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GIBBS-BROWER v. KIRCHHEIMER BROTHERS

May 10, 1985

GIBBS-BROWER INTERNATIONAL, PLAINTIFF,
v.
KIRCHHEIMER BROTHERS CO. AND JOE DEJURE, DEFENDANTS



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

 
                             MEMORANDUM OPINION
                                 AND ORDER

Gibbs-Brower International ("GibbsBrower") initially sued Kirchheimer Brothers Co. ("Kirchheimer") and sole Kerchheimer stockholder Joe DeJure ("DeJure"), seeking to recover a commission and finder's fee as the result of DeJure's sale of all the outstanding shares of Kirchheimer stock to Canover Industries, Inc. ("Canover"). Kirchheimer and DeJure then filed counterclaims against Gibbs-Brower alleging defamation. DeJure has now moved under Fed.R.Civ.P. ("Rule") 56 for summary judgment on Gibbs-Brower's claim for a reasonable finder's fee based on Canover' s purchase of the Kirchheimer stock.*fn1 Gibbs-Brower asks summary judgment against both defendants on their counterclaims. For the reasons stated in this memorandum opinion and order:

1. DeJure's motion is granted.

     2. DeJure's counterclaims are dismissed with
   prejudice by agreement.
     3. Gibbe-Brower's motion is granted in part and
   denied in part as to Kirchheimer's counterclaims.

Facts*fn2

In December 1983 Kirchheimer, a manufacturer of bags, cartons and other forms of packaging, decided to close its manufacturing facility in Schiller Park, Illinois and to sell the machinery and equipment thus removed from service. In late December Gibbs-Brower, a corporation engaged in the business of buying and selling industrial and manufacturing machinery, proposed to handle the sale of the Schiller Park machinery for Kirchheimer. Following a number of meetings between DeJure (acting for Kirchheimer) and Gibbs-Brower representative James Crosset, the corporations entered into a January 27, 1984 Exclusive Sales Agreement (the "Agreement").

Under the Agreement Gibbs-Brower was to advertise and promote the Kirchheimer machinery worldwide, such efforts to include "all means deemed necessary and appropriate by Gibbs-Brower International" (Complaint Ex. A). In addition GibbsBrower was to negotiate any sale it procured and then forward all payments it received to Kirchheimer.*fn3 Kirchheimer, in turn, gave Gibbs-Brower the exclusive right to sell the machinery for a three month period beginning the date of the Agreement and ending April 27, 1984. As is customary in such exclusive brokerage arrangements, Kirchheimer agreed to pay a commission to Gibbs-Brower for any equipment sale made during the term of the Agreement, whether initiated by GibbsBrower or by Kirchheimer personnel.*fn4

During the course of the Kirchheimer Canover negotiations, Gibbs-Brower was at work preparing a marketing brochure describing the Kirchheimer machinery. On March 7 the marketing brochure was mailed to prospective purchasers worldwide. Its cover described the machinery in general terms, making reference to its good condition and low price, and also bore the following statement in block letters:

   KIRCHHEIMER BROTHERS HAS CLOSED ITS ULTRA-MODERN
   CHICAGO PLANT! AND . . . ALL MACHINERY MUST BE SOLD.

Kirchheimer became aware of the brochure March 9. DeJure immediately telephoned Gibbs-Brower to complain that the quoted statement gave the clear impression Kirchheimer was going out of the paper business altogether. On the same day Gibbs-Brower sent telegrams to the recipients of its brochure, correcting any misimpression created by the cover statement and saying the Kirchheimer machinery was no longer on the market (DeJure Aff. Ex. A):

   We wish to correct the statements made in our
   previous letter to you.
   Kirchheimer Brothers Corporation is continuing its
   business and operations and merely intended to sell
   certain machinery and equipment.
   The Company has withdrawn such machinery and
   equipment for sale, as it will be continuing its
   manufacturing and operations as conducted in the
   past.

Gibbs-Brower's Claims Against DeJure

Gibbs-Brower wants to charge Kirchheimer commission, calculated under the Agreement, on the sale of the machinery to Canover (as subsumed within the stock transaction). Gibbs-Brower's claim against DeJure, by contrast, sounds in quantum meruit and seeks to recover a reasonable finder's fee on the entire sale price of Kirchheimer stock to Canover. In that respect Gibbs-Brower asserts its tendering of Canover as a purchaser for the Kirchheimer machinery was also the procuring cause of DeJure's ultimate sale of the Kirchheimer stock to Canover. According to GibbsBrower Mem. 6:

   DeJure could reasonably have been expected to know
   — that if he sold more than just the machinery
   — he would be expected to pay for all of the
   benefits he received. Gibbs-Brower made known to
   DeJure that it expected to be compensated for all of
   its services.

In pressing for summary judgment on that claim DeJure argues:

     1. New York law, which does not recognize claims in
   quantum meruit, applies to the Agreement.
     2. DeJure did not reasonably believe Gibbs-Brower
   expected a fee on the stock sale.
     3. Gibbs-Brower's claim with respect to the stock
   sale is an attempt to expand its business advantage
   beyond the ...

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