Fabrica De Tejidos Imp. v. Brandon Apparel Group

• Decision Date: 06 September 2002
• Docket Number: No. 00 C 7033.,00 C 7033.
• Citation: 218 F.Supp.2d 974
• Parties: FABRICA DE TEJIDOS IMPERIAL, S.A., Plaintiff, v. BRANDON APPAREL GROUP, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

218 F.Supp.2d 974

FABRICA DE TEJIDOS IMPERIAL, S.A., Plaintiff, v. BRANDON APPAREL GROUP, INC., et al., Defendants.

No. 00 C 7033.

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

September 6, 2002.

Neal H. Levin, Neal H. Levin & Associates, P.C., Chicago, IL, for plaintiff.

Robert P. Cummins, Thomas C. Cronin, Cummins & Cronin, LLC, Chicago, IL, for defendants.

MEMORANDUM OPINION AND ORDER

SHADUR, Senior District Judge.

Fabrica de Tejidos Imperial, S.A. ("Tejidos") has filed a diversity of citizenship action against Brandon Apparel Group, Inc. ("Brandon") and two other defendants,¹ alleging as to Brandon that it has failed to pay for goods provided by Tejidos.² Both Tejidos and Brandon have filed motions for partial summary judgment under Fed.R.Civ.P. ("Rule") 56 on Complaint Counts I (Breach of Contract) and III (Account Stated).

With both motions now having been fully briefed, they are ripe for disposition.³ For the reasons stated in this memorandum opinion and order, Tejidos' motion for summary judgment on Count I is granted as to liability, while Brandon's motion is denied. Counts III (Account Stated) and IV (Restitution) are dismissed as moot.

Summary Judgment Standards

Familiar Rule 56 principles impose on each movant the burden of establishing the lack of a genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). For that purpose this Court must "consider the evidentiary record in the light most favorable to the non-moving party ... and draw all reasonable inferences in his favor" (Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.2002)). And Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir.2001) has echoed the teaching of Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986):

A genuine issue of triable fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party."

Where as here cross-motions for summary judgment are involved, it is thus necessary to adopt a dual perspective — one that this Court has often described as Janus-like — that sometimes involves the denial of both motions. As the ensuing discussion reflects, this opinion has been faithful to that approach, but the required dual perspective does not frustrate a definitive resolution here.

Facts

Tejidos is a Guatemalan business that provides clothing items for retail sale (T.St. ¶ 11). Brandon was⁴ in the business of manufacturing and selling children's licensed apparel to retailers in the United States (T.St. ¶ 12).

In about June 1998 Boarman of Amron communicated with Tejidos to negotiate the order of certain clothing items for sale in the United States (T.St. ¶ 14). Boarman was acting on behalf of Brandon, which had earlier issued a number of purchase orders for Tejidos goods (T.St. ¶ 15, T.Exs. A & B).⁵ At about that time Brandon placed an order with Tejidos for F.O.B. delivery of 6461 dozen pieces of clothing (T.St. ¶ 16). Tejidos delivered those goods to Brandon in about June 1998, and Brandon admits that it received them (T.St. ¶¶ 17-18). Brandon then delivered the goods to its own customers (T.St. ¶ 19).

Tejidos' total sale price for the goods was $128,657.11, and it rendered itemized invoices aggregating that amount to Brandon (T.St. ¶¶ 23, 28). Brandon received the invoices⁶ but never paid any part of the purchase price to Tejidos (T.St. ¶¶ 25, 29). About two months after receiving the goods, Brandon communicated to Tejidos through Boarman that it believed the goods were late, of poor quality and defective (T.St. ¶ 31, B.Resp. ¶ 31).

Tejidos claims actual damages in the amount of $128,657.11, plus $174,000 in consequential damage and plus legal expenses (T.St. ¶ 27). Brandon denies liability for any amount whatever.

Breach of Contract

Under well-settled Illinois law⁷ the elements for a breach of contract claim are (1) the existence of a valid and enforceable contract, (2) plaintiff's performance of the contract, (3) defendant's breach of the contract and (4) a resulting injury to the plaintiff (see Priebe v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir.2001)). Both sides seek summary judgment on the Complaint's Count I breach of contract count.

Brandon argues that it is entitled to summary judgment because Tejidos has failed to prove the very first element of that claim: the existence of a valid and enforceable contract between them. In support of its position Brandon points to (1) the lack of any written agreement signed by the two parties and (2) a statement by Tejidos' General Manager that he did not know Brandon's name until about two weeks before the goods were shipped (B.Mem.4-5). Brandon also spends a great deal of time arguing that Tejidos cannot prove that Boarman was Brandon's agent (see B.Mem. 5-8). But all of its contentions miss the vital point: Brandon fails utterly to appreciate the role that its own purchase orders, all of which were approved by Brandon's CEO and listed Tejidos' name and address in the "Factory Information" section, played in the formation of a contract.⁸

Illinois has adopted the Uniform Commercial Code ("UCC"), which provides in relevant part (810 ILCS 5/2-206(b)⁹):

[A]n order or other offer by buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods....

Under that provision (1) each Brandon purchase order constituted an offer and (2) Tejidos' shipment of goods to Brandon in response to each order acted as an acceptance of that offer. We are taught in the first year of law school that offer plus acceptance equals contract. Tejidos has thus established the first element of a breach of contract claim.

Brandon also attempts to dispute the second element — Tejidos' performance of the contract — by claiming that the goods were non-conforming because they were late and defective. But Brandon has offered no evidence as to any nonconformity — and even if it had, that would not itself denote Tejidos' failure to perform. Under UCC §§ 602 and 606 a buyer is deemed to have accepted non-conforming goods unless the buyer rejects those goods within a reasonable time and seasonably notifies the seller. In the absence of Brandon's timely rejection and seasonable notification, Tejidos must be viewed as having fully performed its obligations under the contract.

Not only does none of the evidence presented by Brandon establish that it rejected the goods — it does not even raise an issue of material fact on that issue. Brandon contends only that it told both Boarman and Tejidos that it considered the goods to be defective (B.St. ¶ 10), but even apart from any questions about whether those statements were "seasonable,"¹⁰ a complaint about the quality of goods is simply not the same thing as a rejection.

On that score, at no time did Brandon tell either Boarman or Tejidos that it was rejecting the goods. Brandon's only shred of evidence that even remotely supports such a notion is the deposition testimony of Brandon's President Bradley Keywell ("Keywell") — and all he said in that respect is that he did not know when or how Brandon rejected any Tejidos' shipment, but that Brandon followed a general procedure of letting Boarman know that Brandon could not accept the goods (Keywell Dep. 48, B.Resp.Ex C). But any such generalized and conclusory assertion, unsupported as it is by any specific statement as to a real turndown of the goods, is insufficient to raise a genuine issue for trial on the question of rejection.

Indeed, Brandon's actual behavior was wholly consistent with acceptance rather than rejection of the goods. Under UCC § 606(c) any act taken by a buyer that is inconsistent with the seller's continued ownership operates as an acceptance of the goods. Resale of goods — even after a timely rejection — has long been recognized as inconsistent with the seller's continued ownership and as constituting an acceptance of the goods (see Moscahlades Bros., Inc. v. Mallars & Co., 263 F.2d 631, 635 (7th Cir.1959); Ozite Corp. v. F.C. Clothier & Sons Corp., 130 Ill.App.2d 716, 718-19, 264 N.E.2d 833, 834-35 (4th Dist.1970)). And upon such acceptance the buyer is liable to the seller for the full contract price, regardless of whether or not the goods were conforming.

That is precisely what happened here. After it received the clothing items Brandon invested $2,800 in decorating them (October 19, 1998 Memo, provided in B.Ex. C), and it then resold them to its own customers (B.Interrog.Ans. 11; B.St.Ex. C, B.Resp. ¶ 19; Keywell Dep. 14-15).¹¹ Brandon's actions of decorating and reselling the goods confirm its acceptance. And such acceptance by Brandon compels the conclusion that Tejidos performed its obligations under the contract and was entitled to the full contract price for the goods.

To summarize, then, the parties' contract was formed when Tejidos accepted each offer contained in Brandon's purchase orders by shipping the ordered goods. Each shipment, whether or not the goods were conforming, was accepted by Brandon, thereby establishing Tejidos' performance under the contract.

Two elements remain for Tejidos to prove a breach of contract: that Brandon breached the contract and that Tejidos was injured as a result. Tejidos has no difficulty with either element, for Brandon (1) admits that it never paid Tejidos for the goods that it received and (2) has not disputed that Tejidos suffered monetary damages by reason of Brandon's failure to pay for the goods.

Hence there is no genuine issue of material fact with respect to any element of Tejidos' breach of contract claim. It has successfully demonstrated its entitlement to summary judgment as to liability on that claim.

Other Claims

Two additional claims remain: Complaint Count III (Account Stated), on which both parties have moved for summary...