Echo, Inc. v. Timberland MacHines & Irrigation, Inc.
2011 U.S. App. LEXIS 21502
| 7th Cir. | 2011Background
- Echo terminated TMI’s distributor agreement and reassigned New England to LEPCO; Echo cited TMI’s debt and poor finances as the reason for termination; LEPCO planned to assume Echo’s New England territory and began distribution planning; TMI contested Echo’s termination as improper and sought payment on unpaid Echo invoices; district court granted summary judgment for Echo and LEPCO against TMI on multiple claims; TMI appealed seeking reversal of summary judgments and related rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TMI established a Connecticut Franchise Act franchise relationship with Echo. | TMI contends Echo termination created >50% of its business tied to Echo, via Bear Cat and Home Depot channels. | Echo showed Echo sales accounted for less than 50% when Sprinkler House is excluded; Home Depot sales should not count full sales. | No; TMI failed to prove substantial association (>50%) between Echo and its business. |
| Whether Zeytoonjian's affidavit constituted lay or expert testimony and admissibility issues affected CT Franchise Act claim. | Zeytoonjian’s statements were lay opinions based on his position; should not be struck as expert. | Opinions relied on accounting concepts; district court properly struck as expert testimony. | Court treated as de novo; stricken portions related to irreparable conclusions; admitted relevant lay insights where permissible. |
| Whether Echo is entitled to interest on an account-stated claim against TMI. | Interest properly owed under invoices and UCC; waiver argument insufficient. | Interest was tied to franchise breach and should be contested; waived argument too skeletal. | Interest award affirmed; TMI waived arguments and invoices supported interest. |
| Whether LEPCO tortiously interfered with TMI’s contract. | LEPCO’s September 30 presentation to Echo induced breach of the Distributor Agreement. | Presentation occurred at Echo’s request; no unjustified or causative inducement. | Summary judgment for LEPCO affirmed; no triable issue on inducement or causation. |
| Whether TMI’s CUTPA and unjust enrichment claims against LEPCO survive given CT Franchise Act ruling. | CUTPA and unjust enrichment rely on tortious interference or misuse of Echo’s transfer. | If tortious interference lacks, CUTPA and unjust enrichment fail too. | Affirmed summary judgment for LEPCO on CUTPA and unjust enrichment. |
Key Cases Cited
- Hartford Elec. Supp. Co. v. Allen-Bradley Co., Inc., 250 Conn. 334 (Conn. 1999) (franchise termination impact and dependence on franchisor analyzed under Connecticut law)
- Grand Light and Supply Co., Inc. v. Honeywell, Inc., 771 F.2d 672 (2d Cir. 1985) (purpose of franchise statutes and 'most or all' business dependence)
- Rudel Mach. Co., Inc. v. Giddings & Lewis, Inc., 68 F.Supp.2d 118 (D.Conn. 1999) (franchise association thresholds under Connecticut law)
- B & E Juices, Inc. v. Energy Brands, Inc., 2007 WL 3124903 (D.Conn. 2007) (defining substantial association at or near 50% dependency (district court))
- Dittman & Greer, Inc. v. Chromalox, Inc., 2009 WL 3254481 (D.Conn. 2009) (franchise association analysis—specific percentages; not sufficient here)
- Compania Administradora de Recuperacion de Activos Administradora de Fondos de Inversion Sociedad Anonima v. Titan Int'l, Inc., 533 F.3d 555 (7th Cir. 2008) (standards for distinguishing lay vs. expert testimony on summary judgment)
- Von der Ruhr v. Immtech Intl., Inc., 570 F.3d 858 (7th Cir. 2009) (business facts recognized by corporate officers may support lay opinions)
- K-Koncrete, Inc. v. Mack Trucks, Inc., 1987 WL 9337 (N.D. Ill. 1987) (interest on invoices under UCC §2-207 incorporated into contract terms)