Northbound Grp., Inc. v. Norvax, Inc.

• Decision Date: 01 January 2013
• Docket Number: No. 11 C 6131,11 C 6131
• Citation: 5 F.Supp.3d 956
• Parties: Northbound Group, Inc., Plaintiff, v. Norvax, Inc., Leadbot, LLC, Clint Jones and Michael Ahern, Defendants. Norvax, Inc. and Leadbot, LLC, Defendants and Third Party Plaintiffs, v. Northbound Group, Inc., Benjamin Wagner and Robert McAleer, Plaintiff and Third Party Defendants.
• Court: U.S. District Court — Northern District of Illinois

5 F.Supp.3d 956

Northbound Group, Inc., Plaintiff,

v.Norvax, Inc., Leadbot, LLC, Clint Jones and Michael Ahern, Defendants.

Norvax, Inc. and Leadbot, LLC, Defendants and Third Party Plaintiffs,

v.Northbound Group, Inc., Benjamin Wagner and Robert McAleer, Plaintiff and Third Party Defendants.

No. 11 C 6131

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

Filed: 12/03/2013

Patrick M. Jones, Greensfelder Hamker & Gale P.C., Chicago, IL, James H. Ferrick, III, Greensfelder, Hemker & Gale, P.C., St. Louis, MO, for Plaintiff/Defendants and Third Party Plaintiffs.

Jeffrey Brian Greenspan, Meites, Mulder, Burger & Glink, Christopher E. Kentra, Meckler, Bulger & Tilson, Chicago, IL, for Defendants/Plaintiff and Third Party Defendants.

MEMORANDUM OPINION AND ORDER¹

Sidney I. Schenkier, United States Magistrate Judge

Plaintiff Northbound Group, Inc. (“Northbound” or plaintiff), filed an amended complaint against defendants Norvax, Inc. (“Norvax”), its Chief Executive Officer (“CEO”) Clint Jones, its Chief Financial Officer (“CFO”) Michael Ahern, and Leadbot, LLC (“Leadbot”) (collectively, “defendants”), alleging that the defendants are liable for fraud, promissory estoppel, breach of contract, breach of fiduciary duty, and conversion (doc. # 4). This Court dismissed the claims for promissory estoppel, breach of fiduciary duty, and conversion; dismissed Leadbot from the fraud claim; narrowed the claim of fraudulent inducement “to the alleged statements about the Bid Platform”; and dismissed Mr. Jones and Mr. Ahern from the contract claim. Northbound Group, Inc. v. Norvax, Inc., No. 11 C 6131, 2012 WL 394336, at *11 (N.D.Ill. Feb. 6, 2012). Subsequently, defendants filed an answer, affirmative defenses, and a three-count counter-claim/third-party complaint: (1) Leadbot against Northbound, its Chief Executive Officer (“CEO”) Benjamin Wagner, and its Chief Operating Officer (“COO”) Robert McAleer for conversion (“Counterclaim Count I”); (2) Norvax and Leadbot against Mr. Wagner and Mr. McAleer (“counter-defendants”) for breach of fiduciary duty (“Counterclaim Count II”); and (3) Norvax and Leadbot against Mr. Wagner, Mr. McAleer, and Northbound for fraud (“Counterclaim Count III”) (doc. # 56).

Plaintiff Northbound has filed a motion for partial summary judgment on Count III of the amended complaint (breach of contract) (doc. # 112); defendants Leadbot and Norvax have cross-moved for summary judgment on that claim in its entirety (doc. # 129); defendants Norvax, Mr. Jones, and Mr. Ahern have moved for summary judgment on the fraud claim (Count I of the amended complaint) (doc. # 129); and finally, Northbound and third-party defendants Mr. Wagner and Mr. McAleer seek summary judgment on all three counts of Norvax and Leadbot's counterclaim (Count I: Conversion; Count II: Breach of Fiduciary Duty; and Count III: Fraud) (doc. # 112).

For the following reasons, we grant summary judgment for the defendants on Count I of the amended complaint for fraud and for Norvax on Count III for breach of contract. We grant in part Northbound's motion for partial summary judgment on Count III for the withheld earn-out payments, and grant Leadbot's corresponding motion for summary judgment on Count III other than for plaintiff's claim for the withheld earn-out payments. We also grant counter-defendants' motion for summary judgment on all three counts of the counterclaim asserted against them.

I

As a preliminary matter, we address two motions to strike filed by the plaintiff and counter-defendants, as well as a motion to strike filed by the defendants. First, we address the motion of Northbound, Mr. Wagner, and Mr. McAleer (doc. # 134) to strike what they characterize as immaterial facts, inferences, and arguments set forth in defendants' Local Rule 56.1(a) statement of uncontested facts (doc. # 162 (corrected version of doc. # 131)) and their motion to strike and response (doc. # 148) to defendants' Local Rule 56.1(b)(3)(C) statement of additional uncontested facts (doc. # 142). We then consider defendants' motion (doc. # 154) to strike portions of the affidavits of Benjamin Wagner (doc. # 136) and Robert McAleer (doc. # 137) filed in support of Northbound's Response in Opposition to Defendants' Motion for Summary Judgment (doc. # 135).

A.

Plaintiff and counter-defendants Northbound, Mr. Wagner, and Mr. McAleer have filed a “Motion to Strike Immaterial Facts, Inferences and Arguments Set Forth in Defendants' Local Rule 56.1(a) Statement of Uncontested Facts” (doc. # 134) and a “Motion to Strike and Response to Defendants' Local Rule 56.1(b)(3)(C) Statement of Additional Uncontested Facts” (doc. # 148). Plaintiff and counter-defendants urge this Court to strike the defendants' statement of uncontested facts (doc. # 162) and statement of additional uncontested facts (doc. # 142) because they contain legal argument, mischaracterizations, immaterial and irrelevant statements, statements that contradict documentary evidence, and inadmissible evidence (doc. # 134 at 2–6; doc. # 148 at 2). Defendants filed a response to the motion to strike their Rule 56.1(a) statement (doc. # 153) and a response to the motion to strike their statement of additional uncontested facts (doc. # 165).

Local Rule 56.1 “is designed, in part, to aid the district court, ‘which does not have the advantage of the parties' familiarity with the record and often cannot afford to spend the time combing the record to locate the relevant information,’ in determining whether a trial is necessary.” Delapaz v. Richardson, 634 F.3d 895, 899 (7th Cir.2011) (citation omitted). Local Rule 56.1(a)(3) requires the moving party to provide “a statement of material facts as to which the moving party contends there is no genuine issue.” Cracco v. Vitran Express, Inc., 559 F.3d 625, 632 (7th Cir.2009); seeSojka v. Bovis Lend Lease, Inc., 686 F.3d 394, 398 (7th Cir.2012) (Rule 56.1 statements require “parties to nail down the relevant facts and the way they propose to support them”). “The opposing party is required to file “a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting material relied upon.” Cracco, 559 F.3d at 632 (citing N.D. Ill. R. 56.1(b)(3)(B)). Also, a nonmovant who seeks to assert facts beyond those fairly responsive to the movant's Rule 56.1(a)(3) statement must do so in a separate statement of additional facts under Local Rule 56.1(b)(3)(C). SeeCiomber v. Cooperative Plus, Inc., 527 F.3d 635, 643–44 (7th Cir.2008); Gray v. Ghosh, No. 12 C 194, 2013 WL 5497250, at *4 (N.D. Ill. Oct 3, 2013).

Rule 56.1 statements must identify relevant, admissible evidence supporting material facts, without making factual or legal arguments. SeeCady v. Sheahan, 467 F.3d 1057, 1060 (7th Cir.2006). Although we are entitled to demand strict compliance with the Local Rules, we have broad discretion in deciding whether to do so. SeeBenuzzi v. Bd. of Educ. of City of Chicago, 647 F.3d 652, 655 (7th Cir.2011).

In the present case, while we agree that defendants' Rule 56.1 statements contain some argumentative, immaterial, irrelevant, or duplicative assertions, we are able to separate defendants' properly alleged facts from their improperly asserted statements. Therefore, we deny as moot plaintiff's and counter-defendants' motions to strike (docs. ##134, 148), and we will accordingly disregard any improper statements. See, e.g.,Zitzka v. Vill. of Westmont, 743 F.Supp.2d 887, 897 (N.D.Ill.2010) (denying motions to strike as moot and separating proper from improper allegations); Alvarado v. Corporate Cleaning Serv., Inc., 719 F.Supp.2d 935, 938 n. 2 (N.D.Ill.2010) (denying motion as moot and disregarding improper factual assertions).

B.

The defendants have filed a motion to strike portions of the affidavits of Northbound's CEO Benjamin Wagner (doc. # 136) and its COO Robert McAleer (doc. # 137) on the ground that the affidavits contradict Mr. Wagner's and Mr. McAleer's prior deposition testimony (doc. # 154). Plaintiff filed no response to this motion.

It is well-settled that parties opposing summary judgment may not create issues of fact by contradicting themselves with post-deposition affidavits. Holloway v. Delaware Cnty. Sheriff, 700 F.3d 1063, 1075 (7th Cir.2012); Kalis v. Colgate–Palmolive Co., 231 F.3d 1049, 1055 (7th Cir.2000) (“the law of this circuit does not permit a party to create an issue of fact by submitting an affidavit whose conclusions contradict prior deposition or other sworn testimony”). When a declarant contradicts his or her prior deposition testimony, a court must examine the particular circumstances of the change in testimony to determine “whether it is plainly incredible or merely creates a credibility issue for the jury.” Patton v. MFS/Sun Life Fin. Distribs., 480 F.3d 478, 488 (7th Cir.2007). Defendants ask us to strike paragraphs 3 through 6 of Benjamin Wagner's affidavit (doc. # 136), and paragraphs 3, 4, 5, 11 and Exhibits J and K of Robert McAleer's affidavit (doc. # 137).

1.

Defendants argue that paragraphs 3 through 6 of the Wagner affidavit and paragraphs 3 through 5 of the McAleer affidavit improperly attempt to assert that in persuading Northbound to sell its assets to start a new business, representatives from Norvax falsely advised Mr. Wagner and Mr. McAleer that its computer systems that matched insurance leads with orders from Norvax's customers (the “Bid Platform”) ² would award bids to the highestbidder (doc. # 154 at 2–7). The amended complaint alleged that Mr. Jones and Mr. Ahern “repeatedly represented to Northbound that the Bid Platform did not discriminate among bids and awarded leads to the highest bidder” (doc. # 4 at ¶ 20). In their depositions, Mr. Wagner and Mr. McAleer were both questioned regarding any conversations they had with Norvax executives Mr. Jones and Mr. Ahern in the...