NRRM, LLC v. Mepco Fin. Corp., 10 C 4642
| Decision Date | 27 March 2015 |
| Docket Number | 10 C 4642 |
| Parties | NRRM, LLC, Plaintiff/Counter-Defendant/Cross-Defendant/Counter-Cross Plaintiff, and MARK TRAVIS and NICHOLAS HAMILTON, Plaintiffs/Counter-Defendants/Cross-Defendants, v. MEPCO FINANCE CORPORATION, Defendant/Counter-Plaintiff/Third-Party Plaintiff, v. CHOICE MANUFACTURING CO. INC., Third-Party Defendant/Counter-Third-Party Plaintiff/Cross-Plaintiff/Counter-Cross Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
This litigation arises from a three-way business deal gone, if the case caption is any indication, terribly wrong. Choice Manufacturing administers automobile service and repair warranties; NRRM was a Choice sales agent that marketed and sold the warranties to customers; and Mepco Finance offered financing to customers who wanted to pay for the warranties in installments. (Two of NRRM's member-managers are also parties, but their presence is immaterial for present purposes.) Each party accuses the others of breaching their respective agreements. Docs. 58, 66, 76, 77. Trial is set for September 14, 2015. Doc. 198.
Before the court are several motions. Mepco has moved to enforce its purported settlement agreement with NRRM, Doc. 157, and for a protective order against NRRM's new discovery requests, Doc. 173. Mepco also has moved for summary judgment on its breach claim against Choice, Doc. 152, and, relatedly, for leave to file short supplemental brief and an amended Local Rule 56.1(a)(3) statement in support of summary judgment, Doc. 186. NRRM has moved for summary judgment against Choice on Choice's contractual claim for attorney fees. Doc. 139.
NRRM's summary judgment motion is granted, as are Mepco's motions to enforce its settlement agreement with NRRM and for a protective order. Mepco's motion to file an amended Local Rule 56.1(a)(3) statement is granted, and its summary judgment motion is entered and continued to allow Choice to respond to the amended Local Rule 56.1(a)(3) statement pursuant to Local Rule 56.1(b)(3)(B) and to file, if it wishes, a new brief opposing summary judgment.
The following facts are set forth as favorably to Choice, the non-movant on both summary judgment motions, as the record and Local Rule 56.1 permit. See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir. 2012). The court assumes the truth of those facts, but does not vouch for them. See Smith v. Bray, 681 F.3d 888, 892 (7th Cir. 2012). That said, many of the facts are undisputed, either by agreement or because the fact simply quotes a document.
Much of the relevant background is set forth in the court's previous summary judgment opinion in this case. Doc. 135 (published at 2013 WL 4537391 (N.D. Ill. Aug. 27, 2013)). To simplify greatly, Choice administers vehicle warranties, under which customers pay a fixed up-front fee in exchange for automobile repairs and service over the terms of the warranty. 2013WL 4537391, at *1. Choice does not sell directly to customers; instead, it uses sales agents, one of which was NRRM. Ibid. Customers who wished to purchase Choice's warranties through NRRM had the option of financing their purchase through Mepco. Ibid. Under the agreements Mepco signed with Choice (the "Administrator Agreement") and NRRM (the "Dealer Agreement"), Mepco would pay Choice and NRRM the full price of the warranty up front in exchange for receiving the customer's monthly payments. Id. at *1-2. If the customer defaulted on his payments or canceled the warranty, § 4 of the Mepco-NRRM Dealer Agreement provided:
[NRRM] shall be obligated to refund Mepco the following amount: (1) the amount financed by Mepco [(that is, the full up-front price)]; plus (2) any late payment charges due to Mepco; less (3) payments Mepco received from the [customer]; less (4) any amounts received by Mepco from [Choice] with respect to the canceled [financing plan].
Doc. 140-1 at 6, 12 (emphases added).
But if NRRM—or, for that matter, any other of Choice's Dealers who signed similar agreements with Mepco—failed to fulfill its § 4 obligation to make Mepco whole, "Paragraph 7 of [Choice and Mepco's] Administrator Agreement required Choice to indemnify Mepco." 2013 WL 4537391, at *2. Section 9(e) of the Mepco-NRRM Dealer Agreement provided:
(e) Prevailing Party Costs. The prevailing parties in any litigation in connection with this Agreement shall be entitled to recover from the non-prevailing party all costs and expenses, including, without limitation, reasonable attorneys' and paralegals' fees and costs incurred by such party in connection with any such litigation.
Doc. 144 at p. 2, ¶ 1; Doc. 140-1 at 9, 15. Although Choice was not a signatory to the Dealer Agreement, Doc. 144 at p. 2, ¶ 2, the Dealer Agreement provided that "[t]he Agreement is entered into between [NRRM] and Mepco for the exclusive benefit of [Choice] and Mepco and their respective successors and permitted assigns and is expressly not intended for the benefit of any other party." Doc. 144 at p. 3, ¶ 1; Doc. 140-1 at 9, 15.
In July 2010, NRRM sued Mepco for breaching the Dealer Agreement. Doc. 4. Mepco counterclaimed and filed a third-party complaint against Choice, including on warranties financed by Mepco but sold by agents other than NRRM. Doc. 16. Choice filed a cross-claim against NRRM. Doc. 28. NRRM responded by filing a counter-cross-claim against Choice. Doc. 36. The parties amended their pleadings in 2011. Docs. 55, 58, 66-68, 76-79. After some discovery, Mepco moved for summary judgment as to liability on its counterclaims against NRRM and its third-party claims against Choice. Docs. 91, 93.
On May 30, 2013, while Mepco's motions were pending, NRRM's lawyer emailed Mepco's lawyer a settlement offer. Doc. 159 at ¶ 1. The "only material terms for the offer," in the words of NRRM's lawyer, were:
Ibid.; Doc. 159-1 at 5, 9. Mepco's lawyer accepted NRRM's offer later that day, replying: "Mepco will accept the offer subject to a formal written agreement with customary terms." Doc. 159 at ¶ 2; Doc. 159-1 at 5, 8. NRRM's lawyer confirmed in a June 5 email: Doc. 159 at ¶ 3; Doc. 159-1 at 8. On or about June 10, 2013, NRRM's counsel informed the court that a settlement had been reached, Doc. 159 at ¶ 4, and the court accordingly said that it would deny as moot Mepco's motion for summary judgment against NRRM and also its motion for summary judgment against Choice as to the portion of Mepco'sthird-party claims arising from the NRRM contracts, Doc. 131. At an August 28, 2013 status hearing, NRRM's and Mepco's counsel confirmed that the parties had settled. Doc. 136.
Meanwhile, the court denied the surviving part of Mepco's summary judgment motion—which concerned the portion of Mepco's third-party claims arising from the non-NRRM warranties—for failure to adduce admissible evidence supporting a grant of summary judgment. Doc. 134; 2013 WL 4537391 at *4-5. Now before the court are Mepco's motions to enforce its settlement agreement with NRRM, Doc. 157, and for a protective order against NRRM's new discovery requests, Doc. 173. Mepco has also again moved for summary judgment on its breach claim against Choice, Doc. 152, and, relatedly, for leave to file an amended Local Rule 56.1(a)(3) statement in support of its summary judgment motion, Doc. 186. NRRM has moved for summary judgment against Choice on Choice's contractual claim for attorney fees. Doc. 139.
NRRM and Choice each sought in this lawsuit to force the other to pay Mepco for the losses that Mepco allegedly incurred. Once NRRM and Mepco settled, however, the dispute between NRRM and Choice was rendered largely moot, for as a result of the settlement, Mepco abandoned all of its claims against Choice related to warranties sold by NRRM. (Mepco's pending motion for summary judgment against Choice relates only to warranties allegedly sold by another of Choice's sales agents.) Choice's potential liability to Mepco on the NRRM warranties having evaporated, its only remaining claim against NRRM is its bid for contractual attorney fees. NRRM seeks summary judgment on that claim.
As an initial matter, Choice correctly points out that NRRM did not comply with Local Rule 56.1(a)(3). Doc. 143 at 2-3. For one thing, NRRM did not file a separate Local Rule56.1(a)(3) statement of facts, but simply included it in its memorandum. The local rules do not explicitly prohibit this, but Judge Castillo's seminal decision in Malec v. Sanford, 191 F.R.D. 581 (N.D. Ill. 2000), does. Id. at 585 ( ); see also Sagar Megh Corp. v. United Nat'l Ins. Co., 2013 WL 5951771, at *2 (N.D. Ill. Nov. 6, 2013) (same). But this non-substantive and purely formal violation does not impede the court's consideration of NRRM's motion, and thus will be overlooked.
The court also will overlook the second flaw noted by Choice—NRRM's failure to include in its Local Rule 56.1(a)(3) statement any of the required facts describing the parties and supporting venue and jurisdiction. See N.D. Ill. L.R. 56.1(a)(3)(A) & (B). Although early in this litigation (and in response to the court's show cause order) NRRM alleged facts supporting diversity jurisdiction, Docs. 49, 51, it has not adduced evidence supporting those allegations, as required at the summary judgment stage. See Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 676 (7th Cir. 2001) (...
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