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Ontario Regiment (RCAC) Com. v. Dean V. Kruse Foundation Inc.

United States District Court, N.D. Indiana, Fort Wayne Division

April 10, 2019



          William C. Lee United States District Judge

         Plaintiffs, The Ontario Regiment (RCAC) Company and Alan Duffy (individually herein, “the Museum” and “Duffy”), purchased at auction and sight unseen, what they wrongfully assumed to be two authentic World War II military vehicles from Defendant, Dean V. Kruse Foundation, Inc. (“the Foundation”). Thereafter, the Plaintiffs filed this suit[1] invoking the diversity jurisdiction of this Court alleging, among other things, that the purchased vehicles are not authentic and the Foundation violated Indiana law by committing common-law fraud, criminal fraud, and criminal deception. Presently before the Court are cross-motions for summary judgment [DE 35 and DE 43] and two motions to strike [DE 42 and DE 54]. For the following reasons, the Foundation's Motion for Summary Judgment will be GRANTED. All the remaining motions will be DENIED.


         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The movant bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of designated evidence that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). After “a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quotation marks and citation omitted).

         The existence of cross-motions for summary judgment does not imply that there are no genuine issues of material fact. R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Engineers, Local Union 150, AFL-CIO, 335 F.3d 643, 647 (7th Cir. 2003). “Parties have different burdens of proof with respect to particular facts; different legal theories will have an effect on which facts are material; and the process of taking the facts in the light most favorable to the non-movant, first for one side and then for the other, may highlight the point that neither side has enough to prevail without a trial.” Id.

         A factual issue is material only if resolving the factual issue might change the outcome of the case under the governing law. See Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). A factual issue is genuine only if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the evidence presented. See Anderson, 477 U.S. at 248. In deciding a motion for summary judgment, the court “may not ‘assess the credibility of witnesses, choose between competing reasonable inferences, or balance the relative weight of conflicting evidence.' ” Bassett v. I.C. Sys., Inc., 715 F.Supp.2d 803, 808 (N.D. Ill. 2010) (quoting Stokes v. Bd. of Educ. of the City of Chi., 599 F.3d 617, 619 (7th Cir. 2010)). Instead, it must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in favor of the non-moving party. See Anderson, 477 U.S. at 255. Mindful of these standards, the Court turns now to the facts of the case.


         I. The Parties

         The Museum is a registered and accredited Canadian Armed Forces Museum and a nonprofit entity with principal offices located in Oshawa, Ontario, Canada. (Declaration of Alan Duffy at ¶2, hereinafter, “Duffy Dec. at __”). The Museum maintains Canada's largest collection of operational military vehicles and artifacts related to the history and development of the Ontario Regiment. (Id. At ¶3). Duffy is the president of the Museum. Duffy has purchased a number of military vehicles and armaments on the Museum's behalf. (DE 41 at p. 3).

         The Foundation operates the National Military History Center (formerly known as the World War II Victory Museum) in Dekalb County, Indiana. The National Military History Center is a federally recognized 501(c)(3) non-profit institution. (Duffy Dec. at ¶4).

         II. The Vehicles

         As noted, this case involves two World War II military vehicles: a 1943-44/Opel/Maultier Panzer-Werfer 42 (“the Opel”) and a 1944/Panzer Jager 38(t) MIT7.5 cm PAK AUSF M (“the Marder”). Originally, the Victory Memorial Museum in Belgium recovered these vehicles along with other vehicles from World War II Battlefields. (Victory Memorial Museum Book (“the Book”), Exhibit 35-2 at pp. 5-13, 144, 160). The Book provides details as to how these damaged vehicles were restored through reconstruction efforts. (Id.). The Book is the subject of a Motion to Strike [DE 42] which will be addressed in the Discussion portion of this Order.

         In the mid-1990s, Dean V. Kruse (“Kruse”) purchased the Opel and Marder in the same lot with a number of other military vehicles from the Victory Memorial Museum in Belgium. (Affidavit of Dean V. Kruse, at ¶3, hereafter “Kruse Aff. at p. __”). There were no specific price allocations for the individual military vehicles in the lot; rather, Kruse paid approximately $2.3 million total for the lot. ( ¶4). Kruse avers that no restorations/changes were made to the Opel or the Marder since Kruse purchased the vehicles. (Id. at ¶7). As a result, he asserts these vehicles are the same vehicles he purchased from the Victory Memorial Museum.

         III. Pre-Auction Advertising and the Auction

          The Foundation listed the two vehicles for auction to be held between May 11-13, 2017 (“the Auction”).[2] Approximately one month prior to the Auction, Duffy received notice that Auctions America would be conducting the auction. (Duffy Dec. at ¶7). The Foundation has sold more than $3 million dollars in vehicles through Auctions America, the majority of which were German military vehicles. (Kruse Aff. ¶12). Auctions America has not received any complaints or grievances with respect to any of the Foundation's prior auctions. (Id. at ¶17; Letter from Auction's America, Exh. 5H).

         As the auctioneer, Auctions America prepares the descriptions for the vehicles, takes photos of the vehicles, estimates values for the vehicles, and prepares the advertising materials that appear in print and online. (Kruse Aff. ¶9-¶11; Affidavit of Records Custodian, John Sulman, Exhs. 5, 5B and 5C; Declaration of Matthew Lynch at ¶6: “AA took photographs of the Opel and Marder, and prepared the advertising materials distributed…”).

         Matthew Lynch (“Lynch”), the Catalogue Coordinator for AA, avers that he was responsible for writing various catalogue descriptions for items auctioned at the Auction. (Lynch Dec. at ¶s 3-4). He further avers that he wrote the descriptions for “one item described as a 1943 44 Opel Maultier Panzer-Werfer 42 … and one item described as a 1944 Panzer Jager 38(t) Mit 7.5 CM Pack Ausf M …” (Id.). Lynch states that the descriptions of the Opel and Marder were taken from the Kruse Foundation placards that were posted in front of the Opel and Marder in the National Military History Center. (Id. at ¶6). Lynch physically inspected the vehicles and noted that there was no engine or transmission in either vehicle. As a result, he added “NO ENGINE OR TRANSMISSION” to the text. In addition, at the request of his superior, Lynch included this sentence: “Buyer could source and utilize period engine and transmission or even late model diesel engine and transmission to get in running order.” (Id.).

         Duffy avers that he registered for the Auction online and it is undisputed that the registration information submitted for the Museum at the Auction is accurate. (Duffy Dec. ¶8; Pltfs Response to Admissions, Nos. 20-21). Duffy states that he carefully reviewed the photographs and descriptions of the items and eventually focused on the Opel and the Marder as well as a third item that is not the subject of this lawsuit. (Duffy Dec. ¶8). Duffy did not direct any questions to the Foundation or to Auctions America regarding the condition, authenticity or any other fact relating to either the Opel or the Marder. (Kruse Dec. ¶14).

         The Foundation represents that the both the Opel and Marder were auctioned pursuant to a “Bidder's Conditions of Business and Buyer's Guide.” (Sulman Aff. Exhs 5 and 5D). These conditions contained the following provision for both the Opel and the Marder: “All sales are ‘As Is' and ‘Where Is.' The Bidder is responsible for inspections and verification of condition, authenticity and completeness of any lot purchased.” (Id.). Duffy avers that although he reviewed photographs and item descriptions on the Auctions America website, he has no recollection of seeing these conditions stated anywhere prior to his purchase of the two vehicles. (Duffy Dec. ¶8).

         Duffy participated in the auction by telephone. Duffy did not personally inspect either the Opel or the Marder prior to bidding. (Duffy Dec. ¶9). This was contrary to his normal practice, “[m]y customary practice is to inspect historic military items before purchasing the items.” (Id.). He averred that he typically inspects the items in person or through a representative but did not do so in this case because the items were being offered by the National Military History Center. (Id.). He believed they were “museum quality” items. (Id.).

         Duffy won the auctions for both the Opel and the Marder. His winning bids were $41, 000 for the Opel and $210, 000 for the Marder. In the Acknowledgment of Purchase for both vehicles, the signatory represents, “I have purchased the goods described above relying entirely upon my own examination thereof … I acknowledge that all sales are ‘as is' and ‘where is' with no warranties or representations of any type whatsoever.” (Sulman Aff. Exhibit 5D).

         Duffy avers that he did not sign either the Acknowledgement of Purchase or the Bills of Sale for the Opel and the Marder. (Duffy Dec. at ¶8). He further indicates “someone else must have signed these documents” and that he is unfamiliar with the signature. (Id.).[3]

         IV. Alleged ...

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