The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Brasco, Inc. ("Brasco") sues International Graphic Services,
Inc. ("IGS") for breach of contract (Count I) and fraud (Count
II). On April 20, 1984 this Court denied IGS' motion to dismiss
or strike Count II. Brasco now moves under Fed.R.Civ.P.
("Rule") 56 for summary judgment on Count I. For the reasons
stated in this memorandum opinion and order, that motion is
In November 1982 IGS contracted with the Regional
Transportation Authority to install and thereafter to maintain,
at suburban bus stops in the Chicago area, passenger shelters
equipped with advertising panels. In turn IGS contracted to
purchase the shelters and panels from Brasco,*fn2 which
agreed to supply up to 1,000 shelters and 379 extra panels at
the rate of at least 45 shelters and 15 panels per month
beginning in February 1983. Agreement ¶ 3(a) set the terms of
payment at thirty days net from the date of each delivery
unless IGS then owed Brasco at least $100,000, in which event
Agreement ¶ 3(b) required:
For all shipments which, when aggregated with prior shipments,
leave the buyer indebted to the seller in amounts greater than
$100,000.00: cash on delivery.
On December 22, 1982 Brasco shipped a prototype shelter unit to
IGS, followed by 5 units on February 2, 1983, 20 units on March
7, 45 units and 15 extra advertising panels on March 31 and 5
additional advertising panels on April 7. On April 29, May 3
and May 11 Brasco shipped the component parts for an additional
65 units.*fn3 Brasco however withheld shipment of the dome
roof sections for 13 of those units after IGS' $50,000 check
had been dishonored by the bank for insufficient funds.
Thus Brasco shipped IGS a total of 136 units, of which 123 were
complete and 13 lacked only the dome roof section. IGS has yet
to pay for the major share of the goods shipped. At the end of
February 1983 it tendered a partial payment of $1,259.38.
During early April it sent another part payment of $7,700,
leaving it indebted to Brasco for another $95,530.22. Brasco
accordingly notified IGS any further monthly shipments would be
made only on a cash basis as Agreement ¶ 3(b) provided.
On April 28 a Brasco representative conferred with IGS Chairman
Eugene P. Rosciano ("Rosciano"). That meeting generated a
$50,000 IGS check post-dated to May 10, in reliance on which
Brasco made the April 29, May 3 and May 11 shipments (bringing
IGS' total indebtedness to $164,649.92). When timely presented,
was dishonored and Brasco thereupon ceased all shipments to
In a June 17 letter Brasco notified IGS it would have to assess
interest charges at the rate of 18% per annum on all past due
amounts. According to the affidavit of Brasco General Manager
Thomas J. Lennon ("Lennon") IGS thereafter made payments of
$2,469.75 and $7,875.43, representing accrued interest through
August 31 (Lennon Aff. ¶ 16).*fn4 IGS has made no further
payments on its obligation under the Agreement. On December 27
Brasco filed this action.
Summary Judgment Analysis
On those facts Brasco argues it is entitled as a matter of law
to judgment on Count I for $164,649.92 plus interest at 18% per
annum from September 1, 1983. IGS does not dispute the fact
of its obligation to Brasco under the Agreement. Instead it
challenges the amount of that obligation because, it says:
1. IGS received only 117 units, not 136 as Brasco contends.
2. IGS is entitled to set off damages resulting from Brasco's
failure to deliver goods conforming to its obligations under
3. IGS did not agree and is not obligated to pay interest on
any past due balances.
IGS offers each of those contentions as establishing the
existence of an issue of material fact sufficient to defeat
Brasco's motion. This opinion will consider them in turn.
1. Number of Units Shipped
In support of its assertion that it received only 117 bus
shelter units, IGS cites only Rosciano Aff. ¶ 4:
Brasco shipped no more than one hundred seventeen (117)
shelters during the relevant period herein.
By contrast Brasco describes in some detail (Lennon Aff. ¶¶
10-14) the circumstances surrounding the April 29, May 3 and
May 11 shipments — the only ones allegedly in dispute. But
there is more: Brasco submits copies of its bills of lading for
those three shipments, directly confirming that the component
parts of 65 shelters (20 without advertising panels and 13
without dome roof sections) were in fact shipped.
Once a movant has met its burden of establishing that there is
no genuine issue as to a given material fact, the burden shifts
to the nonmoving party to show an issue remains for the
factfinder. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th
Cir. 1983) (citations omitted) teaches:
To create a question of fact, an adverse party responding to a
properly made and supported summary judgment motion must set
forth specific facts showing that there is a genuine issue for
trial. . . . A party may not rest on mere allegations or
denials of his pleadings; similarly a bare contention that an
issue of fact exists is insufficient to raise a factual
issue. . . . Rule 56 of the Federal Rules of Civil Procedure
clearly requires that an adverse party set forth specific facts
showing a genuine issue for trial.
See also Big O Tire Dealers, Inc. v. Big O Warehouse,
741 F.2d 160, 163 (7th Cir. 1984).
2. Defects in Units Shipped
IGS says the shelters shipped by Brasco were defective in three
1. Some of the units were delivered with badly scratched
2. Locking devices provided to prevent members of the public
from tampering with the advertising panels were inadequate.
3. Anchor clips provided with the shelters were not large or
strong enough to keep the shelters from opening and
Here too IGS mistakes its evidentiary burden: Rosciano's
affidavit sets out "facts" in a way no witness could do from
the stand, substituting instead a kind of generalized
conclusory narrative.*fn6 Nonetheless this opinion will —
for the moment — assume arguendo the claimed flaws in the goods
exist. If so their legal effect must be determined by reference
to the Agreement and to the provisions of the Uniform
Commercial Code ("UCC") as adopted in Michigan.*fn7
Mich.Comp.Laws §§ 440.1101-440.9994 (cited as "Section"
following by the last four digits of the section
Because IGS plainly accepted the units Brasco shipped (see
Section 2606), IGS' right to a remedy for claimed breaches is
governed by Section 2607(3)(a), under which a buyer who has
accepted the tender of goods:
must within a reasonable time after he discovers or should have
discovered any breach notify the seller of breach or be barred
from any remedy.
In turn Section 1204(1) provides:
Whenever this act requires any action to be taken within a
reasonable time, any time which is not manifestly unreasonable
may be fixed by agreement.
Those statutory provisions must be considered in light of
Agreement ¶ 15, which states:
The Buyer shall be deemed to have accepted the goods in as is
condition unelss [sic], within five thirty 10 days after
delivery to the Buyer's warehouse, Buyer notifies the Seller in
writing of defects.
As to the scratched posts, IGS clearly fails the Agreement ¶ 15
requirement. Rosciano Aff. ¶ 7 says only "he notified Brasco of
the scratches immediately upon receipt by IGS of the shelters."
That may carry with it a reasonable inference of timeliness,
but surely not one of written notification (IGS tenders no
IGS does point to Brasco's having shipped spray paint to be
used for touching up the posts (Def. Ex. II).*fn10 But that
is not at all inconsistent with Agreement ¶ 15's "as is"
provision. Indeed Rosciano Aff. ¶ 11 confirms (though it cavils
at) the fact Brasco charged IGS for the touch-up paint. Clearly
Brasco did not interpret any notice it arguably received as
triggering any obligation to cure the scratches. Contrast
Reinhardt v. Bennett, 45 Mich. App. 18, 205 N.W.2d 847, 852
(1973) (defendant's response on three occasions to ...