The opinion of the court was delivered by: RUBEN CASTILLO
Wisconsin Tool and Stamping Company ("Wisconsin Tool") has filed a Motion for Summary Judgment ("Motion") on Counts IV, XIII, XIV and XX of its Adversary Counterclaim and Third Party Complaint ("Counterclaim") against Raymomd A. Mobile ("Mobile") and R. Townley Rose, Jr. ("Rose"). Liability for the claims alleged, rather than damages, is the only issue raised by Wisconsin Tool. In addition, Wisconsin Tool and Robert Ernst ("Ernst"), an adversary counterdefendant, have filed Motions for Summary Judgment against Rocco Palmi ("Palmi") on Count I of Palmi's Amended Adversary Counterclaim ("Palmi's Counterclaim"). A trial date has been set for April 10, 1995. After review of the Motions, the Court finds that judgment on the issue of liability must be entered in favor Wisconsin Tool and against Rose and Mobile, because there are no issues of disputed fact on Counts IV, XIII, and XX of Wisconsin Tool's Counterclaim. Disputed issues of fact exist 'with respect to the agency issue alleged in XIV and summary judgment must therefore be denied. Wisconsin Tool's and Robert Ernst's Motions for Summary Judgment are also granted in favor of Wisconsin Tool and Ernst and against Palmi on Count I of Palmi's Counterclaim, as a matter of law.
The following facts are drawn from the parties' Joint Status Report and Wisconsin Tool's Statement of Material Facts as to which there is no genuine issue filed pursuant to United States District Court for the Northern District of Illinois Local Rule 12(M).
Wisconsin Tool is a 50 year old company in the metal stamping business. Wisconsin Tool purchases raw or processed metal from factories and warehouses and stamps and forms that metal so that it can be used by manufacturers and other companies. Robert Ernst is the President of Wisconsin Tool. Rocco Palmi is a former officer of Wisconsin Tool. Salem Mills is a former supplier of Wisconsin Tool. Rose and Mobile were the owners and principal officers of Salem Mills, a closely-held corporation, before its bankruptcy.
During the summer of 1988, Rose and Mobile initiated discussions with Robert Ernst, the President of Wisconsin Tool, to negotiate a contract for the purchase of metals.
The negotiations were successful and Wisconsin Tool began purchasing metals from Salem Mills. During 1989, Rose and Mobile began making payments to Palmi, which were not disclosed to Wisconsin Tool. In January 1990, Ernst met with Mobile and Rose, at their request. During this conversation, Rose and Mobile admitted that they were making payments to Palmi, initially paying Palmi $ 2,400.00 per month and later increasing the payments to $ 3,400.00, when demanded by Palmi. In addition, Rose and Mobile gave Palmi a turbocharger and other personal items. These payments and gifts totalled $ 36,564.27.
On February 22, 1990, Lawrence Goldsmith, the attorney and accountant for Salem Mills, issued a letter to Palmi., stating that Salem Mills had provided payments and gifts to Palmi, because they wished to retain Salem's business relationship with Wisconsin Tool.
(Ex. J). The letter also indicated that Salem intended to report the total amount of payments and gifts to the IRS on a 1099 form. The 1099 form is included in the record and confirms that payments were made in the amount of $ 36,564.27 (Ex. K). In late February 1990, a copy of the February 22, 1990, Goldsmith letter ("Goldsmith letter") was given to Robert Ernst. After receiving this letter, Palmi's employment relationship with Wisconsin Tool was terminated.
On March 7, 1990, Goldsmith issued a second letter to Wisconsin Tool's attorney, listing a breakdown of the compensation paid to Palmi in 1989. (Ex. L.).
Wisconsin Tool claims that Rose and Mobile caused Salem Mills to bribe Palmi to obtain and maintain Wisconsin Tool's business, and that Rose and Mobile engaged in other fraudulent conduct.
Rose and Mobile admit that some payments were made to Palmi, but claim that their motivation for making these payments was lawful. Rose claims that these payments were sales commissions for sales leads. (12(N) P 15. Mobile has admitted, under oath, that the payments were made to Palmi to avoid "our getting kicked out of Wisconsin Tool." (12(M) PP 13, 16). Palmi denies that he accepted bribes. (Palmi 12(N) P 2). Wisconsin Tool terminated its relationship with Salem Mills on August 30, 1990.
This case was originally filed by Salem Mills, Inc., in the Circuit Court of Cook County against Wisconsin Tool and Stamping Company ("Wisconsin Tool"). Following the bankruptcy of Salem Mills, the case was removed and assigned to the Bankruptcy Court. This case was then consolidated in the Bankruptcy Court with two other adversary proceedings that were referred from the District Court to the Bankruptcy Court. Those two adversary proceedings have now settled. On June 27, 1991, third-party defendants Rose and Mobile filed a Petition to Withdraw the Reference. On July 19, 1991, Judge Hart granted the Petition to Withdraw the Reference for a trial on the merits. Judge Hart then remanded the matter to the Bankruptcy Court for consolidation with related bankruptcy adversary proceedings, ruling upon all interlocutory orders, and the supervision of a final pretrial order.
All claims between Salem Mills and Wisconsin Tool were subsequently settled in a settlement approved by Judge Sonderby, the Bankruptcy Judge. Accordingly, the only claims remaining in the matter are: (1) a claim by Wisconsin Tool against Palmi., Rose, and Mobile under the RICO statute, with additional counts ("Adversary Counterclaim"); (2) a Counterclaim by Mobile against Wisconsin Tool, and (3) an Amended Adversary Counterclaim by Palmi against Wisconsin Tool and Robert Ernst. Motions for Summary Judgment have been filed by Wisconsin Tool on Counts IV, XIII, XIV and XX of its Adversary Counterclaim against Rose and Mobile, and by Wisconsin Tool and Robert Ernst on Count I of Palmi's Counterclaim. A trial date has been set for April 10, 1995.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1985). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there is no genuine issue of material fact." Id. at 248.
"The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. Factual disputes that are irrelevant or unnecessary are not material. Id.
"Summary judgment will not lie if the dispute about a material fact is "genuine," that is, if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986), Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). As stated in Anderson, "at the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." 477 U.S. at 249. "When a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial." Id. at 250. "There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Id. at 249. If the evidence is merely colorable, or is not significantly probative, or is no more than a scintilla, summary judgment may be granted. Id. at 249-250.
I. Wisconsin Tool's Motion For Summary Judgment
The undisputed facts essential to the resolution of Wisconsin Tool's Motion against Rose and Mobile are as follows: (1) Rose and Mobile gave Palmi cash, a turbocharger and other personal items worth $ 36,564.27 (12(M) P 13-16; Ex. J-K); (2) Mobile admits that he and Rose made payments to Palmi in order to maintain a business relationship with Wisconsin Tool (12(M) P 14); and (3) Rose and Mobile failed to disclose to Wisconsin Tool the payments made to Palmi until questioned by Ernst in 1990. (12(M) P 14).
The parties assert that the following facts are in dispute: (1) whether Rose made payments to Palmi for the purpose of maintaining a business relationship with Wisconsin Tool (as admitted by Mobile, his partner), or as sales commissions for sales leads (12(N) PP 15, 37); (2) whether the incriminating language in the Goldsmith letter can be used to attribute unlawful intent (regarding the Palmi payments) to Rose (12(N) P 17); (3) whether Wisconsin Tool relied on Palmi's support and affirmative promotion of Salem Mills during the contract, even though employees of Wisconsin Tool were critical of Salem Mills. (12(N) P 24; Aff. of Ernst, Ex. A, P 7; Aff. of Richard Simonds, Ex. B, P 5); and (4) whether Wisconsin Tool incurred damages as the result of the payments made to Palmi. (12(N) P 28-29).