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G. BAUKNECHT GMBH v. ELECTRONIC RELAYS

United States District Court, Northern District of Illinois, E.D


July 15, 1983

G. BAUKNECHT GMBH, PLAINTIFF,
v.
ELECTRONIC RELAYS, INC., ET AL., DEFENDANTS.

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

MEMORANDUM OPINION AND ORDER

G. Bauknecht GmbH ("Bauknecht") sues Electronic Relays, Inc. and ERI-Energy, Inc. (collectively "ERI"), ERI President Joseph Pascente ("Pascente") and ERI employee Barbara Breibach ("Breibach"). Bauknecht's Complaint has two counts:

    1. Count I is a diversity*fn1 claim for
  conversion, challenging ERI's refusal to refund a
  very large overpayment Bauknecht mistakenly sent
  to ERI in connection with a purchase order for
  two samples of an ERI-manufactured electronic
  device.

    2. Count II asserts a claim against all
  defendants under the Racketeer Influenced and
  Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961-68.

In turn defendants filed a Counterclaim seeking damages for breach of contract. Both sides have filed various motions, three of which are fully briefed and thus ready for disposition:

    1. defendants' motion to strike the May 7 and
  July 1, 1982 affidavits ("Bormann Affidavits") of
  Gerrald Bormann ("Bormann"), an employee of
  Bauknecht's Legal Department;

    2. Bauknecht's Fed.R.Civ.P. ("Rule") 56 motion
  for summary judgment on Count I; and

    3. Bauknecht's motion to strike defendants'
  Counterclaim and jury demand.

For the reasons set forth in this memorandum opinion and order, this Court grants in part defendants' motion to strike the May 7 Bormann Affidavits, denies (albeit regretfully) Bauknecht's motion for summary judgment and grants its motion to strike the Counterclaim and the jury demand.

Facts*fn2

In response to an ERI advertisement, Bauknecht representative Hoffmann ("Hoffmann") sent a letter to ERI (P.Aff.Ex.A, received by ERI May 21, 1981) requesting a sample of ERI's Power Factor Controller (the "Controller") for possible use in the Bauknecht-manufactured lines of freezers and refrigerators. Pascente's May 28 reply letter (P.Aff.Ex.B) said Bauknecht must pay for samples on a COD basis or by letter of credit. Bauknecht's June 26 telex to Pascente (B. May 7 Aff.Ex. 1) ordered two sample Controllers and asked for a price quotation and order acknowledgement by telex. On June 30 and again on July 1, Breibach sent identical confirming telexes (P.Aff.Ex.C; B. May 7 Aff.Ex.A) (emphasis only in the July 1 telex):

  PRICE FOR 2 UNITS OF PB2403-1 IS 34.95 EACH. AIR
  PARCEL POST CHARGES (WITH INSURANCE) IS 20.00USD.
  THEREFORE, ENTIRE ORDER IS 89.90USD.

  DELIVERY WILL BE 2-4 WKS AFTER RECEIPT OF
  PAYMENT. WE WILL ACCEPT EITHER CASH IN ADVANCE OR
  BANK TRANSFER.

  FOR BANK TRANSFER PLS ISSUE TO AMERICAN NTL BANK OF
  CHICAGO, OUR ACCOUNT NO IS 186384. PLS ADVISE WHICH
  METHOD OF PAYMENT U CHOOSE.

On July 3 a clerk in Bauknecht's accounting department caused Bauknecht's bank (inadvertently according to Bauknecht)
*fn3 to wire $89,900 rather than the $89.90 to that ERI account. Bauknecht's banking transaction document (B. May 7 Aff.Ex. 3) contained the following entry:

  2 Units of P8 2433 — Power Factor Controller
  US $89.900, —

On that same day Pascente allegedly received a telephone call from Hoffmann, an assertion hotly contested by Bauknecht. According to P.Aff. ¶ 7:

  On July 3, 1981, I received a telephone call from
  Mr. Hoffmann of BAUKNECHT. Mr. Hoffmann
  identified himself by saying that he was calling
  for BAUKNECHT and that his company had just
  recently ordered two samples of Power Factor
  Controllers, and he said that he wanted to
  purchase another 2,500 units. I told Mr. Hoffmann
  that with our packaging for shipments there were
  134 units to each pallet and that was the best
  way to ship. Therefore, I said to Mr. Hoffmann
  that 19 pallets would come the closest to his
  2,500 figure, and that the total figure would
  then be 2,548 units. I told Mr. Hoffmann that the
  unit price was the same as for the sample, $33.95
  [sic], and that we should allow about $3,000.00
  for shipping. Mr. Hoffmann said that he wanted
  the units and was purchasing such units at that
  price and that he needed the units as soon as
  possible. I then told him that full payment in
  advance by letter or credit or cash was required
  by company policy in conformity with the prior
  letter and telex, and that no work or shipment
  would take place without such full payment. Mr.
  Hoffmann said that that was fine. Mr. Hoffmann
  then said that he wanted 12 sets of literature
  for a possible new German distributorship with a
  potential of 50,000 units annually. We then said
  goodbye to each other. Since I have a habit of
  taking notes of my telephone conversations, I
  made notes during my telephone conversation with
  Mr. Hoffmann, and a true and correct copy of such
  notes is attached hereto as Exhibit D.*fn4

P.Aff. ¶ 8 says ERI immediately proceeded to fill that 2,548 unit order (by making substantial purchases of needed supplies and initiating the manufacturing process itself) when it received the $89,900 on July 7.

On July 10 Hoffmann sent to Breibach confirmation of Bauknecht's order for two Controllers at the originally-quoted price of $34.95 per unit and $20.00 postage. According to P.Aff. ¶ 9, on July 24 an invoice (P.Aff.Ex.E) was purportedly sent to Bauknecht, confirming receipt of payment for the 2,546 additional units supposedly ordered by Hoffmann during the alleged July 3 conversation:

  Quantity   Description                      Unit                   Amount
  Ordered                                     Price

  2546       POWER FACTOR CONTROLLER
             Change order increase order as
             follows
             PB2403-1 240VAC 3HP
             Single Phase                     $33.95               $86,436.70
             Order paid in full — bank transfer of 89,810.10USD
             to American National Bank of Chicago
             Estimated Air Freight 4000 pounds                      $3,000.00

                                                                   ----------
             Credit Allowance                                       $373.40

That invoice promised delivery by September 28.

On August 5 Hoffmann sent a telex (B. July 1 Aff. ¶ 5, incorporating Cplt.Ex.CC) to Breibach. Bauknecht's copy of that telex again unequivocally confirmed its order of two Controllers:

RE OUR ORDER NBR. 043290 OF JULY 10TH

  WE ORDERED TWO POWER FACTOR CONTROLLERS TYPE PB
  2403-1 BUT DIDN'T RECEIVE THEM UNTIL NOW. YOU
  PLEASE MAY CONFIRM OUR ORDER AND DISPATCH THEM AS
  SOON AS POSSIBLE

As received by ERI the telex (P.Aff.Ex.G) was somewhat scrambled, though it expressly referred to Bauknecht's July 10 telex purchase order (which was for only two units):

  RE OUR ORDER NBR. 043290 OF JULY 10TH
  WE OR
       DERED TWO T
                  HO POWER FACTOR CONTROLLERS TYPE
                  PB 2403-1
  BUT DIDN'T RECEIVE THEM UNTIL NOW.
                      YOU PLEASE MAY CONFIRM OUR ORDER AN
  D DISPATCH AS SOON AS
  POSSIBLE

Later that same day Breibach sent a return telex (B. July 1 Aff. ¶ 6, incorporating Cplt.Ex. DD), which referred to Bauknecht's July 10 order and stated "SORRY FOR DELAY. UNITS ARE SHIPPING TODAY VIA A.P.P." ERI shipped two Controller units, not 2,000 or 2,548 units.

On August 12 ERI mailed an invoice (B. May 7 Aff.Ex. B) confirming shipment of two Controllers per Bauknecht's July 10 purchase order at a unit price of $34.95 for a total of $89.90 (including $20.00 in postal charges). Significantly that invoice states, "Paid in full — bank transfer of $89.90 USD to American National Bank of Chicago."

On September 3 Pascente sent the following telex (B. July 1 Aff. ¶ 7, incorporating Cplt.Ex. EE) to Bauknecht — according to Bauknecht, the first clue ERI had been sent $89,900 rather than $89.90:

  WE HAVE SHIPPED 2 UNITS AGAINST YR ORDER OUR W/O
  NO 11020 FOR 2546 UNITS. THE BALANCE OF YR ORDER
  WILL BE SHIPPED IN 10 WEEKS.

By return telex that same day, Bauknecht informed Pascente and Breibach (B. July 1 Aff. ¶ 8, incorporating Cplt.Ex. FF):

  EXCUSE, THERE IS A MISUNDERSTANDING. OUR
  BOOK-KEEPING DEPARTMENT REMITTED INSTEAD OF USD
  89.90 — USD 89 900.00.

  WE DON'T NEED 2546 PIECES BUT ONLY THE 2 UNITS
  ORDERED.

  PLEASE REMIT THE DIFFERENCE OF USD 89 810.10 BACK
  TO DRESDNER BANK AG, STUTTGART ACCOUNT NO 9 008
  676

Bauknecht has since made numerous unsuccessful demands for repayment.

Motion To Strike Bormann Affidavits

In principal part the two affidavits tendered by Bormann are devoted to laying the foundation for admitting, under the routine business record exception to the hearsay rule (Fed.R.Evid. 803(6), "Rule 803(6)"), the various documents furnished in support of Bauknecht's summary judgment motion. Bormann's May 7 Affidavit contains two other assertions as well:

    1. Paragraph 7 states, "In German trade and
  practice, the full stop designates one thousand;
  whereas, in the United States, it is a decimal
  point designating a break between dollars and
  cents."

    2. Paragraph 8 says, "Due to the accountant's
  lack of familiarity with United States trade
  practice, a check in the amount of $89,900.00 was
  issued in payment of the invoice. . . ."

Defendants contend Bormann lacks personal knowledge to testify as to any of the matters in the Affidavits. That argument is groundless except as to Bormann's competency to attest to B. May 7, Aff. ¶ 8:

    1. Paragraph 2 in each Bormann Affidavit
  contains averments of personal knowledge,
  presumptively sufficient to render Bormann "a
  custodian or other qualified witness" whose
  testimony can satisfy the prerequisites of Rule
  803(6).

  In fact Bormann even authored some of the
  documents in question, as defendants concede. In
  any event, in the absence of any indication of
  those documents' lack of trustworthiness or
  authenticity, Bormann's failure to elaborate in
  greater detail as to the basis of his firsthand
  knowledge does not justify striking that portion
  of his affidavit.

    2. As a German national Bormann certainly has
  personal knowledge of the significance of the
  "full stop" in German practice.*fn5

By contrast Bormann's statement of the accountant's reasons for wiring $89,900 rather than $89.90 to ERI has to be inadmissible hearsay. B. May 7 Aff. ¶ 8 will therefore be stricken.

Summary Judgment on Count I

Count I charges ERI with conversion of all but $89.90 of the $89,900 forwarded by Bauknecht to ERI. Under Illinois law a cause of action for conversion has four elements:

    1. an unauthorized and wrongful assumption of
  control, dominion or ownership by a person over
  the personalty of another;

2. plaintiff's right in the property;

    3. plaintiff's absolute and unconditional right
  to immediate possession of the property; and

4. demand for possession by the plaintiff.

Hoffman v. Allstate Insurance Co., 85 Ill. App.3d 631, 634, 40 Ill.Dec. 925, 927, 407 N.E.2d 156, 158 (2d Dist. 1980). Of course the fourth element is satisfied here. But the parties bitterly dispute the fundamental premise of the other three propositions — Bauknecht's entitlement to the $89,810.10.

Bauknecht advances two reasons for summary judgment:

    1. Its contractual commitment to purchase ERI's
  controllers was limited to

  two sample units at a total price of $89.90.

    2. Its clerk mistakenly transferred $89,900
  instead of the $89.90 actually owed because of
  his misunderstanding of the dollars and cents
  decimal designation.

ERI counters that the Pascente Affidavit, coupled with the purported July 24 invoice, supports a reasonable inference ERI was contractually entitled to all but perhaps $400 of the $89,810.10 in dispute:*fn6

    1. P.Aff. ¶ 7 claims Bauknecht, via its agent
  Hoffmann, orally agreed to purchase an additional
  2,546 units (at an additional cost of $89,436.70)
  on July 3 — the same day Bauknecht wired $89,900
  to ERI.

    2. That oral agreement falls within an
  exception to the UCC Statute of Frauds,
  Ill.Rev.Stat. ch. 26, § 2-201(1) ("Section
  2-201(1)"), because the July 24 invoice constituted
  "a writing in confirmation of the contract and
  sufficient against the sender . . . . [and no]
  written notice of objection to its contents [was]
  given within ten days after it [was] received" by
  Bauknecht (Section 2-201(2)).*fn7 Bauknecht's
  receipt of that invoice can be reasonably inferred
  (for Rule 56 purposes) from the statement in P.Aff.
  ¶ 9 that the document was sent to Bauknecht.

ERI insists such evidence suffices to create a "genuine issue" that defeats Bauknecht's summary judgment motion. Bauknecht retorts the uncontroverted documents tendered in this case compel the conclusion (as a matter of law) such evidence is spurious and thus incapable of giving rise to a "genuine" factual issue — even when reasonable inferences (especially as to Pascente's demeanor at trial) are indulged in defendants' favor. See DeLuca v. Atlanta Refining Co., 176 F.2d 421, 423 (2d Cir. 1949) (summary judgment granted because the supporting evidence could not conceivably be refuted by the production of any conflicting evidence), cert. denied, 338 U.S. 943, 70 S.Ct. 423, 94 L.Ed. 581 (1950); 10A Wright and Miller, Federal Practice and Procedure § 2727, at 163-65, 170 ("And, although the court should refrain from assessing the probative value of the material presented, evidence in opposition to the motion that clearly is without any force is insufficient to raise a genuine issue" and "[T]he evidence offered must have the force needed to allow a jury to rely on it and the court may disregard an offer of evidence that is too incredible to be believed."). But that notion is really not suited to what this case would require — treating a detailed (not merely vague or conclusory) affidavit as "too incredible to be believed" (that is, as perjurious).

True enough, Bauknecht is certainly correct in pointing out the evidentiary poverty of defendants' position. Were the present record being weighed in the scales rather than being examined for the presence of any factual issue, the result could not be in doubt — all the circumstantial evidence compels the conclusion the alleged oral contract is non-existent, at the same time substantiating Bauknecht's explanation for its transmission of the $89,900:*fn8

1. B. May 7 Aff.Ex. 3, the banking transaction document authorizing the $89,900 payment, convincingly supports Bauknecht's claim the employee who filled out that form mistakenly converted the intended $89.90 into a wholly unintended $89,900:

    (a) That document expressly shows the
  authorized payment was for two Controller units.

    (b) Its accompanying entry, "US $89.000,-" also
  suggests the cause of the clerical error:
  Bauknecht's employee likely added a "0" to the
  $89.90 in the belief the period was a "thousands"
  indicator in conformity with German practice.
  That is all of a piece with the clerk's inverted
  use of the period and comma, which indicates his
  mistaken belief that such punctuation served the
  same function in denoting sums of money in both
  United States and German currency.

2. ERI's purported July 24 invoice shows the $89,900 payment exceeded (by $373.40) the amount due for both the two sample units and the additional 2,546 units supposedly ordered. That itself strongly implies the payment was not made as consideration for the alleged oral contract. Were Pascente's account of the supposed telephone call factual, the logical expectation would have been Bauknecht's payment of the correct amount, not a rounded figure (which "just happened" to be exactly 1,000 times the agreed-upon price — including postage — for the agreed-upon two units).

3. All the post-July 3 communications and course of dealings between the parties are also instructive:

    (a) Just one week after the alleged oral
  contract was made, Hoffmann (the one who
  allegedly entered into that contract) sent a
  telex that confirmed only the original order for
  the two sample Controllers. That telex's
  conspicuous silence as to the claimed 2,546 unit
  purchase order belies its very existence, for any
  purchasing agent with a modicum of business
  prudence would have taken that occasion to make at
  least some mention of it.

    (b) Again on August 5 Hoffmann sent another
  telex indicating Bauknecht had not received the
  two Controllers previously ordered. That telex too
  illuminates Bauknecht's ignorance of any oral
  contract with ERI. Concededly the telex received by
  ERI was garbled, containing the word and non-word

         "TWO T ."
              HO

But the odd addition of

                  T
                 "HO"

  in the transmission process obviously does not
  affect any inference drawn from the telex message
  Hoffmann attempted to convey. Nor does it lend
  any credence to the alleged oral contract:

      (1) Pascente's asserted oral contract was for
    2,546 additional units, not 2,000 units.

      (2) Bauknecht's August 5 telex expressly
    referred to the July 10 telexed purchase order,
    which was for the two sample units.

      (3) Most importantly, Breibach's own August 5
    reply telex, which said the ordered goods were
    being shipped immediately, coupled with the
    fact that only two units were actually shipped,
    demonstrates defendants realized

              "TWO T "
                   HO

meant simply "two."*fn9

    (c) In light of Bauknecht's practice of
  carefully documenting its $89.90 order, its
  failure to issue even a single document verifying
  the $89,810.10 order reinforces the doubt any
  such order was ever placed.

4. No business is likely to purchase large quantities of a component part to be incorporated in the final product (freezers and refrigerators in this case) for the first time without having seen or used any samples. That abnormal conduct is rendered even more abnormal by the sequence of an admitted original order for a very small sample to check its suitability, allegedly followed by an extremely large order before the samples were even delivered.

5. ERI's alleged July 24 invoice is also highly suspect:

    (a) There are several indications of its lack
  of authenticity — of its having been fabricated
  after August 12:

      (1) Every externally verifiable ERI document
    through August 12 (the June 30 and July 1
    telexes, the August 5 telex and the two-unit
    shipment, and the August 12 invoice reflecting
    that shipment and only the $89.90 "paid in
    full" amount) uniformly spoke simply of the two
    units and the $34.95 unit price. Only after
    August 12 did any verifiable document reflect
    another number (the September 3 telex spoke of
    "2546 units"). In that context the "July 24
    invoice" sounds a wholly false note.

      (2) ERI's "July 24 invoice" referred to "ERI
    Work Order No. 11020-02," while the unquestioned
    August 12 invoice covered "No. 11020-01." Had a
    July 24 invoice actually existed on August 12,
    and had that July 24 invoice really referred to a
    second work order, surely the later August 12
    invoice would not have read as though it were the
    only then-outstanding order (note the invoice
    form has spaces for "Quantity order," "Quantity
    shipped" and "Quantity back ordered").

      (3) ERI's September 3 telex simply referred
    to its "w/o ["work order"] no. 11020 for 2546
    units." How so, when the supposedly pre-existing
    "July 24 invoice" (actually a work order form)
    showed the 2546 units as having been ordered
    under "ERI Work Order No. 11020-02"? And it will
    not wash to say "11020" was intended to encompass
    both alleged orders, for then the telex would
    have referred to "hav[ing] shipped 2 units
    against yr order our w/o no. 11020 for [2548 not
    2546] units."

      (4) Though the August 5 invoice for the two
    units actually shipped was indeed an "invoice"
    form (prenumbered and thus chronologically
    verifiable), the "July 24 invoice" was actually
    a "work order" form with no preprinted number
    (hence easily predated, with no means of
    verification).

      (5) Had Pascente really had the July 3
    conversation with Hoffmann (just two days after
    the two-unit commitment was made at
    $34.95 per unit), there would be no rational
    explanation for his setting what he acknowledged
    as the "same" unit price at $33.95 for the
    asserted 2546 unit order. It should be remembered
    that only Pascente's allegedly contemporaneous
    notes

    (P.Aff.Ex. D), the "July 24 invoice" and the
    1983 Pascente Affidavit mention the peculiar
    $33.95 figure — all of them internal (that is,
    unconfirmed) documents.*fn10

      (6) P.Aff.Ex. D reflects an astonishing level
    of prescience. Bearing a July 3 date and
    assertedly prepared contemporaneously with the
    alleged phone call that day, it refers to "Order
    Paid in Full — bank transfer of $87,810
    USD . . ." (the same language that appeared on
    the "July 24 invoice" — obviously $89,900 less
    the $89.90 applicable to the two units). Yet not
    a word in the alleged Pascente-Hoffmann telephone
    conversation referred to a funds transfer of an
    even $89,900 rather than the right amount as
    assertedly quoted by Pascente.

    (b) Even were the existence of the "July 24
  invoice" plausible, there would remain the
  question whether it was ever sent to or received
  by Bauknecht — one of the prerequisites of the
  Section 2-201(2) exception to the UCC Statute of
  Fraud requirements:

      (1) ERI's alleged transmission of the July 24
    invoice is inconsistent with defendants'
    treatment of the original two-unit order, as to
    which defendants' first acknowledgment occurred
    after shipment.

      (2) Bauknecht's failure to mention the July
    24 invoice in any subsequent communication
    (including the August 5 telex) is strongly
    probative of its non-receipt of that document.
    Its immediate response to the first
    uncontroverted communication hinting at the
    existence of the oral contract (the September 3
    telex) underscores the significance of that
    factor.

This discussion has not sought to be exhaustive. That task will be left to those with better facilities for investigation.*fn11 Certainly a substantial argument can be made for the proposition that ERI's "evidence . . . is too incredible to be believed." Nonetheless, taking (as a Rule 56 motion requires) all inferences in defendants' favor — thin though their position appears — this Court cannot foreclose further factual inquiry by granting Bauknecht a judgment at this stage:*fn12

    1. Bauknecht's banking transaction document
  does not alone conclusively establish clerical
  oversight as the reason for Bauknecht's $89,900
  payment to ERI. After all, the document did
  authorize the payment of "US $89.900,-." And
  Bauknecht's clerk's use of the period and comma
  is arguably consistent with defendants'
  contention that transfer of the $89,900 was
  intended and not accidental.

    2. Bauknecht's (and for that matter ERI's)
  failure to acknowledge the alleged oral contract
  in the pre-September 3 communications (excluding
  the purported July 24 invoice) is not fatal to
  defendants' position as a matter of law. It could
  perhaps be argued both sides ignored the claimed
  2,546 unit purchase order during that period
  because delivery was supposedly scheduled for
  September 28.

    3. Serious questions as to the authenticity of
  the July 24 invoice or its transmission to
  Bauknecht*fn13 still require the resolution of
  disputed facts.

    4. Apart from the difficulties of reconciling
  it entirely with the purported July 24 invoice,
  the August 12 invoice is consistent with both
  sides' positions: It merely confirms the shipment
  of the two Controllers and acknowledges receipt
  of the $89.90 bank transfer.

    5. Bauknecht's failure to tender any affidavit
  or deposition testimony from (a) Hoffmann, (b)
  the clerk responsible for paying the $89,900 or
  (c) any other Bauknecht official with personal
  knowledge as to the non-existence of the oral
  contract or the reason for the $89,900 payment
  leaves the field to the Pascente Affidavit,
  dubious though it may be.*fn14

In sum, this Court must reluctantly deny Bauknecht's summary judgment motion because of the existence of genuinely disputed issues of material fact. If however it ultimately develops that the strong suspicions evoked by the matters discussed in this opinion are justified in fact, defendants should recognize the possibility of being assessed for fees as well as damages.*fn15

Motion To Strike Jury Demand and Counterclaim

Resolution of both aspects of this motion requires a brief excursion into the case's procedural background. On July 2, 1982 the Complaint was served on defendants. On August 18, 1982 defendants filed their Answer, which included affirmative defenses based on the alleged oral contract. Two months later defendants filed an Amended Answer. On February 8, 1983 defendants filed a Second Amended Answer and Counterclaim. That responsive pleading was the first one to include a jury demand. Defendants' alleged Counterclaim is also based on the alleged oral contract and involves the same issues already raised by defendants' affirmative defenses.

1. Counterclaim

Rule 13(f) prescribes the standards under which originally omitted counterclaims can be pleaded by amendment:

  When a pleader fails to set up a counterclaim
  through oversight, inadvertence, or excusable
  neglect, or when justice requires, he may by
  leave of court set up the counterclaim by
  amendment.

As 6 Wright & Miller § 1430, at 153 makes clear, courts are exceedingly liberal in allowing a party to plead a counterclaim omitted from an earlier pleading, particularly where as here the counterclaim is said to be compulsory under Rule 13(a).

One way to look at defendants' delinquency here is in terms of their failure to satisfy their Rule 13(f) burden. Nothing in ERI's memorandum suggests their omission resulted from "oversight, inadvertence, or excusable neglect. . . ." Nor does ERI contend the "justice requires" standard warrants retention of the Counterclaim.

But there is an even more basic flaw in defendants' position: They have really not asserted a counterclaim at all. They have the $89,900. If they are correct in their position, they already have all the relief to which the law would entitle them:

    1. Under UCC § 2-708 (which governs a seller's
  damages for non-acceptance or repudiation by the
  buyer), ERI would be entitled to the greater of (a)
  the difference between the market price at the time
  and place of tender and the unpaid contract price
  and (b) the profit ERI would have realized from
  full performance by Bauknecht, plus (c) any
  "incidental damages" under UCC § 2-710.

    2. ERI has already received the "greater"
  component of damages, for on its own theory it
  has concededly received the full contract price
  (and hence full performance) from Bauknecht.

    3. There is no claim of any "incidental
  damages" arising from Bauknecht's breach. That is
  scarcely surprising, for Bauknecht never breached
  the oral contract. Even under defendants' version
  of events, Bauknecht merely repudiated the
  asserted oral contract after fully performing its
  supposed obligation — payment of the contract
  price.

    4. Nor can the attorneys' fee element of the
  Counterclaim's prayer for relief be characterized
  as "incidental damages." That UCC concept is
  limited to expenses incurred by the seller in
  retrieving and reselling the goods refused by the
  repudiating buyer. Moreover, defendants' prayer
  for attorneys' fees (even if supported by law, a
  showing not yet made) merely echoes a like claim
  already in the Answer.

It would be a distortion to label as a "counterclaim" a pleading that adds nothing to the issues already in suit and that would provide the claimant nothing it does not already have.
*fn16 To the skeptic it might appear defendants tendered their pleading as a means of asserting an untimely jury demand not previously made. That poses the next issue for this opinion.

2. Jury Demand

Under Rule 38(b) any party desiring a jury trial on an issue must make a written request "at any time after the commencement of the action and not later than ten days after the service of the last pleading directed to such issue." As both sides recognize, defendants have no right to a jury trial unless their Second Amended Answer and Counterclaim represents the "last pleading directed to such issue." To trigger a new ten-day period, that amended pleading must raise for the first time the issue as to which a jury trial is sought. See 5 Moore's Federal Practice § 38.41, at 38-364 to 38-365.

It plainly does not do that. As already pointed out, the Second Amended Answer and its non-Counterclaim rehash the same contract issues embraced by the earlier filed affirmative defenses. That kind of attempted bootstrapping is hardly enough to satisfy the "last pleading" requirement. Accord, Leighton v. New York, Susquehanna & W. Ry., 36 F.R.D. 248 (D.C.N.Y. 1964).

But that is not the end of the matter, for Rule 39(b) permits "the court in its discretion upon motion [to] order a trial with a jury of any or all issues" despite the lack of a timely demand. To qualify for discretionary relief, the delinquent party must furnish an adequate justification for his tardiness. Though case law is split as to what constitutes a sufficient excuse, even the most lenient approach (to which our own Court of Appeals subscribes, see Merritt v. Faulkner, 697 F.2d 761, 766, 767 (7th Cir. 1983)) requires a showing of inadvertence. See also Williams v. Lane, 96 F.R.D. 383 at 387 (N.D.Ill. 1982).

Defendants have not even proffered that as the reason for their untimely demand. Instead they argue their constitutional right to a jury cannot be forfeited unless prejudice to Bauknecht is established. That argument misapprehends the applicable standards. Any inquiry as to prejudice will be triggered (if at all) only after a party furnishes an adequate excuse for his or its delinquency. See Pawlak v. Metropolitan Life Insurance Co., 87 F.R.D. 717, 719 (D.C.Mass. 1980).

Accordingly defendants' jury demand must be stricken. This ruling however is without prejudice to a renewed jury demand if accompanied with proof (in affidavit form) of an adequate excuse.

Conclusion

Paragraph 8 of the May 7 Bormann Affidavit is stricken. Bauknecht's motion for summary judgment is denied. Its motion to strike the Counterclaim is granted. Its motion to strike defendants' jury demand is granted, without prejudice to reassertion of that demand on an appropriate showing.


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