970 F.2d 363 (7th Cir. 1992), 91-1329, Valenti v. Qualex, Inc.

Docket Nº:91-1329.
Citation:970 F.2d 363
Party Name:S. Donald VALENTI and Patricia Valenti, Plaintiffs-Appellants, v. QUALEX, INC., Defendant-Appellee.
Case Date:August 07, 1992
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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970 F.2d 363 (7th Cir. 1992)

S. Donald VALENTI and Patricia Valenti, Plaintiffs-Appellants,

v.

QUALEX, INC., Defendant-Appellee.

No. 91-1329.

United States Court of Appeals, Seventh Circuit

August 7, 1992

Argued Dec. 6, 1991.

Page 364

Joel L. Hecker, New York City (argued), Mark H. Barinholtz, Chicago, Ill., for plaintiffs-appellants.

Diane M. Kehl, Donald W. Jenkins (argued), Stephen L. Sitley, Vedder, Price, Kaufman & Kammholz, Chicago, Ill., for defendant-appellee.

Before COFFEY and FLAUM, Circuit Judges, and GRANT, Senior District Judge. [*]

GRANT, Senior District Judge.

Plaintiffs, professional photographers, brought this diversity suit against Qualex, Inc., a partnership of Kodak and Fuqua that owns film development laboratories. Plaintiffs alleged that the defendant negligently damaged the images of 43 rolls of film and breached its agreement to develop the film properly. They claimed damages in the amount of $2,415,000, or $1,500 per image. The district court granted summary judgment to Qualex. We affirm that decision.

I.

Our review of a district court's grant of summary judgment is de novo. Capital Options Investments, Inc. v. Goldberg Bros. Commodities, 958 F.2d 186, 188 (7th Cir.1992). Rule 56 of the Federal Rules of Civil Procedure requires that summary judgment be rendered if the

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pleadings and other filings "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." 1 Fed.R.Civ.P. 56(c). The party opposing the summary judgment motion "may not rest upon the mere allegations or denials of the adverse party's pleading"; rather, it must respond with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986). "Summary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. at 2510, "Mindful that [nonmovants'] version of any disputed issue of fact thus is presumed correct, we begin with the factual basis of [nonmovants' ] claims." Eastman Kodak Co. v. Image Technical Services, Inc., --- U.S. ----, 112 S.Ct. 2072, 2077, 119 L.Ed.2d 265 (1992) (with reference to Arizona v. Maricopa County Medical Society, 457 U.S. 332, 339, 102 S.Ct. 2466, 2470, 73 L.Ed.2d 48 (1982)).

II.

According to their complaint, in April 1989 plaintiffs shot 427 rolls of film in Spain. Upon their return they delivered the film to Colonial Camera Shop in LaGrange, Illinois, a store with which they regularly did business. Together plaintiffs and Colonial employees put tags on the film. Then, complying with plaintiffs' instructions, Colonial separated the film into four batches to protect against loss or damage in the processing, and delivered each group on four successive days (May 15 through 18, 1989) to Qualex. On May 19, after Qualex reported to Colonial that it had damaged some rolls of film, Colonial's president, Steven Isenberg, telephoned Don Valenti to notify him. Several days later two identical letters 2 were sent by Qualex's Customer Services Representative to Colonial, expressing his distress over this "unexpected incident." The letter, in pertinent part, stated:

Attention: Valenti, Customer

Dear Customer:

Given the quality expectations you have as a professional customer, we are disappointed to report that your film was improperly processed by our laboratory. This certainly is not exemplary of the type of quality in which we take great pride.

. . . . .

Of course, there is no charge for your order and we are enclosing replacement film(s) in accordance with our statement of responsibility. The processing incident has been reviewed with the appropriate management and laboratory personnel to prevent a recurrence and to reinforce the importance of maintaining our superior quality standards.

As a valued professional customer, you may be assured of our commitment to serve your future processing needs in a high quality manner.

Colonial forwarded the replacement film from Qualex to plaintiffs, but the Valentis declined to accept it. Instead, in October 1989 they filed their complaint against Qualex, charging negligence in its developing process, which deprived the plaintiffs of the use and benefit of 1610 images, and breach of its agreement to develop the film properly.

Granting summary judgment to Qualex, the court found first that there was neither a direct contractual relationship between Qualex and plaintiffs nor a contract established by an agency relationship between Qualex and Colonial. With respect to the negligence claim, the court found that plaintiffs' prayer for $1,500 per negative was a claim for damages for lost income from an asset that they intended to sell.

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Because Illinois' Moorman Doctrine bars recovery of economic damages in negligent tort actions such as this one, the court granted summary judgment to the defendant on the negligence claim as well as the breach of contract claim. Plaintiffs appeal each of these determinations.

  1. Contractual relationship

    In their complaint the plaintiffs charged that Qualex failed to develop their film properly, in breach of its agreements with them. Both before the district court and on appeal they argue that they were doing business with Qualex, not Colonial, and that Colonial was simply the drop-off location for service by Qualex. They claim they have raised a genuine issue of material fact concerning whether a contract was established between them and Qualex by delivering their film to Colonial as the drop-off point. Further, they point to the defendant's two letters to "Valenti, Customer," as evidence that Qualex considered the Valentis to be their, not Colonial's, customers.

    The district court found that, because the Valentis dealt solely with Colonial and never directly with Qualex, no contractual relationship existed between plaintiffs and defendant. By offering their film to Colonial and obtaining Colonial's acceptance the plaintiffs established a contract with Colonial, not Qualex. The court rejected plaintiffs' assertion that a contractual relationship was established with Qualex because plaintiffs intended that the film be processed by Qualex. [Tr. at 4.]

    We agree that plaintiffs failed to demonstrate a contract with Qualex. In order to meet their burden of proof on the breach of contract count, plaintiffs must first prove that a contract existed. They were therefore required to establish offer, acceptance, consideration, the terms of the contract, plaintiff's performance, defendant's breach of the terms of the contract, and damage resulting from that breach. Penzell v. Taylor, 219 Ill.App.3d 680, 162 Ill.Dec. 142, 147, 579 N.E.2d 956, 961 (1991).

    For the court to find that an enforceable contract exists, the parties must have entered into an agreement which is sufficiently definite and certain so that the terms are either determined or may be implied. When the material terms and conditions are not ascertainable no enforceable contract is created.

    Id. (citations omitted). In this case, the Valentis delivered rolls of film to Colonial for development; Colonial accepted the film for processing and returned the developed film to plaintiffs for compensation. The plaintiffs made no showing of the elements required to establish an agreement between themselves and Qualex. It is clear that the district court properly recognized that no contractual relationship was formed between the Valentis and Qualex.

    The only evidence plaintiffs offer to show that Qualex acknowledged a contractual relationship with the Valentis was the letters from Qualex. As the district court correctly noted, letters addressed to Colonial, to be referred to Valenti, a customer, were insufficient evidence of a contractual relationship between the Valentis and Qualex. The reference to the customer in those letters is too vague to be indicative of an enforceable contract. See, e.g., Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1440 (7th Cir.1992) (letter contained no expression of intent to define obligations or to establish agreement or promise). This court upholds the district court's conclusion that no direct contract existed between plaintiffs and defendant.

  2. Agency relationship

    The district court likewise determined that no agency relationship between Qualex and Colonial was properly alleged:

    In the instant case, plaintiffs have merely alleged in conclusory fashion that Colonial was an agent of Qualex. Self-serving characterizations by parties are irrelevant in determining if a particular individual (or company) is an agent or an independent contractor.

    Tr. at 5 (citation omitted). The court then pointed out that plaintiffs failed to show Qualex's right of control over Colonial: There was evidence that Colonial employees and Qualex representatives met, but,

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    because Colonial's president was not a party and there was no evidence concerning the subject matter of the meetings, the court concluded that the meetings were insufficient proof of control. It also found that plaintiffs failed to dispute Qualex's statement of undisputed facts in the manner required by Local Rule 12. 3 For example, plaintiffs improperly denied that Colonial (rather than plaintiffs) selected Qualex for processing without citing to the record; they also failed to dispute that Colonial alone established the price for processing. Since mere allegations of a factual dispute do not defeat a summary judgment action, the court found that the defendant was entitled to summary judgment on the breach of contract claim. [Tr. at 7 (citation omitted).]

    On appeal plaintiffs argue that the court erroneously determined that independent...

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