Gemshares LLC v. Lipton et al

Filing 187

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 2/13/2019: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court grants the plaintiff's motion for partial summary judgment 81 with respect to Lipton's liability for breach of contract, which is count 4 of plaintiff's amended complaint. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GEMSHARES LLC,
Plaintiff,
vs.
ARTHUR JOSEPH LIPTON and
SECURED WORLDWIDE, LLC,
Defendants.

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Case No. 17 C 6221

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
GemShares LLC moved for partial summary judgment on its breach of contract
claim against Arthur Lipton, arguing that a prior decision by the U.S. District Court for
the Southern District of New York precludes Lipton from relitigating his liability for
breaching a covenant not to compete. This Court issued a decision in which it found
that the earlier ruling had issue-preclusive effect but declined to rule on the motion
because the parties had failed to discuss whether a ruling along the lines the Court
made would entitle GemShares to summary judgment. See GemShares LLC v. Lipton
(Issue Preclusion Ruling), No. 17 C 6221, 2019 WL 330470, at *5 (N.D. Ill. Jan. 25,
2019). The Court assumes familiarity with that decision.
The parties have submitted additional briefs addressing GemShares' entitlement
to summary judgment in light of the Court's issue-preclusion ruling. Summary judgment
is proper if there is no genuine dispute of material fact and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(a); Martinsville Corral, Inc. v. Soc'y

Ins., 910 F.3d 996, 998 (7th Cir. 2018). In ruling on a motion for summary judgment,
the Court construes the evidence and draws all reasonable inferences in favor of the
non-moving party. Lapre v. City of Chicago, 911 F.3d 424, 430 (7th Cir. 2018). The
moving party is entitled to summary judgment if "no reasonable jury could find for the
other party based on the evidence in the record." Martinsville Corral, 910 F.3d at 998.
The Court concludes that GemShares is entitled to summary judgment on the
question of Lipton's liability for breach of contract. Under Illinois law, which the parties
agree governs this claim, a plaintiff alleging breach of contract must show that (1) a
valid and enforceable contract exists, (2) the plaintiff substantially performed,
(3) defendant breached the contract, and (4) damages resulted from the breach.
Swyear v. Fare Foods Corp., 911 F.3d 874, 886 (7th Cir. 2018). The defendants do not
dispute the validity or enforceability of the Operating Agreement, and the Court has
already determined that Lipton is collaterally estopped from relitigating whether he
breached the covenant not to compete. See Issue Preclusion Ruling, 2019 WL 330470,
at *5. The defendants argue, however, that there are genuine disputes that preclude
summary judgment regarding GemShares' performance and the damages caused by
the breach.
The defendants first argue that GemShares has failed to show that it performed
its own obligations under the Operating Agreement. For its part, GemShares points to
Lipton's declaration describing the considerable time and expense GemShares devoted
to developing its product. Lipton Decl., dkt. no. 21-1, ¶ 7. As the parties opposing
summary judgment, the defendants must "present specific facts establishing a material
issue for trial, and any inferences must rely on more than mere speculation or

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conjecture." Giles v. Godinez, No. 15-3077, 2019 WL 349423, at *5 (7th Cir. Jan. 29,
2019). They do not do so, instead offering only conclusory assertions. The defendants
have not identified a single contractual obligation that GemShares has failed to fulfill, let
alone provided evidence to support such an allegation. The defendants' reference to
their "affirmative defense that Plaintiff breached its promises to induce Lipton to sign the
Operating Agreement," Defs.' Resp., dkt. no. 185, at 3, is equally unavailing because it
is devoid of any factual specifics. The Court therefore concludes that there is no
genuine dispute regarding GemShares' substantial performance under the contract.
The defendants next argue that GemShares has failed to submit evidence that it
suffered damages as a result of Lipton's breach. In fact, GemShares points to the ruling
of the court in Secured Worldwide, LLC v. Kinney, No. 15 Civ. 1761 (S.D.N.Y. Dec. 15,
2016), in which the court found that Lipton used GemShares' intellectual property
without the required license. The failure to pay for that license, GemShares argues,
constitutes damages resulting from Lipton's breach. The defendants do not respond to
this contention, nor do they cite evidence or make specific allegations that would suffice
to create a genuine dispute regarding whether GemShares was damaged by the
breach.
To be sure, GemShares has not yet met its burden to provide a "reasonable
basis for computation" of its damages. Assaf v. Trinity Med. Ctr., 821 F.3d 847, 848
(7th Cir. 2016). But because there is no genuine to dispute regarding the fact that
GemShares suffered damages resulting from the breach, summary judgment on the
question of liability is warranted, leaving for later determination what remedy is
appropriate. See MacNeil Auto. Prods. Ltd. v. Cannon Auto. Ltd., No. 08 CV 0139,

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2014 WL 3396114, at *4 (N.D. Ill. July 11, 2014) (noting that partial summary judgment
on a breach of contract claim is appropriate even where the court must "defer[] to trial
the issue of appropriate damages").
Finally, the defendants contend that GemShares has not made a sufficient
showing to obtain certain forms of relief, including a permanent injunction and
assignment of Lipton's interest in a patent application. These arguments are premature,
as GemShares has not yet sought that relief in connection with its breach of contract
claim.
For the foregoing reasons, the Court grants the plaintiff's motion for partial
summary judgment [81] with respect to Lipton's liability for breach of contract, which is
count 4 of GemShares' amended complaint.

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MATTHEW F. KENNELLY
United States District Judge
Date: February 13, 2019

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