BJB Elec., L.P. v. North Cont'l Enters., Inc.

• Decision Date: 28 August 2012
• Docket Number: No. 09 C 3022,09 C 3022
• Citation: BJB Elec., L.P. v. North Cont'l Enters., Inc., No. 09 C 3022 (N.D. Ill. Aug 28, 2012)
• Parties: BJB ELECTRIC, L.P., Plaintiff, v. NORTH CONTINENTAL ENTERPRISES, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

BJB ELECTRIC, L.P., Plaintiff,

v.NORTH CONTINENTAL ENTERPRISES, INC., Defendant.

No. 09 C 3022

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

Dated: August 28, 2012

Judge Joan H. Lefkow

OPINION AND ORDER

BJB Electric, L.P. ("BJB Electric") filed suit against North Continental Enterprises, Inc. ("North Continental") seeking to recover amounts due under several invoices for the purchase of goods. North Continental counterclaimed for breach of two alleged distributorship agreements and violation of the Wisconsin Fair Dealership Law, Wisc. Stat. § 135.01, et seq. Before the court is BJB Electric's motion for summary judgment as to all counts of the complaint as well as North Continental's counterclaims. For the following reasons, the motion [#128] will be granted in part and denied in part.

LEGAL STANDARD

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). To determine whether any genuine issue of fact exists, the court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Fed. R. Civ. P. 56(c) & advisory committee's notes. The party seeking summary judgment bears the initial burden of proving that there is no genuineissue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In response, the nonmoving party cannot rest on mere pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). A material fact is one that might affect the outcome of the suit. Insolia, 216 F.3d at 598-99. Although a bare contention that an issue of fact exists is insufficient to create a factual dispute, Bellaver v. Quanex Corp., 200 F.3d 485, 492 (7th Cir. 2000), the court must construe all facts in a light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed.2d 202 (1986).

BACKGROUND¹

I. BJB Electric and North Continental

BJB Electric is engaged in the sale of components for the appliance and lighting industries, primarily components manufactured by its German affiliate BJB GmbH & Co. KG ("BJB Germany"). BJB Electric is a Georgia limited partnership with its principal place of business in Ringgold, Georgia. BJB Electric's limited partner is BJB Beteiligungs GmbH ("BJBInvestment Germany"), a German entity with its principal place of business in Germany. BJB Electric's general partner is BJB USA Corporation, a Georgia corporation with its principal place of business in Ringgold, Georgia. BJB USA Corporation is owned by BJB Beteiligungs und Verwaltungsgesellschaft mbH Arnsberg ("BJB Investment and Management Germany").

North Continental is a Michigan corporation with its principal place of business in Niles, Illinois.²

II. The Appliance Agreement

In the mid to late 1980's, Lasse Koerm, who is North Continental's sales manager, performed consulting work for the company that is now BJB Germany. North Continental helped introduce BJB Germany to lighting and appliance manufacturers in North America and assisted BJB Germany in developing new products for appliance manufacturers. At around this same time, in return for North Continental's assistance, BJB Germany agreed that North Continental could distribute and sell its appliance components in North America.

North Continental and BJB Germany entered into an appliance component distribution agreement in Germany (the "Appliance Agreement"). Pursuant to the Appliance Agreement, North Continental was entitled to sell appliance components to all but a dozen large manufacturers in North America who were being serviced by a second representative of BJB Germany. The Appliance Agreement was memorialized in a series of written exchanges,although the record does not disclose the date or contents of the writings.³ It is uncontested, however, that BJB Electric did not exist at the time when North Continental and BJB Germany entered into the Appliance Agreement.

North Continental conducted business pursuant to the agreement for twenty-five years.⁴ The Appliance Agreement does not have any provisions regarding duration, geographic scope, pricing, sales quotas, performance measurements, or minimum purchase levels. Koerm believed that the Appliance Agreement was governed by German law.

III. The Lighting Agreement

In 2005, BJB Electric asked North Continental to act as its exclusive distributor in North America for its lighting industry products and to service smaller lighting customers. BJB Electric initially proposed that North Continental would be the exclusive distributor for customers with annual sales of $30,000 or less, but this dollar volume figure was later reduced to $20,000 and was never included in a final agreement.

On March 28, 2006 representatives from BJB Electric and North Continental signed a written distribution agreement for lighting components (the "Lighting Agreement"). Koerm signed on behalf of North Continental. Michael Thompson, BJB Electric's former president, signed on behalf of BJB Electric.

The Lighting Agreement appoints North Continental as BJB Electric's "exclusive distributor" for the sale of specified lighting components in the United States. (Second Kauke Decl. Ex. 2, ¶ 2.1.) The agreement provides that BJB Electric will not supply products to any authorized customers in the United States, with the exception of specified customers referred to as "excluded customers." (Id. ¶¶ 2.1, 2.2.) Schedule 5 to the Lighting Agreement purports to list the excluded customers, which were large customers and potential customers that would be reserved for BJB Electric to work with. Sixteen companies are listed on Schedule 5. (Id. at Schedule 5.)

At the time the Lighting Agreement was signed, Koerm and Thompson knew that the list of customers on Schedule 5 was incomplete. Koerm testified that the following exchange occurred before the agreement was executed:

I looked at that Schedule 5 and said, you know . . . something is wrong here. You have only 20 customers, 15 to 20 customers as exclusive customers. Where is the rest?

I had thought there would be 200. There are about 2,300 to 3,000 I think customers in North America. And Michael Thompson is a very calm person and I think it's the only time I have seen him angry. He looked at Tom Shaffer [another BJB Electric employee] and he said, "Where are the rest?" . . . .

And [Shaffer] said, "Computer glitch." And Michael Thompson said, "Well, will you take care of it?" And he said, "Yes. I'll fix it. I'll take care of it."

And I figure it's not my problem. I'll sign the agreement. . . .

I looked at this that Tom Shaffer would get back and make corrections to it, and I would agree to those corrections. There was a matter of, you know, making some corrections to it.

(Koerm Dep. at 94-95.) Koerm further testified that, at the time he signed the Lighting Agreement, "I knew that I did not consider [the list to be] complete and Michael Thompson didn't." (Id. at 96.)

Thompson also testified that at the time the Lighting Agreement was executed he did not believe that the list of companies included on Schedule 5 was complete. Thompson stated, "[W]e [BJB Electric] had not established who the customers that we had at that time that we were going to hand over to NCE [and] we didn't know which ones could be added" to Schedule 5. (Thompson Dep. at 50.)

BJB Electric told North Continental that it would provide an amended, longer, list of exclusive customers under the Lighting Agreement. It never did so.

After the Lighting Agreement was signed, BJB Electric and North Continental continued to reallocate lighting components customers between them. BJB Electric provided North Continental with a "Small Customer List" that designated which customers were assigned to North Continental. BJB Electric's understanding was that it had the discretion to remove customers from the "Small Customer List," depending on factors such as the growth of the customer or customer needs and demands. For example, in May 2006 BJB Electric wrote North Continental and stated that it had discovered that "a few companies included in the list of those transferred to NCE . . . should not have been included." (Koerm Dep. Ex. 10.) BJB Electric asked North Continental to delete Stylemark, Inc., from its list of companies, and North Continental complied. (Id.; Koerm Dep. at 115-17.) Another customer, MMJ Lighting, requested that it be re-established as a direct customer of BJB Electric, rather than work indirectly through North Continental. BJB Electric indicated that it intended to work directlywith MMJ Lighting to keep it as a customer. BJB Electric recalled the assignment of other small customers that had purportedly been assigned to North Continental under the Lighting Agreement. North Continental, unlike BJB Electric, believed that BJB Electric was wrongfully recalling customers that had been exclusively delegated to North Continental under the terms of the Lighting Agreement.

BJB Electric terminated the Lighting Agreement on December 31, 2007 and took over the small customer accounts that North Continental had developed and serviced while the agreement was in effect.

IV. BJB Electric's Shipment of Poor Quality Goods

In 2007 and 2008, BJB Electric sent several shipments of poor quality goods to North Continental. North Continental's customers complained about the quality of the goods and returned the products for North Continental's review and to obtain a credit. North Continental was forced to perform a quality check on every assembly shipped by BJB Electric. As a result, North Continental...