Chicago Marine Towing v. Boat/U.S., Inc. et al

Filing 77

MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 1/3/2017. Mailed notice(cdh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOHN J. MANLEY d/b/a
CHICAGO MARINE TOWING,
Plaintiff,
v.
BOAT/U.S., INC., a Virginia corporation,
GREAT LAKES REPAIR, INC., d/b/a
GREAT LAKES TOWING & REPAIR,
a Michigan corporation, and RICHARD N.
LENARDSON, an individual and resident
of Michigan,
Defendants.

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Case No. 13-cv-5551
Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Boat U.S., Inc.’s motion for summary judgment [61] and
Defendants Great Lakes Repair, Inc. and Richard N. Lenardson’s motion for summary judgment
[62]. For the reasons that follow, Defendants’ motions for summary judgment are granted as to
Plaintiff’s claim for intentional interference with prospective economic advantage (Count III)
and Plaintiff’s claim for defamation per quod (Count V). Summary judgment is denied as to
Plaintiff’s claim for breach of contract for wrongful termination (Count I), breach of implied
covenant of good faith and fair dealing (Count II), and defamation per se (Count IV). This case
is set for further status hearing on January 24, 2017 at 9:00 a.m.
I.

Background
A.

Factual Background

The Court takes the relevant facts from Boat U.S.’s Local Rule 56.1 Statement of
Material Facts [61-2] and supporting exhibits [61-3]. Plaintiff failed to file a timely response to

Defendants’ motions or Boat U.S.’s Local Rule 56.1 statement [see 72]. Therefore, pursuant to
Local Rule 56.1(b)(3)(C), Boat U.S.’s fact statements are deemed admitted. N.D. Ill. L.R.
56.1(b)(3)(C) (“All material facts set forth in the statement required of the moving party will be
deemed to be admitted unless controverted by the statement of the opposing party.”); see also
Raymond v. Ameritech Corp., 442 F.3d 600, 608 (7th Cir. 2006) (affirming district court’s
decision to admit the facts set forth in moving party’s Local Rule 56.1 submission where
nonmovant failed to timely respond or submit its own Local Rule 56.1 statement); De v. City of
Chicago, 912 F. Supp. 2d 709, 712–13 (N.D. Ill. 2012) (“The Seventh Circuit has repeatedly
held that a district court has broad discretion to require strict compliance with Local Rule 56.1.”
(citation and internal quotation marks omitted)).
Plaintiff John J. Manley d/b/a Chicago Marine Towing (“Chicago Marine”) is an Illinois
corporation located in Chicago, Illinois, which provides marine towing and salvage services.
[61-2, at ¶ 1.] Boat/U.S., Inc. (“Boat U.S.”) is a Virginia corporation that provides water towing
services, 24-hour dispatch service, and insurance coverage for recreational boaters. [Id. at ¶ 2.]
Defendant Richard Lenardson is the owner of Defendant Great Lakes Repair d/b/a Great Lakes
Towing & Repair (“Great Lakes Repair”); both Lenardson and Great Lakes Repair (collectively,
“the Great Lakes Defendants”) are citizens of Michigan. [Id. at ¶ 3–4.] Because there is
complete diversity of citizenship between the parties and the amount in controversy exceeds
$75,000, the Court has jurisdiction pursuant to 28 U.S.C. § 1332(a).
On or around February 5, 2009, Chicago Marine entered into an agreement with Boat
U.S. [Id. at ¶ 6.] Pursuant to the agreement, Chicago Marine was a Boat U.S.-authorized marine
towing company. The agreement provided that it would remain in effect until November 30,
2013, unless Chicago Marine breached Section I, Items 3, 4, 9, 10, or 11 of the agreement,

2

thereby permitting Boat U.S. to terminate the agreement by “delivering written notice of
proposed termination.” [Id. at ¶ 7; see also 1, at Exhibit A, Section I, Item 14(b).] Section I,
Item 10 of the agreement states that both parties to the agreement “shall comply with all
applicable federal, state and local laws, regulations, ordinances, and rules.” Further, Section I,
Item 14(f) of the agreement provides that, with certain exceptions, “any party which is delivered
written notice of a breach and subsequent Termination under this Agreement may within 10 days
of such notice request a hearing by the Termination Review Board.”
On July 1, 2012, Boat U.S. dispatched Chicago Marine to assist distressed boaters Nathan
Locher and his girlfriend Laurie Jagla, whose powerboat had been run aground at or near Wells
Beach, Indiana. [61-2, at ¶ 10.] Albert Bartkus (“Bartkus”), one of Chicago Marine’s employees
at that time, drove a Chicago Marine towboat to the location of Locher’s grounded vessel. [Id. at
¶ 11.] When Bartkus arrived, Locher and Jagla were not on the boat, and there was a crowd of
people around the boat on the beach. [Id. at ¶ 12.] Bartkus met and spoke with Locher and Jagla
on the shore. [Id. at ¶ 13.] In Bartkus’s view, they were coherent and cooperative.1 [Id. at ¶ 14.]
Bartkus had Locher sign a contract for salvage but did not discuss any associated charges. [Id. at
¶ 15.] The contract for salvage signed by Locher stated at the top that Chicago Marine was “A
TowboatU.S. Company.” [Id. at ¶ 16.] Bartkus freed Locher’s grounded boat, and Manley
instructed him via phone to tow the boat to Crowley’s Yacht Yard. [Id. at ¶ 17.] Chicago
Marine asserted a high-priority possessory maritime lien on Locher’s boat and towed it to
Crowley’s after learning that it was insured by American Family Insurance due to Manley’s
claimed difficulty obtaining payment from that insurer. [Id. at ¶ 18.] After Bartkus towed
Locher’s boat to Crowley’s, he had no further contact with Locher or Jagla. [Id. at ¶ 19.]
Although Chicago Marine has admitted to this fact, the transcript of Manley’s deposition also shows that
Manley testified that Locher and Jagla were “drunk and otherwise impaired,” as discussed further below.
[See 61-3, Exhibit 2 (Manley Deposition), at 63.]
1

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Manley drove a second towboat to the grounding site to provide Locher and Jagla
transportation to their boat or to their home. [Id. at ¶ 20.] He arrived after Bartkus completed
the salvage and idled his boat in the shallow water just off shore as Locher and Jagla waded into
the water and boarded Manley’s boat. [Id. at ¶ 21.] Locher and Jagla asked to remove property
from their boat and wanted to know where their boat was being towed. [Id. at ¶¶ 22–23.]
However, Manley testified that he said, “I’m not going to tell you [where Chicago Marine is
taking your boat] right now * * * you’ll get to your boat in good time.” [61-3, Exhibit 2 (Manley
Deposition), at 73.] According to Manley, he responded to their demands to be taken to their
boat in this manner because Locher and Jagla were “drunk and otherwise impaired.” [Id. at 63.]
Relying on his training as a former police officer, Manley guessed that they had been using
methamphetamines. [Id. at 66, 74.] He based this conclusion on their inability to sit still, their
continuous yelling and screaming, their inability to absorb information, their rapid, unpredictable
eye movements, and their jerkiness of limb movements, but did not administer any type of test to
determine if they were in fact substance impaired. [Id. at 69–70.] In Manley’s view, they would
“[a]bsolutely not” have been competent to operate a motor vehicle in their current state. [Id. at
70.]
Manley testified that he “didn’t want them to go down to Crowley’s and cause problems
for Crowley’s personnel.” [Id. at 74; see also id. at 64 (“I was not going to take a couple of
drunken fools to Crowley’s Yacht Yard when they’re, one, totally out of their minds, and two,
threatening violence.”]

Manley stated that he gave Locher his card and told him to call

tomorrow and that “[t]omorrow morning we’ll get this all organized, we’ll get the stuff off your
boat.” [Id. at 74.] Manley further testified that “at one point” he said, “I’ll tell you what * * *
[w]e’ll take you home, get whatever you need, we’ll drive you down to your boat to get whatever

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you need off your boat, all right.” [Id. at 75.] Manley claimed that he thought this plan would
have given him time to “prepare things at Crowley’s for their arrival,” maybe “get a couple of
coppers over there from the fourth district if necessary,” and that he was trying to “stretch some
time out” in hopes that “they would have calmed down by that time.” [Id.] However, Manley
testified that Locher and Jagla declined this offer and “didn’t want [Chicago Marine] to give
them a ride anywhere.” [Id.]
Manley further testified that Locher was threatening and abusive, threatened to “beat the
shit” out of him and to “throw you over the side, take your boat and get mine.” [Id. at 73, 76.]
Locher never raised his hand towards Manley, never came at Manley, never tried to push, touch,
or grab Manley, and never reached for or threatened to use a weapon against Manley. [61-2, at
¶ 25.] However, Manley testified that he knew Locher had the ability to follow through with this
threats because he was approximately 6 foot 2 inches tall, 220 pounds, and muscular. [61-3,
Exhibit 2 (Manley Deposition), at 78.] Manley also testified that he had a genuine concern that
Locher was going to threaten his life. [Id. at 78.] In response to Locher’s verbal threats, Manley
stepped into the pilothouse, opened a briefcase he brought with him, removed a Sig 380
automatic handgun, inserted an ammunition clip, stepped out of the pilothouse, pointed the gun
in the general direction of Locher and Jagla for 15-20 seconds, and said, “if you move your ass
off that transom I’m going to shoot you.”

[Id. at ¶ 26; see also 61-3, Exhibit 2 (Manley

Deposition), at 79, 83, 87.] Locher and Jagla remained seated on the transom, Manley tucked the
loaded handgun into the back of his belt under his jacket, and he dropped Locher and Jagla off at
their home port, Marina Shores. [61-2, at ¶ 27.] Locher was not told the location of his boat and
was not given access to his boat and property until the following day, when Manley contacted
him pretending to be someone else. [Id. at ¶ 28.]

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On July 2, 2012, Boat U.S. received complaints from Locher and his insurer, American
Family Insurance, regarding Manley’s handling of the July 1, 2012 salvage operation and about
being denied access to Locher’s vessel.

[Id. at ¶ 29.]

Boat U.S. conducted a thorough

investigation of the complaints, which included interviews with Locher, Jagla, and Manley, and
consultation with outside legal counsel. [Id. at ¶ 30.] Based on the investigation, on July 23,
2012, Boat U.S. delivered to Chicago Marine a letter terminating the agreement, effective
immediately. [Id. at ¶ 31.] The letter set forth various grounds for termination, including but not
limited to Chicago Marine’s breach of Section I, Item 10 – “Compliance With Law” of the
agreement. [Id. at ¶ 31.] The termination letter stated:
[Chicago Marine] materially breached [Section I, Item 10] when it failed to
comply with the law of salvage. A salvor who has earned the right to a salvage
award through successful voluntary salvage services to a vessel in peril has a
high-priority possessory, preferred maritime lien on the vessel. See 46 U.S.C.
§ 31301(5)(F) (1993); The FAIRFIELD, 30 F. 700 (D. Ga. 1887). A salvor in
possession of a vessel is not bound to surrender it on demand to the owner until a
reasonable security is provided. But, the salvor must move with all deliberate
speed to either arrange for the posting of security or bring an action in rem against
the vessel to foreclose his lien (turning the vessel over to the U.S. Marshall).
However, it is against the law for the salvor to deny the owner or his agents (i.e.,
insurer) access to his vessel or property to inspect or preserve it. The
ALCAZAR, 227 F. 633 (D.N.Y. 1915), See also Martin J. Norris, THE LAW OF
SALVAGE (1958) § § 150-154.
[Chicago Marine’s] admitted refusal to immediately tell Mr. Locher of the
location of his boat and admitted refusal to immediately allow Mr. Locher or his
agents access to his boat (until a later time determined by [Chicago Marine]) is a
material violation of the law of salvage, as outlined above.
It is also reasonable to conclude [Chicago Marine’s] refusal to tell Mr. Locher the
location of his boat or to allow him access to his boat was the primary catalyst for
any subsequent conflict, including [Chicago Marine’s] admitted use of a firearm
against the boater during service.
[1, Exhibit D, at 1–2.]

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Chicago Marine did not request a hearing by the Termination Review Board pursuant to
Section I, Item 14(f) of the agreement. [61-2, at ¶¶ 32–33.] After terminating the agreement
with Chicago Marine, Boat U.S. contracted with Lenardson and Great Lakes Repair to provide
towing services in the area previously assigned to Chicago Marine under the agreement. [Id. at ¶
34.]
In January of 2013, Boat U.S. was an exhibitor at the Chicago Boat Sports & RV Show
(the “Chicago Boat Show”), where it had a booth at which its representatives promoted Boat
U.S.’s services and products. Lenardson was one of the Boat U.S. representatives who manned
the Boat U.S. booth at the Chicago Boat Show. Keith Pearson, who was working for Chicago
Marine as a subcontractor and is listed in the agreement as an “Authorized Captain” of Chicago
Marine’s towboats used to provide towing services under the agreement, attended the Chicago
Boat Show. [See id. at ¶¶ 35–37.] According to Pearson, he spoke with Lenardson and told him
that he was working for Chicago Marine Towing. [61-3, Exhibit 4 (Pearson Deposition), at 23.]
The complaint alleges that in speaking with Pearson, Lenardson made false statements about
Chicago Marine. Pearson testified in his deposition that Lenardson said Chicago Marine was
“out of business” and that Manley “lost his license,” which Pearson assumed referred to his
captain’s license.

[Id. at 23, 25.]

According to Pearson, other people nearby overheard

Lenardson’s statements about Chicago Marine, including Peter Thompson, who was another
Boat U.S. representative at the booth, two marketing representatives from Boat U.S., and
Pearson’s son.

[Id. at 32–33.]

Pearson further testified that he did not believe the false

statements that Lenardson allegedly made and that the alleged statements did not change or
affect his opinion of Chicago Marine. [61-2, at ¶ 37; see also 61-3, at 27 (“No, it didn’t change
my opinion because I knew it wasn’t true.”).] Pearson did not mention Lenardson’s alleged

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statements to Manley until about a month later because he did not think they were important, and
he only brought them up in passing conversation. [61-2, at ¶ 38.] Additionally, Pearson did not
stop working with Chicago Marine because of Lenardson’s alleged statements. [Id. at ¶ 39.]
The complaint also alleges that Lenardson made similar false statements on or around
May 18, 2013, to officers at the United States Coast Guard stations in St. Joseph, Michigan and
in Michigan City, Indiana. Manley testified in his deposition that he went to Michigan City to
give out Chicago Marine’s usual paperwork and the “lady sitting at the radio desk of the
dispatch” said that “[we] got a call from St. Joe saying that * * * you were no longer operational.
* * * They said [ ] the TowBoat/U.S. guy told them.” [61-3, Exhibit 2 (Manley Deposition), at
126–127.] However, Manley did not know the name of the woman who relayed this information
to him, the woman did not indicate whether she was present when these statements were made or
whether someone told her about these statements, and she did not say who from St. Joseph made
these statements.

[Id. at 127–28.]

According to Manley, his understanding was that the

statements were made to the officers in St. Joseph by Lenardson since “the TowBoat/U.S. guy in
St. Joe, * * * that is Mr. Lenardson.” [Id. at 129.]

However, Lenardson testified in his

deposition that he did not make any such statements to Coast Guard officers in St. Joseph or
Michigan City. [61-2, at ¶ 44; see also 61-3, Exhibit 5 (Lenardson Deposition), at 64.]
B.

Procedural Background

On August 2, 2013, Chicago Marine filed a five-count complaint against Defendants
alleging breach of contract for wrongful termination against Boat U.S. (Count I), breach of
implied covenant of good faith and fair dealing against Boat U.S. (Count II), intentional
interference with prospective economic advantage against Boat U.S. and the Great Lakes
Defendants (Count III), defamation per se against Boat U.S. and the Great Lakes Defendants

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(Count IV), and defamation per quod against Boat U.S. and the Great Lakes Defendants (Count
V).

Defendant Boat U.S. moved to dismiss Counts II, III, and V, and the Great Lakes

Defendants moved to dismiss Counts III and V. The Court denied both motions on April 23,
2014. [21 (Manley v. Boat/U.S. Inc., 2014 WL 1647117, at *1–2 (N.D. Ill. Apr. 23, 2014)).]
Boat U.S. filed its first amended answer [34] and raised nine counterclaims against
Chicago Marine including breach of contract (Count I), breach of the implied covenant of good
faith and fair dealing (Count II), trademark infringement under 15 U.S.C. § 1114 (Count III) and
under common law (Count VI), trademark dilution under 15 U.S.C. § 1125(c) (Count IV) and
under the Illinois Trademark Registration and Protection Act, 765 ILCS 1036/65 (Count IX),
false designation of origin under 15 U.S.C. § 1125(a) (Count V), unfair competition (Count VII),
and violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq.
(Count VIII). Chicago Marine moved to dismiss many of Boat U.S.’s counterclaims. [35.] On
December 12, 2014, the Court granted the motion to dismiss with respect to Count IX for
trademark dilution under the Illinois statute and denied the motion with respect to all of the other
counts. [46.] On May 29, 2015, Chicago Marine filed its second amended answer [51] to
Defendants’ counterclaims, raising sixteen affirmative defenses. On March 29, 2016, the Court
granted Boat U.S.’s motion to strike [54] all of these affirmative defenses.2 [66.]
On March 18, 2016, Boat U.S. filed a motion for summary judgment [61], which was
joined by the Great Lakes Defendants [62]. The Court adopted the parties’ proposed briefing
schedule. [See 64.] However, despite having been granted an extension of time to file its
response, Chicago Marine filed its response brief more than five months after the new deadline,
without leave of the court. On November 28, 2016, the Court denied Chicago Marine’s motion
2

The Court gave Chicago Marine until April 29, 2016 to replead any affirmative defenses that were
dismissed without prejudice, but Chicago Marine did not repleaded any affirmative defenses.

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for leave to file its response brief instanter [72] and struck the response and supporting materials
filed without leave of the court [60, 70]. [See 75.] Thus, the Court will decide Defendants’
motions for summary judgment [61] and [62] based on Boat U.S.’s opening brief, Local Rule
56.1 Statement of Material Facts, and supporting exhibits.3 See Raymond, 442 F.3d at 611
(holding that the district court did not abuse its discretion in refusing to accept a response brief
filed three days late or in granting summary judgment without considering the late-filed response
and accompanying Local Rule 56.1 statement).
II.

Legal Standard
Summary judgment is proper where “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). “Once a party has made a properly-supported motion for
summary judgment, the opposing party may not simply rest upon the pleadings but must instead
submit evidentiary materials that ‘set forth specific facts showing that there is a genuine issue for
trial.’” Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099, 1104 (7th Cir. 2008) (quoting
Fed. R. Civ. P. 56(e)); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A
genuine issue of material fact exists if “the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Id. at 248. The party seeking summary judgment has the
burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986).
Summary judgment is proper if the nonmoving party “fails to make a showing sufficient
to establish the existence of an element essential to that party’s case, and on which that party will
3

In their motion for summary judgment [62], the Great Lakes Defendants do not offer any original
arguments but merely “join and incorporate by reference all arguments and positions as to Counts II, IV,
and V” from Boat U.S.’s motion for summary judgment.

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bear the burden of proof at trial.” Ellis v. CCA of Tennessee LLC, 650 F.3d 640, 646 (7th
Cir.2011) (quoting Celotex Corp., 477 U.S. at 322). The non-moving party “must do more than
simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In other words, the “mere
existence of a scintilla of evidence in support of the [non-movant’s] position will be insufficient;
there must be evidence on which the jury could reasonably find for the [non-movant].”
Anderson, 477 U.S. at 252. In evaluating a motion for summary judgment, the Court will
construe all facts in the light most favorable to the nonmoving party and draw all reasonable
inferences in favor of the nonmoving party. Bell v. Taylor, 827 F.3d 699, 704 (7th Cir. 2016).
However, the Court will not draw inferences that are “supported by only speculation or
conjecture,” Williams v. Brooks, 809 F.3d 936, 944 (7th Cir. 2016), cert. denied, 2016 WL
4367440 (U.S. Oct. 17, 2016) (quoting Argyropoulos v. City of Alton, 539 F.3d 724, 732 (7th
Cir. 2008)) (internal citations omitted), and “[c]onclusory allegations alone cannot defeat a
motion for summary judgment.” Thomas v. Christ Hosp. & Med. Ctr., 328 F.3d 890, 892 (7th
Cir. 2003).
It is not the role of the Court to scour the record in search of evidence to defeat a motion
for summary judgment; instead, the nonmoving party bears the responsibility of identifying
evidence to defeat summary judgment. Harney, 526 F.3d at 1104. Although a failure to timely
respond to the moving party’s Local Rule 56.1 statement results in “deeming admitted” the
moving party’s factual statements, a nonmovant’s failure to respond to a summary judgment
motion or failure to comply with Local Rule 56.1 does not, of course, automatically result in
judgment for the movant. Raymond, 442 F.3d at 608. The ultimate burden of persuasion

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remains on the moving party—Defendants, in this case—to show that it is entitled to judgment as
a matter of law.
III.

Analysis
1.

Count I: Wrongful Termination of Contract and Count II: Breach of Implied
Covenant of Good Faith and Fair Dealing

Chicago Marine alleges in Count I that Boat U.S. breached the agreement by terminating
it prior to the November 20, 2013 expiration date. [See 1, at ¶¶ 80–84.] In Count II, Chicago
Marine alleges that to the extent that the agreement granted Boat U.S. discretion in determining
whether Chicago Marine met the terms, conditions, and service standards set forth in the
agreement, Boat U.S. exercised its discretion in an arbitrary, capricious, and unreasonable
manner. [See id. at ¶ 89.] As the Court discussed in denying Boat U.S.’s motion to dismiss,
Virginia law applies to Chicago Marine’s breach of contract claims (Count I and Count II)
because of the choice-of-law provision in the agreement. [See 21, at 6–7; 1, Exhibit A, at
¶ 17(e).] Under Virginia law, a plaintiff may bring a common law claim for breach of contract
based on a violation of the implied duty of good faith and fair dealing. See Stoney Glen, LLC v.
Southern Bank and Trust Co., 2013 WL 1897111, at 4 (E.D. Va. May 2, 2013) (“The United
States Court of Appeals for the Fourth Circuit has consistently held that Virginia does recognize
an implied duty of good faith and fair dealing in common law contracts.”). As the Fourth Circuit
explained in Virginia Vermiculite, Ltd. v. W.R. Grace & Co., “although the duty of good faith
does not prevent a party from exercising its explicit contractual rights, a party may not exercise
contractual discretion in bad faith, even when such discretion is vested solely in that party.” 156
F.3d 535, 542 (4th Cir. 1998).
Boat U.S. argues that it is entitled to summary judgment on Counts I and II because there
is no genuine dispute that Chicago Marine violated salvage law when Manley refused to take
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Locher and Jagla to their boat or tell them where it had been taken. In Boat U.S.’s view, since
Chicago Marine violated the Compliance with Law provision in Section I, Item 10 4 of the
agreement, Boat U.S. was permitted to terminate the contract and was therefore not in breach and
did not exercise its discretion in an arbitrary manner. [See 61-2, at ¶ 7; 1, at Exhibit A, Section I,
Item 14(b).]
To analyze this issue on a motion for summary judgment, the Court must consider
whether a reasonable jury could find that Chicago Marine did not violate salvage law and thus,
that Boat U.S. was not permitted to terminate the contract early. The law of salvage gives
potential salvors incentives to render voluntary and effective aid to people and property in
distress at sea. R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel, 435 F.3d 521, 531
(4th Cir. 2006). Without some promise of compensation, salvors might be reluctant to undertake
the often dangerous and costly efforts necessary to assist others. See R.M.S. Titanic, Inc. v.
Haver, 171 F.3d 943, 962 (4th Cir. 1999) (“Absent the promise of compensation and reward, we
question whether a party, even one with the capacity to save the Titanic itself would incur the
cost to do so.”). Salvage law assumes that the property being salvaged is owned by another and
thus that it has not been abandoned.5 Hener v. United States, 525 F. Supp. 350, 356 (S.D.N.Y.
1981).
To secure payment of the salvage award, the law gives salvors a maritime lien on the
salvaged property, which affords the salvor the right to take possession of the salvaged vessel for

Section I, Item 10 (Compliance With Law) of the agreement states: “BoatU.S. and [Chicago Marine],
together with respective employees, agents, representatives, and subcontractors, shall comply with all
applicable federal, state and local laws, regulations, ordinances, and rules. BoatU.S. and Towing
Company shall not engage in any price fixing, market allocation or other action illegal under anti-trust
laws.”
4

5

This principle of salvage law is in contrast to the law of finds, under which the first person to reduce
abandoned property to actual or constructive possession becomes its owner. Hener, 525 F. Supp. at 354.

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the purpose of saving it from destruction, damage, or loss and to retain it until proper
compensation has been paid. See R.M.S. Titanic, Inc., 435 F.3d at 531; Hener, 525 F. Supp. at
356. The lien attaches to the exclusion of all others, including other potential salvors as well as
the property’s true owner. R.M.S. Titanic, Inc., 435 F.3d at 531. Although the salvor is given
this limited possessory interested in the salvaged property, the true owner is not divested of title
to the property. Id. Further, the salvor’s right to retain possession is not absolute and is instead
“dependent upon conditions affecting the mutual rights of the salvor and owner.” The Alcazar,
227 F. 633, 655 (E.D.N.C. 1915). “There seems to be no hard and fast rule prescribing the
relative right and duty of the owner and the salvor in regard to the time of, or condition upon
which, exclusive possession may be held by the salvor.” Id. at 656. Courts have held that unless
there is a probability that the owner would remove the vessel beyond the jurisdiction of the court,
possession should be surrendered to the owner upon demand, “at least to the extent of permitting
him to come on the vessel and aid in taking care of her.” Id. However, “if the vessel is, at the
time of the demand by the master, in such critical position that there may be risk of loss or
damage to her unless the salvors are allowed to complete their operations, it seems that they may
retain possession pending such completion.” Id. (citation and internal quotation marks omitted).
Salvage law imposes on salvors the “duties of good faith, honesty, and diligence in protecting the
property in [the] salvors’ care.” See R.M.S. Titanic, Inc., 435 F.3d at 532 (alteration in original)
(citation and internal quotation marks omitted).
In the case at hand, it is undisputed that Chicago Marine had the right to assert a
possessory maritime lien on Locher’s boat. [See 61, at 6.] In moving for summary judgment,
Boat U.S. contends that it was a violation of salvage law for Chicago Marine to take Locher’s
vessel to an undisclosed location and to deny Locher and Jagla access to their property.

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However, it is not clear from the record that Chicago Marine deprived Locher and Jagla of
access to their vessel in violation of salvage law. Chicago Marine had a duty to protect the
vessel in its care and could retain possession pending completion of its salvage operation to
prevent damage to the vessel. Here, there is at least a genuine dispute of material fact as to
Locher’s and Jagla’s mental states at the time of the July 1, 2012 salvage operation. Although
Boat U.S.’s fact statement that “Locher and his girlfriend were coherent and cooperative with
Mr. Bartkus,” [61-2, at ¶ 14] is deemed admitted, since Chicago Marine did not file a timely
response to Defendants’ motions or Boat U.S.’s Local Rule 56.1 statement, this does not
conclusively resolve the matter.

Manley testified that Locher and Jagla were “drunk and

otherwise impaired” and that based on his observations and training as a former police officer, he
thought they had been using methamphetamines. [61-3, Exhibit 2 (Manley Deposition), at 66,
73, 74.] In Manley’s view, they would “[a]bsolutely not” have been competent to operate a
motor vehicle in their current state. [Id. at 70.] A reasonable jury could determine that given
Manley’s account of Locher and Jagla’s mental states and behavior and Chicago Marine’s duty
to protect the vessel, Chicago Marine properly retained possession of the salved vessel to prevent
Locher and Jagla from damaging it.

And if a reasonable jury adopted Manley’s factual

assessment, it could conclude that Chicago Marine did not breach salvage law and that Boat
U.S.’s early termination of the agreement was not permitted and thus amounted to a breach of
contract or an arbitrary exercise of discretion by Boat U.S. For these reasons, Boat U.S.’s
motion for summary judgment on Counts I and II is denied.
2.

Count III: Intentional Interference with Prospective Economic Advantage

In Count III, Chicago Marine alleges that on or around May 18, 2013, Lenardson made
false statements about Chicago Marine to United States Coast Guard stations in St. Joseph,

15

Michigan and in Michigan City, Indiana. Lenardson allegedly said that Chicago Marine was out
of business, that Manley had gone bankrupt, and that Manley’s Coast Guard license had been
revoked.

[1, at ¶ 93.]

Chicago Marine further alleges that Lenardson made these false

statements while he was on board a Great Lakes Towing vessel that prominently displayed the
logo and trademark of Boat U.S. and that identified Lenardson and Great Lakes Towing as
representatives and/or agents of Boat U.S. [Id. at ¶ 78.]
As the Court previously discussed in ruling on Defendants’ motions to dismiss [12] and
[15], Illinois law applies to Chicago Marine’s tort claims. [See 21, at 6–7 (citing Westchester
Fire Insurance Company v. Zurich American Insurance Co., 2014 WL 1018115, at *2 (N.D. Ill.
Mar. 12, 2014)).] To establish a tortious interference with economic advantage claim pursuant to
Illinois law, a plaintiff must show: (1) “a reasonable expectancy of entering into a valid business
relationship;” (2) “the defendant’s knowledge of the expectancy;” (3) “an intentional and
unjustified interference by the defendant that induced or caused a breach or termination of the
expectancy;”

and

(4)

“damage

to

the

plaintiff

resulting

from

the

defendant’s

interference.” Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 508 (7th Cir.
2007) (quoting Voyles v. Sandia Mortgage Corp., 751 N.E.2d 1126, 1133–34 (Ill.
2001)) (internal quotations omitted)).
Here, Chicago Marine asserts that when the United States Coast Guard stations in St.
Joseph and Michigan City receive a call from a boater in need of towing or salvage services, they
provide to the boater the name and number of a boat towing company in the area that can
perform the necessary services. According to Chicago Marine, the Coast Guard stations provide
this information on a rotating basis so that they do not favor one company over another. [1, at
¶ 92.] Chicago Marine alleges that Defendants intentionally and unjustifiably interfered with

16

Chicago Marine’s prospective business relationships with customers in need of towing or salvage
services by allegedly making these false statements to the United States Coast Guard stations in
St. Joseph and Michigan City and that as a result, the Coast Guard stations stopped providing
Chicago Marine’s name and number to boaters in distress. [Id. at 93, 95–96.]
However, Chicago Marine offers no support for its allegation that Lenardson made these
false statements to Coast Guard officers. Chicago Marine is unable to identify the woman at the
United States Coast Guard station in Michigan City who allegedly told Manley about these
statements. Nor is Chicago Marine able to identify the St. Joseph Coast Guard officers who told
someone at the Michigan City station that “the TowBoat/U.S. guy” said that Chicago Marine was
out of business. Aside from Manley’s account of this string of anonymous messages resembling
the childhood game of “telephone,” Chicago Marine does not offer any evidence supporting its
allegations that Defendants made these false statements.

Although a plaintiff may defeat

summary judgment with his own deposition, see Paz v. Wauconda Healthcare & Rehab. Ctr.,
LLC, 464 F.3d 659, 664–65 (7th Cir. 2006), he cannot do so with a “deposition based on rumor
or conjecture.”

Palucki v. Sears, Roebuck & Co., 879 F.2d 1568, 1572 (7th Cir. 1989).

“Supporting and opposing affidavits [and depositions] shall be made on personal knowledge.”
Id. (quoting Fed.R.Civ.P. 56(e)) (internal quotation marks omitted). Thus, Chicago Marine’s
“[c]onclusory allegations alone cannot defeat a motion for summary judgment.” Thomas v.
Christ Hosp. & Med. Ctr., 328 F.3d 890, 892 (7th Cir. 2003).
Chicago Marine asks the Court to infer that Lenardson made the statements to the officers
in St. Joseph because Manley testified that “the TowBoat/U.S. guy in St. Joe [is] Lenardson.”
[61-3, Exhibit 2 (Manley Deposition), at 129.] However, the Court cannot draw inferences that
are “supported by only speculation or conjecture,” Williams, 809 F.3d at 944 (7th Cir. 2016),

17

cert. denied, 2016 WL 4367440 (U.S. Oct. 17, 2016) (quoting Argyropoulos, 539 F.3d at 732)
(internal citations omitted). Further, Lenardson testified in his deposition that he did not make
these statements to Coast Guard officers in St. Joseph or Michigan City. [61-2, at ¶ 44; see also
61-3, Exhibit 5 (Lenardson Deposition), at 64.] At summary judgment, when denial meets
conjecture, denial prevails. Thus, even viewing the evidence in the light most favorable to
Chicago Marine, no reasonable jury could find that Defendants intentionally interfered with
Chicago Marine’s prospective economic advantage by making false statements about Chicago
Marine to United States Coast Guard officers. The Court grants summary judgment in favor of
Defendants on Count III.
3.

Count IV: Defamation Per Se and Count V: Defamation Per Quod

To the extent that Count IV (Defamation Per Se) and Count V (Defamation Per Quod)
are based on the statements that Lenardson allegedly made to unidentified United States Coast
Guard officers, the Court grants summary judgment in favor of Defendants because, as discussed
above, Chicago Marine offers no evidence supporting its conclusory allegations that Lenardson
made these statements. In Counts IV and V, Chicago Marine also alleges that Lenardson,
individually and as owner of Great Lakes Repair and a representative and/or agent of Boat U.S.,
made defamatory statements about Chicago Marine at the Chicago Boat Show. The parties
dispute whether Lenardson made these false statements at the Chicago Boat Show. Pearson
testified at his deposition that Lenardson told him Chicago Marine was “out of business” and that
Manley “lost his license,” which Pearson assumed meant his captain’s license. [61-3, Exhibit 4
(Pearson Deposition), at 23.] Lenardson testified at his deposition that he spoke with Pearson at
the show but did not make the alleged statements and did not mention Chicago Marine Towing
or Manley.

[61-3, Exhibit 5 (Lenardson Deposition), at 41–42, 44–45.]

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In evaluating

Defendants’ motion for summary judgment, the Court must construe all facts in the light most
favorable to Chicago Marine and thus assume that Lenardson did make these alleged statements
at the Chicago Boat Show. See Pourghoraishi v. Flying J, Inc., 449 F.3d 751, 754 (7th Cir.
2006), as amended on denial of reh'g (May 25, 2006).
A statement is defamatory under Illinois law if “it tends to harm a person's reputation to
the extent that it lowers that person in the eyes of the community or deters others from
associating with that person.” Huon v. Denton, 2016 WL 6682931, at *2 (7th Cir. Nov. 14,
2016) (citing Tuite v. Corbitt, 866 N.E.2d 114, 121 (Ill. 2006)). To prove a defamation claim,
“the evidence must show that a defendant made a false statement concerning the plaintiff, that
there was an unprivileged publication of the defamatory statement to a third party by the
defendant, and that the plaintiff suffered damages as a result.” Giant Screen Sports v. Can.
Imperial Bank of Commerce, 553 F.3d 527, 532 (7th Cir. 2009) (citations omitted). Illinois law
recognizes two types of defamation: defamation per se and defamation per quod. Id.
“A statement is defamatory per se if its defamatory character is obvious and apparent on
its face and injury to the plaintiff’s reputation may be presumed.” Muzikowski v. Paramount
Pictures Corp., 477 F.3d 899, 904 (7th Cir. 2007) (citation omitted). A plaintiff does not need to
prove actual damages to recover under a theory of defamation per se. Madison v. Frazier, 539
F.3d 646, 653 (7th Cir. 2008). Illinois recognizes five categories of defamation per se, two of
which are germane here: (1) statements that suggest that the subject can’t perform his job
because of lack of ability or want of integrity, and (2) statements that prejudice the subject in the
pursuit of his trade or profession. See Pippen v. NBCUniversal Media, LLC, 734 F.3d 610, 613
(7th Cir. 2013). The difference between these two categories is subtle. The former implies
“some sort of on-the-job malfeasance; the latter covers suitability for a trade of profession.” Id.

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A plaintiff may bring a defamation per quod claim when “the defamatory character of a
statement is not apparent on its face and extrinsic evidence is necessary to demonstrate its
injurious meaning or where a statement is defamatory on its face but does not fall under one of
the categories of statements which are actionable per se.” Maag v. Ill. Coalition for Jobs,
Growth & Prosperity, 858 N.E.2d 967, 975 (Ill. App. Ct. 2006). “A plaintiff bringing a per quod
claim must also plead and prove special damages to recover.” Id.; Muzikowski, 322 F.3d at
927 (stating that an itemization of losses or an allegation of “specific damages of actual financial
injury” is a “required element” of a claim for defamation per quod); Robinson v. Morgan
Stanley,

2008 WL 4874459, at *5 (N.D. Ill. June 18, 2008) (“To allege an action

for defamation per quod in federal court, [the plaintiff] must plead special damages in
accordance with Illinois law and Federal Rule of Civil Procedure 9(g).”).
Defendants argue that they are entitled to summary judgment as to Count V (Defamation
Per Quod) because even assuming Lenardson did make these alleged false statements at the
Chicago Boat Show, Chicago Marine is unable to produce any evidence supporting its claim of
special damages from the alleged statements. The Court agrees. The complaint alleges that
Lenardson’s statements “impeach[ed] Chicago Marine’s reputation, lower[ed] Chicago Marine in
the estimation of the community, and deter[red] third parties from associating and doing business
with Chicago Marine,” that as a direct result of the alleged statements, “Chicago Marine has
been damaged in its reputation and its business in an amount to be determined at trial.” 6 [1, at
¶¶ 109, 112.] However, Chicago Marine has produced no evidence of “specific damages of
The complaint also alleges that as a direct result of Lenardson’s alleged statements to unidentified Coast
Guard officers in St. Joseph and Michigan City, the Coast Guard stations in St. Joseph and Michigan City
stopped referring boaters in need of salvage or towing services to Chicago Marine. [Id. at ¶ 113.]
However, the Court has already granted summary judgment in favor of Defendants as to any statements
allegedly made to the unidentified Coast Guard officers in St. Joseph and Michigan City, and Chicago
Marine does not allege any connection between these claimed damages and Lenardson’s alleged
statements at the Chicago Boat Show.
6

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actual financial injury,” itemized losses that flowed from Lenardson’s alleged statements, or
proposed business opportunities that were lost due to the statements. Cf. Pippen, 734 F.3d at
614.
Additionally, Pearson testified that Lenardson’s alleged statements did not change his
opinion of Chicago Marine because he knew the statements were not true. [61-3, Exhibit 3
(Pearson Deposition), at 27, 32.] He explained that the alleged statements had no effect on him,
just “like water off a duck’s back.” [Id. at 34.] Pearson did not mention the alleged statements
to Manley until a month later and only did so in passing conversation because he did not think it
was a matter of importance. [Id. at 35, 37.] Pearson did not stop working for Chicago Marine
because of the alleged statements. [61-2, at ¶ 39.] Thus, even viewing the evidence in the light
most favorable to Chicago Marine, as the Court must at this stage of the litigation, no reasonable
jury could find that Chicago Marine suffered special damages from Lenardson’s alleged
statements at the Chicago Boat Show.

The Court grants summary judgment in favor of

Defendants on Count V.
Finally, the Court turns to Count IV (Defamation Per Se). Defendants acknowledge that
damages are presumed for defamation per se claims. However, Defendants argue that by
presenting Pearson’s deposition testimony, they have rebutted this presumption and have shown
that Chicago Marine has sustained no loss to its reputation. Defendants contend that they are
thus entitled to summary judgment on Count IV. This argument fails because “[i]f a defamatory
statement is actionable per se, the plaintiff need not plead or prove actual damage to his or her
reputation in order to recover.” Dunlap v. Alcuin Montessori Sch., 698 N.E.2d 574, 580 (Ill.
App. Ct. 1998). In a defamation per se case, “the ‘injury’ can be pretty invisible [and] the jury in
such a case is permitted to award general damages even if there are no actual damages, no

21

demonstrable monetizable loss.” Rice v. Nova Biomedical Corp., 38 F.3d 909, 917 (7th Cir.
1994). Additionally, Defendants have not rebutted the presumption of damages. Even assuming
Pearson did not believe Lenardson’s alleged statements, Pearson testified that others overheard
Lenardson making these alleged statements about Chicago Marine at the Chicago Boat Show,
which could have caused damage to Chicago Marine’s reputation. [See 61-3, Exhibit 4 (Pearson
Deposition), at 32–33 (explaining that Peter Thompson, who was another Boat U.S.
representative at the booth, two marketing representatives from Boat U.S., and Pearson’s son
also heard Lenardson’s alleged statements).] Thus, a reasonable jury could find for Chicago
Marine on this claim, and Defendants’ motions for summary judgment as to Count IV
(Defamation Per Se) is denied.
IV.

Conclusion
For the reasons explained above, the Court enters summary judgment in favor of

Defendants on Plaintiff’s claim for intentional interference with prospective economic advantage
against Boat U.S. and the Great Lakes Defendants (Count III) and Plaintiff’s claim for
defamation per quod against Boat U.S. and the Great Lakes (Count V). Defendants’ motions for
summary judgment [61] and [62] are denied as to Plaintiff’s claim for breach of contract for
wrongful termination against Boat U.S. (Count I), breach of implied covenant of good faith and
fair dealing against Boat U.S. (Count II), and defamation per se against Boat U.S. and the Great
Lakes Defendants (Count IV). This case is set for further status hearing on January 24, 2017 at
10:30 a.m.

Dated: January 3, 2017

_________________________________
Robert M. Dow, Jr.
United States District Judge

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