United States District Court, N.D. Illinois, Eastern Division
August 5, 2004.
BRAD FOOT GEAR WORKS, INC. an Illinois corporation, Plaintiff-counterdefendant,
DELTA BRANDS, INC., a Texas corporation, Defendant-counterplaintiff.
The opinion of the court was delivered by: JAMES MORAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Brad Foote Gear Works, Inc. (BFG), brought this
action against Delta Brands, Inc. (Delta), claiming breach of
contract (Count I) and account stated (Count II). Plaintiff now
brings a motion for summary judgment. The motion is granted in
part and denied in part.
The following facts are taken from the plaintiff's statement of
uncontested fact and defendant's response to the
statement.*fn1 Defendant, a Texas corporation that uses
metalworking machinery, placed a series of orders with plaintiff,
a manufacturer of industrial gears located in Cicero, Illinois.
On January 21, 2000, defendant ordered two sets of loose gears.
After negotiations, the parties agreed defendant would pay
$187,000 for the gears. On February 24, 2000, plaintiff
acknowledged acceptance of the order, #188770, and stated the
terms of payment. Plaintiff shipped the gears to defendant on
June 7 and 13, 2000, along with two invoices, #3242 and #3243,
requesting the $187,700 due. Plaintiff sent an additional invoice to defendant on June 8, 2000, for $624.40, the cost of
freight charges for the order, which were not included on the
first invoice. Defendant made payments on these invoices from
2000 through 2002, though the parties disagree on how much
defendant paid. Plaintiff maintains that defendant paid $135,000,
leaving a balance of $52,700, plus the freight charges, while
defendant argues that plaintiff has disregarded a payment made in
February 2000 for $33,770. Delta contends that its balance is
Defendant placed two other orders in April 2000, which have
gone unpaid. On April 11, defendant ordered an enclosed drive
gear box for $7,020. The next day, plaintiff notified defendant
that it accepted purchase order #189301. Plaintiff shipped
defendant's order along with invoice #3182 on May 24, 2000. None
of the balance has been paid. On April 10, 2000, defendant placed
order #189260 for the manufacture of two other gear boxes, which
cost $29,000 each. Plaintiff acknowledged its acceptance of that
order on April 17, 2000, and then proceeded to create the
custom-designed parts for defendant. When plaintiff completed the
order at the end of July 2000, it sent defendant invoice #3628
and #3629, totaling $58,000. BFG informed defendant that the
gearboxes were ready, but given the company's failure to pay its
earlier bills, they would not be delivered until the invoices
were paid. Defendant asserts that the parties agreed that it
would not be charged for the manufactured parts until it needed
them, thus the invoices had been issued prematurely.
Over a year after Delta's last purchase order, its Director of
Business Operations, Porfirio Duron, wrote a letter to BFG's
president, J. Cameron Drecoll. In his letter Duron acknowledged
that Delta owed plaintiff $145,344.40 for orders already shipped
by BFG. Delta committed to making monthly payments of $25,000 per
month until this balance was paid. Duron also recognized that defendant owed plaintiff $58,000
pursuant to invoice #3628 and #3629, for items still held by BFG.
Defendant also agreed to pay off this balance, once it had
satisfied its other debts to BFG.
Our function in ruling on a motion for summary judgment is to
determine if there is a genuine issue of material fact for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If
the evidence on file shows that no such issue exists and that the
moving party is entitled to judgment as a matter of law we will
grant the motion. Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986); Bennett v. Roberts, 295 F.3d 687, 694 (7th
Cir. 2002). A "metaphysical doubt as to the material facts" is
not enough to create a genuine issue of fact for trial,
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 585 (1986); the evidence must allow for a reasonable
trier of fact to find for the non-movant. Buscaglia v. United
States, 25 F.3d 530, 534 (7th Cir. 1994). When reviewing a
motion for summary judgment, we draw all inferences in the light
most favorable to the non-movant. DeValk Lincoln Mercury, Inc.
v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir. 1987).
Defendant argues that plaintiff is not entitled to summary
judgment because there are genuine issues of material fact. In
declarations by Velinda Savariego, Executive Vice President of
Delta, she states that the balance owed to plaintiff is only
$18,930.80 and that Delta was not obligated to pay the $58,000
for invoice #3628 and #3629 until the company needed the parts.
She also states that Duron's letter of June 11, 2001, which
indicates otherwise is incorrect. Plaintiff concedes that
Savariego's affidavits raise issues of material fact as to the
claim for breach of contract, precluding summary judgment for
Count I. However, plaintiff contends that it does not create an issue of fact as to Count II for
Under Illinois law an account stated is "an agreement between
parties who have had previous transactions that the account
representing those transactions is true and that the balance
stated is correct, together with a promise, express or implied,
for the payment of such balance." W.E. Erickson Const., Inc. v.
Congress-Kenilworth Corp., 132 Ill.App.3d 260, 267,
477 N.E.2d 513, 519 (1st Dist. 1985); See Fabrica de Tejidos
Imperial, S.A. v. Brandon Apparel Group, Inc.,
218 F.Supp.2d 974, 978 (N.D.Ill. 2002). This agreement is often formed by
one party submitting a statement of account to another, who retains
the account beyond a reasonable time without objection. W.E.
Erickson Const., Inc., 132 Ill.App.3d at 267, 477 N.E.2d at 519;
Allied Wire Products., Inc. v. Marketing Techniques, Inc.,
99 Ill.App.3d 29, 40, 424 N.E.2d 1288, 1296-97 (1st Dist. 1981).
A failure to object to the account statement is viewed as a
recognition of its accuracy. Fabrica de Tejidos Imperial, S.A.,
218 F.Supp.2d at 979. As Judge Shadur recognized in Fabrica de
Tejidos Imperial, S.A., a claim for account stated is an
alternative theory for proving the damages asserted in a breach
of contract claim. Id.
Plaintiff is entitled to summary judgment on its account stated
claim. Defendant does not contest that Duron sent BFG a letter
dated June 11, 2001, summarizing Delta's remaining balance from
previous transactions and its intent to pay the amount due. The
letter also recognized Delta's obligation to pay invoice #3628
and #3629 for the gearboxes that were being held by plaintiff.
Plaintiff did not object to this assessment of defendant's
account, nor is there any evidence that Delta objected to its own
accounting within a reasonable time.
Defendant offers its Executive Vice President's affidavits as
evidence of a factual dispute. While her statements create a
question of fact regarding the amount due under the terms of the original agreements, they do not create a question
of fact as to whether there was an account stated. Her
statements, dated July 26, 2004, contesting the information in
Duron's letter do not serve as an objection within a reasonable
period of time to the statement of account offered by Delta.
Defendant provides no evidence that it objected to its
president's accounting within a reasonable time. Rather,
defendant admits that after it submitted the letter to BFG, it
made payments on its balance, $85,000 in total, as promised.
Furthermore, both the alleged oral agreement and the February
2000 payment, which defendant argues alter its liability,
occurred well before defendant summarized its obligation to BFG
and reaffirmed its commitment to pay the debt in other words,
they occurred before the parties created the account stated. As
this is a claim on an account stated, not on a breach of
contract, the original evidence regarding the amount of the debt
is not important. While an account stated does not create a
liability where none existed before, it does establish the amount
of a debt for a pre-existing liability. Pope County State Bank
v. U.G.I. Contracting Co., 265 Ill.App. 420 (4th Dist. 1932)
("An account stated cannot be made the instrument to create an
original liability; it merely determines the amount of the debt
where liability previously existed."); See Dick v. Zimmerman,
207 Ill. 636, 639, 69 N.E. 754, 756 (Ill. 1904) (An action for
account stated is founded, "not upon the original contract, but
upon the promise to pay the balance ascertained.") Defendant had
an obligation to plaintiff, and the extent of that obligation was
agreed upon in the account stated created by Delta's June 11,
2002 letter. CONCLUSION
For the foregoing reasons, plaintiff's motion for summary
judgment is granted as to Count II and denied as to Count I.