Mid-American Salt, LLC v. D.J.'s Lawn Serv., Inc.

396 F.Supp.3d 797

MID-AMERICAN SALT, LLC f/k/a Midwest Salt of Fort Wayne, LLC, Plaintiff,

v.D.J.’S LAWN SERVICE, INC. d/b/a D.J.’s Landscape Management, Defendant.

D.J.’s Lawn Service, Inc. d/b/a D.J.’s Landscape Management, Counterclaim Plaintiff,

v.Mid-American Salt, LLC f/k/a Midwest Salt of Fort Wayne, LLC, Counterclaim Defendant

CASE NUMBER: 1:16 CV 280

United States District Court, N.D. Indiana, Fort Wayne Division, Fort Wayne Division.

Signed June 24, 2019

Jacob M. O'Brien, Scott L. Starr, Raymond Daniel Faust, Starr Austen & Miller LLP, Logansport, IN, Robert D. Moreland, Rob Moreland Attorney at Law, Angola, IN, for Plaintiff/Counterclaim Defendant.

Andrew Miller Pendexter, Gregory A. Neibarger, Bingham Greenebaum Doll LLP, Indianapolis, IN, for Defendant/Counterclaim Plaintiff.

OPINION AND ORDER

William C. Lee, United States District Court Judge

After an agreement for the sale and purchase of rock salt went awry, Mid-American Salt, LLC f/k/a Midwest Salt of Fort Wayne, LLC ("MAS") filed this suit seeking relief for breach of contract by the Defendant, D.J.’s Lawn Service, Inc. ("DLS"). DLS counterclaimed. Before the Court are MAS’s Motion for Partial Summary Judgment [DE 54] as well as DLS’s Cross-motion for Summary Judgment. [DE 57]. For the following reasons, MAS’s Motion will be DENIED and DLS’s Motion will be GRANTED in part and DENIED in part.

APPLICABLE STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The movant bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of designated evidence that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

After "a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (quotation marks and citation omitted).

The existence of cross-motions for summary judgment does not imply that there are no genuine issues of material fact. R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Engineers, Local Union 150, AFL-CIO , 335 F.3d 643, 647 (7th Cir. 2003). "Parties have different burdens of proof with respect to particular facts; different legal theories will have an effect on which facts are material; and the process of taking the facts in the light most favorable to the non-movant, first for one side and then for the other, may highlight the point that neither side has enough to prevail without a trial." Id.

A factual issue is material only if resolving the factual issue might change the outcome of the case under the governing law. See Clifton v. Schafer , 969 F.2d 278, 281 (7th Cir. 1992). A factual issue is genuine only if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the evidence presented. See Anderson , 477 U.S. at 248, 106 S.Ct. 2505. In deciding a motion for summary judgment, the court "may not ‘assess the credibility of witnesses, choose between competing reasonable inferences, or balance the relative weight of conflicting evidence.’ " Bassett v. I.C. Sys., Inc. , 715 F. Supp. 2d 803, 808 (N.D. Ill. 2010) (quoting Stokes v. Bd. of Educ. of the City of Chi. , 599 F.3d 617, 619 (7th Cir. 2010) ). Instead, it must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in favor of the non-moving party. See Anderson , 477 U.S. at 255, 106 S.Ct. 2505. Mindful of these standards, the Court turns now to the facts of the case.

FACTUAL BACKGROUND

For the most part, the parties agree on the underlying facts in this case. Where the parties dispute relevant facts, those will be specifically referenced herein.

A. The Parties

DLS is a Michigan for-profit regional lawn and landscape business that offers comprehensive, year-round landscape services to its clients, including snow and ice management. D.J. VanderSlik ("VanderSlik") is the president and sole shareholder of DLS. (Affidavit of DJ VanderSlik, at ¶2; hereafter "VanderSlik Aff. at ¶––––"). From time to time, DLS purchases rock salt used to prevent snow and ice from accumulating on roads and parking lots and resells the salt to its customers. (Id. at ¶s 4-5)

MAS is a domestic procurer and reseller of bulk rock salt and other deicing products. As a procurer of bulk rock salt, MAS purchases salt from one party and then resells it to its customers at a higher price. (Complaint, ¶s 3, 4, 9). It operates, therefore, as a middle man. Andrew Thiele ("Thiele") is the president of MAS.

B. The Contracts

In 2014, MAS purchased salt for resale from various suppliers, including Chemical Equipment Labs, Inc. ("CEL"). (Deposition of Andrew Thiele [DE 58-2], at p. 50; hereafter "Thiele Dep. at ––––."). In August, 2014, Thiele and VanderSlik began a series of discussions relating to the sale of bulk rock salt from MAS to DLS. (VanderSlik Aff. at ¶8). However, before VanderSlik was willing to finalize an agreement, he requested an opportunity to inspect the inventory of MAS’s supplier.

(Id. at ¶9). At that time, Thiele had not disclosed to VanderSlik that CEL was its supplier.

On August 28, 2014, Thiele and VanderSlik met in Michigan to board a plane to Philadelphia to inspect a salt stockpile in Wilmington, Delaware. While en route, VanderSlik and Thiele discussed the terms of a potential sale of the bulk rock salt. During their meeting, Thiele presented VanderSlik with a document titled "Mutual Non-Disclosure Non Circumvent Agreement," (the "NCA"). (DE 58-4, Exh. D). The NCA was designed to protect MAS from potential customers bypassing MAS to purchase salt directly from MAS’s supplier. Paragraph 3 of the Agreement provided as follows: "All Confidential Information exchanged between the Parties pursuant to this Agreement: (a) shall not be used to circumvent [MAS] and do business directly with the supplier ..." (Id. at ¶3a). Paragraph 4 provides an exception to the restrictions in Paragraph 3: "The obligations of paragraph 3 shall not apply, however, to any information which: (a) is already in the public domain or becomes available to the public through no breach of this Agreement by the receiving party ..." (Id. at ¶4a).

Paragraph 9 of the NCA states:

[MAS] shall provide the name and address of its confidential supplier of Bulk Rock Salt for the purpose of inspecting the quality of the salt. The Customer is bound by this agreement and agrees not to circumvent [MAS] and attempt to purchase salt directly from the named supplier. If the customer circumvents [MAS] and purchases directly from the confidential source, the Customer agrees to compensate [MAS] for the sales commission and fees that would have applied if the salt had been purchased through [MAS].

(Id. at ¶9). There is no temporal or geographic limitation in the NCA. However, in his deposition, Thiele testified that his "understanding" of the duration was that it "specifically was for that season." (Thiele Dep. at 214).

VanderSlik testified that he understood that unless and until he signed the NCA, Thiele would not identify MAS’s supplier to DLS. (Deposition of VanderSlik, at p. 65, hereafter "VanderSlik Dep. at ––––.")

When Thiele and VanderSlik arrived in Philadelphia, they were met by John Morgan, a principal at CEL, who accompanied the men to CEL’s Wilmington, Delaware salt storage facility. (VanderSlik Dep. at 68). Also present in Wilmington was Ed Morgan, who was also a principal at CEL and John’s brother. (Id. ) VanderSlik had not personally met the Morgans prior to this interaction; however, VanderSlik testified that he was aware of the Morgans and CEL prior to that day as they were well known in the industry and attended industry trade shows. (VanderSlik Dep. at 54-55: "I was aware of them prior to my meeting with them. They're known in the industry and go to snow and ice shows."). Thiele, VanderSlik and the Morgans spent approximately three hours on-site inspecting rock salt before Thiele and VanderSlik returned to Michigan.

Upon their return, Thiele presented VanderSlik with a second document titled "Bulk Rock Salt Sales Agreement," ("the BRSSA"). (VanderSlik Dep. at 72; DE 58-5, Exhibit E). Prior to VanderSlik signing the agreement, the two discussed timing, payment, logistics, and additional sales. (VanderSlik Dep. at 73). At the conclusion of the meeting, VanderSlik signed the BRSSA. Pursuant to the terms of the BRSSA, MAS was to sell 27,500 tons of bulk rock salt to DLS in exchange for $2,585,000. (DE 58-5). The salt was to be delivered by MAS to Verplank Dock in Muskegon, Michigan.

The payment terms under the BRSSA were as follows:

The total agreed price is $2,585,000.00 (27,500 TONS x $94.00/US TON) with a down payment of $1,551,000.00 via wire transfer due by 3PM EST on 9/3/2014. The remaining $1,034,000 (40%) will be due via wire transfer upon the vessel arriving at Verplank Dock. The vessel will not discharge until final payment is received. Delay in final payment will result in demurrage to the [DLS].

(DE 58-5 ¶2). The parties further agreed to work cooperatively as the agreement confirms "the Spirit of Mutual Cooperation and Good Faith." (Id. at ¶15).

Prior to the initial payment due date, DLS discovered that it was having trouble obtaining financing for the transaction, as the transaction was unusually large for DLS. (Supplemental Affidavit of VanderSlik [DE 65-1], at ¶10, hereafter "VanderSlik Supp. Aff. At ––––"). In particular, DLS’s lender was concerned that the initial payment was being made directly to MAS, rather than in escrow, and that the remaining $1.5 million would also be sent directly to MAS without any guarantee of...