SMK Associates, LLC v. Sutherland Global Services, Inc
Filing
153
MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 5/19/17. Mailed notice(ca, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SMK ASSOCIATES, LLC,
Plaintiff,
v.
SUTHERLAND GLOBAL SERVICES,
INC., and MICHAEL BARTUSEK,
Defendants.
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14 C 0284
Judge John Z. Lee
MEMORANDUM OPINION AND ORDER
Plaintiff SMK Associates, Inc. (“SMK”), brought suit against Sutherland
Global Services, Inc. (“Sutherland”) and its former CFO, Michael Bartusek
(“Bartusek”), alleging that Sutherland breached two contracts to sell SMK $84
million in tobacco products. Sutherland moved for summary judgment, arguing in
part that SMK had not produced evidence from which a reasonable jury could find
that it was ready, willing, and able to purchase the tobacco products. For this
reason, Sutherland argued that SMK could not make out a prima facie case of
breach of contract.
The Court disagreed, finding that SMK had produced such
evidence, and denied Sutherland’s motion in this and all other respects [134].
Sutherland has moved the Court to reconsider its ruling in respect to SMK’s
readiness, willingness, and ability to perform.
For the reasons that follow,
Sutherland’s motion for reconsideration [136] is denied.
Background
SMK, an Illinois limited liability company, is comprised of one member:
Martin Borg (“Borg”). SMK Assocs., LLC v. Sutherland Glob. Servs., Inc., No. 14 C
284, 2016 WL 5476256, at *1 (N.D. Ill. Sept. 29, 2016). In early 2012, Borg began
working on a deal with Bartusek in which SMK would purchase $84 million in
tobacco products (specifically, cigarettes). Id. Believing the parties had a deal,
SMK submitted two purchase orders for cigarettes totaling $84 million to Bartusek
at his Sutherland office in June and July 2012.
Id.
SMK never received the
cigarettes and sued for breach of contract. See Pl.’s LR 56.1(b)(3)(C) Stmt. ¶ 52,
ECF No. 116; 1 2d Am. Compl. ¶ 2, ECF No. 40.
In its motion for summary judgment, Sutherland argued that SMK needed to
prove that it was ready, willing, and able to perform its obligations under the
purported contract in order to sue for breach and recover damages.
See SMK
Assocs., 2016 WL 5476256, at *3. SMK disputed whether this requirement exists
under Illinois law. Id. The Court declined to resolve whether Illinois law imposes
such a requirement. Id. Instead, the Court explained that, even if SMK had to
prove that it was ready, willing, and able to perform under the contract, it had
offered evidence from which a reasonable jury could rule in its favor.
Id.
Specifically, the Court noted that “Borg’s testimony suggests that he did in fact
Sutherland disputed this fact on summary judgment on other grounds, but did not
contest that SMK never received any cigarettes under the purported deal. Def.’s Resp. Pl.’s
56.1(b)(3)(C) Stmt. ¶ 52, ECF No. 127.
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have buyers to whom he could have sold the tobacco.”
Id.
The Court further
reasoned as follows:
During Borg’s deposition he is asked who would have purchased the
tobacco had Sutherland delivered it—in other words, who would have
given SMK the funds necessary to turn around and pay Sutherland
what it was owed. Borg explained that he had compiled a list of people
he had spoken to who were willing to buy the tobacco. And although
Borg did not have contracts with these individuals and had not
previously sold tobacco to any of them, he was confident that the
product would have sold. Sutherland calls this testimony speculation,
suggesting that it is somehow inadmissible.
But on summary
judgment, such credibility determinations are impermissible. Even
assuming that SMK has a duty to prove that it could have performed,
Borg’s testimony is enough at this stage to withstand Sutherland’s
motion for summary judgment on this issue.
Id. (internal citations omitted).
Legal Standard
District courts have discretion to entertain motions to reconsider prior
decisions. See Patrick v. City of Chi., 103 F. Supp. 3d 907, 911 (N.D. Ill. 2015); Fed.
R. Civ. P. 54(b); see also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 12 (1983) (“[E]very order short of a final decree is subject to reopening at the
discretion of the district judge.”).
But while motions for reconsideration are
permitted, “they are disfavored.” Patrick, 103 F. Supp. 3d at 911. They serve a very
limited purpose: correcting manifest errors of law or fact and presenting newly
discovered evidence. Id. (citations omitted). This is a heavy burden for the moving
party and makes a motion for reconsideration an inappropriate medium to “rehash”
past arguments, id. at 912 (citations omitted), or revisit improvident strategic
decisions made earlier, Birdo v. Dave Gomez, No. 13 C 6864, 2016 WL 6070173, at
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*1 (N.D. Ill. Oct. 17, 2016) (citation omitted). Motions for reconsideration will be
granted only where “the Court has patently misunderstood a party, or has made a
decision outside the adversarial issues presented to the Court by the parties, or has
made an error not of reasoning but of apprehension.”
Bank of Waunakee v.
Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990) (citation omitted).
Given these exacting standards, issues appropriate for reconsideration “rarely arise
and the motion to reconsider should be equally rare.” Id. (citation omitted).
Analysis
Sutherland has moved the Court to reconsider its conclusion that SMK
produced evidence from which a reasonable jury could conclude it was ready,
willing, and able to perform under the parties’ purported contract. It asserts that
the Court made an error of law in determining that Borg’s deposition testimony was
not speculative and interpreting Sutherland’s arguments as going to Borg’s
credibility. Def.’s Mem. Supp. Mot. Recons. 1, 7–9, ECF No. 137. 2
This is precisely the argument that Sutherland made and the Court rejected
on summary judgment, rendering Sutherland’s argument inappropriate to raise in a
motion to reconsider. Birdo, 2016 WL 6070173, at *1. As the Court explained in its
previous opinion, “Borg’s testimony suggests that he did in fact have buyers to
Sutherland also argues that Illinois law requires that SMK prove it was ready,
willing, and able to perform under the contract in order to recover damages for breach of
contract. Id. at 3–7. But just as before, the Court need not resolve this issue, because as
the Court explains, there is sufficient evidence from which a jury could conclude that SMK
was ready, willing, and able to perform.
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whom he could have sold the tobacco.” See SMK Assocs., 2016 WL 5476256, at *3.
Specifically, Borg testified at his deposition as follows:
The purchase orders that we issued were specifically for the products
that we believe that we had accumulated enough clients to sell to. . . .
[W]e had a group of clients that had indicated that they were ready,
willing, and able to purchase this product. We had full faith and belief
in our research that they would be able to buy this product. I believe
that in our estimation we had customers that at that point in time
could purchase 30 to 40 containers worth of product a month, and we
decided we could issue a purchase order for ten containers a month.
Def.’s LR 56.1(a)(3) Stmt., Ex. 5 (“Borg Dep.”), at 231:2–17, ECF No. 101-5. As the
Court then elaborated, “Borg explained that he had compiled a list of people he had
spoken to who were willing to buy the tobacco. And although Borg did not have
contracts with these individuals and had not previously sold tobacco to any of them,
he was confident that the product would have sold.” See SMK Assocs., 2016 WL
5476256, at *3 (internal citations omitted); see Borg Dep. at 233:12–234:20.
Sutherland repeats the argument it made on summary judgment, labeling
this testimony “speculative” and therefore inadmissible. Def.’s Mem. at 7–8. By
“speculative,” Sutherland means to say that Borg did not in fact have any specific
purchasers with whom he had entered into contracts, a reality the Court
acknowledged in its opinion.
Id.; see SMK Assocs., 2016 WL 5476256, at *3.
Sutherland further states that Borg’s testimony “does not prove SMK was ‘ready,
willing and able’ to consummate the transaction upon delivery on a date certain; it
merely proves SMK hoped it might be ‘ready, willing and able’ at some unspecified
date in the future.” Def.’s Mem. at 8. But Borg did not testify that he hoped SMK
would perform; he testified that, consistent with its market research, it would. Borg
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Dep. at 231:2–17, 232:9–17, 233:12–234:20. 3 Construing the record in SMK’s favor,
this is testimony from which a reasonable jury could conclude that SMK would have
performed had it received the cigarettes promised.
What Sutherland’s argument boils down to is an objection to the sufficiency of
Sutherland’s testimony. In essence, Sutherland’s position is that SMK cannot show
it was ready, willing, and able to perform solely on the basis of Borg’s testimony.
Rather, in Sutherland’s view, his testimony is worthless unless corroborated by
contracts with actual purchasers holding the necessary funds. Def.’s Mem. at 8–9.
But, as the Court explained in denying Sutherland’s motion, it is for the jury to
weigh Borg’s credibility and determine if, by his testimony, SMK carries its burden
(insofar as it has one) to establish its readiness, willingness, and ability to perform.
See SMK Assocs., 2016 WL 5476256, at *3. Perhaps, as Sutherland suggests, a jury
would assign very little weight to the testimony given that it does not establish any
actual contracts with third parties. 4
But it is not for the Court to weigh the
persuasive value of such testimony on summary judgment.
In addition to testifying that SMK intended to sell the cigarettes to third parties,
Borg further testified that, in lieu of sales to third parties, “it would have been very easy to
finance these goods for purchase.” Borg Dep. at 233:2–4. Sutherland does not account for
this testimony in its motion to reconsider.
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As Sutherland points out in his motion, insofar as Borg sought to testify to actual
purchasers’ agreements to purchase cigarettes, this testimony could be hearsay. Def.’s
Mem. at 9 n.1. But a reasonable jury could conclude from the record that Borg’s readiness,
willingness, and ability to perform were based on his general knowledge of the market,
independent of statements made by potential purchasers. Dunham v. Dangeles, 384 N.E.2d
836, 838 (Ill. App. Ct. 1978) (“Absent an express provision to the contrary, when a contract
calls for acts by both parties to be done at the same time, only an expression of readiness,
willingness and ability to perform is needed to constitute a tender of performance.”).
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Nor has Sutherland established that, as a matter of law, Borg’s testimony is
insufficient evidence from which a reasonable jury could conclude that SMK was
ready, willing, and able to perform. Sutherland refers the Court to two cases for the
proposition that “SMK must prove it had sufficient funds on hand to complete the
purchase or was able to obtain such funds within an agreed period of time.” Def.’s
Mem. at 7 (citing Hallmark & Johnson Props., LTD. v. Gadea, 578 N.E.2d 1180,
1184 (Ill. App. Ct. 1991); accord In re Prochnow, 474 B.R. 607, 614 (Bankr. C.D. Ill.
2011)). But these cases apply settled law in the specific context of a broker’s right
to receive a commission in a real estate sale. Hallmark & Johnson Props., 578
N.E.2d at 1184; accord In re Prochnow, 474 B.R. at 614.
Sutherland does not
explain why they are of broader applicability to this case. And they do not establish
that a jury could not find that SMK was ready, willing, and able to perform based
on Borg’s stated intention of utilizing third-party purchasers.
Conclusion
For the reasons stated herein, Sutherland’s motion to reconsider [136] is
denied.
IT IS SO ORDERED.
ENTERED 5/19/17
__________________________________
John Z. Lee
United States District Judge
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