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Cathay Industries USA, Inc. v. Bellah

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

January 23, 2018

CATHAY INDUSTRIES USA, INC., Plaintiff,
v.
WILLIAM J. BELLAH, Defendant.

          MEMORANDUM OPINION AND ORDER

          HON. MARIA VALDEZ UNITED STATES MAGISTRATE JUDGE

         Plaintiff Cathay Industries USA, Inc.'s (“Cathay”) complaint, which is premised on diversity jurisdiction, alleges breach of contract due to Defendant William J. Bellah's failure to pay sums due under a promissory note. The parties have consented to the jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c).

         Cathay previously moved for summary judgment on Bellah's Third Affirmative Defense, and that motion was denied on September 28, 2017. Cathay now moves for summary judgment on Bellah's First and Second Affirmative Defenses. For the reasons that follow, Plaintiff's Motion for Partial Summary Judgment [Doc. No. 69] is granted.[1]

         FACTS[2]

         The facts of the case were discussed in the earlier summary judgment motion and will not be repeated here unless necessary. See Cathay Indus. USA, Inc. v. Bellah, No. 16 C 2070, 2017 WL 4310623 (N.D. Ill. Sept. 28, 2017). Two particular contracts are relevant to the present motion. First is the $1.5 million promissory note known as the Compass Note, which is the subject of the present litigation. The Compass Note was executed on September 23, 2008 by Bellah in favor of Compass Chemical International, LLC. (LR 56.1(b)(3)(C) ¶¶ 4-5, 11.) The Compass Note was assigned to Cathay in 2012; assigned from Cathay to its parent Cathay Pigment Holdings (“Cathay Holdings”) in 2014; and finally assigned in 2016 from Cathay Holdings back to Cathay. (Id. ¶¶ 16-20.)

         The second relevant contract is the 2007 Consulting Agreement, which was entered into on January 1, 2007 by Cathay Holdings and Bellah, on behalf of Bel-Air Investments, Inc. (“Bel-Air”), a company owned by him. Pursuant to the 2007 Consulting Agreement, Bel-Air was to provide certain consulting services to Cathay Holdings, and Cathay Holdings would in turn pay monthly fees and yearly bonuses to Bel-Air. The yearly bonuses, in a lump sum amount equal to the total monthly payments during the year, were to be paid in the first quarter of the following year. The bonuses were paid as scheduled in the years 2008 through 2012. The parties also observed an “informal agreement” whereby half of the yearly bonus payments were to be credited to the amounts owed under the Compass Note. (Id. ¶¶ 6-10, 12.)

         At issue in the present motion is Defendant's second affirmative defense, which alleges that any obligation owed by Bellah on the Compass Note “is subject to a set-off for services rendered to Plaintiff by Defendant, ” (LR 56.1(a)(3) ¶ 15), namely $962, 000 allegedly owed to him under the 2007 Consulting Agreement.[3]

         DISCUSSION

         I. LEGAL STANDARD

         Summary judgment is appropriate where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The Court must draw all reasonable inferences in favor of the nonmovant. Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001).

         However, once the movant has carried its burden under Rule 56(c), “its opponent 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). The party opposing summary judgment must offer admissible evidence in support of his version of events, and hearsay evidence does not create a genuine issue of material fact. McKenzie v. Ill. Dep't of Transp., 92 F.3d 473, 484 (7th Cir. 1996); see Larimer v. Dayton Hudson Corp., 137 F.3d 497, 500 (7th Cir. 1998) (“‘If the non-moving party bears the burden of proof on an issue, . . . that party may not rest on the pleadings and must instead show that there is a genuine issue of material fact.'”) (citation omitted). “The mere existence of an alleged factual dispute is not sufficient to defeat a summary judgment motion. . . . The nonmovant will successfully oppose summary judgment only when it presents ‘definite, competent evidence to rebut the motion.'” Vukadinovich v. Bd. of Sch. Trs. of N. Newton Sch. Corp., 278 F.3d 693, 699 (7th Cir. 2002) (citations omitted); see also Hall v. Bodine Elec. Co., 276 F.3d 345, 354 (7th Cir. 2002) (“Conclusory allegations and self-serving affidavits, without support in the record, do not create a triable issue of fact.”).

         “In considering a motion for summary judgment, this court is not required to scour the record in search of evidence to defeat the motion; the nonmoving party must identify with reasonable particularity the evidence upon which the party relies.” Pleniceanu v. Brown Printing Co., No. 05 C 5675, 2007 WL 781726, at *7 (N.D. Ill. Mar. 12, 2007) (citing Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 898 (7th Cir. 2003)); see Estate of Moreland v. Dieter, 395 F.3d 747, 759 (7th Cir. 2005). Finally, the Court is “‘not required to draw every conceivable inference from the record.”' McCoy v. Harrison, 341 F.3d 600, 604 (7th Cir. 2003) (citation omitted).

         II. ANALYSIS

         The Compass Note obligates Bellah to pay Cathay $1.5 million. According to Bellah, Cathay Holdings owes him over $900, 000 pursuant to an “informal agreement” that accompanied the 2007 Consulting Agreement, which was between Cathay Holdings and Bel-Air Investments. Bellah's affirmative defense claims that the money owed by Cathay Holdings should be set off from his obligations under the Compass Note. Plaintiff argues that summary judgment on the affirmative defense is warranted because (1) the debt ...


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