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Comm 2000, LLC v. Southwestern Bell Mobile Systems

June 29, 2009

COMM 2000, LLC D/B/A COMM ONE SYSTEX OF OHIO, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY; AND WIRELESS CENTRAL, INC. D/B/A COMM ONE, AN ILLINOIS CORPORATION, PLAINTIFFS,
v.
SOUTHWESTERN BELL MOBILE SYSTEMS, LLC D/B/A CINGULAR WIRELESS, A SUCCESSOR TO SOUTHWESTERN BELL MOBILE SYSTEMS, INC. D/B/A CELLULAR ONE -CHICAGO AND AMERITECH WIRELESS COMMUNICATIONS, INC., DEFENDANT.



The opinion of the court was delivered by: James B. Zagel United States District Judge

Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

I. BACKGROUND

Defendant and Counterplaintiff Cingular Wireless ("Cingular") has moved for summary judgment on all counts of Plaintiff and Counterdefendant Comm One Systex of Ohio, LLC ("Comm One") and Wireless Central, Inc.'s ("Wireless") complaint, which are: (1) breach of contract with Comm One; (2) breach of contract with Wireless; (3) fraud against Comm One; and (4) fraud against Wireless. Cingular also moves for summary judgment on its counterclaim for breach of contract against both Counterdefendants. For the following reasons, Cingular's Motion for Summary Judgment is granted.

II. PRELIMINARY ISSUES

"Local Rule 56.1(a)(3) requires a movant to submit a statement of undisputed material facts that, according to the movant, entitles that party to judgment as a matter of law." Malec v. Sanford, 191 F.R.D. 581, 583 (N.D. Ill. 2000). According to the rule, the statement "shall consist of short numbered paragraphs," each of which specifically refers to affidavits, parts of the record, and other material in support of the fact set forth therein. Local Rule 56.1. Defendant has complied with this requirement.

Local Rule 56.1(b)(3)(B) requires the opposing party to file "a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon." Pursuant to Rule 56.1(b)(3)(C), the non-movant should also file its own statement of additional facts that require the denial of summary judgment, including references to supporting material. Just as the movant's statement, the non-movant's statement should consist of short numbered paragraphs.

Plaintiffs, in their response, explain that they have objections to Defendant's Local Rule 56.1 Statement of Uncontested Facts, and state that their responses will be addressed separately. However, Plaintiffs include neither their response to Defendant's 56.1 statement, nor a statement of additional facts pursuant to Rule 56.1(b)(3)(C). According to Rule 56.1(b)(3)(C), "[a]ll material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the statement of the opposing party."

This rule may be the most important litigation rule outside statutes of limitation because the consequences of failing to satisfy its requirements are so dire. Essentially, the penalty for failing to properly respond to a movant's 56.1(a) statement is usually summary judgment for the movant (at least if the movant has done his or her job correctly) because the movant's factual allegations are deemed admitted.

Malec, 191 F.R.D. at 583-584. The Seventh Circuit has consistently upheld strict enforcement of Rule 56.1. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009). Because Plaintiffs have failed to respond to Defendant's 56.1(a) statement of fact, Defendant's factual allegations are deemed admitted.

III. STATEMENT OF RELEVANT FACTS

Plaintiffs in this case are companies that were authorized sales agents of Defendant Cingular, a cellular phone company. Prior to 2000, Plaintiff Wireless owned and operated stores primarily in Illinois and the Gary, Indiana area, and was an exclusive reseller of Cingular phones and service. The stores purchased equipment from Cingular in order to perform their obligations. These purchases were governed by an Equipment Distribution Agreement. In late 1999, Edward Garcia, president of Wireless, began discussions with Cingular with an aim to expand operations to Ohio. It was Cingular's understanding that Garcia would merge his Illinois entities into a newly incorporated entity, Comm 2000, and that a Regional Agreement for Illinois and Ohio would be entered into by Comm 2000.

On May 31, 2000, Garcia, on behalf of Comm 2000, executed a Cellular Service Sales Agreement with Cingular ("the Cleveland Agreement"), as well as an Equipment Distribution Agreement. The Cleveland Agreement allowed Cingular to freely compete with the agent. Cingular could sell wireless service "directly, or indirectly, by any means, throughout the service area." Another provision allowed Cingular to offset or deduct all amounts owed to it by the agent from any amounts it owed to the agent. The off-setting provision applies to amounts accrued pursuant to any agreement between the agent and Cingular, including Equipment Distribution Agreements. The Equipment Agreement itself contained a similar off-setting provision, and Cingular also reserved the right to require payment in advance or cash on delivery. Both the Cleveland Agreement and Equipment Agreement contained an integration clause stating that it set forth the entire relationship between the parties and could be modified only by writing signed by both parties.

In February of 2002, Garcia's operations in Ohio took a turn for the worse. As a result, he executed a personal guarantee and promissory note in the amount of $400,000 to further secure Comm One's equipment balance. Over time, the debt to Cingular grew, and at one point Comm One owed Cingular $763,000 for equipment. In response, Cingular informed Garcia that it was exercising its offset rights in accordance with the agreements, and that equipment purchases were to be made in cash. In February 2003, Cingular terminated the Cleveland Agreement. Comm One's ...


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