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Midwest Trading Group, Inc. v. GlobalTranz Enterprises, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 23, 2014


Page 888

For Midwest Trading Group, Inc., Plaintiff: Michael J Malatesta, LEAD ATTORNEY, Malatesta Law Offices, LLC, Chicago, IL; James Andrew Bosco, Law Offices of James A. Bosco, Chicago, IL.

For Globaltranz Enterprises, Inc., Defendant: Robert Lee Reeb, LEAD ATTORNEY, Matthew Carl Koch, Marwedel, Minichello & Reeb, P.C., Chicago, IL.

Page 889


Honorable Thomas M. Durkin, United States District Judge.

Midwest Trading Group, Inc. (" Midwest" ) seeks recovery against GlobalTranz

Page 890

Enterprises, Inc. (" GlobalTranz" ) for a loss arising out of the theft of two shipments of Android tablet computers during interstate motor transit. Other Defendants in the case, American Freight Network, Inc. (" American Freight" ), AKOP Karapetan d/b/a V & R Trucking, Inc. (" V & R Trucking" ), and Evertek, Inc. (" Evertek" ), have not participated in the case and do not have an attorney appearance on file. It also appears that they have never been served. GlobalTranz has moved for summary judgment. For the reasons discussed below, GlobalTranz's motion for summary judgment, R. 18, is granted in part and denied in part.


In late January 2012, West Coast Imports, Inc. (" West Coast" ), acting as Midwest's agent, contacted GlobalTranz in order to arrange for the shipment of two loads of Android tablet computers. R. 1-1 ¶ 9; R. 30 ¶ 5. West Coast and Midwest had previously conducted business with GlobalTranz. Midwest had directly utilized GlobalTranz's services on one prior occasion, R. 20-2 ¶ 11; R. 20-3 at 18; while West Coast had previously booked over 100 shipments with GlobalTranz on various occasions for other customers. R. 36-2 ¶ 10; R. 36-5. On the bottom of " GlobalTranz's Credit Application," a document that is provided to the parties GlobalTranz does business with, the following language appears:

THE ABOVE INFORMATION is for the purpose of obtaining credit and is warranted to be true. I/we hereby authorize the firm to whom this application is made to investigate the references listed pertaining to my/our credit and financial responsibility. A copy of this document shall be the original. BY SIGNING THE APPLICATION, THE APPLICANT CONSENTS TO THE TERMS AND CONDITIONS FOUND ON WWW.CARRIERRATE.COM.

Id. at 1-2. Similar language appears on many payment invoices that are sent to parties after a shipment has been processed. R. 45 ¶ 2. is GlobalTranz's website. On the website are the " Freight Broker Agreement Terms and Conditions" (" the " Terms and Conditions" ). See R. 20-3 at 19-22. A s discussed in more detail below, these Terms and Conditions contain various clauses regarding liability, insurance, a disclaimer of warranties, and rates. Id. In particular, paragraph 10, which contains an insurance disclaimer, provides that " GlobalTranz may have optional Shippers Interest Contingent Cargo Liability Insurance ('Third Party Insurance') available for purchase by Customer.'" R. 20-3 at 20.

GlobalTranz has submitted a copy of the credit application that was allegedly signed in May 2010 by an agent of West Coast (Nuria Coronado, a West Coast employee) and another that was allegedly signed by an agent of Midwest (Rashid Aziz, President of Midwest) in August 2010. R. 20-2 ¶ ¶ 3-4; R. 20-3 at 1-2. Both Coronado and Aziz deny having signed the credit application.[1] R. 25-3; R. 25-4. Nevertheless, GlobalTranz contends that West Coast was aware of the language referring to the Terms and Conditions due to the numerous invoices that it received for other shipments. R. 45 ¶ ¶ 1-4

Regarding the shipments at issue here, one load of Android tablets was to be transported to zip code 78218, R. 20-3 at 34; the second load was to be transported

Page 891

to zip code 27536, id. at 31. Gengler, on behalf of GlobalTranz, quoted Coronado, on behalf of West Coast, a price, which the parties agreed upon. Gengler and Coronado reached the agreement through direct email correspondence. R. 44-1 ¶ 3. According to the sworn declaration of Vinay Saboo, the President of West Coast, West Coast was told that GlobalTranz would purchase insurance on the shipments. R. 29-2 ¶ 6. Coronado also said that it was her " understanding based on [her] experience with GlobalTranz that the quote [for the shipments] included the cost of insurance." R. 44-1 ¶ 4. Gengler denies that GlobalTranz ever offered West Coast such insurance for the shipments. R. 30 ¶ 8. The invoices do not list " insurance" under the description of services included and there is no explicit charge listed for insurance. R. 20-3 at 17-18. Midwest claims that it would not have entered into the shipping agreement with GlobalTranz if insurance had not been included in the transaction. See R. 29-1 ¶ 4.

At some point, GlobalTranz issued two " short form" bills of lading for the shipments to " Westcoast Imports." R. 20-3 at 13-14. It is unclear as to when exactly they were issued. One " long form" bill of lading was issued to " MIDWEST TRADING GROUP C/O WCI" ; another was issued to Midwest Trading Group, C/O West Coast Imports." Id. at 15-16. GlobalTranz was listed as a third party on the long form bill of lading for the second load--i.e., the shipment to zip code 27536.[2] Id. at 15.

After GlobalTranz accepted the order, which was placed by Midwest through West Coast, GlobalTranz brokered the shipment of the loads to American Freight. R. 8 ¶ 14. American Freight re-brokered the shipment of the loads to V & R Trucking. Id. ¶ 15. A few days later, on February 2, 2012, a driver for V & R Trucking picked up the two loads of Android tablet computers. R. 1-1 ¶ 16. Shortly thereafter, while the driver was out of the truck eating lunch, the tractor and trailer containing the tablets were stolen. Id. ¶ 17. Midwest alleges that " Evertek came into possession of part of the stolen loads" at some point and later sold them. Id. ¶ ¶ 42-43.

Gengler and Saboo exchanged emails on February 2, 2012, after the Android tablets were stolen. R. 44-3. As discussed further below, Saboo raised the issue of insurance on the loads, to which Gengler responded in a manner indicating that West Coast had indeed purchased insurance. Id. Midwest eventually submitted a claim to GlobalTranz for $170,000 for the first load, R. 20-3 at 33, and for $440,000 for the second, id. at 30. Midwest contends that it never received any compensation in return for its claims. R. 32-2 ¶ 12.

Midwest filed this suit in the Circuit Court of Cook County, Illinois, on November 20, 2012. R. 1. GlobalTranz removed the suit to federal court on November 21, 2012, R. 6, and the case was reassigned to the undersigned Judge on January 14, 2013. R. 14. The complaint includes four counts. Count I is for fraud against GlobalTranz. Count II is for negligence against GlobalTranz, American Freight, and V & R Trucking. Count III is for breach of contract against GlobalTranz. Count IV is for unjust enrichment against Evertek. No motion to dismiss was ever filed, and limited discovery was taken. Certain documents and affidavits have been submitted in support of, and in opposition

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to, GlobalTranz's motion for summary judgment as to Counts I, II, and III.


Summary judgment under Federal Rule of Civil Procedure 56 is appropriate if " 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, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To defeat summary judgment, the non-moving party must produce more than a " mere scintilla of evidence," meaning " evidence on which [a] jury could reasonably find for the non-moving party." Harris N.A. v. Hershey, 711 F.3d 794, 798 (2013) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In ruling on the motion, the Court considers the entire evidentiary record and " view[s] all facts and draw[s] all inferences in the light most favorable to the non-moving party." Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013); Egan Marine Corp. v. Great Am. Ins. Co., 665 F.3d 800, 811 (7th Cir. 2011).

When federal court jurisdiction is premised on diversity, the Court applies the law of the state in which it sits when neither party raises a conflict of law issue. Fednav Int'l Ltd. v. Cont'l Ins. Co., 624 F.3d 834, 838 (7th Cir. 2010). Accordingly, the Court will apply Illinois law to Midwest's claims. Both parties agree with this approach. See R. 42; R. 43.


GlobalTranz contends it is entitled to summary judgment for several reasons: (1) Midwest lacks standing to pursue the fraud and breach of contract claims (Counts I and III); (2) the fraud and negligence claims (Counts I and II) are preempted by federal statute; and (3) there is no issue of material fact as to any of the elements required for the claims in Counts I, II, or III. Additionally, GlobalTranz argues that Midwest's damages are limited to $3,450 on the breach of contract claim.

I. Summary Judgment Based on Standing

GlobalTranz argues that Midwest lacks standing to pursue the fraud and breach of contract claims because GlobalTranz did not have an agreement with Midwest. R. 19 at 1-2. GlobalTranz claims that all of its communications regarding the shipments were with West Coast, and therefore, GlobalTranz could not have entered into an agreement with Midwest. R. 19 at 9. In addition, the Terms and Conditions, which GlobalTranz claims applies to the shipping agreement at issue, contain a clause stating,

No Other Parties to Benefit. This Agreement is made for the sole benefit of the Parties hereto and their successors and permitted assigns. Except as expressly provided herein, no other person or entity is intended to or shall have any rights or ...

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