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SCHWARTZ v. MICHIGAN POWER MANAGEMENT CO.

April 7, 1983

FRANK J. SCHWARTZ AND CHICAGO POWER MANAGEMENT, INC., PLAINTIFFS AND COUNTERDEFENDANTS,
v.
MICHIGAN POWER MANAGEMENT COMPANY, DEFENDANT AND COUNTERPLAINTIFF.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Chicago Power Management, Inc. and its major principal Frank J. Schwartz*fn1 bring this diversity action against Michigan Power Management Company ("Michigan Power"). Schwartz's three-count Second Amended Complaint (the "Complaint") focuses on Michigan Power's asserted failure to obtain the approval of Underwriters Laboratories, Inc. ("UL"), a standard testing laboratory, for the electrical power management systems Schwartz purchased pursuant to a "Dealer Agreement" (the "Agreement") with Michigan Power:

    1. Count I claims UL approval was an
  unsatisfied condition precedent to the Agreement.
    2. Count II asserts Michigan Power breached the
  Agreement by failing to secure UL approval and to
  offer Schwartz its new products under the
  Agreement's right of first refusal provision.
    3. Count III charges Michigan Power induced
  Schwartz to enter into the Agreement through
  various misrepresentations, including its
  statement that UL approval would be procured for
  all its present products.*fn2

In turn, Michigan Power has filed a counterclaim, asserting Schwartz's failure to perform his Agreement undertakings.

Schwartz has filed two summary judgment motions under Fed.R.Civ.P. ("Rule") 56, one as to all three Complaint counts and the other as to the counterclaim. For the reasons stated in this memorandum opinion and order, both motions are denied.

Facts*fn3

On August 10, 1980 Michigan Power placed an ad in Chicago newspapers, offering to sell energy management electrical equipment. In response to the ad Schwartz called Michigan Power for further details. Michigan Power then mailed Schwartz some brochures describing the equipment.

Over the next several days Schwartz explored with Michigan Power President Carson B. Ashworth ("Ashworth") the possibility of serving as Michigan Power's dealer in the Chicago territory. During the negotiations Schwartz asked whether Michigan Power's energy systems had been listed by UL. Ashworth qualified his "no" answer by saying Michigan Power had already initiated and would continue to pursue the UL listing process. Ashworth Dep. 10.

On August 21, 1980 Schwartz and Ashworth signed the four-section Agreement at Michigan Power's office in Michigan (Agreement's provisions are cited "Section ___ " in this opinion):

    1. Section I appointed Schwartz as Michigan
  Power's exclusive Chicago-area*fn4 dealer "for
  the purpose of selling the MPM-8000 Power
  Management Systems" (the "Systems").
    2. Section II called for the sale of 50
  Systems.
    3. Section III identified the various kinds of
  assistance Michigan Power was to provide
  Schwartz.
    4. Section IV primarily specified Schwartz's
  responsibilities and rights:
      (a) Section IV(1) obligated Schwartz to
    "advertise, promote, and sell the . . .
    MPM-8000 Power Management Systems in his
    exclusive territories."
      (b) Section IV(2) required Schwartz to
    "[h]ire and train salesmen to sell the
    manufacturers [sic] energy systems."

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