the fact that Rose has denied that he made payments with this intent, he is liable, because the Goldsmith letter constitutes a constructive admission against interest which can be imputed to him, and is sufficient evidence of knowledge to meet the intent requirement.
Goldsmith's sworn testimony, after-the-fact, that Rose told him that the payments were "sales commissions,"
does not obviate the legal effect of the prior admission. Lastly, Rose's claim that he did not direct Goldsmith to include the incriminating language (i.e., the language regarding Rose's motivation), but merely provided the information regarding the fact of the payments and the amounts of those payments, is "self-serving" without any other factual support in the record.
Generally, "self-serving assertions without factual support in the record will not defeat a motion for summary judgment." Jones v. Merchants Nat'l Bank & Trust Co. of Indianapolis, 42 F.3d 1054 (7th Cir. 1994)(citing McDonnell v Cournia, 990 F.2d 963, 969 (7th Cir. 1993). This principle holds true even when the self-serving assertion is not contradicted by other testimony made by the declarant. See Darnell v. Target Stores, 16 F.3d 174, 177 (7th Cir. 1994)(citing Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir. 1993) and Miller v. A.H. Robins Co., Inc., 766 F.2d 1102, 1105 (7th Cir. 1985), for the proposition that "parties cannot thwart the purpose of Rule 56 by creating issues of fact through affidavits that contradict their own depositions."). These general statements leave unanswered the question which arises in every case, namely, what facts are sufficient to support an assertion made in a deposition? The answer to this question must be addressed on a case-by-case basis at the summary judgment stage. In this case, the undisputed facts are as follows. Rose and Mobile concealed the fact that they made payments to Palmi; they knew Palmi concealed this fact; Wisconsin Tool relied on Palmi's support and defense of Wisconsin Tool while Palmi was receiving payments; and Rose and Mobile made the payments for the purpose of inducing Wisconsin Tool to maintain its business relationship with Salem Mills. vis-a-vis Palmi. Given these facts, the Court finds that Rose's self-serving assertion is not supported by any evidence in the record other than the inconsistent statements by Goldsmith. Therefore, Rose's affidavit is insufficient to create a genuine issue of material fact, and summary, judgment on the issue of common law fraud liability must be entered against Rose and Mobile.
B. Count XIII: Breach of Fiduciary Duty
Under Illinois law, a third party who knowingly participates in or induces a breach of duty by an agent is liable to the third party to whom the duty was owed. Corroon & Black of Illinois, Inc. v. Magner, 145 Ill. App. 3d 151, 161, 98 Ill. Dec. 663, 668, 494 N.E.2d 785, 790 (1st Dist. 1986); Chicago Park District v. Kenroy, Inc., 78 Ill. 2d 555, 37 Ill. Dec. 291, 402 N.E.2d 181, (1980); A.T. Kearney, Inc. v. INCA International, 132 Ill. App. 3d 655, 87 Ill. Dec. 798, 477 N.E.2d 1326 (1st Dist. 1985); Village of Wheeling v. Stavros, 89 Ill. App. 3d 450, 44 Ill. Dec. 701, 411 N.E.2d 1067 (1st Dist. 1980). The third party must also obtain a benefit from the breach. Corroon, 145 Ill. App. 3d at 161, 98 Ill. Dec. at 668, 494 N.E.2d at 790.
In this case, Palmi acted as Wisconsin Tool's agent. Rose and Mobile acted as third parties. When Palmi accepted payments from Rose and Mobile without disclosing this fact to Wisconsin Tool, he breached his fiduciary duty of honesty and loyalty to Wisconsin Tool. See United States v. Lovett, 811 F.2d 979, 985 (7th Cir. 1987)(employee's acceptance of a "kickback" or other bribe constitutes fraud against the employer); United States v. George, 477 F.2d 508, 513 (7th Cir. 1973)(fraud consists of employee "holding himself out to be a loyal employee, acting in [the employer's] best interests, but actually not giving his honest and faithful services, to [the employer's] real detriment."). A fiduciary duty was breached because Wisconsin Tool's company policy prohibited its employees from accepting presents from a supplier, and Palmi knew of this policy. Mobile is liable because his admission indicates that he knowingly induced this breach for the purpose of maintaining a business relationship with Wisconsin Tool. Rose is liable because the Goldsmith letter constitutes a constructive admission against interest which can be imputed to him, and is sufficient evidence of knowledge to meet the intent requirement for inducement of a breach of fiduciary duty. Finally, the "benefit" Rose and Mobile obtained from the inducement of the breach was their ultimate retention of a business relationship with Wisconsin Tool. Summary judgment must therefore be entered against Rose and Mobile as a matter of law, since there is no genuine issue of material fact as to liability on Count XIII.
C. Count XIV: Subagency Theory
The subagency theory simply realigns the players in this case, substituting Salem Mills for Palmi, as Wisconsin Tool's agent, and labeling Rose and Mobile as subagents of Salem Mills, the corporate agent. On March 10, 1993, Judge Sonderby noted that if Salem Mills were held to be an agent of Wisconsin Tool, then defendants were also subagents of Wisconsin tool. In re Salem Mills, Inc., No. 91 A 74 (Bankr. N.D.Ill. March 10, 1993) at p. 27. citing, Restatement (Second) of Agency § 5 cmt. c, at p. 24 (1958). Salem Mills has claimed that it acted as the agent for Wisconsin Tool in purchasing metals. Wisconsin Tool has denied that Salem Mills was its agent or that any agency relationship was created. (WTS Answer at P 5 filed with Counterclaim). Wisconsin Tool argues, however, that if Salem Mills is an agent of Wisconsin Tool, then it should be liable for breach of a fiduciary duty to Wisconsin Tool. Count XIV alleges this claim in the alternative, arguing that "the same documented evidence that demonstrates Wisconsin Tool's claim for Tortious Inducement of Breach of Fiduciary Duty" by Palmi "also conclusively establishes that Wisconsin Tool is entitled to summary judgment on Count XIV of its Counterclaim." The Court disagrees.
An agent is "subject to tort liability to the principal for falling to perform his duties." Restatement (Second) of Agency Introduction to Chapter 13, at 171; see Restatement (Second) of Agency § 376 cmt. a. One of the duties an agent has is the duty of loyalty to the principal. See State Security Ins. Co. v. Frank B. Hall & Co., 258 Ill. App. 3d 588, 595, 196 Ill. Dec. 775, 781, 630 N.E.2d 940, 946 (1st Dist. 1994)("once an agency relationship is found, a fiduciary relationship arises as a matter of law"). A subagent will also be liable in tort if he violates his duty of loyalty to the principal. Restatement (Second) of Agency § 428 cmt. b. Rose and Mobile, as the principals of Salem Mills may be subagents. As subagents, Rose and Mobile would owe this same duty of loyalty (or fiduciary duty) to Wisconsin Tool. See Roscoe Company v. Lewis University, 79 Ill. App. 3d 1098, 35 Ill. Dec. 133, 398 N.E.2d 1083, 1085-1086 (1st Dist. 1979)(finding that employee of exclusive managing agent was a duly-appointed sub-agent, with authority to execute contracts binding the principal).
Salem Mills was arguably a purchasing agent of Wisconsin Tool, authorized to procure metals for Wisconsin Tool, rather than a broker. Assuming that Rose and Mobile were subagents with a fiduciary duty, Rose and Mobile breached their duty of loyalty and full disclosure by making undisclosed payments to Palmi. A.T. Kearney, Inc. v. INCA International, 132 Ill. App. 3d 655, 661-661, 477 N.E.2d 1326-62, 87 Ill. Dec. 798, 804 (1st Dist. 1985) (company hired to supervise relocation of plaintiff's office, breached its fiduciary duty when it presented only one construction bid to plaintiff from a company in which the agent had an interest): Beaton & Assoc. v. Joslyn Mfg. & Supply Co., 159 Ill. App. 3d 834, 111 Ill. Dec. 649, 512 N.E.2d 1286 (1st Dist. 1987) (independent consultant breached fiduciary duty to his principal by accepting a secret referral fee from another consultant he recommended to his principal). However, determination of whether Salem Mills, and thus Rose and Mobile, were agents and subagents, (respectively) of Wisconsin Tool, is a question of fact. Frank B. Hall & Co., 258 Ill. App. 3d 588 at 595, 196 Ill. Dec. 775, 630 N.E.2d 940 (finding evidence at trial insufficient to establish that defendants were agents, with fiduciary duties, rather than brokers or that a fiduciary relationship arose through the existence of special circumstances); Blocklinger v. Schlegel, 58 Ill. App. 3d 324, 15 Ill. Dec. 883, 374 N.E.2d 491, 493 (3rd Dist. 1978)(multiple listing agreement did not create fiduciary relationship between realtor and seller); Lageschulte v. Steinbrecher, 36 Ill. App. 3d 909, 344 N.E.2d 750, 755 (Hayes, J., concurring). In addition, determination of whether a defendant is an agent is based on conduct rather than a job title. Frank B. Hall & Co., 258 Ill. App. 3d at 595. The parties have failed to provide the Court with the undisputed facts necessary to make this determination. Rather, the parties (taking alternative postures in order to avoid summary judgment on this issue) merely argue the law. The Court cannot grant Wisconsin Tool's Motion without an undisputed factual basis from which to conclude that Salem Mills was, in fact, an agent of Wisconsin Tool. Salem Mills' argument that it acted as an agent is not a sufficient factual basis. Therefore, summary judgment must be denied on Count XIV.
C. Count XX: Illinois Consumer Fraud Act
Wisconsin Tool has alleged that the fraudulent acts of Rose and Mobile violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"). 815 ILCS 505/1 et seq. The Consumer Fraud Act prohibits:
Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact . . . in the conduct of any trade or commerce. . . .
815 ILCS 505/2.
Wisconsin Tool correctly argues that a Consumer Fraud Act claim is subsumed by a common law fraud claim provided the fraud occurred in the course of conduct involving trade or commerce. Siegel v. Levy Org'n Dev., 153 Ill. 2d 534, 180 Ill. Dec. 300, 304, 607 N.E.2d 194 (1992)(Illinois Supreme Court stated that if summary judgment were granted on a common law fraud claim then judgment should have also been entered on Consumer Fraud Act claim provided the deceptive act occurred in the course of conduct involving trade or commerce). The Court has concluded that Wisconsin Tool is entitled to summary judgment on its common law fraud claim in Count IV of the Counterclaim. Therefore, Wisconsin Tool is also entitled to judgment on the Illinois Consumer Fraud Act claim under the auspices of Siegel.
II. Robert Ernst's Motion For Summary Judgment
Robert Ernst ("Ernst"), a counterdefendant in this case and the President of Wisconsin Tool, has filed a Motion for Summary Judgment on Count I of the Amended Adversary Counterclaim of Rocco Palmi, the former Executive Vice President of Wisconsin Tool. In Count I, Palmi asserts that Ernst and Wisconsin Tool defamed him by publishing or causing the publication of the Goldsmith letter and the statements contained in that letter to Wisconsin Tool employees and co-workers. Palmi then alleges that he incurred damage due to the alleged publication by Ernst and Wisconsin Tool.
To establish a claim for defamation, the plaintiff must allege sufficient facts to show that the defendant "made a false statement concerning him, that there was an unprivileged publication to a third party with fault by the defendant, which caused damage to the plaintiff." Krasinski v. United Parcel Service, Inc., 124 Ill. 2d 483, 125 Ill. Dec. 310, 530 N.E.2d 468, 471 (1988). To prove publication the plaintiff must show that, "the defamatory statements were communicated to some person other than plaintiff." Pandya v. Hoerchler, 256 Ill. App. 3d 669, 195 Ill. Dec. 576, 628 N.E.2d 1040, 1043 (1st Dist 1993).
Wisconsin Tool argues that the undisputed facts prevent Palmi from establishing a defamation claim. First, in his deposition Palmi could not identify any person to whom Ernst made a disparaging or false statement about Palmi. (12(M) P 4). Second, Palmi cannot identify any statement made about him by Robert Ernst, Richard Simonds, or any other officer of Wisconsin Tool or any other employee of Wisconsin Tool. (12(N) P 5). The elements of damage are disputed by Palmi, but the only "damage" Palmi alleges is the termination of his employment with Wisconsin Tool, once Salem Mills provided Ernst with the 1099 tax form reporting payments made to Palmi during the course of Palmi's employment. Damage is only an issue, however, if Palmi can prove the other elements of the defamation claim. For the reasons which follow, the Court finds that Palmi has failed to meet his burden on summary judgment by coming forward with admissible evidence which would enable a reasonable jury to find in his favor on the elements of falsity and publication.
Palmi claims that Ernst participated in causing the tax form and cover letter to be issued, and is liable for the defamatory contents of those documents and the damage caused by their publication.
Although Goldsmith testified in his deposition that Ernst initiated a telephone call to Goldsmith, stating that Rose and Mobile had met with Ernst then asked him whether he had prepared any letters to Mr. Palmi regarding the payments or the 1099 tax form. Goldsmith then testified that he told Ernst that he was drafting "something". According to Goldsmith, Ernst then asked Goldsmith for a copy, Goldsmith refused, and Ernst indicated that he would obtain a copy from Salem Mills directly. (Goldsmith Dep. at 640-41). Goldsmith also testified that he believed that Salem Mills had a conversation with Ernst regarding the draft of the cover letter and that changes were made to Goldsmith's draft. (Goldsmith Dep. at 641).
The tax form and cover letter claiming payments were made by Salem Mills to Rocco Palmi impute the commission of crime and are libelous per se. Fried v. Jacobson, 99 Ill. 2d 24, 75 Ill. Dec. 398, 457 N.E.2d 392 (1983); Weber v. Village of Hanover Park, 768 F. Supp. 630 (N.D.Ill. 1991). Palmi then notes that "the very words of the cover letter, 'compromise business ethics,' recognize that integrity in performing the duties of employment is at issue." (Ex. J). Words imputing fitness for or misconduct or criminal acts in office or employment are also defamatory per se. Fried, 99 Ill. 2d at 28. If Ernst was responsible for the content of these statements, if these statements were published to others and if those statements are false, then Ernst may be liable for defamation. However, Palmi offers no evidence, except his own self-serving denial that he received payments from Rose and Mobile, to support the element of falsity in his defamation claim.
Palmi also claims that the tax form and cover letter were published by Ernst "to enough key people at Wisconsin Tool to result in Palmi being fired." It is true that communication to employees that another employee was dismissed for reasons related to integrity or criminal activity is sufficient to meet the requirements of publication. Jones v. Britt Airways, Inc., 622 F. Supp. 389, 391-92 (N.D.Ill. 1985). Palmi then notes that although the 1099 form was directed to the IRS and the cover letter was directed to Palmi, Ernst received copies of these forms. Palmi has not sued Goldsmith for publishing information to Ernst. Rather, Palmi claims that Ernst is liable for defamation, because he was responsible for publishing these documents to other Wisconsin Tool employees. Palmi has not offered any evidence to support this claim, except his own affidavit. (Palmi Aff. P 13). The allegations in Ernst's affidavit are conclusory and self-serving, without a factual basis in the record to support Palmi's claims.
For these reasons, the Court grants Ernst's Motion for Summary Judgment on Count I of Palmi's Adversary Counterclaim.
For the reasons given above, Wisconsin Tool's Motion for Summary Judgment on Counts IV, XIII, and XX is granted (# 43-1). Wisconsin Tool's Motion for Summary Judgment is denied on Count XIV, because the issue of agency is a question for the trier of fact, The Clerk of the Court is therefore directed to enter judgment in favor of Wisconsin Tool on Counts IV, XIV, and XX and against Rose and Mobile. In addition, Wisconsin Tool's Motion for Summary Judgment (# 42-1) and Robert Ernst's Motion for Summary Judgement (# 46-1) is granted on Count I of Rocco Palmi's Adversary Counterclaim. The Clerk of the Court is therefore directed to enter judgment against Palmi and in favor of Wisconsin Tool and Ernst on Count I of the Adversary Counterclaim. Ernst's Motion to Strike Portions of Palmi's 12(N) Statement and Portions of the Affidavit In Support is denied as moot (# 62-1). In addition, the Court directs the Clerk of the Court to enter an Order withdrawing the Reference from Bankruptcy Judge Sonderby.
The parties are ordered to submit a Final Pretrial Order on April 7, 1995 at 12:00 P.M., at which time this Court will conduct a Final Pretrial Conference to ensure that the trial on the remaining issues in this case will be conducted in a fair and efficient manner. The parties are also directed to familiarize themselves with the Court's written procedures for trials.
United States District Judge
March 16, 1995.