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BRASCO, INC. v. INTERNATIONAL GRAPHIC SERVICES

October 23, 1984

BRASCO, INC., PLAINTIFF,
v.
INTERNATIONAL GRAPHIC SERVICES, INC., DEFENDANT.



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 granted.

Facts*fn1

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, the check was dishonored and Brasco thereupon ceased all shipments to IGS.

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
  the Agreement.
    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).

IGS clearly has not generated a genuine factual issue as to the number of units shipped. In light of Brasco's showing,*fn5 IGS had to provide specific evidentiary support for its counter-assertion. Rosciano's conclusory affidavit statement is not even a makeweight to that end.

2. Defects in Units Shipped

IGS says the shelters shipped by Brasco were defective in three respects:

    1. Some of the units were delivered with badly scratched
  posts.
    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
  collapsing.

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 number).*fn8

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 supporting document).

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 ...


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