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TRUSERV CORPORATION v. FLEGLES INC.

July 21, 2004.

TRUSERV CORPORATION f/k/a COTTER & COMPANY, Plaintiff,
v.
FLEGLES INC, d/b/a FLEGLES TRUE VALUE HOME CENTER and ALICE MAE FLEGLE, Defendants.



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on defendants' Flegles, Inc. and Alice Mae Flegle's (collectively "Defendants") motion for reconsideration. Additionally, before this court is Plaintiff TruServ Corporation's ("TruServ") motion for summary judgment. For the reasons stated below we deny Defendants' motion for reconsideration. TruServ's motion for summary judgment as to Count I and III are granted. In addition, we deny TruServ's motion for summary judgment as to Count II and dismiss Count II as moot. BACKGROUND

In 1948, TruServ was originally organized under the name Cotter & Company. In 1997, Cotter & Company changed its name to TruServ. Presently, TruServ is a nationwide hardware store cooperative which supplies goods and services to True Value hardware stores ("Members"). TruServ's principal place of business is Chicago, Illinois. Since at least 1976, Flegles, a Kentucky corporation, has owned and operated a TrueValue hardware store in Kentucky. Flegles has been a Member of Cotter & Company and/or TruServ since that time and until February 18, 2003 when TruServ terminated Flegles' membership.

  On February 12, 2003, Flegles filed suit against TruServ in Carlisle Circuit Court in Kentucky. Flegles claims that TruServ made fraudulent misrepresentations to Flegles to induce Flegles to continue as a member. Specifically, Flegles alleges that from 1997 to 2000 Flegles relied on misrepresentations made by TruServ in making the decision to greatly expand Flegles' store. Flegles claims that TruServ fraudulently concealed losses of over $131 million. Flegles also claims that TruServ made misrepresentations in order to induce Flegles to forego redemption payments on its member shares. In the Kentucky state court action Flegles is seeking a declaratory judgment, declaring agreements between TruServ and itself null and void thus relieving Flegles of its obligation to pay its debts. Flegles also brought claims of fraud and breach of contract.

  After Flegles filed the lawsuit in Kentucky, TruServ terminated Flegles' membership in TruServ. TruServ contends that it provided Flegles with merchandise and services and Flegles has refused to pay for them. TruServ accuses Flegles of manufacturing the misrepresentation claims in order to file the action in Kentucky state court despite the fact that the parties had an agreement containing a forum selection clause to proceed in Illinois. TruServ also accuses Flegles of adding an additional plaintiff to the Kentucky case that serves no purpose other than to destroy diversity jurisdiction and prevent TruServ from removing the Kentucky case to federal court.

  In the Kentucky state court case TruServ moved to dismiss based on a forum selection clause in agreements between TruServ and Flegles. On March 20, 2003, the state court judge denied the motion to dismiss, finding that the forum selection clause is unreasonable and that it should not be enforced.

  On May 16, 2003, TruServ filed the instant action in which TruServ seeks to recover for a breach of contract between TruServ and Flegles and also seeks to enforce personal guarantees signed by Alice Mae Flegle.

  Previously, Flegles had filed a motion to dismiss or in the alternative to stay proceedings in this case arguing that this court should decline to exercise its jurisdiction based on the doctrines of abstention and comity in light of the prior proceedings in Kentucky state court. On November 24, 2003, in a memorandum opinion, we denied that motion.

  Defendants have now filed a motion seeking reconsideration of our November 24, 2003 ruling and request that in the alternative we grant certification for an interlocutory appeal. In addition, TruServ has filed a motion for summary judgment.

  LEGAL STANDARDS

  I. Motion For Reconsideration

  A motion for reconsideration may be brought "to correct manifest errors of law or fact or to present newly discovered evidence." Caisse Nationale de Credit Agricole v. CBI Indus., 90 F.3d 1264, 1270 (7th Cir. 1996). Such motions cannot be used as a "vehicle to produce new evidence that could have been" produced earlier" or as a vehicle to reargue the same arguments presented to the court on a prior occasion. Id.

  II. Motion For Summary Judgment

  Summary judgment is appropriate when the record reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In seeking a grant of summary judgment the moving party must identify "those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations or denials in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp, 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty ...


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