RealWheels Corp. v. Crossan , 2021 IL App (1st) 120809-U ( 2021 )

2021 IL App (1st) 120809-UNo. 1-20-0809
June 21, 2021
FIRST DIVISION
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in
the limited circumstances allowed under Rule 23(e)(1).
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
REALWHEELS CORPORATION, ) Appeal from the Circuit Court
) Of Cook County. Law Division
Plaintiff-Appellant, )
)
v. )
) The Honorable
JOHN R. CROSSAN and CROSSAN ) Patrick J. Sherlock,
INTELLECTUAL PROPERTY LAW, LLC ) Judge Presiding.
)
Defendant-Appellee. )
JUSTICE WALKER delivered the judgment of the court. Justice
Hyman and Justice Coghlan concurred in the judgment.
ORDER
¶1 Held: The circuit court's order granting summary judgment to defendants is affirmed where
the defendants presented evidence that plaintiff had not sustained damages, and the plaintiff
did not present evidence of a reasonable basis for calculating damages or an affidavit
explaining the additional discovery needed to prove damages.
¶2 RealWheels Corporation sued John Crossan for legal malpractice, alleging that
RealWheels lost the rights to patent an invention because Crossan failed to file a timely patent
application. The circuit court granted summary judgment in favor of Crossan based on a
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finding that RealWheels could not prove damages. RealWheels argues that the court should
not have entered summary judgment, the court improperly shifted the burden of production,
and the court relied on inadmissible materials as evidence. We find that RealWheels failed to
refute Crossan’s evidence that RealWheels suffered no damages. Accordingly, we affirm the
circuit court’s judgment.
¶3 I. BACKGROUND
¶4 RealWheels sold aerodynamic wheel covers, used mostly on trucks to improve gas
mileage. In 2016, RealWheels invented a “twist and lock” wheel cover that drivers could
install without tools. Two competitors, FlowBelow and Deflektor, also invented wheel covers
drivers could install without tools. The three competitors used significantly different
mechanisms for their wheel covers. FlowBelow and Deflektor obtained patents for their wheel
covers.
¶5 In February 2016, Crossan, as RealWheels’s attorney, filed a provisional application for a
patent for the twist and lock wheel covers. When filing a revision of the provisional
application, Crossan promised to remind RealWheels in January 2017 that RealWheels would
need to file a regular patent application by February 15, 2017. January and February 2017
passed with no contact between Crossan and RealWheels. In February 2018, after Crossan
had retired, John Polka, president of RealWheels, discovered that no regular patent application
had been filed. Polka spoke with new attorneys to determine whether RealWheels could take
any steps to get twist and lock wheel covers patented. The attorneys informed Polka that
RealWheels had lost the opportunity to patent its twist and lock invention. RealWheels filed
its complaint against Crossan in April 2018.
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¶6 Crossan filed his motion for summary judgment in November 2019, after the date set for
completion of fact discovery, but before the parties finished deposing expert witnesses.
Crossan chose not to depose RealWheels’s expert witnesses. Crossan appended to his motion
for summary judgment Polka’s deposition. Polka testified that he tried to sell his twist and
lock wheel covers to two trucking companies, International and Schneider. International chose
FlowBelow’s wheel covers, and Schneider chose Deflektor’s. Polka admitted that no one from
FlowBelow or Schneider told him why they did not purchase RealWheels’s products. Polka
“would have to speculate” about the reasons International and Deflektor chose to buy the other
wheel covers. Polka admitted that he explained the twist and lock invention in a brochure and
in RealWheels’s internet postings, and “all the people who look at the internet and see [the]
brochure, anyone who wants to in the entire world can just copy it” because RealWheels has
no patent. Polka did not know whether anyone had copied the invention.
¶7 RealWheels’s sales of twist and lock wheel covers fell from $198,000 in 2016 to $111,000
in 2017 and $110,000 in 2018. In his deposition, Polka said sales fell because RealWheels
stopped pushing the product once it discovered the patent problem. Crossan pointed out that
Polka said he discovered the patent problem in February 2018, well after RealWheels’s sales
of the product had sharply decreased.
¶8 Crossan argued that Polka’s deposition showed RealWheels had not suffered any damages
due to the failure to file the patent application. RealWheels, in its response to the motion for
summary judgment, did not present any affidavits from its experts, and it did not present a Rule
191(b) affidavit explaining its need for further discovery. Ill. S. Ct. R. 191(b) (eff.). The
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circuit court granted Crossan’s motion for summary judgment and later denied RealWheels’s
motion for reconsideration. RealWheels now appeals.
¶9 II. ANALYSIS
¶ 10 RealWheels contends that the circuit court should not have entered summary judgment in
favor of Crossan, the court considered inadmissible materials and improperly shifted the
burden of production, and the court should have granted RealWheels’s motion for
reconsideration.
¶ 11 The circuit court should enter summary judgment only “when the pleadings, depositions,
admissions, and affidavits fail to establish a genuine issue of material fact, thereby entitling
the movant to judgment as a matter of law.” General Auto Service Station v. Maniatis, 328 Ill.
App. 3d 537, 543 (2002). “A defendant who moves for summary judgment may meet its initial
burden of production in at least two ways: (1) by affirmatively disproving the plaintiff's case
by introducing evidence that, if uncontroverted, would entitle the movant to judgment as a
matter of law (traditional test) (citation), or (2) by establishing that the nonmovant lacks
sufficient evidence to prove an essential element of the cause of action (Celotex test). (***
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265, 273 (1986)
***).” Williams v. Covenant Medical Center, 316 Ill. App. 3d 682, 688 (2000). We review the
order granting summary judgment de novo. In re Estate of Rennick, 181 Ill. 2d 395, 401 (1998).
¶ 12 RealWheels characterizes Crossan’s motion as a Celotex motion, challenging RealWheels
to produce evidence of damages, but Crossan relies on Polka’s deposition as proof that
RealWheels suffered no compensable damages. “Inasmuch as the damages claimed by
defendant, as set forth in his examination before trial, are neither actual nor ascertainable and
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are speculative in nature, he failed to establish a prima facie case of legal malpractice.” Collard
& Roe, P.C. v. Vlacancich, 6 Misc. 3d 17, 18–19, 789 N.Y.S.2d 599, 600 (2004); see IGEN,
Inc. v. White, 250 A.D.2d 463, 464-65 (1998) (“What plaintiff's argument overlooks is that it
has sustained no injury unless there has been an infringement against which its patent would
have afforded a right of recovery”). We find the evidence supporting the motion sufficient to
shift the burden to RealWheels “to present some factual basis that would arguably entitle them
to a judgment under the applicable law.” Williams, 316 Ill. App. 3d at 689.
¶ 13 A federal case explores the kind of showing needed to survive a summary judgment motion
in a similar setting. In AS Tech Intern., LLC v. Husick, 676 F. Supp. 2d 389 (E.D. Pa. 2009),
the plaintiffs sued their attorneys for professional negligence in failing to complete two patent
applications in a timely manner. For one pharmaceutical invention, the plaintiffs presented a
report by an expert, Cashman, on the amounts the plaintiffs lost due to the delay in issuing the
patent. The court found the report sufficient to create an issue of fact. The court stated:
“[Defendants] argue that there is no evidence of a potential buyer of that patent
and therefore the sale price and the resulting calculations of royalty income are
based on speculation. Plaintiffs respond that they have not yet attempted to
market this invention because they believe the invention will be most valuable
after it is patented. Therefore, the current absence of a potential buyer does not
mean the invention is altogether unmarketable. Instead, per plaintiffs, the fair
market value of such a patent is contained in the Cashman report which
marshals the considerable experience of Cashman in the pharmaceutical field
to provide a list of potential buyers, a list of comparable transactions and
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projections of sale price and royalty income.” AS Tech, 676 F. Supp. 2d at 405-
06.
¶ 14 For the second invention, designed to identify livestock, the court entered judgment in
favor of the defendants. The court found:
“[P]laintiffs cite five exhibits in support of their contention that ‘[p]laintiffs, collectively,
based upon their broad experience with comparable situations in their own careers and in the
animal, industry made reasoned and conservative estimates of the values of the patents.’
(citations). Review of each of the exhibits reveals no support for the valuation of the livestock
identification invention. ***. Therefore, plaintiffs will be unable to provide a reasonable basis
for the jury to calculate loss.” AS Tech, 676 F. Supp. 2d at 406.
¶ 15 The federal court decision accords with Illinois cases requiring either an affidavit
explaining fully the basis for an opinion on damages, or a Rule 191(b) affidavit explaining the
discovery the party needs to conduct to prove damages. See Robidoux v. Oliphant, 201 Ill. 2d
324, 336-38 (2002); Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380, ¶ 48.
Polka’s deposition, in which he admitted that he knew of no evidence anyone had copied his
unpatented invention, he could only speculate as to the reasons he could not sell his wheel
covers to major potential buyers, and sales of the wheel covers fell sharply before he knew of
any patent problem, presented a basis on which a jury could find RealWheels suffered no
damages. To respond, RealWheels needed to present evidence showing a reasonable basis for
calculating damages. See AS Tech, 676 F. Supp. 2d at 405-06 RealWheels presented neither
an affidavit from its experts showing the basis for a calculation of damages, nor an affidavit
explaining the discovery RealWheels needed to conduct to prove damages.
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¶ 16 “Recovery of lost profits cannot be based upon conjecture or speculation and the evidence
must afford a reasonable basis for the computation of damages. [Citation]. The plaintiff bears
the burden of proving lost profit damages to a reasonable degree of certainty.” Meriturn
Partners, LLC v. Banner & Witcoff, Ltd., 2015 IL App (1st) 131883, ¶ 18. Because
RealWheels failed to offer any evidence that could support a finding it suffered damages due
to the lack of a patent, the circuit court correctly granted summary judgment in favor of
Crossan. We must affirm the judgment regardless of whether the circuit court relied on
incorrect reasons or inadmissible evidence when it reached the correct result. Arthur v.
Lutheran General Hospital, 295 Ill. App. 3d 818, 823 (1998). The circuit court correctly
denied the motion for reconsideration, as that motion presented no new evidence and no new
grounds for finding damages.
¶ 17 III. CONCLUSION
¶ 18 The deposition of RealWheels’s president supports a finding that RealWheels suffered no
damages from the loss of the patent. RealWheels failed to present other evidence that could
support a finding of compensable damages. Accordingly, we affirm the entry of summary
judgment in favor of Crossan.
¶ 19 Affirmed.
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