The opinion of the court was delivered by: P. Michael Mahoney, Magistrate Judge United States District Court
Magistrate Judge P. Michael Mahoney
MEMORANDUM OPINION AND ORDER
The Final Pretrial Order for this case was entered on September 16, 2009. In the Final Pretrial Order, both parties consented to the exercise of jurisdiction by a United States magistrate judge. Judge Kapala transferred the case to this court's docket on September 17, 2009.
The only claim remaining in this case is Defendant Iowa Midland Supply, Inc.'s ("IMS") counterclaim. IMS claims that Plaintiff Ingersoll Cutting Tool Company ("ICTC") breached a contract signed in 1998. Before the court are four motions in limine filed by IMS.
In February 1998, IMS and ICTC signed an Authorized Distributor Agreement ("1998 Agreement"). The relevant language stated, "Effective February 1, 1998, IOWA MIDLAND SUPPLY INC. will be an authorized distributor handling INGERSOLL CUTTING TOOL products exclusively for all counties of Iowa east of and including" specified counties in Iowa and Illinois, and non-exclusively in certain Illinois counties. The 1998 Agreement also provided that the contract automatically renewed each year.
Either party could cancel the contract "at any time without cause upon thirty (30) days written notice to the other party." If either party terminated the 1998 Agreement, IMS agreed to return ICTC's property, and ICTC agreed to accept for credit any unused ICTC product.
In November 2001, ICTC mailed a letter to IMS stating, "[W]e have prepared a Distributor Agreement that describes the relationship between Ingersoll and your company. Please find enclosed two copies of the proposed agreement for your consideration and signature. . . . Please sign both copies of the agreement and return to Ingersoll for counter signature." The letter did not otherwise explicitly terminate the 1998 Agreement.
The 2001 distributor agreement ("2001 Agreement") attached to the letter stated, "ICTC shall appoint Distributor as its non-exclusive distributor in the State of Iowa and parts of Illinois and Minnesota ('Territory') for the sale and promotion of ICTC products . . . for a term of 2 years, commencing on November 19, 2001." IMS did not sign and return the 2001 Agreement as requested by the letter. ICTC continued providing IMS with its product, and IMS continued distributing it.
On December 23, 2005, ICTC sent a letter indicating that ICTC did not believe IMS was capable of continuing as an ICTC distributor. The letter further stated, "Please accept this letter as 'notice' that Ingersoll Cutting Tools is canceling any and all agreements between our two companies." Thereafter, ICTC did not accept back IMS's inventory of ICTC product.
IMS's counterclaim alleges that ICTC breached the exclusivity provision of the 1998 Agreement.*fn1 According to IMS, ICTC sold to other distributors that ICTC knew would resell in territories in which IMS had exclusive distributor rights. IMS also claims that ICTC began assigning customers from IMS's exclusive territories to other distributors. ICTC also did not accept back IMS's inventory of ICTC product.
The parties dispute whether the 1998 Agreement was still in effect after IMS received the 2001 letter with the 2001 Agreement. ICTC first argues that the 2001 letter and 2001 Agreement constituted official notice of termination of the 1998 Agreement. Alternatively, ICTC argues that if sending the 2001 letter and 2001 Agreement to IMS did not explicitly terminate the 1998 Agreement, IMS still performed under the terms of the 2001 Agreement after receiving it. This indicates that IMS understood the 1998 Agreement to have been terminated. If the 1998 Agreement was terminated by receipt of the 2001 letter and 2001 Agreement or by performance thereafter, ICTC is not liable for breach.
Even if the 1998 Agreement was in effect, the parties dispute whether the contract forbade ICTC from selling its product to any distributor it knew might sell in IMS's exclusive territory, or from simply appointing another "authorized" distributor in that area. See Ingersoll Cutting Tool Co. v. Iowa Midland Supply, Inc., 06-C00845, at 5 (N.D. Ill. ...