The opinion of the court was delivered by: Shadur, District Judge. [fn*] This is one of two opinions issuing concurrently in this action (the other deals with affirmative defenses asserted by the Continental Bank). In each instance the most valuable analytical input for this Court's consideration came from its law clerk, Linda Rusch, rather than the parties' submissions (extensive though they were).
MEMORANDUM OPINION AND ORDER *fn*
Indeca has now moved for summary judgment under Fed.R.Civ.P.
("Rule") 56 against Deborah Bell ("Bell") and Rumex International
("Rumex") on Count I (breach of contract) and against Bell,
Rumex, Robert Tucker ("Tucker") and Michael Ball ("Ball") on
Count II (fraud). Shirley Nagel ("Nagel") and Quosando
Corporation ("Quosando")*fn2 have moved for summary judgment against
Indeca on Counts I, II and VI (asserting a RICO*fn3 violation). For
the reasons stated in this memorandum opinion and order, Indeca's
motion is granted and the Nagel-Quosando motion is denied.
In July 1980 Indeca sought to purchase a large quantity of
black beans. Thomas J. Lipani ("Lipani") learned of Indeca's need
and wanted to submit a bid, but he needed a black bean supplier.
Lipani spoke with Juan Jose Caceres ("Caceres"), a friend and
sometime business associate, who (1) happened to have some
connection to Indeca head Carlos Ramirez ("Ramirez") and (2) knew
Nagel, who Caceres thought might know where Lipani could purchase
the beans. On Caceres' recommendation Lipani communicated with
Nagel, who in turn spoke with Bell, a commodities broker doing
business as Rumex.
Between July 28 and August 19 numerous telexes were sent,
either bearing Nagel-Quosando's name (authorship of those is
disputed by Nagel) or directed to Nagel-Quosando, regarding the
sale of black beans.*fn4 Nagel concededly wrote an August 19 letter
appointing Lipani as Quosando's representative in Guatemala (that
letter was later rejected by the Guatemalan government for its
informality). Bell too sent a letter, this one appointing Lipani
as Rumex' representative.
Thereafter Bell negotiated a contract dated September 4 with
Irving Pheterson ("Pheterson") doing business as International
Association of Grocers, Inc. ("IAG"), under which Pheterson
agreed to supply the beans for sale to Indeca. Rumex had
represented in the Indeca-Rumex contract it already owned the
beans. Pheterson testified in his deposition he had never heard
of Nagel or Quosando.
Another provision of the Indeca-Rumex contract required Indeca
to open a letter of credit ("Letter") at Continental Illinois
National Bank and Trust Company of Chicago ("Continental"),*fn5 with
delivery of the beans to occur within 30 days of such opening.
Though the Letter was paid the beans were not delivered. There
was a flurry of telexes through the end of 1980 among Rumex,
Bell, Lipani, Caceres and Ramirez, with repeated promises of
delivery by Rumex and Bell — never carried out. Then Tucker's
January 15, 1981 letter told Indeca the beans would not be
delivered, as Rumex had been defrauded by its supplier.
Part of Indeca's Count II fraud claim asserts Tucker's, Bell's
and Ball's participation in presenting false documents to
Continental to obtain payment of the Letter. Those three
defendants have been convicted on nine counts of wire fraud under
18 U.S.C. § 1343, based upon their participation in such
presentation and misrepresentations to Indeca regarding the bean
shipments. All of them have appealed their convictions.
1. Count I: Breach of Contract
To prevail on its breach of contract claim against Bell and
Rumex, Indeca must prove the existence of the contract, Bell's
and Rumex' breach, Indeca's damages as a result of that breach
and Indeca's performance of all its conditions precedent. Thilman
& Co. v. Esposito, 87 Ill.App.3d 289, 296, 42 Ill.Dec. 305, 311,
408 N.E.2d 1014, 1020 (1st Dist. 1980). To meet that burden
Indeca has submitted:
1. the affidavit of Ana Imelda Garavito Castellanos
("Garavito Affidavit"), custodian of all Indeca
records regarding the transaction, which identifies
the following documents;
2. a translated copy of the Indeca contract;
3. Tucker's January 15, 1981 letter admitting
Rumex cannot deliver;
4. Indeca's application for the Letter;
5. issuance by Banco de Guatemala ("Banco") of the
Letter, later confirmed by Continental; and
6. Banco's liquidation of the Letter to Rumex.
Moreover Bell and Rumex have elected not to submit any evidence
in opposition to those matters, but simply to rest on their
pleadings. Without more, summary judgment could properly be
entered against Bell and Rumex on Count I. Posey v. Skyline
Corp., 702 F.2d 102, 105 (7th Cir. 1983), cert. denied, ___ U.S.
___, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983).
However, Tucker's submission in opposition to Indeca's Count II
summary judgment motion has asserted an in pari delicto defense
relevant to both Counts I and II.*fn7 Because of the identity of
issues, further discussion of that defense will be deferred to
the more logical place for its treatment: the next section of
Indeca moves for summary judgment on Count II, asserting the
collateral estoppel effects of the criminal convictions of Bell,*fn8
Tucker and Ball for wire fraud under 18 U.S.C. § 1343. That
motion compels consideration both of the elements of a civil
fraud claim and of collateral estoppel principles.
First, to prevail on its fraud claim Indeca must show (Almgren
v. Engelland, 94 Ill.App.3d 475, 477, 50 Ill.Dec. 66, 68,
418 N.E.2d 1060, 1062 (1st Dist. 1981)):
1. misrepresentation of a material fact
2. made for the purpose of influencing the other
party to act,
3. by a person who knew or believed the statement
to be untrue,
5. to a person who believes and relies on the
Indeca asserts the criminal convictions establish all those
elements except for its reliance, as to which it submits
Again Bell and Rumex offer no evidence in rebuttal, and Ball
has made no submission at all. Tucker however raises five points
in opposition to the motion:
1. Under Illinois rules of collateral estoppel a
criminal conviction is only prima facie evidence, not
conclusive evidence, of matters established in the
2. Under federal collateral estoppel principles the
doctrine is inapplicable here because Tucker, as a
criminal defendant, lacked procedural advantages
afforded civil litigants.
3. Because the convictions have been appealed, this
Court cannot give them preclusive effect.
4. Indeca cannot show it relied on any of Tucker's
statements because he made no direct representations
to Indeca and he was not involved in presenting false
documents to Continental.
5. In pari delicto, an issue not litigated in the
criminal case, bars summary judgment.
Brief analysis confirms Tucker's only possibly viable point is
the last one:
2. Any procedural differences that may exist between criminal
and civil cases are not such as to evoke any different collateral
estoppel result. Criminal defendants, like civil litigants,
plainly have every incentive to litigate their cases fully and
vigorously. County of Cook v. Lynch, 560 F. Supp. 136, 139
3. Pendency of an appeal does not alter the preclusive effect
of a criminal conviction. Kurek v. Pleasure Driveway & Park
District of Peoria, 557 F.2d 580, 595 (7th Cir. 1977).
4. Tucker need not have made representations directly to Indeca
to sustain a fraud ...