Highway Equipment Company v. Ermak USA, Inc. et al

Filing 60

MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 3/22/17. Mailed notice(ca, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
HIGHWAY EQUIPMENT COMPANY,
Plaintiff/Counter-Defendant,
v.
ERMAK USA, INC.,
Defendant/Counter-Plaintiff,
and
ERMAKSAN TURKEY,
Defendant.

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14 C 8342
Judge John Z. Lee

MEMORANDUM OPINION AND ORDER
In September 2012, Plaintiff Highway Equipment Company (“Plaintiff”) sent
Defendant Ermak USA, Inc. (“Ermak USA”) a purchase order for a Fibermak Laser
Cutting Machine, an expensive piece of equipment that is used to cut sheet metal.
It was to be manufactured and shipped by Defendant Ermaksan Turkey
(“Ermaksan”). Dissatisfied with the final product, Plaintiff brought suit against
Ermak USA and Ermaksan (together, “Defendants”), alleging various contractual
claims under Illinois statutory and common law. In response, Ermak USA brought
contract-based counterclaims of its own against Plaintiff. Defendants have now
moved for summary judgment with regard to all of Plaintiff’s claims and Ermak
USA’s counterclaims. For the reasons provided herein, their motion for summary
judgment [48] is denied.

Factual Background 1
Plaintiff is an Iowa corporation that manufactures large-scale farm and
municipal equipment. Pl.’s LR 56.1(b)(3)(C) Stmt. ¶ 1, ECF No. 52-2. Its principal
place of business is in Linn County, Iowa. Defs.’ LR 56.1(a)(3) Stmt. ¶ 1, ECF No.
48-1. Ermak USA is an Illinois corporation with its principal place of business in
Elk Grove Village, Illinois. Id. ¶ 2. Ermaksan is a Turkish corporation with its
principal place of business in Turkey. Id. ¶ 3.
Around July 2012, Plaintiff and Ermak USA began negotiations regarding
Plaintiff’s purchase of a fiber laser cutter.

Id. ¶ 7.

In connection with these

negotiations, Ermak USA provided Plaintiff with a quote for a Fibermak Laser
Cutting Machine (“the Fibermak”).

Id. ¶ 13.

Shortly thereafter, Plaintiff sent

Ermak USA a purchase order for the Fibermak. Id. ¶ 14. On September 6, 2012,
Ermak

USA

acknowledged

the

purchase

order

by

sending

an

order

acknowledgment, which included the final “Special Terms and Conditions”
governing the Fibermak’s sale. Id. ¶ 15.
Under the Special Terms and Conditions, Plaintiff agreed to pay Ermak USA
a total of $777,500 on an installment basis in exchange for the manufacture and
shipment of the Fibermak. Id., Ex. 12, at 1, 6–7. For its part, Ermak USA agreed
that the Fibermak would be shipped to Norfolk, Virginia, at which point it would be
loaded onto Plaintiff’s truck and shipped to Plaintiff’s facility in Cedar Rapids,

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The following facts are undisputed except where noted.

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Iowa. See id., Ex. 12, at 1. 2 Ermak USA further agreed that the Fibermak would
be covered by Ermak USA’s two-year “Manufacturer’s Limited Warranty” and that
“English speaking service technicians based in the Chicago area” would be available
to provide free service support. Id., Ex. 12, at 2, 9.
The Special Terms and Conditions also set forth criteria for Plaintiff’s
acceptance of the Fibermak. See Defs.’ LR 56.1 Stmt. ¶ 18; Pl.’s LR 56.1(b)(3)(B)
Stmt. ¶ 13, ECF No. 52-1. In pertinent part, these criteria read as follows:
Acceptance of the [Fibermak] is a three step process based on the
satisfactory completion of test cutting at Ermaksan in Bursa, Turkey
on the specific machine purchased by [Plaintiff] and then the
satisfactory replication of the same test cutting following installation
and startup of the machine at [Plaintiff’s facility] in Cedar Rapids, IA.
Final acceptance occurs when the operator and maintenance training
is complete in Cedar Rapids, IA.
Defs.’ LR 56.1 Stmt., Ex. 12, at 7–8.
In February 2013, Plaintiff’s employees traveled to Bursa, Turkey, to observe
test cutting on the Fibermak at Ermaksan’s facilities. Defs.’ LR 56.1 Stmt. ¶ 20.
The parties agree that this test cutting failed to meet several requirements. In
particular, Ermaksan “never met the speed requirement of 4kw during the test
cutting, did not meet the burr requirements for the 1/4" 304 steel, and did not have a
completed [Fibermak] as the lift table and table stops were not complete.” Pl.’s LR
56.1(b)(3)(C) Stmt. ¶ 10. Nevertheless, on May 8, 2013, installation of the Fibermak
The Special Terms and Conditions specify an arrival date in Norfolk no later than
“January 11, 2012.” Defs.’ LR 56.1 Stmt., Ex. 12, at 1. Given that the parties’ negotiations
began in July 2012 and Ermak USA sent the final version of the Special Terms and
Conditions in September 2012, this arrival date appears to contain a typographical error. For
example, perhaps the parties intended to specify an arrival date of January 11, 2013, rather
than January 11, 2012. The parties’ filings do not address this discrepancy.
2

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began at Plaintiff’s facility in Cedar Rapids, Iowa.

Defs.’ LR 56.1 Stmt. ¶ 23.

Defendants acknowledge that the installation process began later than the agreedupon date on which installation was supposed to begin. Id.
The details of what happened after installation began remain the subject of
much dispute.

According to Defendants, installation of the Fibermak was

completed soon thereafter on May 22, 2013, and test cutting on the Fibermak at
Plaintiff’s facility was completed on June 7, 2013. Id. ¶¶ 25–26. Defendants assert
that the Fibermak was fully operational at the time of this test cutting. Id. ¶ 26.
By contrast, Plaintiff denies these assertions, claiming that installation remained
incomplete as of May 22, 2013, because the Fibermak’s “cut loss sensor” had not yet
been installed. Pl.’s LR 56.1(b)(3)(B) Stmt. ¶ 25. Plaintiff further claims that the
Fibermak was not fully operational as of June 7, 2013, because key components of
the Fibermak—namely, “loss of cut and opposite hand construction and the related
reference point”—also had not been installed by that date. Id. ¶¶ 27–28.
From May 2013 to March 2014, the Fibermak had difficulty maintaining cut
quality and running in production mode. Pl.’s LR 56.1(b)(3)(C) Stmt. ¶ 13. These
issues required seven or eight on-site service visits by Ermak USA’s technicians.
See Defs.’ LR 56.1 Stmt. ¶ 33. Defendants claim—while Plaintiff denies—that “[a]ll
material issues were resolved during these site visits.”

Id. ¶ 34; Pl.’s LR

56.1(b)(3)(B) Stmt. ¶ 34.
Defendants’ final service visit to Plaintiff’s facility took place from February 10
to March 7, 2014. Defs.’ LR 56.1 Stmt. ¶ 36. During this visit, one of Defendants’

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technicians provided technical support, installed a new cutting head, installed loss-ofcut monitoring, and conducted further test cutting on the Fibermak. Id. Defendants
claim that the Fibermak was functioning properly as of March 7, 2014, as a result of
its technician’s work. Id. ¶ 37. Plaintiff, however, maintains that the Fibermak
continued to malfunction and still was not operating in full production mode. Pl.’s LR
56.1(b)(3)(B) Stmt. ¶ 37; Pl.’s LR. 56.1(b)(3)(C) Stmt. ¶¶ 33–36.
More problems with the Fibermak arose after this final service visit.
According to Defendants, on March 10, 2014, one of Plaintiff’s employees damaged
two components of the Fibermak’s cutting head—namely, the “ceramic” and the
“pin”—while operating the Fibermak.

Defs.’ LR 56.1 Stmt. ¶¶ 39–40.

But

according to Plaintiff, the pin fell out of the cutting head on its own on March 10,
and its employee did not damage the ceramic until March 13. Pl.’s LR 56.1(b)(3)(B)
Stmt. ¶¶ 39–40.
On April 2, 2014, Plaintiff sent Defendants a letter asking them to remove
the Fibermak and refund all of Plaintiff’s payments. Defs.’ LR 56.1 Stmt., Ex. 39.
The letter also stated: “We are rejecting your machine since we have never accepted
it due to Ermak’s failure to perform. To the extent you claim we have accepted it,
we hereby revoke our acceptance.” Defs.’ LR 56.1 Stmt. ¶ 56. Defendants never
responded to this letter. Pl.’s LR 56.1(b)(3)(C) Stmt. ¶ 37.
From April to November 2014, Plaintiff attempted to resell the Fibermak to
other companies. Defs.’ LR 56.1 Stmt. ¶ 58. These attempts were unsuccessful, and
Plaintiff subsequently filed this lawsuit. See id. ¶ 60.

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Legal Standard
“The court shall grant summary judgment 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). To survive summary judgment, the
nonmoving party must “do more than simply show that there is some metaphysical
doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986), and instead must “establish some genuine issue for trial
such that a reasonable jury could return a verdict in her favor.” Gordon v. FedEx
Freight, Inc., 674 F.3d 769, 772–73 (7th Cir. 2012).

In reviewing a motion for

summary judgment, the Court gives the nonmoving party “the benefit of conflicts in
the evidence and reasonable inferences that could be drawn from it.” Grochocinski
v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir. 2013). The Court
must not make credibility determinations or weigh conflicting evidence. McCann v.
Iroquois Mem’l Hosp., 622 F.3d 745, 752 (7th Cir. 2010).
Analysis
I.

Count I: Recovery of Payment Based Upon Refusal to Accept Goods
In Count I of its Amended Complaint, Plaintiff seeks to recover the payments

it made to Defendants in exchange for the Fibermak’s manufacture and shipment.
In support, Plaintiff advances the theory that it never accepted the Fibermak and is
therefore entitled to recover these payments under 810 Ill. Comp. Stat. 5/2-711.
Under Illinois law, “acceptance of goods occurs when the buyer, after a
reasonable opportunity to inspect the goods, (1) notifies the seller of acceptance,
(2) fails to make an effective rejection or (3) does any act inconsistent with the
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seller’s ownership.” Midwest Generation, LLC v. Carbon Processing & Reclamation,
LLC, 445 F. Supp. 2d 928, 933 (N.D. Ill. 2006) (quoting Phil Jacobs Co. v. Mifflin,
320 N.E.2d 329, 332 (Ill. App. Ct. 1974)) (internal quotation marks omitted); accord
810 Ill. Comp. Stat. 5/2-606.

Whether an acceptance or rejection of goods has

occurred is a question for the trier of fact. Bank of Am., N.A. v. R.B. Gustafson Co.,
No. 10 CV 1608, 2012 WL 3134003, at *5 (N.D. Ill. July 31, 2012) (citing Alden
Press, Inc. v. Block & Co., Inc., 527 N.E.2d 489, 495 (Ill. App. Ct. 1988)).
In moving for summary judgment as to Count I, Defendants contend that the
undisputed facts show that Plaintiff (1) notified them of acceptance of the
Fibermak, (2) failed to effectively reject the Fibermak, and (3) took acts inconsistent
with Defendants’ ownership. For the reasons explained below, however, none of
these arguments is persuasive, and Defendants’ motion for summary judgment as to
Count I is denied.
A.

Notification of Acceptance

In arguing that Plaintiff notified them of acceptance of the Fibermak,
Defendants point to two primary pieces of evidence. First, they point to an Ermak
USA service report that Plaintiff signed on June 7, 2013. They contend that the
service report indicates Plaintiff’s acceptance of the Fibermak subject only to the
future installation of loss-of-cut monitoring, opposite-handed material stops, and
the corresponding reference point. Mot. Summ. J. at 3–4, ECF No. 48; see also
Defs.’ LR 56.1 Stmt. ¶ 28. Building on this argument, Defendants maintain that
Plaintiff had no right to condition its acceptance on the future installment of these
“additional” components, because the components were not required under the
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Special Terms and Conditions.

Defs.’ LR 56.1 Stmt. ¶¶ 28–29.

For its part,

Plaintiff insists that inclusion of these components was, in fact, required under the
Special Terms and Conditions. Pl.’s LR 56.1(b)(3)(B) Stmt. ¶¶ 28–29. Plaintiff also
denies that the service report constituted notice of acceptance, arguing that the
report instead indicated Plaintiff’s lack of acceptance by expressly noting a
condition antecedent to acceptance. Id. ¶ 28.
Defendants also point to a letter that Plaintiff sent them on March 14, 2014.
Mot. Summ. J. at 4. In the letter, one of Plaintiff’s representatives praised the work
of Defendants’ service technicians and stated that Ermaksan “was successful in
completing the necessary requirements to allow [Plaintiff] to begin operating the
machine.”

Defs.’ LR 56.1 Stmt. ¶ 49.

Plaintiff argues that this letter, though

laudatory, cannot be construed as a notification of acceptance, because the final
paragraph of the letter expressly conditioned Plaintiff’s acceptance upon the
Fibermak’s continued and successful operation per the parties’ criteria for acceptance.
Resp. at 16, ECF No. 52. Defendants counter that the initially agreed-upon criteria
for acceptance had been satisfied as of June 7, 2013, Reply at 3–6, ECF No. 53, while
Plaintiff insists that neither the initially agreed-upon criteria nor additional criteria
set forth via e-mail correspondence were ever satisfied, Resp. at 10–14.
Having considered the parties’ arguments, it is clear to the Court that
whether Plaintiff accepted the Fibermak by providing Defendants with notification
of acceptance in either the June 7 service report or the March 14 letter is an issue
rife with underlying factual disputes. A reasonable jury considering these disputes

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and weighing the evidence before it could find in Plaintiff’s favor as to this matter.
See Alden, 527 N.E.2d at 495. As such, Defendants are not entitled to summary
judgment based upon Plaintiff’s purported notification of acceptance.
B.

Failure to Effectively Reject

Next, Defendants argue that Plaintiff accepted the Fibermak by failing to
effectively reject it.

Under Illinois law, a rejection of nonconforming goods is

effective only if it is (1) made within a reasonable time after the goods’ delivery and
(2) communicated seasonably to the seller. 810 Ill. Comp. Stat. 5/2-602(1); Softa Grp.,
Inc. v. Scarsdale Dev., 632 N.E.2d 13, 16 (Ill. App. Ct. 1993)).

A rejection of

nonconforming goods must be “clear and unambiguous” in order to be seasonable, and
“a mere complaint about the quality of the goods does not satisfy this standard.”
Marmi E. Graniti D’Italia Sicilmarmi S.p.A. v. Universal Granite & Marble, 757 F.
Supp. 2d 773, 779–80 (N.D. Ill. 2010). That said, “[t]he reasonableness of a rejection
of goods is ordinarily a question for the trier of fact.” Alden, 527 N.E.2d at 495.
A central piece of evidence bearing on whether Plaintiff effectively rejected
the Fibermak is the letter that Plaintiff sent Defendants on April 2, 2014. In this
letter, Plaintiff expressly stated: “We are rejecting your machine since we have
never accepted it due to Ermak’s failure to perform.” Defs.’ LR 56.1 Stmt. ¶ 56.
Defendants do not appear to dispute that, to the extent this letter attempted to
reject the Fibermak, the letter was clear and unambiguous on its face. Rather,
Defendants argue that the attempted rejection was ineffective solely on the ground
that the letter was not sent within a reasonable amount of time after the
Fibermak’s installation in May 2013. Mot. Summ. J. at 5; Reply at 6.
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In response, Plaintiff raises two genuine disputes of material fact.

First,

Plaintiff contends that it clearly communicated its revocation prior to April 2, 2014,
in various e-mails that it sent to Defendants. Resp. at 7–8. Some of the e-mails to
which Plaintiff points appear to constitute “mere complaint[s]” about the
Fibermak’s quality, and, as noted above, such complaints are generally insufficient
to constitute rejection. Marmi, 757 F. Supp. 2d at 780. But other e-mails present a
closer question. For example, on March 22 and 27, 2014, Plaintiff sent e-mails
informing Defendants of its desire to return the Fibermak for a full refund. See
Resp. at 8. Though these e-mails perhaps do not reject the Fibermak as clearly as
the April 2 letter does, a reasonable jury drawing inferences in Plaintiff’s favor
might nevertheless conclude that Plaintiff rejected the Fibermak prior to April 2,
2014. See Alden, 527 N.E.2d at 495 (internal quotation marks omitted) (“[W]hether
conduct has amounted to an acceptance or a rejection of goods is a question of fact to
be determined within the framework of the facts of each particular case.”).
Second, Plaintiff asserts that, even assuming the April 2 letter was its
earliest unequivocal rejection of the Fibermak, the timeliness and reasonableness of
this rejection are issues of fact that must be determined by a jury in light of the
unique circumstances surrounding the parties’ dispute. Id. at 9. Plaintiff is correct
in this assertion; it is well established that the reasonableness of a rejection of
goods is a question for the trier of fact. See, e.g., Alden, 527 N.E.2d at 495; Bank of
Am., 2012 WL 3134003, at *6 (“Jurors are [ ] entitled to examine the circumstances
surrounding [the] rejection [of goods].”).

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For these reasons, Defendants are not

entitled to summary judgment based upon Plaintiff’s purported failure to effectively
reject the Fibermak.
C.

Acts Inconsistent with Defendants’ Ownership

Finally, Defendants contend that Plaintiff accepted the Fibermak by acting in
a manner inconsistent with Defendants’ continued ownership.

In support,

Defendants rely upon the undisputed fact that Plaintiff attempted to resell the
Fibermak in 2014. Mot. Summ. J. at 5–6 (citing Defs.’ LR 56.1 Stmt. ¶ 58).
Defendants correctly note that the “[r]esale of goods—even after a timely
rejection—has long been recognized as inconsistent with the seller’s continued
ownership and as constituting an acceptance of the goods.”

Fabrica de Tejidos

Imperial, S.A. v. Brandon Apparel Grp., Inc., 218 F. Supp. 2d 974, 978 (N.D. Ill.
2002) (emphasis omitted).

But Defendants cite no case law in support of the

broader proposition that a mere attempt to resell goods is so inconsistent with a
seller’s ownership of goods to constitute acceptance as a matter of law. Rather, the
question whether Plaintiff accepted the Fibermak through its unsuccessful attempt
at resale remains an issue that must be resolved by a jury. See Alden, 527 N.E.2d
at 495 (citing Frank’s Maint. & Eng’g, Inc. v. C.A. Roberts Co., 408 N.E.2d 403, 408
(Ill. App. Ct. 1980)) (“The overriding rule is that, in determining whether a buyer
has so wrongfully exercised ownership over the goods as to be barred from rejecting
them, the trier of fact must apply a rule of reasonableness.”).
Furthermore, even assuming arguendo that Plaintiff’s attempted resale was
inconsistent with Defendants’ ownership of the Fibermak, the attempted resale
cannot have constituted acceptance if (1) Plaintiff previously rejected the Fibermak
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and (2) Defendants failed to give Plaintiff instructions within a reasonable time
after the rejection regarding the Fibermak’s storage, resale, or return to
Defendants. See 810 Ill. Comp. Stat. 5/2-604. As such, the question of whether the
attempted resale constituted acceptance is inextricably intertwined with the
threshold question of whether Plaintiff had effectively rejected the Fibermak in the
first place. The latter question involves disputes of fact, as explained supra, and the
interdependence of these questions is another reason why Defendants’ motion for
summary judgment as to Count I must be denied.
II.

Count II: Recovery of Payments Based Upon Revocation of Acceptance
In Count II, Plaintiff alternatively seeks to recover its payments for the

Fibermak on the theory that, assuming it accepted the Fibermak, it subsequently
revoked acceptance under 810 Ill. Comp. Stat. 5/2-711. In particular, Plaintiff argues
that it revoked its acceptance in its letter dated April 2, 2014, in which it stated: “We
are rejecting your machine since we have never accepted it due to Ermak’s failure to
perform.

To the extent you claim we have accepted it, we hereby revoke our

acceptance.” Defs.’ LR 56.1 Stmt. ¶ 56 (emphasis added); see also Resp. at 20–21.
Under Illinois law, a buyer may revoke its acceptance of a nonconforming good
where (1) the nonconformity substantially impaired the good’s value, (2) the buyer
accepted the good on the reasonable assumption that the nonconformity would be
cured, and (3) the nonconformity was not seasonably cured. 810 Ill. Comp. Stat. 5/2608(1). Revocation must occur “within a reasonable time after the buyer discovers or
should have discovered the ground for it and before any substantial change in

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condition of the goods which is not caused by their own defects.” Id. 5/2-608(2); see
also N. Am. Lighting, Inc. v. Hopkins Mfg. Corp., 37 F.3d 1253, 1257 (7th Cir. 1994).
According to Defendants, the undisputed facts show that any nonconformity
in the Fibermak was cured by March 7, 2014; that any damage thereafter was the
result of mishandling by Plaintiff’s own employee; and that any uncured
nonconformity did not substantially impair the Fibermak’s value. Mot. Summ. J. at
10–11. Based upon this account of the facts, Defendants argue that Plaintiff cannot
prove it revoked its prior acceptance of the Fibermak.
Defendants’ argument is unavailing, however, because it overlooks several
disputes of material fact. First, Plaintiff has adduced evidence suggesting that not all
nonconformities were cured by March 7, 2014. For example, Plaintiff cites testimony
in which its employees, as well as one of Defendants’ employees, state that the
Fibermak was never able to operate in full production mode. Pl.’s LR 56.1(b)(3)(C)
Stmt. ¶ 36. Plaintiff also points to an affidavit in which its manufacturing engineer
states that a piece of the Fibermak fell off the cutting head on March 10, 2014, prior
to the later damage caused by Plaintiff’s employee. See Pl.’s LR 56.1(b)(3)(B) Stmt.
¶ 40. Drawing reasonable inferences in Plaintiff’s favor, such evidence gives rise to a
triable issue as to whether Defendants seasonably cured the Fibermak’s
nonconformities by March 7, 2014. In addition, whether any uncured nonconformities
substantially impaired the Fibermak’s value is a fact-intensive issue properly within
the jury’s purview. See N. Am. Lighting, 37 F.3d at 1257; Alden, 527 N.E.2d at 493.
For these reasons, summary judgment with regard to Count II is unwarranted.

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III.

Count III: Breach of Contract
In Count III, Plaintiff brings a claim for breach of contract.

A plaintiff

seeking to prevail on a breach of contract claim under Illinois law must prove four
elements: “(1) the existence of a valid and enforceable contract; (2) substantial
performance by the plaintiff; (3) a breach by the defendant; and (4) resultant
damages.” Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759, 764 (7th Cir. 2010).
Here, among other agreed-upon terms, the parties’ contract called for the
Fibermak’s manufacture and shipment, specified the Fibermak’s arrival date within
the United States, and represented that English-speaking service technicians based
in the Chicago area would be available to provide technical support for the
Fibermak. 3 Defs.’ LR 56.1 Stmt., Ex. 12. Plaintiff claims that Defendants breached
this contract in a number of ways, including by failing to deliver a Fibermak
capable of operating in full production mode, failing to timely deliver and install the
Fibermak, and failing to provide English-speaking service technicians based in
These terms are included in the Special Terms and Conditions, which the parties
agree contained terms that were part of their contract. Defs.’ Resp. Pl.’s LR 56.1(b)(3)(C)
Stmt. ¶ 2, ECF No. 53-2.
3

The Court acknowledges that, by contrast, the parties presently dispute whether two
additional documents—the original quote from Ermak USA and an invoice dated
September 6, 2012—also contained binding contractual terms.
See id.
For two
independently sufficient reasons, however, the Court declines to address this point of
disagreement. First, as explained herein, Plaintiff has raised triable issues of fact as to
whether Defendants breached the Special Terms and Conditions. As such, the issue of
whether the quote and invoice supplemented the Special Terms and Conditions is
immaterial to the disposition of Defendants’ motion for summary judgment. Second,
Defendants unequivocally admitted in their answers to Plaintiff’s Amended Complaint that
the quote and invoice were part of the contract. See Ermak USA’s Answer ¶ 15, ECF
No. 27; Ermaksan’s Answer ¶ 15, ECF No. 28. Such admissions are binding, and
Defendants have offered no explanation as to why the Court should disregard them at this
late stage.

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Chicago.

See Resp. at 22–23.

In support, Plaintiff offers abundant testimonial

evidence that the Fibermak never operated in full production mode, Pl.’s LR
56.1(b)(3)(C) Stmt. ¶ 36, as well as undisputed evidence that installation of the
Fibermak began later than the agreed-upon date, Pl.’s LR 56.1(b)(3)(B) Stmt. ¶ 23.
Plaintiff also notes that no service technicians were based in the Chicago area until
June 2015, several months after this lawsuit was filed, Pl.’s LR 56.1(b)(3)(C) Stmt.
¶ 5.
For their part, Defendants assert that there is no genuine dispute as to
whether they breached their sales contract with Plaintiff.

But this assertion

ignores the many pieces of evidence that Plaintiff has offered with regard to the
element of breach. Plaintiff’s evidence plainly creates a triable issue of fact as to
whether Defendants breached their contract, and Defendants’ motion for summary
judgment as to Count III is thus denied.
IV.

Count IV: Breach of Express Warranty
Finally, in Count IV, Plaintiff brings a claim for breach of express warranty.

To prevail on a claim for breach of express warranty, a plaintiff “must show a
breach of an affirmation of fact or promise that was made a part of the basis of the
bargain.” Hasek v. DaimlerChrysler Corp., 745 N.E.2d 627, 634 (Ill. App. Ct. 2001).
Here, Plaintiff alleges that Defendants are liable for breach of express warranty
because they failed to replace the Fibermak or repair its defects as promised in
their two-year Manufacturer’s Limited Warranty.
While Defendants acknowledge that the Manufacturer’s Limited Warranty
was part of the parties’ bargain, Defs.’ Resp. Pl.’s LR 56.1(b)(3)(C) Stmt. ¶ 2, they
15

argue that they did not breach this warranty and that they are therefore entitled to
summary judgment on this claim. In support, Defendants assert that they satisfied
their obligations under the Manufacturer’s Limited Warranty by repairing the
Fibermak in a manner that rendered it fully operational as of March 7, 2014. Mot.
Summ. J. at 14. In addition, they contend that the warranty did not obligate them
to make any further repairs after March 7, 2014, because any subsequent damage
to the Fibermak was caused by Plaintiff’s own employee and thus was outside the
warranty’s scope. Id.; see also Defs.’ LR 56.1 Stmt., Ex. 46, at 2 (stating the terms
of the Manufacturer’s Limited Warranty).
As noted above, however, Plaintiff argues that the Fibermak was still not
fully operational as of March 7, 2014, and has offered ample evidence in support of
its position that the Fibermak never attained full functionality. See Resp. at 24;
Pl.’s LR 56.1(b)(3)(C) Stmt. ¶ 36. Plaintiff has thus raised a genuine dispute of
material fact as to whether Defendants fulfilled their obligation under their express
warranty to replace the Fibermak or repair its defects. For this reason, Defendants’
motion for summary judgment as to Count IV is denied.
V.

Ermak USA’s Counterclaims
In exchange for the Fibermak’s manufacture and shipment, Plaintiff agreed

to pay Ermak USA $777,500 on an installment basis. Id., Ex. 12, at 1, 6–7. It is
undisputed, however, that Plaintiff never paid the final installment payment of
$77,750. Defs.’ LR 56.1 Stmt. ¶ 67. On this basis, Ermak USA has brought a
counterclaim against Plaintiff, seeking to recover the outstanding $77,750
installment payment under 810 Ill. Comp. Stat. 5/2-709. In the alternative, Ermak
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USA has also alleged a counterclaim for breach of contract, seeking to recover the
same amount.
In their motion for summary judgment, Defendants argue that, in the event
the Court were to enter summary judgment in their favor with regard to all four
counts of Plaintiff’s Amended Complaint, Ermak USA would necessarily be entitled
to summary judgment in its favor as to its counterclaims. Mot. Summ. J. at 15.
Defendants advance no other arguments in moving for summary judgment as
Ermak USA’s counterclaims. Given that Defendants are not entitled to summary
judgment as to any of Plaintiff’s claims, Defendants’ motion for summary judgment
as to Ermak USA’s counterclaims is denied.
Conclusion
For the reasons stated herein, Defendants’ motion for summary judgment
[48] is denied. A status hearing will be held at 9:00 a.m. on Tuesday, April 11,
2017, at which point the parties should be prepared to set deadlines for pretrial
filings, a date for the pretrial conference, and a date for trial.
IT IS SO ORDERED.

ENTERED 3/22/17

__________________________________
John Z. Lee
United States District Judge

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