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LESCHA MASCHINENFABRIK GMBH v. GSC PROPERTIES

July 28, 1989

LESCHA MASCHINENFABRIK GmbH, a foreign corporation, and SOCIETE ODO, a foreign corporation, Plaintiffs,
v.
GSC PROPERTIES, a real estate partnership, REM MANAGEMENT COMPANY, an Illinois general partnership, RICHARD PANICHI, HAROLD HAWKINS, and WALTER BRATKIV, Defendants



The opinion of the court was delivered by: NORGLE

 CHARLES RONALD NORGLE, UNITED STATES DISTRICT JUDGE.

 Plaintiffs, Lescha Maschinenfabrik GmbH ("Lescha"), a German corporation, and Societe Odo ("Odo"), a French corporation, complain against GSC Properties ("GSC"), an Illinois partnership, REM Management Co., an Illinois partnership, and the individual defendants (collectively "GSC" or the "defendants") for conversion, breach of constructive bailment, and unjust enrichment. Both sides have moved for summary judgment as to liability. The Magistrate has recommended that summary judgment as to liability be entered in favor of plaintiffs. Upon conducting a de novo review, pursuant to Fed.R.Civ.P. 72(b), the court, for the reasons set forth below, rejects the Report and Recommendation of the Magistrate and grants summary judgment in favor of defendants.

 FACTS

 Lescha and Odo manufacture and sell outdoor power equipment and gramophones, respectively (collectively the "Goods"). Both Lescha and Odo stored Goods with Fischer Consultants International ("Fischer"), at 150 G. East St. Charles Road, Carol Stream, Illinois, (the "Premises"). Grochocinski Affidavit, Exhibit C to Plaintiffs' Memorandum in Support; Defendants' Response to Request to Admit para. #15, Exhibit D to Plaintiffs' Memorandum in Support. Fischer leased the Premises from GSC. Defendants' Response to Request to Admit para. 13. Lescha paid Fischer $ 351 per month in storage charges, Winter Dep. at 91, Exhibit G to Defendants' Response, while Odo, in lieu of monthly storage charges, agreed to pay Fischer a ten percent commission on any gramophone orders received. Odobez Deposition at 54-55, Exhibit H to Defendants' Response.

 On November 20, 1985, GSC served Fischer with a five-day termination notice for the Premises, and on November 25, 1985, after Fischer failed to cure, terminated Fischer's lease for nonpayment of rent. Fischer, which also filed for bankruptcy on November 25, 1985, Amended Complaint para. 17, "abandoned" *fn1" the Premises, leaving behind the Goods, specifically 614 Lescha garden shredders and 145 Odo gramophones. Consequently, upon termination of Fischer's lease and Fischer's abandonment of the Premises, GSC assumed possession and control of the Premises and the Goods located on the Premises. Defendants' Response to Statement of Uncontroverted Facts paras. 8-12; Defendants' Response to Plaintiffs' Request to Admit paras. 18, 20.

 On December 6, 1985, GSC inventoried the property left in the Premises. After storing the Goods for over a month, GSC scheduled an auction of the inventory, including the Goods, on January 17, 1986. GSC twice attempted, but was unable to contact a Fischer representative. Defendants' Statement of Uncontested Facts, para. 7. The individuals GSC contacted refused to place it in contact with Fischer representatives. GSC was not on Fischer's list of creditors and was not contacted by the bankruptcy trustee until after the auction. Defendants' Statement of Uncontested Facts, paras. 5, 6.

 The auction was conducted on January 17, 1986, with GSC the successful bidder for the Goods. No other bidders appeared. GSC's bid of $ 6,140 for the 614 shredders, and $ 2,900 for the 145 gramophones, was not in cash. Rather, GSC "bid in" the lien it had asserted against the Goods for storage charges. Subsequently, GSC sold the Lescha shredders for $ 14,200, but has not sold the gramophones. Panichi Dep. at 44-48, Exhibit B to Defendants' Response.

 Fischer's trustee in bankruptcy has submitted an affidavit stating that based upon his examination of Fischer's records, which included certain of plaintiffs' brochures, "these documents provided sufficient information from which to determine the identity and location of the manufacturers of the property that remained on the St. Charles Rd. premises." Affidavit of David E. Grochocinski, para. 8.

 DISCUSSION

 Lescha and Odo, upon learning of these events, filed their three count complaint alleging in Count I that GSC's sale of the Goods without their consent and without notice amounted to conversion, in Count II that GSC's sale of the Goods breached a constructive bailment created when Fischer abandoned the Premises leaving the Goods in GSC's possession, and in Count III that GSC has been unjustly enriched through the sale of the Goods.

 GSC argues that, when it regained possession of the Premises abandoned by Fischer, it provided storage for the Goods. It asserts the right to a lien against the Goods under the Illinois chattel lien law, which provides that "every person, firm, or corporation who has . . . furnished storage for [any] chattel, at the request of its owner, reputed owner, or authorized agent of the owner, or lawful possessor thereof, shall have a lien upon such chattel . . . ." Ill.Rev.Stat.Ch. 82, para. 40. Thus, GSC concludes that its sale of the Goods constituted the enforcement of a valid chattel lien, under Ill.Rev.Stat.Ch. 141, para. 3, which therefore amounted to neither a conversion, nor a breach of bailment.

 The Magistrate concluded that, as a matter of law, GSC was not a "lawful possessor," of the Goods as that term is used in Ch. 82, para. 40. Having determined that GSC was not a lawful possessor of the Goods, the Magistrate found further that, as a matter of law, GSC had no right to create a lien against the Goods under Ch. 82, para. 40. Finally, because GSC had no right to create a lien against the Goods, the Magistrate concluded that GSC's sale of the Goods constituted conversion of the Goods. Although the Magistrate found that GSC was not a ...


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