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AA Sales & Associates, Inc. v. Coni-Seal

June 26, 2007

AA SALES & ASSOCIATES, INC., PLAINTIFF,
v.
CONI-SEAL, INC., DEFENDANT.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Coni-Seal, Inc.'s ("Coni-Seal") motion for summary judgment. For the reasons stated below, we grant Coni-Seal's motion for summary judgment.

BACKGROUND

Plaintiff AA Sales & Associates, Inc. ("AA Sales") alleges that it is a sales representative for Coni-Seal, a manufacturer of automotive parts. AA Sales claims that it entered into a contract with Coni-Seal in 1987 ("1987 Contract") that established a commission-based payment system for accounts that were approved by Coni-Seal. AA Sales contends that the 1987 Contract states that Coni-Seal "agrees to pay AA Sales a commission of six (6) per cent on all products sold to approved accounts." (Comp. 19).

AA Sales contends that it began calling on AutoZone around 1994, and that, after many years of sales efforts, AutoZone bought products from Coni-Seal in 2004 for AutoZone's facilities in Mexico and the United States. In order to help secure the AutoZone business, AA Sales allegedly agreed to accept a reduced commission of three percent. AA Sales claims that it also began calling on Advance Auto Parts in the early 1990s, and that because of its efforts, Coni-Seal sold products to Advance Auto Parts in the late 1990s. In order to help secure the Advance Auto Parts business, AA Sales allegedly agreed to accept a reduced commission of four percent. Further, AA Sales contends that in the late 1990s, it agreed to a reduced commission on all other national accounts it had obtained for Coni-Seal in exchange for relief from responsibility of those accounts. In addition, AA Sales contends that in 1995, Coni-Seal and AA Sales entered into an agreement ("1995 Agreement") that called for AA Sales to receive a two percent "override" on sales by Coni-Seal to all Illinois customers and $1,700.00 per month for all sales from Coni-Seal to Unicor. In exchange for these payments, AA Sales would allegedly cease making sales calls in Illinois and to Unicor. AA Sales contends that Coni-Seal has not paid AA Sales any commissions on the AutoZone, Advance Auto Parts, and other accounts.

AA Sales brought the instant action and includes in the complaint a breach of contract claim (Count I), a claim alleging a violation of the Illinois Sales Representative Act ("ISRA"), 802 ILCS 120/1, et seq. (Count II), and a Declaratory Judgment Act, 28 U.S.C. § 2001, et seq., claim (Count III). Coni-Seal moves for summary judgment on all claims.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, 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 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).

DISCUSSION

I. Breach of Contract Claim (Count I)

Coni-Seal moves for summary judgment on the breach of contract claim. To establish a claim for breach of contract under Illinois law, a plaintiff must establish: "(1) the existence of a valid and enforceable contract; (2) the performance of the contract by plaintiff; (3) the breach of the contract by defendant; and (4) a resulting injury to the plaintiff." Priebe v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001) (citing Hickox v. Bell, 552 N.E.2d 1133 (Ill. App. Ct. 1990)); see Dawn Equip. Co. v. Micro-Trak Sys., Inc., 186 F.3d 981, 986-87 (7th Cir. 1999)(noting that in a diversity case we apply federal procedural law and state substantive law)(citing Erie R.R. v. Tompkins, 304 U.S. 64 (1938)). In the instant action, both Coni-Seal and AA Sales agree that a valid and enforceable contract existed. The parties disagree, however, on the interpretation of the 1987 Contract and whether Coni-Seal breached the 1987 Contract.

A. Contract Interpretation

Contract interpretation is particularly suited for disposition on summary judgment. Metalex Corp. v. Uniden Corp. of Am., 863 F.2d 1331, 1333 (7th Cir. 1988). Id. The first step in interpreting any contract is determining whether the contract is ambiguous. Whether or not an ambiguity exists in a contract is a question of law for the court to determine. Vill. of Glenview v. Northfield Woods Water & Utility Co., Inc., 576 N.E.2d 238, 244 (Ill. App. Ct. 1991). When determining whether a contract is ambiguous, the terms of the contract should be given their natural and ordinary meaning. Dribeck Importers, Inc. v. G. Heileman Brewing Co. Inc., 883 F.2d 569, 573 (7th Cir. 1989). A contract is intrinsically ambiguous, or internally unclear, when it is "reasonably and fairly susceptible to more than one meaning." The Home Ins. Co. v. Chicago and Northwestern Transp. Co., 56 F.3d 763, 768 (7th Cir. 1995)(quoting Lenzi v. Morkin, 452 N.E.2d 667, 669 (Ill. App. Ct. 1983)). A contract can also be extrinsically ambiguous if it is clear on its face but, when understood in the real-world context, anyone "would know that the contract means something other that what it seems to mean." Id. (citing AM Int'l, Inc. v. Graphic Mgmt. Assoc., Inc., 44 F.3d 572, 575 (7th Cir. 1995)).

When a contract is extrinsically ambiguous, only "objective" evidence is permissible, which is evidence "that can be supplied by disinterested third parties," such as evidence of custom or usage of the trade. AM Int'l, 44 F.3d at 575. "Subjective" evidence, which consists of the parties' testimony as to what they believe the contract means, is inadmissible because it is "invariably self-serving" and "inherently difficult to verify." Home Ins. Co., 56 F.3d at 768. Further, language in a contract is not deemed ambiguous simply because the parties disagree as to its meaning. Id. (citing Fed. Deposit Ins. Corp. v. W.R. Grace & Co., 877 F.2d 614, 621 (7th Cir. 1989)). When ...


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