AL Schutzman Company Inc v. Nutsco Inc

Filing 56

ORDER signed by Judge J P Stadtmueller on 12/16/09 granting 30 plaintiff's Motion for Summary Judgment on its complaint and on the defendant's counterclaims; plaintiff shall have and recover from the defendant the sum of $367,850 together with costs as taxed by the Clerk of the Court. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN
____________________________________________ A .L . SCHUTZMAN COMPANY, INC., Plaintiff, v. N U T S C O , INC., D e fe n d a n t. ____________________________________________ Case No. 08-CV-465

ORDER
P la in tiff A.L. Schutzman Company, Inc. ("Schutzman") accuses defendant N u ts c o , Inc. ("Nutsco") of breaching their contract for the sale and delivery of c a s h e w s . Schutzman alleges that Nutsco's failure to deliver all promised loads of n u ts forced Schutzman to purchase replacement cashews at a higher market price. S c h u tz m a n seeks an award of damages in the amount it paid to obtain cashews fro m other providers above the price provided for in its contract with Nutsco. Nutsco a ls o makes allegations of its own. Nutsco asserts counterclaims against Schutzman fo r breach of contract, unjust enrichment, conversion, and breach of duty to act in g o o d faith. Schutzman now seeks summary judgment on its breach of contract c la im and on each of Nutsco's counterclaims. Based on the reasoning set forth b e lo w , the court will grant Schutzman's motion in its entirety. B AC K G R O U N D S c h u tz m a n is a W is c o n s in corporation engaged in the business of selling ro a s te d and salted nuts. (Defendant's Response to Plaintiff's Proposed Findings of

F a c t, hereinafter "DRPFOF," ¶ 1). Nutsco is a New Jersey wholesaler of cashews th a t imports the nuts from an affiliated Brazilian company and then packs and sells th e m in the United States. (Id. at ¶¶ 2-3; Plaintiff's Responses to Defendant's A d d itio n a l Proposed Findings of Fact, hereinafter "PRDFOF," ¶ 128). The Brazilian s u p p lie r is owned and controlled by Francisco Assis Neto, who resides in Brazil. (Id. a t ¶¶ 4-5). Neto's son, Patricio Assis, lives in the United States and manages N u ts c o 's operations. (Id. at ¶ 6). In 2006, Nutsco began using the services of food broker Jim W a rn e r and his c o m p a n y, J. Warner, Inc. (collectively, "Warner"), for facilitating the sale of its c a s h e w s . (DRPFOF ¶¶ 8-9). W a rn e r was authorized to talk to customers, to quote p ric e s and agree to delivery dates, and to enter into particular contracts with c u s to m e r s on Nutsco's behalf. (Id. at ¶ 11). Indeed, nearly all of Nutsco's

c o m m u n ic a tio n s with Schutzman were conducted through Warner, and Nutsco sales in vo ic e s listed Jim Warner as its "salesperson." (Id. at ¶¶ 11, 12). While serving in th is capacity, W a rn e r brokered a contract between Nutsco and Schutzman whereby N u t s c o promised to deliver twelve 35,000 pound loads of super large, whole, first q u a lity ("SLW -1 ") cashews. (Id. at ¶ 14). The contract also included an option a llo w in g Schutzman to buy four loads of large, whole, first quality ("LW -1 ") cashews, if exercised by a certain date. (Id. at ¶ 15; PRDFOF ¶ 131). A fte r brokering the contract between Nutsco and Schutzman, W a rn e r sent a w r itte n Contract Confirmation to both parties. (DRPFOF ¶ 22). The contract

-2-

c o n firm e d shipment of 12 loads of SLW -1 cashews to be delivered at various in te rva ls between February and September 2007, and confirmed that loads delivered p rio r to July 1, 2007 would be $3.30/lb. and loads delivered after July 1, 2007, would in c re a s e by three cents per month. (Id. at ¶¶ 23, 24). The Contract Confirmation s p e c ifie d that payment terms were "net 30 days," but did not provide that interest or la te charges would be owed for late payments. (Id. at ¶ 25). Though the original contract provided for only 12 loads of SLW -1 cashews, S c h u tz m a n later sought to increase that number. Warner amended the contract to a d d two additional loads. (DRPFOF ¶ 32). Patricio Assis is "not sure" whether he a u th o riz e d W a rn e r to add these two loads. (Id. at ¶ 33). However, at the time, in M a rc h 2007, W a rn e r sent a copy of the revised Contract Confirmation adding the tw o extra loads (loads 13 and 14) to both Nutsco and Schutzman. (Id. at ¶¶ 34, 39). T h e revised version noted that "two loads were added on 3/2/07, one more for Sept s h ip m e n t and one for October," and included a schedule for delivery of 14 loads b e tw e e n February and October 2007. (Id. at ¶¶ 35-36). The new Contract

C o n firm a tio n increased the "net weight" of cashews for sale and delivery by 70,000 p o u n d s and increased the "quantity" of "50 lb. bags" by 1400 from the original c o n tra c t. (Id. at ¶¶ 37-38). The increased order for 14 loads was also noted on the tw o additional Contract Confirmations that W a rn e r provided to Patricio Assis in April 2 0 0 7 and June 2007. (Id. at ¶ 42). Patricio Assis forwarded the June 2007 Contract C o n firm a tio n to his sister in Brazil shortly after receiving it and forwarded the

-3-

d o c u m e n t again in November 2007. Each time, he referred to the document as "the S c h u tz m a n contract," in Portuguese. (Id. at ¶ 44). The parties proceeded under the contract and Nutsco delivered ten loads of S L W -1 cashews to Schutzman, with the last load being received on November 9, 2 0 0 7 . (DRPFOF ¶¶ 69-70). After receiving the tenth load, however, Schutzman ro a s t tested the cashews and determined that they did not qualify as "first quality" u n d e r Association of Food Industries, Inc.'s (AFI) specifications because of a high le ve l of scorching. (Id. at ¶¶ 72-74). AFI specifications spell out how large cashew k e rn e ls must be to qualify as "super large whole" (SLW ) or "large whole" (LW ) and w h a t amount of defect or damage they can have to still qualify as "first quality." (Id. a t ¶¶ 16-18; PRDFOF ¶ 142). Nutsco represents to the market that if they are going to sell SLW -1 cashews, the cashews will meet AFI standards for SLW -1 's . (D R P F O F . at ¶ 20). A fte r determining that the tenth load did not meet standards, Schutzman n o tifie d W a rn e r that the load was highly scorched and Jim W a rn e r brought the c o m p la in t and results of the roast test to Patricio Assis's attention. (DRPFOF ¶ 89, 9 1 ). At W a rn e r's request, Schutzman provided six cases of cashews from the tenth lo a d for evaluation by Nutsco. (Id. at ¶¶ 92-93). Nutsco did not perform a roast test o f the samples, but did conclude after its own analysis that the raw cashews th e m s e lve s did not meet AFI Specifications for first quality cashews. (Id. at ¶ 95).

-4-

T w o months after Nutsco delivered the tenth load, in January 2008, Patricio A s s is began arguing that the parties' contract only provided for 12 loads of SLW - 1 c a s h e w s and that Nutsco was not responsible for providing the two additional loads a d d e d in March 2007. (DRPFOF ¶ 99). At this point in time, the market prices for S L W -1 cashews were approximately $2 per pound higher than the price Nutsco was to receive from Schutzman under their contract. (Id.). W a rn e r reported to

S c h u tz m a n that Mr. Assis was arguing that the parties did not have a signed contract c o ve rin g the additional loads. (Id. at ¶ 100). W a r n e r acknowledged that Schutzman was within its rights in rejecting the te n th load, but tried to persuade Schutzman to accept the load instead. (DRPFOF ¶ 104). Schutzman initially agreed to keep the load and pay the contract price, on th e condition that Nutsco deliver all remaining loads, including loads 13 and 14. (Id. a t ¶ 105). Patricio Assis would not agree to this arrangement. (Id. at 107). Warner th e n attempted to circumvent Patricio Assis and contacted Francisco Assis Neto d ire c tly. (Id.). Jim W a rn e r advised Mr. Neto in an email that Schutzman would pay fo r the scorched tenth load, but wanted delivery of the five loads of cashews re m a in in g under the contract. (Id.). The communication also stated that the parties w o u ld await a reply and not take any action until they received a response. (Id.). W h ile waiting for a reply, Schutzman stored the tenth load in its refrigerated w a re h o u s e . (Id. at ¶ 108).

-5-

S c h u tz m a n never received a response on the matter and turned the issue o ve r to its legal counsel, setting in motion the instant litigation. (DRPFOF ¶ 110). On M a y 5, 2008, Jim W a rn e r sent an email to Patricio Assis reminding him that S c h u tz m a n was waiting for Nutsco to pick up the rejected tenth load of cashews and a d vis in g him to contact Mike Kloth in Schutzman's shipping department. (Id. at 111). M r. Assis did not contact Mr. Kloth regarding pick up until one month later, on J u n e 5, 2008. (Id. at 112). Due to confusion with Schutzman's new buyer, Mr. Kloth w ro n g ly informed Mr. Assis that Schutzman did not possess a load of SLW - 1 c a s h e w s waiting to be picked up by Nutsco. (Id. at ¶¶ 113-114). The issue was c le a r e d up the following month during a July 25, 2008, scheduling conference b e tw e e n the parties' attorneys. At this meeting, Nutsco's counsel informed

S c h u tz m a n that Nutsco had received conflicting messages about the tenth load. (Id. a t ¶ 115). Schutzman clarified that it did possess the load of cashews and Nutsco m a d e arrangements to retrieve it from the warehouse. However, Patricio Assis in s is te d on first personally inspecting the load. (Id. at ¶ 116). Another month passed b e fo re Mr. Assis traveled to W is c o n s in to conduct his inspection. Mr. Assis finally in s p e c te d the load on September 3, 2008, and arranged to have the load picked up o n September 10, 2008. (Id. at ¶ 118.). S c h u tz m a n did not pay for the rejected tenth load of SLW -1 cashews that N u ts c o retrieved in September 2008. (DRPFOF ¶ 124). Schutzman did pay all in vo ic e s for the nine preceding loads it received and accepted. (Id. at ¶ 125).

-6-

S c h u tz m a n paid a reduced price on two of the invoices after W a rn e r agreed that it c o u ld apply $1,750 and $1,284 in credit against these invoices. (DRPFOF ¶ 125). In addition to the amounts it paid to Nutsco for delivery of the nine accepted lo a d s , Schutzman also paid to purchase loads of SLW -1 cashews from other w h o le s a le rs . (DRPFOF ¶ 121). Schutzman purchased five loads to replace the re m a in in g loads it had expected Nutsco to provide under their contract. (Id. at ¶ 120). Schutzman paid $5.45 per pound for these loads and received delivery b e t w e e n June 18, 2008 and September 12, 2008. (Id. at ¶¶ 121-22). Schutzman p a id $367,850 more for the five loads than it would have paid under the contract with N u ts c o . (Id. at ¶ 123). This amount forms the basis for Schutzman's claim of dam age s. AN AL Y S IS S c h u tz m a n asserts that it is entitled to summary judgment on its breach of c o n tra c t claims and on Nutsco's six counterclaims. A grant of summary judgment is appropriate where the moving party establishes that there is no genuine issue of m a te ria l fact and the party is entitled to judgment as a matter of law. Fed. R. Civ. P. 5 6 (c ); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "Material facts" are those fa c ts which "might affect the outcome of the suit," and a dispute about a material fact is "genuine" if a reasonable finder of fact could find in favor of the nonmoving party. S e e Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party opposing s u m m a ry judgment cannot simply rest on allegations or denials in its pleadings, but

-7-

ra th e r, it must also introduce affidavits or other evidence setting forth specific facts s h o w in g a genuine issue for trial. Anders v. Waste Management of Wisconsin, 463 F .3 d 670, 675 (7th Cir. 2006). The court views all facts and draws all reasonable in fe re n c e s in favor of the nonmoving party. Tanner v. Jupiter Realty Corp., 433 F.3d 9 1 3 , 915 (7th Cir. 2006). 1. S c h u tz m a n 's Breach of Contract Claim S c h u tz m a n asserts that it contracted with Nutsco for the purchase of 14 loads o f SLW -1 cashews and that Nutsco breached this contract by providing only nine lo a d s . Nutsco acknowledges that it never provided the full number of loads required b y the contract. However, Nutsco asserts that it was only obligated to provide the n u m b e r of SLW -1 cashew loads included in the original contract between the parties b e c a u s e it never authorized an amendment to the contract. Nutsco also argues that S c h u tz m a n is not entitled to damages for the tenth load, which was later returned to N u ts c o , because Schutzman wrongly rejected the load as being out of specification. F in a lly, Nutsco argues that Schutzman is not entitled to damages for the undelivered lo a d s because Schutzman committed an earlier material breach of the contract. N u ts c o alleges that Schutzman committed conversion of the tenth load of cashews b y refusing to return it until September 2008. a. N u m b e r of Loads Under the Contract

T h e parties agree that Nutsco did not deliver the full number of loads promised u n d e r their contract. The parties disagree, however, about the total number of loads

-8-

re q u ire d by that contract. Schutzman asserts that the contract provided for the sale o f 14 loads of SLW -1 cashews, while Nutsco argues that it only provided for the sale o f 12 loads. Schutzman maintains that Nutsco's broker, Jim W a rn e r, amended the c o n tra c t in March 2007 to include an additional two loads and that Nutsco confirmed t h is amendment by failing to object after receiving multiple copies of the revised c o n tra c t. Conversely, Nutsco argues that it was only obliged to provide the 12 loads s p e c ifie d in the original contract because Jim W a rn e r did not have authority to a m e n d the contract and obligate Nutsco to provide an additional two loads. Nutsco does not contest that W a rn e r amended the contract between S c h u tz m a n and Nutsco to include an additional two loads. Nutsco merely contests th a t W a r n e r had either the actual or apparent authority to do so. However, Nutsco fails to establish a genuine issue of material fact regarding W a r n e r ' s authority. T h e re fo re , the revised contract was enforceable and obligated Nutsco to provide 14 lo a d s of SLW -1 cashews. S c h u t z m a n asserts that W a r n e r had actual authority to amend the contract b a s e d on Jim W a rn e r's testimony. Schutzman points to Mr. W a rn e r's affidavit te s tim o n y stating that Patricio Assis authorized him to make two additional loads a va ila b le to Schutzman and Mr. W a rn e r's deposition testimony stating that Patricio A s s is was happy with the increased order and never informed him that Nutsco o b je c te d to an amendment of the contract. Schutzman also notes that Patricio Assis te s tifie d that he was "not sure" whether he gave authorization to W a rn e r to amend

-9-

th e contract. Nutsco does not directly refute these statements.

Instead, Nutsco

re s p o n d s that "no documents or information exist" establishing that W a rn e r had the a u th o r ity to commit Nutsco to providing an additional two loads of SLW -1 cashews. H o w e ve r, this does not create a genuine issue of material fact. N u ts c o also tries to create a genuine issue of fact by arguing that a factfinder c o u ld infer from the contract itself that W a rn e r did not possess the authority to a m e n d it. First, Nutsco argues that the inclusion of a buyer's option for LW - 1 c a s h e w s shows that W a rn e r did not have actual authority to amend. If W a rn e r could s im p ly amend the contract, Nutsco urges, then providing Schutzman with an "option" fo r the purchase of additional LW -1 's within the contract is unnecessary. Second, N u ts c o argues the fact that the parties executed other contracts prior to the contract a t issue in this case showing that W a rn e r did not have blanket authority to amend c o n tra c ts . Nutsco reasons that if Jim W a rn e r had amendment authority, he would h a ve simply added loads to prior contracts and there would be no need to enter into a d d itio n a l, separate contracts. These arguments are unconvincing. The inclusion o f a buyer's option to purchase LW -1 cashews does not explicitly foreclose a m e n d m e n t of the contract to add loads of SLW -1 cashews. Further, the existence o f prior, completed contracts is irrelevant. Businesses who engage in ongoing sales re la tio n s h ip s need not do so under only one contract. There are no larger

im p lic a tio n s arising from Nutsco and Schutzman's decision to execute one contract fo r a particular number of sales and deliveries, and, when that set of sales was

-10-

c o m p le te , to execute a second contract for a new set of sales and deliveries. A re a s o n a b le fact finder could not determine that Jim W a rn e r did not have authority to add two loads of SLW -1 cashews to a particular contract based solely on the fact th a t Nutsco and Schutzman had previously executed other contracts. R e g a rd le s s , W a rn e r had apparent authority to amend the contract. A principal m a y be held liable for the acts of another when the principal had knowledge of those a c ts and acquiesced in them, causing a third person to reasonably believe that a u th o riz e d agency existed. Lamoreux v. Oreck, 2004 W I App 160, ¶ 52, 275 W is .2 d 8 0 1 , 686 N.W .2 d 722; See also Sickinger v. Raymond, 178 W is. 439, 446, 190 N.W . 9 3 , 95 (1922) ("It is the well-settled rule that, if a principal so conducts his business a s to lead the public to believe that his agent has authority to contract in the name o f the principal, he is bound by the acts of such agent within the scope of his a p p a re n t authority as to contracts with persons who, acting in good faith, believe, a n d have reasonable ground to believe, that the agent has such authority."). The e le m e n ts necessary for apparent authority include: 1) acts by the principal or agent g ivin g a third party a justifiable belief that agency exists; 2) the principal's knowledge o f the acts; and 3) reliance on the acts by the third party. Iowa National Mutual In s u ra n c e Co. v. Backens, 51 W is . 2d 26, 34, 186 N.W.2d 196, 199-200 (1971).1

The parties both assum e that W is c o n s in law applies to their contract and provide no evidence of a c h o ic e of law clause stating otherwise. Schutzm a n is based in W is c o n s in and delivery of the cashews that a r e the subject of the suit also occurred within this state. Thus, the court will apply W is c o n s in law. State Farm M u t u a l Auto Insurance Co. v. Gillette, 2002 W I 31, ¶ 51, 251 W is . 2d 561, 641 N.W .2 d 662 (holding that c o u r ts should assum e that W is c o n s in law applies unless non-forum contacts are clearly m o r e significant).

1

-1 1 -

S c h u tz m a n presents evidence establishing these elements. First, Schutzman ju s tifia b ly believed that W a rn e r had authority to agree to the sale of two additional lo a d s . Nearly all of Schutzman's communications and dealings with Nutsco

re g a rd in g the original contract went directly through W a rn e r and Nutsco held Jim W a rn e r out as its "salesperson." Schutzman negotiated and finalized its original a g re e m e n t through W a rn e r and received its Contract Confirmation from W a r n e r . W h e n Schutzman sought to amend that contract, it again went through Warner and d id not contact Nutsco. Schutzman negotiated for the addition of two loads and th e n , just as with the original contract, received a copy of the revised Contract C o n firm a tio n from W a r n e r . Schutzman's previous experience negotiating a contract th ro u g h W a r n e r and its receipt of a revised contract from W a rn e r incorporating its re q u e s ted amendment led Schutzman to reasonably believe in W a r n e r 's authority. S e c o n d , Nutsco was aware of the amendment W a rn e r made to the contract. In d e e d , Nutsco received three contract confirmations that provided for the sale of in c r e a s e d load numbers and increased cashew weights. One of the revised contract c o n firm a tio n s even included a note specifying that "two loads were added on 3/2/07." D e s p ite receiving the revised Contract Confirmations in March, April and June 2007, N u ts c o did not attempt to correct any alleged errors or inform either W a r n e r or S c h u t z m a n that the amendment was not authorized. Instead, it appeared to

a c q u ie s c e to the change. As late as November 2007, Nutsco forwarded the revised

-12-

C o n tra c t Confirmation to Brazil and referred to it as "the Schutzman contract." There is no question that Nutsco had knowledge of W a rn e r 's amendment of its contract. F in a lly, Schutzman has always maintained that it believed W a rn e r's re p re s e n ta tio n s that Nutsco would provide it with 14 loads of SLW -1 cashews, and N u ts c o does not dispute this fact. Schutzman had no reason to believe otherwise, a s it did not receive any word from Nutsco that the two additional loads were u n a u th o riz e d until January 2008. It was only after Nutsco denied any obligation to p ro vid e a thirteenth and fourteenth load that Nutsco purchased loads of cashews fro m other wholesalers. W a rn e r had apparent authority to amend the contract and add two additional lo a d s . Therefore, the contract between the parties provided for the sale and delivery o f 14 loads of SLW -1 cashews. The court will employ this figure as the contractually re q u ire d number of loads for the remainder of its analysis. b. C o n d itio n of the Tenth Load

S c h u tz m a n seeks an award of damages for "cover" expenses it incurred in re p la c in g a load of cashews delivered by Nutsco, but ultimately rejected and re tu rn e d for not meeting AFI specifications. Nutsco denies that Schutzman is

e n title d to damages for this "tenth load" because Schutzman does not have a le g itim a te basis for rejecting the load. Nutsco argues that the AFI specifications for s c o r c h in g did not apply to its cashews because its contract did not provide for roast te s tin g . Nutsco cites language from the AFI specifications stating that "[i]f a roast

-13-

te s t is required in the contract, it should be conducted in accordance with Appendix II." (Def.'s Opp. Br. at 12). Nutsco takes this phrase to mean that its cashews did not n e e d to meet AFI specifications and Schutzman wrongly rejected the load for failing to meet the inapplicable specifications. However, the cited language states only that a contractually-required roast test m u s t be conducted in compliance with AFI specifications. It says nothing about the a p p lic a b ility of AFI specifications in the absence of a contract provision for roast tes tin g . Here, the parties understood the AFI specifications to apply. In d e e d , Nutsco fails to account for Patricio Assis's statement that the cashews p ro vid e d to Schutzman were supposed to meet AFI specifications. Mr. Assis

te s tifie d that when Nutsco sells SLW -1 cashews, Nutsco is representing that those c a s h e w s will meet all AFI specifications for SLW -1 cashews. Even if the cashews d id not have to meet AFI specifications for roast cashews, the tenth load failed to m e e t AFI specifications for raw cashews. Nutsco concedes that it analyzed the raw c a s h e w s and confirmed that they did not meet the AFI specifications. Therefore, the p a rtie s understood the contract for SLW -1 cashews to mean that the cashews would m e e t AFI specifications, which the tenth load failed to do. Nutsco fails to establish a n issue of material fact as to whether the SLW -1 cashews must comply with AFI s p e c ifica tio n s under the contract.

-14-

c.

C o n v e r s io n of the Tenth Load

S c h u tz m a n argues that it is entitled to summary judgment based on Nutsco's fa ilu re to provide promised loads 10 through 14. However, Nutsco argues that S c h u tz m a n materially breached the contract by committing the tort of conversion, e x c u s in g Nutsco from its contractual obligations to provide the remaining loads. N u ts c o asserts that Schutzman converted the tenth load of cashews by holding it for m o re than eight months. Conversion is the only basis Nutsco asserts as a material b re a c h of the contract. Thus, if Schutzman did not convert the load, then there is no m a te ria l breach which might justify nonperformance. C o n v e rs io n is the wrongful exercise of dominion or control over chattel and is u s u a lly committed through an unauthorized transfer of the goods to someone not e n title d to them. Production Credit Ass'n of Chippewa Falls v. Equity Coop Livestock S a le s Ass'n, 82 W is. 2d 5, 10, 261 N.W .2 d 127, 129 (1978). The elements of a c o n ve rs io n claim include: 1) intentional control or taking of property belonging to a n o th e r, 2) without the owner's consent, 3) resulting in serious interference with the o w n e r's right to possess the property. H.A. Friend & Co. v. Professional Stationery, In c ., 2006 W I App 141, ¶ 11, 294 W is. 2d 754, ¶ 11, 720 N.W .2 d 96, ¶ 11; see also B r u n e r v. Heritage Companies, 225 W is .2 d 728, 736, 593 N.W .2 d 814, 818 (Ct. App. 1 9 9 9 ). Nutsco is crippled by a lack of evidence regarding conversion of the tenth lo a d . To support its claims, Nutsco relies entirely upon an email sent by its broker

-15-

a n d upon the length of time between Nutsco's delivery of the tenth load and Nutsco's re trie va l of the rejected load. However, the fact that Nutsco's broker advised

S c h u tz m a n : "I suggest you keep the container you have as collateral," provides no e vid e n c e that Schutzman actually converted the tenth load. Further, the simple passage of time between the load's November 2007 d e live ry and September 2008 retrieval by Nutsco does not tell the entire story. First, th e tenth load was delivered into Schutzman's possession pursuant to a valid c o n tra c t. Thus, Schutzman's control over the load was authorized. Even after S c h u tz m a n initially complained about the condition of the load, the parties were n e g o tia tin g for Schutzman's acceptance of the load. Indeed, Nutsco's broker

c o n vin c e d Schutzman to accept the out-of-spec load. As of January 2008, W a rn e r a n d Schutzman had arranged that Schutzman would accept the tenth load on the c o n d itio n that Nutsco deliver the remaining loads required under the contract. H o w e v e r, Schutzman never received confirmation that Nutsco would deliver the re m a in in g loads if Schutzman accepted the tenth load and Schutzman pursued legal a c t io n . It was only at this point that Schutzman ultimately rejected the load of c a s h e w s , and it became clear that Schutzman's possession of the load was not c o n s id e re d a part of the contract. N u ts c o then received word that Schutzman was waiting for the rejected tenth lo a d of cashews to be picked up. W a rn e r sent Patricio Assis an email on May 5, 2 0 0 8 , reminding him of this fact. Nutsco then delayed for a month before contacting

-16-

S c h u tz m a n 's shipping department in June 2008.

When Nutsco did contact

S c h u tz m a n , a Schutzman employee incorrectly informed Nutsco that there was no lo a d of cashews waiting for retrieval. However, this was a misunderstanding that w a s cleared up the following month during a July 2008 attorney scheduling c o n fe re n c e . From this point on, any barriers to Nutsco re-gaining possession of the t e n t h load were constructed by Nutsco itself. Mr. Assis requested a personal

in s p e c tio n of the load before Nutsco would retrieve it, but did not travel to W is c o n s in a n d conduct his inspection until September 2008. T h e period of time between Nutsco's delivery of the tenth load and its pick up o f that load is insufficient to establish conversion. Nutsco willingly provided the tenth lo a d as part of its contract with Schutzman and the load remained an assumed part o f the transaction until Schutzman made the final decision to reject it. Schutzman d id not exercise unauthorized control. Nutsco suggests that it began making

d e m a n d s for the return of its load in February 2008, rendering any subsequent p o s s e s s io n of the load a conversion. However, the portion of Patricio Assis's a ffid a vit cited in support of this proposition merely states: In February 2008, I contacted A.L. Schutzman's accounts payable d e p a rtm e n t regarding the tenth load. Approximately one week later, I a g a in contacted A.L. Schutzman's accounts payable department re g a rd in g the tenth load. On both occasions, I was informed that A.L. S c h u tz m a n did not have the tenth load. (A s s is Aff. ¶ 19). The affidavit testimony does not state that Nutsco demanded the re tu rn of the tenth load. Further, Schutzman had an agreement with Nutsco's broker

-17-

th a t Schutzman would keep and pay for the tenth load if Nutsco would deliver the re m a in in g contract loads. Therefore, the only evidence supporting conversion is the misinformation s u p p lie d by Schutzman's shipping department employee and Schutzman's control o f the load between the time that conversation occurred in June and the time that N u ts c o was informed in July that Schutzman did, in fact, have the load in its p o s s e s s io n . However, this scintilla of evidence does not raise a genuine issue of m a te r ia l doubt as to whether Schutzman exerted wrongful control over the cashews, w ith o u t Nutsco's consent, and seriously interfered with Nutsco's right to possess the p ro p e rty. Nutsco regained its SLW -1 cashews and had the opportunity to sell them to another purchaser. The court holds that conversion did not occur. Nutsco argued that

S c h u tz m a n 's conversion constituted a material breach and excused Nutsco's n o n p e rfo rm a n c e . However, Schutzman did not convert the tenth load. As a result, n o material breach occurred and Nutsco's failure to deliver the five remaining loads re q u ire d under the contract is not excused on this basis. 2. N u ts c o 's Counterclaims Schutzman also moves for summary judgment on each of Nutsco's six c o u n te rc la im s , including: 1) breach of contract for failure to satisfy conditions; 2) u n ju s t enrichment; 3) breach of contract for late payment; 4) breach of contract for fa ilu re to submit payment; 5) conversion; and 6) breach of duty to act in good faith.

-18-

N u ts c o wholly abandons the first four of its six claims and makes no response to S c h u tz m a n 's summary judgment arguments. Instead, Nutsco defends only its last tw o claims for conversion and breach of duty to act in good faith. The court will grant s u m m a r y judgment to Schutzman on all counterclaims because Nutsco fails to raise a n y genuine issue of material fact. a. B r e a c h of Contract - Failure to Satisfy Conditions

N u ts c o first asserts a claim for breach of contract arising from Schutzman's a lle g e d refusal to pick up two cashew shipments in April 2007. Nutsco alleged d a m a g e s for storage and inspection costs incurred for these shipments. However, N u ts c o does not oppose Schutzman's summary judgment motion on this claim. N u tsc o also admits that Schutzman never refused to pick up a load of SLW - 1 c a s h e w s from Nutsco in 2007. (DRPFOF ¶ 68). Thus, a grant of summary judgment fo r Schutzman on this claim is appropriate. b. U n ju s t Enrichment

N u ts c o next asserts a claim for unjust enrichment arising from Nutsco's p a ym e n t of inspection and storage fees for shipments of cashews that Schutzman faile d to pick up in a timely fashion. Nutsco makes no response to Schutzman's m o tio n for summary judgment on this claim. Additionally, as noted above, Nutsco a d m its that Schutzman never refused to pick up any load of SLW -1 cashews. The c o u rt will grant summary judgment to Schutzman on this claim.

-19-

c.

B r e a c h of Contract - Late Payment

N u ts c o raises another breach of contract claim, but premises the claim upon S c h u tz m a n 's alleged failure to make timely payments as required by the contract. N u ts c o alleges that it is entitled to interest on the late payments. As with its previous tw o claims, Nutsco fails to defend its claim. Summary judgment is appropriate b e c a u s e Nutsco does not raise any genuine issue of material fact and because N u ts c o concedes that the contract does not provide for interest on late payments. (D R P F O F ¶ 25). d. B r e a c h of Contract - Failure to Submit Payment

N u t s c o raises a third breach of contract claim arising from Schutzman's a lle g e d refusal to make full payments for particular loads of cashews it received. Specifically, Nutsco asserts that Schutzman wrongfully refused to pay $118,650 for o n e load of cashews and underpaid for two other shipments by approximately $ 3 ,0 3 4 . Schutzman moves for summary judgment on this claim and cites evidence th a t it withheld the $118,650 payment on the tenth load of SLW -1 cashews (which w a s ultimately rejected) because the cashews did not meet AFI specifications. S c h u tz m a n also cites evidence that Nutsco agreed to give it $3,034 in credit for a c c e p tin g two slightly non-conforming loads of LW -1 cashews. Nutsco makes no

-20-

re s p o n s e to Schutzman's arguments or cited evidence.2 Thus, the court will enter s u m m a ry judgment in favor of Schutzman on the claim. e. C o n v e r s io n

N u ts c o claims that Schutzman converted the tenth load of SLW -1 cashews b y holding the load until September 2008. Nutsco alleges damages arising from its in a b ility to re-sell the load to a different buyer during a time when the market price o f $5.00 per pound for such cashews was higher than the contract price of $3.30 per p o u n d because the load was in Schutzman's possession. However, as previously d is c u s s e d , Schutzman did not convert the tenth load because there was no wrongful e x e rc is e of control. Further, Nutsco cannot establish that it suffered damages. N u ts c o reclaimed possession of the tenth load and could have re-sold the cashews a n ytim e thereafter. Nutsco presents no evidence that receiving the tenth load in

S e p te m b e r, rather than five months earlier, caused Nutsco to miss out on the high m a rk e t prices for cashews. Instead, the evidence shows that market prices for SLW -1 cashews remained h ig h even after Nutsco picked up the tenth load. Schutzman paid $5.45 per pound to obtain two loads of cashews from an alternate wholesaler in September 2008, the s a m e period in which Nutsco reclaimed its own load. Therefore, the market price for S L W -1 cashews remained higher than the contract price Nutsco would have

The court notes that Nutsco previously attem p te d to abandon this claim . On July 10, 2009, Nutsco s o u g h t leave to file an am e n d e d counterclaim which elim in a te d the claim for breach of contract based on f a ilu r e to subm it paym e n t . (See Docket ## 37, 38). However, Nutsco then withdrew its m o tio n to am e n d and t h e original counterclaim rem a in s the operative pleading. (See Docket #43).

2

-2 1 -

re c e ive d if Schutzman accepted the tenth load instead of rejecting it. Nutsco does n o t show that it was damaged by offering its cashews for sale on the open market in September 2008, instead of at an earlier time in 2008. Finally, the market price c ite d by Nutsco is irrelevant if it applies to SLW -1 cashews which conform to AFI s p e c i fic a t io n s . s p e c if ic a tio n s . The tenth load that Nutsco reclaimed did not meet these Consequently, Schutzman is entitled to summary judgment on

N u ts c o 's conversion claim. f. B re a c h of Duty to Act in Good Faith

N u ts c o 's final claim alleges that Schutzman violated its duty to act in good fa ith by engaging in behaviors that gave rise to the previous counterclaims. Nutsco a rg u e s that a fact finder could infer that Schutzman breached this duty to act in good fa ith based on W a rn e r's email suggesting that Schutzman keep the tenth load of c a s h e w s as leverage during negotiations and the fact that Nutsco did not pick up the te n th load until September 2008. However, this sparse evidence does not save the c o u n te rc la im from summary judgment. W is c o n s in law recognizes an implied contractual duty of good faith and fair d e a lin g . Home Valu, Inc. v. Pep Boys, 213 F.3d 960, 965 (7th Cir. 2000). A party s e e k in g to recover under a breach of the duty of good faith claim must make a s h o w in g which can "support a conclusion that the party accused of bad faith has a c tua lly denied the benefit of the bargain originally intended by the parties." Zenith In s . Co. v. Employers Ins. of Wausau, 141 F.3d 300 (7th Cir. 1998) (citing Foseid v.

-22-

S ta te Bank of Cross Plains, 197 W is . 2d 772, 541 N.W.2d 203, 212 (Ct. App. 1995)). H o w e v e r, the evidence Nutsco cites does not show that Schutzman denied it the b e n e fit of their bargain. Nutsco failed on each of its preceding claims and the court fo u n d that Schutzman did not materially breach the contract based on conversion. A d d itio n a lly , the intended benefit for Nutsco under the contract was that it would re c e ive payment for providing loads of cashews to Schutzman. Nutsco did receive p a ym e n t for all loads that Schutzman accepted. The load of cashews Schutzman re je c te d was returned to Nutsco. It was Schutzman who was denied the benefit of th e bargain because it never received the total number of loads promised in the c o n tra c t. Therefore, the court will enter judgment in Schutzman's favor on the c o u n te r c la im . C O N C L U S IO N N u ts co contracted to provide Schutzman with 14 loads of SLW - 1 cashews, but b re a c h e d the contract by providing only nine. Nutsco's nonperformance is not e xc u s e d by any material breach on Schutzman's part. Therefore, the court will grant s u m m a ry judgment in favor of Schutzman on its claim for breach of contract. A grant o f summary judgment is also appropriate on each of Nutsco's counterclaims. Nutsco fa ils to defend four of its six claims, and fails to establish a genuine issue of material fa c t regarding its claims for conversion and breach of the duty of good faith. Accordingly,

-23-

I T IS ORDERED that the plaintiff's motion for summary judgment on its c o m p la in t and on the defendant's counterclaims (Docket #30) be and the same is h e re b y GRANTED; and the plaintiff, A.L. Schutzman Company, Inc., shall have and re c o ve r from the defendant, Nutsco, Inc, the sum of Three Hundred Sixty-Seven T h o u s a n d , Eight Hundred Fifty Dollars ($367,850.00) together with costs as taxed b y the Clerk of the Court. T h e clerk is directed to enter judgment accordingly. D a te d at Milwaukee, W is c o n s in , this 16th day of December, 2009. BY THE COURT:

J .P . Stadtmueller U .S . District Judge

-24-