Morris Silverman Man. v. Western Union Fin. Servs.

• Decision Date: 19 June 2003
• Docket Number: No. 01 C 1688.,01 C 1688.
• Citation: 284 F.Supp.2d 964
• Court: U.S. District Court — Northern District of Illinois
• Parties: MORRIS SILVERMAN MANAGEMENT CORPORATION, Plaintiff, Counterdefendant, v. WESTERN UNION FINANCIAL SERVICES, INC., Defendant, Counterplaintiff.

284 F.Supp.2d 964

MORRIS SILVERMAN MANAGEMENT CORPORATION, Plaintiff, Counterdefendant, v. WESTERN UNION FINANCIAL SERVICES, INC., Defendant, Counterplaintiff.

No. 01 C 1688.

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

June 19, 2003.

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Robert L. Graham, Mark D. Pollack, Anthony C. Porcelli, Jenner & Block, Dennis C. Waldon, Lavin, Wldon & Bornstein, Robert M. Wigoda, Chicago, IL, for plaintiff.

Richard J. O'Brien, David L. Ter Molen, Sidley, Austin, Brown & Wood, G. Wayne Hillis, Jr., David G. Russell, Linda G. Carpenter, Parker, Hudson, Rainer & Dobbs, LLP, Atlanta, GA, for defendant.

MEMORANDUM OPINION AND ORDER

HART, District Judge.

I. BACKGROUND

This case centers around the dissolution of a relationship between plaintiff-counter-defendant Morris Silverman Management Corporation ("MSMC") and defendant-counterplaintiff Western Union Financial Services, Inc. ("Western Union"). MSMC owns and operates numerous currency exchanges, check cashing facilities, and pay-day loan centers at various locations in the United States. During the late 1990's, it operated up to 200 locations. For more than 25 years, MSMC offered Western Union wire transfer and other services at those locations. Other non-Western-Union services are also offered at each location. The last contract under which MSMC offered Western Union services expired June 28, 2001. The present case centers on the termination of the parties' relationship and the last few years before termination.

Diversity jurisdiction is proper in that MSMC is an Illinois corporation with it principal place of business in Illinois and Western Union is a Colorado corporation with its principal place of business in Colorado. The amount in controversy is well in excess of $75,000. The parties agree that, under a choice of law provision of the parties' contract, New Jersey law applies to the contract claims between the parties. Because the parties present no choice-of-law arguments regarding the noncontract claims, generally cite to Illinois law regarding these claims, and do not contend there is any applicable law that is different than Illinois law, Illinois law will be applied in resolving the noncontract claims. See Massachusetts Bay Insurance Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116, 1120 (7th Cir.1998); Wood v. Mid-Valley, Inc., 942 F.2d 425, 426-27 (7th Cir.1991); In re Iowa Railroad, 840 F.2d 535, 543 (7th Cir.1988); Eggert v. Weisz, 839 F.2d 1261, 1263 n.1 (7th Cir.1988).¹ Presently pending are cross motions for summary judgment.

The contract between the parties (the "Agreement") is dated June 28, 1995 and was amended July 15, 1996. The Agreement provided for an initial term of six years and was to remain in force thereafter unless either party exercised a right to terminate by giving at least twelve months' notice to the other party. There is no dispute that, in October 1999, Western Union provided written notice to terminate the agreement at the end of the initial term. MSMC, however, contends that Western Union violated its duty to act in good faith in negotiating an extension of the Agreement and that the written notice of termination was ineffective. The Agreement has provisions regarding fees and commissions to be paid to MSMC for providing Western Union services to the public. There is also a provision that MSMC was to receive an upfront Acquired Location Allowance (the "Allowance") for each new "Acquired Location" it opened or acquired and at which it offered Western Union services. If such an Acquired Location offered Western Union services for less than 36 months, Western Union was entitled to a pro rata refund of the Allowance ("Allowance Refund"). A dispute exists regarding whether Western Union was entitled to the Allowance Refund for locations that were open less than 36 months at the time the Agreement terminated. There is also a dispute concerning whether Western Union was entitled to the Allowance Refund when MSMC sold some Acquired Locations to Ace Cash Express, Inc. ("Ace") and Western Union would not allow Ace to continue to offer Western Union services at those locations. As to Acquired Locations sold to Ace, MSMC seeks the return of the Allowance Refunds it has already paid. MSMC also complains that Western Union wrongfully denied approval of a number of locations as Acquired Locations.

Western Union brings a five-count Second Amended Counterclaim. Most of the counts center on MSMC's alleged misappropriation of customer and transaction information related to MSMC's provision of Western Union services ("customer information"). Count I is labeled as a conversion claim based on MSMC's retention and use of the customer information. Count II is labeled as a fraud claim and is based on the allegation that MSMC falsely represented that it returned all customer information around the time the Agreement terminated. Count III is labeled as a trade secret misappropriation claim based on MSMC using the customer information to create a database used in soliciting customers to continue to use MSMC locations after the Agreement terminated. After the Agreement terminated, MSMC locations offered money transfer services provided by MoneyGram Payments Systems, Inc. ("MoneyGram"), a competitor of Western Union. Count IV is labeled as a breach of contract claim and is broken into subclaims. Count IV(A) seeks the Allowance Refunds regarding the Acquired Locations that had not offered Western Union Services for 36 months at the time the Agreement terminated. Count IV(B) alleges the copying and use of customer information and certain financial information breached a provision of the Agreement. Count IV(C) seeks indemnity under the Agreement for $1800 in losses that Western Union allegedly incurred due to MSMC's failure to remit money transfers to the proper person. Count V is labeled as a set-off claim, seeking to set off the Allowance Refunds allegedly due against any damages MSMC may obtain on its claims.

Western Union moves for summary judgment dismissing MSMC's Second Amended Complaint in its entirety. Western Union also moves for summary judgment in its favor on the Count I conversion and Count IV(B) contract claims related to the customer information, as well as the Count IV(A) claim for the Allowance Refunds. MSMC moves for summary judgment dismissing all the counts of the Second Amended Counterclaim that concern customer information, that is, Counts I, II, III, and IV(B).

II. SUMMARY JUDGMENT STANDARD

On a motion for summary judgment, the entire record is considered with all reasonable inferences drawn in favor of the nonmovant and all factual disputes resolved in favor of the nonmovant. Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.2002); Hilt-Dyson v. City Of Chicago, 282 F.3d 456, 462 (7th Cir.), cert. denied, 537 U.S. 820, 123 S.Ct. 97, 154 L.Ed.2d 27 (2002); Schneiker v. Fortis Insurance Co., 200 F.3d 1055, 1057 (7th Cir.2000). The burden of establishing a lack of any genuine issue of material fact rests on the movant. Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir.2001); Wollin v. Gondert, 192 F.3d 616, 621-22 (7th Cir.1999). The nonmovant, however, must make a showing sufficient to establish any essential element for which it will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Billings v. Madison Metropolitan School District, 259 F.3d 807, 812 (7th Cir.2001). The movant need not provide affidavits or deposition testimony showing the nonexistence of such essential elements. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Also, it is not sufficient to show evidence of purportedly disputed facts if those facts are not plausible in light of the entire record. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 236 (7th Cir.), cert. denied, 515 U.S. 1104, 115 S.Ct. 2249, 132 L.Ed.2d 257 (1995); Covalt v. Carey Canada, Inc., 950 F.2d 481, 485 (7th Cir.1991); Collins v. Associated Pathologists, Ltd., 844 F.2d 473, 476-77 (7th Cir.), cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 110 (1988). As the Seventh Circuit has summarized:

The party moving for summary judgment carries the initial burden of production to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Logan v. Commercial Union Ins. Co., 96 F.3d 971, 978 (7th Cir.1996) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citation and internal quotation omitted)). The moving party may discharge this burden by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. 2548, 91 L.Ed.2d 265. Once the moving party satisfies this burden, the nonmovant must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The nonmovant must do more, however, than demonstrate some factual disagreement between the parties; the issue must be `material.'" Logan, 96 F.3d at 978. "Irrelevant or unnecessary facts do not preclude summary judgment even when they are in dispute." Id. (citation omitted). In determining whether the nonmovant has identified a "material" issue of fact for trial, we are guided by the applicable substantive law; "[o]nly disputes that could affect the outcome of the suit under governing law will properly preclude the entry of summary judgment." McGinn v. Burlington Northern R.R. Co., 102 F.3d 295, 298 (7th Cir.1996) (citation omitted). Furthermore, a factual dispute is "genuine" for summary judgment purposes only when there is "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v....