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Temtex Industries, Inc v. Tps Associates

July 18, 2012

TEMTEX INDUSTRIES, INC.,
PLAINTIFF, COUNTER DEFENDANT,
AND HAROLD ROTMAN, COUNTER DEFENDANT,
v.
TPS ASSOCIATES, LLC,
DEFENDANT, COUNTER PLAINTIFF,
AND MARTIN BORG, DEFENDANT, TPS ASSOCIATES, LLC, THIRD-PARTY PLAINTIFF,
v.
NUTRANO, INC., AND GARY ROTMAN, THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

Temtex Industries, Inc. ("Temtex") filed an eight count complaint against TPS Associates, LLC ("TPS") alleging that TPS failed to pay Temtex for products it supplied on TPS's behalf. TPS counterclaimed alleging that Temtex failed to pay TPS for services rendered under a consulting agreement and sales consulting agreement (the "agreements"). (#43 Ex. 1 & 2.) TPS also filed a counterclaim against Temtex officer Harold Rotman (#131), who signed a personal guaranty for Temtex. (See #43 Ex. 6.) Temtex eventually abandoned its claims against TPS, and this court entered judgment against Temtex on TPS's counterclaim in the amount of $472,286.80. (#88.) TPS now moves for summary judgment against Rotman (#92) on the theory that, as Temtex's guarantor, Rotman is obligated to satisfy the judgment against Temtex. For the reasons set forth herein, TPS's motion is granted in part and denied in part.*fn1

LEGAL STANDARD

Summary judgment obviates the need for a trial where 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(a). The court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record to determine whether there is a genuine need for trial. See Advisory Committee Note to 1963 Amendment of Fed. R. Civ. P. 56(e). While the court must construe all facts in a light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), where a claim or defense is factually unsupported, it should be disposed of on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323--24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The party seeking summary judgment bears the initial burden of proving there is no genuine issue of material fact. Id. at 323. In response, the nonmoving party cannot rest on bare pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). Material facts are those which might impact the outcome of the lawsuit. Insolia, 216 F.3d at 598--99.

BACKGROUND*fn2

Temtex and TPS entered into a consulting agreement on March 15, 2005 (#43 Ex. 1) and a sales consulting agreement on April 19, 2005 (#43 Ex. 2). (See #15 ¶¶ 3, 4.). The consulting agreement called for TPS to provide consulting services on an as-needed basis to Temtex at the rate of $200 per hour and required TPS to provide an itemized statement of services performed and expenses incurred. (#43 Ex. 1 ¶ 3.) In addition, the consulting agreement stated that Temtex would pay TPS a commission of two and one-half percent of gross sales for licensing and/or third-party sales programs developed by TPS. (Id.) The sales consulting agreement stated that Temtex would pay TPS a fee of five percent of all net sales received by Temtex from products sold in the United States and its territories. (#43 Ex. 2 ¶ 3.) Both agreements allowed for a service charge of one and one-half percent per month on unpaid amounts. (#43 Ex. 1 ¶ 3; Ex. 2 ¶ 3.)On March 25, 2007, Harold Rotman signed a personal guaranty for Temtex where he "personally and unconditionally guarantee[d] to TPS and any of its affiliates the payment of any obligation of [Temtex] and its successors and assigns." (#43 Ex. 6 at 1.) Rotman does not dispute that he signed the guaranty. (See #82 ¶ 19.)

On March 4, 2009, Temtex initiated this lawsuit to collect money it claimed it was owed for products it supplied to QVC and Big Lots on TPS's behalf. (#1.) TPS filed an answer denying Temtex's claims (#13) and a counterclaim (#14) alleging that Temtex in fact owed TPS $297,972.61 plus interest under the agreements. TPS filed a third-party complaint against Temtex's president and principal shareholder, Gary Rotman, and his new company, Nutrano, Inc. ("Nutrano"), claiming that Gary failed to pay TPS money owed under two promissory notes (#43 Ex. 4 & 5), and that Gary Rotman and Nutrano wrongfully diverted sales of TPS-developed products from Temtex to Nutrano in violation of the parties' agreements. TPS also filed a counterclaim against Temtex's guarantor, Harold Rotman (see #130 & #131), who is Gary's father and a Temtex officer. (#43 Ex. 6; H. Rotman Aff. ¶¶ 4, 6.)*fn3 Temtex's counsel withdrew from the case in June 24, 2010 (#58), leading the court to dismiss Temtex's complaint with prejudice on August 5, 2010. (#63.) Upon TPS's motion, the court entered default and judgment against Gary in the amount of $369,495.00 plus costs (#77), and entered judgment against Temtex in the amount of $472,286.80, which was the amount due to TPS under the agreements plus interest. (#88.) TPS then moved for summary judgment against Harold Rotman (#92) on the theory that, as Temtex's guarantor, Rotman is obligated to satisfy the judgment against Temtex. This motion is currently before the court.

DISCUSSION

Rotman argues that the court should deny TPS's motion for summary judgment because 1) Rotman, as a guarantor, is allowed to assert Temtex's defenses as a matter of law; and 2) a genuine issue of material fact remains as to the amount owed to TPS under the agreements.

I. Compliance with Local Rule 56.1

As an initial matter, the court is obligated to address the parties' compliance, or lack thereof, with Northern District of Illinois Local Rule 56.1. Local Rule 56.1(a) requires the party seeking summary judgment to submit, among other things, a statement of material facts, which consists of short, numbered paragraphs and specific references within each paragraph to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph, a description of the parties, and all facts supporting jurisdiction in the court. L.R. 56.1(a)(3). The nonmoving party must then submit a concise response to the movant's statement of facts, admitting or denying each fact and supporting each denial with references to the record. L.R. 56.1(b)(3)(B). The nonmoving party may submit a statement of additional facts that require the denial of summary judgment. L.R. 56.1(b)(3)(C). The moving party may then submit a concise reply to these facts in compliance with the method previously set forth. L.R. 56.1(a). Material facts improperly denied by either party are deemed admitted by the court. L.R. 56.1(a) & (b)(3)(C); Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003).

Neither party in this case complied with the requirements of Local Rule 56.1. TPS, which is represented by counsel, did not submit a separate statement of material facts, and the facts it did submit, which were included in its memorandum in support of its motion for summary judgment (#93), were not supported by specific references to affidavits, parts of the record, and other supporting materials. Rotman, who is defending himself pro se, attempted to comply with Local Rule 56.1(b)(3) by submitting a "concise response" to TPS's memorandum, wherein Rotman responded to each of the facts alleged in TPS's memorandum. (#97.) Rotman did not, however, admit or deny each statement of fact, and his responses did not contain any reference to supporting materials in the record. Included in Rotman's "concise response" was a statement of additional facts that require denial of summary judgment. (Id.) With the exception of paragraph 8, Rotman's statement of additional facts is devoid of any reference to the record. In support of paragraph 8, Rotman submitted a notarized affidavit signed under penalty of perjury by Gary Rotman and five supporting exhibits attached thereto. (#98 at 68--88; #98-1.) Rotman also attached other exhibits to his memorandum in opposition to TPS's motion for summary judgment, including an notarized affidavit signed by him under penalty of perjury (#98 at 63--66), but none of these exhibits are referenced in his responses or his statement of additional facts. TPS did not respond to Rotman's statement of additional facts.

The parties have left the court at a disadvantage by failing to set forth the facts in this case with particularity as required by the Local Rule. Nevertheless, because TPS's claim is based on a guarantee that Rotman does not deny signing, see #82 ΒΆ 19, the court is confident that it can resolve the pending motion by resorting to the few pieces of admissible evidence contained ...


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