Driveline Systems, LLC, an Illinois limited liability company, Plaintiff-Appellant/ Counter-Defendant,
Arctic Cat, Inc., a Minnesota corporation, Defendant-Appellee/ Counter-Plaintiff.
April 3, 2019
from the United States District Court for the Northern
District of Illinois, Western Division. No. 3:08-cv-50154 -
Frederick J. Kapala, Judge.
WOOD, Chief Judge, and BAUER and ROVNER, Circuit Judges.
Systems, LLC ("Driveline") filed a breach of
contract lawsuit against Arctic Cat, Inc. ("Arctic
Cat") over a supply contract for specially manufactured
goods. Counts II-V were resolved against Driveline by summary
judgment. The remaining claim and Arctic Cat's
countersuit were resolved by a trial on the papers. Driveline
appeals the district court's grant of summary judgment on
Count II, arguing that there were genuine issues of material
fact which preclude summary judgment.
1999, Driveline's predecessor in interest, Valley Drive
Systems, Inc., began manufacturing parts for Arctic Cat and,
in May 2002, Driveline assumed control of Valley Drive
Systems, Inc.'s assets. In June 2002, Driveline and
Arctic Cat entered into a contractual agreement where
Driveline would provide specifically-manufactured hubs,
axels/half-shafts, outer and inner tie rods, shift shafts,
and steering stops (the "Goods"). During the
pendency of their relationship, Driveline was a
"just-in-time supplier" providing the Goods and
taking and filling orders daily with regular daily deliveries
to Arctic Cat.
A Deteriorating Relationship
production of axles/half-shafts constituted the majority of
Arctic Cat's purchases from Driveline, making up between
60-90 percent of total sales. In August 2007, Arctic Cat
contacted Driveline to request a price reduction. At around
this time, Arctic Cat received a bid from a foreign company
to produce the half-shafts for approximately $30/shaft-for a
projected monthly savings of approximately $200, 000.00.
Throughout the rest of 2007, Arctic Cat and Driveline
negotiated about the future of Arctic Cat's half-shaft
production business. An email before December 14, 2007, from
Arctic Cat's Director of Supply Management, Chuck Hicks,
to Driveline's Donald DiGiovanni, Jr., says Driveline
will not be retaining the half-shaft business. Driveline
disputes this, asserting it only became aware of the change
in production on February 15, 2008, when it received a
termination letter from Arctic Cat.
the above negotiations were ongoing, Driveline and Arctic
Cat's relationship continued as usual. From January 2007
through February 2008, Arctic Cat paid Driveline between $12
and $15 million for the Goods. But on January 21, Driveline
halted all shipments to Arctic Cat, citing the ballooning
amount due, $640, 986.03, as accounts receivable. On January
24, 2008, Arctic Cat paid $371, 387.27 and Driveline resumed
shipments; a second check for $140, 951.31 was issued on
January 28. In early February 2008, Driveline again halted
all shipments to Arctic Cat citing non-payment.
February 8, 2008, Arctic Cat sent a letter to Driveline
informing them that they were in breach of contract and as a
result, any losses suffered by Arctic Cat would be the
responsibility of Driveline. On the same day, Richard
DiGiovanni of Driveline wrote a letter informing Arctic Cat
that it was in arrears. The letter from Driveline went on to
say that $185, 241.60 was due immediately and all further
shipments would be paid cash on delivery.
further deliveries were made and, on February 15, 2008,
Arctic Cat sent Driveline a letter terminating their
relationship and notifying Driveline that they would be
seeking reimbursement for any damages suffered as a result of
their failure to ship the Goods. On February 19, 2008, Arctic
Cat sent a letter to Driveline demanding $540, 750.00 for
freight costs associated with Driveline's failure to
deliver the Goods.
Proceedings Before the District Court
25, 2008, Driveline filed this lawsuit which was ultimately
amended on February 27, 2015; Arctic Cat filed a counterclaim
on January 13, 2009. Following cross-motions for summary
judgment, the district court granted judgment for Arctic Cat
on Counts II-V of the Revised Second Amended Complaint (the
"Complaint"). Shortly thereafter, the parties went
to trial on the papers, pursuant to Federal Rule of Civil
Procedure 52 on Count I of the Complaint, Arctic Cat's
Counterclaim, and prevailing party attorney's fees. The
district court found that Arctic Cat was liable for $182,
234.05 on Count I of the Complaint; Driveline was liable for
$163, 481.04 on the Counterclaim; and Arctic Cat was ...