United States District Court, N.D. Illinois, Eastern Division
July 21, 2004.
TRUSERV CORPORATION f/k/a COTTER & COMPANY, Plaintiff,
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
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.
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 Lobby, Inc., 477 U.S. 242, 248
(1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th
Cir. 2000). The court must consider the record as a whole, in a
light most favorable to the non-moving party, and draw all
reasonable inferences that favor the non-moving party.
Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co.,
212 F.3d 969, 972 (7th Cir. 2000).
I. Motion For Reconsideration
Defendants argue that there is new information that the court
was not aware of when it made its ruling on November 24, 2003.
Defendants contend that in October of 2003 Defendants had taken eight depositions and that the
parties in the Kentucky action have exchanged extensive amounts
of discovery. Defendants argue that a trial is set in the
Kentucky proceedings on July 26, 2004 and that the Kentucky
proceedings are much further along than the instant proceedings.
First of all this information is not a significant alteration of
the circumstances that would warrant an alteration of our
findings. Secondly, it comes of no surprise that Defendants have
sought to move the Kentucky action along as quickly as possible
in order to strengthen their argument that all claims should be
resolved in Kentucky. It is clear from the record that Defendants
engaged in a race to the courthouse in an attempt to nullify the
effect of the forum selection clause. Also, the progress of the
Kentucky proceedings relates only to one of ten factors to be
considered by the court and thus, Defendants' assertion that one
factor of ten is a little more in their favor than before is
inappropriate at this juncture because motions of reconsideration
are reserved for allegations of manifest error of law, which has
not occurred here. Defendants have presented arguments regarding
the factors we discussed in our November 24, 2003 decision as to
the issue of inconvenience of the federal forum. However, all of
the arguments either were already presented to the court or
should have been presented to the court in conjunction with
Defendants' motion to dismiss and therefore are inappropriate for
a motion for reconsideration. A motion for reconsideration is not
an opportunity to present the same arguments to the court to see
if the court will change its findings the second time around.
Defendants' arguments on this issue are overreaching and completely without merit. Defendants again seek
to mesh the issues of the instant action with the issues in the
Kentucky proceedings. However, the issues are not the same.
TruServ does not seek in the instant action to attack the rulings
by the Kentucky court in any way. Another factor that we
discussed in our earlier decision was in regards to avoiding
piecemeal litigation, Defendants offer no new arguments, but
simply suggest that we reconsider this factor. Again, Defendants
would do well to review the law in regards to the proper reasons
for bringing a motion for reconsideration. Such reasons are
entirely absent from the briefs presented by Defendants in
regards to the instant motion. As we stated in our prior ruling
we have an obligation to exercise our jurisdiction and it would
be unfair if Defendants were able to race to the Kentucky
courthouse, knowing that they agreed to resolve the issues in the
instant action outside of Kentucky. In such a context,
Defendants' arguments that the claims in the instant action
should be resolved in Kentucky for the good of the judicial
system in order to avoid piecemeal litigation ring hollow.
Defendants have also filed a motion for certification of an
interlocutory appeal. However, such motion is moot at this
juncture inasmuch as we have granted TruServ's motion for summary
judgment and there is now a final appealable judgment.
TruServ has also made a request for an award of costs in
connection with responding to the motion for reconsideration. We
deny the motion for costs without prejudice. If TruServ wishes to
request costs it must do so in a separate and more detailed motion.
II. Motion For Summary Judgment
TruServ has filed a motion for summary judgment. For the
reasons stated below, we grant TruServ's motion for summary
judgment on Count I and III. In addition, we deny TruServ's
motion for summary judgment as to Count II and dismiss Count II
A. Breach of Contract Claim (Count I)
TruServ maintains that on or about January 20, 2000, TruServ,
as a company, and Flegles, as a retail member, entered into a
written agreement entitled "Retail Member Agreement with TruServ
Corporation an Independent Retailer Cooperative" ("Member
Agreement"). (Pl.'s Ex. 1; Pl.'s Rule 56.1 ¶ 9) According to
TruServ, the Member Agreement governed the relationship between
TruServ and Flegles and allowed Flegles, as a retail member, to
purchase merchandise and services from TruServ for amounts stated
in the member's statements of accounts ("Members Statements") for
Flegles. According to the terms of the Member Agreement, it was
agreed to by TruServ and Flegles that Illinois law would govern
the Member Agreement. (Pl.'s Ex. 1; Pl.'s Rule 56.1 ¶ 12).
TruServ contends that Flegles has breached the Member Agreement.
To establish a claim for breach of contract under Illinois law,
a plaintiff must establish that: (1) a valid and enforceable contract existed, (2)
the plaintiff performed on the contract, (3) the defendant
breached the contract; and (4) a resulting injury to the
plaintiff occurred. Priebe v. Autobarn, Ltd., 240 F.3d 584, 587
(7th Cir. 2001).
1. Valid and Enforceable Contract
Under Illinois law, a valid contract "must contain offer,
acceptance, and consideration." See Voelker v. Porsche Cars
North America, Inc. 353 F.3d 516, 528 (7th Cir. 2003).
Defendants have not contested the validity of the Member
Agreement, but have instead refused to admit or deny that the
Member Agreement governs the relationship between TruServ and
Flegles. Defendants have repeatedly stated that "the
enforceability of the Member Agreement is subject to the claims
asserted in the prior pending Kentucky action." (Def.'s Resp. to
Pl.'s Summ. J. p. 2; Def.'s Resp. to Rule 56.1 ¶'s 9-12, 24)
This court, in a November 24, 2003 Memorandum Opinion, has
already found that the issues in the pending Kentucky action and
the issues in this case are not identical and are not
overlapping. Because Defendants have not properly responded to
TruServ's assertion as to the validity of the Member Agreement,
the court will construe their responses as admissions that the
Member Agreement is valid and enforceable. See Jankovich v.
Exelon Corp., 2003 WL 260714, at *5 (N.D. Ill. 2003) (indicating
that evasive denials that do not directly oppose an assertion are
improper and thus the contested fact is deemed to be admitted pursuant to Local Rule 56.1).
The Member Agreement contains an offer, an acceptance, and
adequate consideration inasmuch as the Member Agreement is a
signed document that expresses an intention between TruServ and
Flegles to enter into an agreement in which Flegles agreed to
purchase, and TruServ offered to sell, merchandise and services
from TruServ. Therefore, no reasonable trier of fact could find
that there is not a valid and enforceable contract between
TruServ and Flegles.
According to TruServ, while Flegles was a Member, TruServ
provided or caused to be provided merchandise and services to
Flegles for amounts stated in the Flegles Members Statements. In
addition, TruServ also contends that it advanced funds to Flegles
by issuing credits to the Flegles Members Statements for the
purpose of assisting Flegles to make improvements to its retail
store. Defendants admit that TruServ provided and Flegles
accepted the merchandise, advances, and services which are the
subject of the Members Statements. (Def.'s Resp. to Pl.'s
Rule 56.1 ¶ 18) Therefore, no reasonable trier of fact could find that
TruServ did not perform its obligations under the Member
The Member Agreement provides in part: (1) that Flegles is
obligated to pay on the date due all invoices on accounts receivable statements
and any other financial obligations to TruServ; and (2) that upon
Flegles' termination as a retail member, Flegles agrees to pay
immediately all amounts due or to be due from Flegles to TruServ.
(Pl.'s Ex. 1; Pl.'s Rule 56.1 ¶'s 10-12).
Defendants acknowledge that TruServ demanded payment from
Flegles and submitted a demand letter to Flegles dated November
13, 2002. (Def.'s Resp. to Pl.'s Rule 56.1 ¶ 20). Defendants also
admit that Flegles has refused to pay for the merchandise,
advances, and services that TruServ provided or caused to be
provided. (Def.'s Resp. to Pl.'s Rule 56.1 ¶ 19) On February 18,
2003, TruServ terminated Flegles Membership for nonpayment.
Defendants admit that Flegles has refused and continues to refuse
to pay TruServ for any debt TruServ alleges Flegles owes. (Def.'s
Resp. to Pl.'s Rule 56.1 ¶ 21).
Therefore, no reasonable jury could find that Flegles has not
breached the Member Agreement and is not indebted to TruServ.
TruServ has not been paid for the merchandise, advances, and
services that TruServ provided or caused to be provided to
Flegles. Therefore, no reasonable trier of fact could not find
that as a result of Flegles breach of the Member Agreement,
TruServ has been injured.
Therefore, no reasonable trier of fact could find against
TruServ for a claim of breach of contract under Illinois law. Therefore, we grant the
motion for summary judgment on Count I.
B. Account Stated Claim (Count II)
TruServ moves for summary judgement on Count II of it's
Complaint on an account stated claim. An account stated is
defined as "an agreement between parties who have had previous
transactions that the account representing those transaction is
true and the balance stated is correct, together with a promise,
express or implied, for the payment of such balance." Dreyer
Med. Clinic, S.C. v. Corral, 227 Ill. App.3d 221, 226 (Ill.App.
Ct. 1992). Under Illinois law, an account stated claim "is merely
a form of proving damages for the breach of a promise to pay on a
contract" and "cannot be made the instrument to create an
original liability." See id. (citing Sexton v. Brach,
124 Ill. App.3d 202, 205 (Ill.App. Ct. 1984)) Because an account
stated claim is only a form of proving damages and cannot be used
to establish liability, the court finds that TruServ's attempt to
establish Flegles' liability under an account stated claim is not
proper. Therefore, we deny TruServ's motion for summary judgment
as to Count II and dismiss Count II as moot.
C. Breach of Personal Guaranties Claim (Count III)
On March 25, 1976, May 4, 1976, and December 13, 1982, Alice
Mae Flegle ("Ms. Flegle") the Guarantor, executed three separate
guaranty agreements ("Guaranty Agreements") in favor of Cotter & Company (n/k/a
TruServ), the Guaranties. The Guarantee Agreements provide that
Illinois law governs the terms of the Guaranty Agreements. In the
Guaranty Agreements, Ms. Flegle guaranteed to TruServ the payment
"of any indebtedness or balance of any past, present, or future
indebtedness. . . ." that Flegles owed to TruServ. (Pl.'s Ex. 7)
TruServ maintains that Ms. Flegle has breached her duty as the
Guarantor and seeks to enforce the Guarantee Agreements.
1. The Guarantee Agreements are valid and enforceable
A guaranty agreement is considered a contract under Illinois
law. See AAR Aircraft & Engine Group, Inc. v. Edwards,
272 F.3d 468, 470 (7th Cir. 2001) (citing McLean County Bank v. Browkaw,
519 N.E.2d 453, 456 (Ill. 1998)) (stating that in contracts of
guaranty the rules of construction of contracts will generally
apply). A valid contract "must contain offer, acceptance, and
consideration." See Voelker, 353 F.3d at 528. The Guarantee
Agreements executed by Ms. Flegle each contain an offer by Ms.
Flegle to guarantee the payment of any indebtedness that Flegles
may owe to TruServ in consideration for any credit extended by
TruServ to Flegles. The Guarantee Agreements clearly include an
offer, acceptance, and consideration between the parties.
Therefore, no reasonable jury could find that the Guarantee
Agreements executed by Ms. Flegle in favor of TruServ are not
valid and enforceable contracts. 2. Ms. Flegle's Liability Under the Guarantee Agreement
Guaranty agreements should be "[i]nterpreted in accordance with
their clear and unambiguous meaning." Chrysler Credit Corp. v.
Marino, 63 F.3d 574, 577 (7th Cir. 1995). The Guarantee
Agreements executed by Ms. Flegle guaranteed to TruServ the
payment "of any indebtedness or balance of any past, present, or
future indebtedness. . . ." that Flegles may owe to TruServ. Ms.
Flegle argues that there is an issue as to what debt obligations
she is liable for under the Guarantee Agreements. However, Ms.
Flegle's argument is without merit because the unambiguous and
plain language of the Guaranty Agreements state that Ms. Flegle
guarantees the payment of "any indebtedness" that Flegles may owe
to TruServ. See id. (rejecting arguments made by a defendant
that were designed to "subvert the guaranty's clear meaning");
see also Much v. Pacific Mut. Life Ins. Co., 266 F.3d 637, 643
(7th Cir. 2001) (explaining that the plain language of a contract
will control where no ambiguity exists). Therefore, no reasonable
jury could find that under the Guarantee Agreements executed by
Ms. Flegle, Ms. Flegle is not liable for any indebtedness Flegles
may owe to TruServ.
In Illinois, a guarantor "[i]s not discharged unless the
essentials of the original contract have been changed and the
performance required of the principal is materially different
from that first contemplated." See Grundstad v. Ritt,
166 F.3d 867, 870 (7th Cir. 1999) (citing Essex International v.
Clamage, 440 F.2d 547, 550 (7th Cir. 1971). When Ms. Flegle
entered into the Guarantee Agreements she guaranteed the payment of any indebtedness that Flegles may owe
to TruServ in consideration for any credit extended by TruServ to
Flegles. In this case, we earlier concluded that no reasonable
trier of fact could find that Flegles is not indebted to TruServ.
In addition, the essentials of the Member Agreement and the
performance required by Flegles under the Member Agreement are
not materially different from what Ms. Flegle guaranteed when she
originally executed the Guarantee Agreements. Therefore, no
reasonable jury could find that Ms. Flegle, as the Guarantor, is
not liable for Flegles' indebtedness to TruServ based upon the
Guarantee Agreements she executed.
3. Breach of Guaranty Agreement
TruServ, in accordance with the Guarantee Agreements, demanded
payment from Ms. Flegle as Guarantor. (Def.'s Resp. to Pl.'s
Rule 56.1 ¶ 36) Ms. Flegle has failed to pay TruServ for Flegles' debt
to TruServ. Therefore, no reasonable jury could find that Ms.
Flegle has not breached her duty as a Guarantor under the
Therefore, we grant the motion for summary judgment on Count
Based on the foregoing, we grant TruServ's motion for summary
judgment on Count I and III. In addition, we deny TruServ's
motion for summary judgment as to Count II and dismiss Count II as moot.
TruServ has sought damages in the sum of $78,627.04 plus costs,
interest, and attorneys' fees. However, the parties have not
sufficiently briefed the damages issue including any applicable
setoffs, attorneys' fees, and costs. Therefore, we order TruServ
to submit a brief in support of its request for damages on or
before August 4, 2004. Defendants are ordered to submit their
answer brief on or before August 18, 2004. TruServ is ordered to
submit its reply on or before August 25, 2004.
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