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Basler Electric Co. v. Fortis Plastics, LLC and Realization Services, Inc..

United States District Court, Seventh Circuit

September 23, 2013



J. PHIL GILBERT, District Judge.

This matter comes before the Court on defendants Fortis Plastics, LLC's ("Fortis") and Realization Services, Inc.'s ("RSI") (collectively "Defendants") motion for summary judgment (Doc. 50). Plaintiff Basler Electric Company ("Basler") filed its response (Doc. 52) to which Defendants replied (Doc. 53). For the following reasons, the Court grants in part and denies in part Defendants' motion for summary judgment.

I. Background

This dispute between Basler and Fortis arises from the way in which their business relationship abruptly ended. Basler produces power and magnetic system products that it ships worldwide. For years, Basler purchased certain plastic components from Fortis and its predecessors necessary for the production of Basler's product. Basler furnished Fortis with certain tooling and equipment necessary to produce these plastic components.

On September 22, 2010, Basler and Fortis entered into a Purchase Agreement which provided that Basler would issue purchase orders to Fortis directing Fortis to produce the plastic components. Basler and Fortis also entered into a Tooling Agreement dated November 7, 2011, that listed the tools in Fortis' possession that belonged to Basler. The Tooling Agreement provided as follows:

Supplier acknowledges that Basler owns all of the above equipment and documentation and as such Supplier agrees that Basler may at any time upon notifying supplier come to Supplier[']s facility to remove the equipment listed above.

Doc. 51-3, p. 11.

In 2011, Fortis began to suffer financial hardships. As a result, Fortis hired RSI, a strategic consulting firm specializing in "turnaround management and value enhancements of distressed companies" to assess and make recommendations for its business. Barry Kasoff is the founder and president of RSI. Fortis also appointed Kasoff as its Chief Restructuring Officer ("CRO"). Based on Kasoff's dual roles, the parties dispute in which capacity he was acting at times relevant to this dispute. Basler contends that Kasoff was never a Fortis employee because he was neither employed nor paid by Fortis; he merely held the CRO title. Fortis and RSI maintain that Kasoff was acting in his role as CRO during the relevant time period. The evidence indicates Kasoff represented himself in both capacities - as Fortis' CRO and RSI's president. See Doc. 51-14, p. 29 & Doc. 52-8, p. 5. (Kasoff's deposition in which he identifies himself as RSI's president and Fortis' CRO). The evidence further indicates Kasoff was paid directly by RSI, not Fortis. Doc. 52-8, p. 5.

Setting aside the true nature of Kasoff's role, the parties agree that Kasoff directed Fortis to stop accepting Basler's purchase orders because RSI and Kasoff believed Fortis was losing money on its transactions with Basler. See Doc 51-14, p. 36; Doc 51-14, p. 48 (RSI advised Fortis not to accept further purchase orders from Basler because RSI concluded that Fortis was losing money on its transactions with Basler). Specifically, at Kasoff's direction, Jason Peters, Fortis' regional sales manager, sent an email to Ralph Boester, a Basler buyer, informing him that Fortis refused to accept any further purchase orders from Basler.

Peters further informed Boester that Fortis would ship Basler's finished orders upon receipt of Basler's outstanding payments. Basler then sought to take immediate possession of its tooling so it could obtain its plastic components from another source. Fortis refused to return the tooling until Basler paid its outstanding balance. Eventually, Fortis released the tooling to Basler on March 15, 2012, after receipt of $355, 000. Basler asserts it discovered that Fortis had damaged the tools while they were in Fortis' possession. Further, Basler asserts its resulting shipping delays caused by Fortis' refusal to comply with the purchase orders and release the tooling negatively impacted Basler's business, including the loss of at least one customer.

On May 17, 2012, Basler filed its four-count complaint in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois, alleging (1) breach of contract against Fortis, (2) breach of warranty against Fortis, (3) tortious interference against RSI, and (4) conversion against Fortis and RSI. Defendants removed the case to this Court. Subsequent to removal, Basler filed an amended tortious interference claim. Defendants now argue they are entitled to summary judgment on Basler's conversion claim against Defendants, tortious interference claim against RSI, punitive damages request, and request for damages with respect to Basler's tooling. The Court will now consider whether Defendants are entitled to judgment as a matter of law.

II. Analysis

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520 F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396. Where the moving party fails to meet its strict burden of proof, a court cannot enter summary judgment for the moving party even if the opposing party fails to present relevant evidence in response to the motion. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992).

In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e)(2); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996). A genuine issue of material fact is not demonstrated by the mere existence of "some alleged factual dispute between the parties, " Anderson, 477 U.S. at 247, or by "some metaphysical doubt as to the material facts, " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252. The Court will proceed to analyze whether Defendants are entitled to judgment as a matter of law under any of their arguments.

a. Conversion Claim

Basler's conversion claim against Defendants alleges that Defendants wrongfully held Basler's tooling when Defendants denied Basler's demand for immediate possession of the tooling. Under Illinois law, Basler must establish the following elements to prevail on its conversion claim: "(1) [it] has a right to the property; (2) [it] has an absolute and unconditional right to the immediate possession of the property; (3) [it] made a demand for possession; and (4) the defendant wrongfully and without ...

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