Precision Press, Inc v. MLP USA, Inc -- SEE #33 JUDGMENT WHEN CASE RETERMED

Filing 47

MEMORANDUM OPINION AND ORDER granting 42 Motion for Partial Summary Judgment. See text of Order. Signed by Judge Mark W Bennett on 8/24/12. (djs)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION

PRECISION PRESS, INC., d/b/a
ANDERSON BROTHERS PRINTING
COMPANY,
Plaintiff,
vs.
MLP U.S.A., INC.,
Defendant.

No. C09-4005-MWB
MEMORANDUM OPINION AND
ORDER REGARDING
DEFENDANT’S MOTION FOR
PARTIAL SUMMARY JUDGMENT
____________________
TABLE OF CONTENTS

1. INTRODUCTION AND BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . .
A. Procedural Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Federal litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
The arbitration award and post-arbitration proceedings . . . . .
B. Factual Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Arbitration panel’s factual findings . . . . . . . . . . . . . . . . . .
2.
Arbitration panel’s legal conclusions . . . . . . . . . . . . . . . . .
II. LEGAL ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Summary Judgment Standards . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Analysis of MLP’s Breach of Contract Counterclaim . . . . . . . . . . . .
1.
Collateral estoppel doctrine . . . . . . . . . . . . . . . . . . . . . . .
2.
Whether collateral estoppel applies here . . . . . . . . . . . . . .
a.
Valid and enforceable contract . . . . . . . . . . . . . . . .
b.
Breach by Anderson Brothers . . . . . . . . . . . . . . . . .
c.
Performance by MLP . . . . . . . . . . . . . . . . . . . . . .
d.
Resulting damages . . . . . . . . . . . . . . . . . . . . . . . .
C. Is Summary Judgment Premature? . . . . . . . . . . . . . . . . . . . . . . . .

2
3
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4
6
6
9
11
11
14
15
16
17
17
17
19
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III. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Yogi Berra might describe this case as “deja vu all over again.” See Yogi Berra,
Yogi-isms, Yogi Berra Official Web Site, http://yogiberra.com/yogi-isms.html (last visited
1

August 20, 2012). This is the third time this case, concerning the plaintiff’s purchase of
a printing press from the defendant, has come before me, albeit on different, but related
motions. Originally, the parties crossed swords over whether I should compel them to
arbitrate their dispute.

After compelling arbitration, the parties came before me again

over whether I should confirm the arbitration award. Having confirmed the arbitration
award, the parties are before me yet again. The dispute this time is over whether the
arbitration award should be given collateral estoppel effect.
1. INTRODUCTION AND BACKGROUND
Plaintiff Precision Press, Inc., d/b/a Anderson Brothers Printing Company
(“Anderson Brothers”), is an Iowa corporation with its principle place of business in Sioux
City, Iowa. Anderson Brothers is in the printing business. Defendant MLP U.S.A., Inc.
(“MLP”) is a Delaware corporation with its principle place of business in Lincolnshire,
Illinois. MLP sells and services commercial sheetfed, newspaper, and web offset presses
manufactured by Mitsubishi Heavy Industries, Ltd. (“Mitsubishi”). Anderson Brothers
purchased a Mitsubishi 3000R-8CC-XXX Press from MLP in 2008. After the press’s
installation, a dispute arose between Anderson Brothers and MLP over the press’s
operation. Anderson Brothers contends it had difficulties with the press immediately,
reported the problems it was experiencing, but MLP was unable to remedy them.
Anderson Brothers alleges that it gave timely notice to MLP that it was rejecting the press.
1

But see Ralph Keyes, Nice Guys Finish Seventh; Phrases, Spurious Sayings and
Familiar Misquotations 152 (1992) (observing that “although this [phrase] is commonly
cited as a ‘Berra-ism,’ Yogi Berra denies ever saying it”).
2

MLP contends Anderson Brothers failed to give it a reasonable amount of time to repair
or replace the press, and the problems Anderson Brothers was experiencing did not breach
the press’s express warranty.
A. Procedural Background
1.

Federal litigation

Anderson Brothers filed the present action on January 20, 2009, asserting diversity
jurisdiction pursuant to 28 U.S.C. § 1332(a). Count I of the Complaint seeks a declaratory
judgment, pursuant to 28 U.S.C. § 2201, that the sales agreement is null and void for
failure of its essential purpose. In Count II, Anderson Brothers asserts a claim for breach
of contract, alleging that the press did not perform as represented and MLP failed to
remedy the press’s performance and mechanical problems.
Before answering the Complaint, MLP filed a Motion To Dismiss, or Alternatively,
To Stay Pending Arbitration. MLP asserted a lack of subject matter jurisdiction due to an
arbitration clause in the parties’ sales agreement, and requested dismissal pursuant to
Federal Rule of Civil Procedure 12(b)(1). Alternatively, MLP requested arbitration be
ordered and this case stayed pending completion of the arbitration proceedings. Anderson
Brothers filed a timely resistance to MLP’s motion in which it asserted, inter alia, that the
Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., does not govern this dispute and
this case falls outside the scope of the sales agreement’s arbitration clause. MLP, in turn,
filed a timely reply brief.

On June 1, 2009, I entered a memorandum opinion and order

granting in part and denying in part MLP’s motion. I concluded the sales agreement’s
arbitration clause was governed by the FAA and the parties agreed to arbitrate the issues
involved in this litigation. I ordered the parties to arbitrate their dispute. The case was

3

stayed and the parties submitted their dispute to a panel of the American Arbitration
Association for resolution.
2.

The arbitration award and post-arbitration proceedings

Arbitration occurred between June 21, 2010, and June 25, 2010, in Chicago,
Illinois. On July 26, 2010, the arbitration panel issued its written opinion and award, in
favor of MLP. Following the arbitration panel’s award, on November 5, 2010, MLP filed
its Motion to Confirm Arbitration Award requesting, pursuant to 9 U.S.C. § 9, that I
confirm the arbitration award, enter judgment against Anderson Brothers in conformity
with the arbitration award and dismiss Anderson Brothers’s claims against it. Also, on
November 5, 2010, MLP filed its answer and counterclaim. In it’s counterclaim, MLP
sought monetary damages and replevin, both of which were specifically excluded from the
2

Sales Agreement’s arbitration provision. Anderson Brothers resisted MLP’s motion and
2

The Sales Agreement’s arbitration clause provides:
Except for Seller’s right to seek collection of payments due
or replevin of the Equipment referenced herein in
accordance with its security interest in the event of Purchaser’s
failure to provide for return of the same in violation of this
Agreement, all disputes and claims arising out of or in any
way related to this Agreement, or arising in connection with
this Agreement and all disputes and claims regarding any
alleged defects in the Equipment shall be resolved exclusively
by final and binding arbitration conducted in Chicago, Illinois,
pursuant to the American Arbitration Association’s Model
Commercial Arbitration Rules. The arbitration shall be before
a panel of three (3) arbitrators. The arbitration opinion and
award shall be final and binding upon the parties and
enforceable by any court of competent jurisdiction. Seller and
Purchaser shall share equally all costs of arbitration (except
(continued...)
4

filed its own Motion to Vacate Arbitration Award. MLP subsequently amended its Motion
to Confirm Arbitration Award, which Anderson Brothers timely resisted. On May 11,
2011, I granted MLP’s motion, denied Anderson Brother’s motion, and confirmed the
arbitration award. However, because the arbitration award did not resolve all issues raised
in MLP’s counterclaim, the case remained open.

On April 12, 2012, MLP moved for

partial summary judgment on its counterclaim for monetary damages and requested
3

dismissal of its counterclaim for replevin as being moot (docket no. 42). MLP contends
that, under the doctrine of collateral estoppel, the issues and findings contained in the
arbitration award are dispositive on all issues relating to its counterclaim for monetary
damages from Anderson Brothers. MLP, alternatively, contends that, under the “law of
the case” doctrine, my order confirming the arbitration award is also dispositve as to its
counterclaim. On May 7, 2012, Anderson Brothers resisted MLP’s motion. Anderson
Brothers argues, inter alia, that the arbitration award should not be given collateral
estoppel effect because the issues decided in arbitration are not identical to the issues in
MLP’s breach of contract counterclaim. For the same reason, Anderson Brothers also
argues that law of the case doctrine is inapplicable. Anderson Brothers, alternatively,
argues that MLP’s motion is premature because damages cannot be ascertained yet because
MLP has not resold the press. MLP has, in turn, filed a timely reply brief.

2

(...continued)
their own attorneys’ fees).

Sales Agreement ¶ 12 (emphasis added).
3

Following the arbitration award, MLP repossessed the press.
5

B. Factual Background
The summary judgment record reveals the following undisputed facts. Plaintiff
Anderson Brothers is an Iowa corporation with its principal place of business in Sioux
City, Iowa. Anderson Brothers is in the printing business. Defendant MLP is a Delaware
corporation with its principal place of business in Lincolnshire, Illinois. MLP sells and
services commercial sheetfed, newspaper, and web offset printing presses manufactured
by Mitsubishi. In 2008, Anderson Brothers purchased a Mitsubishi 3000R-8CC-XXX
Press from MLP.

After the press’s installation, a dispute arose between Anderson

Brothers and MLP over the press’s operation.
On January 20, 2009, Anderson Brothers filed the present lawsuit against MLP.
In Count I, Anderson Brothers sought a declaratory judgment that the sales agreement for
the press was null and void for failure of its essential purpose. In Count II, Anderson
Brothers asserted a breach of contract claim, alleging that the press did not perform as
represented and MLP failed to remedy the press’s performance and mechanical problems.
On June 1, 2009, based on an arbitration clause in the sales agreement, I ordered the
parties to arbitrate their dispute.
1.

Arbitration panel’s factual findings

On July 26, 2010, the arbitration panel issued its written opinion and award, in
favor of MLP. The arbitration award was based on Illinois law. The arbitration panel
made the following findings of fact:
MLP salesperson Mike Stock solicited Anderson Brothers’s business. Stock’s oral
representations concerning the press’s capabilities were general and in the nature of
“puffing.” He did not intentionally make any statements which he knew were false.
On March 26, 2008, Anderson Brothers and MLP executed a sales agreement for
Anderson Brothers’s purchase of a Mitsubishi 3000R-8CC-XXX Press (Serial No. 4582)
6

from MLP. The sales agreement was amended on April 23, 2008. The press was to be
installed at Anderson Brothers’s facility in Sioux City, Iowa. The sales agreement stated
a total purchase price of $3,898,000, less a $225,000 trade-in allowance for a net purchase
price of $3,673,000.
The sales agreement contains, in relevant part, the following warranty language:
6.

Warranty and Warranty Disclaimer
(a)

Seller warrants that the Equipment manufactured
by Mitsubishi Heavy Industries, Ltd. (MHI) and
sold hereunder will be designed and
manufactured to conform within the
specifications attached hereto, and will be free
from defects in material and workmanship for a
period of three (3) years from the date of “StartUp” of the Equipment (See Schedule D).
Seller’s sole and exclusive liability under Seller’s
warranty for Equipment manufactured by
Mitsubishi Heavy Industries, Ltd. (MHI) and
sold hereunder and Purchaser’s sole and
exclusive remedy shall be for Seller to replace or
repair, at its discretion, any defective equipment
or part thereof.

(b)

SELLER’S WARRANTY HEREIN IS IN LIEU
OF AND EXCLUDES ALL OTHER
WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY, OR OTHERWISE CREATED
UNDER APPLICABLE LAW INCLUDING,
BUT NOT LIMITED TO, THE WARRANTY
OF MERCHANTABILITY AND THE
WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT
SHALL SELLER BE LIABLE FOR SPECIAL,
INCIDENTAL OR COLLATERAL
7

DAMAGES, INCLUDING LOSS OF PROFITS,
WHETHER OR NOT CAUSED BY OR
RESULTING FROM THE SHIPMENT,
DELIVERY, ERECTION, ASSEMBLY,
INSTALLATION, NEGLIGENCE, OR ANY
ACTION OF SELLER ARISING FROM OR
RELATED TO THIS AGREEMENT.
Sales Agreement ¶ 6(a)-(b). The press’s performance specifications are set out in Schedule
“B” and include the press’s capability to use paper with a minimum thickness of .0016"
at a pile height of 43" at a speed of 11,000 sheets per hour in perfecting mode.
The sales agreement also contains the following arbitration clause:
Except for Seller’s right to seek collection of payments due or
replevin of the Equipment referenced herein in accordance
with its security interest in the event of Purchaser’s failure to
provide for return of the same in violation of this Agreement,
all disputes and claims arising out of or in any way related to
this Agreement, or arising in connection with this Agreement
and all disputes and claims regarding any alleged defects in the
Equipment shall be resolved exclusively by final and binding
arbitration conducted in Chicago, Illinois, pursuant to the
American Arbitration Association’s Model Commercial
Arbitration Rules. The arbitration shall be before a panel of
three (3) arbitrators. The arbitration opinion and award shall
be final and binding upon the parties and enforceable by any
court of competent jurisdiction. Seller and Purchaser shall
share equally all costs of arbitration (except their own
attorneys’ fees).
Sales Agreement ¶ 12. Among the sales agreement’s miscellaneous provisions is a choice
of law clause, which provides: “This Contract Shall be construed in accordance with the
laws of the state of Illinois.” Sales Agreement ¶ 13(g).
MLP shipped the press to Anderson Brothers on July 31, 2008. Anderson Brothers
experienced problems with the press, including unacceptable color, roller problems, and
8

excessive curl. Anderson Brothers told MLP about the problems and demanded that they
be remedied. MLP sent its top technicians to Anderson Brothers’s facility and directly
consulted Mitsubishi about the press. MLP’s technicians made several modifications to
the press but the results were inconsistent and the curl was still apparent. The quality of
the press’s printing still did not meet Anderson Brothers’s expectations. MLP was willing
to continue its attempts to correct the problems with the press when Anderson Brothers
decided to permanently shut the press down on January 19, 2009. MLP asked for, but was
denied, the opportunity to perform a Graphic Arts Technical Foundation (“GATF”) test
on the press after January 19, 2009.
2.

Arbitration panel’s legal conclusions

The arbitration panel determined that Anderson Brothers accepted the press, but
attempted to revoke its acceptance. The arbitration panel further concluded Anderson
Brothers’s attempted revocation was invalid because Anderson Brothers failed to give MLP
an adequate and reasonable amount of time to replace or repair the equipment. The
arbitration panel found: (1) the parties’ sales agreement was a valid, binding contract; (2)
the press’s performance in January 2009 did not breach any express warranty; and (3)
Anderson Brothers did not have a right to assert implied warranties of merchantability and
fitness for a particular purpose under the sales agreement. The arbitration panel also
rejected Anderson Brothers’s claims of fraudulent misrepresentation and violations of the
Illinois Consumer Fraud Act, explaining:
In carefully reviewing the testimony, we find Mike Stock’s
representations concerning the capabilities of the Press were
general and in the nature of “puffing.” For the most part, he
merely agreed with the buyer’s own expectations of what a
perfecting press using UV printing could accomplish.

9

Anderson Brothers’ own witnesses concede that Mike Stock
did not intentionally make any statements he knew to be false.
Furthermore, there were no material representations
concerning “curl,” “no use of spray powder,” “pallet to
pallet” or full loads. We believe that Anderson Brothers were
swayed by its own investigation and due diligence, even in
light of its initial skepticism.
Having found no support for any fraudulent or material
misrepresentations, both counts VI and VII of the Third
Amended Counterclaim fail.
Arbitration Award at 5.
The arbitration panel awarded the following:
1.

The Panel finds all issues in favor of Claimant MLP,
Inc. and against Respondent Precision Press, doing
business as Anderson Brothers;

2.

The Panel declares that Anderson Brothers is in default
of the Sales Agreement dated March 26, 2008 for
failure to pay sums due and owing thereunder;

2.

Anderson Brothers is hereby directed to permit MLP to
repossess the Press, at MLP’s expense, and to do
nothing to interfere with such repossession. MLP shall
conduct a sale of the Press in accordance with the
Uniform Commercial Code, free and clear of liens,
with the proceeds of sale to be credited against the
contract price owed by Anderson Brothers;

3.

MLP is not liable for Fraudulent Misrepresentation or
violation of the Illinois Consumer Fraud Act.

4.

Pursuant to Section 12 of the Sales Agreement, and
Rule 43 of the Commercial Arbitration Rules of the
American Arbitration Association (the “Association”),
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the parties shall share equally in the administrative fees
and expenses of the Association totaling $13,500.00 and
the compensation and expenses of the arbitrators
totaling $106,960.24. In addition, each party shall bear
its own attorney fees. Accordingly, MLP shall
reimburse Anderson Brothers the sum of $250.00,
representing that portion of said fees and expenses in
excess of the apportioned costs previously incurred by
Anderson Brothers.
5.

Any claim not expressly granted herein is denied. This
Award is submitted in satisfaction of all claims
submitted to arbitration.

Arbitration Award at 6 (misnumbering in original).
On November 1, 2010, MLP took possession of the press pursuant to the arbitration
award. To date, MLP has not sold the press and continues to store it at its facilities.
II. LEGAL ANALYSIS
A. Summary Judgment Standards
Motions for summary judgment essentially “define disputed facts and issues and . . .
dispose of unmeritorious claims [or defenses].” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 585 (2007) (internal quotation marks and citation omitted); see Celotex Corp. v.
Catrett, 477 U.S. 317, 323-24 (1986) (“One of the principal purposes of the summary
judgment rule is to isolate and dispose of factually unsupported claims or defenses. . . .”).
Summary judgment is only appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show that there is
no genuine issue of material fact and that the moving party is entitled to a judgment as a
matter of law.” FED. R. CIV. P. 56(c) (emphasis added); see Woods v. DaimlerChrysler
Corp., 409 F.3d 984, 990 (8th Cir. 2005) (“Summary judgment is appropriate if viewing
11

the record in the light most favorable to the nonmoving party, there are no genuine issues
of material fact and the moving party is entitled to judgment as a matter of law.”).
A fact is material when it “‘might affect the outcome of the suit under the governing
law.’” Johnson v. Crooks, 326 F.3d 995, 1005 (8th Cir. 2003) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Thus, “the substantive law will identify
which facts are material.” Anderson, 477 U.S. at 248. An issue of material fact is
genuine if it has a real basis in the record, Hartnagel v. Norman, 953 F.2d 394, 395 (8th
Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 58687 (1986)), or when “‘a reasonable jury could return a verdict for the nonmoving party’
on the question,” Woods, 409 F.3d at 990 (quoting Anderson, 477 U.S. at 248); see Diesel
Machinery, Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir. 2005) (stating
genuineness depends on “whether a reasonable jury could return a verdict for the nonmoving party based on the evidence”).
Procedurally, the moving party bears “the initial responsibility of informing the
district court of the basis for its motion and identifying those portions of the record which
show a lack of a genuine issue,” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at
323), and demonstrating that it is entitled to judgment according to law. See Celotex, 477
U.S. at 323 (“[T]he motion may, and should, be granted so long as whatever is before the
district court demonstrates that the standard for the entry of summary judgment, as set
forth in Rule 56(c), is satisfied.”). Once the moving party has successfully carried its
burden under Rule 56(c), the nonmoving party has an affirmative burden to go beyond the
pleadings and by depositions, affidavits, or otherwise, designate “specific facts showing
that there is a genuine issue for trial.”

FED. R. CIV. P. 56(e); Mosley v. City of

Northwoods, Mo., 415 F.3d 908, 910 (8th Cir. 2005) (“The nonmoving party may not
‘rest on mere allegations or denials, but must demonstrate on the record the existence of
12

specific facts which create a genuine issue for trial.’” (quoting Krenik v. County of Le
Sueur, 47 F.3d 953, 957 (8th Cir. 1995))).
As the Eighth Circuit Court of Appeals has explained,
“On a motion for summary judgment, ‘facts must be viewed
in the light most favorable to the nonmoving party only if there
is a genuine dispute as to those facts.’” Ricci v. DeStefano,
––– U.S. –––, 129 S. Ct. 2658, 2677, 174 L. Ed. 2d 490
(2009) quoting Scott v. Harris, 550 U.S. 372, 380, 127 S. Ct.
1769, 167 L. Ed. 2d 686 (2007) (internal quotations omitted).
“Credibility determinations, the weighing of the evidence, and
the drawing of legitimate inferences from the facts are jury
functions, not those of a judge.” Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097,
147 L. Ed. 2d 105 (2000), quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202
(1986). The nonmovant “must do more than simply show that
there is some metaphysical doubt as to the material facts,” and
must come forward with “specific facts showing that there is
a genuine issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S. Ct. 1348,
89 L. Ed. 2d 538 (1986). “‘Where the record taken as a
whole could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for trial.’” Ricci,
129 S. Ct. at 2677, quoting Matsushita, 475 U.S. at 587, 106
S. Ct. 1348.
Torgerson v. City of Rochester, 643 F.3d 1031, 1042-43 (8th Cir. 2011) (en banc).
Therefore, I will apply these standards to MLP’s Motion for Partial Summary
Judgment.

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B. Analysis of MLP’s Breach of Contract Counterclaim
Under Illinois law, the elements for a breach of contract claim are: “(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.” W.W. Vincent & Co. v. First
Colony Life Ins. Co., 351 Ill. App.3d 752, 286 Ill. Dec. 734, 814 N.E.2d 960, 967
(2004); accord Henderson–Smith & Assocs. Inc. v. Nahamani Family Serv. Ctr., Inc., 323
Ill. App.3d 15, 27, 256 Ill. Dec. 488, 752 N.E.2d 33 (2001); see Reger Dev. L.L.C. v.
National City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (quoting First Colony Life Ins. Co.,
351 Ill. App.3d 752, 286 Ill. Dec. 734, 814 N.E.2d at 967).

4

A contract is valid and

enforceable if: (1) there is a valid offer and acceptance; (2) the terms of the contract are
definite and certain; and (3) there is consideration. Zirp–Burnham, L.L.C. v. E. Terrell
Assocs., Inc., 356 Ill. App.3d 590, 292 Ill. Dec. 289, 826 N.E.2d 430, 439 (Ill. App. Ct.
2005).
MLP argues that the factual findings and legal conclusions contained in the
arbitration award satisfy each of the required elements for MLP’s breach of contract claim.
Anderson Brothers concedes that the arbitration award detailed the existence of a valid and
enforceable agreement and default by Anderson Brothers. However, Anderson Brothers
argues that collateral estoppel does not apply because the issues decided in the arbitration
award are not identical to the issues in MLP’s breach of contract counterclaim.
Specifically, Anderson Brothers argues that the arbitration award did not include findings
on the remaining two breach of contract elements, substantial performance by MLP and
resulting damages. Before delving into whether the arbitration award considered all of the

4

I will apply Illinois law under traditional choice of law rules and because the
parties agree that Illinois law is applicable to the issues here.
14

required breach of contract elements, I will briefly review Illinois’s collateral estoppel
doctrine.
1.

Collateral estoppel doctrine

Under Illinois law, collateral estoppel applies “when a party, or someone in privity
with a party, participates in two separate and consecutive cases arising on different causes
of action and some controlling fact or question material to the determination of both causes
has been adjudicated against that party in the former suit by a court of competent
5

jurisdiction.” Nowak v. St. Rita High School, 197 Ill.2d 381, 389–90, 258 Ill. Dec. 782,
757 N.E.2d 471, 477 (2001). Collateral estoppel, also known as issue preclusion, applies
where:
(1) the issue decided in the prior adjudication is identical with
the one presented in the suit in question, (2) there was a final
judgment on the merits in the prior adjudication, and (3) the
party against whom estoppel is asserted was a party or in
privity with a party to the prior adjudication.
Gumma v. White, 216 Ill.2d 23, 295 Ill. Dec. 628, 833 N.E.2d 834, 843 (2005); accord
Nowak, 197 Ill.2d 381, 258 Ill. Dec. 782, 757 N.E.2d at 478; Long v. Elborno, 397 Ill.
App.3d 982, 337 Ill.Dec. 432, 922 N.E.2d 555, 562 (2010); see Brown v. City of

5

Res judicata is distinguishable from collateral estoppel. “‘The doctrine of res
judicata provides that a final judgment on the merits rendered by a court of competent
jurisdiction bars any subsequent litigation between the same parties or their privies on
matters found to be part of the same cause of action.’” Frankel v. Otiswear, Inc., 216 Ill.
App. 3d 204, 160 Ill. Dec. 1, 576 N.E.2d 955, 960 (1991) (quoting Bismarck Hotel Co.
v. Sutherland, 175 Ill. App.3d 739, 744, 125 Ill. Dec. 15, 529 N.E.2d 1091 (1988)). As
the United States Supreme Court has explained: “Whereas res judicata forecloses all that
which might have been litigated previously, collateral estoppel treats as final only those
questions actually and necessarily decided in a prior suit.” Brown v. Felsen, 442 U.S.
127, 139 n.10 (1979).
15

Chicago, 599 F.3d 772, 774 (7th Cir. 2010).

Collateral estoppel applies to both

determinations of law and fact. Du Page Forklift Serv., Inc. v. Material Handling Servs.,
195 Ill. 2d 71, 253 Ill. Dec. 112, 744 N.E.2d 845, 850 (2001); People ex. rel Madigan
v. Illinois Commerce Comm’n, ---Ill. App. 3d ---, 359 Ill. Dec. 833, 967 N.E.2d 863, 870
(2012). However, the Illinois Supreme Court has emphasized that “[c]ollateral estoppel
is an equitable doctrine,” and, as a result, even “where the threshold elements of the
doctrine are satisfied, collateral estoppel must not be applied to preclude parties from
presenting their claims or defenses unless it is clear that no unfairness results to the party
being estopped.” Nowak, 197 Ill. 2d 381, 258 Ill. Dec. 782, 757 N.E.2d at 478.
“Generally, arbitration awards have the same collateral estoppel effect as court
judgments.” Dearborn Maple Venture, L.L.C. v. SCI IL. Servs., Inc., ---Ill. App. 3d ---,
360 Ill. Dec. 469, 968 N.E.2d 1222, 1230 (2012); see Peregrine Fin. Group, Inc. v.
Martinez, 305 Ill. App.3d 571, 238 Ill. Dec. 757, 712 N.E.2d 861, 867 (1999); Taylor v.
Peoples Gas Light & Coke Co., 275 Ill. App.3d 655, 211 Ill. Dec. 942, 656 N.E.2d 134,
139 (1995); Rosee v. Board of Trade, 43 Ill. App.3d 203, 1 Ill. Dec. 730, 356 N.E.2d
1012, 1036 (1976). “[H]owever, exceptions exist where it appears that the arbitration
proceeding was unfair or the result unreliable, or where giving the award preclusive effect
would be incompatible with other legal or contractual policies.” Taylor, 275 Ill. App.3d
655, 211 Ill. Dec. 942, 656 N.E.2d at 139.
2.

Whether collateral estoppel applies here

The parties do not dispute that the second and third requirements of collateral
estoppel are satisfied here. There was a final judgment on the merits in the arbitration, and
Anderson Brothers was a party in the arbitration. However, as discussed above, the
parties do dispute whether the issues decided in the arbitration award are identical to the
issues in MLP’s breach of contract counterclaim. Resolution of this dispute requires me
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to analyze the issues raised in the arbitration award and determine whether they are
identical to those in MLP’s breach of contract counterclaim for purposes of collateral
estoppel.
a.

Valid and enforceable contract

The parties agree that the arbitration award contains a finding that a valid and
enforceable contract exists between MLP and Anderson Brothers. The arbitration award
identifies the sales agreement entered by the parties and states “the Sales Agreement was
a binding contract.” Arbitration Award at 1-2, App. at 42-43. From this, I conclude the
arbitration award establishes the first element of MLP’s breach of contract counterclaim.
b.

Breach by Anderson Brothers

The parties also agree that the arbitration award contained a finding that Anderson
Brothers was in beach of the sales agreement. The arbitration award bears this out,
containing the following specific finding: “The Panel declares that Anderson Brothers is
in default of the Sales Agreement dated March 26, 2008 for failure to pay sums due and
owing thereunder[.]” Arbitration Award at 6, App. at 47. Thus, I conclude that the
arbitration award also establishes this element of MLP’s breach of contract counterclaim.
c.

Performance by MLP

The performance element of MLP’s breach of contract counterclaim is disputed by
the parties.

Anderson Brothers contends that the arbitration panel’s findings are

insufficient to satisfy the performance element of MLP’s breach of contract counterclaim.
Anderson Brothers argues the arbitration award did not address the issue of whether MLP
performed all of its obligations under the agreement. Anderson Brothers reasons that
because MLP had not asserted its counterclaim at the time of arbitration, the arbitration
panel had no reason to determine whether MLP had performed all of its obligations. MLP

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counters that the issues here and those before the arbitration panel are identical for the
purposes of Illinois’s collateral estoppel doctrine.
Whether MLP’s performance is identical to an issue that was litigated in arbitration
turns on whether “the fact must have been so in issue that it was necessarily decided by
the court rendering the prior judgment.” Ganger v. Hendle, 352 Ill. Dec. 447, ---Ill. App.
3d ---, 954 N.E.2d 307, 331 (2011). The arbitration panel was tasked with determining,
inter alia, whether MLP was in breach of the sales agreement. This issue required the
arbitration panel to determine both whether MLP was in breach of any express warranties
for the press or was in breach for failing to remedy perceived flaws in the press. Whether
MLP was in breach of the sales agreement, the issue before the arbitration panel, is the
mirror issue of the one before me, whether MLP has performed under the contract, since
both issues require the same assessment of MLP’s performance under the sales agreement.
Thus, I turn to consider whether the arbitration award establishes MLP’s substantial
performance.
The arbitration panel found that the press’s performance did not breach any express
warranty, and that Anderson Brothers could not press claims for breach of implied
warranty of merchantability and fitness for a particular purpose. The arbitration panel
also made the following finding:
The Panel agrees that MLP expended great effort to meet
Anderson Brothers’ expectations to reduce curl and obtain
acceptable color quality. It agrees that MLP expended time,
money and resources to continue to make adjustments in the
grippers, the rollers, and other parts of the equipment. Even
assuming that the print quality of John Ward’s last effort on
January 19, 2009 did not meet Anderson Brothers’
expectations of print quality and no curl, however, it is the
Panel’s conclusion that limiting MLP’s efforts to replace or
repair as of January 2009 was an unreasonable limitation on
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MLP’s responsibilities to meet its obligations under the
Contract.
Arbitration award at 3, App. at 44. The arbitration panel went on to specifically find that:
MLP clearly had not abandoned Anderson Brothers, nor could
its conduct be considered “dilatory or careless and negligent.”
In fact, MLP was willing to continue its attempts and showed
shock and dismay at Anderson Brothers’ abrupt termination of
the servicing in January 2009.
Arbitration award at 4, App. at 45. The arbitration panel concluded that “Anderson
Brothers is not entitled to a “declaration that MLP was in breach of contract.” Arbitration
award at 5, App. at 46. From these findings of the arbitration panel, I have no difficulty
concluding that the arbitration award establishes MLP’s substantial performance of the
sales agreement.

Thus, I conclude that the arbitration award establishes MLP’s

“substantial performance” element of its breach of contract counterclaim.
d.

Resulting damages

As with the previous issue, Anderson Brothers argues that the arbitration award did
not include findings regarding MLP’s damages resulting from Anderson Brothers’ breach
of contract. Anderson Brothers contends that, until the press is resold in a commercially
reasonable manner, MLP’s injury is not “fixed.” While MLP concedes that its damages
are not yet fixed, MLP argues that it nonetheless has suffered an injury by not receiving
the full contract price when due.
The arbitration award identified that “[t]he Sales Agreement called for a total
purchase price of $3,898,000.00 less a trade-in allowance of $225,000.00 for a net
purchase price of $3,673,000.00.” Arbitration award at 2, App. at 43. The arbitration
award goes on to find that “Anderson Brothers is in default of the Sales Agreement dated
March 26, 2008 for failure to pay sums due and owing thereunder[.]” Arbitration award

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at 6, App. at 47. The arbitration award also discloses, sub silentio, that sums are still due
and owing to MLP on the purchase price of the press. This is clear from the arbitration
award’s direction that “MLP shall conduct a sale of the Press. . . with proceeds of the sale
to be credited against the contract price.” Arbitration award at 6, App. at 47. Because
MLP has not been paid the amount due and owing on the press, the arbitration award
establishes that it has suffered damages from Anderson Brothers’s breach of the sales
agreement. Thus, I conclude that the arbitration award also establishes MLP’s “resulting
damages performance” element of its breach of contract counterclaim.
Therefore, I find that MLP has demonstrated that the issues raised here are identical
to those raised in arbitration and that the doctrine of collateral estoppel applies.
Accordingly, Anderson Brothers is collaterally estopped from relitigating the elements of
MLP’s breach of contract counterclaim, and MLP has established each element of its
breach of contract counterclaim.
C. Is Summary Judgment Premature?
Anderson Brothers further argues that even if collateral estoppel applies here, the
motion for summary judgment is premature until such time as the press is sold and I am
able to make a determination as to whether the press was sold in a commercially
reasonable manner. MLP counters that it is not seeking a judgment as to damages but
summary judgment only on Anderson Brothers’s liability under the sales agreement.
Federal district courts are often asked to, and do, grant partial summary judgment on an
issue of liability and leave damages for trial. See Westdale Const., Ltd. v. Kwasnik, Civil
No. 11-5701, 2012 WL 3133740, at *6 (D.N.J. July 32, 2012) (granting partial summary
judgment on liability only); Electrical Workers Pension Trust Fund of Local No. 58, IBEW
v. Alpha Elec. & Eng’g, L.L.C., No. 11-15459, 2012 WL 2871758, at * 1 (E.D. Mich.
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July 12, 2012) (granting motion for partial summary judgment as to liability only);
Hensarling v. Regions Bank, No. 3:11CV149TSL-MTP, 2012 WL 2839687, at *6 (S.D.
Miss. July 10, 2012) (same); First Fin. Bank, N.S. v. Christensen, 2012 WL 2789020, at
*2 (D. Nev. July 9, 2012) (same); US Investigations Servs. L.L.C. v. Callihan, No. 2:11cv-0355, 2012 WL 1377378, at *17 (W.D. Pa. April 29, 2012) (same); Bradshaw v. Hilco
Receivables, L.L.C., 765 F. Supp.2d 719, (D. Md. 2011) (same). Therefore, MLP’s
seeking partial summary judgment as to liability only is no impediment to my granting its
motion.
III. CONCLUSION
For the reasons discussed above, I conclude that plaintiff Anderson Brothers is
collaterally estopped from relitigating the elements of defendant MLP’s breach of contract
counterclaim, and MLP has established its breach of contract counterclaim. Accordingly,
MLP’s Partial Motion for Summary Judgment is granted on the issue of liability in
connection with its counterclaim for breach of contract. MLP’s counterclaim for replevin
of the press is dismissed as moot.
IT IS SO ORDERED.
DATED this 24th day of August, 2012.

__________________________________
MARK W. BENNETT
U. S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA

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