March 31, 2016
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 12-cv-10058 -
Sharon Johnson Coleman, Judge.
Manion and Kanne, Circuit Judges, and Pepper, District Judge
Pepper, District Judge.
Processing Services, LLC ("Toll Processing")
appeals from the district court's order granting summary
judgment in favor of Kastalon, Inc. and Kastalon Polyurethane
Products (collectively, "Kastalon") on Toll
Processing's conversion and negligence claims. We reverse
the district court's order as to those claims, and remand
the case for further proceedings.
a diversity case, governed by Illinois law, involving state
law contract and tort claims. Appellant Toll Processing is a
subsidiary of International Steel Services, Inc.; it was
formed in 2006 for the purpose of owning and operating a
pickle line. Appellee Kastalon provides equipment and
repairs for the steel industry. In 2006, Toll Processing
purchased a used pickle line from Joseph T. Ryerson &
Sons, Inc.; the line included fifty-seven pickle line rolls,
some of which were in need of repair. Kastalon had serviced
the rolls during the time Ryerson owned the line.
Processing planned to reinstall the Ryerson pickle line
somewhere else, but as of the spring of 2007, did not have a
facility in which to put it, or anywhere to store the rolls.
In April 2007, Toll Processing began to disassemble the used
pickle line at Ryerson's facility in Chicago. Early in
2008, Kastalon agreed that it would move the rolls to its
facility and store them, at no cost, until Toll Processing
could issue a purchase order to Kastalon to recondition the
rolls. In January of that year, Paula Dent-a former Ryerson
employee, and a plant and project manager for Toll
Processing- orally contacted Kastalon's vice president
and half owner Michael DeMent to make the arrangements. Dent
was Kastalon's main contact regarding the pickle line.
parties initially believed that Toll Processing would
complete its plan to re-install the pickle line within
months, but they did not discuss a specific timeframe during
which Kastalon would store the rolls. Kastalon appears to
have assumed that it would be storing the rolls for a few
months only; both parties expected Toll Processing to find a
new facility shortly. Regardless of timing, the parties agree
that Kastalon was storing the rolls while it waited for Toll
Processing to issue it a purchase order for the repair and
reconditioning of those rolls that needed it.
Sander, vice president and general counsel for Toll
Processing, represented Toll Processing in negotiating its
purchase of the pickle line. Later, at his deposition, Sander
testified that he agreed it would not have been reasonable
for Toll Processing to expect Kastalon to store the rolls
forever. Gus Schempp, a consultant hired to assist in
disassembling the line and reinstalling it at its new
location, testified at his deposition that he did not know
what Kastalon's storage obligation would be if Toll
Processing never issued the expected reconditioning purchase
moved fifty-seven pickle rolls to its facility in Alsip,
Illinois, over the first three months of 2008. After March
2008, however, Dent had no further contact with Kastalon
about the rolls. In fact, Toll Processing laid Dent off in
April 2008, but did not inform Kastalon that Dent had been
let go. In October 2008, DeMent called Gus Schempp at Toll
Processing regarding the disassembling/reinstallation
project. Schempp did not tell DeMent that the project to
reinstall the line had been delayed (although it appears that
it had been). DeMent also sent Schempp an email asking to be
kept informed as to the progress of the reinstallation
project; Schempp did not respond.
the next two years, Toll Processing negotiated with various
companies, either to set up and run the pickle line, or to
sell it. It was not in communication with Kastalon about the
line during that period. Kastalon stored the rolls indoors
for about two years. At some point, though, Kastalon used a
crane to move the rolls from their original location inside
the facility to another location inside the facility, which
took four to five hours of labor. Later, Kastalon greased and
wrapped the rolls before moving them to be stored outside
under tarps, which took about ten hours of labor.
Kastalon's plant manager testified at his deposition that
the condition of the rolls did not change while they were in
November or December 2010-some two years after the last
contact between the two companies-DeMent contacted Dent and
Carlos Monzon (a former Ryerson employee, who was hired by
Toll Processing and later laid off). Dent and Monzon informed
DeMent that they were unemployed. DeMent did not specifically
enquire into the status of the rolls, or inform Dent or
Monzon that Kastalon planned to dispose of the rolls. He
testified at his deposition that after this conversation, he
thought that Toll Processing had gone out of business. He
also indicated that he believed that the pickle rolls were in
poor condition and had little value.
Subsequent to the conversation between DeMent, Dent and
Monzon, Kastalon concluded that the rolls had been abandoned,
had them scrapped by a local recyler and received $6, 380.80.
Before scrapping the rolls, Kastalon did not inspect them to
determine their condition.
2011, Toll Processing believed that it was close to
finalizing arrangements to reinstall the pickle line, which
would call for repair and refurbishment of the rolls. Schempp
called DeMent to request a price quote for reconditioning the
rolls so they could be put into service. DeMent informed
Schempp that the rolls had been scrapped. Toll Processing
obtained quotes for replacement rolls, the lowest of which
was $311, 750, plus $104, 905 for roll covers (apparently a
quote from Kastalon), for a total replacement cost of $416,
695. Toll Processing never issued a purchase order to
Kastalon to refurbish the rolls.
Processing filed a three-count complaint pleading claims for
conversion, negligence and breach of contract. The parties
each moved for summary judgment. The district court granted
summary judgment in favor of Kastalon and against Toll
Processing as to each of Toll Processing's claims.
review the district court's grant of summary judgment
de novo. Boss v. Castro, 816 F.3d 910, 916 (7th Cir.
2016). Summary judgment 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 also, Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). The parties agree
that Illinois substantive law applies to the state law