad faith on the State’s part. Accordingly, the trial court did not abuse its discretion when it allowed Vincent to testify.

II

Defendant also argues that Vincent’s statement was improperly admitted as substantive evidence under section 115 — 10.1 because defendant did not cross-examine Vincent when he testified at Kenneth’s trial and that his sixth amendment right of confrontation was violated.

At issue here is the application of section 115 — 10.1, which in relevant part provides:

“§115.10.1. Admissibility of Prior Inconsistent Statements. In all criminal cases, evidence of a statement made by a witness is not made inadmissible by the hearsay rule if
(a) the statement is inconsistent with his testimony at the hearing or trial, and
(b) the witness is subject to cross-examination concerning the statement, and
(c) the statement—
(1) was made under oath at a trial, hearing, or other proceeding ***.” Ill. Rev. Stat. 1985, ch. 38, par. 115 — 10.1.

Defendant initially argues that under section 115 — 10.1 the prior testimony should not have been admitted because defendant did not cross-examine Vincent at the time he previously testified. Defendant misinterprets the requirements of the section. The section requires that “the witness is subject to cross-examination concerning the statement.” (Ill. Rev. Stat. 1985, ch. 38, par. 115-10.1(b).) This refers to the witness being subject to cross-examination at the time his prior inconsistent statement is admitted in evidence. See People v. Flores (1989), 128 Ill. 2d 66, 88, 538 N.E.2d 481, 489 (a declarant’s prior grand jury testimony is admissible when “the declarant is testifying as a witness and [is] subject to full and effective cross-examination”).

The Illinois Supreme Court has recently decided the issue presented by defendant in a case with similar facts. In Flores (128 Ill. 2d 66, 538 N.E.2d 481), the trial court admitted a witness’ grand jury testimony under section 115 — 10.1 when at defendant’s trial the witness testified he could not remember the content of his prior grand jury testimony. Defendant appealed his convictions and argued, among other issues, that the witness’ two statements were not inconsistent and that defendant was denied his right of confrontation under the sixth amendment. The court found the witness’ prior grand jury testimony was properly admitted under section 115 — 10.1.

Although defendant here does not argue the point, the supreme court in Flores found the trial court did not abuse its discretion when it determined that the witness’ “professed memory loss” on the stand and his prior grand jury testimony were inconsistent. (Flores, 128 Ill. 2d at 88, 538 N.E.2d at 489.) Similarly here, the trial court did not abuse its discretion when it found Vincent’s claimed memory loss was inconsistent with his prior testimony in Kenneth’s trial.

Defendant argues that his sixth amendment right to confront witnesses was violated when Vincent would only testify “I don’t remember” to defendant’s cross-examination questions.

The sixth amendment in relevant part states, “In all criminal prosecutions, the accused shall enjoy the right *** to be confronted with the witnesses against him ***.” (U.S. Const., amend. VI.) In addressing the issue presented, we note the reasoning of our supreme court in Flores:

“The confrontation clause [of the sixth amendment] is not violated by admitting a declarant’s out-of-court statements, as long as the declarant is testifying as a witness and subject to full and effective cross-examination. [Citations.] Contrary to the defendant’s assertions, a gap in the witness’ recollection concerning the content of a prior statement does not necessarily preclude an opportunity for effective cross-examination.” (Flores, 128 Ill. 2d at 88, 538 N.E.2d at 489.)

The supreme court in Flores relied on the recent United States Supreme Court decision in United States v. Owens (1988), 484 U.S. 554, 98 L. Ed. 2d 951, 108 S. Ct. 838. In Owens, the Supreme Court addressed the issue presented and stated, “ ‘the Confrontation Clause guarantees only “an opportunity for effective cross-examination, not cross-examination that is effective in whatever way, and to whatever extent, the defense might wish.” ’ ” (Emphasis in original.) Owens, 484 U.S. at 559, 98 L. Ed. 2d at 957, 108 S. Ct. at 842, quoting Kentucky v. Stincer (1987), 482 U.S. 730, 739, 96 L. Ed. 2d 631, 643, 107 S. Ct. 2658, 2664.

In Owens, the court determined that a witness is subject to cross-examination under Rule 801 of the Federal Rules of Evidence (Fed. R. Evid. 801) when the witness “is placed on the stand, under oath, and responds willingly to questions.” (Owens, 484 U.S. at 561, 98 L. Ed. 2d at 959, 108 S. Ct. at 844.) The phrase “subject to cross-examination” is also used in section 115 — 10.1, and defendant argues that Vincent did not willingly respond to questions because he “refused to answer questions.” Defendant’s characterization of Vincent’s testimony is inaccurate, however, because Vincent, rather than having refused to answer questions, merely testified he did not remember. As stated in Owens:

“[Limitations on the scope of examination by the trial court or assertions of privilege by the witness may undermine the process to such a degree that meaningful cross-examination within the intent of the rule no longer exists. But that effect is not produced by the witness’s assertion of memory loss — which *** is often the very result sought to be produced by cross-examination, and can be effective in destroying the force of the prior statement.” (Owens, 484 U.S. at 561-62, 98 L. Ed. 2d at 959, 108 S. Ct. at 844.)

Accordingly, we find Vincent was subject to cross-examination as required under section 115 — 10.1.

Despite defendant’s arguments to the contrary, we note that when a witness’ prior statement was made under oath at a trial, hearing, or other proceeding there is no requirement under section 115 — 10.1 that the witness admit he made the prior statement before it can be introduced as evidence.

With the authority of Owens and Flores we find that defendant’s sixth amendment right of confrontation was not violated by the admission of Vincent’s prior testimony under section 115 — 10.1.

III

Defendant also argues he was not proven guilty beyond a reasonable doubt because his conviction was based in large part on the “unreliable” testimony of his brother, Vincent, and was otherwise based on insufficient evidence.

When a defendant claims he was convicted with insufficient evidence, the evidence must be reviewed in a light most favorable to the prosecution and the court must determine whether any rational trier of fact could have found defendant guilty of the crime beyond a reasonable doubt. (People v. Young (1989), 128 Ill. 2d 1, 538 N.E.2d 461.) It is the function of the trier of fact to determine the reliability of the witnesses, the weight to be given their testimony, and the inferences to be drawn from the evidence. (Young, 128 Ill. 2d 1, 538 N.E.2d 461.) The reviewing court will not substitute its judgment for that of the trier of fact on questions involving the weight of the evidence or the credibility of the witnesses and will not reverse a criminal conviction unless the evidence presented is so unreasonable, improbable, or unsatisfactory as to raise a reasonable doubt of defendant’s guilt. Young, 128 Ill. 2d 1, 538 N.E.2d 461.

Defendant relies on People v. Wilson (1977), 66 Ill. 2d 346, 362 N.E.2d 291, where defendant was convicted of robbery based in part on the testimony of a witness who admitted he helped defendant plan the crime. Defendant contended the accomplice’s testimony was uncorroborated and, therefore, he was not convicted beyond a reasonable doubt. On review, the court noted that the uncorroborated testimony of an accomplice is sufficient to justify a conviction but must be regarded with suspicion and caution. The court reversed the conviction because defendant was not proven guilty beyond a reasonable doubt. The court found the accomplice’s testimony did not have the “absolute conviction of truth” because he was incarcerated at the time on other indictments, he admitted planning the crime, and he was promised immunity. Wilson, 66 Ill. 2d at 349-50, 362 N.E.2d at 292.

Wilson does not support defendant’s argument that he was not convicted beyond a reasonable doubt. Here, Vincent was never charged with the crime in question, was not in jail at the time with other pending crimes, and did not admit to having any role in the armed robbery. In fact, he denied any knowledge of the crime. He also did not testify with the promise of immunity. Vincent was not an accomplice as was the witness in Wilson, and therefore, there is no requirement that his testimony be viewed with skepticism and caution.

The evidence establishes that Gillis was robbed by two men, one carrying a chrome-colored gun and the other carrying a blue or black steel gun with a rubber band wrapped around it. Gillis identified Kenneth as one of the men who robbed him but could not identify the second man. Less than one hour later, defendant, who was with Kenneth and two other men, was stopped by the police near the area where the robbery took place. The police discovered two guns in the car that matched the description of those used in the robbery. Also in the car on the. floor near where defendant was sitting, the police discovered Gillis’ bank deposit slip which he gave to the second man who robbed him. Vincent’s prior testimony at Kenneth’s trial, which was properly admitted in evidence in defendant’s trial, established that defendant left the car on each of the stops they made. When Vincent noticed that the police were following them, defendant handed two guns to Vincent in the back seat and told him to “put them up.”

Basically, defendant is arguing a credibility question between the testimony of Vincent and defendant. The trial court considered Vincent’s testimony and found he was not credible and unworthy of belief in many respects. However, the court found that Vincent’s testimony at Kenneth’s trial was “a matter of significance and importance when a person identifies a brother as having been involved in a commission of a crime.” Based on the significance of Vincent identifying his brother, the court could not discount Vincent’s testimony. On the other hand, the court found that defendant’s testimony was not credible. The court, noting that the only issue was which two men in the car committed the offense, focused on defendant’s testimony that he claimed he did not know who was involved in the robbery or that guns were in the car. The court found defendant’s testimony was not truthful and did not make sense.

We will not substitute the trial court’s judgment in determining that Vincent was credible and defendant was not. Also, after reviewing the evidence presented, we cannot say it was so unreasonable, improbable, or unsatisfactory to raise a reasonable doubt of defendant’s guilt.

IV

Lastly, defendant argued that he was entitled to credit for the time he served in custody prior to being sentenced. During the pendency of this appeal, the State’s Attorney and the public defender filed a stipulation in this court agreeing that defendant was entitled to 447 days of sentence credit. By separate order of this court, we remanded this issue with directions that defendant be given 447 days of sentence credit.

Affirmed.

MURRAY, P.J., and COCCIA, J., concur.


author: JUSTICE COCCIA

text:
    LINAS BURYS, Plaintiff-Appellant and Cross-Appellee, v. FIRST BANK OF OAK PARK et al., Defendants-Appellees and Cross-Appellants.
    First District (5th Division)
    No. 1—88—0780
    Opinion filed August 11, 1989.
    Edward C. Fitzpatrick, Neil H. Cohen, and Timothy M. Maggio, all of Lord, Bissell & Brook, of Chicago, for appellant.
    Daniel Nagle and Patrick J. Ruberry, both of Nagle & Gallagher, of Chicago, for appellees.
   JUSTICE COCCIA

delivered the opinion of the court:

Plaintiff Linas Burys appeals from an order entered by the circuit court, granting summary judgment in favor of defendant First Bank of Oak Park upon counts II and III of his complaint. First Bank cross-appeals from the circuit court’s refusal to dismiss those counts on the grounds that they were barred by a prior judgment. Because Burys has now abandoned the claims he pled in counts II and III, and because he now raises claims he did not plead below, we affirm the circuit court’s entry of summary judgment against him. In light of this conclusion, we need not reach First Bank’s cross-appeal; accordingly, we dismiss it.

Burys’ complaint was filed on October 28, 1982. He alleged therein that First Bank owned an office building located at 1515 North Harlem Avenue. In 1977, First Bank sold that property to Milfred Towne and Howard Orleans, who are not parties in this case. First Bank, as trustee, and Towne and Orleans, as beneficiaries, created a land trust, which took title to the property. The transaction was financed by two bearer notes secured by a trust deed. Paragraph 14 of the real estate sales contract entered into by First Bank, as seller, and Towne and Orleans, as buyers, stated:

“Seller agrees that on the Due Date, provided there shall be no default under either of the Notes or the mortgage securing both of the Notes, the obligation for repayment of both of the Notes shall be extended and modified ***.”

In 1980, Burys claims, Towne and Orleans agreed to assign him their rights and obligations under the trust deed, the notes, and the contract, when they were unable to pay for certain repairs he made to the building.

In count I of his complaint, Burys charged First Bank with fraud. He claimed that First Bank falsely represented to him that it would extend the repayment period of the notes if he agreed to assume the obligations of Towne and Orleans. Thereafter, according to Burys, First Bank fraudulently refused to extend the notes.

Burys defaulted on the notes, however, and First Bank successfully prosecuted a foreclosure action. (Burys states that, although he did not appeal the foreclosure judgment, he has since redeemed the property.) First Bank then moved to dismiss his complaint on the grounds that the theories he pled were virtually identical to affirmative defenses which he raised, and which were rejected, in the foreclosure action. Thus, First Bank argued, Burys’ claims were barred by the foreclosure judgment. The circuit court concluded that only count I of Burys’ complaint was barred and dismissed it. Burys has not appealed the dismissal of count I, so it is not before us.

In count II, Burys charged First Bank with anticipatory breach of its written agreement to renew the notes. Prior to the notes’ due date, alleged Burys, he demanded that First Bank renew them, but it refused to do so.

Burys alleged that First Bank was guilty of breach of its fiduciary duties in count III. By failing to renew the notes when they were due, Burys asserted, First Bank acted inconsistently with its duties as trustee of the land trust, of which he had become a beneficiary.

After obtaining the dismissal of count I of Burys’ complaint, First Bank moved for summary judgment on counts II and III. Regarding count II, First Bank contended that under paragraph 14 of the real estate sales contract, quoted above, the notes’ extension was conditioned upon the absence of default. Inasmuch as Burys was undeniably in default, given its success in the foreclosure action, First Bank asserted that it had not committed breach of contract by refusing to extend the notes. Regarding count III, First Bank argued that under Illinois law, a land trustee cannot commit breach of fiduciary duty toward a beneficiary by acting as a creditor of the debtor trust. See “An Act in relation to land trusts and the power and authority of trustees of land trusts to deal with trust property” (Ill. Rev. Stat. 1983, ch. 148, par. 81 et seq.).

After hearing arguments, the circuit court entered summary judgment in First Bank’s favor on counts II and III of Burys’ complaint. The circuit court decided that, since Burys undoubtedly defaulted on the notes, First Bank had no obligation to renew them under the terms of the contract. Therefore, in contrast to the allegations of count II, the circuit court determined that First Bank did not commit breach of written contract by refusing to extend the notes. The circuit court also concluded that Burys could not prevail on his breach of fiduciary duty claim, as set forth in count III. The circuit court reasoned that Illinois law imposed no such duty, as alleged by Burys, upon First Bank.

In his notice of appeal, Burys stated that he was appealing from the circuit court’s entry of summary judgment in favor of First Bank on counts II and III of his complaint. His initial brief, however, failed to include a statement of the issues presented for review, contrary to Illinois Supreme Court Rule 341(e)(3) (113 Ill. 2d R. 341(e)(3)). Furthermore, Burys’ initial brief failed to include an appendix, contrary to Supreme Court Rule 342(a) (107 Ill. 2d R. 342(a)). On the basis of these deficiencies, we granted First Bank’s motion to strike his initial brief. In his corrected brief, Burys has now abandoned the claims he pled in counts II and III. In their stead, he now argues claims that were not pled below.

In his corrected brief, Burys only mentions the theories pled in counts II and III of his complaint — anticipatory breach of written contract and breach of fiduciary duty, respectively — in response to First Bank’s cross-appeal. That cross-appeal, as mentioned above, is premised upon First Bank’s assertion that the circuit court erred in refusing to rule that counts II and III, like count I, were barred by the foreclosure judgment, but he does not argue that the circuit court erred by entering summary judgment against him on the claims pled in those counts.

Supreme Court Rule 341(e)(7) provides:

“Points not argued are waived ***.” (113 Ill. 2d R. 341(e)(7).) When a plaintiff pleads a claim in the circuit court, but fails to argue it on appeal, such conduct amounts to a waiver of that claim. (See Ray’s Liquors, Inc. v. Newland (1977), 52 Ill. App. 3d 680, 681, 367 N.E.2d 982, 983-84.) Burys has failed to argue the claims he pled in the circuit court in any of his briefs. Consequently, he has waived the theories pled in counts II and III.

Burys now argues two theories that he did not plead below. In the first place, Burys apparently claims that First Bank breached a good-faith duty to notify him that it would not renew the bearer notes when they were due. He raised this theory before the circuit court at the hearing on First Bank’s motion for summary judgment. The circuit court rejected the claim, concluding the First Bank had no duty to notify Burys of that which was expressly stated in the real estate sales contract: namely, the notes would not be extended if they were in default. Burys did not seek leave to amend his complaint in order to plead this, or any other, theory. Since it was not pled below, it falls within the rule prohibiting presentation of new theories on appeal. See Miscevich v. Commonwealth Edison Co. (1982), 110 Ill. App. 3d 400, 404-05, 442 N.E.2d 338, 342.

In the second place, Burys apparently claims that First Bank breached an unconditional oral promise to renew the notes. He states that this promise was made to him by First Bank’s former president. In his complaint Burys averred that First Bank had an unconditional duty to renew the notes, but this averment was based upon paragraph 14 of the real estate sales contract, quoted in his complaint. Paragraph 14, which is also set forth above, clearly states that First Bank was under no duty to extend the notes if they were in default.

In Bennett v. Raag (1982), 103 Ill. App. 3d 321, 431 N.E.2d 48, a medical malpractice action, the circuit court entered summary judgment in favor of defendants. On appeal, plaintiffs raised the theory of lack of informed consent to surgery. The appellate court concluded that plaintiffs had alleged misdiagnosis of plaintiff Richard Bennett’s condition, but that they had failed to allege a cause of action based upon lack of informed consent. Since the issue of lack of informed consent was not clearly raised by plaintiffs’ pleadings in the circuit court, the appellate court held that it could not be considered for the first time on appeal. (See Bennett, 103 Ill. App. 3d at 327-28, 431 N.E.2d at 53.) Here, Burys alleged a cause of action grounded upon anticipatory breach of written contract in count II of his complaint, but he did not allege a cause of action based upon breach of an unconditional oral promise to renew the notes. Thus, in view of Bennett, Burys cannot bring his newly minted theory before us.

For the reasons stated, the circuit court’s entry of summary judgment in First Bank’s favor on counts II and III of Burys’ complaint is affirmed. As we need not reach First Bank’s cross-appeal, given our holding, it is dismissed.

Affirmed; cross-appeal dismissed.

MURRAY, P.J., and LORENZ, J., concur.


text:
    JEROME J. MANCUSO et al., Plaintiffs-Appellants, v. ALDA BLANCHE BEACH et al., Defendants-Appellees.
    First District (5th Division)
    No. 1—88—2322
    Opinion filed August 11, 1989.

      Steven J. Rosenberg, P.C., and Rosenberg, Opdycke, Gildea, Hellner & Kelly, both of Chicago, for appellants.
    Donald T. Bertucci, of Chicago, and Karl L. Felbinger, of Deerfield, for appellees.
   JUSTICE COCCIA

delivered the opinion of the court:

Plaintiffs Jerome and Joanne Mancuso have taken this appeal from an order entered by the circuit court, dismissing their third amended complaint. We have concluded that the circuit court erred in not following the mandate of this court issued after Mancuso v. Beach (1986), 149 Ill. App. 3d 188, 500 N.E.2d 589, was decided, when this case was first before us. Accordingly, we reverse and remand for proceedings consistent with that mandate.

The facts of this case are set forth in Mancuso I, and we shall only revisit them as necessary. Plaintiffs contracted for and ultimately purchased a home from Alda Blanche Beach and Robert Sanden, the beneficial owners, through Koenig & Strey, Inc., the real estate brokers. After purchasing the house, plaintiffs were dissatisfied not only with the condition of its roof, but also with the fact that the house was not air conditioned, contrary to alleged representations made by Koenig & Strey. Consequently, they brought an action for rescission or, alternatively, money damages in the circuit court.

Plaintiffs’ original complaint was dismissed upon defendants’ motions for failure to state a cause of action. Plaintiffs were allowed 28 days to replead, and they subsequently filed a first amended complaint. Beach and Sanden then moved to dismiss that complaint for failure to state a cause of action. Prior to a hearing on the motion to dismiss, plaintiffs moved for voluntary dismissal, pursuant to section 2 — 1009(a) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2 — 1009(a)). Beach and Sanden opposed plaintiffs’ motion, as did Koenig & Strey, which also moved to dismiss the first amended complaint for failure to state a cause of action. Judge Duff denied plaintiffs’ motion for voluntary dismissal, granted defendants’ motions to dismiss, and awarded defendants attorney fees on the grounds that plaintiffs’ first amended complaint was filed in bad faith.

Plaintiffs appealed to this court. We determined in Mancuso I that the circuit court erred in denying plaintiffs’ motion for voluntary dismissal and reversed the order awarding attorney fees. In light of that disposition, we declined to reach the parties’ arguments regarding the sufficiency of plaintiffs’ first amended complaint. Our mandate ordered:

“The judgment of the Circuit Court of Cook County is REVERSED and this case is remanded for further proceedings consistent with the views expressed in the opinion of this Court filed herein.”

After our mandate was filed in the circuit court, plaintiffs substituted attorneys. They also sought, and were given, leave to file what amounts to a second amended complaint, which the parties refer to as plaintiffs’ “first amended complaint (No. 2).” Defendants moved to dismiss the second amended complaint, on the grounds that it was barred by Judge Duff’s dismissal of plaintiffs’ earlier complaints for failure to state a cause of action. (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 619(a)(4).) Defendants contended that plaintiffs’ second amended complaint was virtually identical to their previously dismissed complaints. Defendants also claimed that the circuit court only had authority to voluntarily dismiss plaintiffs’ action, in light of our holding in Mancuso I.

Judge Gillis, who was assigned to the case upon remand, heard the defendants’ motions on May 23, 1988. He disagreed with defendants’ interpretation of our opinion. Unlike defendants, he concluded that plaintiffs had the option of seeking a voluntary dismissal, or amending their complaint, as it was his view that this court’s mandate and decision in Mancuso I did not preclude them from amending their pleadings. Judge Gillis continued the hearing on the issue of whether plaintiffs’ second amended complaint was barred by Judge Duff’s rulings.

Thereafter, plaintiffs sought leave to file a third amended complaint. The continued hearing on defendants’ motions to dismiss was held on July 7, 1988. Although plaintiffs were not given leave to file their third amended complaint before the hearing, the parties’ arguments were based upon it, as if leave to file had indeed been granted. Judge Gillis was persuaded by defendants’ claims that Judge Duff’s rulings on the sufficiency of plaintiffs’ earlier complaints barred the third amended complaint, so he granted the motions to dismiss. Counsel for plaintiffs then requested a formal ruling on the motion for leave to file the third amended complaint. He further asked for leave to “voluntarily dismiss” the second amended complaint. Defendants did not oppose the motion for leave to file the third amended complaint. Counsel for Beach and Sanden, however, contended that plaintiffs were not truly seeking a voluntary dismissal of their action, but rather a substitution of the third amended complaint for the second amended complaint. Counsel for plaintiffs admitted that he was asking to substitute the third amended complaint for the second amended complaint. Judge Gillis believed he had implicitly ruled upon plaintiffs’ motion for leave to file by dismissing the third amended complaint, but he allowed the substitution of the third amended complaint for the second amended complaint. Finally, Judge Gillis reiterated that he was dismissing plaintiffs’ third amended complaint on the grounds that it was barred by Judge Duff’s previous rulings.

The order entered on July 7, 1988, from which plaintiffs appeal, clearly states that the third amended complaint was substituted for the second amended complaint, which plaintiffs were granted leave to withdraw. It is important to note that plaintiffs did not voluntarily dismiss within the meaning of section 2 — 1009 of the Code of Civil Procedure, which is confirmed by the fact that they failed to pay costs, as section 2 — 1009 requires. Thus, the mandate of this court was not complied with upon remand.

OPINION

The mandate of a reviewing court is the transmittal of that court’s judgment to the circuit court, which revests the latter with jurisdiction. (PSL Realty Co. v. Granite Investment Co. (1981), 86 Ill. 2d 291, 304, 427 N.E.2d 563, 569.) When a judgment is reversed by a reviewing court, that judgment is final upon all questions decided, and if the cause is remanded, the circuit court can take only such action as conforms to the reviewing court’s judgment. (PSL Realty, 86 Ill. 2d at 305, 427 N.E .2d at 570.) That is, the circuit court may only do those things directed in the mandate; it has no authority to act beyond the mandate’s dictates. PSL Realty, 86 Ill. 2d at 308-09, 427 N.E.2d at 571.

When the circuit court’s action upon remand is inconsistent with the reviewing court’s mandate, it is subject to reversal on appeal. (See Gridley v. Wood (1922), 305 Ill. 376, 380-81, 137 N.E. 251, 253.) In Parker v. Shannon (1887), 121 Ill. 452, 13 N.E. 155, our supreme court was faced with a second appeal. In the first appeal, the supreme court held that the circuit court erred in passing upon legal title to certain property, and that it should have temporarily stayed the doing of irreparable injury until trial and determination of the question of title could be had in a court of law. Accordingly, the supreme court remanded the cause. After the remanding order was filed in the circuit court, an amended bill was filed. The amended bill set up the same claim as the original bill in the first appeal.

The supreme court stated that when a cause is reversed and remanded generally, without specific directions, amendments to pleadings may be allowed upon reinstatement in the lower court. However, the supreme court did not remand the case generally after the first appeal. Rather, the order provided, like the mandate of this court in Mancuso I:

“The decree will be reversed, and the cause remanded for further proceedings consistent with this opinion.” (Parker, 121 Ill. at 454,13 N.E. at 156.)

The only proceeding consistent with that opinion, reasoned the supreme court, was for the circuit court to enjoin the doing of irreparable injury until the question of title could be tried and determined. The supreme court went on to state that when a certain mode of proceeding is marked out in an opinion and the direction is to proceed consistently therewith, any other mode of proceeding is excluded. Consequently, the supreme court reversed the second decree entered by the circuit court and remanded the cause with directions to proceed as indicated in its first opinion. Parker, 121 Ill. at 454-55, 13 N.E. at 156. See also In re Marriage of Bates (1987), 163 Ill. App. 3d 893, 517 N.E.2d 23.

Given the aforementioned authorities, the only proceeding consistent with Mancuso I was the voluntary dismissal of plaintiffs’ action. Our mandate, like the order at issue in Parker, was specific, rather than general. It gave the circuit court no authority to permit plaintiffs to amend their pleadings. The circuit court erred in allowing plaintiffs to do so; therefore, this case must be reversed and remanded again.

In view of the foregoing, the judgment of the circuit court is reversed and the cause is remanded for proceedings consistent with Mancuso I, as construed herein.

Reversed and remanded.

LORENZ and PINCHAM, JJ., concur.


author: PRESIDING JUSTICE EGAN

text:
    KELSEY AXLE & BRAKE DIVISION, a division of Kelsey-Hayes Company, Plaintiff-Appellant and Cross-Appellee, v. PRESCO PLASTICS, INC., et al., Defendant-Appellees and Cross-Appellants.
    First District (6th Division)
    No. 1—88—1289
    Opinion filed August 11, 1989.

      McKenna, Storer, Rowe, White & Farrug, of Chicago (James R DeNardo, Lyndon C. Molzahn, Thomas R. Schutt, and Christine L. Olson, of counsel), for appellant.
    Phelan, Pope & John, Ltd., of Chicago (Roseann Oliver and Therese A. Kelly, of counsel), for appellees.
   PRESIDING JUSTICE EGAN

delivered the opinion of the court:

The plaintiff, Kelsey Axle & Brake Division (Kelsey), sued three corporations, Presco Plastics, Inc. (Presco), Bob Goltermann & Associates, Inc. (EGA), and KI Industries, Inc., which during the time pertinent to this appeal, 1978-1980, was Knobs, Inc. (Knobs). The plaintiff claimed that it had contracted with Presco to manufacture plastic pistons which were to be incorporated into brake cylinders produced by the plaintiff which it sold to Harley-Davidson to be used in rear brakes in motorcycles. The plastic pistons were defective, and the plaintiff was damaged in that it was required to participate in a recall campaign with Harley-Davidson and to expend substantial sums of money in settlements and judgments arising out of lawsuits against it and for attorney fees in defense of those lawsuits.

Presco, however, became insolvent and was dissolved. Consequently, the plaintiff also sued KI Industries, formerly Knobs, and EGA on a “piercing the corporate veil” theory, alleging that Presco was the alter ego of EGA and Knobs. The judge first heard evidence on the plaintiff’s claim against EGA and Knobs. He held that the plaintiff had failed to establish that Presco was the alter ego of EGA and Knobs and entered judgment for EGA and KI Industries.

The judge then heard the claim against Presco and entered judgment for the plaintiff on two counts and for Presco on the two remaining counts. He denied the plaintiff’s claim for attorney fees incurred in defending the various lawsuits filed against it.

The plaintiff appeals from the judgment in favor of EGA and KI Industries, from the judgment in favor of Presco on two of the counts of the complaint and from the order denying attorney fees. Presco appeals from the judgment in favor of the plaintiff on two of the counts of the complaint.

We will first consider the plaintiff’s appeal of the judgment in favor of EGA and KI Industries. It contends that the judge’s finding was against the manifest weight of the evidence.

As in most, if not all, cases involving the issue of manifest weight of the evidence, a rather detailed recitation of the evidence is required. Presco, a Wisconsin corporation, was a custom molding machine shop with approximately five employees operating in Milwaukee. Knobs, an Illinois corporation, was in the business of manufacturing knobs for an appliance industry. Robert Goltermann (Robert) and his wife, Marsha Goltermann, were the sole shareholders of Knobs. Robert was the chairman and treasurer of Knobs, his wife was the secretary and his brother, Carl Goltermann (Carl), was the president.

EGA was a manufacturer’s representative. Robert was the sole shareholder, the chairman, president and treasurer; and his wife was the secretary.

Sometime before February 5, 1975, Carl and Robert discussed purchasing a custom molding company that could do molding work for Knobs and would operate as a separate company. Presco was purchased and later capitalized by Knobs with $50,000. Knobs added another $35,000 through a loan to Presco, several days after the purchase. Carl, the president of Knobs, also became the president of Presco.

The plaintiff emphasizes the following facts in support of its argument that the manifest weight of the evidence establishes that Presco was the alter ego of Knobs and EGA:

(1) The officers of Knobs held the same positions in Presco. Robert and his wife were the sole shareholders of Knobs, and Robert was the sole shareholder of EGA.
(2) Carl supervised the daily running of Presco and determined what equipment Presco needed. He made the decision not to purchase product liability insurance.
(3) Knobs paid Carl’s salary as president of Presco and his traveling expenses.
(4) Forty to fifty percent of Fresco’s revenue was to Knobs, and Knobs purchased approximately one-third of its products from Presco.
(5) From 1976 through 1980 all three companies filed consolidated tax returns; and Knobs received tax credits from Fresco’s business operating losses.
(6) Robert and Carl were signators on Fresco’s bank account.
(7) From 1976 to 1978, Presco leased all its equipment from EGA, which was not in the business of equipment leasing.
(8) Between 1975 and 1979 both EGA and Knobs loaned money to Presco, but there was no note, no collateral and no repayment schedule.
(9) On September 30, 1975, EGA loaned Presco $23,000 and on the same day Presco paid Knobs $23,000. In February 1978 Knobs paid Presco $60,000, and Presco paid EGA $60,000. In June 1978 Presco received $20,000 from EGA, which Presco then paid to Knobs. In 1979, of Fresco’s $200,000 in liability, $110,000 was owed to EGA and Knobs.
(10) After the initial corporate meeting of Presco in 1975, there were no other minutes in Fresco’s corporate minute book. As of March 28, 1979, Fresco’s last meeting was February 1975. From 1978 through 1980 there are no entries in Knob’s corporate minute books regarding Presco.
(11) Presco lost money from 1975 to 1978. In 1979 Carl was discour ,.ed about Presco ever becoming a “successful venture” and con-eluded that Knobs should stop buying from Presco. There was no Presco corporate resolution to terminate Fresco’s existence; nor was there any corporate resolution by Knobs, Fresco’s sole shareholder, to terminate Fresco’s existence. Fresco’s assets were simply sold. The remaining $17,000 Presco owed to EGA was never repaid. EGA never instituted any legal proceedings to recover the remainder of the money due from Presco.

The plaintiff also presented expert testimony from Donald Brenner. It was his opinion that Robert controlled, owned and managed the three corporations, employed other people and operated all three corporations as if they were one entity; and that the corporate separateness of the three was largely ignored.

The defendants refer to the following evidence as support for their position:

(1) Carl’s activities with respect to Presco were to oversee the management and financial condition of the company. They did not entail day-to-day supervision over the company. Presco was run by a general manager, and Carl traveled from Illinois to Presco only about once a week. Robert’s sole role with respect to Presco was to confer with Carl on the financial condition of Presco.
(2) At the time that Knobs purchased Presco, Presco did not have product liability insurance. The decision not to obtain such insurance was made by Carl with his brother’s advice.
(3) Presco at all times maintained its own corporate identity with respect to its customers and creditors, its own corporate records, financial statements, bank account and filings with the States of Illinois and Wisconsin.
(4) Carl hired a plant manager who was responsible for Fresco’s day-to-day operations and its work and who had check-signing authority. Although Carl and Robert also had check-signing authority, Carl only occasionally signed checks, and Robert did not recall ever signing any. Fresco’s plant manager, along with Carl, was involved in various operational decisions, such as determining what equipment Presco needed and the materials Presco should purchase. Presco paid no salaries, bonuses or other remunerations to its officers, including Carl, nor did it ever pay their expenses. Carl’s travel expenses to Milwaukee were paid by Knobs.
(5) Presco was never more than a marginally profitable business. From time-to-time additional cash was needed to maintain its operations and Presco borrowed money from a local Milwaukee bank as well as from Knobs and EGA. The loans from Knobs were made at Carl’s discretion, and the loans from EGA were made with Robert’s knowledge and approval. Although no security for the loans was required by Knobs and EGA, interest was charged on the loans, and repayments on the loans were made by Presco as business permitted. Repayments were duly noted on Fresco’s ledger and on the books of both Knobs and EGA. Carl testified that at least some of the loans were evidenced by notes. There is no evidence that funds of Presco were ever transferred or used by Knobs or EGA. The opposite is true: funds by Knobs and EGA were constantly infused into Presco for the benefit of Presco.
(6) Presco required additional machinery and equipment in order to expand and modernize its operations to increase profitability. Presco purchased some of the necessary equipment but needed financing for other equipment. Carl looked into bank financing but ultimately arranged financing through EGA. EGA, although not in the business of equipment financing, had previously purchased equipment for other customers and had entered into equipment leases with those customers. EGA purchased equipment for Presco and leased it to Presco under written equipment leases. The leases to Presco followed the terms a bank would require and were negotiated fairly with Presco.
(7) Knobs, which did not perform custom molding, became a customer of Fresco’s and paid the same price, under the same terms and billing as other Presco customers. Knobs also utilized other custom molders besides Presco. In fact, Knobs purchased more molded parts from the other custom molders than it did from Presco.
(8) As a manufacturer’s representative, EGA represented Presco in attempting to increase Fresco’s business and sales. EGA received commissions from Presco as it did from other businesses it represented. Those commissions were minimal over the years and never exceeded $1,000.
(9) Presco was an Illinois corporation but was authorized by the State of Wisconsin to do business there. Presco filed annual reports in Wisconsin and Illinois and paid Milwaukee withholding taxes on all its employees, as well as other local taxes. A corporate ledger was maintained by Presco which reflected sales to all its customers, loans and repayments with interest, operating expenses and the purchase and leasing of equipment.
(10) EGA filed its own annual reports with the State of Illinois and its own corporate tax returns. As required by law, EGA also identified Presco, Knobs and EGA as “control group corporations” for tax purposes. Although it shared office space with Knobs, EGA always paid Knobs its pro rata share of rent and use of office equipment. EGA maintained its own records reflecting its business transactions.
(11) Knobs always filed its annual reports with the State of Illinois. As parent corporation of Presco, Knobs filed consolidated tax returns from 1976 to 1980 with Presco identified as its subsidiary. Although Knobs received tax credits generated by Fresco’s business operating loses on its returns, Knobs provided Presco with cash reimbursements for such credits. Knobs maintained general ledgers reflecting all its business transactions.
(12) All three companies maintained separate corporate records. The Goltermanns’ personal attorney, George Hodges, was responsible for drafting corporate minutes and records for the three companies. The Goltermanns generally informed Hodges of the actions they planned to take regarding the corporations and relied on Hodges to draft minutes recording those actions. Often Carl would draft correspondence to Hodges reminding him to draft minutes reflecting the activities of the companies.
(13) Presco continually had problems with equipment, labor and quality. It was not unusual for Fresco’s customers, including the plaintiff, to return parts for reworking before accepting them and paying for them. Knobs was becoming more dissatisfied with the quality of work Presco was performing for it. In the late summer of 1979 Carl and Robert agreed that Presco would never be a profitable business and that it should stop doing business. They agreed that Fresco’s assets should be liquidated and that all its creditors should be paid in full. In October 1979 Presco shut down operations and all its equipment and assets were sold, and all its creditors were paid in full. EGA was paid the book value of the equipment it had leased to Presco. The only unpaid debt was approximately $17,000 owed on EGA’s loan.

The defendants also produced an expert witness, Charles Murdock. It was his opinion that Presco was organized and operated as a separate and distinct legal entity. Although the three corporations were related in that they shared common directors, officers and shareholders, and although both EGA and Knobs had an interest or economic stake in Presco, that interest did not mean that the corporations were not separate corporate entities. He considered two factors important in his determination that the businesses were operated as separate entities: Presco was not operated as a sham corporation of either Knobs or EGA and the operation of Presco was not fraudulent and did not result in any injustice to its customers or creditors.

It was also his opinion that because Presco had assets and was an ongoing business, its capitalization of $50,000 was adequate. He also relied on the fact that all three corporations were involved in different businesses and had different locations, employees and bank accounts. There was no indication of any misrepresentation or holding out in the operation of Presco. All of Fresco’s listings, advertisements, letterheads and invoices indicated that Presco was a separate entity located in Wisconsin. The fact that a Milwaukee bank loaned money to Presco was a further indication that third parties also believed that Presco was a separate entity.

He also found it significant that Presco, EGA and Knobs did business with each other on a fair, arm’s-length basis. All the prices charged among the companies were comparable to prices charged to other customers, and records of all transactions were kept. It is an acceptable business practice for a parent corporation, such as Knobs, to take the tax benefits of a subsidiary’s operating losses. The fact that Presco was reimbursed by Knobs in cash for those tax credits was a further indication that the corporations were operated as separate entities and without any unfairness to Presco. The equipment leases between EGA and Presco appeared to him to be fair, arm’s-length transactions. The fact that loans were made to Presco by EGA and Knobs only indicated a flow of funds into Presco for the benefit of the company and its creditors and customers, such as Kelsey, and not any unfairness to Presco.

In summary he found that no assets or funds were commingled by Knobs or EGA, that there was no indication of any misuse of funds; and he was not aware of anything that any of the companies did with respect to Presco that resulted in harm to any of Fresco’s customers or creditors.

In analyzing the evidence in this case it should be kept in mind that a plaintiff seeking to have a corporate identity disregarded has a substantial burden. On this question the supreme court has spoken thus (Main Bank v. Baker (1981), 86 Ill. 2d 188, 204-05, 427 N.E.2d 94):

“It is a well-established principle that a corporation is separate and distinct as a legal entity from its shareholders, directors and officers and, generally, from other corporations with which it may be affiliated. (Dregne v. Five Cent Cab Co. (1943), 381 Ill. 594.) Stock ownership alone in one corporation by another does not create an identity of interest between the two or create the relation of principal and agent, representative, or alter ego between the two. Nor does the use of common officers and directors of itself render one corporation liable for the obligations of another. (Superior Coal Co. v. Department of Finance (1941), 377 Ill. 282.) These practices are common and ex-1st in most parent-subsidiary relationships. (Steven v. Roseoe Turner Aeronautical Corp. (7th Cir. 1963), 324 F.2d 157, 161.) Generally, before the separate corporate identity of one corporation will be disregarded and treated as the alter ego of another, it must be shown it is so controlled and its affairs so conducted that it is a mere instrumentality of another, and it must further appear that observance of the fiction of separate existence would, under the circumstances, sanction a fraud or promote injustice. People ex rel. Scott v. Pintozzi (1971), 50 Ill. 2d 115, 128-29; Dregne v. Five Cent Cab Co. (1943), 381 Ill. 594, 603-04; Superior Coal Co. v. Department of Finance (1941), 377 Ill. 282, 294; see generally Annot., 38 A.L.E.Sd 1102 (1971).”

Our review of the record does not convince us that the finding of the trial judge is against the manifest weight of the evidence. A finding may not be overturned merely because a reviewing court might disagree or might have come to a different conclusion. (Schulenburg v. Signatrol, Inc. (1967), 37 Ill. 2d 352, 226 N.E.2d 624.) In this case, however, we have no reservations about the trial judge’s findings. We agree with them.

A party seeking to have a corporate identity disregarded must come forward with a substantial showing that one corporation is really a dummy or sham for another. (Walker v. Dominick’s Finer Foods, Inc. (1980), 92 Ill. App. 3d 645, 415 N.E.2d 1213.) The plaintiff has failed to make such a substantial showing. Indeed, even the plaintiff’s expert’s testimony was riddled by the defense. On cross-examination he admitted that a number of his basic assumptions were incorrect and that he formed his opinions before he reviewed most of the three corporations’ records. Although he had believed that all three corporations were involved in the same business, he admitted he now knew that Knobs was in the business of assembling and selling knobs to the appliance and entertainment industry while Presco was a custom molder and EGA was a manufacturers’ representative. Although he believed that Presco was inadequately capitalized, he admitted that at the time of purchase Fresco’s debt-equity ratio was within the guidelines of other companies in the industry. He was unaware that interest had been paid on the loans to Presco and conceded that, if interest had been paid, the transfers of cash to Presco could be legitimate loans. Other than those loans he admitted that he did not find any evidence that Knobs removed money from or stripped the assets of Presco. He also testified that he had no evidence that the equipment leases between Presco and EGA were not arm’s-length transactions. He was not aware that BGA had equipment leases with other companies, and he said that BGA’s practice of leasing equipment to other customers tended to show that Presco was treated as a separate corporate entity. He was not aware that Knobs had provided Presco with cash reimbursements for any tax credits it had received as a result of Fresco’s operating loss. He had no opinion whether the decision to terminate Presco in October of 1979 was a reasonable business decision, and he was also not aware of any other creditor or customer, other than BGA, who was harmed or adversely affected by Fresco’s operation.

The plaintiff has cited three cases, all of which are affirmances of the trial court’s finding that one corporation was the alter ego of another corporation or individual. (Van Dorn Co. v. Future Chemical & Oil Corp. (7th Cir. 1985), 753 F.2d 565; McCracken v. Olson Cos. (1986), 149 Ill. App. 3d 104, 500 N.E.2d 487; Macaluso v. Jenkins (1981), 95 Ill. App. 3d 461, 420 N.E.2d 251.) Each case is factually distinguishable from this one, and we need not discuss them at length. But, we note that in Van Dorn the court held that the record clearly supported the trial court’s finding that the assets of the insolvent corporation were dissipated for the benefit of the other related corporations and to the injury of the plaintiff. (Van Dorn, 753 F.2d at 572.) In McCracken the court said that the defendant used the corporations as “facades to avoid rightful responsibility for his acts.” (McCracken, 149 Ill. App. 3d at 112.) In Macaluso the defendant commingled the assets of his corporation with the assets of a not-for-profit corporation and used some of the assets of the not-for-profit corporation to pay his personal obligations. In this case there is no dissipation of Fresco’s funds for the benefit of Knobs or BGA; there is no evidence that Presco was a facade used by Knobs or BGA to avoid their rightful responsibility for their acts; and there is no evidence that Knobs or BGA commingled the assets of Presco with theirs or used the assets of Presco to pay their obligations.

For these reasons the judgment of the circuit court on behalf of BGA and KI Industries, Inc., and against Kelsey is affirmed.

We turn now to the appeal of Kelsey from the judgment in favor of Presco on counts II and III. Count II alleged Fresco’s breach of the implied warranty of fitness for a particular purpose and count III alleged Fresco’s breach of an implied warranty of merchantability. The damages sought were the costs of the recall campaign of Harley-Davidson paid by Kelsey, the money paid by Kelsey for settlements of claims and payment of judgments and attorney fees incurred in defense of the claims. Both sides agree that the issues are governed by Wisconsin law.

Presco asserts several arguments in support of the judgment:
(1) Kelsey failed to prove that it advised Presco of the specific uses of the piston parts machined by Presco, or that Kelsey relied on Fresco’s judgment and skill in selecting the pistons.
(2) Kelsey failed to prove that Fresco’s breach of warranties caused the $2 million in losses claimed.
(3) Kelsey failed to provide sufficient notice of the breach of warranty to Presco.
(4) Kelsey’s claim is barred by the Illinois statute of limitations, laches and res judicata.

The trial judge said that he was ruling in favor of Presco on counts II and III because the purpose for which the cylinders were to be used was not sufficiently “defined” to Presco “to hold [it] to the standard of care which is necessary.” He ruled against the defendant on all the affirmative defenses. He did not address the defendant’s argument that Kelsey had to provide sufficient notice of the breach of warranty.

The Wisconsin Commercial Code provides as follows (Wis. Stat. Ann. §402.315 (1964)):

“Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under [the next section] an implied warranty that the goods shall be fit for such purpose.”

At the outset, we agree with Kelsey’s argument that the judge’s finding that Kelsey had not sufficiently defined the piston’s purpose to Presco was irrelevant to the claim of breach of warranty of merchantability. However, in view of the position we take that other grounds support the judgment on both claims for breach of warranty, it is not necessary that we address the question of whether the seller knew of the buyer’s particular or special purpose for the product or that the buyer relied on the seller’s judgment and skill in selecting the goods.

A reviewing court may affirm a correct decision for any reason appearing in the record, regardless of the basis relied upon by the trial court. (Bell v. Louisville & Nashville R.R. Co. (1985), 106 Ill. 2d . 135, 478 N.E.2d 384.) We hold that the judgment should be affirmed but for a reason not addressed by the judge and for the additional reason that the plaintiff failed to prove that its damages were proximately caused by any breach of the defendant.

First, the defendant argues, and we agree, that the plaintiff did not meet the notice requirement of the Wisconsin Commercial Code, which provides as follows (Wis. Stat. Ann. §402.607(3)(a) (1964)):

“The buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy.”

The burden is on the plaintiff to prove that the notice provided was reasonable under the circumstances.

Kelsey points to the following evidence as proof that it complied with the notice provision of the statute.

On June 1, 1979, Kelsey issued Presco a discrepant material report indicating that pistons were made of the wrong material and had been rejected by Kelsey on May 24. James Williams, Kelsey’s manager of quality control, testified that he told Leo Darts, an employee of Presco, that “it was the wrong material.” On September 4, 1979, Kelsey sent Darts the following letter:

“Leo — confirming your phone conversation this date with Mr. Zagacki, enclosed for your information are copies of the correspondence received from Harley-Davidson relative to the ‘recall program’. If you have any further questions or comments please direct them to Mr. Zagacki or myself. Thank you.”

The copies of the correspondence received from Harley-Davidson were not made part of that letter; but, we assume that they consisted of notices sent by Harley-Davidson to owners of motorcycles and to a Federal agency. Those notices were exhibits which were received in evidence; and we will refer to them later. Kelsey argues that the discrepant report itself, the conversation between Williams and Darts and the letter to Darts established the required notice.

On the other hand, Kelsey continued to do business with Presco after May 24. Williams testified that he did not have “any quarrel” with the pistons after May 1979. He said that the report was a “[n]ormal method of notifying vendors [and] suppliers of problems” and used codes that were to inform vendors of the alleged problems with parts. When asked if he told anyone at Presco that there was a problem, he answered that the people at Presco told him what the problem was.

The discrepant report also contains an entry, “Scrap at vendor’s expense.” The exhibit includes a bill to Presco for the “wrong material.” The inference is clear, since Presco paid all outstanding debts, that that bill was paid. Presco had the right to assume that that was the end of the matter. In our judgment, this evidence does not establish that Kelsey was placing Presco on notice that it considered Presco to have breached its warranties.

The case cited by Kelsey is factually wide of the mark. In Paulson v. Olson Implement Co. (1982), 107 Wis. 2d 510, 319 N.W.2d 855, the Wisconsin Supreme Court held that the notice was sufficient, and rejected the previous rule that the notice required that the seller be informed that the buyer would look to him for damages. The plaintiffs purchased a grain drying bin and informed the defendant manufacturers within approximately two months that the equipment was not performing as expected. There were numerous instances where the defendants’ employees went to the plaintiffs’ farms and attempted to alleviate the drying problems about which the plaintiffs repeatedly complained. The defendants inspected the equipment and recommended increasing the drying temperature. They replaced a drying fan and installed a new drying floor facility. When the defendants were unable to cure the defect, the plaintiff filed suit. The factual differences between that case and this one should be obvious; and we note that the court cited for comparison purposes another Wisconsin case, Marsh Wood Products Co. v. Babcock & Wilcox Co. (1932), 207 Wis. 209, 240 N.W. 392, that held notice was improperly given where 20 months had elapsed from the time of the occurrence and the plaintiff had ordered the same product without complaint during that time. We recall, at this point, the testimony of Kelsey’s employee that it had no “quarrel” with Fresco’s pistons after May 24 and continued to do business with Presco. We do not believe that the Paulson court would have held as it did if the plaintiffs continued to use the drying device for another two or three months and filed suit three years after that.

By 1979, Kelsey had begun receiving notice of third-party actions filed against Harley-Davidson as a result of alleged malfunctions of master cylinders. It did not notify Presco that Kelsey was involved in third-party litigation as a result of Fresco’s manufactured parts or that it was holding Presco liable for the costs incurred as a result of those third-party actions. It was not until suit was filed in November 1982, 3V2 years later, that Presco learned of Kelsey’s specific claims. Wisconsin courts have held in a number or cases that a particular lapse of time renders a notice unreasonable as a matter of law. See, e.g., Herman v. Smith, Kline & French Laboratories (E.D. Wis. 1968), 286 E Supp. 694 (notice after 2xk years); Barlow v. DeVilbiss Co. (E.D. Wis. 1963), 214 F. Supp. 540 (notice given 11 months and 3 weeks after breach); Schaefer v. Weber (1953), 265 Wis. 160, 60 N.W.2d 696 (delay of five months in notifying seller of breach).

We believe that an examination of another part of the Wisconsin notice statute discloses support for Fresco’s position. In addition to that part of section 402.607 requiring reasonable notice, to which we have previously referred, the statute further provides as follows (Wis. Stat. Ann. §402.607(5) (1964)):

“(5) Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable over:
(a) He may give his seller written notice of the litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the 2 litigations, then unless the seller after seasonable receipt of the notice does not come in and defend he is so bound.”

Implicit in the statute is the conclusion that the seller will not be bound if the buyer does not give him written notice of the litigation.

In our judgment, to permit the plaintiff to sit by for 3V2 years, to voluntarily pay the costs of Harley-Davidson’s recall campaign, to manage the defense of the litigation, including the retaining and payment of lawyers, to settle cases under whatever terms it deemed appropriate and then to saddle the unsuspecting defendant with those costs would be contrary to the spirit of the statute and simple justice.

We also believe that the plaintiff failed to prove that the damages claimed were proximately caused by any breach of warranty. The plaintiff relies on the testimony of James Williams and Bocena Baranowski, a paralegal in the legal department of Kelsey.

Williams testified that he received complaints from the service department of Harley-Davidson. He learned that the nylon used by Presco in the manufacture of the pistons was different from that used by the previous manufacturer and was not within the specifications Kelsey gave Presco. Absorption tests he conducted in April and May 1979 showed that the nylon used in the Presco pistons absorbed five times as much water as the nylon required by the specifications. Kelsey also had dimensional problems with the pistons, and Kelsey had to grind the outer diameter of the pistons to make them conform with the specifications. In June, after notifying Harley-Davidson of the results of the absorption tests, he met with representatives of Harley-Davidson, and Kelsey agreed to defend the claims made against Harley-Davidson. Kelsey also prepared 14,000 repair kits which were sent to Harley-Davidson to be sent in turn to owners of the motorcycles. The repair kit contained much more than the piston; according to Williams, it included some of the “important parts in the master cylinders” which were the piston, oval-ring, the primary cup and “several other components.” The decision to recall the master cylinder was made by Harley-Davidson. Kelsey paid Harley-Davidson $158,043.98 as a result of the recall.

Williams identified a number of claims including lawsuits filed against Harley-Davidson. A few of the lawsuits also named Kelsey. He said that all the settlements or judgments involved the master cylinder, which included components. In none of the claims or judgments paid by Kelsey was there any adjudication of fault on the part of Presco. He examined some, but not all, of the motorcycles involved in the claims.

On redirect examination Williams said he did not examine the pistons as a reconstruction expert. He only measured them and that told him only if the piston had swelled. The record does not disclose whether any of the pistons he examined had, in fact, swelled. He could not tell by looking at any of the pistons whether it was a Presco piston or one manufactured by the previous company. He could not tell by looking at the piston the particular date it was manufactured. There is a date code on the cylinder, but there is no date code on the piston. All of the cylinders involved were date coded between February and May 1979.

He made no review of the claims to determine whether the accident occurred through operator error. He did not know how the accidents happened. He only knew that they were claimed to be related to the recall. There never was any determination that there was an absorption problem with any of the pistons involved in the accidents. He did not do any absorption tests on the pistons involved. He admitted that a brake might fail on a Harley-Davidson for reasons other than the piston. Some of the claims were dismissed in favor of Harley-Davidson and Kelsey.

Bocena Baranowski identified the Harley-Davidson claims, including copies of complaints, and the records concerning the amounts paid by Kelsey in the settlements and judgments as well as the expenses and attorney fees connected with the litigation and the recall campaign. She had no knowledge of the merits of the lawsuits or the reasonableness of the settlements, judgments, expenses or attorney fees.

The position of the defendant was made clear in the trial court in the remarks of its attorney. The record attributes the remarks to the lawyer for the plaintiff; but, we believe that the lawyer for the defendant made them:

“Your Honor, the burden that the plaintiff has is proving that each one of these claims that they think they are entitled to recover for was, in fact, by an absorption problem in this piston.”

Later she spoke to the court as follows:

“Well, it’s our position that in order to prove that Presco is responsible for these amounts, the plaintiff has the burden of showing that number one, there was, in fact, a finding or some kind of evidence that the allegations of the complaint and the plaintiff’s injury was caused by this piston problem.”

No one ever took issue with those statements of Fresco’s attorney, and we believe they were proper summaries of the issue before the trial court and before us.

The only proof in support of causation is the testimony of Williams that the claims involved the master cylinder, of which the piston is but one part. There is no showing that the master cylinder, let alone the piston, caused any of the accidents.

It is interesting to note that the notice sent by Harley-Davidson to the Office of Compliance of the National Highway Traffic Safety Administration informed the agency that a possible defect existed in the rear brake master cylinder which “appears to allow absorption to a greater degree than the material specified.” The notice also recited that “it is possible, though extremely unlikely, that this condition may become severe enough to make the rear wheel skid and possibly cause the motorcycle operator to lose control.” (Emphasis added.) The notice concluded that “the information presently available suggests that only a small percentage [of the 21,970 vehicles produced with the defective piston] may ever experience possible master cylinder malfunction to any degree due to this problem.” (Emphasis added.)

In our judgment it is obvious that the plaintiff has failed, as a matter of law, to prove that the pistons manufactured by Presco caused the damages proved by Williams and Baranowski. Kelsey has not cited any case, nor do we believe one exists, to support its argument.

For these reasons, the judgment in favor of Presco on counts II and III is affirmed.

We turn now to the cross-appeal of Presco from the order granting judgment in favor of Kelsey on counts I and IV. Count I was a breach of contract action, and count IV was a negligence action. The damages prayed for in counts I and IV were the same as those prayed for in counts II and III. Counts I and IV are based on the same facts as the claims under counts II and III. Since we have determined that the plaintiff has failed, as a matter of law, to prove that the damages claimed were the result of any defect in the pistons manufactured by Presco, we hold that judgment should not have been entered for the plaintiff on counts I and IV. Therefore, the judgment on counts I and IV in favor of Kelsey is reversed.

The last assignment of error is Kelsey’s contention that the court erred in denying attorney fees. Again, since we have concluded that Kelsey failed to prove a causal connection between the pistons manufactured by Fresco and the damages claimed by Kelsey, it necessarily follows that its claim for attorney fees must also fall. Therefore, the order denying attorney fees to Kelsey is affirmed.

In view of our holding, it is unnecessary that we pass on the other claims of Fresco that Kelsey’s claim is barred by the Illinois statute of limitations, laches or res judicata.

In summary, the judgment in favor of EGA and KI Industries is affirmed; the judgment in favor of Fresco on counts II and III is affirmed; the order denying attorney fees to Kelsey is affirmed; and the judgment in favor of Kelsey on counts I and IV is reversed.

Judgment affirmed in part, and reversed in part.

McNAMARA and LaPORTA, JJ., concur.