Opinion
No. 2-14-0947
06-30-2015
INLAND FASTENER, INC., Plaintiff-Appellee, v. SOUTH HOLLAND METAL FINISHING CO., INC., Defendant-Appellant.
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1). Appeal from the Circuit Court of Du Page County. No. 11-L-1441 Honorable Dorothy French Mallen Judge, Presiding JUSTICE JORGENSEN delivered the judgment of the court.
Justices Schostok and Birkett concurred in the judgment.
ORDER
¶ 1 Held: The trial court correctly granted summary judgment to plaintiff in breach-of-contract action. However, because the court did not consider the effects of a settlement agreement on the non-settling defendant, we remand for hearing on damages. Affirmed in part and remanded with directions. ¶ 2 The trial court granted summary judgment to plaintiff-appellee, Inland Fastener, Inc., in its breach-of-contract claim against defendant-appellant South Holland Metal Finishing Co., Inc. South Holland appeals, arguing that Inland did not establish as a matter of law the existence of a breach nor its entitlement to $280,000 in damages and costs. We hold that the trial court correctly granted summary judgment for breach of contract. However, because the court did not properly consider the effects of a settlement agreement between Inland and its purchaser, Skyware Global we remand for reconsideration of the damages amount.
¶ 3 I. BACKGROUND
¶ 4 This case arises from the interplay in business relationships between three companies: Inland of Illinois (a supplier of fastener products such as screws, nuts, and bolts), South Holland of Illinois (a sub-supplier with whom Inland contracted to plate, or coat, its product with a weather resistant substance before Inland delivered the product to a purchaser), and Skyware Global of North Carolina (a purchaser with whom Inland contracted, who planned to provide the fasteners to its end consumers to secure its antenna products in outdoor environments). Skyware is not a party to this case.
¶ 5 A. Inland and Skyware
¶ 6 We first discuss Inland's relationship with Skyware. Inland and Skyware have been doing business together since 2005. Typically, Skyware ordered "kitted" fastener products from Inland, meaning that the products came in pre-assembled bags to be used in installing Skyware's antennas. Between June 2009 and August 2010, Skyware submitted numerous purchase orders for kitted fastener products. Inland filled 6 of these numerous purchase orders with flawed parts subject to rust, a defect around which the instant appeal centers. The six purchase orders and their various fastener products, with names such as "BOP 503," are as follows:
Purchase Order 1701: BOP 503Each of Skyware's purchase orders specified that the products were to be plated to meet a 720-hour salt-spray specification. This specification meant that, if tested, the plated products could endure 720 hours, or 30 days, of salt exposure without rusting.
Purchase Order 2621: FAS 120, FAS 159, FAS 170, FAS 175, FAS 176, FAS 181, FAS 185, BOP 468, PAC 144, PAC 186, PAC 288, PAC 350, PAC 358
Purchase Order 3043: FAS 163, FAS 214
Purchase Order 3286: BOP 503
Purchase Order 3297: FAS 120, FAS 129
Purchase Order 4893: PAC 307
¶ 7 B. Inland and South Holland
¶ 8 Upon receiving Skyware's purchase orders, Inland secured the necessary parts in raw, uncoated form from an overseas sub-supplier. Inland, who had been working with South Holland since 2008, then submitted several purchase orders to South Holland, ordering the plating of the raw parts. Inland's purchase order to South Holland did not use complete sentences. As a result, Inland and South Holland would later debate whether Inland had contracted for its parts to go through a 720 process or for its parts to achieve a 720 result. The purchase order simply stated, in this format:
"Process:Very few of the purchase orders specified an agreed price; that section of the form was blank. The few that did fill in the price slot stated "$38.00/CWT," which we take to mean $38 per 100 (C) weight (WT), or $38 per 100 pounds. ¶ 9 South Holland filled the purchase orders, apparently without any further written correspondence. It returned the plated parts to Inland via a truck. South Holland provided certifications, which stated:
720 Salt Spray Hours
Must Certify
Plate to Gage
Bake Split Lock Washers [or other relevant part]"
"PER SPEC:
ZINC .00035
DICH.
JS 500
HYDROCOAT 330
Thickness in inches or grams-meter squared
Per SHMF 4.20 or SHMF 4.5.4: .00049 [Thickness result varied per purchase order]
[relevant purchase order numbers]
Uncertainty level data available upon request."
¶ 10 C. Inland Delivers the "Rejected Parts" to Skyware
¶ 11 After the return of its parts, Inland then painted them and, in some instances, put a "patch" on them. (To our review, the parties do not define patching.) Inland then had the parts kitted to Skyware's specifications by yet another sub-supplier, Addison Packaging. Inland warehoused the parts in sealed cartons and drums at its own facility prior to staged shipment via freight service to Skyware. ¶ 12 Upon receipt of an early shipment, Skyware determined that the parts did not meet quality standards. As is relevant to the instant appeal, some of the parts did not withstand 720 hours of salt exposure. Skyware tested parts at its own salt exposure lab. The bolded results indicate the hour of exposure, each under the requisite 720 hours, upon which the part showed red rust:
Purchase Order 1701: BOP 503 (264 hours)¶ 13 To confirm its results, Skyware had certain parts tested at third-party labs. The third-party lab results are set forth in bold, after Skyware's in-house results:
Purchase Order 2621: FAS 120 (256 hours), FAS 159, FAS 170 (379 hours), FAS 175, FAS 176, FAS 181, FAS 185, BOP 468, PAC 144, PAC 186, PAC 288, PAC 350 (335 hours), PAC 358 (184 hours)
Purchase Order 3043: FAS 163, FAS 214 (379 hours)
Purchase Order 3286: BOP 503 (264 hours)
Purchase Order 3297: FAS 120 (256 hours), FAS 129
Purchase Order 4893: PAC 307 (171 hours)
Purchase Order 1701: BOP 503 (264 hours)Skyware then informed Inland that it would reject the failing parts. ¶ 14 Upon notification of the failures, Inland proposed several potential cures. A May 2011 letter documents one such proposal:
Purchase Order 2621: FAS 120 (256 hours), FAS 159, FAS 170 (379 hours, 408 hours), FAS 175, FAS 176, FAS 181, FAS 185, BOP 468, PAC 144, PAC 186, PAC 288, PAC 350 (335 hours), PAC 358 (184 hours, 672 hours)
Purchase Order 3043: FAS 163, FAS 214 (379 hours, 192 and 504 hours)
Purchase Order 3286: BOP 503 (264 hours)
Purchase Order 3297: FAS 120 (256 hours), FAS 129
Purchase Order 4893: PAC 307 (171 hours).
"Dear Skyware Team,Skyware denied Inland's requests to attempt a cure. ¶ 15 Skyware returned all rejected parts to Inland at Inland's expense and did not pay Inland for the rejected parts. The payment due on these rejected parts would have been $204,447.69. In an effort to mitigate this loss, Skyware retained a vendor to disassemble and sort the kits for resale. Disassembly was required, because the kits were specific to Skyware products, and individual components were more marketable. Inland contacted potential vendors and listed the products for sale in industry publications. ¶ 16 After Skyware returned the rejected parts, the parts plated by South Holland fell into three categories: (1) parts that had been shipped to Skyware but had been rejected for salt spray failures, as described above (rejected parts); (2) parts ordered by Skyware and plated by South Holland but not yet shipped to Skyware (open-order parts); and (3) parts that had been shipped to Skyware that were not rejected, that Skyware retained, and for which Skyware had not paid; these included parts from the numerous other purchase orders, supra ¶ 6 (retained parts).
Would you please reconsider and let us get all the product replated to your salt specifications? We are looking at over $200,000 dollars of loss to our company because of a plater doing a terrible job at plating. We realize that this is our problem, but at the same time we did have certification from our plater that they did meet your specifications. He has promised to put a 1,000 hour salt spray coating on all the parts so there would be no issues with rust. After seven years of doing business with [Skyware], I was hoping that we could work this out in a much more amicable way for the both of us. The other thought was we send the parts to a plater you recommend in North Carolina. Before [Skyware] moved [from Illinois to North Carolina], we were a valued supplier and on many occasions we helped them get out of jams. Could you do the same for us?" (Emphasis added.)
The parties refer to this third category as "shipped parts," but we term them "retained parts." --------
¶ 17 D. "Open-Order Parts" and "Retained Parts"
¶ 18 In April 2011, Skyware agreed to accept the open-order parts on a conditional basis. That is, Skyware informed Inland that it would only accept the open-order parts if Inland obtained certification from a third-party lab that all of the parts would meet a 720 salt-spray specification. The open-order part numbers are bolded below:
Purchase Order 1701: BOP 503¶ 19 Inland asked South Holland to re-plate the open-order parts. To facilitate the re-plating process, Inland (or Addison) disassembled the kits by opening up all the packages and sorting the parts by number. South Holland re-plated the parts, certified them, and sent them back to Inland. Inland sent samples of the parts to a third-party lab for testing. The third-party lab results showed multiple failures, specifically, with the following parts: BOP 468, PAC 144, and PAC 288 (comprising 3 of the 11 re-plated, open-order part numbers). (Additionally, as would later come out in discovery, South Holland tested the parts in-house before returning them to Inland. South Holland recorded the following failures: FAS 129, FAS 175, FAS 176, and FAS 185 (comprising an additional 4 of the 11 re-plated, open-order part numbers).) ¶ 20 Due to the third-party lab results, Skyware refused to accept or pay for any of the re-plated, open-order parts. Inland's lost revenue for the open-order parts was $51,470.85. Again, Inland tried to mitigate its loss by listing the parts for resale. ¶ 21 Additionally, due to the problems with the rejected parts and the open-order parts, Skyware had refused to make any payments, even for parts that it had retained and that were not defective (the retained parts). The record does not contain the contracted-for value of the retained parts.
Purchase Order 2621: FAS 120, FAS 159, FAS 170, FAS 175, FAS 176, FAS 181, FAS 185, BOP 468, PAC 144, PAC 186, PAC 288, PAC 350, PAC 358
Purchase Order 3043: FAS 163, FAS 214
Purchase Order 3286: BOP 503
Purchase Order 3297: FAS 120, FAS 129
Purchase Order 4893: PAC 307
¶ 22 E. Settlement Between Inland and Skyware
¶ 23 Inland and Skyware entered into a settlement agreement. They did not disclose the terms of the settlement agreement to South Holland, but South Holland later obtained a court order to view the agreement and that agreement is now part of the record, filed under seal. ¶ 24 Particularly because Skyware is not a party to this appeal, we try to respect its bargained-for confidentiality in discussing the settlement. Therefore, we discuss it only in the most basic terms utilized by Inland in its brief. That is, in part one of the agreement, Skyware paid Inland a certain sum for the retained parts. In part two of the agreement, the parties released one another from all potential claims, including, we must specify, any claim Inland may have had to pursue a right to cure defects in the rejected parts.
¶ 25 F. Inland's Suit Against South Holland
¶ 26 In December 2013, Inland filed suit against South Holland for breach of contract. It ultimately sought $280,837.44 damages from South Holland for the lost revenue from Skyware for the rejected parts and the open-order parts, as well as costs incurred in trying to mitigate losses:
$204,447.69: lost revenue for the rejected partsThe above-quoted figures came out in the discovery process. South Holland did not dispute these figures; rather, it would ultimately question whether and to what degree it should be responsible. ¶ 27 As such, in its answer(s), South Holland denied that it breached the agreement to plate the products to withstand 720 hours of exposure, arguing that it conducted the plating process ordered by Inland and that post-plating damage caused the parts to fail salt-spray testing (such as painting, patching, improper storage, and friction during shipping and kitting). Alternatively, South Holland argued that, even if it did breach the contract, the trial court must consider Inland's settlement agreement with Skyware to avoid awarding Inland a windfall.
$3,400: freighting for rejected parts
$12,664.83: sorting the rejected parts for resale
$3,327.25: salt-spray testing for rejected and open-order parts
$942.72: listing rejected and open-order parts for resale
$51,470: lost revenue for open-order parts
$4,284.60: sorting kitted open-order parts for re-plating
$300: litigation costs
¶ 28 1. Evidence Concerning Breach
¶ 29 During the course of discovery, the parties conducted a number of depositions and produced documentation concerning the purchase orders, certifications, and test results. Much of the information contained therein has been set forth above. ¶ 30 Matthew Giesler of Element, one of the third-party companies who tested the parts at issue, explained the testing process. If red rust appears prior to 720 hours in the salt chamber, the part fails. Giesler discussed the significance of red rust:
"A. The salt spray test is done on a typically ferrous or iron material to look to see that a solution doesn't get in and attack the base metal by protection of some sort of substrate or coating on the metal. When you see corrosion [on] products, it means that there's exposure to the base metal, which is iron. Iron is often used because it's cheaper for manufacturing, and rather than using a fully corrosive product, there's a surface finish or coating put on it as a barrier to rust.¶ 31 Donald Troy of South Holland attested to his understanding of Inland's purchase orders. Troy understood that the "particular parts from Inland that are described on th[e] purchase order[s] were to be plated according to the process set forth on th[e] first page of the purchase order[s]." (Emphasis added.) In his view, the process certifications indicated that the process had been completed, not that a certain result was achieved. ¶ 32 Troy described the plating process, which involved cleaning, plating, and, finally, baking or chromium coating. First, South Holland cleans the parts by placing them in an alkaline solution of detergent and caustic designed to remove machine and finishing oil from the surface. It then places the parts into an electroplater to remove scale. Following a rinse, it places the parts in an acid to remove rust and any remaining scale. It then rinses the parts again. Second, South Holland plates the parts by immersing them in a chemical bath containing zinc, a carrier salt, a brightener, and water. South Holland then applies electricity directly to the immerged part, causing it to act as a cathode in the electrical circuit. The negative ions present on the part's surface attract the anions in the bath, forming a deposition, or plate, on the surface. Finally, South Holland considers whether to bake the parts. If the part is vulnerable to a condition called hydrogen embrittlement, the part is baked or heat treated, and chromium is used. If the part did not need to be baked, it is then treated with a higher level of chromium, which provides the part with additional corrosion resistance. South Holland dries the parts and, as a final precaution, runs them through a mixture of silicates and alkaline chemicals to further increase corrosion resistance. As to post-processing inspection, South Holland reviews the job ticket to confirm that each step in the process was completed. It also performs a visual inspection of the parts, looking at the thickness of the plating and for any blistering or discoloration. If a part fails visual inspection, it is re-plated. Troy attested that this entire process complies with the "ISO 9001:2000," an international quality standard for organizations that provide services similar to South Holland. Similarly, the entire process complies with the procedures set forth in South Holland's own quality policy manual, which was based upon the ISO standards. ¶ 33 Troy explained that plated parts could be damaged by post-plating events such as excessive handling, improper storage, improper shipping, and patching or painting. South Holland warned Inland in advance of the risks. Troy posited that one "can infer that [Inland is] assembling these kits using automatic handling methods which can damage the finish." Additionally, Troy explained that improper storage, such as failing to use protective plastic bags, could affect the ability of the parts to withstand corrosion. However, he "did not know the details of how the products were stored." And, he was not aware of any industry standards to be used in storing plated products. Assuming the storage facility was climate controlled, the plating did not have a shelf life. Although improper shipping could damage the parts, he was not aware of how the products at issue here were shipped. And, he was not aware if there were any industry standards in shipping plated products. Still, "the fact that the parts had been shipped that distance [from Illinois to North Carolina] could be a factor in the reason why they failed." Finally, as to patching and painting, Troy stated: "[W]e're aware that a patch was applied to the parts and that they were painted [after the plating process], and both of those operations can be detrimental to the plating that's [been] applied to that part." ¶ 34 Troy admitted that, after South Holland re-plated the open-order parts, it tested a sample of eight parts in-house before returning them to Inland. South Holland recorded the following failures: FAS 129, FAS 175, FAS 176, and FAS 185 (comprising 4 of the 8 tested, and 4 of the 11 re-plated, open-order part numbers).) Troy did not inform Inland of the negative test results, and he did not know whether anyone else at South Holland informed Inland of the negative test results.
Q. So where you see the red rust, that means that the salt solution is attacking and degrading the underlying metal?
A. Yes."
¶ 35 2. Evidence Concerning Damages
¶ 36 Troy testified that, at the time Inland was sending parts to South Holland to be plated, he had no knowledge of who the end customer for the products would be. In November 2010, Inland informed South Holland that Skyware would be the end user. As Inland set forth in its interrogatories and as neither party seems to dispute, once the parties realized that Skyware would no longer be purchasing the products, Inland representatives met with South Holland representatives, who agreed to help Inland find buyers for the rejected parts. ¶ 37 The remaining evidence concerning damages concerned an interpretation of the settlement agreement, as set forth above. Inland argued throughout the proceedings that double recovery was not a concern, because the settlement agreement required Skyware to pay Inland a certain sum for only the retained parts (and no longer would buy the rejected and open-order parts, allowing Inland to keep and resell the rejected and open-order parts), whereas Inland sought damages from South Holland for only the rejected and open-order parts for which it had not received payment from Skyware. Inland argued that it gave South Holland ample evidence concerning the rejected and open-order parts at issue; it had produced documents to show the part numbers, quantities and prices for those parts, including the purchase orders, invoices, and test results.
¶ 38 3. Trial Court's Ruling
¶ 39 The trial court entered a ruling in Inland's favor. In its written order, it granted Inland summary judgment for breach of contract and awarded Inland its requested damages. It did not consider the settlement agreement. Orally, as to breach, the court explained, "the contract said [South Holland] will supply to [Inland] these products that will meet this particular testing, and they didn't. So I don't believe there is a genuine issue of material fact that South Holland did not provide the product as certified." It did not consider the settlement agreement in determining damages, because "[a]ll the evidence *** indicates that the settlement agreement [i.e., the certain sum] is for parts that [Skyware] retained and not for parts that they rejected." This appeal followed.
¶ 40 II. ANALYSIS
¶ 41 South Holland challenges the trial court's grant of summary judgment to Inland, arguing that material questions of fact remain as to the element of breach. Alternatively, South Holland argues that, even if it did breach the contract, Inland did not establish a reasonable basis upon which to calculate its damages, because it did not adequately address the foreseeability of its mitigation efforts or account for gains obtained in the Skyware settlement. For the reasons that follow, we hold that the trial court properly granted summary judgment. However, we remand on the issue of damages.
¶ 42 A. Summary Judgment: Element of Breach
¶ 43 A summary judgment is a drastic remedy that is to be awarded and reviewed with care and caution. Bloomer Amusement Co. v. Eskenazi, 75 Ill. App. 3d 117, 118, (1979). The movant carries the burden of proof. Farmers Auto Insurance Association v. Burton, 2012 IL App (4th) 110289, ¶ 15. The burden of proof consists of a burden of persuasion and a burden of production. 4 Richard A. Michael, Illinois Practice § 40.3 (2d ed. 2011) (Civil Procedure Before Trial). The burden of persuasion never shifts. Id. To that end, the pleadings, depositions, and admissions on file, together with the affidavits, if any, must be construed strictly against the movant, and the movant's right to judgment must be clear and free from doubt. Id.; 735 ILCS 5/2-1005(c) (West 2014). If the facts are not in dispute but are subject to conflicting inferences, or if a reasonable person can draw different inferences and conclusions from the undisputed facts, summary judgment is not appropriate. Bloomer, 75 Ill. App. 3d at 118-19. ¶ 44 However, unlike the burden of persuasion, the burden of production may shift. Il. Practice sec. 40.3. The movant carries the initial burden of production. Id. Where the movant is the plaintiff, it must set forth affirmative evidence of each element of the cause of action that, if uncontradicted, would entitle it to judgment as a matter of law. Farmers, 2012 IL App (4th) 110289, ¶ 15. If the movant fails in that task, the analysis ends and summary judgment must be denied. If, however, the movant satisfies its initial burden of production, the burden shifts to the nonmovant. Doe v. University of Chicago Medical Center, 2015 IL App (1st) 133735, ¶ 42. At that point, if the nonmovant wishes to survive summary judgment, it must produce evidence of a relevant, contradictory factual matter that is sufficient to create a genuine issue of material fact. Id. A "genuine" issue of material fact means that there is competent evidence to support the nonmovant. Pekin Insurance Co. v. Adams, 343 Ill. App. 3d 272, 275 (2003). Mere speculation is not enough to create a genuine issue of material fact. Judge-Zeit v. General Parking Co., 376 Ill. App. 3d 573, 584 (2007). A grant of summary judgement is subject to de novo review. Id. at 119. ¶ 45 To prevail on its breach of contract claim, Inland must prove: (1) the existence of a valid and enforceable contract; (2) performance by Inland; (3) breach of contract by South Holland; and (4) resulting injury to Inland. See Batson v. The Oak Tree, Ltd., 2013 IL App (1st) 123071, ¶ 35. Here, South Holland disputes only the element of breach. It acknowledges that, if it breached the contract, it caused Inland some injury. ¶ 46 South Holland's argument concerning the element of breach is two-fold: (1) Inland did not meet its burden of production, because it contracted for its parts to go through a certain process, not to achieve a certain result, and, therefore, evidence of negative test results alone is insufficient to prove a breach; and (2) even if Inland met its burden of production, South Holland successfully responded by producing evidence of a contradictory factual matter sufficient to create a genuine issue of material fact precluding summary judgment, i.e., the possibility that the parts were damaged after they left South Holland's control.
¶ 47 1. Inland's Burden of Production
¶ 48 South Holland's attack on the sufficiency of Inland's evidence depends upon an interpretation of the purchase orders. South Holland asks us to hold that Inland contracted for a process rather than a result. If a determination of the parties' intent requires resorting to facts in dispute, then the contract must be construed by a trier of fact. Gomez v. Bovis Lend Lease, Inc., 2013 IL App (1st) 130568, ¶ 24. However, if the parties' intent can be determined solely from facts not in dispute, then the issue is a question of law appropriate for summary judgment. Id. ¶ 49 For the reasons that follow, we agree with South Holland that, for the purposes of summary judgment, it raises a fair argument that Inland contracted for a process rather than a result. However, in this case, where the facts are not in dispute that comprehensive failures occurred on a large scale, we reject South Holland's premise that there is a meaningful difference between the process and the result. ¶ 50 South Holland raises a fair argument that Inland contracted for a process allowing for some measure of error. Troy testified that he understood the purchase orders to be a request by Inland for the parts to go through a certain process. He described that process at length, and stated that it was consistent with international quality standards. Additionally, the purchase orders stated:
"Process:They did not state:
720 Salt Spray Hours
Must Certify
Plate to Gage
Bake Split Lock Washers [or other relevant part]" (Emphasis added.)
Result:Moreover, a fair argument can be made that Inland never contracted for perfect results, because the certifications that it initially accepted from South Holland spoke of an "uncertainty level."
720 Salt Spray Hours
Must Certify
Plate to Gage
Bake Split Lock Washers [or other relevant part]
"PER SPEC:¶ 51 Still, even if it can be said that Inland merely contracted for a process that allowed for some amount of error, Inland showed a breach of that agreement by demonstrating extreme and sweeping failures. Although "process" and "result" are separate concepts, they must, at some point, meet. It would be nonsensical to hold that a contract for a process that complies with international quality standards aimed at achieving a certain result holds zero assurance of actually achieving results within that range. To be sure, through its actions, South Holland admitted that it guaranteed a certain result, because it agreed to re-plate open-order parts sans further payment. ¶ 52 Here, Inland produced undisputed evidence of extreme and sweeping failures. As tested by numerous parties, tens of thousands of parts, totaling over $200,000 in value began to show rust well before the 720-hour mark. Some parts began to show rust in less than 200 hours. At least 6 of the numerous purchase orders contained parts that began to show rust in less than 500 hours. Under these circumstances, there cannot be a meaningful difference between a guaranteed process and a guaranteed result. As such, we conclude that Inland has satisfied its initial burden of production. It has presented evidence that, if uncontradicted, establishes as a matter of law that South Holland breached its agreement to provide adequate plating.
ZINC .00035
DICH.
JS 500
HYDROCOAT 330
Thickness in inches or grams-meter squared
Per SHMF 4.20 or SHMF 4.5.4: .00049 [Thickness result varied per purchase order]
[relevant purchase order numbers]
Uncertainty level data available upon request." (Emphasis added.)
¶ 53 2. South Holland's Burden of Production
¶ 54 The burden of production now shifts to South Holland, meaning that South Holland must produce evidence of a relevant, contradictory factual matter that is sufficient to create a genuine issue of material fact in order to survive summary judgment. South Holland's remaining argument is that a post-plating event caused the parts to be vulnerable to early rust. Under this theory, South Holland plated the parts such that they would withstand 720 hours of salt exposure, but a post-plating event, out of its control, damaged the parts such that they could no longer withstand 720 hours of salt exposure. ¶ 55 In support of its theory, South Holland produced evidence, through Troy's testimony, that the plated parts could be damaged by excessive handling, improper storage, improper shipping, patching, and painting. South Holland did not question the Inland experts as to the actual handling process used. Troy simply stated, "we can infer" that Inland used "automatic handling methods." Troy further stated that the failure to use plastic bags could lead to damage, but South Holland produced no evidence that Inland did indeed fail to use plastic bags. Troy attested that shipping the parts across a great distance could damage them, but he did not explain the process by which that might happen. Finally, Troy stated that patching or painting the parts could increase vulnerability to rust. However, he did not explain what patching was, nor did he explain why painting would increase vulnerability. He did not testify to the type of paint used or its chemical makeup. These gaps in information stand in contrast to the detailed information that Troy was able to provide in explaining the plating process itself. ¶ 56 South Holland's evidence is not sufficient to create a genuine issue of material fact. South Holland does not present evidence that any of the aforementioned post-plating risks actually happened here. Troy did not state what actually happened to the parts once they left South Holland's facility that caused damage. He only speculated. South Holland did not adequately explain how these potential occurrences would have produced such significant and wide-spread failures. Troy's speculations did not constitute competent evidence that could support a finding in favor of South Holland. Moreover, South Holland's assertion that the damage occurred once the parts left its care is not only unsupported, but it is actually refuted by the record (at least as to the open-order parts). South Holland tested the open-order, re-plated parts in-house before returning them to Inland, and half of the tested parts still failed. South Holland was given the opportunity to cure the defect in a portion of the parts, and it was unable to do so. In sum, we reject South Holland's arguments concerning breach. The trial court properly granted summary judgment to Inland.
¶ 57 B. Damages
¶ 58 1. Recap of Trial Court's Award
¶ 59 When a trial court grants summary judgment to the plaintiff, it may either award damages in conjunction with its ruling or continue the cause for a prove-up on damages. See, e.g., Wausau Insurance Co. v. All Chicagoland Moving and Storage Co., 333 Ill. App. 3d 1116, 1119 (2002) (where the appellant court affirmed the grant of summary judgment but remanded for a hearing on damages); Ebert v. Dr. Scholl's Foot Comfort Shops, Inc., 137 Ill. App. 3d 550, 560 (1985) (where, in a breach-of-contract case, the court granted summary judgment as to liability only and then continued the matter for a prove-up on damages). Here, the trial court awarded damages in conjunction with its ruling. Again, it accepted evidence, such as purchase orders and receipts, of the following losses, totaling near $280,000:
$204,447.69: lost revenue for the rejected partsSouth Holland accepts these figures. It accepts, for example, that Inland spent $942 listing parts for re-sale. It further accepts that, if it breached its contract with Inland, Inland suffered injury as a result.
$3,400: freighting for rejected parts
$12,664.83: sorting the rejected parts for resale
$3,327.25: salt-spray testing for rejected and open-order parts
$942.72: listing rejected and open-order parts for resale
$51,470: lost revenue for open-order parts
$4,284.60: sorting kitted open-order parts for re-plating
$300: litigation costs
¶ 60 2. The Skyware Settlement's Potential Effects on the $280,000 in Damages
¶ 61 Although South Holland accepts the raw data for losses associated with the rejected and open-order parts, it contends that the trial court erred, because it did not even consider the effects of the Skyware settlement, including whether those effects warranted an adjustment or offset to the damages amount. Specifically, South Holland argues that: (1) Inland's attempts to mitigate its losses were not foreseeable to South Holland, and, therefore, South Holland should not be liable for the losses stemming from Inland's chosen course of mitigation; and (2) Inland's settlement with Skyway has allowed for a double recovery. Collectively, these arguments may be understood as an overarching complaint that Inland's settlement with Skyway, in which South Holland played no role, perhaps unintentionally but certainly unfairly, manipulated the damages amount. ¶ 62 South Holland raises a fair concern, in that it is this state's policy to protect the interests of non-settling parties when the settlement of parties in one lawsuit affects the interests of a non-settling party in a separate lawsuit. See, e.g., Palmer v. Avco Distributing Co., 82 Ill. 2d 211, 224 (1980) (the entire amount of a loan agreement/settlement obtained in the negligence action was required to be off-set against the separate defendant's judgment in the separate, strict-liability action, even though this went against the terms of the settlement; it was not the separate defendant who forfeited the offset). The intent of settling parties must give way where it is contrary to public policy, such as preventing double recovery and protecting the financial interests of nonsettling parties. Id.; Popovich v. Ram Pipe and Supply Co., 82 Ill. 2d 203, 208 (1980). We now turn to South Holland's specific concerns regarding the reasonableness and foreseeability of Inland's mitigation attempts and the possibility that the settlement allowed for Inland to double recover.
¶ 63 i. Mitigation
¶ 64 Costs for failed mitigation attempts, including the repair or attempted sale of nonconforming goods, are recoverable in breach of contract claims. Magnum Press Automation, Inc. v. Thomas & Betts Corp., 325 Ill. App. 3d 613, 622 (2001). However, recovery for these costs depends on the reasonableness and foreseeability of the mitigation attempts, particularly where the party attempting to mitigate the loss did not keep the other party apprised of its course of action. Id. at 62; Kalal v. Goldblatt Brothers, Inc., 53 Ill. App. 3d 109, 112 (1977) (damages that were a consequence of special circumstances are recoverable only if they were reasonably in contemplation of the parties at the time of contract). When receiving defective goods, the buyer is required to give notice at every important juncture. Magnum, 325 Ill. App. 3d at 621. The reasonableness and foreseeability of the mitigation attempt is typically one of fact, and, where the trial court does not consider the question, a remand is required. Id. at 622 (where the buyer of defective goods attempted a relatively expensive and ultimately unsuccessful repair without notifying the seller of its course of action, a remand was required to determine the reasonableness and foreseeability of its actions and the degree to which the seller would be responsible for the mitigation costs). And, of course, it should go without saying that "reasonableness" is determined with a view toward the entirety of the circumstances and all parties, not with a view toward one or several parties at the expense of another party. See, e.g., Palmer, 82 Ill. 2d at 224. ¶ 65 Here, South Holland posits that Inland's agreement with Skyware was an intervening event, resulting in failed attempts to mitigate that were not proximately caused by South Holland's breach, and which South Holland could not have foreseen. South Holland argues that it could not have foreseen that, upon a plating failure, Inland would, through settlement, simply dissolve its contract with Skyware to supply large quantities of kitted parts (rather than persevere to salvage the project), and, after foreclosing the possibility of salvaging the project, attempt to mitigate its costs by listing the custom parts on the open market. Inland did not keep South Holland apprised of its settlement with Skyware; to the contrary, South Holland pursued court action to acquire the pertinent details. ¶ 66 We see the substantive validity of South Holland's position, making it worthy of a hearing. Generally, under common law and the Uniform Commercial Code, nonconforming goods do not constitute a breach where the seller has not been given a reasonable opportunity to cure the defect. 810 ILCS 5/2-508(1) (West 2014); 15 Williston on Contracts sec. 45:23 (4th ed.). "The right of a breaching party to be given an opportunity to cure its own material breach is an ancient equitable principle intended: (1) to prevent forfeiture by termination; (2) to allow the breaching party to mitigate damages; (3) to avoid similar future deficiencies in performance; and (4) to promote the informal settlement of disputes." 5 Bruner and O'Connor Construction Law sec. 18:15. The right to attempt a cure corresponds with the duty to mitigate damages. Id.; Magnum, 325 Ill. App. 3d at 622. As such, a fair argument can be made that it would have been reasonable for South Holland to anticipate that Inland's first course of mitigation would be to enforce its, Inland's, right to cure. Instead, Inland abandoned its right to cure, and with it, abandoned the remainder of the project, through settlement. ¶ 67 The decision to abandon a right to cure or to litigate in pursuit of that right constitutes an "important juncture" in Inland's path to mitigate damages. That is, by abandoning its right to cure, Inland limited its options for mitigation. Again, as to the rejected parts in particular, Skyware rejected those parts and gave Inland no opportunity to cure (which, consequently, affected South Holland's opportunity to cure that category of parts, either in-house or otherwise). Now, rather than attempt to cure the plating defect by, for example, hiring a new plating company, and save its original contract with Skyware, Inland is left to try to resell the goods to mitigate against lost profits. Inland's chosen course of mitigation had an impact on South Holland. Going down the first road, South Holland would be responsible for all costs associated with its own failed plating attempts. Going down the second road, if Inland is unable to resell, South Holland is responsible for costs associated with the remaining project. The recipient of defective goods should notify the other party at all important junctures. Magnum, 325 Ill. App. 3d 621. Inland notified South Holland that the parts were defective, but it did not keep South Holland apprised of the settlement, it gave South Holland no voice in the settlement, and limited South Holland's opportunities to cure. Additionally, apart from the settlement, considering Inland's resale attempts in isolation, we do not see how Inland has established its reasonableness as a matter of law. The trial court seemed to simply accept that Inland could not resell the parts. It is not clear whether the parts were on the market for an unusual length of time or whether they were ever discounted so as to encourage a sale and enable some recovery, etc. At a minimum, Inland should have the burden of proving that its attempts at mitigation were both reasonable and foreseeable to South Holland at the time they entered into contract.
¶ 68 ii. Double Recovery
¶ 69 A plaintiff in a breach of contract action may not double-recover for its losses. Rivenbark v. Finis P. Ernest, Inc., 37 Ill. App. 3d 536, 538 (1976). South Holland believes that Inland has double recovered for its losses, because Inland received consideration relating to the rejected and open-order parts in the Skyware settlement, but the trial court did not offset that consideration against the damages relating to the rejected and open-order parts. The court reasoned that none of the certain sum constituted consideration for the losses associated with the rejected and open- order parts. Therefore, it awarded Inland all of its $280,000 in documented losses associated with the rejected and open-order parts without any offset. ¶ 70 We note that "[w]hether a contract is entire or [separable] cannot be determined by a precise rule and must depend upon the parties' intention. [citation.] 'The question essentially is one of fact: did the parties give a single assent to the whole transaction or did they assent separately to several things?' " Candalaus Chicago, Inc. v. Evans Mill Supply Co., 51 Ill. App. 3d 38, 44-45 (1977) (quoting 6 Williston on Contracts s. 863, pp. 279-80 (3d Ed. Jaeger 1962)). Various components of consideration in a contract are not separable merely because the parties later say that they are. See, e.g., Murphy v. Rochford, 55 Ill. App. 3d 695, 700 (1977); Douthart v. Congdon, 197 Ill. 349, 356 (1902) ("the whole consideration is the basis of the whole promise"). Additionally, we note that, typically, a valid release must be based upon a valuable consideration. Johnson v. Maki and Associates, Inc., 289 Ill. App. 3d 1023, 1027 (1997) (the right to sue is significant and cannot be released absent valuable consideration in return). ¶ 71 As such, we disagree that none of the certain sum constituted consideration for the losses associated with the rejected and open-order parts, because, in our view, the various components of consideration set forth in the settlement are not separable from one another. In other words, although the settlement is organized in two parts such that the certain sum appears to be in payment for the retained parts, there is no indication that Inland and Skyware would have agreed to the other portions of the settlement concerning the rejected and open-order parts without that monetary consideration. For example, Inland also agreed to abandon its right to cure the defects in the rejected parts. A release is not without value. See, e.g., Johnson, 289 Ill. App. 3d 1027. Inland effectively accepted the certain sum not only as a payment for the retained parts, but, also as part of an agreement to abandon pursuit of its own right to cure. Although Inland's course of action affected both its and South Holland's right to cure, only Inland received consideration for that relinquishment. The certain sum purportedly made in consideration for the retained parts is not, from the evidence gathered thus far, separable from the rest of the settlement. Therefore, the trial court erred in compartmentalizing the various exchanges in the settlement such that it did not contemplate at all the consideration Inland has already received in relation to the rejected and open-order parts, assign a value to that consideration (if any), and offset the value of that consideration (if any) against the $280,000 in documented losses associated with the rejected and open-order parts (or against a different amount in losses, should the court determine that Inland's course of mitigation in entering into the settlement was not reasonable and foreseeable to Inland). These issues are ones of fact, and Inland carries the burden in establishing its damages.
¶ 72 III. CONCLUSION
¶ 73 For the aforementioned reasons, we affirm the trial court's grant of summary judgment. However, we remand for a hearing on damages. ¶ 74 Affirmed in part and remanded with directions.