LRN Holding, Inc. v. Windlake Capital Advisors, LLC

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State: Illinois

Court: 3rd District Appellate

Docket No: 3-10-0194 Rel

Case Date: 05/09/2011

Preview:No. 3--10--0194 Opinion filed May 9, 2011

IN THE APPELLATE COURT OF ILLINOIS THIRD DISTRICT A.D., 2011 LRN HOLDING, INC., and DAVID P. RANSBURG, Plaintiffs-Appellants, v. WINDLAKE CAPITAL ADVISORS, LLC, Defendant-Appellee. ) ) ) ) ) ) ) ) ) ) ) Appeal from the Circuit Court of the 10th Judicial Circuit Peoria County, Illinois

No. 09--L--230

Honorable Joe Vespa, Judge, Presiding.

JUSTICE SCHMIDT delivered the judgment of the court, with opinion. Justice Wright specially concurred in the judgment and opinion. Justice Holdridge dissented, with opinion.

OPINION Plaintiffs, LRN Holding, Inc. (LRN), and David Ransburg, brought this declaratory judgment action against defendant,

Windlake Capital Advisors, LLC, seeking a declaration that a contract entered into by the parties is void. As such,

plaintiffs claimed they were entitled to recover fees associated with the sale of LRN. Defendant, Windlake Capital Advisors,

LLC., moved to dismiss the action or, in the alternative, to stay the action and compel arbitration. The trial court granted

defendant's motion to stay the proceeding and ordered the matter to proceed to arbitration. Plaintiffs appeal from that order. FACTS Plaintiffs' complaint alleges that they entered into a contract with defendant which stated that defendant would act as the exclusive brokerage agent seeking to secure a purchaser of the assets or stock of LRN. The contract called for plaintiffs

to pay defendant a $35,000 engagement fee upon the signing of the contract and a success fee of "$200,000 + 2% of all consideration" upon the closing of the transaction. Plaintiffs' complaint acknowledges that defendant successfully brokered a transaction through which Robert Bosch Tool Corporation purchased LRN assets. in compensation for its services. 2 Defendant received $1,226,340 The complaint contains no

allegations suggesting defendant's services were in any way inadequate or that the transaction somehow harmed plaintiffs. Plaintiffs' complaint alleges, however, that their contract with defendant should be declared void as defendant failed to properly register its services with the State of Illinois. As

such, plaintiffs claim they are entitled to collect defendant's $1,226,340 fee, as well as interest on those monies and attorney fees. Attached to the complaint is a photocopy of an "LLC File

Detail Report" from the Illinois Secretary of State, the agreement between the parties, and photocopies of two pages associated with a "broker search" from the Illinois Secretary of State's Web site. Defendant never answered plaintiffs' complaint but instead filed a "Motion to Dismiss or Stay Proceedings and to Compel Arbitration" pursuant to section 2-619 of the Code of Civil Procedure. 735 ILCS 5/2-619(a)(9) (West 2008). In its

memorandum in support of its motion, defendant noted the agreement between it and plaintiffs contained an arbitration provision mandating that any controversy between the parties relating to this agreement shall be resolved by binding 3

arbitration. Defendant submitted that arbitration was mandated by both the Federal Arbitration Act (9 U.S.C.

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