ACE Hardware Corp. v. Landen Hardware, LLC

• Decision Date: 27 June 2012
• Docket Number: No. 10 C 2884.,10 C 2884.
• Citation: 883 F.Supp.2d 739
• Parties: ACE HARDWARE CORPORATION, Plaintiff, v. LANDEN HARDWARE, LLC, Marketplace Hardware, LLC, William B. Lovett, Steven D. McMahan, Linda Lovett, and Sandra McMahan, Defendants.
• Court: U.S. District Court — Northern District of Illinois

883 F.Supp.2d 739

ACE HARDWARE CORPORATION, Plaintiff,

v.LANDEN HARDWARE, LLC, Marketplace Hardware, LLC, William B. Lovett, Steven D. McMahan, Linda Lovett, and Sandra McMahan, Defendants.

No. 10 C 2884.

United States District Court,

N.D. Illinois,

Eastern Division.

June 27, 2012.

Michael James Drabant, David J. Fish, The Fish Law Firm, P.C., Naperville, IL, for Plaintiff.

Randall D. Lehner, Julia Renee Lissner, Ulmer & Berne LLP, Chicago, IL, Reuel Dolnick Ash, Ulmer & Berne LLP, Cincinnati, OH, for Defendants.

MEMORANDUM AND ORDER

BLANCHE M. MANNING, District Judge.

Defendants Landen Hardware and Marketplace Hardware each were Ace Hardware franchisees, and individual defendants William and Linda Lovett signed guaranties connected with the agreements between Landen and Marketplace and Ace Hardware.¹ Ace has filed a motion for summary judgment, contending that the franchisees breached a variety of contracts and the Lovetts are liable under their personal guaranties. On the other hand, the franchisees and the Lovetts contend that the doctrine of equitable estoppel bars any recovery by Ace. For the following reasons, Ace's motion is granted.

I. BackgroundA. Local Rule 56.1

Local Rule 56.1 requires a party seeking summary judgment to file a statement of material facts, submitted as short numbered paragraphs containing citations to admissible evidence. Loc. R. 56.1(a). So far, so good, as Ace's statement of material facts consists of declarative factual statements accompanied by citations to the record. Local Rule 56.1 also requires the opposing party to either admit or deny each paragraph and cite to its own supporting evidence. Loc. R. 56.1(b)(3)(A). The defendants' response largely fails to meet this straightforward standard as it is argumentative and attempts to create factual disputes that are irrelevant.

For example, in response to the innocuous statement “William Lovett and Steven McMahan (hereafter, “the doctors”) were business partners in a medical company and a medical leasing company,” the defendants respond:

Admit only that the doctors were the sole partners in a closed corporation that employed them to provide emergency medical services. Admit only that the doctors were also partners in a company that leased the equipment that they used in providing their medical services. (Defs' Exhibit A, Lovett Decl. ¶ 3). The medical leasing company did not confer any special business expertise in the doctors because the medical leasing company was established by their attorney as an operational convenience and had no business other than that relating to the doctors' medical services.

Response to Ace's Statement of Facts at ¶ 7, Dkt. 119 at Page ID# 2126. The defendants appear to be casting about for ways to create a factual dispute since clearly, there can be no actual dispute that the doctors were “business partners in a medical company and a medical leasing company.” To the extent that the responses do not state “deny” and then provide a brief explanation accompanied by citations to the record, Ace's statements of fact are deemed admitted. See Loc. R. 56(1)(b)(3)(A) (failure to adequately reference affidavits, the record, or other materials relied upon to support the party's denial may result in admission of the movant's facts to the extent supported by the record); Bone Care Intern., LLC v. Pentech Pharmaceuticals, Inc., No. 08 C 1083, 2012 WL 1068506, at *1 (N.D.Ill. Mar. 29, 2012) (“To the extent that Plaintiffs' denials are evasive and Defendants' statements are supported by admissible evidence, those statements will be admitted”).

Similarly, the court will disregard the defendants' arguments about the legal import of the allegedly disputed facts as it is well established that arguments belong in memoranda, not Rule 56.1 responses. See Judson Atkinson Candies, Inc. v. Latini–Hohberger Dhimantec, 529 F.3d 371, 382 n. 2 (7th Cir.2008) (“It is inappropriate to make legal arguments in a Rule 56.1 statement” or response); see also Sys. Dev. Integration, LLC v. Computer Sci. Corp., 739 F.Supp.2d 1063, 1068 (N.D.Ill.2010) (“the purpose of Rule 56.1 statements is to identify the relevant evidence supporting the material facts, not to make factual or legal arguments, and thus the Court will not address the parties' arguments made in their Rule 56.1 statements and responses”) (citation omitted).

The defendants' attempt to interject arguments into their Rule 56.1 response is particularly striking as the court allowed them to file an oversized response brief. A litigant may not circumvent page limitations by adding arguments into a Rule 56.1 response. Accordingly, the court will not consider any of the defendants' legal arguments raised in their Rule 56.1 response. This means that most of Ace's facts are deemed admitted, as the defendants repeatedly respond to statements of fact by stating that the doctrine of equitable estoppel provides a complete defense to Ace's claims. For the purposes of Rule 56. 1, that is neither here nor there as this contention does not “admit or deny” Ace's statements of fact or direct the court's attention to evidence supporting a denial. See Loc. R. 56. 1(b)(3)(A).

The defendants also have declined to directly respond to statements of fact, such as “[p]ursuant to the Equity Match Loan Agreement/Promissory Note, Ace provided to Landen the sum of $180,000,” by stating that they “are without sufficient knowledge to admit or deny.” Response to Ace's Statement of Facts at ¶ 9, Dkt. 119 at Page ID# 2127. This type of response is ineffective at the summary judgment stage as it neither admits nor denies Ace's facts and is unsupported by citations to the record. Hence, to the extent that the defendants state that they lack knowledge to admit or deny, Ace's corresponding facts are deemed admitted to the extent they are supported by the record. See, e.g., Marchman v. Advocate Bethany Hosp., No. 04 C 6051, 2006 WL 1987815, at *6 (N.D.Ill. Jul. 12, 2006) (the failure of the party opposing summary judgment to point to “controverting evidence in the record” means that the movant's facts are admitted).

Moreover, some of the defendants' responses are flat out unhelpful. For example, in response to information about Landen's citizenship, the defendants state “Deny. Landen is no longer in existence.” Response to Ace's Statement of Facts at ¶ 3, Dkt. 119 at Page ID# 2125. This is not only unresponsive but also at odds with the fundamental principle that the court must consider whether subject matter jurisdiction in this diversity case exists.

The court will also disregard unresponsive “add on” facts to Ace's facts, such as the defendants' commentary about unrelated matters following their admission that venue in this district is proper. See Response to Ace's Statement of Facts at ¶ 6, Dkt. 119 at Page ID# 2125.

The defendants' statement of additional facts also includes argumentative characterizations of facts. For example, the defendants state that Ace's conduct “forced” the McMahons into personal bankruptcy and that Ace “bombarded” them with promises about profitability. Response to the Defendants' Statement of Additional Facts at ¶ 3, Dkt. 119 at Page ID# 2145. The court will disregard this type of language as it is improper. The court also notes that any future filings by counsel for the defendants must contain “short” paragraphs of “facts” as opposed to lengthy narratives. See Loc. R. 56.1(b)(3)(c). Finally, to the extent that any statement of additional fact is not supported by citations to the record, it will not be considered. See id.

With these caveats in mind, the court turns to the facts, which are actually quite straightforward.

B. Facts

In this diversity case, Ace is an Illinois citizen with its principal place of business in Illinois, William and Linda Lovett and Steven and Sandra McMahon are Ohio citizens, and Landen and Marketplace are Ohio limited liability companies whose sole members are William Lovett and Steven McMahon. William Lovett and Steven McMahon are doctors who made the fateful decision to open two Ace franchises that ultimately led to this lawsuit.

1. Overview of Ace's Complaint²

In July of 2006, Landen and Ace signed an Equity Match Loan Agreement under which Ace, among other things, promised to lend money to Landen and Landen executed a promissory note promising to repay the loan plus interest. Pursuant to the Equity Match Loan Agreement, Ace loaned $180,000 to Landen. Landen did not repay Ace and does not dispute that if its promissory estoppel argument fails, it currently owes Ace over $190,000. Count I of Ace's complaint is against Landen and is based on an alleged breach of the Equity Match Loan Agreement and promissory note. Count II is a similar count against Marketplace based on its execution of an Equity Match Loan Agreement and promissory note and its failure to repay $200,000 loaned by Ace plus interest.

Counts III and IV are breach of contract claims against Landen and Marketplace,respectively, based on their alleged breaches of the Ace Hardware Membership Agreement. Landen and Marketplace ordered merchandise and services from Ace pursuant to that agreement and did not repay Ace.

William Lovett signed two guaranties of credit under which he promised to repay all debts owed by Landen. Count V is directed at him and alleges that he breached the guaranties. William and Linda Lovett also signed personal guaranties for all “liabilities, obligations, and indebtedness” owed by Landen. Ace refers to these guaranties as the Equity Match Guaranties, and they form the basis of Count VI.

2. The Parties' Contracts

On February 16, 2006, Dr. Lovett and Dr. McMahon signed a “Prospective Member Certification” which provides, in part, that:

Personally and on behalf of any corporation, partnership or limited liability company that now or subsequently owns and operates my Store, I hereby represent and warrant to Ace that each of following statements is true, correct and...