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Auburn Sales, Inc. v. Cypros Trading & Shipping, Inc.

United States District Court, E.D. Michigan, Southern Division

March 13, 2017

AUBURN SALES, INC., Plaintiff,
v.
CYPROS TRADING & SHIPPING, INC., JOSEPH KILANI, and FADI KILANI, Defendants.

          OPINION AND ORDER (1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (ECF NO. 107) AND (2) DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (ECF NO. 110) AS MOOT

          LINDA V. PARKER U.S. DISTRICT JUDGE

         On February 28, 2014, Plaintiff Auburn Sales, Inc. (“Auburn”) filed this lawsuit against Defendants Cypros Trading & Shipping, Inc. (“Cypros”), Joseph Kilani, and Fadi Kilani (collectively “Defendants”) arising out of a past business relationship between the parties. Presently before the Court are motions for summary judgment filed by both parties pursuant to Federal Rule of Civil Procedure 56. (ECF Nos. 107, 110.) Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court dispensed with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f). For the reasons that follow, the Court is granting in part and denying in part Plaintiff's motion for summary judgment, and denying Defendants' motion for summary judgment as moot.

         I. Summary Judgment Standard

         Summary judgment pursuant to Federal Rule of Civil Procedure 56 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 central inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). After adequate time for discovery and upon motion, Rule 56 mandates summary judgment against a party who fails to establish the existence of an element essential to that party's case and on which that party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The movant has the initial burden of showing “the absence of a genuine issue of material fact.” Id. at 323. Once the movant meets this burden, the “nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and citation omitted). To demonstrate a genuine issue, the nonmoving party must present sufficient evidence upon which a jury could reasonably find for that party; a “scintilla of evidence” is insufficient. See Anderson, 477 U.S. at 252.

         Courts evaluate cross-motions for summary judgment under the same standard. La Quinta Corp. v. Heartland Props., LLC, 603 F.3d 327, 335 (6th Cir. 2010) (citing Beck v. City of Cleveland, 390 F.3d 912, 917 (6th Cir. 2004)). When faced with cross- motions for summary judgment, each motion is examined on its own merits. Id.

         III. Factual and Procedural Background

         Plaintiff is in the business of buying Chrysler parts, and reselling the parts to Defendant Cypros. (Compl. ¶ 13.) Defendant Joseph Kilani and his son, Defendant Fadi Kilani, are employees of Defendant Cypros. (Id. at ¶¶ 11, 12.) In early 2009, Plaintiff began having discussions with Automotive Aftermarket Resources, LLC (“AAR”) and Chrysler's parts subsidiary Mopar (“Mopar”)-both nonparties to this case-in order to obtain Chrysler parts at favorable pricing. (Id. at ¶¶ 25-26.) In March 2010, Plaintiff, AAR, Mopar, and Defendant Cypros cemented a distribution chain agreement for procuring Chrysler parts for the Middle East through Defendant Cypros. (Id.) The agreement was as follows: “[Mopar] would provide all the parts that Auburn could sell to AAR [;] who would then sell them to Auburn at a markup [;] who would then sell the parts to Cypros at a markup [.] (Id. at ¶ 27.) Mopar delivered the goods directly to Defendant Cypros under a “drop shipment” agreement; and consequently, parts were never tangibly in the hands of AAR or Plaintiff. (Id.)

         Plaintiff asserts that in 2011, Defendants obtained counterfeit parts, and mixed and sold them with legitimate Chrysler parts they had purchased from Plaintiff. (Id. at ¶ 31.) In February 2013, the FBI raided Defendants' New Jersey warehouse. (Id. at ¶ 32.) Thereafter, Defendant Fadi Kilani was charged with trafficking in counterfeit goods, and ultimately pled guilty to the charges in the indictment. (Id. at ¶ 33.)

         Plaintiff asserts that when Chrysler learned of Defendants' conduct, Chrysler instructed AAR that it could no longer sell Chrysler parts to Plaintiff. (Id. at ¶ 38.) Plaintiff asserts that once Defendants' wrongful actions became publicly known, Plaintiff's “automotive supplier customers” refused to do business with it, and that said customers imputed Defendants' wrongful conduct onto Plaintiff. (Id. at ¶ 40.)

         Plaintiff further asserts that as a result of the harm caused to its reputation by Defendants' conduct, it is unable to procure or sell any parts. (Id. at ¶ 41.) Consequently, Plaintiff filed its lawsuit on February 28, 2014, asserting: (1) “intentional interference with business relationship”; (2) “intentional interference with prospective economic advantage”; (3) breach of contract; and (4) negligence. (Id. at ¶¶ 44-76.)

         On February 3, 2015, Defendants filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. (ECF No. 40.) This Court held a hearing on May 27, 2015. In its opinion and order issued on September 1, 2015, this Court construed Defendants' motion as a judgment on the pleadings and granted Defendants' motion as to the negligence claim and denied the motion on the remaining claims. (ECF No. 71.)

         On May 16, 2016, Plaintiff filed a motion for summary judgment as to liability on their claims and requesting that this Court dismiss Defendants' counterclaims. (ECF No. 107.) Defendants filed an opposition brief on June 6, 2016 and Plaintiff filed a reply on June 20, 2016. (ECF Nos. 115, 117.) Defendants also filed a motion for summary judgment on May 18, 2016. (ECF No. 110.) Plaintiff filed an opposition brief on June 3, 2016 and Defendants submitted a reply on June 16, 2016. (ECF Nos. 114, 116.)

         IV. Plaintiff's Motion for Summary Judgment

         A. Tortious Interference Claims

         Plaintiff argues that this Court should grant summary judgment as to liability on their claims of tortious interference with a business relationship and interference with an economic expectancy. To prevail on a tortious interference claim, a party must establish (1) the existence of a valid business relationship or expectancy (enforceable contract not required); (2) the knowledge of the relationship or expectancy on the part of the defendant; (3) an intentional interference by the defendant inducing or causing a breach or termination of the relationship or expectancy, and (4) resultant damage to the party whose relationship or expectancy was disrupted. See Saab Auto. AB v. Gen Motors Co., 770 F.3d 436, 440 (6th Cir. 2014) (discussing tortious interference with economic expectancy); Wausau Underwriters Ins. Co. v. Vulcan Dev., Inc., 323 F.3d 396, 404 (6th Cir. 2003) (discussing tortious interference with a business relationship).

         The Sixth Circuit has found that intentional interference “requires more than just purposeful or knowing behavior on the part of the defendant.” Wausau Underwriters Ins. Co., 323 F.3d at 404. “[A] plaintiff must also allege that the interference was either (1) a per se wrongful act or (2) a lawful act done with malice and unjustified in law for the purpose of invading the contractual rights or business relationship of another.” Id.; see also Feldman v. Green, 360 N.W.2d 881, 891 (Mich. Ct. App. 1984). “Where the defendant's actions were motivated by legitimate business reasons, its actions would not constitute improper motive or interference.” Wausau Underwriters Ins. Co., 323 F.3d at 404 (quoting BPS Clinical Labs v. Blue Cross and Blue Shield of Mich., 552 N.W.2d 919, 925 (Mich. Ct. App. 1996).

         Plaintiff argues that intentional interference is established by: “(1) [Defendant] Fadi's guilty plea as to his counterfeiting, (2) [Defendant] Joseph's admissions of counterfeiting in the Answer, and (3) [Defendant] Fadi's express admission of counterfeiting Chrysler labels and buying non-Chrysler parts[.]” In their opposition brief, Defendants argue that Plaintiff fails to demonstrate that Defendants had the requisite intent to interfere with Plaintiff's business. (ECF No. 115 at Pg ID 2709; see also ECF No. 110 at Pg ID 2558.)[1] According to Defendants, Plaintiff cannot satisfy intentional interference solely by establishing that Defendants intentionally engaged in the act of counterfeiting automobile parts. (ECF No. 115 at Pg ID 2709.) Defendants argue that Plaintiff fails to make a necessary distinction between intent to counterfeit and intent to interfere with the business relationship or economic advantage. (Id.) In their reply brief, Plaintiff goes further to say that intent is not a requirement where a party has committed a wrongful act, relying on Mino v. Clio School Dist., 661 N.W.2d 586 (Mich. Ct. App. 2003). (ECF No. 114 at Pg ID 2620.) “Only a lawful act imposes the specific intent finding upon which Defendants harp[.]” (Id.)

         Plaintiff's characterization of Mino is misleading. In Mino, the Michigan Court of Appeals stated that “[t]o establish that a lawful act was done with malice and without justification, the plaintiff must demonstrate, with specificity, affirmative acts by the defendant that corroborate the improper motive of the interference.” Mino, 661 N.W.2d at 596. Plaintiff is correct in stating that Defendants actions would not constitute a lawful act. However, the case law is clear that the interference-whether lawful or unlawful-must have been “for the purpose of invading the contractual rights or business relationship of another.” Wausau Underwriters Ins. Co., 323 F.3d at 404. Plaintiff has failed to demonstrate that Defendants sold counterfeit automobile parts for the ...


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