Opinion ID: 222490
Heading Depth: 2
Heading Rank: 3

Heading: Breach of Contract & Guaranty Claims

Text: The district court granted summary judgment in Dynegy's favor on both its breach-of-contract and breach-of-guaranty claims. Summary judgment is appropriate if the admissible evidence considered as a whole 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), even after all reasonable inferences are drawn in the nonmovant's favor. We review de novo the district court's determination that this standard has been met. E.g., Davis v. Time Warner Cable of Se. Wis., L.P., ___ F.3d ___, ___ (7th Cir.2011).
Multiut and Draiman take an unusual tack in challenging summary judgment on the breach-of-contract claim. Rather than dispute the validity of the agreement, Dynegy's interpretation of its provisions, or Dynegy's allegations that Multiut was in breach, they contend that Dynegy is not entitled to recover damages because it offered insufficient proof of those damages, participated in improper manipulation of natural gas price indices, and breached other alleged oral and implied contracts. Though novel, none of these arguments gets Multiut and Draiman past the absence of evidence demonstrating a genuine issue for trial. Multiut and Draiman first contend that Dynegy inadequately proved its damages because it based its calculations not on (largely nonexistent) Exhibit Bs but instead had an expert review invoices and tabulate a total due. Under Illinois law, plaintiffs alleging breaches of contract bear[ ] the burden of proving that [they] sustained damages resulting from the breach and establishing both the correct measurement of damages and the final computation of damages based on that measurement. Ollivier v. Alden, 262 Ill. App.3d 190, 199 Ill.Dec. 579, 634 N.E.2d 418, 422 (1994). Plaintiffs are not required to prove damages to the exact cent; they must merely establish a reasonable basis for computing damages, Razor v. Hyundai Motor Am., 222 Ill.2d 75, 305 Ill.Dec. 15, 854 N.E.2d 607, 626 (2006) (quotation omitted), and may do so in any reasonable manner, id., 305 Ill.Dec. 15, 854 N.E.2d at 627. Here, the record unequivocally indicates that Dynegy did just that. It provided a qualified expert with invoices from Multiut's as well as its own records, and the expert checked them against the handwritten records of Multiut's bookkeeper, which she testified were accurate. The expert then compared the invoices with Multiut's payment records and calculated interest charges pursuant to a provision in the agreement to arrive at a damage figure of roughly $15.3 million as of October 2004. Multiut and Draiman object to the expert's calculation because it rested on documents other than the Exhibit Bs, though they simultaneously concede that [t]he parties were free to depart from the procedures contemplated by the written contract and . . . then rely on their contemporaneous notes to confirm each other's record of quantities or price. Reply Br. 10. The parties through their course of conduct mutually eschewed the formality of Exhibit Bs; Multiut cannot now hold that decision against Dynegy in a one-sided fashion. Nor is there any basis for the argument that Dynegy's damages computation is flawed because it rests in large part on Multiut's concededly accurate data rather than Dynegy's own records. Multiut and Draiman next contend that even if Dynegy adequately computed its damages, it should be barred from recovering them because of its alleged manipulation of gas price indices. Even if the invoices accurately reflected the prices charged, the argument goes, they improperly reflected inflated prices and therefore create a genuine issue of material fact as to the amount that would have been due had the price indices been left to the mercy of the invisible hand. Moreover, Multiut and Draiman continue, Dynegy bears the burden of proving that the amounts of the invoices it seeks to collect are accurate based on free and open market indices. Appellants' Br. 27. The district court rejected these arguments, finding that the causal chain that Multiut seeks to prove is too attenuated and diffuse, and noting, it is not clear how damages would apply in that Multiut's theory is that fraud was perpetrated on the whole marketplace so that the price charged by all suppliers presumably would have been equally affected by the alleged manipulation. We agree with the sound reasoning of the district court. Multiut and Dynegy's argument has some intuitive appeal, and echoes the equitable doctrine of unclean hands, but there is no evidence in the record from which a reasonable jury could conclude that Dynegy's alleged price manipulation out west so significantly affected the prices it was quoting Multiut in Chicago that it should not be paid for the gas it distributed. Multiut has offered little more than indignant speculation that the prices it was charged were impermissibly inflated. They may well have been. But Multiut has not presented any evidence showing how much they were inflated, what portion of that inflation might reasonably be attributable to Dynegy's alleged misdeeds, or what price it would have been charged had the market been functioning normally. The FERC report, Multiut's only real evidence of the alleged manipulation, focuses predominantly on the western United States, implicates more than a dozen firms, and mentions Chicago and the Great Lakes region only twice in roughly 400 pages and never in connection with Dynegy. Multiut makes a logical point, but more than speculation, no matter how righteous, is required to create a genuine issue of material fact. See Delapaz v. Richardson, 634 F.3d 895, 901 (7th Cir.2011); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (noting that nonmoving party must do more than simply show that there is some metaphysical doubt as to the material facts). Multiut and Draiman's final argument against the entry of summary judgment is similar to their previous one. They contend that the invoices are inaccurate and therefore unenforceable because they do not take into account the provisions of three alleged unwritten contracts: an oral most-favored-nations contract, an oral fixed-price contract, and an implied-in-fact contract to waive interest. We have already seen, however, that the record does not support the inference that such binding contracts existed. See supra Part II.B. If they did not exist, they could not possibly have hampered Dynegy's ability to abide by the concededly valid written agreement.
Dynegy also alleged that Multiut and Draiman breached a 1995 guaranty by failing to satisfy the debts Multiut incurred in connection with the agreement. Draiman signed the guaranty in both his official and individual capacities, and he and Multiut concede that it is a valid document. They argue that it should not be enforced against them, however, because Dynegy failed to comply strictly with the agreement's Exhibit B requirements. This argument gets them no further here than it did in connection with Dynegy's breach of contract claim. A guaranty is a third party's promise to answer for payment on or fulfill an obligation if the person primarily liable fails to perform. Panno v. Nicolau, 174 Ill.App.3d 890, 124 Ill.Dec. 378, 529 N.E.2d 95, 98 (1988). Multiut and Draiman do not contest that the guaranty here subjects them to liability if Multiut fails to perform its obligations under the agreement; they challenge neither its validity nor scope. We have already determined that Dynegy is entitled to summary judgment on its breach of contract claim; there is no genuine issue as to whether Multiut failed to fulfill its obligations. We recognized Multiut's concern with the lack of Exhibit Bs, but concluded that their absence was no impediment to finding Multiut liable under the contract. See supra Part II.C.1. Since Multiut and Draiman do not raise an independent argument or present any independent evidence as to why they should not be held to the terms of the guaranty, we need not continue our analysis beyond this point. They have failed to demonstrate that a material issue of genuine fact exists for trial, so summary judgment is appropriate on this claim.