Marion T LLC v. Formall Inc.

• Decision Date: 30 March 2016
• Docket Number: CAUSE NO. 1:13-cv-00132-SLC,CAUSE NO. 1:12-cv-00456-SLC
• Parties: MARION T LLC, Plaintiff/Counter Defendant, v. FORMALL INC., Defendant/Counter Claimant.
• Court: U.S. District Court — Northern District of Indiana

MARION T LLC, Plaintiff/Counter Defendant, v. FORMALL INC., Defendant/Counter Claimant.

CAUSE NO. 1:13-cv-00132-SLC

CAUSE NO. 1:12-cv-00456-SLC¹

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA FORT WAYNE DIVISION

March 30, 2016

OPINION AND ORDER

Plaintiff Marion T, LLC ("Marion T"), filed this suit against Defendant Formall, Inc. ("Formall"), claiming that Formall converted to its own use certain industrial equipment owned by Marion T.² In turn, Formall advances a counterclaim of conversion against Marion T, claiming that Formall was the rightful owner of the equipment and that Marion T wrongfully withheld the equipment from Formall.

Now before the Court is a motion for summary judgment (DE 76) filed by Formall, contending that it is entitled to summary judgment in its favor on both Marion T's claim of conversion and on its own counterclaim of conversion. The motion for summary judgment is fully briefed. (DE 77; DE 80; DE 86). Formall filed, together with its reply brief, a motion to strike (DE 87) portions of the affidavit of Lester Lee (DE 80-1), the manager of Marion T, which Marion submitted with its response brief. Marion T did not file a response to the motion to strike, and its time to do so has now passed.

Because Marion T's opposition to the motion for summary judgment addresses evidence subject to Formall's motion to strike, the Court will first turn to that motion. For the following reasons, Formall's motion to strike will be GRANTED, and its motion for summary judgment will be DENIED.

I. MOTION TO STRIKE

A. Applicable Law

Federal Rule of Civil Procedure 56 states that affidavits filed in support of summary judgment "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." Fed. R. Civ. P. 56(c)(4). "An affidavit not in compliance with Rule 56 can neither lend support to, nor defeat, a summary judgment motion." Paniaguas v. Aldon Cos., No. 2:04-cv-468-PRC, 2006 WL 2568210, at *4 (N.D. Ind. Sept. 5, 2006) (citing Zayre Corp. v. S.M. & R. Co., 882 F.2d 1145, 1148-49 (7th Cir. 1989); Palucki v. Sears, Roebuck & Co., 879 F.2d 1568, 1572 (7th Cir. 1989)).

"[W]hen considering a motion to strike portions of an affidavit in support of a motion for summary judgment, courts will only strike and disregard the improper portions of the affidavit and allow all appropriate recitations of fact to stand." Id. (citations omitted); see also Stromsen v. Aluma Shield Indus., Inc., No. 89 C 5036, 1993 WL 34727, at *4 (N.D. Ill. Feb. 8, 1993); Toro Co. v. Krouse, Kern & Co., 644 F. Supp. 986, 989 (N.D. Ind. 1986); 10B Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2738 (3d ed). Specifically, the following statements are not properly included in an affidavit and should be disregarded: (1) conclusory allegations lacking supporting evidence, see Young v. Monahan, 420 F. App'x 578, 583 (7th Cir. 2011); (2) legal argument, see Pfeil v. Rogers, 757 F.2d 850, 862 (7th Cir. 1985); (3) inferences or opinions not "grounded in observation or other first-hand experience," Visser v. Packer Eng'g Assocs., Inc., 924 F.2d 655, 659 (7th Cir. 1991); (4) mere speculation or conjecture, see Stagman v. Ryan, 176 F.3d 986, 995 (7th Cir. 1999); and (5) statements in affidavits which blatantly contradict prior sworn testimony in an attempt to create sham issues of genuine dispute, see Beckel v. Wal-Mart Assocs., Inc., 301 F.3d 621, 624 (7th Cir. 2002); Bank of Ill. v. Allied Signal Safety Restraint, Sys., 75 F.3d 1162, 1168-69 (7th Cir. 1996).

B. Analysis

Formall seeks to strike portions of Lee's affidavit on the grounds that Lee's testimony renders legal conclusions or contradicts his prior deposition testimony. (DE 87). Marion T failed to respond to the motion to strike, which is sufficient enough reason to grant it. See generally Wojtas v. Capital Guardian Tr. Co., 477 F.3d 924, 926 (7th Cir. 2007) (stating that failure to oppose an argument constitutes waiver). However, to complete the record, the Court will briefly address Formall's arguments.

Paragraph 10. Formall argues that in paragraph 10 of the affidavit, Lee testifies about the legal impact of the terms of the TriEnda Lease (defined infra) on the ownership of the disputed equipment. The Court agrees that Lee's testimony in paragraph 10 includes a legal argument and conclusion, as he concludes that the equipment installed by TriEnda, LLC ("TriEnda"), "immediately vested" in Marion T, and thus, that "all electrical equipment after that first junction box belonged to Marion T from the time of installation." (DE 80-1 at 2 ¶ 10). These statements offer legal conclusions on the matters ultimately at issue in this dispute, and therefore, paragraph 10 will be stricken. See, e.g., Bitler Inv. Venture II, LLC v. Marathon Ashland Petroleum, LLC, 779 F. Supp. 2d 858, 873-74 (N.D. Ind. 2011) (granting motion to strike portion of affidavit that concluded defendant's action constituted a breach of the contract at issue, finding that such testimony was a legal conclusion).

Paragraph 11 and Exhibit 2. Formall contends that paragraph 11 and exhibit 2 to Lee's affidavit contain statements or conclusions that contradict the Court's prior ruling (DE 48) and Lee's prior deposition testimony (DE 87-1 at 2-5). See Nuzzi v. St. George Cmty. Consol. Sch. Dist. No. 258, 688 F. Supp. 2d 815, 831 (C.D. Ill. 2010) (striking statements in a witness's affidavit that contradicted her prior deposition testimony). Indeed, Lee attached a version of the Marion T Agreement (defined infra) as an exhibit to his affidavit, stating that it was the final version as determined by the Court; but as Formall points out, Lee attached an incorrect version of the Marion T Agreement. Additionally, Lee seemingly quotes from the Marion T Agreement, but does so incorrectly. As such, paragraph 11 and exhibit 2 will be stricken.

Paragraphs 13, 14, and 16. Formall contends that the second sentence of paragraph 13 and portions of paragraphs 14 and 16 of Lee's affidavit contain legal argument and conclusion. In the second sentence of paragraph 13, Lee testifies about what equipment Formall was "entitled to remove" from Marion T's building. Similarly, in paragraphs 14 and 16, Lee testifies about what items "were not covered by the [a]greement with TM & E" or "were not included in the transfer to Formall." The Court agrees that these statements embrace the legal matters ultimately at issue in this dispute; therefore, the statements will be stricken. See Bitler Inv. Venture II, LLC, 779 F. Supp. 2d at 873-74.

C. Conclusion

Accordingly, Formall's motion to strike, which is unopposed by Marion T, is GRANTED. The Court now turns to Formall's motion for summary judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND³

A. Marion T and TriEnda Enter Into the TriEnda Lease

Marion T owned an industrial manufacturing storage facility located in Marion, Indiana. (DE 48 at 2). In December 2008, Marion T entered into a Lease Agreement ("the TriEnda Lease") with TriEnda, a plastic pallet manufacturing company. (DE 48 at 2; DE 80-1 at 5-16). The term of the TriEnda Lease was four and a half years. (DE 80-1 at 5 § 2). The portions of the TriEnda Lease applicable to this dispute are, in relevant part:

Article 7. CARE OF PREMISES. . . . At the expiration of this Lease or any extensions hereof, Tenant shall surrender the Leased Premises, including any alterations, improvements and/or additions to the Leased Premises made by Tenant which are required to be left at the termination of this Lease . . . .

Article 11. FIXTURES. Any trade fixtures belonging to and installed by Tenant in the Leased Premises prior to or during the term of this Lease, or any extensions hereof, are to be and remain the property of the Tenant, no matter how they may be attached to or incorporated in the Leased Premises, and Tenant shall have the duty to remove same at the termination of this Lease, or any extensions hereof, and to repair, at its own expense, any damage to the Leased Premises caused by the installation or removal of such fixtures. Trade fixtures shall be manufacturing equipment and electrical wiring back to the first junction box or electrical service feed.

Article 12. TENANT IMPROVEMENTS. Tenant may make such alterations to the Leased Premises as necessary for conduct of its business, after submission of plans, specifications and contracts to Landlord. Any existing equipment or metals removed in the course of such improvement shall remain the sole property of Landlord. All improvements (other than trade fixtures) inure to the benefit of Landlord.

(DE 80-1 at 7-9 §§ 7, 11, 12).

B. TME Purchases the TriEnda Equipment Located in Marion T's Building

TriEnda's business venture eventually failed, and Lexington Logistics purchased the TriEnda equipment located in Marion T's building. (DE 48 at 1). Lexington Logistics then sold this equipment to TME, a broker in the business of buying and selling industrial equipment. (DE 48 at 1). Don Kruschke, TME's president, was TME's representative in the transactions relevant to this dispute. (DE 48 at 2; DE 41 at 65). In its transaction with Lexington Logistics, TME purchased:

2 2009 Brown 9.5' x 17' Twinsheet Rotary Therm[o]formers Model R244ETF Serial numbers __________ & __________

Included: All contents of Spara Industries/TriEnda plant located in Marion, IN facility. To include: Vacuum pumps, vacuum tanks, schematics, manuals, chillers, temperature control units, compressors, all clamp frames, miscellaneous spare parts and tools pertaining to Brown Thermoformers, Excluding Maac twinsheet thermoformer and all KMT robots and routers.

(DE 77-1 at 10). The equipment remained in Marion T's building while Kruschke solicited buyers for the equipment. (DE 77-2 at 3).

C. TME and Formall Enter Into the Formall Agreement

Kruschke starting negotiating with Formall, who is in the thermoforming industry, to purchase a...