Sharon Leasing, Inc. v. Phil Terese Transportation, Ltd.

No. 3--97--0777

_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

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SHARON LEASING, INC., d/b/a ) Appeal from the Circuit Court
Refrigerated NationaLease, ) of DuPage County.
)
Plaintiff-Appellant and )
Cross-Appellee, )
)
v. ) No. 95--L--01480
)
PHIL TERESE TRANSPORTATION, )
LTD., MICHAEL R. APA, ANTHONY )
APA, and FRANK DILEONARDI, )
) Honorable
Defendants-Appellees and ) Edward Duncan,
Cross-Appellants. ) Judge, Presiding.

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JUSTICE THOMAS delivered the opinion of the court:
Plaintiff filed a complaint against defendants for tortious
interference with contract, breach of contract against defendant
Phil Terese Transportation, Ltd. (Phil Terese Transportation),
breach of contract against the individual defendants under a
piercing-the-corporate-veil theory, and common-law and statutory
fraud. Following a bench trial, the trial court first held that
plaintiff did not have standing to bring its claim against
defendants. Stating that its ruling concerning standing might be
erroneous, however, the trial court then ruled on the issues raised
in plaintiff's complaint. The trial court held that plaintiff had
not proved breach of a valid contract or damages, as required to
recover on its claim for tortious interference with contract. The
trial court further held that Phil Terese Transportation's
corporate veil could be pierced as to defendants Michael Apa and
Anthony Apa, but not as to defendant Frank DiLeonardi.
Nonetheless, with regard to the breach of contract claims against
Phil Terese Transportation and the Apas, the trial court held that
plaintiff had not proved its damages. Finally, the trial court
held that plaintiff had not proved a cause of action for fraud.
The trial court, therefore, entered a verdict in favor of
defendants.
Plaintiff now timely appeals the trial court's finding that
plaintiff lacked standing to pursue its claims, that plaintiff had
not proved damages on its breach of contract claims, that Phil
Terese Transportation's corporate veil should not be pierced as to
Frank DiLeonardi, and that plaintiff had not proved that defendants
tortiously interfered with plaintiff's contract. Defendants cross-
appeal the trial court's finding that Phil Terese Transportation's
corporate veil could be pierced as to Michael Apa and Anthony Apa.
The facts giving rise to plaintiff's complaint are as follows.
Defendant Frank DiLeonardi was the sole shareholder of AMA
Transport, a trucking company incorporated in 1989. DiLeonardi
formed AMA Transport from the assets of AMA Warehousing, which
DiLeonardi had purchased at a public auction after AMA Warehousing
had made an assignment for the benefit of creditors. Codefendants
Michael Apa and Anthony Apa had formed AMA Warehousing early in the
1980s. DiLeonardi did not have an ownership interest in AMA
Warehousing, and neither of the Apas had an ownership interest in
AMA Transport, although they both worked for the company.
On October 26, 1990, plaintiff entered into a five-year
contract with AMA Transport for the lease of 25 trucks. Isaac
Freeman, one of plaintiff's sales representatives, testified that
although plaintiff's invoices provided for payment within 21 days,
AMA Transport had always paid the invoices in 30 to 45 days.
Freeman testified that around the beginning of 1994, AMA Transport
began paying its invoices from six to nine weeks behind.
At trial, DiLeonardi testified that in 1994, AMA Transport
encountered financial difficulties. It had been treating its truck
drivers as independent contractors, but the Illinois Department of
Employment Security held that the drivers were employees and
assessed a $16,000 fine against the company. DiLeonardi was afraid
that the Internal Revenue Service would make a similar finding and
also would assess a large fine against the company, so he decided
to file for bankruptcy on behalf of AMA Transport. On January 4,
1994, Michael Apa and Anthony Apa formed defendant Phil Terese
Transportation, Ltd., which operated from the same address and used
the same telephone number as AMA Transport. Thereafter, on May 2,
1994, AMA Transport and Phil Terese Transportation entered into an
asset purchase agreement pursuant to which AMA Transport sold its
name, its carrying authority and all of its cartage contracts to
Phil Terese Transportation for $26,000. AMA Transport, however,
never received the $26,000 from Phil Terese Transportation.
Following the asset purchase agreement, AMA Transport
continued to operate using plaintiff's trucks. Phil Terese
Transportation also began to operate using some of plaintiff's
trucks. Freeman testified that, in the first or second quarter of
1994, he thought that AMA Transport was taking over Phil Terese
Transportation. In the third quarter of 1994, he learned that Phil
Terese Transportation was taking over AMA Transport because he was
directed to pick up checks from Anthony Apa instead of Frank
DiLeonardi. In addition, the checks said "Phil Terese
Transportation," with the name "AMA Transport" in parentheses.
Freeman was told that AMA Transport was going to be switched over
to Phil Terese Transportation, and that AMA Transport would
eventually cease doing business.
Freeman also testified that on or around July 1, 1994,
plaintiff sold some trucks to AMA Transport for $66,000. AMA
Transport put $6,000 down and executed a note for the remaining
$60,000. DiLeonardi signed the note for AMA Transport, then
suggested that the note be put under Phil Terese Transportation's
name because AMA Transport would be gone before the end of the
payment period. Accordingly, the document was changed and put in
Phil Terese Transportation's name. On or about April 22, 1995,
plaintiff entered into a truck lease with Phil Terese
Transportation. On April 25, 1995, DiLeonardi signed AMA
Transport's petition for bankruptcy, which was filed on May 4,
1995.
Bruce Dandrew, plaintiff's president, testified that he took
over management of AMA Transport's account when its accounts
receivable were around $150,000. Dandrew had a meeting in late
1994 with DiLeonardi and the Apas concerning the delinquent
account. Defendants told Dandrew that they had a tax problem and
that they were going to transfer AMA Transport's operations to Phil
Terese Transportation and bankrupt AMA Transport. Dandrew said
that he did not repossess plaintiff's vehicles at that time because
he wanted to give defendants an opportunity to get some financing.
When AMA Transport's accounts receivable still did not drop,
Dandrew had a second meeting with defendants. Defendants told
Dandrew that the bank had turned down their request for financing,
so Dandrew suggested putting the accounts receivable into a loan
that defendants could pay off in six months to a year. Defendants
were agreeable to the concept of a loan but wanted around five
years to pay off the loan. After defendants refused to execute a
short-term loan, Dandrew demanded repossession of plaintiff's
vehicles on May 6, 1995. Following plaintiff's repossession of its
trucks, Phil Terese Transportation issued notice that it had
assigned its assets for the benefit of creditors on May 12, 1995.
At trial, plaintiff offered into evidence as damages the open
and unpaid invoices for AMA Transport and Phil Terese
Transportation. James Lynch, plaintiff's comptroller, testified
that the open invoices totaled $134,470.84, and the invoices which
had been written off as bad debt totaled $105,076.56. Plaintiff
had repossessed the trucks that were the subject of the invoices,
but plaintiff did not credit defendants' invoices for any amounts
received from the resale or lease of the trucks. Further, Lynch
testified that the balance due on the $60,000 note was $36,443.10,
plus 20% per annum interest, although this amount did not reflect
any credit for the resale or lease of the trucks that were the
subject of the note. Finally, Dandrew testified that plaintiff
sent defendants an invoice in the compiled amount of $100,000 for
liquidated damages as a result of defendants' breach of the lease
contract.
On the first day of trial, defendants moved for leave to file
affirmative defenses of lack of standing and failure to mitigate
damages. Defendants claimed that plaintiff lacked standing as to
its claims for tortious interference with contract, breach of
contract against the individual defendants, common-law fraud, and
statutory fraud because those claims could only be brought by the
trustee of AMA Transport's bankruptcy estate or by Phil Terese
Transportation's assignee for the benefit of creditors. Defendants
also claimed that plaintiff had failed to mitigate its damages as
required by state law. The trial court denied defendants' motion
but held that it was plaintiff's burden to prove standing as part
of its prima facie case. The court stated that defendants could
then raise the standing issue at the close of plaintiff's case.
The trial court also held that defendants could raise the issue of
failure to mitigate damages at the conclusion of their case, but
could not raise it as an affirmative defense because the defense
was not timely filed.
At the close of plaintiff's case, defendants moved for a
directed finding on all counts of plaintiff's complaint. The trial
court granted defendants' motion with respect to its claim of
statutory fraud but reserved ruling on the issue of standing and
reserved ruling on the motion with respect to the other counts of
the complaint. At the end of trial, as noted, the trial court
entered judgment in favor of defendants on all counts of
plaintiff's complaint.
On appeal, plaintiff first argues that the trial court erred
in rendering its verdict based upon plaintiff's lack of standing
after it had ruled that defendants were barred from raising
standing as an affirmative defense. Plaintiff claims that the
trial court erroneously held that plaintiff was required to prove
standing in its case in chief because lack of standing is an
affirmative defense that is waived if not raised in a timely
fashion. Plaintiff further argues that, even if the standing
defense had been timely raised, plaintiff did have standing to
bring its claims because none of plaintiff's claims could have been
considered property of AMA Transport's bankruptcy estate or of Phil
Terese Transportation's assignee.
In response, defendants argue that, in denying their motion
for leave to add an affirmative defense concerning lack of
standing, the trial court made no finding of prejudice to plaintiff
and preserved the issue for later review. Defendants also argue
that the trial court's findings should be affirmed because
plaintiff's claims are property of the estates of AMA Transport and
Phil Terese Transportation and, therefore, may be raised only by
the bankruptcy trustee and the assignee. Because plaintiff failed
to show that the bankruptcy trustee and the assignee had abandoned
those claims, plaintiff lacked standing to raise those claims.
We agree with plaintiff that the trial court erred in ruling
that plaintiff was required to prove standing as part of its prima
facie case. As noted by plaintiff, lack of standing is an
affirmative defense that is waived if not raised in a timely
fashion. Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462, 508 (1988). A plaintiff initially has no burden to plead
and prove standing. Senese v. Climatemp, Inc., 222 Ill. App. 3d
302, 317 (1991). It is the defendant who must plead and prove lack
of standing as a defense to a plaintiff's claim. Senese, 222 Ill.
App. 3d at 317. Because we also find that the trial court's
finding that plaintiff lacked standing in this case was erroneous,
however, we need not decide whether the trial court's ruling
constituted reversible error.
In ruling that plaintiff had no standing to bring its claim,
the trial court relied on an opinion of the United States Court of
Appeals for the Seventh Circuit, Koch Refining v. Farmers Union
Central Exchange, Inc., 831 F.2d 1339 (7th Cir. 1987). There, the
seventh circuit held that a bankruptcy trustee has no standing to
bring a personal claim of creditors but may bring an action that is
a general claim of creditors. Koch Refining, 831 F.2d at 1348-49.
A general claim is one wherein the liability is to all creditors of
a corporation. Koch Refining, 831 F.2d at 1349. The trial court
in this case also noted the seventh circuit decision in Steinberg
v. Buczynski, 40 F.3d 890 (7th Cir. 1994), where the Seventh
Circuit seemed to abandon the distinction between personal and
general claims. The trial court stated, however, that it did not
believe the courts in Illinois had abandoned the general and
personal distinction in bankruptcy cases. The trial court
therefore concluded that the plaintiff's cause of action was a
general cause of action and thus the property of the bankruptcy
trustee or the assignee for the benefit of creditors.
As noted by the trial court, the seventh circuit in Koch
Refining held that a bankruptcy trustee represents not only the
rights of the debtor but also the interests of the creditors of the
debtor. Koch Refining, 831 F.2d at 1342. At issue in Koch
Refining was whether the plaintiffs, rather than the bankruptcy
trustee, were the proper parties to bring an alter ego action
against the fiduciaries of the debtor. Koch Refining, 831 F.2d 1339. The Koch Refining court concluded that, under Illinois law,
a bankruptcy trustee can bring an alter ego claim. Koch Refining,
831 F.2d at 1346. The court held that a trustee has a right to
bring any action in which the debtor has an interest, including
actions for breach of duty or misconduct against the debtor's
officers and directors. Koch Refining, 831 F.2d at 1348. A
trustee lacks standing only as to those claims in which one
creditor has been harmed and no other creditor or claimant has an
interest in the claim. Koch Refining, 831 F.2d at 1348.
Following the decision in Koch Refining, this court in Aspling
v. Ferrall, 232 Ill. App. 3d 758 (1992), addressed whether a
bankruptcy trustee had the exclusive right to assert an alter ego
claim. This court interpreted Koch Refining "to mean that the
bankruptcy trustee, as the proper party to bring general claims of
the bankruptcy estate, has the exclusive right to bring an alter
ego action against corporate shareholders and fiduciaries."
Aspling, 232 Ill. App. 3d at 763. The plaintiff in Aspling sought
damages from the defendant under an alter ego theory, contending
that the defendant had treated his corporation as though it was a
proprietorship and, for the purpose of defrauding the plaintiff,
had paid himself $24,000 from the corporation when the corporation
was insolvent. Aspling, 232 Ill. App. 3d at 760. This court found
that the plaintiff had alleged a general claim against the
defendant, which was exclusively within the province of the
bankruptcy trustee. Aspling, 232 Ill. App. 3d at 764. This court
also noted that principles of finality dictated a finding that the
plaintiff lacked standing, as the bankruptcy estate had been
distributed and a preference action against the defendant had been
settled. Aspling, 232 Ill. App. 3d at 766.
Following the Aspling decision, the Illinois Supreme Court
addressed the issue of whether a corporation may bring an alter ego
action against its parent shareholder, thereby piercing its own
corporate veil. In re Rehabilitation of Centaur Insurance Co., 158 Ill. 2d 166 (1994). The supreme court stated that this court's
decision in Aspling did not determine whether a corporation in
Illinois has standing to assert an alter ego action against its own
shareholders but rather held that a creditor of a bankrupt
corporation could not assert an alter ego action against a
corporation's shareholder because a similar claim had already been
brought and settled by the bankruptcy trustee, and the plaintiff
creditor had already received a settlement from the bankruptcy
estate. Centaur Insurance Co., 158 Ill. 2d at 174-75. The supreme
court stated that, although the Aspling court had noted Koch
Refining's holding that a corporation in Illinois could assert an
alter ego claim against its parent corporation, the Aspling court
did not discuss whether that was the law in Illinois. Centaur
Insurance Co., 158 Ill. 2d at 174.
The Illinois Supreme Court then noted that the Koch Refining
case relied on an interpretation of Illinois alter ego law that was
not the law in Illinois. Centaur Insurance Co., 158 Ill. 2d at
176. The supreme court declined to adopt the Koch Refining court's
reasoning. Centaur Insurance Co., 158 Ill. 2d at 175. The court
instead concluded that a corporation may not assert an alter ego
action against its own shareholders. Centaur Insurance Co., 158 Ill. 2d at 172. The court held that an alter ego action is needed
by creditors because creditors do not have standing to bring
actions for breaches of fiduciary duties. Centaur Insurance Co.,
158 Ill. 2d at 178.
Because the issue of standing presents a question of law, we
review the trial court's finding de novo. Anderson v. McHenry
Township, 289 Ill. App. 3d 830, 832 (1997). State law governs the
causes of action that can be asserted by creditors and by
bankruptcy trustees. Koch Refining, 831 F.2d at 1348. We
therefore look to Illinois case law to determine whether plaintiff
had standing to assert its causes of action. As noted, our supreme
court has rejected the Koch Refining court's interpretation of
Illinois alter ego law. Accordingly, the trial court erred in
finding that, based on the decision in Koch Refining, plaintiff
lacked standing to bring its claims against defendants. Pursuant
to the decision in In re Rehabilitation of Centaur Insurance Co.,
which was not discussed by the trial court, we find that plaintiff,
as creditor of AMA Transport and Phil Terese Transportation, had
standing to bring the alter ego claims against defendants. A
reviewing court, however, is not bound by a trial court's reasoning
and may affirm upon any ground in the trial record. International
Precision Components Corp. v. Lake County Zoning Board of Appeals,
282 Ill. App. 3d 735, 738 (1996). Consequently, because we find
that plaintiff did have standing to assert its claims against
defendants, we must determine whether the trial court's verdict in
favor of defendants may be affirmed based upon the trial court's
rulings on the substantive issues in plaintiff's complaint.
With regard to the substantive issues, plaintiff first argues
that the trial court erred in finding that plaintiff had failed to
prove its damages as required to recover on its breach of contract
claims. Plaintiff contends that it proved its damages clearly and
with specificity and that defendant was not entitled to a setoff
against the money it owed. The breach of contract damages
plaintiff claimed included $239,547.40 in unpaid invoices
(including the invoices that had been written off), $36,443.10 in
principal due under the $60,000 promissory note, plus 20% per annum
in interest, and $100,000 in liquidated damages.
In rendering its verdict, the trial court noted that
plaintiff's comptroller, James Lynch, could not state why certain
debts were written off, nor did he indicate that any credits were
made for the resale or reletting of the trucks. The trial court
stated that plaintiff's contract required a credit for funds
received when there was a reletting or subsequent sale of
repossessed trucks. Because plaintiff had failed to credit
defendant for the funds received, the trial court found that it was
unable to discern plaintiff's damages with reasonable certainty.
The rule that a trial court's findings in a bench trial will
not be disturbed unless manifestly erroneous applies equally to a
trial court's assessment of damages. Haudrich v. Howmedica, Inc.,
169 Ill. 2d 525, 543 (1996). The burden rests on the party seeking
to recover to establish that he sustained damages and to establish
a reasonable basis for the computation of those damages. Keno &
Sons Construction Co. v. LaSalle National Bank, 214 Ill. App. 3d
310, 312 (1991). The general rule in contract actions is that
damages should place the injured party in the position he would
have been in had the contract been performed. Illiana Machine and
Manufacturing Corp. v. Duro-Chrome Corp., 152 Ill. App. 3d 764, 768
(1987). A damage award should not result in a windfall to the
plaintiff. Illiana Machine and Manufacturing Corp., 152 Ill. App.
3d at 768.
In finding that plaintiff had not proved damages on its breach
of contract claims, the trial court relied on article 15 of
plaintiff's lease. That article, entitled "Default By Customer and
Remedies," provided that in the event of a default plaintiff may
take possession of the subject vehicles and may also require the
customer to either purchase the vehicles or make an alternative
payment as set forth in article 16 of plaintiff's lease. Article
15 of plaintiff's lease also provided:
"In the event that CUSTOMER shall fail to purchase the
Vehicle (or, at RNL's [plaintiff's] option, make the
alternative payment), ***, RNL may sell the Vehicle(s) at one
(1) or more public or private sales, with or without notice to
CUSTOMER, ***. The proceeds of the sale, less RNL's expenses
***, shall be applied to payment of any obligations due to RNL
by CUSTOMER under this lease or otherwise. CUSTOMER shall
remain liable for the balance due RNL under the preceding
paragraph and for any deficiency in the balance of any sums
due RNL under any other lease or indebtedness."
Further, in the event plaintiff retained the vehicles because it
could not or chose not to resell them, article 15 of the lease
required plaintiff to credit the customer with the then net fair
market value of the vehicles and to apply that net fair market
value to the customer's obligations under the lease.
As noted, rather than require defendants to purchase the
subject vehicles, plaintiff sought the alternative payment set
forth in article 16 of the lease. Article 16, entitled
"Termination Privileges," provided as follows:
"Upon termination by either party, CUSTOMER shall, at RNL's
option, purchase the Vehicle as to which the notice has been
given ***. Alternatively, in lieu of purchasing the Vehicle,
CUSTOMER may elect to pay RNL the difference, if any, between
the purchase price as calculated in this Article and the Fair
Market Value *** ."
Plaintiff argues that because it sought the alternative
payment set forth in article 16, defendants were not entitled to
any credit against their obligations under article 15. Plaintiff
claims that the provisions in paragraph 15 relating to credits from
the proceeds of a sale or for the net fair market value of the
repossessed vehicles applied only when plaintiff required a
customer to purchase the subject vehicles, not when plaintiff
elected the alternative payment under article 16. In response,
defendants argue that article 15 required plaintiff to credit
defendants with the net sale proceeds or net fair market value of
the trucks at issue in the lease even when the article 16
alternative payment was sought.
Both sides agree that articles 15 and 16 are at best poorly
drafted. Those provisions were drafted by plaintiff. A contract
is to be construed strictly against the drafter. Lake Bluff
Heating and Air Conditioning Supply, Inc. v. Harris Trust and
Savings Bank, 117 Ill. App. 3d 284, 294 (1983). Upon reviewing the
lease at issue and construing it strictly against plaintiff, we
agree with defendants. The provision in article 15 of plaintiff's
lease concerning credits toward a customer's obligations stated
that it applied "[i]n the event that CUSTOMER shall fail to
purchase the Vehicle (or, at RNL's option, make the alternative
payment)." (Emphasis added.) By the very language of the lease,
this provision applied when a customer failed to make the
alternative payment. The evidence in this case was uncontroverted
that defendants had failed to make the alternative payment pursuant
to article 16. Accordingly, article 15 then authorized plaintiff
to sell the subject vehicles, and required plaintiff to credit
defendants with the proceeds of any sale, less plaintiff's
expenses, or to credit defendants with the net fair market value of
the vehicles if plaintiff retained the vehicles. Plaintiff's
comptroller and president both admitted that some of the subject
vehicles had been resold or leased and further admitted that
plaintiff had not credited defendants' invoices or note with the
proceeds from any of those sales or leases. No evidence was
introduced concerning which trucks had been resold or leased, nor
was any evidence introduced concerning the net amount received upon
resale or lease. Furthermore, there was no evidence concerning how
many vehicles had been retained by plaintiff or the net fair market
value of those vehicles.
Absent any evidence concerning the number of trucks resold or
leased, the proceeds from the resale or lease of those trucks, or
the net fair market value of the retained vehicles, the trial court
could not ascertain the damages that would place plaintiff in the
position it would have been in had the contract been performed.
Plaintiff's claim that it was owed $239,547.40 in unpaid invoices
and $36,443.10 on its note was at best speculative and, given
plaintiff's admission that it had not applied any credits toward
defendants' lease obligations, likely would have resulted in a
windfall to plaintiff. Accordingly, the trial court correctly
found that plaintiff had failed both to establish its damages on
the unpaid invoices and note and to establish a reasonable basis
for the computation of those damages.
We further find that plaintiff failed to establish that it was
entitled to $100,000 in damages pursuant to the alternative damage
formula set forth in article 16 of its lease. Article 16 of the
lease explained the alternative payment as follows:
"[T]he difference, if any, between the purchase price as
calculated in this Article and the Fair Market Value (defined
as the highest appraisal of market value (wholesale) received
by RNL from two (2) or more independent vehicle dealers of
each such vehicle as of the date of termination (the
'alternative payment'). The purchase price of the Vehicle
shall be the original agreed value of the Vehicle set forth in
Schedule 'A' less the weekly depreciation credit of the
Vehicle set forth in Schedule 'A' multiplied by the number of
weeks elapsed from the in service date of the Vehicle to the
termination date, provided, however, that the purchase price
to be paid by the CUSTOMER for the Vehicle shall not be less
than fifteen percent (15%) of its original agreed value set
forth in Schedule 'A'."
In support of its claim for damages under this article,
plaintiff produced an invoice to defendants that simply had two
entries for premature cancellation of lease at $50,000 each.
Dandrew testified that he performed the calculations to arrive at
the $100,000 figure but did not testify concerning the numbers he
used, nor did plaintiff offer into evidence any written
calculations. Dandrew claimed that plaintiff lost $30,000 to
$35,000 on the repossession, repair, and resale of the trucks
subject to the note but offered no evidence to support his claim.
Dandrew stated that plaintiff repossessed the trucks "and tried to
add up the damages, the breach of the lease contract in which the
lessee is to pay the difference between the wholesale value and the
Schedule A's value. And we sent [defendants] an invoice for all of
that in a compiled amount of $100,000." Dandrew later claimed that
the vehicles were in such disrepair that plaintiff "never really
got an iron clad wholesale value on the vehicles in their existing
state."
Based upon Dandrew's testimony, the trial court could have
concluded that plaintiff did not attempt to determine its damages
under article 16 and instead simply estimated its damage figure.
In fact, as noted by defendants, plaintiff did not establish the
fair market value for the trucks, the original agreed value of the
trucks, or the weekly depreciation credit of the trucks, as
required pursuant to article 16 of plaintiff's lease. Because
plaintiff did not comply with the formula set forth in article 16
to determine its damages, we find that plaintiff's $100,000 damage
claim also is speculative. We therefore agree with the trial court
that plaintiff failed to establish that it sustained $100,000 in
damages and that plaintiff failed to establish a reasonable basis
for the computation of those damages. Consequently, we affirm the
trial court's verdict in favor of defendants on the ground that
plaintiff did not prove the damage element of its breach of
contract and tortious-interference-with-contract claims.
Plaintiff then argues that, even if defendants were entitled
to a setoff under their lease, defendants waived that right when
they failed to file a timely affirmative defense on the issue of
mitigation and when defendants failed to present any evidence
concerning the amount of setoff to which they were entitled.
Plaintiff also claims that the trial court erred in ruling that
defendants were entitled to a setoff after it had denied
defendants' leave to add an affirmative defense concerning
mitigation of damages.
Plaintiff correctly notes that the failure to mitigate damages
is an affirmative defense that must be pleaded and proved by a
defendant in a breach of contract case. Illiana Machine and
Manufacturing Corp. v. Dura-Chrome Corp., 152 Ill. App. 3d 764, 769
(1987). Plaintiff, however, incorrectly characterizes the evidence
concerning credits from the proceeds of any sales to be applied
toward defendants' obligations as mitigation of damages evidence.
Rather, the testimony concerning plaintiff's failure to apply
credits from the proceeds of any sales toward defendants' lease
obligations was relevant to determine whether plaintiff had
established its breach of contract damages. Accordingly, the trial
court properly admitted that evidence.
In contrast, it is arguable that the evidence concerning the
leasing of the repossessed vehicles was improperly admitted because
that evidence went to the issue of mitigation. Plaintiff's lease
did not require plaintiff to attempt to lease the repossessed
vehicles or to credit defendants with the proceeds of any
subsequent leases. Even if such evidence was improperly admitted,
however, we cannot say that the admission of that evidence
prejudiced plaintiff or affected the outcome of the trial. In a
case tried before the court without a jury, any error in admitting
evidence is not grounds for reversal as long as there is sufficient
evidence to support the judgment. Phillips v. Britton, 162 Ill.
App. 3d 774, 786 (1987). Here, as noted, there was sufficient
competent evidence to support the trial court's judgment.
Because we affirm the trial court's verdict in favor of
defendants on the ground that plaintiff had failed to establish
damages on its breach of contract claims, we need not address the
plaintiff's claim that the trial court erred in finding that there
was no breach of contract on its tortious-interference-with-
contract claim and in finding that Frank DiLeonardi was not
personally liable for the debts of AMA Transport, nor do we need to
address defendants' claim that the trial court erred in holding
Michael Apa and Anthony Apa personally liable for Phil Terese
Transportation's debts.
For the foregoing reasons, the judgment of the Circuit Court
of DuPage County is affirmed.
Affirmed.
BOWMAN and HUTCHINSON, JJ., concur.