Tahir

Filing 182

Opinion and Order Signed by the Honorable Joan H. Lefkow on 3/13/2014: Plaintiff's motion for summary judgment on Count I 162 is granted with respect to Downers Motors, Inc., and denied with respect to Import Acquisition Motors, LLC, Mark Hop pe, and MK Fund, LLC. Judgment of $115,197, with interest accruing at 5 percent per year from September 29, 2009 is entered against Downers Motors, Inc. The motion of Lamborghini Chicago, Inc., Import Acquisition Motors, LLC, Mark Hoppe, and MK Fund, LLC 165 is granted in part and denied in part: Summary judgment is granted in favor of Lamborghini Chicago, Inc.; denied with respect to Mark Hoppe and MK Fund, LLC; and granted in favor of Import Acquisition Motors, LLC on Count II. Scheduling Conference set for 4/22/2014 at 11:00 AM.Mailed notice(mad, )

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

MUZZAFER S.M. TAHIR,

)
)
Plaintiff,
)
)
v.
)
)
IMPORT ACQUISITION MOTORS, LLC; )
LAMBORGHINI CHICAGO, INC.;
)
DOWNERS MOTORS, INC.; JOSEPH
)
ABBAS; MARK HOPPE; and
)
MK FUND, LLC,
)
)
Defendants.
)

Case No. 09 C 6471
Judge Joan H. Lefkow

OPINION AND ORDER
Plaintiff Muzzaffer S.M. Tahir filed suit against defendants Import Acquisition Motors,
LLC (“IAM”), Lamborghini Chicago, Inc. (n/k/a Fox Valley Motor Cars, LLC) (“Lamborghini
Chicago”), Downers Motors, Inc. (“DMI”), Joseph Abbas, Mark Hoppe, and MK Fund, LLC
(“MK Fund”) (collectively, “the defendants”) for breach of contract (Count I) and violation of
the Illinois Consumer Fraud and Deceptive Business Practices Act (“the Consumer Fraud Act”),
815 Ill. Comp. Stat. 505/2 (Count II). 1 The suit arises out of defendants’ failure to deliver a car
that Tahir purchased. Before the court are cross-motions for summary judgment. Tahir moves
for summary judgment against defendants DMI, IAM, Hoppe, and MK Fund on Count I. (Dkt.
162.) Defendants Lamborghini Chicago, Hoppe, and MK Fund move for summary judgment in
their favor on both counts, and defendant IAM moves for summary judgment in its favor on

1

The court has jurisdiction pursuant to 28 U.S.C. § 1332(a) because the amount in controversy
exceeds $75,000 and there is complete diversity between Tahir and defendants. Tahir is an alien
(Canadian citizen); IAM, Lamborghini Chicago, DMI, Abbas, Hoppe and MK Fund are Illinois citizens.
Venue is proper under 28 U.S.C. § 1391(b) because defendants are residents of this district.

Count II. (Dkt. 165.) Tahir’s motion is granted against DMI and denied against IAM, Hoppe,
and MK Fund. Defendants’ motion is granted in part and denied in part. Specifically, summary
judgment is granted in favor of Lamborghini Chicago on both counts; denied with respect to
Hoppe and MK Fund on both counts; and granted in favor of IAM on Count II.
LEGAL STANDARD
Summary judgment obviates the need for a trial where there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). A genuine issue of material fact exists if “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). To determine whether any genuine fact issue
exists, the court must pierce the pleadings and assess the proof as presented in depositions,
answers to interrogatories, admissions, and affidavits that are part of the record. Fed. R. Civ. P.
56(c). In doing so, the court must view the facts in the light most favorable to the non-moving
party and draw all reasonable inferences in that party’s favor. Scott v. Harris, 550 U.S. 372, 378
127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007). When considering cross-motions for summary
judgment, the court must be careful to draw reasonable inferences in the correct direction. See,
e.g., Int’l Bhd. of Elec. Workers, Local 176 v. Balmoral Racing Club, Inc., 293 F.3d 402, 404
(7th Cir. 2002). The court may not weigh conflicting evidence or make credibility
determinations. Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011).
The party seeking summary judgment bears the initial burden of proving there is no
genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548,
91 L. Ed. 2d 265 (1986). In response, the non-moving party cannot rest on bare pleadings alone
but must designate specific material facts showing that there is a genuine issue for trial. Id. at
324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). If a claim or defense is
2

factually unsupported, it should be disposed of on summary judgment. Celotex, 477 U.S. at 32324.
BACKGROUND 2
It is undisputed that well over four years ago Tahir paid more than $100,000 for a car that
was never delivered. In response to Tahir’s claim, defendants present a complex web of
corporate entities and a considerable amount of finger pointing. 3
In August 2009, the operation and management of the Bentley Gold Coast car dealership
was in flux. Although defendant DMI 4 owned the dealership (and DMI was owned by Abbas)
(dkt. 170 at 4, ¶ 15; id. at 6, ¶ 27), Abbas had signed an agreement with I-Hopp Motor Cars, LLC
(“I-Hopp”) to sell DMI. 5 (Dkt. 177 at 2, ¶ 6.) I-Hopp was formed by defendant Mark Hoppe for
the purpose of purchasing DMI. (Dkt. 167 at 2, ¶ 6.) In order to ensure that DMI survived until
the sale closed, Hoppe also formed defendant IAM 6 to manage and fund DMI. (Dkt. 177 at 2, ¶
2

The facts set forth in this section are derived from the statements of fact submitted to the parties
to the extent they comport with Local Rule 56.1. They are taken in the light most favorable to the nonmovant. In accordance with its regular practice, the court has considered the parties’ objections to the
statements of fact and included in this background section only those portions of the statements and
responses that are appropriately presented, supported, and relevant to the resolution of these motions.
3

Based on the motions before it, the court will enter judgment against defendant DMI for
outstanding amounts due to Tahir plus prejudgment interest. The court notes, however, that DMI has
filed cross claims against the Hoppe defendants who appear to be ultimately responsible for Tahir’s
repayment. The court strongly suggests that Mr. Abbas and Mr. Hoppe engage in serious discussions
regarding repayment of the amounts owing to Mr. Tahir and settlement of the remaining issues in this
case without further expense to themselves or burden on this court.
4

DMI also did business under the names Bentley Gold Coast and Bentley Downers Grove. (Id.

at 2, ¶ 6.)
5

The agreement also covered the sale of DMI’s affiliate, Rush Motors, Inc. Although Rush is
included in many of the transactions described in this section, it is not a named defendant in this case and
the court will refer only to DMI in an attempt to focus on the facts relevant to the instant case.
6

Hoppe is a manager and member of IAM. (Dkt. 175 at 2, ¶ 4.) IAM has done business under
the names Bentley Gold Coast, Bentley Downers Grove, Lamborghini Gold Coast, Bentley Gold Coast,
and Bugatti Chicago. (Dkt. 167, Ex, 3; Dkt. 175 at 2, ¶ 3.)

3

7.) Another company formed by Hoppe, MK Fund, 7 provided investment, management, and
administrative services to IAM, I-Hopp, and Lamborghini Chicago, among other entities, during
the relevant time period. (Dkt. 170 at 2, ¶ 3.) The court will refer to IAM, Lamborghini
Chicago, Hoppe, and MK Fund collectively as “the Hoppe defendants” and to DMI and Abbas as
“the DMI defendants.”
On March 25, 2009, IAM and DMI entered into a Management Areement to memorialize
IAM’s management of DMI. (Dkt 170 at 3, ¶ 10; Dkt. 175 at 3, ¶ 10; Dkt. 177 at 3, ¶ 9.) The
Management Agreement described the relationship between IAM and DMI as follows:
At all times during the existence of this Agreement, [IAM] shall,
insofar and while existing the powers and duties hereby conferred
upon it, be considered an agent of [DMI] in the same manner as a
person employed by [DMI] having like authority and duties, and
every employee of [DMI], provided that any such person shall be
employed upon the recommendation or approval of [IAM], shall be
considered solely an employee of [DMI], but the cost of whose
wages, compensation and other benefits of employment shall be
the responsibility of [IAM].
(Dkt. 164, Ex. D (“Mgmt. Agmt.”), § 11.) With respect to selling cars, the agreement provided,
[IAM] is hereby authorized to supervise the sale and disposition of
any new or used motor vehicles . . . on such terms and conditions
as it deems reasonable and prudent in the ordinary course . . . and
to contract for, and authorize the purchase on behalf of [DMI],
such new . . . vehicles . . . as, in the reasonable business judgment
of the Manager, shall be necessary for the operation of [DMI].
(Id., § 4.)
While operating under the Management Agreement, IAM held an account in its name for
the management of DMI (“the IAM/DMI account”). (See dkt. 170 at 4-5, ¶ 17; dkt. 175 at 4-5, ¶
17.) IAM was entitled to “receive, collect and retain all income and receipts in excess of
[DMI]’s cost of its goods and materials sold from [DMI]’s inventory of such items from and
7

Hoppe and a business partner are the owners and managers of MK Fund. (Dkt. 175 at 2, ¶ 8;
Dkt. 177 at 1, ¶ 2.)
4

after the date hereof during the term of this Agreement in the operation of [DMI’s] businesses.”
(Mgmt. Agmt., § 9.) IAM was required to pay out of the IAM/DMI account “[a]ll operating
expenses for goods and services incurred in the ordinary course of operation of [DMI’s] business
which accrue, are purchased or are incurred on and after the effective date of this Agreement,
including, but not limited to, agreements and contracts for goods and services[.]” (Id., § 9(B).)
In addition, IAM ran credit card transactions for DMI through defendant Lamborghini Chicago’s
credit card machine. 8 (Dkt. 177 at 3, ¶¶ 10-11.) Lamborghini Chicago paid amounts charged
through its credit card machine for DMI-related transactions to IAM. (Id., ¶ 12.)
On August 4, 2009, Tahir visited the Bentley Gold Coast dealership, met with defendant
Abbas, and executed a contract for the purchase of a 2008 Bentley Spur (“the Purchase Order”). 9
(Dkt. 164, Ex. H (“Abbas Dep.”) at 30; Dkt. 170 at 4, ¶¶ 12-13; Dkt. 175 at 3, ¶¶ 12-13.) The
Purchase Order 10 identifies “Bentley Gold Coast dba Bugatti Chicago, dba Saleen Chicago, dba
Saleen Midwest, dba Lamborghini Gold Coast, dba Luxury Motors Gold Coast, Inc.” as the
seller. (Dkt. 170 at 4, ¶ 14.) The Purchase Order appears to be “accepted by” Nicholas B. Litsos
on behalf of the dealer. 11 (Dkt. 164, Ex. G.)
At the time Tahir signed the Purchase Order, the Bentley Gold Coast dealership did not
own the car that Tahir purchased. Instead, it was located at and owned by Luxury Motors
O’Hare, an unrelated dealership. (Dkt. 170 at 8, ¶ 6.) The expectation was that Tahir would pay

8

Lamborghini Chicago is affiliated with Hoppe and it owned and operated a Lamborghini
dealership in Westmont, Illinois during the relevant time period. (Dkt. 177 at 2, ¶ 5.)
9

Defendants admit that Tahir was not aware of IAM’s involvement in the operation of the
dealership at the time. (Dkt 170 at 4, ¶¶ 18-19; Dkt. 175 at 5, ¶¶ 18-19.)
10

The Purchase Order incorporates provisions on the reverse side of the order, but the parties
have not provided the court with a copy of the reverse side. (See dkt. 164, ex. G.)
11

The parties have not provided the court with any information about Litsos.
5

the Bentley Gold Coast dealership for the car and Bentley Gold Coast would then buy the car
from Luxury Motors O’Hare and deliver the car to Tahir. (Abbas Dep. at 33:12-36:2, 51:852:3.) The day that Tahir signed the Purchase Order, he made a deposit of $20,000 using his
credit card, payable to Lamborghini Chicago. 12 (Dkt. 170 at 4, ¶ 16; Dkt. 175 at 4, ¶ 16.) For
the balance of the purchase price, Tahir made two wire transfers totaling $115,197 on August 4
and 10, 2009. (Dkt. 170 at 4-5, ¶ 17; Dkt. 175 at 5, ¶ 17.) Tahir’s wire transfers were made from
his Royal Bank of Canada account to the IAM/DMI account held by IAM. (Dkt. 170 at 7, ¶ 5;
id., Ex. 3.) It is undisputed that the DMI defendants never had access to the funds in the
IAM/DMI account or otherwise received any money from Tahir. (Id. at 7, ¶ 5.)
On the day that Tahir made the final wire transfer, August 10, 2009, an individual with an
email address indicating she worked for MK Fund wrote an email to two salesmen at the Bentley
Gold Coast dealership stating that IAM would cut a check to Luxury Motors O’Hare to purchase
Tahir’s car. 13 (Dkt. 170 at 5, ¶ 21; Dkt. 164, Ex. I.) But the next day DMI terminated the
Management Agreement. (Dkt. 167 at 3, ¶ 13; Dkt. 170 at 3, ¶ 11.) IAM never provided a check
to buy the car from Luxury Motors O’Hare and the car was never purchased. (Id. at 8, ¶ 8.)
On August 11, 2009, Hoppe’s deal to buy DMI apparently fell through. On the same day,
IAM, whose sole purpose had been to fund and manage DMI, transferred funds out of the
IAM/DMI account to several creditors, including a $100,000 transfer for legal services, a

12

Tahir later reversed this payment and he received a credit on his card for the full $20,000.
(Dkt. 177 at 4, ¶ 17.)
13

The Hoppe defendants object to Tahir’s use of this email on hearsay grounds. (Dkt. 175 at ¶
21.) The statements are not being offered to prove the truth of the matter asserted, however, and therefore
are not hearsay. Fed. R. Evid. 801(c)(2); see also Barnes v. City of Harvey, No. 98 C 3316, 1998 WL
664951, at *2 (N.D. Ill. Sept. 18, 1998) (statements introduced to show fact that statements were made
and for the effect of statements on audience are not hearsay). Further, the email provides helpful color
but is not material to the court’s decision.

6

$300,000 transfer to defendant MK Fund, a $250,000 transfer to Hoppe in partial repayment of a
loan, and a $60,000 transfer to Hoppe to reimburse him for certain expenses incurred in
connection with IAM’s operation of DMI. 14 (Dkt. 177 at 4, ¶¶ 20-21; Dkt. 175 at 6, ¶ 22.)
Tahir expected to receive the car on or before August 17, 2009, but it was never
delivered. (Dkt. 170 at 5, ¶ 23; Dkt. 175 at 7, ¶ 23; Dkt. 177 at 4-5, ¶¶ 22-23.) On September
29, 2009, Tahir made a formal written demand for the return of his payments to defendants.
(Dkt. 170 at 6, ¶ 28; Dkt. 175 at 8, ¶ 28.) Two weeks later he filed this suit.
ANALYSIS
I.

Breach of the Purchase Order
Tahir seeks summary judgment on his claim for breach of the Purchase Order by DMI,

IAM, Hoppe and MK Fund. The elements of a breach of contract claim under Illinois law 15 are
“(1) the existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach
of contract by the defendant; and (4) resultant injury to the plaintiff.” Asset Exch. II, LLC v.
First Choice Bank, 953 N.E.2d 446, 455, 2011 IL App (1st) 103718, 352 Ill. Dec. 207 (2011).
The parties do not dispute the existence of a valid contract. Further, Tahir concedes that
DMI is the counterparty to the Purchase Order. 16 (See dkt. 181 at 4 (“DMI contracted to sell
Plaintiff the car. IAM, the manager of the dealership with the authority over sales and purchase
of inventory at the dealership, took Plaintiff’s payment.”); dkt. 176 at 5 (“Had Plaintiff been
14

On September 9, 2009, IAM transferred an additional $100,000 to MK Fund. (Dkt. 170 at 5, ¶
22; Dkt. 175 at 6, ¶ 22.)
15

The parties do not dispute that Illinois law governs the claims for breach of the Purchase Order.

16

Although the DMI defendants may disagree with this fact, the court is addressing Tahir’s
motion for summary judgment, and Tahir had “no disagreement” with the Hoppe defendants’ statement of
fact that “[o]n August 4, 2009, Tahir entered into an agreement with DMI to purchase a 2008 Bentley
Flying Spur.” (Dkt. 177 at 3, ¶ 13.) Thus under Local Rule 56.1(b)(3)(C), this fact is deemed admitted
for purposes of Tahir’s motion for summary judgment. See N.D. Ill. R. 56.1(b)(3)(A)-(C) (“All material
facts set forth in the statement required of the moving party will be deemed admitted unless controverted
by the statement of the opposing party.”).
7

aware that IAM was managing the dealership and was the only party with the ability to sell him
the car, he would not have entered into a sales contract solely with ‘Bentley Gold Coast’ (the
business name for defendant DMI).”); dkt. 177 at 3, ¶ 13.) The parties disagree about the agency
relationship between DMI and IAM, and raise various other arguments that are addressed below.
A.

DMI
1.

DMI’s Liability Under Agency Principles

Tahir argues both that IAM was acting as DMI’s agent (dkt. 181 at 3-4) and that DMI
was acting as IAM’s agent (dkt. 163 at 5) in signing the Purchase Order. Under Illinois law,
“[t]he test of agency is whether the alleged principal has the right to control the manner and
method in which work is carried out by the alleged agent and whether the alleged agent can
affect the legal relationships of the principal.” Chemtool, Inc. v. Lubrication Techs., Inc.,148
F.3d 742, 745 (7th Cir. 1998) (internal quotations and citations omitted). “Where the identity of
the principal for whom an agent acts is sufficiently disclosed to a third party, then the principal
and not the agent is liable on the contract.” Powers v. Warner Bros. Records, Inc., 411 F. Supp.
747, 748 (N.D. Ill. 1976); see also Am. Design Group, Inc. v. Soft Sheen Prods., Inc., No. 95 C
3196, 1996 WL 41698, at *1 (N.D. Ill. Feb. 1, 1996) (absent proof of an “undisclosed principal”
or an agent’s agreement to personal liability, an agent generally is not liable for a principal’s
breach of contract). An agent who contracts on behalf of an undisclosed principal is personally
liable on the contract because “the third party is obviously relying on the credit of the agent and
not that of the principal.” Jameson Realty Group v. Kostiner, 813 N.E.2d 1124, 1136, 351 Ill.
App. 3d 416, 286 Ill. Dec. 431 (2004).
Although the Management Agreement explicitly provides that IAM acted as DMI’s
agent, parties’ labels are not sufficient to establish an agency relationship. Cf. EEOC v. Sidley

8

Austin Brown & Wood, 315 F.3d 696, 709 (7th Cir. 2002) (“[E]mployer may not evade
obligations under federal law by plastering the name “partner” on someone whose legal and
economic characteristics are those of an employee.”) (citing Restatement (Third) of Agency §
1.02 (2001) (parties’ labels do not control)); Chemtool, 148 F.3d at 745 (“While an agency
relationship can be created by contract . . . not all contracts create agency relationships . . . .”).
The nature of the agency relationship between DMI and IAM, however, does not affect DMI’s
liability for breach of contract. If IAM was acting as DMI’s agent, DMI is liable for breach of
contract as a disclosed principal. If DMI was acting as IAM’s agent, DMI is liable under the
“undisclosed principal” doctrine. Tahir had purchased a car from Abbas in the past (Abbas Dep.
29:11-12), and he was not aware of the newly-formed relationship between DMI and IAM (dkt.
170 at 5, ¶ 19; dkt. 175 at 5, ¶ 19). The fact that IAM may have been the principal controlling
sales behind the scenes does not alter the fact that Tahir entered into the contract in reliance on
the DMI defendants’ reputation and credit. Thus, DMI may be liable for breach of contract both
if it was acting as an agent for IAM (under the undisclosed principal doctrine) and if it was
acting as principal.
2.

DMI’s Defenses

The DMI defendants argue that DMI cannot be liable for breach of the Purchase Order
because (1) Tahir did not perform on the Purchase Order (his money was sent to an account
controlled by IAM rather than DMI 17), and (2) DMI did everything within its power to deliver

17

The portion of the Purchase Order provided to the court does not specify the account to which
Tahir was supposed to wire his payment, but there is no allegation that Tahir wired the payments to the
wrong account. The DMI defendants simply argue that Tahir paid IAM for the car and IAM stole the
funds instead of buying the car. (Dkt. 169 at 4.) The fact that an intervening event interfered with DMI’s
recovering consideration for the Purchase Order is not the same as non-performance by Tahir and does
not excuse DMI’s performance. See, e.g., OptionMonster Holdings, Inc. v. Tavant Techs., Inc., No. 10 C
2792, 2010 WL 2639809, at *3 (N.D. Ill. June 29, 2010) (“A plaintiff has substantially performed under a
contract where the plaintiff has ‘substantially complied with the material terms of the agreement
9

the car to Tahir. These arguments appear to invoke the related Illinois doctrines of impossibility
of performance and commercial frustration. 18
For an obligation to be “impossible” to fulfill, Illinois law requires that (1) the
impossibility was not and could not have been anticipated by the parties; (2) the party asserting
impossibility did not contribute to it; and (3) the party asserting impossibility demonstrates that it
has tried all practical alternatives to permit performance. See Caravette v. Z Trim Holdings, Inc.,
No. 2-11-0087, 2011 IL App (2d) 110087, at *11 (2011). To show commercial frustration, a
party must prove that “(1) the frustrating event was not reasonably foreseeable; and (2) the value
of counterperformance has been totally or nearly totally destroyed by the frustrating event.”
Blue Cross Blue Shield of Tenn. v. BCS Ins. Co., 517 F. Supp. 2d 1050, 1059-60 (N.D. Ill. 2007)
(citing N. Ill. Gas Co. v. Energy Co-op., Inc., 461 N.E.2d 1049, 1059, 122 Ill. App. 3d 940, 78
Ill. Dec. 215 (1984)).
DMI does not succeed in demonstrating the elements of an impossibility or frustration
defense. The apparent frustration or impossibility is IAM’s failure to purchase the car from
Luxury Motors O’Hare despite the fact that Tahir made full payment to IAM. This frustrating
event was foreseeable when DMI entered into the Management Agreement with IAM. The
Management Agreement provided that IAM would collect receipts and make payments as
necessary to run DMI’s business. (See Mgmt. Agmt., § 9.) DMI’s inability to force IAM to
perform according to the terms of their agreement is not an unforeseeable impossibility. See Ner
attributable to him.’”) (quoting Allsopp Sand & Gravel, Inc. v. Lincoln Sand & Gravel Co., 525 N.E.2d
1185, 1188, 171 Ill. App. 3d 532, 121 Ill. Dec. 878 (1988)).
18

DMI failed to plead either impossibility or commercial frustration as affirmative defenses.
Even though the court will address the substance of DMI’s arguments, DMI’s failure to plead generally
amounts to waiver of the affirmative defenses. See Radkiewicz v. Radkiewicz, 818 N.E.2d 411, 418, 353
Ill. App. 3d 251, 288 Ill. Dec. 723 (2004) (“The affirmative defense of impossibility is well established in
the common law of Illinois.”); Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 235 (7th Cir. 1991)
(“Failure to plead an affirmative defense results in a waiver of that defense.”) (citations omitted).
10

Tamid Congregation of N. Town v. Krivoruchko, 638 F. Supp. 2d 913, 930 (N.D. Ill. 2009)
(inability to cause a third party to perform is “ordinarily not to be regarded as an impossibility
avoiding the obligation”) (quoting Hubbard v. Talbott Tavern, Inc., No. 2003-CA-001468, 2006
WL 2089308, at **3-4 (Ky. Ct. App. July 28, 2006)). In fact, the Management Agreement
specifically contemplates the possibility that either party could default. (See Mgmt. Agmt., §
13.) DMI also contributed to the frustration or impossibility by terminating the Management
Agreement. Finally, DMI has not demonstrated that it was incapable of purchasing the car from
the Luxury Motors O’Hare dealership itself and delivering it to Tahir, or otherwise making Tahir
whole by repaying him in cash. Thus, neither the fact that Tahir paid IAM nor the fact that DMI
attempted to force IAM to perform as required under the Management Agreement excuses
DMI’s performance under the Purchase Agreement. Tahir is entitled to summary judgment
against DMI on his claim for breach of contract.
The court acknowledges that such a holding may appear unfair to DMI because it never
received any money from Tahir. DMI, however, entered into a contractual arrangement with
IAM that had attendant risks. One of those risks was that IAM would not fulfill its obligations
under the Management Agreement. DMI cannot now use IAM’s failure to perform as a defense
to Tahir’s claims, but DMI has recourse against IAM for breach of the Management Agreement.
In fact, DMI has asserted such claims against IAM. (See dkt. 145 (DMI defendants’ cross claims
against IAM for breach of contract).)

11

B.

IAM, Hoppe, and MK Fund

IAM’s liability for breach of the Purchase Order turns on whether DMI acted as IAM’s
agent in entering into the Purchase Order. 19 If IAM acted as an undisclosed principal, it may be
liable for breach of contract. See Vander Wagen Bros. Inc. v. Barnes, 904 N.E.2d 663, 665, 15
Ill. App. 3d 550 (1973) (either agent or previously undisclosed principal may be liable for breach
of contract). 20 It is unclear from the facts presented whether IAM had the right to control DMI’s
manner and method of work as is required to find a principal-agent relationship under Illinois
law. Tahir and the DMI defendants contend that DMI had to obtain IAM’s approval before
purchasing or selling any cars, but the Hoppe defendants dispute this characterization and point
to the terms of the Management Agreement, which are ambiguous. (See dkt. 175 at 6, ¶ 20.)
Section 4 “authorizes” IAM to “supervise the sale and disposition of any new or used motor
vehicles” but does not discuss whether IAM had the right to control all sales and dispositions or
whether DMI could override IAM’s decisions. (Mgmt. Agmt., at § 4.) Other provisions of the
Management Agreement indicate that DMI may have been able to exercise some control over its
operations. For example, section 3 of the Management Agreement allows IAM to discharge
DMI employees, “subject only to the general supervision and control of the board of directors of
[DMI].” (Id., § 3.) Making all inferences in favor of IAM as the non-movant, the court cannot
find that the Management Agreement provided IAM with the ability to control DMI as required

19

Because DMI was a “disclosed” principal and there is no evidence that IAM agreed to personal
liability for its actions as DMI’s agent, IAM cannot be held liable if it was simply acting as agent for
DMI. See Am. Design Group, 1996 WL 41698, at *1.
20

Illinois courts have held that if a plaintiff succeeds in obtaining judgment against both an
undisclosed principal and the agent, the plaintiff must elect which party to take judgment against. See,
e.g., Johnson v. Fischer, 247 N.E.2d 805, 807, 108 Ill. App. 2d 433 (1969). As summary judgment only
is being entered against DMI, this is not an issue at this stage in the case.
12

to find IAM acted as DMI’s principal. 21 Thus, the court cannot grant summary judgment against
IAM on Tahir’s breach of contract claim. 22 The court also denies Tahir’s motion for summary
judgment against Hoppe and MK Fund because his claims against them are derivative of the
claims against IAM.
II.

Prejudgment Interest
Tahir requests that the court include prejudgment interest in its judgment, citing the

Illinois Interest Act, 815 Ill. Comp. Stat. 205/2, et seq. In diversity cases, “federal courts look to
state law to determine the availability of (and rules for computing) prejudgment interest.”
Medcom Holding Co. v. Baxter Travenol Labs., Inc., 106 F.3d 1388, 1405 (7th Cir. 1997)
(quoting Matter of Oil Spill by the Amoco Cadiz, 954 F.2d 1279, 1333 (7th Cir. 1992)). “The
Illinois Interest Act provides for the award of interest when money is withheld by an
unreasonable and vexatious delay of payment.” Cress v. Recreation Servs., Inc., 795 N.E.2d
817, 858-59, 341 Ill. App. 3d 149, 277 Ill. Dec. 149 (2003). An award of prejudgment interest
may be made in the sound discretion of the trial court but, in order for interest to be awarded, the
amount due to the plaintiff must be “a fixed and easily calculated amount due from a debtorcreditor relationship that has come into existence by virtue of a written instrument.” Id. at 859;
see also Mutual Serv. Cas. Ins. Co. v. Elizabeth State Bank, 265 F.3d 601, 629 (2001) (finding
21

The court notes that additional facts may aid in determining IAM’s ability to control DMI,
including the provisions of the purchase agreement between DMI and I-Hopp dated March 18, 2009. The
court has not been provided with a copy of the agreement and thus must infer that IAM’s right to control
DMI is restricted to the relationship as set forth in the Management Agreement.
22

Although Tahir asserts a breach of contract claim against IAM, the underlying facts seem to
point to the equitable theory of unjust enrichment. In Raintree Homes, Inc. v. Village of Long Grove, 807
N.E.2d 439, 445, 209 Ill. 2d 248, 282 Ill. Dec. 815 (2004), the Illinois Supreme Court found, “Here,
plaintiffs have no substantive claim grounded in tort, contract, or statute; therefore the only substantive
basis for the claim is restitution to prevent unjust enrichment.” Id.; see also Cleary v. Philip Morris Inc.,
656 F.3d 511, 519 (7th Cir. 2011) (discussing unjust enrichment claim under Illinois law); Shinmax v.
Colovos, No. 13 C 5430, 2014 WL 644568, at *2 (N.D. Ill. Feb. 19, 2014) (citing Cleary and allowing
plaintiff to proceed with unjust enrichment claim). But because this claim has not been asserted by Tahir,
the court is constrained to its analysis under Tahir’s breach of contract claim.
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contracts qualify as “written instruments” for the purpose of the Interest Act). The Interest Act
specifies an interest rate of five percent per year for all moneys due under any written
instrument. 815 Ill. Comp. Stat. 205/2. If a contract counterparty has failed to perform,
prejudgment interest may be awarded in the amount paid for such performance. See Ameritech
Info. Sys., Inc. v. Bar Code Res., Inc., 331 F.3d 571, 574-75 (7th Cir. 2003) (affirming award of
prejudgment interest on amount paid by plaintiff to defendant for services that were never
performed).
In this case, an award of prejudgment interest at the rate of 5 percent per year on the
$115,197 paid by Tahir is appropriate. Interest shall accrue from the date of Tahir’s first written
demand for payment on September 29, 2009 until the date of the judgment.
III.

Liability of Hoppe and MK Fund
The court need not address Tahir’s motion for summary judgment against Hoppe and MK

Fund because his claims against them are derivative of the claims against IAM and the court has
denied summary judgment against IAM. Hoppe and MK Fund, however, separately move for
summary judgment in their favor, arguing that there is no evidence to support a veil-piercing or
alter ego claim to hold them liable even if IAM is found liable. 23
Veil-piercing claims are governed by the law of the state of the corporation whose veil is
sought to be pierced. On Command Video Corp. v. Roti, 705 F.3d 267, 272 (7th Cir. 2013). In
this case, Tahir seeks to pierce the veil of IAM, an Illinois limited liability company, to hold
Hoppe and MK Fund liable. Although IAM is not a corporation, similar veil-piercing standards

23

While Hoppe is a member and manager of IAM, MK Fund is a separate Illinois limited liability
company of which Hoppe also is both a member and manager. “[A]lthough usually it is the corporate veil
between the parent corporation and its subsidiary that is pierced, courts may also pierce the corporate veil
between two affiliated, or ‘sister,’ corporations.” Tower Investors, LLC v. 111 E. Chestnut Consultants,
Inc., 864 N.E.2d 927, 941, 371 Ill. App. 3d 1019, 308 Ill. Dec. 686 (2007) (citing Main Bank of Chicago
v. Baker, 427 N.E.2d 94, 101, 86 Ill. 2d 188, 56 Ill. Dec. 14 (1981)).
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apply to corporations and LLCs. Id. at 269; see also Westmeyer v. Flynn, 889 N.E.2d 671, 678,
382 Ill. App. 3d 952, 321 Ill. Dec. 406 (2008).
To pierce the corporate veil under Illinois law, a plaintiff must show “such a unity of
interest and ownership that the separate personalities of the corporation and the individual no
longer exist, and that adherence to the fiction of separate corporate existence would sanction a
fraud or promote injustice.” Sea-Land Servs., Inc. v. Pepper Source, 993 F.2d 1309, 1311 (7th
Cir. 1993) (internal quotation and citation omitted). “[T]he decision whether to disregard the
corporate form to impose liability is fact intensive.” Laborers’ Pension Fund v. Lay-Com, Inc.,
580 F.3d 602, 610 (7th Cir. 2009). To determine whether there is a unity of interest such that the
corporate form should be disregarded, courts consider the following factors, among others: (1)
inadequate capitalization; (2) insolvency of the debtor corporation; (3) failure to observe
corporate formalities; (4) non-functioning of the other officers or directors; (5) absence of
corporate records; (6) commingling of funds; (7) diversion of assets from the corporation by or
to a stockholder or other person or entity to the detriment of creditors; (8) failure to maintain
arm’s length relationships among related entities; and (9) whether the corporation is a mere
façade for the operation of the dominant shareholders. See Gass v. Anna Hosp. Corp., 911
N.E.2d 1084, 1091, 392 Ill. App. 3d 179, 331 Ill. Dec. 854 (2009) (citation omitted). Further,
“Illinois law endorses veil piercing to avoid unfair enrichment, permitting the creator of a
liability and cause of the inability to meet that liability to escape responsibility[.]” Wachovia
Secs., LLC v. Banco Panamericano, Inc., 674 F.3d 743, 756 (7th Cir. 2012).
Tahir has provided the court with little information with respect to his veil-piercing
claim. 24 The thrust of Tahir’s case for veil-piercing is that Hoppe diverted funds from IAM to
24

Tahir argues that it requested, but did not receive discovery on some of these issues. (See dkt.
176 at 4.) To the extent that Tahir is not able to support his case due to the Hoppe defendants’ failure to
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himself and MK Fund shortly after the Management Agreement terminated. Hoppe admits that
these transfers were made but contends that they were made for valid consideration. Tahir has
presented no evidence regarding IAM’s capitalization or solvency but, making reasonable
inferences in favor of Tahir, the court presumes that after Hoppe’s purchase of DMI fell through,
IAM no longer had any operational purpose and the subsequent transfers to pay off creditors
likely depleted its account almost completely. Furthermore, it is clear that Tahir’s payments
unjustly enriched Hoppe and his companies and it may be improper to allow IAM’s corporate
form to shield them from liability. In light of these facts and inferences, the court finds there is a
genuine issue of material fact with respect to whether IAM’s corporate form should be
disregarded. The court thus denies the Hoppe defendants’ motion for summary judgment in
favor of Hoppe and MK Fund.
IV.

IAM’s Violation of the Consumer Fraud Act
The Hoppe defendants move for summary judgment in favor of IAM on Tahir’s claim for

violation of the Consumer Fraud Act. To succeed on a claim for deceptive practices under the
Consumer Fraud Act, Tahir must show “(1) a deceptive act or practice by the defendant; (2)
defendant’s intent that plaintiff rely on the deception; and (3) the occurrence of the deception in
the course of conduct involving trade or commerce.” Zekman v. Direct Am. Marketers, 695
N.E.2d 853, 860, 182 Ill. 2d 359, 231 Ill. Dec. 80 (1998).
Tahir’s claim fails because he does not show that IAM intended that Tahir rely on any
deceptive act in consummating his purchase of the car. Tahir does not point to any affirmative
misrepresentation made by IAM. He argues that he was deceived because he was not aware of
the Management Agreement and DMI’s relationship with IAM. Tahir contends that had he
comply with discovery requests, this is an issue that should have been raised during discovery, which
closed on March 6, 2013. Tahir did not file a motion to compel the Hoppe defendants to answer his
discovery requests.
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“been aware that IAM was managing the dealership and was the only party with the ability to
sell him the car, he would not have entered into a sales contract solely with ‘Bentley Gold
Coast.’” (Dkt. 176 at 5.) There is no evidence, however, that IAM intended at the time of the
transaction to take Tahir’s money without delivering a car. The facts adduced by Tahir show
instead that IAM intended to carry through with the sale of the car but failed to do so after the
Management Agreement was terminated and the deal to purchase DMI fell through. See Stern
v. Great Western Bank, 959 F. Supp. 478, 486 (N.D Ill. 1997) (finding second element of
deceptive practices claim lacking where defendants did not intend that plaintiff rely on deceptive
practice at time of contracting). As stated in this court’s opinion on the motions to dismiss in
this case, the circumstances of Tahir’s “purchase” do not sound in fraud, but instead support his
breach of contract claim. Compare Gehrett v. Chrysler Corp., 882 N.E.2d 1102, 1115-16, 379
Ill. App. 3d 162, 317 Ill. Dec. 946 (2008) (finding cause of action under Consumer Fraud Act
where plaintiff was induced to enter a contract by faulty representations of an automobile’s
features), with Langendorf v. Conseco Senior Health Ins. Co., 590 F. Supp. 2d 1020, 1023-24
(N.D. Ill. 2008) (distinguishing Gehrett and dismissing deceptive practices claim where
deceptive practice was the same conduct forming the basis for a breach of contract claim).
Summary judgment is granted in IAM’s favor on Count II.
V.

Liability of Lamborghini Chicago
The Hoppe defendants move for summary judgment on all counts in favor of

Lamborghini Chicago, arguing that its only involvement was the use of its credit card machine to
process Tahir’s $20,000 deposit, which was returned in full. Tahir does not respond to the
motion and the court agrees with the Hoppe defendants that Tahir has made no showing that a
claim for breach of contract or violation of the Consumer Fraud Act lies against Lamborghini
Chicago.
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With respect to Count I, it is undisputed that no contract exists between Lamborghini
Chicago and Tahir, and there is no indication that there is an agency relationship between
Lamborghini Chicago and either DMI or IAM. With respect to Count II, as discussed in the
previous section, Tahir has not asserted any facts that indicate that any defendant intended to
engage in deception at the time Tahir signed the Purchase Order. Summary judgment is thus
granted in favor of Lamborghini Chicago on all counts.
CONCLUSION AND ORDER
Based on the motions before it, the court enters judgment against defendant DMI for
outstanding amounts due to Tahir plus prejudgment interest. The court notes, however, that DMI
has filed cross claims against the Hoppe defendants who appear to be ultimately responsible for
Tahir’s repayment. The court strongly suggests that Mr. Abbas and Mr. Hoppe engage in serious
discussions regarding repayment of the amounts owing to Mr. Tahir and settlement of the
remaining issues in this case without further expense to themselves or burden on this court. The
parties shall report for a status conference on April 22, 2014 at 11 a.m.
Tahir’s motion for summary judgment on Count I (dkt. 162) is granted with respect to
DMI, and denied with respect to IAM, Hoppe, and MK Fund. Judgment of $115,197, with
interest accruing at 5 percent per year from September 29, 2009 is entered against DMI. The
motion of Lamborghini Chicago, IAM, Hoppe, and MK Fund (dkt. 165) is granted in part and
denied in part: Summary judgment is granted in favor of Lamborghini Chicago; denied with
respect to Hoppe and MK Fund; and granted in favor of IAM on Count II.

Date: March 13, 2014

_______________________________________
U.S. District Judge Joan H. Lefkow

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