Newton Tractor Sales v. Kubota Tractor Corporation

SUPREME COURT CASES

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State: Illinois

Docket No: 106798 Rel

Case Date: 04/02/2009

Preview:Docket No. 106798.

IN THE SUPREME COURT OF THE STATE OF ILLINOIS

NEWTON TRACTOR SALES, INC., Appellant, v. KUBOTA TRACTOR CORPORATION et al., Appellees. Opinion filed April 2, 2009.

JUSTICE GARMAN delivered the judgment of the court, with opinion. Chief Justice Fitzgerald and Justices Freeman, Thomas, Kilbride, Karmeier, and Burke concurred in the judgment and opinion.

OPINION Plaintiff-Appellant, Newton Tractor Sales, Inc. (Newton), brought suit against defendants, Kubota Tractor Corporation and Michael Jacobson, a local Kubota representative (collectively, Kubota) on counts of promissory estoppel, common law fraud, and negligent misrepresentation. The circuit court of Fayette County granted summary judgment in favor of Kubota on all three counts. The appellate court affirmed. 382 Ill. App. 3d 1176. Newton then filed a petition for leave to appeal, which we allowed pursuant to Supreme Court Rule 315 (210 Ill. 2d R. 315(a)). On appeal we are asked to determine whether promissory estoppel is a recognized cause of action in Illinois and, if so, whether Newton has sufficiently established a genuine issue of material fact so as to survive Kubota's motion for

summary judgment. For the reasons set forth below, we agree with Newton that promissory estoppel is a recognized cause of action in Illinois, reverse the circuit and appellate courts' judgments, and remand the cause for further proceedings. BACKGROUND In 2002, Newton owned and operated a dealership that sold farm equipment. In November 2002, Newton began negotiations to purchase another nearby dealership, Vandalia Tractor & Equipment, Inc. (VTE). VTE at that time was being operated by two brothers, Tim and Ron Emerick. Newton was at first reluctant to purchase VTE. Newton decided it could not buy VTE without having a local partner with which to run the dealership. Eventually, one of VTE's salesmen, Mike Cripe, agreed to partner with Newton. Newton then proceeded in its attempt to purchase VTE. The negotiations between Newton and VTE culminated in an asset purchase agreement signed by both parties on July 10, 2003. Among the provisions of that agreement was section 8.11, which allowed Newton to cancel the asset purchase agreement if it was unable to obtain authority to sell New Holland, Agco or Kubota products. If any one of those manufacturers denied Newton a license to sell its products, Newton could rescind the agreement. At the time Newton and VTE entered into the asset purchase agreement, VTE was an authorized dealer for Kubota, a manufacturer of a line of farm equipment. VTE was also authorized to sell other lines of equipment. As part of purchasing VTE, Newton became the authorized dealer for several lines of equipment previously sold at VTE's dealership. The authority to sell Kubota products, however, was not included within the asset purchase agreement. Instead, Kubota required Newton to submit an application to Kubota's local representative, defendant Michael Jacobson. On June 19, 2003, Newton submitted its application to Jacobson along with financial statements. That application had not been approved at the time Newton and VTE entered into the asset purchase agreement. In its complaint, Newton alleges that its officers met with Tim Emerick and Jacobson on July 25, 2003. At that meeting, Jacobson -2-

explained that Newton could not have their application processed until Kubota had approved termination of Kubota's existing relationship with VTE. Jacobson presented a voluntary termination agreement to VTE. Newton alleges that Tim Emerick told Jacobson he would not sign the termination agreement if Newton were not going to become the authorized Kubota dealer. Newton alleges Jacobson responded by saying, "They [Newton] will be the dealer." Newton claims that in reliance on this statement by Jacobson, it allowed Tim Emerick to sign the termination agreement. Tim Emerick in his affidavit confirmed that he would not have signed the termination agreement if Newton was not going to be the authorized Kubota dealer. Newton claims to have further relied on Jacobson's statements by selling Kubota products under VTE's dealership number and performing $28,500 in warranty work on Kubota equipment. On July 28, 2003, Jacobson submitted an internal memo recommending that Newton become the authorized Kubota dealer. In an analysis dated July 29, 2003, Jacobson indicated that "Vandalia Tractor & Equip. was purchased by Newton Tractor Sales, Inc. dba Vandalia Tractor Sales, Inc. Dealer Buy-out w/out interruption of Kubota sales & service." On August 12, the application was approved at Kubota's division level. However, Newton's application was subsequently denied by Kubota's corporate office. According to Jacobson, Newton was informed of the decision on August 25, 2003, and was invited to submit further information to Kubota. Newton did so, but Kubota did not change its position on Newton's application. In late September, Kubota had its products removed from the former VTE dealership in Vandalia. Newton filed a complaint against Kubota and Jacobson on three counts

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