$2.3M Judgment against Teamsters Local Upheld in Landmark Appellate Decision
Expands Successor Liability to Unincorporated Associations for the First Time in Illinois
CHICAGO, Nov. 15, 2017 /PRNewswire/ -- In a groundbreaking decision issued on November 13, 2017, the Appellate Court of Illinois ruled – for the first time in Illinois – that an unincorporated association such as a labor union may be held liable as the legal successor to a dissolved labor union for that union's commercial debts. The case is 1550 MP Road, LLC v. Teamster Local Union No. 700, et al., 2017 IL App (1st) 153300. The Appellate Court thus extended the doctrine of "successor liability" to unincorporated associations. Previously, this doctrine had only been applied to corporations, limited liability companies and partnerships.
In affirming Cook County Circuit Court Judge Raymond Mitchell's July 2015 judgment against International Brotherhood of Teamsters Local Union No. 700, the Appellate Court created new law in Illinois, identifying the factors that are to be considered in future cases in determining whether an unincorporated association can be held liable for a prior association's debts. The factors include: (1) the relationship between the dissolved and successor associations; (2) whether there was substantial continuity of the dissolved association after a merger or consolidation; (3) whether the successor association had notice of the dissolved association's liabilities; and (4) whether there are important state policies that would be affected by declining to impose successor liability.
In 2008, plaintiff, 1550 MP Road LLC, a Park Ridge-based real estate developer, purchased and developed an office building for Teamsters Local 726 and then leased the building to the Local for 15 years. The lease also provided that Local 726 would purchase the building after five years. After less than one year under the lease, the International dissolved Local 726 and transferred the Local's entire membership, along with its assets and liabilities (but not the lease obligation), to a newly chartered union, Local 700. Local 700 immediately informed the developer that it was not bound by the lease despite its members and staff continuing to occupy the building. After four months of failed negotiations between the parties, Local 700 vacated the building and the developer was left with an empty building that it was unable to resell or re-let.
Attorney Richard K. Hellerman, founder and President of The Law Office of Richard K. Hellerman, P.C., sued Local 700 on 1550's behalf, alleging that Local 700 was the legal successor to Local 726 and therefore was responsible for Local 726's breach of the lease. After a 2-week bench trial, Judge Mitchell found Local 700 liable as Local 726's successor, assessing damages of $1,996,853 for rent due under the remaining term of the lease and awarding legal fees and costs of over $320,000 to 1550 under the terms of the lease.
The Appellate Court affirmed Judge Mitchell's findings that the lease was valid, that Local 726 breached the lease and that Local 700 was Local 726's successor and thus liable for Local 726's breach.
Richard K. Hellerman is a seasoned litigator, having tried cases before both juries and judges in State and Federal courts in Illinois, Wisconsin, Ohio and New York. He also been involved in over 20 appeals making law in such important areas as corporate successor liability and the rights of banks in enforcing promissory notes. He concentrates his practice in business and commercial litigation, with particular emphasis on emergent litigation arising out of restrictive covenants, disputes between owners of small businesses and disputes between businesses. For additional information, please visit www.hellermanlaw.com.
Contact: Richard K. Hellerman
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