December 3, 2018
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division. No.
l:ll-cv-06771 - Robert M. Dow, Jr., Judge.
Sykes, Barrett, and St. Eve, Circuit Judges.
EVE, CIRCUIT JUDGE.
Therapeutics, Inc., a medical-supply company, contracted with
VitalGo, Inc., maker of the Total Lift Bed® (or the
"bed"), for exclusive distribution rights in
several markets. A year and a half later, the arrangement
soured. VitalGo told Kreg that it had not made the
minimum-purchase commitments required by the contract for
Kreg to keep its exclusivity. Kreg thought VitalGo was wrong
on the facts and the contract's requirements. This
district court, VitalGo did not make a strong showing in
defending its case. The district court ruled during the
summary-judgment stage that VitalGo breached the agreement,
and the court treated that ruling as established for the
case. That left only Kreg's damages. The case went to a
bench trial, despite an eleventh-hour request from VitalGo to
have it dismissed on pleading grounds. After the bench trial,
the district court ordered VitalGo to pay Kreg a little over
$1, 000, 000 in lost-asset damages and prejudgment interest.
appeals, arguing that the district court made a host of
reversible errors. We see none and affirm.
Total Lift Bed, as the name suggests, can incline to a near
90-degree angle with the occupant harnessed and upright.
Hospitals use the beds when treating obese and elderly
patients. And the beds are expensive, with some models
running more than $10, 000. Kreg is in the business of
selling and renting specialty medical equipment to medical
providers, and it sought a distribution arrangement with
VitalGo for the beds.
parties entered into a written agreement in December 2009.
The agreement conferred exclusive distribution rights of the
Total Lift Bed to Kreg in several geographic regions:
Indiana, Illinois, Wisconsin, and Atlanta, Georgia (the
"original territories"). Those rights lasted until
January 31, 2011, but paragraph l.B. of the agreement
contemplated their extension. If Kreg made a minimum-purchase
commitment of $200, 000 in each of the four territories
before January 31, 2011, then paragraph l.B. extended
exclusivity for another year. The agreement also contained an
in-writing clause. Per paragraph 23, any "notice or
communication required or permitted" under the agreement
"shall be made in writing and shall be sent by
registered mail, return receipt requested."
April 2010, a few months into the agreement, Kreg and VitalGo
added an amendment to it. The amendment granted Kreg
exclusivity in several additional territories, including
parts of Florida, New Jersey, and St. Louis, Missouri (the
"additional territories"), through May 2012. The
amendment did not make clear whether that date applied to the
additional territories only or whether it covered the
original territories as well.
and VitalGo went about their business uneventfully until
mid-2011. On June 2, 2011, Ohad Paz, VitalGo's CEO and
Managing Director, emailed Craig Poulos, Kreg's
President, complaining that Kreg had not performed under the
contracts as required to maintain exclusivity. The email
read: "Despite our conversation in January 2011 and the
different options we spoke about, you did not make any
commitment for purchase of our products for 2011, as you
should have, in order to keep your exclusivity." Poulos
responded a few days later that Kreg was "willing to
agree to commit to future minimum purchases in 2011,"
but that it needed updates on design problems Kreg saw in the
beds first. About a week later, on June 15, 2011, VitalGo and
one of Kreg's competitors, RecoverCare, issued a press
release announcing a nationwide exclusivity arrangement for
the Total Lift Bed. They entered a multiyear agreement in
September 2011, Kreg requested five new beds from Vi-talGo.
VitalGo refused to fill the order. Kreg responded by filing
complaint brought one cause of action-breach of contract-and
it sought only injunctive relief. On the day it filed the
complaint, Kreg also moved the district court for a temporary
restraining order. After a hearing, the district court denied
the request and concluded that Kreg had not shown irreparable
harm caused by VitalGo's alleged breach. VitalGo filed
counterclaims, including for breach of contract, and the case
March 2012, the parties cross-moved for summary judgment.
Kreg argued that there was no genuine issue of material fact
relating to its breach-of-contract claim and that injunctive
relief was warranted. VitalGo, meanwhile, contended that Kreg
had not shown irreparable harm or performance under the
contracts. Those motions, like all summary-judgment
motions filed in the Northern District of Illinois, were
subject to Local Rule 56.1. Pursuant to Local Rule 56.1(a),
both Kreg and VitalGo filed a statement of uncontested facts
with their motions. But there ended VitalGo's compliance
with the rule. VitalGo did not support its statement of facts
with contemporaneously filed record evidence, as Local Rule
56.1(a) requires (and as Kreg did). Nor did VitalGo file a
response to the opposition's statement of facts, as Local
Rule 56.1(b) requires (and as Kreg did). VitalGo also did not
file a response to Kreg's summary-judgment motion. The
district court tried twice, unsuccessfully, to alert
VitalGo's counsel to the filing failures.
March 2013, the district court issued a thorough opinion
ruling on the cross motions. The court addressed at the
outset VitalGo's noncompliance with Local Rule 56.1.
According to well-established Seventh Circuit law, that
noncompliance meant that the district court could exercise
its discretion to accept Kreg's statements of fact as
undisputed. See, e.g., Curtis v. Costco Wholesale
Corp., 807 F.3d 215, 219 (7th Cir. 2015). The court did
so, "to the extent" the facts were "supported
by admissible and docketed evidence."
merits, and applying New York law, the district court first
decided that the agreement and the amendment were two
distinct contracts. The agreement covered exclusivity
obligations with respect to the original territories; the
amendment governed the additional territories. As to the
original territories, the district court ruled that Kreg had
performed under the agreement and that VitalGo had breached
it. Kreg's undisputed evidence showed that Poulos and Paz
met in Chicago in December 2010-before the original
territories' commitment date of January 2011-and there
Poulos orally agreed to purchase $800, 000 worth of beds from
VitalGo. That constituted Kreg's performance under the
agreement, according to the district court. That Kreg's
commitment was not in writing did not doom its claim, the
court ruled, because the agreement did not require
all communications to be made in writing, paragraph
district court therefore decided that, even viewing the facts
in the light most favorable to VitalGo, Kreg had established
the first three elements of a breach of contract: the
existence of a contract, its performance, and VitalGo's
breach. But it found Kreg's case lacking with respect to
the fourth element: damages. See, e.g., Johnson v. Nextel
Commc'ns, Inc., 660 F.3d 131, 142 (2d Cir. 2011)
(identifying the four elements of a breach-of-contract claim
under New York law). Kreg had claimed losses from the breach,
but it had not shown that the parties foresaw such losses
when they made the agreement- as required to collect
consequential damages under New York law. See, e.g.,
Awards.com, LLC v. Kinko's, Inc., 834 N.Y.S.2d 147,
152 (N.Y App. Div. 2007). Kreg had also not established
irreparable harm, a requirement for the injunctive relief
Kreg requested. Yet not all was lost for Kreg, the district
court explained. Under Federal Rule of Civil Procedure 54(c),
a party can obtain any form of relief to which it is
entitled-like monetary damages-even if the party did not
expressly seek it.
the additional territories, the district court saw no
evidence of actual commitments from Kreg. The June 2011
emails evidenced only a willingness to commit. The
district court thus granted in part and denied in part
VitalGo's motion and denied Kreg's motion.
court held a status hearing the next month to chart the
case's course. VitalGo's counsel failed to attend.
Kreg's counsel told the court that it read the
summary-judgment opinion as, in part, a ruling under Federal
Rule of Civil Procedure 56(g), which permits a court to
"enter an order stating any material fact ... that is
not genuinely in dispute and treating the fact as established
in the case." Kreg's counsel added that, after the
opinion, "the only thing left" to address was
damages with respect to the original territories. The
district court agreed and set a briefing schedule for a
second summary-judgment motion on damages.
couple months later, Kreg filed its second summary-judgment
motion. VitalGo replaced its counsel before responding, and
the court gave new counsel leave to take discovery on
Kreg's damages. When VitalGo did respond-this time in
compliance with Rule 56.1-it addressed Kreg's damages
argument. But it also contended that Rule 56(g) should not
apply, and that the issues of performance and breach should
still be on the table. The district court, in ruling on the
second motion, admitted that it should have cited Rule 56(g)
in its first opinion, but it affirmed that its previous
opinion established performance and breach as undisputed
facts of the case. The court, however, again concluded that
material issues of fact existed with respect to Kreg's
court put the litigation on pause for about two years, after
VitalGo entered bankruptcy in late 2014. When it emerged, the
district court set a bench trial on the issue of damages for
September 2016. A couple weeks before trial, VitalGo moved to
dismiss the case pursuant to Federal Rule of Civil Procedure
12(c) and alternatively Rule 12(h)(2)(c), contending that
Kreg had never pleaded damages. Kreg responded by filing a
Rule 15 motion ...