United States District Court, N.D. Illinois, Eastern Division
KARUM HOLDINGS LLC, KARUM GROUP LLC, and KARUM CARD SERVICES S.A. DE C.V., SOFOM, E.N.R., Plaintiffs,
LOWE'S COMPANIES, INC., and LOWE'S COMPANIES MEXICO, S. DE R.L. DE C.V., Defendants.
MEMORANDUM OPINION AND ORDER
Z. Lee United States District Judge.
Companies, Inc. (“Lowe's Inc.”) is a
corporation that operates home improvement stores in North
America. Around 2007, Lowe's Inc. announced plans to
expand into Mexico. It also decided to create a Private Label
Credit Program through which consumers could obtain private
label credit cards usable only at its Mexico locations. To
that end, Lowe's Companies Mexico, S. de R.L. de C.V.
(“Lowe's Mexico”) entered into two agreements
with Karum Holdings LLC (“Karum Holdings”), Karum
Group LLC (“Karum Group”), and Karum Card
Services S.A. de C.V., SOFOM, E.N.R. (“KCS”) for
the provision of private label credit services.
2015, Karum Holdings, Karum Group, and KCS
(“Plaintiffs”) sued Lowe's Inc. and
Lowe's Mexico (“Defendants”) for breaching
the parties' agreements. Defendants have filed a motion
for partial summary judgment. For the reasons stated herein,
their motion is granted in part and denied in part.
Holdings and Karum Group are Delaware limited liability
companies. Defs.' LR 56.1(a)(3) Stmt. ¶¶ 1-2,
ECF No. 87. Their principal places of business are in
California, and their members reside in California and Texas.
Id.; Am. Compl. ¶¶ 1-5, ECF No. 50. KCS is
a subsidiary of Karum Group. Defs.' LR 56.1(a)(3) Stmt.
¶ 3. It is a special-purpose bank organized under the
laws of Mexico, and it is a citizen of Mexico. Id.
Lowe's Inc. is incorporated in North Carolina and has its
principal place of business in North Carolina. Id.
¶ 4. Lowe's Mexico is a corporation organized under
the laws of Mexico. Id. ¶ 5. It operates stores
in Mexico and is a citizen of Mexico.
February 10, 2010, Lowe's Mexico entered into a Private
Label Credit Card Program Agreement (“the Program
Agreement”) with Karum Holdings and KCS for the
provision of private label credit cards for Lowe's
Mexico's customers. Id. ¶ 9; id.,
Ex. 1 (“Program Agreement”), at 1. On April 4,
2014, Lowe's Mexico also entered into a Profit Sharing
and Funding Agreement (“the Funding Agreement”)
with Karum Group, Karum Holdings, and KCS, which governed
funding and profit percentages with respect to KCS's
operations. See Id. ¶ 11; id., Ex. 2
(“Funding Agreement”), at 2. Plaintiffs assert
that Lowe's Inc. acted as the alter ego of Lowe's
Mexico for purposes of both the Program Agreement and the
Funding Agreement (together, “the Agreements”).
Am. Compl. ¶ 13.
August 21, 2014, Lowe's Inc.'s Senior Vice-President
of International Operations, Doug Robinson, spoke on the
phone with Plaintiffs' CEO, Peter Johnson. Defs.' LR
56.1(a)(3) Stmt. ¶ 13. The parties dispute what Robinson
said to Johnson during this phone call. According to
Defendants, Robinson merely told Johnson that Defendants
“desire[d] to end [their] relationship” with
Plaintiffs. Id. But according to Plaintiffs,
Robinson told Johnson more definitively that Defendants
“had determined to terminate the Agreements.”
Pls.' LR 56.1(b)(3) Stmt. ¶ 13.
October 2, 2014, Plaintiffs served Defendants with a demand
for mediation, as required under both Agreements as a
condition precedent to litigation. Defs.' LR 56.1(a)(3)
Stmt. ¶ 19. The mediation was conducted on December 10,
2014, but it was unsuccessful. Id. ¶ 20.
Accordingly, Plaintiffs filed this lawsuit in January 2015,
alleging breach of the Agreements. In particular, they claim
that Defendants breached the Agreements by (1) terminating
the Agreements, (2) awarding contracts to third parties for
services related to the Agreements, (3) refusing to work
cooperatively with Plaintiffs on day-to-day business issues,
and (4) refusing to cure deficiencies in the performance of
their duties under the Agreements. Am. Compl. ¶¶
32-36. Defendants have moved for partial summary judgment as
to these claims.
court shall grant summary judgment 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 also Shell v. Smith, 789
F.3d 715, 717 (7th Cir. 2015). To survive summary judgment,
the nonmoving party must “do more than simply show that
there is some metaphysical doubt as to the material facts,
” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986), and instead must
“establish some genuine issue for trial such that a
reasonable jury could return a verdict in her favor.”
Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73
(7th Cir. 2012). In reviewing a motion for summary judgment,
the Court gives the nonmoving party “the benefit of
conflicts in the evidence and reasonable inferences that
could be drawn from it.” Grochocinski v. Mayer
Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir.
2013). The Court must not make credibility determinations or
weigh conflicting evidence. McCann v. Iroquois Mem'l
Hosp., 622 F.3d 745, 752 (7th Cir. 2010).
Defendants move for summary judgment on Plaintiffs'
breach of contract claims to the extent they rest on
allegations that Defendants prematurely terminated the
Agreements. According to Defendants, even assuming as true
that Robinson attempted to orally terminate the Agreements in
his phone call with Johnson on August 21, 2014, his attempted
termination cannot form the basis of Plaintiffs' breach
of contract claim as a matter of law, because the
Agreements' express terms required any notice of
termination to be in writing. Defs.' Mem. Supp. at 7-10,
ECF No. 88. In response, Plaintiffs argue that Robinson's
statement to Johnson gave rise to a breach because it was an
anticipatory repudiation. Pls.' Mem. Opp. at 8-9, ECF No.
New York law,  an anticipatory repudiation occurs when a
party declares a positive, unequivocal intention not to
fulfill a contractual duty before the time for performance
begins. DiFolco v. MSNBC Cable LLC, 622 F.3d 104,
112 (2d Cir. 2010); Lucente v. Int'l Bus. Machines
Corp., 310 F.3d 243, 258 (2d Cir. 2002). A party can
repudiate a contract either in a statement, written or oral,
or through its conduct. See, e.g., Norcon Power
Partners, L.P. v. Niagara Mohawk Power Corp., 705 N.E.2d
656, 659 (N.Y. 1998) (holding that repudiation may occur
through a statement or conduct); Tenavision, Inc. v.
Neuman, 379 N.E.2d 1166, 1168 (N.Y. 1978) (holding that
oral statements along with one piece of related
correspondence were sufficient evidence of an anticipatory
repudiation); see also DiFolco, 622 F.3d at 112.