Landale Signs and Neon, Ltd. v. Runnion Equipment Company et al

Filing 101

MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 2/25/2019. Mailed notice(gel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LANDALE SIGNS AND NEON, LTD.,
Plaintiff,

Case No. 16-cv-7619

v.

Judge John Robert Blakey

RUNNION EQUIPMENT CO. AND
JOHN DOE,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Landale Signs and Neon Ltd. entered into a written contract to
purchase a crane from Defendant Runnion Equipment Co. Shortly thereafter, third
party John Doe, posing as Defendant, sent Plaintiff wiring instructions to pay for the
crane. Plaintiff wired the money to John Doe, realizing only later that John Doe was
not Defendant. Despite its efforts to work with law enforcement, Plaintiff could not
identify John Doe and cannot recover the funds. It has thus sued Defendant to
recover the funds, alleging that Defendant is liable for breach of contract because
Defendant failed to protect Plaintiff’s confidential information, therefore making it
possible for John Doe to hack Defendant’s system and obtain it.
Defendant moves for summary judgment [87].
below, this Court grants Defendant’s motion.

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For the reasons explained

I.

Background
The facts in this section come from Defendant’s statement of facts [89-1] and

Plaintiff’s statement of additional facts [93].
Plaintiff manufactures custom signs and on-premise advertising. [93] ¶ 1. It
sought to purchase a truck-mounted crane from Defendant. Id. ¶ 2. Plaintiff’s
president, Darrell Brown, contacted Patrick Runnion, Defendant’s CEO, to initiate
discussions and negotiations regarding the crane. [89-1] ¶ 5.
In April 2016, Plaintiff entered into a written contract with Defendant to
purchase the crane in exchange for $87,625.00. Id. ¶ 6. Runnion signed the contract
on behalf of Defendant; Brown signed the contract on behalf of Plaintiff. Id. ¶¶ 8–9.
Runnion did not make any specific statements that he would protect Plaintiff’s
information. Id. ¶ 27.
After the parties executed the contract, Plaintiff received several sets of
divergent wiring instructions. Defendant’s personnel can be reached at the email
domain: “@runnionequipment.com.”

Id. ¶ 17.

But, on April 18, 2016, Plaintiff

received wiring instructions from an email address with domain “runnionequpment”
(which misspelled “equipment”). Id. ¶ 19. These instructions requested that Plaintiff
send the funds to a Michael Mitch LLC at BB&T Bank in Cary, North Carolina. Id.
Then, on May 12, 2016, Plaintiff received a second set of instructions directing
that the funds be transferred to a different entity—Prime C. Contractors at Sun Trust
Bank in Alexandria, Virginia. Id. ¶ 20. These instructions also came from an email
domain “runnionequpment.” Id.

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Plaintiff ignored the April 18, 2016 instructions, but followed through with the
May 12, 2016 instructions. Id. ¶ 21. On May 13, 2016, Brown directed that the funds
for purchase be forwarded to Prime C. Contractors at Sun Trust Bank. Id. A few
days later, on May 16, 2016, Brown realized he was the victim of fraud. Id. ¶ 22.
II.

Legal Standard
Summary judgment is proper where there is “no dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A
genuine dispute as to any material fact exists if “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary judgment has the
burden of establishing that there is no genuine dispute as to any material fact. See
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
In determining whether a genuine issue of material fact exists, this Court must
construe all facts and reasonable inferences in the light most favorable to the nonmoving party. See CTL ex rel. Trebatoski v. Ashland Sch. Dist., 743 F.3d 524, 528
(7th Cir. 2014). The non-moving party has the burden of identifying the evidence
creating an issue of fact. Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099,
1104 (7th Cir. 2008). To satisfy that burden, 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).
Thus, a mere “scintilla of evidence” supporting the non-movant’s position does not
suffice; “there must be evidence on which the jury could reasonably find” for the nonmoving party. Anderson, 477 U.S. at 252.
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III.

Analysis
Plaintiff alleges claims against Defendant for breach of express contract and

breach of implied contract. [33] ¶¶ 52–72. 1 Both claims seek to hold Defendant liable
for failing to keep sensitive information confidential during the transaction. Id.
Defendant moves for summary judgment on both claims. [89].
A.

Breach of Contract Standards

To prevail on a breach of express claim, Plaintiff must prove: (1) the existence
of a valid and enforceable contract; (2) performance by the plaintiff; (3) a breach by
the defendant; and (4) damages caused by the breach. Spitz v. Proven Winners N.
Am., LLC, 759 F.3d 724, 730 (7th Cir. 2014) (citing Lindy Lu LLC v. Ill. Cent. R.R.
Co., 984 N.E.2d 1171, 1175 (Ill. App. Ct. 2013)). 2 To prove breach of implied contract,
Plaintiff must “show the same elements as an express contract, as well as a meeting
of the minds and a mutual intent to contract.” New v. Verizon Commc’ns, Inc., 635 F.
Supp. 2d 773, 782–83 (N.D. Ill. 2008).
The “only difference between an express contract and a contract implied in fact
is that in the former the parties arrive at their agreement by words, either written or
oral, while in the latter their agreement is arrived at by a consideration of their acts
and conduct.” Barry Mogul & Assocs., Inc. v. Terrestris Dev. Co., 750, 643 N.E.2d 245,
251 (Ill. App. Ct. 1994). An implied contract claim cannot coexist with an express

Plaintiff’s third amended complaint alleges tort and contract claims, but at this point in the case,
only the contract claims remain. [41].
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The parties agree that Illinois law applies to Plaintiff’s claims. See [88] 12–13; [94] at 6–12.

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contract on the same subject. Marcatante v. City of Chicago, Ill., 657 F.3d 433, 440
(7th Cir. 2011).
B.

Breach of Express Contract

Plaintiff concedes that the parties’ contract did not contain any express
provision providing that the parties must keeping sensitive information confidential.
[94] at 7. Additionally, Plaintiff admits that Defendant never made any oral express
promise to keep Plaintiff’s information confidential. [89-1] ¶ 27. Thus, this Court
grants summary judgment to Defendant to the extent Plaintiff’s complaint alleges
any breach of express contract, and now proceeds to analyze only whether Defendant
is entitled to judgment on Plaintiff’s breach of implied contact claim.
C.

Breach of Implied Contract

Plaintiff’s breach of implied contract claim alleges that Defendant is liable for
breaching an implied agreement that the parties maintain confidentiality over
sensitive information. See [94] at 6–14.
The parties focus their arguments primarily upon whether they did, in fact,
form an implied contract to keep certain information confidential. See generally [88];
[94]. This Court, however, need not decide this point. Even if the parties formed such
an implied agreement and Defendant breached that agreement, Plaintiff’s claim still
fails because it cannot prove damages caused by Defendant’s breach.
Illinois courts refer to causation as “proximate causation,” which encompasses
two distinct concepts: cause in fact and legal cause. In re: Emerald Casino, Inc., 867
F.3d 743, 755 (7th Cir. 2017); In re Illinois Bell Tel. Link-Up II, 994 N.E.2d 553, 558
(Ill. App. Ct. 2013) (“Damages which are not the proximate cause of the breach are
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not allowed.”). A plaintiff must satisfy both concepts to prevail on a breach of contract
clam. Emerald, 867 F.3d at 755.
Plaintiff’s claim fails as a matter of law because it cannot establish cause in
fact—that is, the record fails to show “a reasonable certainty” that Defendant’s acts
“caused the injury or damage.” Id. (quoting Young v. Bryco Arms, 821 N.E.2d 1078,
1085 (Ill. 2004)). Importantly, there is no evidence that any of Defendant’s employees
affirmatively provided any customer information to any third party.
Likewise, Plaintiff fails to show that Defendant otherwise caused a third-party
breach of Plaintiff’s customer information by failing to properly maintain secure data
and email networks. On this point, Plaintiff attempts to avoid summary judgment
solely by relying upon an affidavit from Neil Swindlehurst, its external IT consultant.
[94] at 13–14; [93-8]. Swindlehurst provides a cursory five-paragraph declaration,
concluding that the third party’s intrusion must have originated from Defendant’s
shoddy IT setup. [93-8] ¶ 5.
Swindlehurst’s affidavit testimony, however, remains insufficient for a variety
of reasons. The witness purports to opine based upon personal knowledge but then,
after merely reviewing the deposition of Defendant’s IT consultant, he offers only an
opinion about causation. In essence, he thinks that Defendant’s IT setup must have
allowed the third-party to hack into Defendant’s system, which in turn, must have
allowed the theft of Plaintiff’s information. [93-8]. 3 The declaration provides no

The affidavit also contains inadmissible hearsay, which this Court may properly disregard for
summary judgment purposes. Gunville v. Walker, 583 F.3d 979, 985 (7th Cir. 2009).

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evidentiary foundation for his speculation, and he fails to explain how the nature of
Defendant’s IT setup made it more possible for an intruder to gain access to
Defendant’s network, or that Defendant’s IT setup did, in fact, cause a data breach
to Defendant’s network. Id.
This Court thus disregards Swindlehurst’s affidavit, because it is merely
speculative and lacks a proper foundation. See Stagman v. Ryan, 176 F.3d 986, 995
(7th Cir. 1999) (district courts may properly disregard affidavit statements that are
made without personal knowledge or the result of speculation or conjecture). Without
Swindlehurst’s affidavit, Plaintiff lacks any evidence raising a triable issue as to
whether Defendant proximately caused its damages. Therefore, its breach of implied
contract claim fails as a matter of law.
IV.

Conclusion
For the reasons explained above, this Court grants Defendant’s motion for

summary judgment [87]. All dates and deadlines are stricken. Civil case terminated.
Dated: February 25, 2019
Entered:
____________________________
John Robert Blakey
United States District Judge

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