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