Thompson Corrugated Sys. v. Engico S.R.L.

• Decision Date: 22 July 2022
• Docket Number: 20-cv-122-JPG
• Parties: THOMPSON CORRUGATED SYSTEMS, INC. and THOMPSON CORRUGATED SYSTEMS LLC, Plaintiffs, v. ENGICO S.R.L., Defendant.
• Court: U.S. District Court — Southern District of Illinois

THOMPSON CORRUGATED SYSTEMS, INC. and THOMPSON CORRUGATED SYSTEMS LLC, Plaintiffs,
v.
ENGICO S.R.L., Defendant.

No. 20-cv-122-JPG

United States District Court, S.D. Illinois

July 22, 2022

MEMORANDUM AND ORDER

J. PHIL GILBERT DISTRICT JUDGE

This matter comes before the Court on the motion of plaintiffs Thompson Corrugated Systems, Inc. and Thompson Corrugated Systems LLC (collectively, “TCS”) for a determination of the exact amount awardable for their summary judgment victory on Count I (breach of contract) and Count II (Illinois Sales Representative Act) based on the 2019 sale of an Engico machine to Lawrence Paper Company (Doc. 97). TCS seeks entry of an immediate judgment as to the amount determined to be due. Engico has responded to the motion (Doc. 99), and TCS has replied to that response (Doc. 101).

I. Background

A brief recap of the history of this case is helpful to understanding the plaintiffs' request. This case arose out of a relationship between Engico and TCS that began in 2002 and went south in 2019. TCS alleges that in 2004 Engico orally agreed that TCS would jointly be the exclusive sales representative for Engico's products-machinery to produce corrugated materials-in North America, and that it would be paid on commission. The relationship was terminated in 2019.

In granting TCS partial summary judgment, the Court found there was no genuine issue

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of material fact that, for at least a period of time, there was an exclusive sales representative agreement. The Court found that the agreement entitled TCS to a commission on the sale of a new Engico machine to Lawrence Paper in May 2019; the Court left the issue of commissions on two later sales for a jury to decide. Procedurally, the Court granted summary judgment on Count I, a breach of contract claim, and Count II, a claim under the Illinois Sales Representative Act (“IRSA”), 820 ILCS 120/0.01 et seq., but only to the extent those claims were based on commission due for the 2019 Lawrence Paper sale. Because the evidence established the unpaid commission for that sale in euros that needed to be converted dollars and because there remained questions about the propriety and amount of other damage components, the Court sought further input from the parties.

II. Damages Calculation

A. Compensatory Damages for Unpaid Commission

TCS has responded by offering a basis for calculating compensatory damages due to the breach of the contract to pay a commission on the 2019 Lawrence Paper sale: €180,000 converted at the exchange rate of $1.1233, the rate on May 19, 2019, the date of the sale, for a commission due of $202,194. Engico does not dispute this calculation. Accordingly, the Court finds that compensatory damages due for the unpaid commission on Count I, to the extent it is based on the 2019 Lawrence Paper sale, is $202,194.

B. Prejudgment Interest

TCS asks for prejudgment interest at the rate of 5% under the Illinois Interest Act, 815 ILCS 205/2, on Count I from May 19, 2019, because Engico acknowledged the full commission was due yet failed to pay it. Engico does not specifically oppose the request for prejudgment interest, although it argues its failure to pay was the result of a legitimate legal dispute.

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The Interest Act provides that creditors shall pay prejudgment interest at a rate of 5% “on money withheld by an unreasonable and vexatious delay of payment.” 815 ILCS 205/2. The Court has discretion under Illinois law whether to award prejudgment interest. Twenhafel v. State Auto Prop. & Cas. Ins. Co., 581 F.3d 625, 630 (7th Cir. 2009); In re Est. of Feinberg, 6 N.E.3d 310, 344 (Ill.App.Ct. 2014).

The Court believes that Engico's failure to pay the 2019 Lawrence Paper commission after entry of this order is unreasonable and would entitle TCS to prejudgment interest beginning today. To the extent TCS requests prejudgment interest from May 19, 2019, to today, the Court reserves the question for trial when it can review the evidence and exercise its discretion to determine whether Engico's delay in paying commission on the 2019 Lawrence Paper sale was unreasonably or vexatiously delayed. It will wait until the conclusion of the case to calculate the total prejudgment interest award.

C. Exemplary Damages

TCS asks the Court for exemplary damages on Count II of three times the amount of its compensatory damages for the 2019 Lawrence Paper sale. Engico argues that its conduct did not rise to the level of egregiousness warranting exemplary damages at all, much less exemplary damages of three time the unpaid commission.

It is true that the ISRA states that a principal who fails to timely pay commissions “shall be liable in a civil action for exemplary damages in an amount which does not exceed 3 times the amount of the commissions owed to the sales representative.” 820 ILCS 120/3 (emphasis added). However, despite the mandatory language in the statute, Illinois courts “award exemplary damages only when the sales representative proves that the principal willfully and wantonly refused to pay. Illinois courts caution against...