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Custom Blending and Packaging of St. Louis, LLC v. Moser

November 16, 2010


The opinion of the court was delivered by: Herndon, Chief Judge


I. Introduction and Background

Pending before the Court are two motions for summary judgment: (1) Plaintiff/Counter-Defendant's motion for summary judgment (Doc. 97) and (2) Defendants DAC Industries, Inc., DAC Aerosol & Liquid Fill, Inc., and Dennis Litz's motion for summary judgment (Doc. 98). Based on the following, the Court denies both motions for summary judgment.

Originally, Custom Blending and Packaging of St. Louis, LLC ("Custom Blending") filed suit against Steven Moser Sr., Steven Moser Jr., DAC Industries, Inc. ("DAC") and DAC Aerosol & Liquid Fill, Inc. ("DAC Aerosol") on August 19, 2008 (Doc. 2).*fn1 On September 5, 2008, Custom Blending filed its Amended Complaint (Doc. 4). That Amended Complaint contained seven counts: Count I - breach of fiduciary duty; Count II - defamation; Count III - tortious interference with business expectancy; Count IV - tortious interference with contract; Count V - violation of the Illinois Trade Secrets Act ("ITSA"); Count VI - conspiracy - civil; and Count VII -injunctive relief.

On March 30, 2009, DAC and DAC Aerosol filed a compulsory counterclaim based on breach of contract for damages against Custom Blending (Doc. 34). In the counterclaim, DAC and DAC Aerosol allege that "the parties entered into an supply agreement whereby in exchange for payment from DAC, Plaintiff, Custom Blending and Packaging of St. Louis, LLC ("CBP") was required to order, fill and supply DAC certain aerosol cans containing petroleum product for various commercial, automotive and household uses." (Doc. 34, ¶ 2). Further, the counterclaim states: "in numerous shipments before and after the filing of this suit, the Plaintiff has either billed the Defendant for cans not received, has not properly credited the Defendants [sic] account for those omitted cans, filled cans with adulterated and illegal materials, and/or attempting to ship cans without proper and updated labeling." (Doc. 34, ¶ 6). Defendants claim that they have "paid for product not or incorrectly produced and those payments have not been credited back to Defendants [sic] account." Further, Defendants claim that "CBP's failure to produce the necessary product subject to the supply agreement, Defendant, DAC, has suffered consequential damages, including but not limited to, cancelled contracts with buyers, loss of customers and other incidents in attempting to cover these losses." (Doc. 34, ¶ 8).

On April 16, 2009, the Court issued an Order granting in part and denying in party various motions to dismiss and allowed Custom Blending leave to file another amended complaint that corrected, designated, and divided the remaining claims (Doc. 36). Thereafter, Custom Blending filed Second and Third Amended Complaints (Docs. 37 & 62). The Fourth Amended Complaint, filed on January 15, 2010, contains eight counts (Doc. 80). Count I is for breach of fiduciary duty against the Mosers; Count II is for defamation against Moser Jr.; Count III is for tortious interference with business expectancy against the Mosers, DAC and Litz; Count IV is for tortious interference with contract against the Mosers, DAC Aerosol and Litz; Count V is for violations of Illinois Trade Secrets Act against the Mosers; Count VI is for civil conspiracy against all Defendants; Count VII is for injunctive relief against the Mosers, DAC and DAC Aerosol; and Count VIII is for breach of contract for goods sold and delivered and suit on account against DAC.

Thereafter, the parties filed their respective motions for summary judgment. Custom Blending argues that it is entitled to summary judgment on DAC and DAC Aerosol's counterclaim. DAC, DAC Aerosol and Litz argue that they are entitled to summary judgment on Counts III, IV and VI of Custom Blending's Fourth Amended Complaint. Both motions are fully briefed and ripe for ruling. First, the Court address DAC, DAC Aerosol and Litz's motion for summary judgment.

II. Facts

Custom Blending is in the business of formulating, blending and packaging chemicals and aerosols.*fn2 Steven Moser Jr. is a former employee of Custom Blending. Moser Jr. left the employ of Custom Blending on June 26, 2008. He was a manager of production and had responsibility for customer interaction. Steven Moser Sr. is also a former employee of Custom Blending. Moser Sr. left the employ of Custom Blending in December 2007. Moser Sr. also acted as a manager.*fn3

DAC, a Minnesota Corporation, has been a customer of Custom Blending and regularly purchases product from Custom Blending. The Mosers along with DAC established DAC Aerosol. Litz is the owner of DAC and DAC Aerosol. DAC Aerosol provides services and products to DAC and the general market that were formerly provided by Custom Blending.

Moser Jr. signed a document agreeing that he would comply with all company rules and regulations set forth in Custom Blending's handbook. The Mosers had access to Custom Blending's trade secrets, including customer information, bidding and pricing information, vendor and supply information, product formulas, methods, operating procedures, production diagrams, and other proprietary and confidential information. The Mosers, while employed by Custom Blending, serviced the DAC account. DAC during its relationship with Custom Blending dealt almost exclusively with Moser Jr.

The Mosers, who knew Litz through their employment with Custom Blending, both voluntarily left Custom Blending and went to work for Litz and DAC Aerosol. Litz hired Moser Jr. to work at DAC Aerosol on July 1, 2008. Both Mosers, while employed with Custom Blending and using Custom Blending resources, worked for Litz on behalf of DAC and DAC Aerosol. As early as October 2007, Moser Jr. was conducting business activity for DAC, DAC Aerosol and Litz on Custom Blending's time and equipment. At Litz's request, Moser Jr. planned and designed the China Line (an aerosol filling line). Moser Jr. also developed a business plan for DAC Aerosol; compiled the vendor lists and contacted suppliers and customers on behalf of DAC. In December 2007, the Mosers and Litz went to dinner together at Ruby Tuesdays near Sullivan, Missouri. At this dinner, Moser Sr. told Litz that he was leaving Custom Blending. Litz testified that if they discussed business at that meeting it was about whether they were going to go through with DAC Aerosol.

In early 2008, Litz put a personal down payment on the China Line. Also in early 2008, the Mosers helped Litz find a location for DAC Aerosol in Sullivan, Missouri. On March 28, 2008, Litz personally and individually signed a lease on the Sullivan property. The lease has an occupancy date of July 1, 2008.

Moser Jr. testified that he retained attorney Kurt Breeze to form DAC Aerosol.*fn4 On May 21, 2008, DAC Aerosol was formed in Missouri. Litz is the sole owner of DAC Aerosol. DAC Aerosol's corporate papers identify Moser Jr. as the registered agent and the corporate address as the property that Litz leased in Sullivan, ...

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